As yet, other than saying that Atlantic Hotels Inc is a public-private sector partnership, the government and its handmaiden NICIL have been silent on where the money to build a hotel in Kingston to be operated under the Marriott label will come from. We have heard about some group operating in Grenada that has run into problems in that country and have heard that some friends may be interested. The fact is we do not know. Meanwhile NICIL is proceeding with speed to identify a contractor to begin construction of the hotel.
Where indeed is the money going to come from? Last week, in part 2 of this series on the decision by President Jagdeo to build a hotel, I wrote that it would take more than investigative journalism to ascertain the labyrinthine sources from which the funds for the hotel would be derived. That it would take an enquiry with full powers to demand information and explanations. And that it would need to look into the books of the Consolidated Fund, NICIL, Guysuco, the Lottery Funds, and other unknowns at this stage.
The strategy of no systems
As this closing piece argues, the first stage in a strategy of misusing money is either to have no system or to undermine the existing system and then exploit its weaknesses. Add to the mix opaque rules such as those dealing with the Lottery Funds, spice it up with an entity that depends on you for its survival (Guysuco), have a few non-accountable entities at the ready (NICIL) and neutralise with carrots those likely to oppose (the leadership of the opposition) and have ready a sufficient number of persons who would be prepared to execute your work. It would help if the press and the public are uninformed or apathetic. When all these forces serendipitously come together, you are on top of the galaxy, with Zeus and Atlas at your side.
There are sufficient secret or hazy sources which could provide some if not all the funding for the hotel. With the role of the Leader of the Opposition becoming increasingly a sinecure, with so many prepared to do the work out of fear or favour, with the carrots dangled to emasculate individuals and groups accustomed to handouts, the government is almost guaranteed not even a whimper of opposition if it decides to use one of these hazy sources to finance the hotel.
A consolidated mess
Despite the boasts by the government, the Consolidated Fund is in a mess. In its 2008 report, the Audit Office reported that it had received confirmation from the Bank of Guyana that the government was holding in special accounts, outside of the Consolidated Fund, some $35.031 billion. But that was the only certainty. The Audit Office’s assessment of the balances held in the special accounts indicated that thirteen accounts with balances totalling approximately $7.868 billion appear to be funds that are transferable to the Consolidated Fund. Of those thirteen accounts, nine reflected static balances totalling $4.778 billion over the last five years; amounts of $10.980 billion held in Other Ministries/Departments Bank Accounts; and twenty inactive bank accounts.
The 2008 report tells of a new and an old Consolidated Fund and it would be fair to assume that the new would be an improvement on the old. Wrong again. The New Consolidated Fund bank account reflected a balance of $2.376 billion compared with an overdraft of $11.602 billion as stated in the cash book as at December 31, 2008. This represents a difference of fourteen billion dollars but was probably considered not too important and so no effort was made to reconcile the difference in the two amounts.
You would think that there would be some serious effort by the government to resolve this mess. Year after year, even as the quantum of the special funds keeps increasing, the only word coming out of the Ministry of Finance is that it is addressing these matters.
Contingencies Fund and the lottery
Then there is the Contingencies Fund provided for under the constitution and the Fiscal Management and Accountability Act 2003 which allows the Minister of Finance, on being satisfied that “an urgent, unavoidable and unforeseen need for the expenditure has arisen (a) for which no moneys have been appropriated or for which the sum appropriated is insufficient; (b) for which moneys cannot be reallocated as provided for under this Act; or (c) which cannot be deferred without injury to the public interest….” to approve a Contingencies Fund advance. This account has been ripe for systematic abuse, year after year as routine payments are made well outside the criteria set out in the law.
Increasingly it seems that the public interest is determined not by law or the technocrats but by the President and the other politicians. And in any case, if expenditure for Carifesta and Amerindian Month could qualify, then maybe with a little bit of a stretch, so could the President’s Marriott.
Then there is the President’s former favourite, the Lottery Funds. I say former because I now believe that his new favourite, based on value and opacity, is NICIL, which I will return to presently. Either as Finance Minister or as President, Mr Jagdeo has unconstitutionally and unlawfully made or authorised payments out of the Lotto Funds totalling $3.097 billion during the period 1996 to 2008. These funds are closely hidden away and spent purely at the discretion of the President on such things as $20 million given to the Commissioner of Police to acquire a steel band; paying to bring Indian cultural groups to Guyana; funding the construction of mosques; Amerindian activities; youth awards; empowerment activities, etc.
