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Twenty years later

Introduction
Twenty years and four days ago, Business Page became a feature of the Sunday Stabroek. The year 1992 is generally regarded as a breakthrough year for democracy and the return of free and fair elections in Guyana. But economically, former President Desmond Hoyte and his Finance Minister Carl Greenidge had already placed the economy on the path of market-based economic recovery within the framework of an Economic Recovery Programme (ERP) under the direction of and with the support of the International Monetary Fund and the international community.

Let us recall that in his presentation of the 1992 Budget on March 30, 1992, Mr Greenidge had reported growth of 6.1% in real GDP, “dramatically halting three years negative growth.” Indeed so optimistic was Mr Greenidge about the performance of the economy that he conveyed the famous message to those pundits and their parties who had made “tenebrous predictions” that the ERP would not work, with the admonition “the one who says it cannot be done should never interrupt the one who is doing it.”

ERP
Mr Greenidge was of course referring mainly to elements in the trade union movement, the WPA, the PPP/C and even some independent critics. The PPP/C had put its own spin on the ERP, describing it as Empty Rice Pot. So the loss by Hoyte of the October 1992 elections to the PPP/C under Cheddi Jagan brought with it uncertainty about the direction Dr Jagan would take the country and specifically whether he would re-introduce socialism.

After all, Marxism-Leninism had been the guiding philosophy of the Peoples’ Progressive Party which he formed and led until his death.

The ERP has had its serious consequences including a widening of the income gap of unprecedented proportions. But it also had its benefits, and while many would question key segments of the programme, it brought with it many improvements, including massive write-offs of a crippling debt burden which had developed for several years, and also only the second phase of significant tax reform since income tax was introduced in Guyana in 1929.

When Business Page first appeared in December 1992, the Guyana economy had continued the improvements witnessed in 1991.

In 1992 the economy grew by 7.7%, the fastest rate of growth ever recorded in Guyana; aggregate expenditure had moderated; inflation had declined from 75% to 15%; the overall deficit on the balance of payments fell from US$66 million in 1991 to US$41 million in 1992; the stock of public debt had already begun to fall; and the exchange rate had stabilized following the unification of the official and the market exchange rates.

Asgar Ally
Not that these developments impressed the first PPP/C Minister of Finance who in his 1993 Budget speech wrote, “the apparent economic recovery is fragile as major structural obstacles to sustained growth still persist.” Add to this Jagan’s mantra of lean and clean, weeding out corruption, expanding democracy and giving every Guyanese a fair chance to benefit from the country’s resources, and we see why there was some uncertainty among the banking community.

For better or worse, it will remain one of Guyana’s unanswerable questions why Dr Jagan allowed pragmatism to trump his ideology, but it was a major relief among the business and investing community that his government, first under his choice of Finance Minister Mr Asgar Ally, retained the ERP for several more years. That continuation was to result in one of the longest running IMF programmes anywhere in the world.

Banking in 1992
It was against that background that Business Page appeared with its first column captioned ‘Our banks must adopt a more positive role.’ That column made several comments and recommendations with regard to the commercial banking sector and I thought it useful to see how far and in what ways the banking sector in particular has changed in twenty years.

Of course at that time the government was the dominant player in the banking and financial sector. It controlled the National Bank of Industry and Commerce, the former Royal Bank of Canada whose assets, liabilities and operations were acquired by the Government of Guyana in 1994.

The government had also acquired the assets, liabilities and operations of Barclays Bank PLC and vested these into the Guyana Bank of Trade and Industry Limited. On January 1, 1990 the operations, assets and liabilities of Republic Bank (Guyana) Limited, which had arisen from the US Chase Manhattan Bank were merged with GBTI. Bank of Baroda had quietly been carrying on its own operations, as did the Bank of Nova Scotia.

Importantly the government also owned and operated the Guyana National Co-operative Bank (GNCB), the Guyana Co-operative Mortgage Finance Bank and the Guyana Co-operative Agricultural Development Bank.

In 1992 therefore the banking system was largely state-controlled. Indigenous banks had become the vogue and we recall that the GNCB, GAIBANK and the Mortgage Finance Bank had been established with the aim of fast-tracking economic development by making it easier for individuals and businesses to access capital for business and social purposes.

