Category: Letters to the editor

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Acceptance of invitation from Agriculture Ministry and GuySuCo

I note in an article (Kaieteur News, Wednesday May 25, 2011) captioned “GuySuCo details US$12.5 expenditure on packaging plant”, statements emanating from Mr. Robert Persaud MBA, Minister of Agriculture and the Guyana Sugar Corporation. Both parties were reacting to a Kaieteur News article of the previous day, in which the newspaper raised questions about the cost of the plant.

I am sure that both the Minister and the Corporation are aware that my contribution to the discussion on the GuySuCo packaging plant was by way of a letter in the SN, of May 17, 2011.

In that letter I corrected President Jagdeo’s exaggerated pronouncement of sugar’s contribution to the GDP as 16% instead of approximately 6%. The focus of my letter was to caution that the packaging plant, welcome though it is, could not be a silver bullet for the serious financial problems of the Corporation.

In that connection I drew attention to the wave of packaging plants taking place across the world and specifically referred to a 300,000 tonnes capacity Plant by Mumias Sugar Company (MSC) with a daily capacity of 700 tonnes and a price tag of US$3M.

I challenge both GuySuCo and the Minister of Agriculture to show either in my letter or anywhere else where I referred to or questioned the cost of the Enmore Packaging Plant.

I note that Mr. Robert Persaud has challenged Kaieteur News and me “to conduct a forensic audit of GuySuCo and the Packaging Plant.” I herby accept this challenge to undertake a professional audit, the cost of which will be borne by Kaieteur News.

I hope this is not just bluff on Mr. Persaud’s part and that he has both the authority and the courage to carry through with his challenge. I now await word from him.

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A packaging plant will not be a magic bullet to salvage Jagdeo’s sugar decision

In making his case for an increased financial contribution to the state-owned Guyana Sugar Corporation President Jagdeo is quoted as saying that “government’s commitment to sugar has nothing to do with the workers being ‘a party support base,’ but rather with the development of the sector which contributes some 16 per cent of the country’s Gross Domestic Product.” One is never sure whether the President’s loose use of facts and data is politically driven or is evidence of his unfamiliarity with up-to-date national income statistics. In normal circumstances, he can be dismissed but not when, as in the case of the building of the packaging plant, what he mistakenly thinks forms the basis of major spending decisions.

This is what the most recent official figures published by the government show in relation to sugar’s contribution to the economy measured by GDP:

It is perhaps not without some significance but with considerable irony that GuySuCo Director Keith Burrowes used the occasion to announce his assessment of Mr Jagdeo as Guyana’s best president ever, which obviously includes Cheddi Jagan who waged a life-long struggle for sugar workers. Mr Jagdeo of course, led GuySuCo into the inadequately conceived and poorly executed US$200 million Skeldon modernization project which drove the corporation to the brink of insolvency from which its survival requires a combination of:

1. sales of a depleting quantity of sugar lands. Before a substantial sale of lands at Diamond in 2009, only 28% of the lands used to derive economic benefits to the corporation were actually owned by it;

2. the indefinite continuation of subsidised peppercorn rent of G$1,000 per acre per year;

3. the assumption/payment by the government of the corporation’s debts; and

4. various other forms of subsidy including the deferral of taxes of $2.3 billion over a five-year period without penalties.

Director Donald Ramotar has sought to distance himself and fellow directors including Mr Burrowes and Ms Gita Singh-Knight from responsibility for the plight of the corporation. This is not only legally flawed, it is also totally unfair. The political and corporate directorate has practically imposed on the management not only an unbearable debt burden, but some $1,900 million of capitalised interest at December 2009. This is a huge non-productive cost to bear and the executive management deserves the nation’s sympathy.

The problem for the corporation and for the country as a whole which Mr David Granger’s “privatization” comment did not reflect is that in its present form and with its existing liabilities it would be impossible to find a buyer for GuySuCo. A buyer would almost certainly insist on an asset purchase in which the cost of the Skeldon factory would have to be heavily discounted. That would leave the country to meet the lion’s share of tens of billions of liabilities at December 31, 2009, the last year for which the corporation’s financial statements are available.

