Serious questions remain about the LCDS including the wisdom of putting Norway funds into the Amaila project

Despite its Stalinist ring, the request to Transparency International by acting Minister of Foreign Affairs Mr. Manzoor Nadir for a purge of the board of Transparency Institute (Guyana) Inc. (TIGI), a civil society group, is no surprise. Similarly, his falsehood that TIGI director Gino Persaud was “removed by the Government from the University Council” and his references to familial connections are entirely consistent with the evolution of the political behaviour of Mr. Nadir.

Not surprising either is President Jagdeo’s threat to host a press conference to deal exclusively with civil society activists Dr. Janette Bulkan and me over a letter on the LCDS signed by a group that includes the two of us. That too has become par for his course. Whether he will carry out that promise is uncertain given his surreal Saturday Night forgiveness fiesta and epiphany.

The venom in the statements by Messrs. Jagdeo and Nadir show how intolerant the Jagdeo administration has become of independent voices and critical views. I have no authority to speak for TIGI, the directors of which are quite capable. I do however feel compelled to respond to the attacks on my colleagues who signed the open letter for their “blasphemy” in expressing their well-grounded fears of abuse of LCDS money by a government that constantly shows only a cynical interest in openness, transparency and accountability and audit of public funds. A government that seems able to find from nowhere sometimes hundreds of millions of dollars to pay for spy equipment, for laptops and for various improper activities.

I assume those associated with a counter-letter under the Jagdeo-led Multi-Stakeholder Steering Committee (MSSC) did in fact read the letter in full and not rely on the government’s misrepresentation of it. To them I wish to pose the following issues relevant to the LCDS:

1. No matter how inevitable, any change in policy has winners and losers. How does the prioritization of the spending projects take account of and compensate, whether by way of cash compensation, retraining or otherwise, some of the biggest losers such as the forestry and mining sectors and their thousands of employees and small operators.

2. Our first peoples deserve reparations and appreciation of the rest of the country. But they also deserve our honesty, not hypocrisy. For four years until I called for action, the Government refus-ed to pay the Amerindians their share of royalty under the Amerindian Act.

3. Under the Guyana-Norway MOU, the Amerindians are not bound by the constraints of the LCDS and can choose to opt in or stay out of the LCDS. They are required to make no sacrifice but are the first in line for rewards. The LCDS is a country project not an ethnic initiative. If the Norwegians wish to assist the Amerindians then they should contribute to an Amerindian Fund.

4. By its patronizing attitude the government is creating a charity, entitlement culture among Amerindians who simply sit back and ask when is the money coming rather than consider among themselves steps to exploit their unique traditional knowledge, their culture and the resources they control.

5. The delay in disbursements is not due to any failings by Norway, the World Bank or members of civil society. It is because the Government has failed to submit proper project proposals which are ready for implementation. At this stage all they can advance is land titling and solar panels for the Amerindians and equity in Fip Motilall’s hydro-electricity project.

To the Government’s credit, land-titling under the Amerindian Act is a low cost administrative exercise which since 2006 has been funded out of the national budget. It does not need LCDS money.

6. The alternative energy initiative is being funded by the IDB and again does not require LCDS money.

7. That leaves the hydro-electricity project spearheaded by a man who has consistently failed to meet his contractual obligations to this country and its people. Under a licence granted to him in 2002, Mr. Fip Motilall’s company was supposed to provide thermal power as an interim measure and commence construction of the Amaila Hydro-Electricity Plant. He did not supply the thermal plant but the Government renewed/extended the licence in 2004, and again in 2006 for one year which means that it would have required further extensions to remain current. That information is not public.

8. Despite all of that bad experience, in 2009 the government awarded Synergy a road project contract under an unlawful process managed by an unlawfully operating government company NICIL. Which businessperson in their right mind would agree to put their money into his company which did not realize that it needed first to have a road to the plant site before it could build the plant?

9. The hydro-electricity plant would revert to the state after an already agreed period with no financial input by the Government. By putting LCDS funds into the company the country is paying for an asset the residual ownership of which is already agreed to be vested in the state. If we are to put money into the project why should Motilall remain in control? Now that we have a Procure-ment Act should we not put the project out to tender? Is the best use of the Norwegian-sourced money rushing headlong into what will amount to a joint-venture with and controlled by Mr. Motilall?

10. Like its comparator the PNC, this government has a poor record on accounting and transparency. But in terms of truth and integrity, this government is in a class of its own. Relevantly, can Mr. Peter Persaud and Mr. Clinton Urling – no doubt well-intentioned and well-informed persons – who have written critically of the letter by Dr. Janette Bulkan and others, tell us how they knew of the Siddhartha 1.8 million acres deal which had been hidden from the rest of the country and possibly the Multi-Stakeholder Steering Committee?