Such state control over such a key sector had problems beyond losses of staggering amounts, as politics became a major consideration in the operations of the institutions, although it was less so in the case of NBIC and GBTI.

Bank ownership
Since 1992, there have been substantial changes in the ownership and operations of commercial banks in Guyana. GNCB had acquired the portfolio of GAIBANK which was subsequently closed, but in 2003 certain assets and liabilities of GNCB were sold to what was by then Republic Bank (Guyana) Limited.

In October 1997, the government’s shareholding in NBIC – approximately 47% – was sold to Republic Bank of Trinidad and Tobago and the name NBIC was changed to Republic Bank (Guyana) Limited. The Republic Bank of Trinidad and Tobago now owns 51% of the local subsidiary while other substantial shareholders (defined as 5% shareholding) include Demerara Mutual Life Assurance Society Limited, GTM and Trust Company Guyana Limited.

GBTI was sold to the locally owned Beharry Group of Companies which now controls 61% of GBTI’s shares. The remaining shares appear to be spread among several non-substantial shareholders.

But there were new players as well. In January 1992 Demerara Bank Limited was incorporated as a private limited liability company and received its licence to carry on banking business in October 1994. It was subsequently registered as a reporting issuer under the Securities Industry Act in 2003. According to this Bank’s 2011 annual report, no shareholder owns more than 5% of its shares.

Another entrant to the market was the Citizens Bank which started out in November 1993 as a Jamaican initiative, but all its shares were subsequently acquired by Guyanese. It is now a subsidiary of Banks DIH Limited, a publicly traded company. Apart from Banks DIH, other substantial shareholders include Continental Agencies Limited (16.7%), the Hand-in-Hand Group (8.7%), and the Hand-in-Hand Pension Scheme (7.8%).

Regulatory changes
Another defining feature of then and now is the regulatory landscape. In 1992, banks were regulated under the Banking Act and, whether they were private or public companies, operated purely under the Companies Act, Cap 89:01 which had seen no amendment of substance since it appeared on the statute books in 1913. The Banking Act was repealed in 1995 with the passing of the Financial Institutions Act that brought about some sweeping changes to the industry.

For one, the capital stock of a company carrying on banking business has been increased substantially. The capital stock specified by the Banking Act for a Guyana company to be granted a licence was initially not less than G$500,000 unimpaired by losses. In 1986 this requirement was increased to the greater of 10% the demand and time liabilities or one million dollars.

At the 1965 exchange rate the requirement was equivalent to approximately US$200,000 compared with US$24,096 in 1986 and US$4000 in 1992! Under the Financial Institutions Act the minimum capital of a deposit-taking financial institution is $250 million. The FIA also has capital requirements for branches of international banks such as Scotiabank and provides for a build-up of a statutory reserve fund equivalent to its paid up capital.

The FIA is a modern piece of legislation that has been supervised by the Bank of Guyana, the FIA regulator, in a very professional and co-operative manner. While the reporting requirements are quite considerable the commercial banks have not complained and actually praise the BOG for its adoption of risk-based audits, a key requirement under the FIA.

By December 1992, the Companies Act 1991 had been passed in the National Assembly repealing the earlier Act, but it was several years after the call by the 1992 Business Page and others that the Act was finally brought into force. What was more significant however was the passing of the Securities Industry Act which regulates, among other things, public companies. That Act too has largely been well received by the two publicly traded commercial banks and its regulator, the Securities Council, has had far fewer issues with them than with some other public companies.

One of the other principal regulatory changes is the Anti-Money Laundering and Prevention of Terrorism Act. This Act sets up a Financial Intelligence Unit to pursue money laundering by requiring a range of bodies to report transactions. The operation of the Act has however proved quite onerous and there are complaints about the manner in which it is administered by an appointee of the Minister of Finance.

Next week: I have invited the commercial banks to provide me with some brief information on their own operations over the intervening twenty years. I will share the results with readers.

