Category: Letters to the editor

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The economics of the Amaila project do not add up

Last Thursday, Dr Roger Luncheon, Head of the Presidential Secretariat was asked for further details about the award of the multi-billion contract to Synergy Holdings for the construction of a road to the Amaila Falls. Dr Luncheon who placed the contract “within the provisions of the Procurement Act,” said that the persons who were raising doubts about Synergy and its ability to implement the project, were by extension raising doubts about the procurement process, and accused them of being part of a sinister agenda. It was also said that the award was based on the fact that Synergy had submitted the lowest tender.

The facts show that it is Dr Luncheon who is being sinister – and less than forthcoming – in attempting to mislead the public, which is asked to pay more than G$3 billion to build a road by a company that has zero experience in such a project. Dr Luncheon must know that National Industrial and Commercial Investments Limited (NICIL) is a state-owned private company that does not fall under the Procurement Act; that Synergy did not meet any of the pre-qualification criteria for the contract and its tender should therefore have failed at the first hurdle; and that the project’s Request for Proposal states unambiguously that there was no obligation to accept the lowest proposal. Yet, Synergy is now foisted on the nation as the only road to shining light, compliments of NICIL, chaired by Finance Minister Dr Ashni Singh, with a supporting cast of other ministers and political appointees of the President.

As a private company, NICIL is a vehicle of convenience to award the road-building contract as a precursor to giving a preferred company an even more lucrative contract – the construction of a hydropower plant valued at hundreds of millions of US dollars. Dr Luncheon’s government pretends to be blissfully unaware that the economics of the Amaila project do not add up, and may end up like the decision to spend more than US$200 million on the Skeldon Sugar Modernisation Plant, financed by loans on which GuySuCo has defaulted, requiring a government bailout.

Moreover, Dr Luncheon did not tell the nation about the source of this initial US$15 million. The 2010 Budget anticipated a G$6 billion from the Norwegians under the MOU. That money has not arrived, and indeed many key conditions of the MOU for its receipt are yet to be met by Guyana. Ironically, the four million square metres of tree-clearing operation required under the Synergy contract is likely to cost some US$14 million of penalty under the very MOU, reducing by approximately 48% the G$6 billion budgeted to be received from Norway this year.

The budget already has a $28.6 billion deficit which will increase as more money is put into GuySuCo to keep it afloat, and political spending accelerates in preparation for the 2011 elections. Of course, it is the hapless Guyanese taxpayer who is saddled ultimately with the related implications of, and responsibilities for, deficits brought about by government’s caprice.

Taking a different tack, there is also the possibility that this project is being financed from the NICIL fund created out of moneys diverted from privatisation proceeds and huge sums from various public entities. By these unlawful and unconstitutional means Parliament and the Consolidated Fund are bypassed in favour of NICIL, a company which for several years has not been filing its annual tax returns, or having its accounts prepared and audited in accordance with the law.

All in all, the choice of NICIL to do this piece of midwifery is not surprising. It has been at the centre of many highly questionable transactions involving this government, including: 1) the RUSAL bauxite give-away; 2) spending for the phantom hotel; 3) the NIS investment in the Berbice Bridge Company; and 4) facilitating, most egregiously, the Ramroop’s Queens Atlantic Investment Inc deal which included unlawful tax concessions.

This Synergy deal continues a pattern, and the parliamentary opposition and the people of Guyana should demand an enquiry into this outrage, potentially the largest single financial transaction ever undertaken in Guyana. This must be stopped.

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Minister Lall did not address the key issues I raised

In my letter appearing in the Kaieteur News and the Stabroek News on March 12 and 13 respectively, I relied on the Local Government Elections Act, appearing on an official website, as the statutory basis for my position. I should have known better and corrected myself promptly on the internet edition of the Stabroek News website.

Nevertheless, and even after I had done so, Minister of Local Government, Mr. Kellawan Lall, decided to take the low ground, through going way beyond the error, and engaging in language and conduct unbecoming of a Minister of Government. This is also regrettable.

More significantly, Minister Lall did not address the key issues I raised about him: that he instructed the Auditor General contrary to the Constitution; that he set himself up as a tribunal to pronounce guilt on two NDC employees; and that the law gives to the Minister too much control over local authorities, control that is inconsistent with the relevant Constitutional provisions.

In closing, I reiterate my position on the aforementioned key issue, and associated ministerial overreach. I, also repeat my call to the Honourable Minister to clear the air, should he so desire, but this time with decorum more becoming.

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The Minister of Local Government should not have control over local authorities and their elections

On March 8, I penned a letter ‘Under the constitution Minister Lall cannot instruct the Auditor General’ (SN) after he informed the nation that he had so instructed, and that the Auditor General (ag), had duly complied. After writing that letter, I read an equally strange and uninformed disclosure by the Minister in connection with a proposed sale of a playground in Nandy Park to a “prominent, very well connected businessman.”

