Posts

Posted on

Business Commentary Part 32: The Underground Economy in two parts

Business and Economic Commentary by Christopher Ram

Part I: When business disputes expose underground networks

Introduction

The leak of an explosive March 25, 2025, interview between businessman Azeem ‘Junior’ Baksh of Gold Target Imports and intrepid journalist Travis Chase has triggered more than just a public clash between wealthy businessmen. Baksh detailed what he described as a “harrowing” gold importation scheme, claiming it implicated high-ranking officials. “I am sure that they want to close me down,” Baksh said. “Tamesh Jagmohan wants me closed down… Sonna made that very clear to me – if I pursue him for owed cash, (those in authority) would use state agencies to get me.”

The parties have denied the revelations. But beyond the specific business dispute lies a more troubling question: how did our country arrive at a point where underground economic networks appear so deeply intertwined with state power?

This is no child’s play. It recalls a time when the underground economy which kept the country supplied to an extent that it was tolerated by the state and woven into everyday life. But crucially, it did not threaten the state’s survival – it existed around politics, not inside it.

Frighteningly, Baksh, reflecting his experiences, tells us that in this new world, State agencies would act as agents of a different type in service to private disputants.

In the 1970s and 1980s, it was sometimes difficult to distinguish the underground economy from what was described as the official economy. Top public servants and business executives left their offices to buy contraband flour and potatoes and dhal and toilet paper from shops that had lookouts for the state police. After the Sophia Declaration nationalisations, the government controlled an estimated over 80% of the economy. Import licences, foreign exchange rationing, and price controls created chronic shortages. The oil crisis of 1973, collapsing bauxite prices, and the fixed exchange rate of G$2.55 to US$1 became a fiction.

How the original underground worked

On the streets, US dollars traded at several times the official rate. Traders traveled to Trinidad, Suriname, Venezuela, and Curaçao to buy goods with black-market dollars for resale at home. Tellingly, when President Hoyte introduced cambio licences to formalise currency exchange, the men who had been selling US dollars in Commerce Street (where else?) and around Stabroek Market were among the first to apply for licences to operate non-bank cambios.

Border routes moved goods from neighbouring countries: Springlands on the East, Lethem on the South and fuel coming via Morawhanna to the North. Some operators became household names – the man with an oriental nickname who started out dealing with flour, built a massive construction equipment empire, an accomplished athlete who hawked ladies’ underwear was eponymously associated with a nightclub (and noise nuisance) and now a major entertainment and gambling operation.

That phase also produced the market vendor who founded a prominent national newspaper; another whose buildings have transformed Georgetown’s skyline, and three enterprising professionals who pioneered the barrel trade that grew into a major shipping operation. These were textbook cases of how contraband profits could be folded into legitimate corporate identities.

Political tolerance, not dependence

Despite public threats to “stamp out smuggling,” the state often looked the other way. Contraband eased shortages, and the underground currency market provided hard cash that even official agencies sometimes accessed through intermediaries. Crucially, operators did not try to buy political influence – they were traders, not power brokers. Indeed, one of them up to this day describes himself simply as a hustler.

By the mid-1980s, this economy was part of normal life. Border towns like Lethem and Corriverton bustled with unofficial markets. Regent and Water streets offered goods that government outlets lacked. Civil servants and police officers ran small side ventures – a minibus, a shop, rental rooms – to supplement incomes. These were modest, low-profile, and carefully kept separate from public activities.

That sector did not escape academic interest. Perhaps the most famous was Clive Thomas whose study found that the underground economy at 80-100% of the official economy during the mid-1980s. Notable too were Bishnodat Persaud (UWI) and Kenrick Hunte (UG) who found valuable opportunity to study the phenomenon of parallel markets and shadow activities, exchange rates and tax evasion. Inevitably too, there were institutional sources like the IMF, World Bank, and ECLAC.

Then and now

This first-phase underground economy distorted prices and eroded formal business, but it was not an existential danger to governance. The black market, not the Bank of Guyana, set the real price of the dollar. Formal importers could not match contraband’s speed or cost. Staying in one’s place was the rule. Politicians tolerated the underground economy. The unwritten rule was simple: take a little, keep it quiet, and stay away from the political arena.

The most telling difference between then and now lies in scale and integration. In the 1970s-80s, a senior public servant might own one or two minibuses or run a small shop. Today, many in similar positions have become major contractors, licensed and unlicensed exporters, or concession-holders, and dredge owners, using public office as commercial weapons.

This change is fundamental: the side hustle has moved from the margins to the heart of the state apparatus. Phase One was a safety valve in a scarcity economy. Underground operators made money but did not bankroll political parties and their election campaigns or dictate policy. Nor did politicians need them to survive in power to retain – and remain in – power.

