Category: Letters to the editor

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Provisions of two financial Acts are vastly different

One of the attributes of someone engaged in teaching, as I have been at various times, is the constant and necessary effort to put things over in a manner that facilitates comprehension by students. While that does not apply to Mr Ralph Ramkarran, his response of March 1 to my letter of February 29 on the two financial papers currently before the National Assembly, suggests that he missed several points which I thought would be quite obvious, particularly since he presided over the parliamentary debate on the Fiscal Management and Accountability Act 2003 which is again being hotly contested in the National Assembly. Mr Ramkarran either does not understand, or is unwilling to accept, that the Financial Administration and Audit Act Cap. 73:01 is as different from the 2003 Act as chalk is from milk.

In order to make the differences between the relevant Contingencies Fund provisions of the two Acts excruciatingly clear – borrowing the words of our energetic new Attorney General – I thought it would be helpful to set those features out in tabular form. Visually, the following ought to be obvious: that the provisions are vastly different; the reasons for their being different (the sums involved, ever evolving standards of accountability and transparency); what the legislators set out to do to manage the risks associated with the huge sums involved (detailed reporting, a statement showing the impact on the annual budget); and statutory sanctions against the Minister.

Financial Administration and Audit Act Cap. 73:01 (1961)  

Fiscal Management and Accountability  Act 2003
1. Purpose:
To meet unforeseen and urgent expenditure.

 1. Purpose:
To meet urgent, unavoidable and unforeseen expenditure.
2. Circumstances:
Expenditure cannot be postponed without injury to the public, and no other provision exists to meet the expenditure.

 2. Circumstances:
Expenditure cannot be deferred without injury to the public interest and there have been no or insufficient appropriated sums for which no reallocation is possible.
3. Mechanism
An advance 		3. Mechanism
Issuance of a drawing right
4. Maximum Spending:
$500,000

 4. Maximum Spending:
2% of expenditure approved by the national assembly of the preceding year. Currently equivalent to $2.5 Billion.
5. Report to National Assembly
NONE 		5. Report to National Assembly
Report by minister specifying:
I. The amounts advanced;
II. To whom paid;
III. Purpose of advances; and
IV. A supplementary document describing the impact that the variations, if approved, will have on the financial plan outlined in the annual budget.
6. Time for taking to National Assembly
As soon as possible
 		 6. Time for taking to National Assembly
Next sitting of the Assembly
 
7. Procedures:
a) Preparation of supplementary estimates.
b) Approval by National Assembly.		 7. Procedures:
a) The Submission of supplementary appropriation bill.
b) Approval by National Assembly.
8. Sanctions against the Minister of Finance
NONE  		 8. Sanctions against the Minister of Finance
Minister personally liable for any loss which he caused or to which he contributed.

It may have escaped the attention, not only of the learned Senior Counsel Mr Ramkarran but also the entire National Assembly, that the limit remained at a modest dollar sum for thirty-seven years because the circumstances – even at the lower pre-2003 standards – so extreme that it would have been unimaginable that any person would be given discretion to spend such huge sums without parliamentary approval when the convening of the National Assembly is a telephone call away! Section 41 should be amended immediately to restore some discipline to the demonstrated tendency of Dr Ashni Singh to abuse his powers and to act recklessly. I recommend a figure of no more than $50 million, which is one hundred times the pre-2003 limit.

Finally, as demonstrated by letters in the press, Mr Ramkarran is not the only person who appears to have difficulties with the nature and implications of the 2003 vis-à-vis the 1961 Act. He shares company with Mr Philip Bynoe and pollster Vishnu Bisram, who can only see an “Indian hospital.” Not too long ago, Mr Bisram saw a landslide; it was a mirage.

To my disappointment, Mr Ramkarran, stung by my letter, allowed himself in his March 1 letter to degenerate into the public ‘cuss-down’ which up to recently he had opposed from his nemesis Mr Jagdeo. I would suggest that he moderate any intemperate response to this letter, since he himself is not without vulnerabilities.

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Ramkarran has disregarded essential facts in his comments on the 1961 and 2003 finance Acts

In his column in last Sunday’s Weekend Mirror defending the government’s $5.7 billion Supplementary Appropriation Bill No. 1 of 2012, Mr Ralph Ramkarran SC may have been guilty of some of the very charges – political opportunism, a disregard for essential facts and, over one significant issue, the taint of racially inspired motives – which he makes against Mr Carl Greenidge, the APNU shadow Finance Minister.