11. I would like too to hear from the informed members of the SSMC about the carbon footprint of the deal with Siddhartha and whether it is compatible with the ethos and concept of a low carbon development strategy.

With all respect to the Amerindians land titling is not a low carbon issue and what do we do with the annual average US$50 million we will receive while Mr. Motilall takes his time in building our hydro-electricity facility? Put it all into his company? I hope the businesspersons on the SSMC would ask their Chairman Mr. Jagdeo to publish the Licence, agreements and extensions with Mr. Motilall before any public funds are put into his company.

Finally, let me say this to Jagdeo, Nadir and those who feel compelled to attack Dr. Bulkan and other members of civil society. I consider Dr. Bulkan and all the other signatories to our letter, capable, patriotic and courageous. I have never distanced myself from such persons and am proud to be associated with them – cuss or no cuss.

Jagdeo’s mis-conceptions of the details of Guyana-Norway MOU source of international embarrassment

The road from Oslo, Norway to Cancun, Mexico has been proving to be a rather rocky one for Guyana’s President Jagdeo. In February 2009, Jagdeo and Norwegian Prime Minister Jens Stoltenberg signed a memorandum of understanding in the Norwegian capital Oslo under which Guyana would receive from Norway up to US$250 million ($51.7 billion) during a five year period ending in 2015 for this country to preserve its forests. In return Guyana has undertaken to accelerate its efforts to limit forest-based greenhouse gas emissions and protect its rainforest as an asset for the world. It was a euphoric moment for Jagdeo, one that placed him in a positive light on the world stage and caused some of his supporters to nominate him unsuccessfully for the Nobel Peace Prize.

As a measure of President Jagdeo’s excitement, in November 2009, he described the agreement as a watershed moment, “another first by Guyana” for which Norway should be commended. One year later at a climate change forum in Cancun, Mexico on Tuesday December 7 when, sitting beside the Norwegian Prime Minister, he tore off at his long-time benefactor the World Bank as well as the Norwegians for what he perceives as delays in the disbursement process of what he described as “our money.” According to Mr Jagdeo, a process that Stoltenberg saw as going well, had turned into a nightmare that could for good measure cost him his presidency. This latter comment clearly indicates that President Jagdeo had overstepped the boundaries and with this had lost the respect of Stoltenberg and the World Bank which was quick to point out the mechanics of the Norwegian deal.

Irresponsibility and immaturity
Mr Stoltenberg’s incredulous look at the iconic moment of his outburst was a defining point for Mr Jagdeo and Guyana, a measure of how one moment of irresponsibility and immaturity can undo a year of good solid and hard work. Suddenly the Champion of the Earth shrank into ordinariness and Guyana was exposed as a country unable to appreciate and demonstrate basic rules of diplomacy and discretion. But those who have observed President Jagdeo over the years would not have been as surprised as Mr Stoltenberg. That has been Mr Jagdeo’s brand of behaviour in Guyana where he could rail, abuse and defame with complete impunity.

By the time the President had returned to Guyana two weeks later his temper had subsided and more calmly he announced that he expected disbursements to take place some time next month. Bad as it, Mr Jagdeo’s conduct in Cancun might have been understandable, except that the display of crassness was not an isolated case of abuse but rather a pattern that has been directed at the British over security, the Americans over drugs, the World Bank over process and Guyanese over the mildest criticism, no matter how justified. This is more than a problem for Mr Jagdeo; it is one for the country, its citizens and its diplomats. Their task of damage control will add to the challenge they face with few and sometimes mixed signals from the Office of the President that is effectively the country’s Foreign Ministry.

Glaring misconception
So what is the problem or are there more than is being let on? President Jagdeo had said in January that Guyana had complied with all of the conditions under the Memorandum of Understanding (MOU) and that the “only outstanding thing” is the settlement of the trust fund mechanism through which the money will flow to Guyana. Even if that was all, a trust fund carries immense legal and other obligations as the World Bank Director for the Caribbean Yvonne Tsikata had to point out in trying to correct our President.

The fund, the Guyana REDD+ Investment Fund, which aims to be a multi-donor financial mechanism managed by a reputable international organization, is to be operational before any contributions can be disbursed from Norway. Describing Jagdeo’s position as “the most glaring misconception,” Ms Tsikata explained that as a trustee, the World Bank cannot disburse any funds to the implementing partners such as the UN and the Inter American Development Bank, before getting the green light from a Steering Committee comprised of Norway and Guyana. She added that up to now, the committee has not instructed us to transfer any funds and as trustee, the World Bank cannot act faster than the Steering Committee. That elementary fact appears to have escaped Guyana’s President.