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Nandlall did no research in relation to Transparency International before making his comments

Attorney General Anil Nandlall has joined the attack on Transparency International (TI) on the publication of its 2012 Corruption Perceptions Index. Because Mr Nandlall is a member of a profession which calls itself learned, and which is known for its members researching before speaking, and speaking with a certain sense of responsibility and decorum, I thought it might be useful to examine how Mr Nandalall’s statement stacks up against those standards.

Mr Nandlall accused TI of:

1. Failing to disclose “the empirical data or sources that they examined to arrive at those conclusions.”
2. Not stating the methodology as to how the organisation ended up at its findings [sic].
3. Not disclosing whom they spoke to and which institutions and organisations, or which documents they consulted.
4. “Gross dereliction” by arriving at baseless disclosures.
5. Failure to say where corruption exists, be it in the government, public or private sector.
6. Failure to examine the institutional mechanisms which are in place constitutionally, legislatively or departmentally.
7. Being insulting and disrespectful to Guyana and Guyanese.

Points 1, 2, 3 and 4 are all on the same issue: that Transparency International did not disclose vital information and sources.

If Mr Nandlall had taken the elementary research step of going on TI’s website he would have learnt that the basis for inclusion of a country/territory in the CPI is a minimum of three of the CPI’s data sources. The website also identifies CPI’s 2012 data sources as: i) African Development Bank (ADB); ii) Bertelsmann Foundation (German non-profit foundation); iii) International Institute for Management Development (IMD); iv) World Competitiveness Yearbook; v) International Country Risk Guide (ICRG); vi) World Bank; vii) World Economic Forum (WEF); viii) World Justice Project; ix) Economist Intelligence Unit; x) Global Insight; xi) Political Economic Risk Consultancy (Asian); xii) Transparency International Bribe Payers Survey; and Freedom House (no, not that one).

If he had acted more responsibly, he would have learnt that in the case of Guyana, there were four sources: ICRG, WB, WEF and Global Insight, and that a country’s score on the index is a simple average of its data sources.

Point 5 is even worse in terms of Mr Nandlall’s research efforts. I find it embarrassing that the Attorney General of this country does not by now know that the definition of corruption in the TI lexicon is “misuse of public office for private gain.” Perhaps he is more familiar with relevant examples such as Pradoville 1 and 2; the misuse of duty-free concessions; and paying out of the Treasury so-called advisors to the President and the Local Government Minister to work at Nandlall’s party in Freedom House.

Mr Nandlall should and could have served his and the country’s interest by challenging the local Institute to start speaking out on private sector corruption, including tax evasion and money laundering. He must be personally aware that members of his and other professions as well as aggressive law firms not only engage in these practices for their own direct benefit, but also in aiding and abetting others to do so.

Once Mr Nandlall understands my comments on points 1 to 5 above, he will realise that point 6 is not relevant to his argument. I cannot believe that the holder of such a distinguished public office does not recognise that in his attempt to discredit others, he ought not to be relying on laws that are on the statute books but not in operation. Any person would know that rather than prevent and punish, it actually perpetuates corruption if the Procurement Commission is not established ten years after it became a mandatory constitutional requirement; if there is an Integrity Commission without commissioners; an Access to Information Act not brought into force sixteen months after passage; and a Judicial Review Act not brought into force two years after passage.

On disrespect and insult, readers might wish to consider whether Mr Nandlall’s failures do not amount to an insult to his own intelligence, that of the legal profession and to the expectation of Guyanese to have an Attorney General who is informed, responsible, temperate and accurate.

Finally Editor, I researched the recent publications of leading newspapers in Zimbabwe and Pakistan which had much worse ratings than Guyana in the 2012 Index. In fact, in the case of Pakistan, the 2012 CPI was sensationally misreported by stating that Pakistan was the 33rd most corrupt country in the world. That report wrongly assumed that all the countries of the world were covered in the survey. Some twenty countries were not.

Yet I could not see any article or statement in which the governments of Pakistan and Zimbabwe engaged in any attack on Transparency International or their national chapters, let alone in the crass, vulgar, shameless and disgraceful manner in which Mr Nandlall, Ms Gail Teixeira, the PPP/C and the PYO did in the case of Guyana.