Conclusion

What we see in the Baksh revelations is fundamentally different. The underground economy has grown richer, politically powerful – and dangerous. Unexplained and dark money are called on to finance expensive election campaigns. Political and commercial interests combine in a symbiotic web of private and public corruption.

This is no longer tolerance – it is mutual dependency. When underground wealth and political power lock together, they threaten not just fair competition, but democracy itself.

Next week: Part II examines how this transformation threatens democratic institutions and what the Baksh case reveals about modern underground networks.

Posted on

The PPP/C’s campaign has suffered degradation in standards in contrast to an issues based opposition

Dear Editor,

The PPP/C’s elections campaign has taken a nasty turn. One arm has leaned on disguised vote-buying and selective, distorted facts. Another has descended into language so coarse and abusive as to be unprintable. It is not confined to fringe voices. Leonard Craig, Joseph Hamilton, and even the Vice President himself have joined in.

Minister Vindhya Persaud, to her credit, spoke out against the conduct. But hers was a lone voice, quickly drowned by the noise of the campaign. The party or its women’s arm took no corrective action. GECOM, which is supposed to safeguard fairness, has remained silent. The Ethnic Relations Commission, which had only weeks ago promoted a code of conduct, also looked away.

What is even more striking is who has been asked to carry the harshest lines. It is not the party’s leadership, but campaigners given licence to say what the leaders will not. Their role is clear: to reach certain voters while proving their loyalty and securing their place. They are being used, while the leadership hides its hands.

The problem runs deeper. The PPP continues to shelter individuals facing serious criminal charges, including sexual misconduct. When vulgarity, falsehoods, and compromised candidates are tolerated, the damage goes beyond politics. It corrodes society itself. It lowers standards, teaches the young that indecency is strength, and normalises such behaviour.

Some argue these tactics come from desperation or fear of the opposition. But fear cannot justify filth. The contrast between them is clear: opposition parties, even the one most vilified, are running restrained campaigns, focusing on issues more than personalities. They have shown that an election can be fought without dragging the nation into the gutter.

This matters because once such behaviour is accepted, it is not easily reversed. Today it is vulgar language, tomorrow it may be worse – harming members of the opposition and their supporters. If standards collapse, elections will no longer be contests of ideas but battles of abuse. That is the road the PPP/C is taking the nation. 

This is not healthy politics. It is distortion and vulgarity, a degradation of our society and its standards. Decent voters should recoil – and show their disapproval come September 1.

Sincerely,

Christopher Ram

Posted on

GMSA’s compliments government on its tariff failure

Dear Editor,

I refer to Mr. Howard Bulkan’s letter “We are incensed at non-consultation and composition of GMSA’s press release” (SN August 4, 2025). Adverting to broad assurances about the “negotiations” that led to a five percentage points increase from 10% to 15% in the tariff imposed on Guyana’s exports into the USA, the entrepreneur and processed wood product exporter asks the simple but profound question about the reported negotiating process by Guyana: “At what levels? Between whom? “Over what conditions?”

The answer to these questions appears to lie in the limited scope of GMSA’s actual involvement in the process. While the association acknowledges that the wood sector – particularly companies like Bulkan’s – would be most affected by these tariffs, their engagement appears to have been confined to a meeting with VP Jagdeo rather than any direct participation in negotiations with US counterparts. As part of the GMSA – Government engagement, then head of the GMSA revealed in April of this year that “the government has asked [the GMSA] not to issue any public statements until a resolution is reached”. Without consultation or feedback, the GMSA agreed.

It appears that the Government of Guyana took a disjointed approach to the matter. As the Stabroek News of July 7 reported, President Ali engaged the CARICOM Heads; Guyana “was in advanced discussions with the US side”; and that “we are approaching this in partnership with the US.” Despite all the optimism expressed over each of these approaches, we ended up coming out worse than the 10% baseline which replaced Trump’s initial hypothetical (and flawed) 38%. None of these however, appears to have included the persons most directly affected, or seemingly, the Ministry of Foreign Affairs where we have not one but two ministers.

And what did the GMSA do about this failure? It issued a statement complimenting the Government! Of course, no consultation. It is not too late, and a meeting of affected and concerned members should now be convened. 

It appears that the leaders of the GMSA does not understand that it comprises a cross-section of Guyana society, and that its leaders have no authority to make what are no more than political statements in the name of the association. They are free to do so in their own names, thereby demonstrating their political preferences.

The Private Sector Commission has not been much better in this matter. As a corporate member, I persuaded the chair of the relevant PSC sub-committee to convene a meeting to address the tariff. One meeting was called. No follow-up, and no action of which I am aware. That is not an isolated issue. I have called unsuccessfully and repeatedly for a meeting of the corporate members, speaking with the group’s Convenor on more than one occasion. Results: None. 