And as Prime Minister Stoltenberg pointed out in Cancun, his country’s agreement with Guyana is one that is results-based. Knowledgeable persons I have spoken to confirm Mr Jagdeo’s misinterpretation of the agreement which he negotiated.

Technical and scientific issues
Persons familiar with the agreement point out that its technical and scientific issues and Guyana’s spending proposals under its hurriedly cobbled up LCDS are distinct issues which have been distorted and conflated by Mr Jagdeo. The Verification Report for Norway is not final – Rainforest Alliance has been contracted to undertake this verification of compliance with the enablers (progress indicators) in the Joint Concept Note attached to the Norway-Guyana MOU. I understand that the report is not yet finalised.

Also incomplete is a report by Poyry, a New Zealand management consulting firm that specialises in forest and related industries and which is conducting a study into the technical and scientific issues of monitoring, reporting and verification system (MRVS) for carbon emissions. So, there is no verified performance, and consequently, the Norwegians have no obligation to pay in advance of the agreement on verification.

A separate issue is the proposals for spending. President Jagdeo is confusing these two issues. He said that all spending proposals will be run past the MSSC, which is different from the Steering Committee under the GRIF. According to the LCDS website, the MSSC is not recorded to have met since August, and there is no evidence that MSSC has considered any of the proposals on spending – these are Mr Jagdeo’s proposals.

Then there still remains the anomaly that this is a REDD scheme. REDD is about reductions in carbon emissions. But Guyana is increasing emissions – from increasing gold mining and gold exploration, road-building and associated land-clearing, increasing log exports. So that paradox remains unresolved.

Cancun was a failure for Guyana which was represented by Andrew Bishop but who was effectively silenced by Mr Jagdeo. How fast we have lost ground in terms of our credentials as a climate change champion is demonstrated in the recent UNASUR communiqué, in which there were prominent mentions of Ecuador’s Yasuni initiative to keep oil in the ground but no mention of Jagdeo’s LCDS, even though the summit was held in and financed by Guyana.

Money, money, money
President Jagdeo’s performance also vindicated the view of many here that his only interest in climate change was in the money it could bring. Had the McKinsey study been done by any lesser known consultancy it might have been described as bogus, valuing the retention of our forests at US$580 million annually, when we settled for an average of less than 10% of that for each year over the next five years. And at a very practical level, if Mr Jagdeo really believed in the dangers of climate change, the rise in ocean levels and the overtopping of our sea defences, would he have allowed an entirely new community involving some of his close colleagues to be established right on the shores of the Atlantic knowing that it is the state that will have to come to the rescue of the property owners if the fears were to be realised?

And some of President Jagdeo’s LCDS proposals are equally spurious as the World Bank and Norway would discover with minimal research of the Amaila Falls hydro-project and his land titling for the swing voters in next year’s elections. We are told that just when the 2011 elections are around the corner, Mr Jagdeo wants to spend some $1.6 billion on land titling. Not only has the process of land titling for Amerindians been greatly simplified under the 2006 Amerindian Act which his government was finally forced to bring into law four years late. In fact for several years the national budget has easily provided the money for land titling exercises and there is no evidence of any major backlog of applications that are outstanding. Some fear that without campaign financing laws and no financial controls, the bulk of the $1.6 billion will simply be used for political purposes.

The LCDS Unit in the Office of the President has been busy spending money while some of its key players have been engaging in private consultancies. They should have been sent home a long time ago. Ram & McRae had cautioned about including in the 2010 Budget money from Norway but instead of cutting back on expenditure we now have the Finance Minister going to the National Assembly for $6 billion including $4 billion for Irfaan Ali’s ministry. One can only hope that on this occasion, he has fewer difficulties with the truth than he had with a similar sum around the same time last year.

And finally there is an element of governance in the agreement. That is another word that makes Mr Jagdeo see blue.

Have a happy and peaceful Christmas.

Transparency, accountability underpin Guyana and Norway MOU

President Jagdeo was obviously pleased about the Memorandum of Understanding (MOU) signed by him and Norway’s Minister of the Environment and International Development Erik Solheim under which Norway agrees to provide defined financing for Guyana’s evolving Low Carbon Development Strategy (LCDS). For the President it is vindication of his huge investment in time and money pursuing LCDS funding, in exchange for a commitment to drastically restrict the exploitation of the country’s forests, described by him as the country’s most valuable resource. The signing comes within three weeks of a United Nations Conference scheduled for Copenhagen, Denmark to consider a replacement for the international treaty on the environment called the Kyoto Protocol. In fact President Jagdeo was so excited at a post-signing press conference that he called the MOU “our Copenhagen.”