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Teixeira was very wrong

In his presentation at the awards dinner of the Georgetown Chamber of Commerce and Industry last Thursday Mr Clinton Urling, the Chamber’s President included in his wish list for Guyana a stronger civil society. In the course of his presentation Mr Urling not only referred to the work of the Transparency Institute of Guyana Inc but also echoed a recent call by that young organisation – made on the day Transparency International released its 2012 world Corruption Perceptions Index – for measures to enhance accountability, combat corruption and strengthen governance.

Mr Urling would most likely have been aware that only a few hours before he spoke the youth arm of the ruling party had attacked Transparency Institute, singling out its highly respected Vice-president Dr Anand Goolsarran for its vituperation, and severely chastising Transparency International for daring to include Guyana in its 2012 survey. Significantly, even if Mr Urling was aware of the attack, he offered no comment or defence of a civil society organisation in the presence of two Ministers of Government, Messrs Irfaan Ally and Robert Persaud.

One day later, PPP/C governance czarina Ms Gail Teixeira took the PYO vulgarity one notch down when she dismissed the 2012 CPI by stating that “only four persons were surveyed [by TI] as it related to Guyana.“ She even suggested that they must all be male! Surely anyone who knows anything about surveys would know that no sane person would regard a sample of four as reliable or representative of any population and that such a statement simply could not be right. Indeed, Ms Teixeira was wrong, very wrong.

The Transparency International website discloses that for its 2012 CPI with respect to Guyana, TI used four surveys, which in total, and even allowing for overlap, would have covered hundreds of individuals and organisations. The four surveys were Global Insight, World Bank’s Control of Corruption Index (WB), World Economic Forum and the International Country Risk Guide.

If this better information does not have any impact on Ms Teixeira and her “youths”, it is inevitable that any discourse in Guyana would continue to be backward-looking, uncivil and profoundly infected by manipulation and distortions. The leadership of the PPP/C must be in dreamland if it does not realise that for many Guyanese, the ‘C’ in PPP/C has long since ceased to represent any evaporated Civic and now, on empirical evidence as well as well-founded perception, unmistakably stands for Corruption.

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Clico and immunity

Introduction
Perhaps it is the constant stream of news coming out of Trinidad about Commissions of Enquiry, referring files to the Director of Public Prosecution or about police investigations in that country. Or perhaps it is the knowledge that Clico Guyana is partly responsible for the sorry state in which the NIS finds itself, or that the individual who directly contributed to the loss to this country of close to seven billion Guyana dollars walks free, or the unsatisfactory conduct of the liquidation of the company, or the fact that so far my request to the courts for access to relevant files has come up with nought.

Then we have the rounds of telephone interviews being given by politicians to the newspapers and speeches made at hugely expensive dinners in which words like crisis at the NIS or the resolution of the Clico debacle are regarded as taboo. After all, the self-employed could not care two hoots about whether the NIS sinks or swims or whether anyone is held responsible for the failure in which so many authorities are in an incestuous game to protect each other.

To square the circle we have the political opposition which has spent inordinate energy on the “symbol” of Rohee. It is now close to four years since I wrote an open piece in which I said that the parliament must do something about Clico and suggested a number of measures they should consider.

In that call I noted that the National Insurance Scheme (NIS) alone is exposed to Clico for well in excess of six billion dollars or more than 20% of the funds accumulated by the NIS over its forty years of existence. I pointed out that members of Parliament ought to be aware that under the National Insurance Scheme Act any temporary insufficiency in the assets of the (NIS) Fund to meet its liabilities has to be met from appropriations by Parliament. In other words, they would have to approve the money to be funded by taxpayers. The politicians’ response has been less than adequate.

Red ink
Shortly before the call on the National Assembly, I had written about the widening financial instability enveloping Guyana as a result of Clico and Stanford and wrote that when the dust settles, the taxpayers, NIS contributors and beneficiaries, members of pension and medical schemes and depositors in Clico and potentially in Hand-in-Hand Trust (HIHT) and the New Building Society could lose collectively several billions from the fall-out in the financial sector. Of these only the NBS came out largely unscathed since its own $70 million loss had nothing to do with the Clico or Stanford.