Even politicians, who often find truth and history inconvenient, do their best to avoid some of the errors made by Mr Ramkarran in his column. It is more than semantics that Mr Ramkarran describes the Bill as Estimates rather than what it was – an appropriation for 2011 transactions for which parliamentary approval is being sought in 2012. Mr Ramkarran’s statement that the Fiscal Management and Accountability Act 2003 Act, which he mis-identified, had “only one material amendment” to a 1961 Act is way off mark. In fact, the 2003 Act repealed twenty-eight of the forty sections of the 1961 Act, including two of its three substantive parts. The remaining substantive part and one general part were removed one year later.

I find those lapses most amazing since Mr Ramkarran, as Speaker of the National Assembly, was in the chair when the 2003 Act was debated and passed on December 16, 2003, assented to the same day, and gazetted one day later. I can overlook, as an inconsequential error, Mr Ramkarran’s miscalculation about the duration of the combined operation of section 24 of the FAA Act (it really is section 25) and section 41 of the FMA Act – it is fifty and not forty years as he states. What I am hesitant in allowing to pass is his suggestion of similarity between “the methodology and format … of approaching the National Assembly to approve the expenditure of funds by way of supplementary estimates” under the 1961 and 2003 Acts. The contrast between the two Acts is fundamental, touching on provisions of the Constitution of Guyana and involving the difference between substantial sums – half-a-million dollars under the old Act and billions of dollars currently.

I will take a short walk down memory lane with Mr Ramkarran and point to the fact that Guyana was a colony when the Financial Administration and Audit Act was passed in 1961. Five years later in 1966 we had our Independence Constitution, and fourteen years thereafter, the present day 1980 Constitution. In 2003 came what on paper was the path-breaking Fiscal Management and Accountability Act designed to give effect to the provisions of the constitution requiring strict financial discipline over the moneys received by the government and the procedures for approving and accounting for expenditure.

Mr Ramkarran is therefore being more than a little disingenuous in speaking of “only one material amendment”; that ‘section 41 added “unavoidable” as a qualification to “unforeseen and urgent.” The real and substantial differences between the two Acts lie not only in whether or not the Minister of Finance has discretion but in several major areas:

1. The amount in the Contingencies Fund is now 2% of the previous year‘s budget which in 2011 would have translated to approximately $2.5 billion compared with $500,000 prior to the passing of the 2003 Act.

2. The Minister is required to report to the National Assembly all withdrawals from the Consolidated Fund, providing specific information on the payments made.

3. Specific allocation of responsibilities, the creation of offences and imposition of penalties, including on the Minister;

4. the concept of conditional appropriations;

5. mid-year reporting;

6. government guarantee levy, etc.

Mr Ramkarran seems to find it inconvenient to acknowledge the vastly different sums involved in “Contingencies” spending between 1961 and now, or that the concept of transparency and accountability is a defining feature of modern public sector management. As a defender of a Bill and financial papers not brought to the National Assembly in accordance with the Act, Mr Ramkarran and the Finance Minister Dr Singh should be happy that the parliamentary opposition allowed almost all of Financial Paper # 7 to pass, not mock them with references to the “Indian” hospital.

Let me put this scenario to Mr Ramkarran as the CEO of the country’s oldest law practice. His chief finance officer comes to him saying that he has spent, without any evidence whatsoever, not only the $150 million the management had approved for “preparatory studies and designs on a specialty hospital,” but also another $29.1 million on “mobilization payment” for which he now seeks approval. I cannot see Mr Ramkarran approving the additional payment – as he is now asking not only the opposition, but the entire National Assembly – without some serious and penetrating questions and demands for documentary evidence. I know Mr Ramkarran quite well and I am certain that, couched in some good Guyanese language, he would demand, under threat of sacking, a copy of the study to examine its recommendations before any further expenditure is incurred. It troubles me therefore that in what amounts to a similar response by the Opposition, Mr Ramkarran can see some racially inspired undertones.

If Mr Ramkarran had understood the significance of the legislative changes in the 2003 Act, he would not have filled the remainder of the column with a learned but irrelevant discussion on the exercise of ministerial judgment. The space would have been better utilised reminding Dr Singh that as Speaker he had cause to caution the Minister with the message that arrogance and disrespect ought to have no place in Guyanese society, let alone the National Assembly.

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Whatever the result of the elections they will not have been fair

Parliament was prorogued in late September, meaning that we now have no parliament and the passage of new laws including those for incurring of new debts must await the next parliament. However, to ensure that the wheels of government do not grind to a halt, the constitution provides for the executive, including the president and the cabinet, to remain in office until a new government is installed. The government meanwhile assumes a holding mode, sometimes loosely described as a lame duck government.

Our constitution does not specify, or indeed restrict, the powers of the government during this holding period. That does not mean the government can do as it pleases. Indeed what it should do is to follow convention and good practice and limit its actions, decisions and expenditure to what the National Assembly approved before prorogation. Accordingly, the decisions they should make and action taken should be restricted to routine, operational matters.