Under the MOU, Norway will pay US$30 million (approximately $6.2 billion) next year and potentially up to US$250 million ($51.7 billion) by 2015 for Guyana to preserve its forests. According to the President the figure committed by Norway “is more than the combined loans and grants Guyana receives on an annual basis from the World Bank, the Inter-American Development Bank, the Caribbean Development Bank and the European Union.” If not inaccurate, that statement is terribly misleading since it compares an annual amount with a five-year sum. We have also had debt write-offs, loans and grants from countries and institutions in some years, in net present terms, in excess of the total amount committed by the Norwegians. Notwithstanding this, the agreement is indeed an achievement and needs no exaggeration or misrepresentation, even if it comes at a huge cost to the country. Some time soon we will need a thorough evaluation by the experts, academics and economists to assess the cost/benefit of the agreement to the country.

McKinsey and the US$580 million
In response to the President’s comparison between Norway and the rest of the donor community – excluding significantly individual countries and the International Monetary Fund (IMF) – his critics might add that the agreement comes with more strings than those that have ever been imposed by the International Monetary Fund, the World Bank, the Inter-American Development Bank, the Caribbean Development Bank and the European Union, all combined. More significantly, the critics might suggest that a far more meaningful comparison is between what the Norwegians have committed and what McKinsey, the government’s LCDS consulting guru, has told them, quite unrealistically, that our forests are worth to the world.

Essentially the LCDS is arguing that since the world benefits, according to McKinsey, by US$40 billion dollars per year from the conservation of our forests, and since to Guyana the annual worth of the forest in economic terms is US$580 million, then the world must pay us that sum. Accordingly McKinsey, in a document which has not been released despite calls for this to be done, has appears to have convinced the government of the country’s entitlement of annual payments by the international community in the following four phases.

Phase 1 (2009) – No sum indicated but the Draft LCDS refers to interim payments to launch the LCDS and funding for Monitoring, Reporting and Verification (MRV).

Phase 2 (2010 – 2012) – US$60 million to US$350 million annually for capacity building, human capital development and the investment required to build a low carbon economy.

Phase 3 (2013 – 2020) – US$350 million to US$580 million annually for essentially the same purposes in Phase 2 and for payments to avoid deforestation and climate change adaptation.

Phase 4 (2020 [sic] and onwards) – Greater than US$580 million annually, providing incentives at or above the McKinsey’s annual economic valuation of the country’s forests.

Who will join Norway?
Critics should not however jump to the conclusion or their calculator to prove that the amount committed by Norway is negligible and a mere fraction of what McKinsey had led the government to believe it should receive from the world in return for strict limits on forestry exploitation. The total amount committed by the Norwegians through to 2015 is indeed US$100 million less than the amount of the lower range McKinsey told the government it should expect during the seven-year Phase 3. In fairness, however, the LCDS is premised not only on inflows from Norway but from other countries that either historically caused much of the world’s pollution, such as the US, Europe, Japan and Russia or the newer, large-scale polluters such as China and India.

That is why I think President Jagdeo is wrong to have exulted that the deal with Norway is “our Copenhagen.” Perhaps the President is not optimistic that much will come out of Copenhagen and in any case for the first time he told the nation this week that even if agreement is secured in Denmark, it would take almost four years before funds would flow to countries like Guyana. What that means is that unless there are other ‘bi-laterals’ such as the Guyana-Norway deal, Guyana cannot look forward to similar funding for at least another four years.

Under the Draft LCDS, Guyana had identified more than US$1 billion in “essential capital projects” that can be fully or partially funded through private investment assisted by an in-country infrastructure investment fund built from forest compensation payments. The Norwegians are clearly not interested in any such in-country fund, and if we accept the President’s four year prediction, then there is a huge financing gap to be filled. Now that the Norwegians have put down their marker, the Government of Guyana has a lot of work to revise the LCDS and make it more realistic. Hydro-power which appears as a centre-piece of the LCDS will now have to be financed from other sources, the private sector will have to come up with quite a lot of money and the government too can do its part. The money pledged in the first year equates to less than 6% of the national budget for 2009 and with proper financial management and a commitment to collect the taxes legally due by the army of tax evaders out there, we can easily raise more than what the Norwegians have committed in the first year of their programme.

The options for achieving that are available, but are not new, neither has there been any commitment to a national response to global warming or to responsible financial management. Only this week we saw the Minister of Finance presenting his mid-year report that was due at the end of August but conveniently misdated. We have never been an environmentally conscious people and the economy is based on the most inefficient and unfriendly use of energy whether in vehicle fuel consumption or electricity; we have no policy on recycling and fail to manage our water resources efficiently or exercise proper flood control measures.