Only the leaders of these bodies can say whether they seek these offices to satisfy their ego or promote their personal, business or political interests. They will therefore measure their effectiveness differently. What is certain, however, is that they have failed their members, like Mr. Bulkan, who join these organisations for the greater good and for proper representation, not for political theatre masquerading as advocacy.

Sincerely,

Christopher Ram

Posted on

Jagdeo’s dangerous Chevron’s expectation

Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 165












Introduction

Chevron has won the right to acquire Hess’s 30% share in the Stabroek Block. This is not a direct acquisition but one made at the shareholders level where Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. Exxon had challenged the transaction claiming that it had the right of first refusal but the International Chamber of Commerce in Paris ruled otherwise. Exxon’s challenge stemmed from its interpretation of a joint operating agreement (JOA) that governs the Stabroek Block. The agreement included a “right of first refusal” clause, which Exxon argued gave it the right to buy Hess’s stake before it could be sold to a third party. The flaw in Exxon’s thinking is that this was not a Guyana/Stabroek Block transaction.

These columns had argued that Guyana ought to have stepped in and bought the share, paying out of future profits. Clearly, this Government has no appetite to challenge anything the Stabroek Block partners do. But it is more than that. Vice President Jagdeo, in an apparent endorsement of Chevron’s success expressed confidence that Chevron will serve as Guyana’s guardian angel. Such an opinion reflects a fundamental misunderstanding of how multinational oil companies operate and what the recent arbitration victory actually reveals about corporate priorities.

Jagdeo’s misguided logic

Let us try to understand Jagdeo’s convoluted idea. He argues that “having another US major that had a kind of well, tense relationship with Exxon… that tension between the two could serve our country better” because Chevron will be “making sure that those costs are minimised”, thus increasing Guyana’s take which currently stands at about 14%. Those sentiments reveal dangerous naiveté about corporate motivations. Jagdeo believes Chevron will somehow prioritise Guyana’s interests over profit maximisation – a fundamentally flawed assumption. All he had to do was read the statements coming out of Chevron, or read the Joint Operating Agreement signed by Exxon, Hess and CNOOC.

In fact, central to their case before the Arbitration Panel, was the interest and their duty to their shareholders. ExxonMobil CEO Darren Woods stated the company had “a clear duty to our investors to consider our preemption rights to protect the value we created through our innovation and hard work.”

And following the approval of the deal, Chevron’s CFO Eimear Bonner emphasised that the deal would “drive significant free cash flow and production growth into the 2030s” and achieve “$1 billion in annual run-rate cost synergies.” And CEO Mike Wirth stated it would “drive greater long-term value to shareholders.”

Guyana not in oil companies’ equation

When asked about operational changes, Wirth told American television that his company anticipates headcount reductions due to “overlaps.” Notably absent from any of these shareholder communications was any mention of looking out for Guyana’s interests or serving as a watchdog over ExxonMobil’s costs. Jagdeo, the policy wonk, should know better. The 2016 Petroleum Agreement explicitly designates ExxonMobil as the operator with comprehensive authority over day-to-day operations. This operational control provides ExxonMobil with several crucial advantages that limit Chevron’s ability to effectively police costs. Chevron, as a non-operating partner, will have limited ability to challenge these decisions effectively, particularly given that ExxonMobil can leverage its technical expertise and its 26 years in the Block, to defend expenditure decisions.

As an economist, Jagdeo understands that when costs are largely recoverable and profits shared proportionally, there is extremely limited incentive for cost reduction, let alone cost policing. (They get back 100% of cost but only 50% share of profit). Nor does he seem to understand boardroom dynamics. Even after the bitter arbitration dispute, ExxonMobil immediately welcomed Chevron as a partner, stating: “We welcome Chevron to the venture and look forward to continued industry-leading performance and value creation in Guyana for all parties involved.” Indeed, there is no evidence internationally that show joint venture partners in oil or other resource projects acting as effective watchdogs for host governments. Their primary obligation is to their shareholders, not to the host country.

The Audit Reality Check

If Jagdeo believes that Exxon and CNOOC are inflating costs, then he is admitting that the three annual audits of the oil companies’ books allowed by the Agreement are ineffective, a waste of time and money. It is disturbing even to contemplate that the government expects Chevron, the new kid on the block, will spend time seeking to solve Guyana’s audit problem. The issue is ineffective contract administration and weak government oversight which Jagdeo’s approach is seeking to outsource to Chevron! Instead of protecting the country’s interests through robust regulatory mechanisms, Jagdeo seeks to abdicate its duty.