It would not be appropriate for example for the government to enter into a new international treaty or to make a decision on matters that would require parliamentary approval, whether in the form of authorisation or the provision of finance. I understand that the constitutions of some countries limit the actions such holding governments can take, thus making it unconstitutional for them to do the kinds of things that have become routine under the increasingly lawless PPP/C.

The thinly disguised Cabinet Outreach, outboard engines and fertilizer of 2006 are modest compared with the multibillion agreements we have been hearing about since the announcement of elections. A few days ago we learnt from Jamaica that Jagdeo has signed a secret deal with the Chinese for an investment of $27 billion on the Timehri Airport, and from the local press that he is borrowing $4 billion from India for a specialty hospital, and is committing several billion dollars for an overpriced Marriott Hotel.

We have become so accustomed to this lawlessness that we simply dismiss Mr Jagdeo’s actions as further cases of his routine violations of the constitution, some of which concern the protection afforded by the constitution. These include the appointment of an Ombudsman, the Public Procurement Commission and the integrity of the Consolidated Fund and the Contingencies Fund.

There are two important consequences to these actions: whether it is proper for the Jagdeo administration to tie the hands of the successor government; and the impact of such actions on the elections. The first touches on the constitutional issue of whether a successor government (PPP/C, APNU or AFC) should consider itself bound by these reckless decisions. Unfortunately Mr Donald Ramotar appears to be a party to most of the recent excesses and would seem to be allowing himself little or no room to revisit any of them. It would seem from their pronouncements that the other major parties are committed to revisiting and quite probably rescinding a number of the recent deals, with the Amaila Project heading the list. That could put Guyana on a collision course with investors and tarnish the country’s reputation as an investment destination.

On the issue of the fairness of the elections, I think it would be hard for anyone to conclude that house lots to communities, subventions for Veterans Homes, salary increases to public servants and the disciplined services, the signing of new contracts with major tax concessions and or state borrowings, the payment of discretionary sums from the ruling party office and the opening of miscellaneous facilities by the President and his ministers are not intended to and will not influence the vote. That means the elections – whatever the result – will not be free and fair and one hopes that the Elections Observer Missions are taking note.

Over the last fourteen years I have tried to convince GECOM and the political parties to have some form of campaign finance rules. Mrs Sheila Holder actually tabled a motion in the National Assembly on this. The PPP/C simply stalled. As a result we have neither campaign rules nor restrictions on the use of state resources for party political purposes.

It is a gift for a president who has no sense of constitutional convention or propriety, has no respect for the rule of law, and indulges himself with the belief that he is all powerful.

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Issues to which Ramotar should make a commitment

PPP/C presidential candidate Donald Ramotar announced at a political rally on Sunday evening that he would be ready to listen to the views and ideas of national interest from persons, groups or organisations.

Indeed he was specific enough to say, “As long as they think they have ideas I would be ready to listen to them, I would be ready to discuss with them, I would be ready to debate with them and I would be ready to work with them in the interest of Guyana.”

Unfortunately, over the past nineteen years Mr Ramotar and his party have rejected every single proposal made by the parliamentary opposition during the annual budget debate. He and his party have been silent even as the party’s President and government have rejected hundreds of calls, suggestions and ideas made by Guyanese on issues ranging from murders of citizens, abuse of state power, financial management and good governance.

But Guyanese are a forgiving people and do not hold him personally responsible for all the violations that have taken place under his party’s watch. I am sure they are prepared to turn a new leaf with him. The question is: is he himself prepared to turn a new leaf? Here are twelve issues that citizens would like him to make a commitment to:

1. If elected President, ensuring that the constitutional bodies such as the Ombudsman, the Public Procurement Commission and the Local Government Commission are set up within thirty days of, or other specified period after his election;

2. Within sixty or other specified number of days but not exceeding four months of his election, working with Parliament to appoint a broad-based Constitutional Reform Commission to examine the constitution with a view to removing its dictatorial features and making it more democratic and consistent with republican status and the rule of law;

3. Appointing a Commission of Enquiry to look into all aspects of the crime spree that led to the deaths of hundreds of Guyanese including his party’s Minister, Mr Sash Sawh;

4. Ensuring that all public funds including money from the sale of government properties and the proceeds of the Lottery are placed in the Consolidated Fund;

5. Implementing the recommendations of the Chang and the Symonds Reports to strengthen the Guyana Police Force;

6. Removing party control of the state media and the restriction on the citizens of Region 10 to access to television of their choice;

7. Removing the state monopoly on radio;

8. Reviewing the Amaila Falls Hydro Electricity Project with a view to ensuring transparency and economy in the project and lower tariffs to the consumers;

9. The establishment of a full enquiry into the CLICO collapse and action to deal with wrongdoers;

10. Appointing qualified independent persons to the Audit Office and removing those who have a conflict of interest;

11. Repealing the Former Presidents (Other Benefits and Facilities) Act; and

12. The passing of modern anti-corruption legislation.

Mr Ramotar will note that the issues raised will either save money or lead to better governance. They do not involve any expenditure or loss of revenue such as the reduction of VAT and other taxes on which he may wish to take the lead.