The cost
In return for the less than required funding for the LCDS the country is giving up a lot, including control over the money we receive and sovereignty over our forests, contrary to what the government had been assuring Guyanese. The Norwegians have obviously been tougher in their negotiations than many feared they might be, and may have taken on board several of the concerns raised by the groups and individuals from the political parties and civil society whom they canvassed or who canvassed them. While the documents they have signed stay clear of the domestic issues such as the improper and unlawful use of funds, it is quite likely that those issues have informed some of the conditions they have imposed, conditions that show that the Norwegians are not taking any chances with the money they are prepared to give to Guyana.

Financial safeguards
The deal is a carrot and stick arrangement but with more emphasis on stick than carrot. The maximum we can receive under the MOU is fixed but the stick is that the amounts which we will receive are results-based according to how well we measure up to the terms and conditions set out in the document which themselves require considerable resources to ensure compliance. In fact, in the early stages of the implementation of the deal, a disproportionate amount of the funds will be used to set up the administrative and oversight arrangements which could see huge sums going to consultants. The costs to be met in the first two years include those for the establishment of the Project Management Office; the Office of Climate Change (operational costs); the multi-stakeholder consultation process and annual verification by neutral experts that the enabling activities have been completed.

What is particularly noticeable are the financial conditions set out in the Joint Concept Note (JCN), conditions that might otherwise be considered draconian but which many Guyanese bloggers seem to welcome. The JCN covers not only the Norwegian funds but other similar funds as well, raising the possibility that the Norwegian conditions are baseline, to be supplemented by any conditions imposed by other donors. The funds will go into a Guyana REDD-plus Investment Fund (GRIF), managed by a reputable international organisation and responsible for ensuring full oversight of the GRIF’s operations, including fiduciary obligation as trustee, and providing technical support as agreed with Guyana. Significantly the Joint Concept Note specifies that the GRIF must be operational before any contributions can be disbursed from Norway (emphasis mine). Safeguards, including social, economic and environmental safeguards, as well as the fiduciary and operational policies of the organisation selected, will apply, as appropriate, to all activities to be financed by the GRIF.

Technical conditions
The conditions applying to the technical, forest-related issues are no less stringent. Before any money is disbursed Guyana will have to take formal steps to establish independent forest monitoring by a credible, independent entity. Almost immediately the government is required to prepare an outline of Guyana’s REDD-plus governance development and no later than October 2010, a more detailed plan setting out clear requirements and timelines for its implementation. Additionally the country is required to show evidence of entering a formal dialogue with the European Union with the intent of joining its Forest Law Enforcement, Governance and Trade (FLEGT) processes towards a Voluntary Partnership Agreement (VPA), with its resonance with the EU EPA which the President had railed about. Government also has to show evidence of its decision to enter a formal dialogue with the Extractive Industries Transparency Initiative (EITI) or an alternative mechanism agreed by Guyana and Norway to further the same aim as EITI.

Transparency and accountability underpin the entire arrangement and the JCN requires that information regarding the initiative be publicly available. As if to show its immediate commitment to these concepts, the government has posted both the MOU and the JCN on the Guyana LCDS website.

One of the questions that none of our journalists appears to have raised with the President is whether he consulted with anyone – including his Cabinet, the Leader of the Opposition and the LCDS Steering Committee – before agreeing to the terms set by the Norwegians. That of course is not the President’s style and he might have considered that given how much he had invested in the LCDS, he needed something – anything – to show for his efforts. He has expressed confidence that Guyana will be able to meet its obligations both under the technical as well as the financial provisions of the deal. Recent experiences with the UK on security sector reform and the EU on funding to agriculture suggest that more than words will be necessary.

Financial lawlessness on the increase

The Fiscal Management and Accountability Act, 2003 (FMAA), along with the Integrity Commission Act and the Audit Act, are often advertised by the government as proof of its commitment to transparency and accountability. This trilogy of legislation is underpinned and intended to give effect to a constitutional provision for the proper accounting of public moneys. To prevent any doubt about what public moneys means the FMAA defines it as “all moneys belonging to the State received or collected by officials in their official capacity including tax and non-tax revenue collections authorised by law and… grants to the Government…”. That clearly includes money from Lotto and privatisation and any funds received from the Norwegians and other sources towards the Low Carbon Development Strategy (LCDS).

Not only that. The various acts referred to above are all part of the commitment of the Government of Guyana to the international donor community – the IMF, the World Bank, the IDB, the EU, Canada, the US and others – for good governance including transparency in accounting, in exchange for financial support. The Minister of Finance is the member of the Cabinet designated by law for ensuring that the constitutional and statutory requirements are complied with and is empowered by the act to take punitive action against those who breach its provisions. Having played a major role in the passage of the accountability legislation, the donors are assumed to be familiar with the main provisions of the legislation and must therefore be aware of the major infractions of the legislation by the very Minister bound to ensure compliance.