Conclusion

VP Jagdeo’s faith that Chevron will look out for Guyana’s interests represents dangerous naiveté about corporate motivations. The recent arbitration battle demonstrated that both ExxonMobil and Chevron are primarily concerned with maximising returns to their shareholders, not protecting Guyana’s fiscal interests. In fact, if they were that interested in Guyana’s interest, they would proactively agree to renegotiating the 2016 Agreement. But Jagdeo does not want to hear that. The Joint Operating Agreement dynamics, combined with cost recovery mechanisms in the 2016 Petroleum Agreement, actually align the interests of all foreign partners against those of the host government.

Guyana’s interests will be protected only through robust government oversight, technical expertise, and strong contractual frameworks – not through hoping that one Stabroek Block contractor will police another. We should not contemplate, let alone afford to outsource our country’s oversight responsibilities to foreign oil companies whose primary allegiance lies elsewhere. Jagdeo’s statement does not inspire confidence. 

Posted on

Business Commentary Part 31: Trump’s tariff scorecard: 15% on Guyana, Trinidad and Venezuela. 10% on other CARICOM countries and Cuba

Introduction
One day before Guyana observed Emancipation Day, the mercurial universe Boss Donald Trump confirmed his April 2 Liberation Day Executive Order to unilaterally impose tariffs on every country trading with the United States of America. The US President imposed on Guyana’s products entering the United States a 15% tariff beginning next week – a blow with implications for this country’s trade policy and its economic diversification programme. If one is looking for any consolation, maybe it lies in the initial implausible reciprocal rate of 38% previously announced in April, using an amateur’s methodology based on the size of the trade deficit which that country has with the United States. Thanks Exxon!

It is no consolation however that Guyana and Trinidad and Tobago all have a higher rate than the other countries of the Region, including all the CARICOM countries, Suriname, Cuba and Haiti. This appears a cautionary word to Guyana which has been cosying up to the Americans, accepting that the lopsided 2016 Petroleum Agreement will remain unchanged up to 2057, hosting its Secretary of State at a special function and tolerating its ambassador interfering in Guyana’s domestic affairs in an election season. It will take some time to see the economic consequences of Trump’s action which even questions the well-worn cliché that America does not have permanent friends, only permanent interests.

Strategic partner?
It is not as if Guyana is of no consequence to the United States. We are not only of strategic importance, sitting at the top of South America. Nor are we of no diplomatic value – we make our voice heard at the United Nations and are not ideologically at odds with the USA. Indeed, there is a view that Guyana is a compliant and accommodating partner. On the economic front, we have no equal among CARICOM states. In another few years, Guyana will contribute significantly to the energy security of the USA with around 600,000 barrels of oil per day earned by American giants Exxon and Chevron from the Stabroek Block. Does that not count for something!

This imposition is not an oversight. We have former President Sam Hinds heading our embassy in Washington. We have a highly paid lobbyist in that country, and we have in Georgetown an ambassador with whom we are obviously in contact. They have all failed us and the question we must ask – without getting any answers – is why has Guyana been excluded from the 10% club? By what measure could we be placed below Cuba and Haiti and on the same plane as Venezuela? What message are the Americans trying to send? 

Despite the abundance of rhetoric about Guyana being “a strategic partner” or “the new frontier,” we remain little more than a resource basin, extracted by multinationals and then sidelined when broader trade benefits are being shared. This 15% tariff is not merely economic. It is a diplomatic signal that Guyana does not carry sufficient weight in U.S. trade calculations to warrant even the same treatment as Haiti or Saint Lucia. That is both alarming and deeply humiliating.

Question time
Even as we accelerate towards national elections, we expect our leaders and politicians to ask some searching questions. Did we request inclusion in the 10% group? Did we raise objections when the 15% classification was being drawn up? Were our diplomats even informed? This is no time for passivity. The 15% tariff decision is a clear sign that our foreign policy must be recalibrated. Our leaders must be willing to make meaningful, not symbolic representation.

Make no mistake: this has real economic consequences. Exporters of rice, rum, lumber, processed foods, and other non-oil products will now find their goods 15% more expensive in the U.S. market than similar products from Barbados or Jamaica. It undermines Guyana’s already fragile export base and disadvantages any attempt at economic diversification.

Even as we talk about building a manufacturing sector or value-added production, such efforts are directly harmed by this kind of tariff penalty. And since our oil exports are outside the scope of these tariffs, it is the non-oil sector – the very segment we claim to want to strengthen – that takes the hit.

Conclusion
We must now wait until the elections are over to address the issue and its consequences. Late as it is, we need to understand the rationale for the decision. There seems no reason why we do not call in Kingston for an explanation. The Ministry of Foreign Affairs must publish the timeline of its knowledge of this classification and the representations, if any, made to U.S. authorities. The Office of the President and Ministry of Finance must clarify how this tariff will impact exports and growth. And the Private Sector Commission must shake off its inertia and demand redress on behalf of the exporters it claims to represent.