If the truth were ever to be told, we might even hear that the Lotto Funds will finance the President’s Buxton initiatives.
The PNC’s black hole
Why the government accounts are in such a mess is hard to imagine. Yes, there was a black hole ten-year period beginning in 1981 when we had no audit reports, and while that in itself was unlawful and unacceptable it did not mean that there was necessarily any major improprieties. But the deteriorating situation over the past five years or so probably has to do with the supine leadership of the political opposition; the departure of Goolsarran from the Audit Office and the quality of staff there; Jagdeo’s increasing boldness if not contempt for accountability and the total failure of the Public Accounts Committee to do any serious work.
This state-owned entity is now pivotal to a matter that is pivotal to a hearing of a matter by the Privileges Committee of the National Assembly. In that matter, the Speaker of the Assembly has ruled that a prima facie case has been made out against one minister of the government. The National Assembly is in recess and it is not known when the matter will come up. Both numerically and qualitatively the composition of the committee weighs heavily in favour of the minister and he may come out of it unscathed. The role of Guysuco in that matter is best left until it is dealt with, not because one attorney-at-law has said – wrongly – that it is sub judice, but for more practical reasons.
What can be said now, however, is that despite a clean audit opinion, Guysuco has not been properly accounting for its land sales. In November 2007 four hundred acres of land were transferred from the corporation to the government and in May 2008 another two hundred acres. The disposal proceeds of those lands do not appear in the books of the corporation. Nor are lands disposed to Republic Bank, GBTI and Demerara Bank.
Where did this money go? Even if it was gifted to the government, it should have been accounted for as a distribution. It was not. One probability is that the money went to NICIL which has now replaced the Lottery Funds as the slush fund of choice. It is bigger, more opaque, more convenient and therefore more useful as a fund to be used for anything and everything. NICIL has received hundreds of millions as privatisation proceeds, including lands sold to John Fernandes Limited, GBTI and Queens Atlantic Investment Inc. It is also a rent collector and incredibly an asset fund manager to build roads for the GGMC from which it received $1.8 billion in 2007 and 2008.
The law defines most if not all of these as public moneys which should therefore be placed in the Consolidated Fund. NICIL is many things, but it is not even part of the Consolidated Fund. Its objects set out in its corporate documents do not allow it to do many of the things it purports to do. But it is convenient and, being a private, state-owned company is outside of the formal government accounting rules. The Privatisation Unit that was set up as a department of the Ministry of Finance is not even listed as a budget agency which seems to exclude it from the strictures of the Fiscal Management and Accountability Act. The stage is therefore set for NICIL to do the kind of work which it has been doing for some time and with an increasing sense of impunity.
LCDS: the big one
But even NICIL may be overtaken by another vehicle to channel public moneys into questionable investments. And that is the LCDS funds. As we see with Mr Fip Motilall and the road to Amaila, such funds are already being used by the government, even before their receipt. That I fear is the wave of the future. It would not matter how many lives and jobs in forestry and mining are sacrificed, how many royalties are foregone and how many entrepreneurs and their investments are jeopardized, it is politically expedient for the government to have full control of the LCDS funds.
As a major forester described the matter, the ‘S’ in LCDS stands for sacrifice to be made by the forestry and mining sector as they are strangled by draconian regulations and the commitments by President Jagdeo to the Norwegians. Currently the income from forestry and mining flows to the operators and the government, while jobs are provided for both coastlanders and members of hinterland communities. There is a perception that the persons making the money from these sectors are not supporters of the government, and in consequence, they are dispensable and will be sacrificed to the LCDS.
LCDS funds flow directly to the government which alone decides how they will be spent. If it wants to support a particular project or person, all it has to do is put it in the context of the LCDS as in the case of Amaila and Fip Motilall. And if another project – like a hotel – is not that easy, just prefix the project with the word “green.”
The Office of the President has spent scores if not hundreds of millions on LCDS already. It does so without accountability and transparency. The Audit Office has turned a blind eye to that and to the misdeeds of NICIL. The government can count on the office doing the same with LCDS. And if perchance the hotel succeeds, the government can always sell its interest to a friendly partner.
The case for the Kingston hotel then has little to do with tourism and a top-of-the-line, international standards hotel. When built, it will be a monument to the extent to which egomania has gripped President Jagdeo, testimony that civil society is dead and it will explain why Guyana lags far behind even the smallest Caribbean island, barring Haiti. It will be our beacon of arrogance and attitude to spending public funds on the one hand, and the cowardice of a nation on the other.