Let me briefly fast-forward to today. As of now, while several pension funds and the NIS are still holding anywhere between six and seven billion dollars of worthless paper, the majority of Guyanese including the several politicians have quietly recovered most of their money and some of them began counting their blessings around this time last year. They are not going to open their mouths, while when they do it amounts to nothing, and the private sector is only willing to repeat all kinds of platitudes or safe criticisms sent with signals to the government that this is for show only.

Part of the problem with Clico is that the approach to Clico from the very beginning has been without resort to facts, a point made ad nauseam over the years. Some of it was clearly carelessness or laziness. For example, when the President assured the nation on February 5, 2009 shortly after the collapse began that Clico’s assets were sufficient to meet its liabilities he was repeating a company line without having read the December 31, 2007 analysis showing that 81% of the company’s assets was invested in related parties, all of which were under various degrees of threat (SN February 7; Business Page Feb 8 2009).

Collective failure
But it was partly skin-saving as well since Clico was a collective failure of a number of institutions and individuals. In transactions that came under the supervisory lens of both the Commissioner of Insurance and the Bank of Guyana, no one it appeared noticed or felt competent to deal with a company that issued “insurance policies” with premiums running into billions of dollars having a statutory fund of less than fifty million dollars. As pressure mounted on the President and on those with direct responsibility for the sector, the President in his typical style threatened prosecution against the directors and management of Clico if fraud were found. That threat could not be serious for the simple reason that the President knew that the sole Guyanese director and officer was the company’s CEO who would have been the decider over who should be favoured in getting their money back from the fast sinking ship. That is one secret that never saw daylight.

We knew from the newspapers here that the government of Trinidad and Tobago had moved against CEO Lawrence Duprey and finance specialist Andre Monteil for civil and/or criminal conduct in the collapse of the insurance giant Clico and its parent CL Financial. I reported that a civil lawsuit was brought by Trinidad’s Central Bank and Clico against Duprey and Monteil for alleged mismanagement and misappropriation of Clico assets and that Attorney General Anand Ramlogan had directed that all files coming out of the probe into the collapse of insurance giant Clico should be forwarded to Director of Public Prosecutions (DPP) Roger Gaspard to determine if criminal charges should be laid against Duprey and Monteil.

The story is different in Guyana because of the political and personal relationships that control Guyana. The key players in the Clico saga three years ago were President Jagdeo, Finance Minister Dr Ashni Singh, Clico’s CEO Ms Geeta Singh-Knight all of whom currently hold and enjoy various forms of public office, and Ms Maria Van Beek, former Commissioner of Insurance who left the country following an attempt on her life.

Complicity
They all knew but did nothing about the company breaching the provisions of the Insurance Act and compounded its unlawful conduct by failure to comply with a demand/request by the regulator to repatriate the Statutory Fund. They did nothing of consequence.

It is not as if there are no penalties. Section 19 of the Insurance Act provides that any person who contravenes any provision of the Act, or any of its regulations or any direction or requirement made by the Commissioner of Insurance, is guilty of an offence. Unlike the normal presumption in law where the prosecution has the burden of proving beyond reasonable doubt the guilt of the accused, the Insurance Act shifts the burden to the “person” to prove that s/he did not knowingly commit the offence of omission or commission.

In what in normal circumstances would be real noose-tightening, the law goes on to provide that where an offence is committed by a company – in this case Clico – and the offence is proved to have been committed with the consent or connivance of, or to have been facilitated by any neglect on the part of, any director, principal officer, or other officer or an actuary or auditor of the company, he, as well as the company, shall be deemed to be guilty of the offence. Ms Singh-Knight was both a director and principal officer of the local company and most certainly it would have been to Ms Singh-Knight that the Commissioner of Insurance would have been addressing correspondence and directions.

Playing a supporting role then was the Central Bank Governor who failed to appreciate the nature of the product that Clico was offering and the Bank’s responsibility to regulate it.