The Minister revealed at a press conference that he summoned persons to his office, and that they pleaded not guilty “in that they did not know the law.” For good measure, the Minister, having set himself up as a tribunal, then ruled that “it was quite clear they are all knowledgeable of the law.”

I regret that I cannot say the same of the Minister, a senior member of this government. Although Mr Lall displays a regrettable ignorance of relevant, key provisions of the constitution and the laws that are specific to his post, we tend to regard such behaviour by a minister of Mr Lall’s standing as providing light relief, not worthy of a comment. But this time it is different. As Minister of Local Government, Mr Lall is empowered under section 3 of the Local Authorities (Elections) Act Cap 28:03, for the “general direction and supervision over the registration of voters and over the administrative conduct of elections.”

In my view, the electoral system should be entirely taken away from the political authority and vested in the Guyana Elections Commission. Some may say that this is still not ideal, since the commissioners are all political appointees. But at least in GECOM, the Carter model prevails with both government and opposition parties represented, under an independent chairman.

That model was intended for a limited time only and it is more than time for it to be changed. But we should never let the perfect be the enemy of the good. The ruling party should go through with the agreement for an amendment of the law to remove the control which the Minister of Local Government has over the local authorities and their elections. That will help to foster confidence in the electoral process.

Finally, let me recommend that our ministers replace their in-house public relations contract employees with in-house attorneys-at-law. Larger private sector entities ensure they have in-house legal expertise to advise them on the laws and prevent them embarrassing themselves either in public or private.

Edit: I have been informed, and can confirm that section 3 referred to in my letter was changed in 2009 so that the fear about the Minister’s control of elections has been removed.

His control of the local authorities and city councils remain however.

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Under the constitution Minister Lall cannot instruct the Auditor General

Minister of Local Government, Mr Kellawan Lall boasts in a letter (‘Minister of Local Government called in Auditor General’ SN, March 3) that the investigation currently being carried out by the Auditor General into alleged financial irregularities by Region 4 personnel was done on his “explicit instructions.”

Perhaps Mr Lall is unaware of Article 223 of the Constitution which states: “In the exercise of his functions under this Constitution, the Auditor General shall not be subject to the direction or control of any person or authority.”

While no minister should be excused for ignorance of the constitution, it is absolutely unacceptable for the Auditor General (ag) to act on such instructions. But that is what Mr Sharma did. As Mr Lall further proudly announced in the letter, the Auditor General has since submitted to him a preliminary report.

Unfortunately, this is not the first time that the Auditor General has acted on political instructions, with the flood money and the Polar Beer scam being prominent cases. All the talk about transparency and accountability amounts to nothing until we appoint a qualified person as the Auditor General and deal with the egregious case of conflict of interest between the Ministry of Finance and the Audit Office.

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NICIL is in violation of the law

Ram & McRae in its Budget Focus 2010 drew attention to one example of the subversive manner in which funds constitutionally due to the Consolidated Fund are diverted into a government owned company with the impressive sounding name of National Industrial Commercial and Investments Ltd (NICIL). The steps are as follows: 1. “vest” into this company assets belonging to the state; 2. have the company sell those assets; 3. use the money thus received for unconnected purposes, without authority or oversight; 4. pay any chicken feed balance as dividends into the Consolidated Fund.

The company can even divert sewage. It financed the multi-million dollar sewage diversion for the Kingston phantom hotel project that refuses to go away. In 2007, it also used $5,000,000 of Lotto funds generously made available to it by President Jagdeo, to “support public viewing of FIFA [2006] World Cup Football.”

The Directors of the Company on record, as they were at 2004, were Mr Saisnarine Kowlessar (then Minister of Finance); Dr. Ashni Singh (then Director of Budget); Dr Roger Luncheon (Head, Presidential Secretariat); Mr Geoff Da Silva (Executive Director, GO-Invest) and the ubiquitous Mr Winston Brassington, Executive Director of NICIL.

The Secretary and Legal Officer of the company is Ms Marcia Nadir, attorney at law.

The law requires all companies to have annual audits, and to file an annual return with the companies section of the Deeds Registry. The return must be accompanied by audited financial statements, and must contain information on the directors, the company secretary, and the shareholders.

Additionally, an annual report, which is distinct from the annual return and audited accounts, must be submitted to the Minister no later than six months after year-end. He then has three months to lay these over in the National Assembly.

Now this is the situation:

1. The company has not filed any annual return for more than ten years.

2. No report and accounts have been laid in the National Assembly for the same period.

3. No notice has been filed to show that Mr Saisnarine Kowlessar has been replaced as a director.

Non-compliance constitutes an offence for which the company and every director and officer, including the secretary, are liable. They stand accused of gross violations of the law. Frighteningly, they also control, directly or indirectly, the billions of taxpayers’ money in the National Budget and the nation’s public assets.

The Registrar of Companies is responsible for enforcing the act and has the power to strike companies off the register. She has been demanding compliance by private companies. Why is nothing being done against NICIL and its directors?