Spend, baby spend
The national budget continues to grow at a considerable rate helped by VAT producing immoral windfalls to the government. With a penchant for huge numbers and throwing money after problems, for President Jagdeo the policy has been ‘spend, baby spend.’ Like the World Cup money and the flood funds, accountability and audit will come later, if at all. No one would have identified Dr Ashni Singh, Minister of Finance with the ‘spend, baby spend’ attitude, or given his background as a professionally qualified accountant and former Deputy Auditor General, have expected that he would treat accountability and the audit of the books of the state with such disdain. It is neither excusable nor understandable.

Yet Dr Ashni Singh has breached several of the statutory duties and professional obligations imposed on him in defiance of public opinion and the rule of law, and confident of no warning letter from the President, his political boss. Dr Singh’s apparent contempt for good governance and accountability makes many hesitate to support the LCDS which places the centre of the LCDS in the Office of the President, the very office that now unconstitutionally (mis)appropriates the Lotto Funds, using it for all sorts of improper purposes at the fancy of the President.

Article 217 of the Constitution of Guyana – the country’s supreme law – requires that “all revenues or other moneys raised or received by Guyana (not being revenues or other moneys that are payable, by or under an Act of Parliament, into some other fund established for any specific purpose or that may, by or under such an Act, be retained by the authority that received them for the purpose of defraying the expenses of that authority) shall be paid into and form one Consolidated Fund.” I do not believe that the term “for any specific purpose” can be interpreted so widely as to allow an Act of Parliament to defeat the main constitutional objective to ensure that moneys coming in to the state go only into the Consolidated Fund and any spending done out of that Fund is on the basis of appropriations by the National Assembly.

In defiance of the constitution the 24% of gross takings collected by the government from the Guyana Lottery Company are made available to the President who seems to exercise total control of how it is spent with only any unspent balance being put into the Consolidated Fund. I have heard this practice defended under the second parenthetical exception to Article 217 and that the money should go to the Government Lotteries Control Committee under the Government Lotteries Act Cap. 80:07. That argument in my view falls at the first hurdle since that act deals only with lotteries “organised and conducted by the Government Lotteries Control Committee.” The Lotto Funds as they are infamously referred to, represent the government’s share of the gross takings from a private lottery run under a contract between the Canadian operator and the government. It is a tax/levy and should rightly go straight into the Consolidated Fund. The President’s misuse of these funds is a clear breach of the constitution which he has taken an oath to uphold, while the failure by the Minister of Finance to bring these moneys into the Consolidated Fund constitutes a dereliction of his duty and obligation and contrary to section 48 of the FMAA which makes it unlawful for any minister or official to misuse, misapply, or improperly dispose of public moneys.

The mid-year report
The Fiscal Management and Accountability Act 2003 imposes on the Minister a mandatory duty to present to the National Assembly, no later than August 30 of the half year, a report on the year-to-date execution of the annual budget and the prospects for the remainder of the year. This column has been at pains to point out that not only is the Minister in breach of this statutory duty with regard to timing, but even when he belatedly submits the report, it is frequently misdated to minimise the delay and omits key information prescribed by the act. The act requires the report to include “an update on the current macroeconomic and fiscal situation, a revised economic outlook for the remainder of the fiscal year, and a statement of the projected impact that these trends are likely to have on the annual budget for the current fiscal year.”

This is a practical proposition and the report should comment on emerging issues such as the alleged $300 million fraud at the GRA, the President’s $2 billion housing fund for the vulnerable, the gains from the LCDS and any unbudgeted expenditure incurred in the first half of the year. This kind of information is not only for the business community and the citizenry but also the kind of information any Finance Minister as the country’s Chief Finance Officer needs for his short-term planning.

Unintended consequences
The delay by the Minister causes the Bank of Guyana (BoG) to delay the publication of its own half-year report until the Minister releases his. I understand the BoG’s report has been ready for some time and while the Bank is an independent statutory body, it comes within the ministerial control of the Finance Minister, a choice between losing its reputation for independence and offending the Minister.

A similar situation exists with the Bureau of Statistics. This entity has received several millions of dollars to enhance its professional competence and secure its independence. I think it was in 1991 that an act was passed to make the bureau a body corporate, independent and effective. The minister responsible for the act is the Minister of Finance who in the absence of a chairman appointed by him is automatically the chairman. There is nothing to indicate that a board was ever appointed and by default the bureau remains as a unit of the Ministry of Finance, mistakenly described on its website as a “Government of Guyana Agency.” It should not therefore come as a surprise that the bureau is far from effective in how it carries out its mandate, selectively choosing if and when to publish important statistical information, a decision apparently not unrelated to the wishes of the Minister.