One big happy family
Now we have moved on to phase 2 in a liquidation that breaks many of the rules, some players have changed. Ms Van Beek has gone and her place has been taken by a lawyer Ms Tracy Gibson whose supervisory responsibility of the insurance sector is conflicting with her unlawful role as an assistant to the liquidator. Mr Jagdeo is busy with his accolades and ventures while Dr Singh remains as Minister. The Bank of Guyana has seen its Governor appointed liquidator over a company to the demise of which his Bank contributed in no small measure. Ms Singh-Knight has been promoted and for all practical purposes granted a pardon, Chartered Accountant Mr Maurice Solomon is another unlawful assistant liquidator to Mr Williams while Senior Counsel Ashton Chase is the attorney. Mr Solomon in turn has been appointed a liquidator of Caribbean Resources Limited, one of Clico’s big debtors. Given that tens of millions of dollars of fees are being paid out by cheques signed by Mr Solomon and Ms Gibson one might have expected some better accounting with the reporting of the transactions under the liquidation and compliance with the Companies Act.

Conclusion
It is not that some people are receiving moneys outside of the law that bothers me. It is that a responsible and competent liquidator has a duty to look for wrongdoings by the company prior to the order for liquidation. Mr Williams is an extremely decent man in the best tradition of that word. But inexperience alone does not explain his unwillingness to date to have pre-liquidation transactions and conduct reopened for examination.

I am sure our private sector leaders read the regional pages of the Stabroek News. The news coming out of Trinidad and Tobago must surely suggest to them that an enquiry into Clico for possible criminal conduct is long overdue. We have been duped before by President Jagdeo who responded to calls for action on Clico by insisting on a similar investigation into Globe Trust. When his bluff was called he changed tack – no investigation into Clico in consideration for no investigation into Globe Trust. What a clever deed!

Let us hope that the next leader of the private sector to speak at a function will at least recognise the twin issues of Clico and the NIS.

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Things we have not noticed – conclusion

Introduction
This week I continue to raise questions on matters we may not have noticed in areas of public finance and management in Guyana. If former President Bharrat Jagdeo is rightly credited as the mastermind for the circumventing the financial provisions of the constitution and the financial laws, the credit for the execution of any schemes go to his choice as Minister of Finance, Dr Ashni Singh. Dr Singh as an accountant and former deputy Auditor General has used all his knowledge to confuse all and sundry over the Consolidated Fund and its sub-fund the Contingencies Fund, and other funds known and unknown.

Minister Clement Rohee should justifiably feel aggrieved that he is the only Minister of this government to have been targeted with a no-confidence vote in the National Assembly. After all, Dr Singh must at least have been aware of the deception over the rate of the VAT and the $4 billion for which Irfaan Ally was taken before the Committee of Privileges in the last Parliament while he, Dr Singh, was creatively spared by the then Speaker. He was central to the Clico debacle which has not been followed by any investigation into the serial illegalities that continue to this day; is solely responsible for the annual abuses of the Contingencies Fund; would have played a major role in moving more than $30 billion, yes thirty billion dollars, in dormant bank accounts without proper accounting; and is the minister with responsibility for the state of the National Insurance Scheme. And let us not forget that he is the Chairman of the NICIL Board that has been central to the breaches of the constitution and the inappropriately named Fiscal Management and Accountability Act. NICIL under him is several years in breach of the Companies Act and basic rules of accounting but he continues merrily on. Mr Rohee has every reason to think that there has been some goat in his past.

No more lottery accounting
We can assume that the Minister of Finance has had no hand in the decision to have Mr Ramson offer opportunistic advice on the lottery funds, but he clearly has no problem with the discontinuance by the Audit Office of the annual reporting of the funds collected and how they have been spent. It would be excessively charitable, however, to believe that he has not been consulted and has played no part in ensuring that his colleagues who were targeted for budget cuts earlier this year remain funded, parliament or no parliament, cut or no cut.

However assiduously, and at times clumsily, Attorney General, Mr Anil Nandlall, has rushed to position himself for entry into the Guinness Book of Records for the highest number of cases brought by an attorney general against his own parliament, the responsibilities and the powers of the minister of finance make his office the next most important one in the land. For that reason, while we just cannot afford not to notice the things the does, he and his government, with the help of a hardly working parliamentary opposition, a media that is at best poorly informed, a conflicted and handicapped Audit Office under an unqualified Auditor General, an equally unqualified Accountant General and a Finance Secretary with his own challenges and biases, have made sure he is the only brainer in the country, to use a word he employed recently to disparage his hosts at a public function.