While Mr Jagdeo will soon be enjoying a gigantic retirement package which he signed into law and under which he pays no taxes, the debts he continues to amass for the corporation and the country will have to be paid by the workers in sugar and other sectors and the taxpayers and consumers of this country. Mr Burrowes may have cause to rejoice and exult, but not those groups.

The packaging plant will certainly add value but will not be a magic bullet to salvage Jagdeo’s and the board’s stand-out sugar decision. Packaging plants are the wave of the sugar industry as several countries in Africa, Australia and here in South America expand into sugar packaging in a bid to remain competitive. Kenya’s largest sugar miller, Mumias Sugar Company (MSC) recently built, at a cost of US$3 million, a new eleven-machine, state-of-the-art packaging plant with a daily capacity of 700t, enabling the company’s packaging production capacity to increase to 300,000t per annum. Incidentally, the packaging machines for MSC were supplied by Brazilian companies Brazafric and Raumak while we trekked to India to source our plant!

With the continuing trend towards more and sophisticated packaging by the industry internationally, GuySuCo’s only hope of survival without further and more costly and unaffordable state support is to drastically cut its cost of production in line with the rest of the world. That imperative was conveniently ignored at the launch of the packaging plant.

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In discussing Vaitarna, Messrs Persaud and Singh failed to distinguish the State Forest Exploratory Permit from the TSA

When Agriculture Minister Mr. Robert Persaud held his press conference on April 12, 2011 to defend the permit/agreement over 1.82 million acres granted to the Indian company Vaitarna Holdings Private Inc., there had been very few letters and questions about the manner in which the two parcels of the land had been allocated to the company owned by Mr. Siddhartha, the coffee magnate of India. Mr. Persaud’s accusation of a “misinformation” and “sleazeball” campaign seemed therefore both inappropriate and disproportionate particularly since Mr. James Singh, Commissioner of Forests had spoken two days earlier on the matter.

In seeking to dispel concerns about Vaitarna, Mr. Singh had raised in my mind some interesting questions which I had hoped to put to him in some form. I withheld those after the Minister had said that he was “ready to debate and discuss the sector’s management stewardship, the policies and whatever is being done within the GFC, at anytime, at any place and with anyone.” It is now close to two weeks since I invited Mr. Persaud to do exactly that on Plain Talk but he has not responded to my written invitation or taken my follow-up telephone calls.

In my view, both Mr. Singh and Mr. Persaud failed to distinguish between the State Forest Exploratory Permit (SFEP), like the one previously granted to Simon and Shock International Logging Inc. (SSI) and the Timber Sales Agreement (TSA) previously granted to Caribbean Resources Limited (CRL). SFEPs and TSAs are issued and revoked under different sections and authority under the 1953 Forest Act.

SFEPs do not confer exclusive rights while TSAs do. SFEP’s are issued by the GFC under the authorisation of the Minister but only if the GFC is satisfied that the applicant, which must be a Guyana incorporated company, has adequate experience to carry on effective exploratory operations. Where there is a breach, the GFC can suspend the permit, subject to review by the President. A TSA on the other hand, permits the sale of produce and is issued by or under the authority of the President. In the case of a non-fulfilment of any of its terms, the TSA may be suspended by the Minister, also subject to review by the President.

It would be interesting to learn of any precedent of a new entrant in the sector being granted almost simultaneously an SFEP and a TSA. The intent of the Forest Act seems clear – an entity must demonstrate its capacity to deliver under an SFEP before being entitled to a TSA. Neither the Minister nor the Commissioner offered any indication that would remotely suggest that Vaitarna has demonstrated any capacity other than a keenness to get control of pristine forests covering 5% of Guyana’s forests. Instead, there is a lot to suggest that the decision was based not on any objective technical criteria but on Vaitarna’s willingness to pay $600 million, an indeterminate portion of which was for debts of CRL, a CLICO subsidiary. With such an outlay, Mr. Siddhartha, a shrewd businessman in India’s competitive and notoriously corrupt business environment will expect to recover his investment at or above his company’s cut-off rate of return, which will only come from fairly intensive operations.

With regard to the actual sums collected, both the US$254,000 and the $600 million should have been paid into the GFC from which, subject to the Act, surpluses could be paid into the Consolidated Fund. Both Mr. Singh and the Minister confirmed that the lesser amount was paid to the GFC but were ambivalent with respect to the $600 million. From a review of the Commission’s records it appears that the $600 million was paid straight into the CLICO fund, in a liquidation process that defies many laws but which the public is silent about for reasons of convenience.