Perhaps more out of frustration than from a practical consideration a source close to the Bank of Guyana has suggested that these two bodies should report direct to the National Assembly. This may very well be a suggestion that the Speaker of the National Assembly or the Public Accounts Committee may wish to take up, even if in the first instance it is done privately. What is clear is that the failure of these bodies to discharge their statutory duties does little to contradict those who argue that what Guyana has is paper accountability only.

The Office of the Auditor General
Not only is this office subject to its own act but it is also a constitutional body with serious responsibilities and functions. One of the first but fundamental points to note about the head of this office is that the constitution makes no provision for an acting Auditor General and the job description clearly requires a professionally qualified accountant. In fact the incumbent has no such qualification and it would be a travesty for him to be appointed substantively to the position. It may be convenient for the government to have him there, but surely it is dangerous for the taxpayers of the country and severely compromises the quality of its reports. By retaining him the government is aware that the real authority in the Audit Office is no less a person than the spouse of the Minister of Finance. It is hard to believe that neither of them nor anyone in the government, nor in the international donor community that keeps putting money into the Office, recognises this obvious conflict of interest or simply is not interested even in token accountability.

Even with that major weakness the Audit Office is operating at half its required manpower and this helps to explain why it keeps falling back and down on many of its public commitments. Like the Minister of Finance’s mid-year report, the Audit Office’s report on the Government accounts for 2008 is also late. By law this must be submitted to the National Assembly within nine months of the end of the accounting year. We are now in the eleventh month without any word about when this report will be available.

One of the mandates of the Office is to conduct Value-For-Money (VFM) audits and it must now be coming on to a year or more since the Office has been due to issue its report on a VFM audit conducted on the financially miniscule Palms.

Even with expensive Canadian assistance the Office has been unable to deliver. VFM audits are of less value where the expenditure is unavoidable, as it is with the Palms, the main expenditure on which comprises staffing (it is understaffed) and meals (which are as low-cost as one can get). VFMs are useful in the case of discretionary expenditure such as Cabinet Outreach and the choice of newspapers for government advertisements. With weak and compromised leadership, the Office is clearly not in a position to deliver on its mandate.

Transparency and accountability are not esoteric or theoretical concepts but are practical, part of the democratic landscape and help to ensure that money is properly accounted for and sensibly spent. Our national budget exceeds $100 billion and if we take the most conservative estimate of 10% as lost through poor financial management, the country loses $10 billion per year. Think what that can do to reduce taxation or enhance social spending. The Minister of Finance has a wonderful opportunity to redeem his reputation.

A review of the Low Carbon Development Strategy – Conclusion

Today we conclude our review of the Low Carbon Development Strategy (LCDS) announced by President Jagdeo to the international community and now the subject of consultations taking place across Guyana. The first two parts of this series appeared in these columns on July 19 and July 26 and both before and since that time the reading public have had the benefit of a series of letters on the strategy both supportive and critical of it. More significantly, the Stabroek News has been carrying a ten-part review by Ms Janette Bulkan in which she addresses some of the more technical questions about forest carbon and our own forests about which she is extremely knowledgeable.

Not surprisingly, Ms Bulkan has drawn from a representative of the Guyana Forestry Commission and from the Office of Climate Change set up in the Office of the President strong criticisms, some of which have crossed the line into personal attacks. Ms Bulkan’s contribution has stood out for its scholarship and her responses to the criticisms have been measured and responsible. She and other critics have also been attacked for pointing out the serious weaknesses in the document and for not offering recommendations to improve it. That is regrettable for a number of reasons.

One would expect those who are now employed as full-time specialists to recognise from the identified weaknesses the implicit recommendations for improvements. They cannot expect those from the outside to do their work for them. For all the money that is being spent on the LCDS, there seems to be no official voice and the structure of the website hardly fills the breach. As a result one is confused by the ambiguity created by the government’s assurance to the domestic audience that the country will not cede our sovereignty while the highly respected international weekly Economist informs the world that the Guyana President has committed the country to ceding to the world the stewardship of the country’s entire forests by outsiders.

Second, it is often easier to re-write than try to improve a document containing fundamental flaws; third, the government has refused to publish important information relevant to the strategy such as the McKinsey Study on which so much seems to hang, as well as the agreement the President signed with the Prime Minister of Norway which it seems will constitute some kind of model for developed countries to pay rainforest countries for drastically restricting forest operations. And there should be no valid reason for the government’s spokespersons being unwilling to concede the very valid points being made by others, and offering a commitment that these would be incorporated into the final document. Indeed no one is sure – and that seems to extend to the members of the LCDS Steering Committee – of the process for accepting and rejecting the submissions made by others.