Because I wanted to limit the list to a round dozen, and to make them as uncontroversial as possible, I have not asked about the Marriot Hotel, the Intelligence Agency in the Castellani House Compound, the Airport Expansion Project or the giveaway of state property to party leaders, comrades and friends. He is of course free to address these. Nor have I raised any matter that could cause him any embarrassment like his role as a Director of Omai and GuySuCo or how his daughter obtained state property in Pradoville 2.

These are not new matters or fresh ideas. They have been around and expressed by many “persons, groups [and] organizations.”

He would have no doubt addressed his mind to them. Each is capable of a yes or no answer. As a citizen, I am appealing to him to answer them promptly for the benefit of the electorate whose vote he now seeks.

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The tax exemption of the president’s pension package is an abomination

The defenders of the Former Presidents (Benefits and Other Facilities) Act 2009 including Prime Minister Sam Hinds, Dr. Roger Luncheon, Mr. Robert Persaud and now Dr. Nanda Gopaul are having a hard time trying to convince the Guyanese taxpayer that President Bharrat Jagdeo was less than greedy in initiating and approving legislation providing for benefits that are patently overgenerous.

The best that Mr. Persaud could do was question the timing of the questions, seemingly unaware that as far back as May 2009 Prime Minister Sam Hinds was vainly defending the Act with misrepresentations.

Mr. Hinds incorrectly wrote that all Mr. Jagdeo and his spouse would have is a single vehicle owned and maintained by the State. In fact Mr. Jagdeo is entitled to an unspecified number of such vehicles with drivers. In addition, Mr. Jagdeo is also entitled to duty-free concessions for motor vehicles and every other item he chooses to import. Mr. Hinds would also wish us to believe that free medical expenses are limited to the former president and his spouse. In fact taxpayers would have to pay for the medical costs for him and the dependent members of his family, for the rest of his life. And if Mr. Jagdeo or any one of them opts for treatment abroad, no big deal – the Act places no restriction.

Dr. Luncheon and others have been saying that all the Act did was to put into law payments made to former presidents, completely forgetting that neither Burnham nor Jagan lived to become former presidents.

With a slight twist Dr. Gopaul then tries to confuse the issue by listing eight types of expenses that former presidents were entitled to but fails to state what they actually received which is the real concern over the Act. What Dr. Gopaul seems to miss is what the parliamentary opposition and civil society have been saying all along, i.e. that there are no caps to any of the facilities; no conditions for receipt of benefits and no consideration of cost.

A former president working abroad is still entitled to tax-free pensions and most if not all the benefits and facilities permitted under the Act. And even if resident, s/he is entitled to clerical and technical staff even for private consultancy work, and can run up the most outrageous utilities bill for electricity, telephone and water to be paid for by the state. As drafted, the legislation would seem to impose on the state all the costs where the former president decides to have two or more residences. And we know from the advertisements, our soon-to-be former President is actually constructing on the sprawling state-owned land he awarded himself two houses and a distinctly un-low carbon hot and cold swimming pool for which the monthly electricity bill will easily run to $600,000. We will pay for all of that.

Even while visiting friends that individual likes to travel with an entourage often consisting of five vehicles and several staff providing security. If he is unwilling or unable to give up such show of power and influence, we the taxpayers will pay for them too, including overtime late into the night.

We may take some comfort in the two services that seem to be limited in number – the gardener, though even that could be circumvented by retaining a landscaping service, and an attendant. And if the soon-to-be former president joins one of his buddies in business or enters in business in name, either on his own account or for their benefit, all the income will be tax-free. This abomination has no parallel or precedent anywhere in the world and is deserving of its own Champion of the World Award.

The menu of benefits and facilities hardly seems what the Constitution intended as payments to former presidents when it states that “A person who has held the office of President shall receive such pension or, upon the expiration of his term of office, such gratuity as may be prescribed by Parliament. Any such pension or gratuity shall be a charge on the Consolidated Fund.”

One is forced to wonder whether the attempts by Hinds, Luncheon and others to confuse the public about the contents and consequences of the Act really show their inability to defend its inherent obscenity. What one does not have to wonder about is the frightening disregard for rules and cost on the one hand, and the interest of self on the other, which are symptomatic of how the PPP/C has been managing the financial resources of the country.