It is interesting to note that the President has not assented to the new Forests Act passed in the National Assembly in February 2009, as a consequence of which it is impossible for the new Guyana Forestry Commission Act 2007 to come into operation, making the Commission more independent and autonomous. It is regrettable that even as we enter into international agreements for the conservation of our forests, we seem determined to retain legislation that is sixty years old rather than operationalise modern legislation that eliminates policy confusion, emphasises sustainable management of the forests, grants the regulator more autonomy and gives the public access to information.

If these recent Acts had been in place, it would have been harder for the Government to enter into the kind of transactions it has with Vaitarna and easier for the public to access information. This failure may have nothing to do with Vaitarna. But it may be hard to convince any informed person otherwise.

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The GLTA never demanded a percentage of the Sport Ministry’s budget

I confess to an inability to discern whether Mr. Neil Kumar’s response (S/N April 21, All expenditure under the Sports and Art Development Fund can be accounted for) to Business Page (BP) of April 17 is a measure of an innate tendency to mislead and obfuscate, a misunderstanding or misrepresentation of what was written coupled with a failure to distinguish between the President of the Guyana (Lawn) Tennis Association and Christopher Ram the incumbent. Even as he confesses – in relation to Business Page – to an appreciation of writing that impresses and persuades, he misinterprets my disclosure of interest as one of bias.

I therefore ask Mr. Kumar to read the column again and provide the taxpaying public with a more informed response to the specific issues raised therein. Until then, there are certain issues in his response that warrant some comment.

1. That the Director of Sports – an office created under the National Sports Commission Act, 1993 – should sign a letter trying to defend the Ministry of Culture, Youth and Sport for its vindictiveness, discrimination among sporting bodies and lack of transparency and accountability, confirms the incestuous relationship between the Ministry and the Commission, an independent statutory body in receipt of a subvention.

2. Mr. Kumar says incorrectly that I demanded a percentage of the Ministry’s Sports Budget to be assigned to tennis. What the GLTA did was make a request for a contribution to help finance a national team of six under-14 tennis players to participate for the first time in a world lawn tennis event. It was in response to Dr. Anthony’s categorical refusal to our request that we pointed out to the Minister that what the GLTA was asking for was the equivalent to 0.2% of the 2010 sports budget, or 20 “cents” of every one hundred dollars. Since Mr. Kumar was not at the meeting I can excuse him if Dr. Anthony misrepresented our request, which leaves the minister in a rather invidious position. Determined not to go begging the Minister again this year we undertook some audacious fundraising efforts which made it possible for our juniors to participate once again in the WJT, showing considerable improvement.

3. Mr. Kumar suggested that I should have called the Ministry for clarification before writing BP. He may wish to ask his minister and the minister’s secretary of the number of unanswered written and oral communication not only from our Association but other sports bodies as well.

He may also wish to offer some explanation for a piece of advice given to me by an officer recently that I should have someone else sign letters from our Association!

4. Mr. Kumar carefully avoided the disclosure of the ballooning cost of the swimming pool and instead takes us around to the Non Pareil tennis courts which are as much a saga as the swimming pool, in terms of time, quality and increasing, undisclosed cost.

5. Now we are told that money from the Fund went to pay for the Guyana Classics, a project headed by Dr. David Dabydeen, recently appointed Ambassador to China. Carefully, Mr. Kumar did not specify how much of the five hundred million dollars allocated to the Fund so far was paid towards that project and who were the payees/beneficiaries.

6. Since Mr. Kumar accuses me of acting on dated information, can he tell us the last year for which Minister Frank Anthony tabled in the National Assembly, as required by the NSC Act, the annual report and audited financial statements of the NSC.

7. Finally, in connection with the status of the NSC, Mr. Kumar’s response is revealing indeed. He should ask its former Chairman Mr. Conrad Plummer why he has consistently disavowed association with the NSC and whether it was not because the NSC had been defunct and dead for several years. Overcome by the spirit of Easter, Cabinet we are now told has resurrected it!

To use a term in doubles tennis, the ball is now in Mr. Kumar’s and his Minister’s court.

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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.