Extravagant assumptions
In Part One of this series we said that the success of the LCDS would not be determined in Guyana but by what happens in Copenhagen in December this year, and in the more powerful countries of the world who the strategy expects to pay Guyana as much as US$580M per year for keeping our forests intact as our contribution to fight global warming. This column believes that there will be some money available but nothing on the transformative scale worked out by McKinsey. One has only to look at Exhibit 4 of the strategy which places the projections of expected government revenues for fruits and vegetables within a spread of US$40M–US$110M in 2013, an investment of US$80M–US$100M in 2009 and net exports of US$250M–US$350M after 2011. The estimate for aquaculture products seems even more exotic with a projection of 2013 government revenue of US$150M–US$200M, an investment of between US$135M and US$175M in 2009 and net exports after 2011 of US$500M–US$1,000M after 2011! It borders on the reckless to estimate government revenue in the form of taxation to be 30% of gross revenue, ie before expenses. Whoever did those numbers clearly does not understand our tax culture or the range of tax allowances including export allowances that are available for particular businesses.

I fail to see why anyone would not want to question seriously these projections, and inevitably the value arrived at by McKinsey of US$580M as the value debt owed to Guyana for keeping its forests intact. With Guyana having just 0.5% of the world’s standing forests, that figure which translates to a value of $116,000M, for all the rainforests is a huge sum indeed. No wonder even persons supportive of the LCDS do not believe that Guyana would receive anything like the sums quoted in the document.

And it is that kind of doubt that makes the proposed spending sound a mere wish list. There is nothing in the strategy that indicates how the government will adjust its proposed spending programme if the sums received are less than McKinsey tells us our forests are worth intact. And does the expenditure mean that the government will be engaging in these businesses or giving to particular businesses the money which should be for the country as a whole?

Poor accounting and accountability
As a columnist who has witnessed the bad accounting, misspending and unlawful spending which has become a defining trait of the Jagdeo administration, I shudder at the thought that this or a government with similar tendencies would have control of huge sums of money extracted from international donors to spend as they please. Our under-resourced Audit Office, minimal accountability, gross wastage, unprecedented extravagance, increasing corruption, widespread non-compliance with the financial regulations and poor accountability will hardly impress the international community, and it seems unjust and immoral to ask Norway or any other country to give us money to spend in a manner which their own taxpayers would find completely unacceptable. It is ironic that the LCDS may itself be an example of the absence of accountability. The 2009 Budget had no provision for all the structures, the huge consultancy fees, the costs of travel both locally and abroad being spent on the LCDS, and one has to wonder where the money is coming from (Lotto?) and who is controlling the spending. What we need to accompany any strategy is an accountability strategy that finds favour with our population.

Another reason for doubts about the strategy is that it is not rooted in the culture and habits of this government or in any strong commitment to the environment. For nearly two decades, Asian and Chinese logging companies and local chainsaw operators have been allowed to do almost as they wished with the forests, and efforts to reverse those practices will take time to produce results. The government imports for itself and allows the importation, often duty free, of large numbers of gas-guzzling vehicles; we have unlimited numbers of ministries and departments, no policy on recycling; we tolerate mining practices that are detrimental to the environment and dangerous to some communities and practise not big, but huge government. President Jagdeo most eloquently demonstrated that lack of commitment when he threatened to continue cutting down our forests if the rich countries do not pay up. Blackmail as Plan B can hardly be described as a strategy.
What if the money does not flow?

President Jagdeo is right that we need to protect the environment, but for the wrong reasons. By protecting our forests and our environment we are also protecting our present and future interests. He is also right that we need a strategy to lift the economy from its sub-par performance of below 2% since he became President to a level where the economy provides valuable jobs so that our artisans do not go knocking at the doors of our less-endowed neighbours only to be used and humiliated. He is wrong to believe that such a limited document can provide the blueprint for the economic growth and development of the country.

Guyana does not need a Development Strategy – it has one. Millions of real dollars was spent on versions 1 and 2 of the National Development Strategy (NDS) financed by the Carter Center during the last decade. It brought together the best that Guyana could offer in terms of time and talent and remains a sound document that could drive national development while caring for the environment. It recognised the value of the country’s forests, flora and fauna to eco-tourism which warrant mainly footnotes in the LCDS. It advocated a national forest policy with “guidelines for environmental protection and sustainable resource utilization.” President Jagdeo is half-right when he states that our forests are our most valuable resource – in truth it is the people – but the greatest value of that wealth can be derived if we sustainably manage them. It is not as the President seems to think, all or nothing. The NDS which President Jagdeo praised for its inclusiveness and comprehensiveness has languished largely unimplemented because of his own lack of commitment and attention span.

On the other hand, the LCDS is mainly a document for raising money. As such, it comes with too many shortcomings.