As a specific example, how else does one explain the failure by the Audit Office, the National Assembly, the Public Accounts Committee and the press to demand an explanation for the non-tabling of a mandatory annual report on tax holidays granted by the Minister of Finance? There is sufficient anecdotal evidence that tax concessions alone cost this country about a half as much again as the taxes we collect, to make us take the Minister’s cavalier attitude to tax holidays a matter of substance and seriousness. Yet we as a country choose not to notice. We must have lost our marbles along the way.

Unrestrained powers
Who in the political opposition, the wider National Assembly or the Economics Affairs Committee have taken the time to consider and understand the powers the laws give to the Minister to grant all forms of tax concessions without any disclosure or accountability? I am convinced that the reason tax reform is not on the agenda is that it might expose the lawlessness as well as the ease and impunity with which even illegal concessions can be granted to friends and family alike. We have all forgotten that it is now one year since President Ramotar set up a Tax Review Committee while ensuring that it would not function. As the GMA, the Chamber of Commerce and the Private Sector Commission head into the fund-raising activities and the fun of the cocktail circuit, maybe one of their leaders would ask about the fate of that committee as well as the state of the NIS.

But let us stick to the question of taxes and see the extent of the powers of the Minister of Finance in addition to the power to grant tax discretionary holidays.

The Minister of course has powers to make laws under what is referred to as delegated legislation, and should have these tabled in the National Assembly and published in the Official Gazette. While this tool is seen as useful in enhancing the efficiency in public administration and is available generally to all ministers, the proliferation of such subsidiary legislation has aroused increasing scrutiny. As a result, countries around the world and more recently Australia have introduced legislation to regulate when and how such delegated legislation is used.

I thought it might be useful in an article of this nature to separate the powers of the minister of finance into those that have been used to help in curbing corruption from those which enhance public financial management in Guyana.

The incumbent has done nothing on corruption other than to challenge the Transparency Institute and question Guyana’s place on the Corruption Perception Index. He has centred procurement in his office, and his ministry was the biggest defender of Fip Motilall who cost this country so much.

The incumbent has to consider himself the luckiest man alive for not having been subject to a motion that he be brought before the Privileges Committee of the National Assembly.

Tax laws
Let us now look at some of the powers of the office granted to him by various laws. The Minister can effectively make laws to provide that the interest payable on any loan charged on the Consolidated Fund or guaranteed by the government is exempted from the tax; to approve as a mortgage finance company any company which has entered into an agreement with the government whereunder the company agrees to finance housing development; for the introduction of a presumptive tax on the income from self-employment of individuals who have annual turnover from self-employment of less than ten million dollars (not done); for the introduction of a minimum tax on the income from self-employment of individuals whose annual turnover from self-employment exceeds ten million dollars (not done); exempting under defined circumstances the income of non-resident shipping companies; deciding which sectors and products receive export allowances; designating the allowable expenditure for development of agricultural land; designating the central authorities for transacting diamond business; providing for minimum tax on self-employed professionals (not done); exemption from filing returns by persons whose income comes mainly from employment or interest (not done); specifying the books and records to be maintained by persons carrying on any business; appointing an agent in the UK for the purpose of facilitating the assessment of the income of persons residing in the United Kingdom (a clear throwback to the days when England was the Mother Country); appointment of the Board of Review (which has not been done for several years); making and revising Double Taxation Agreements (which has not been done for nearly two decades); entering into agreements with other countries for the exchange of information for the prevention of evasion or avoidance of income tax and the carrying out of those agreements (not done); prescribing the times for the payment of taxes by companies; and providing for the remitting wholly or in part of the tax payable by any person or category of persons on such income, in respect of any year of assessment, and in accordance with such conditions as may be specified in the regulations.

And that list is under the Income tax Act only.

Under the Corporation Tax Act the Minister can declare as exempt the income of any institution established for the encouragement of thrift or any income arising from investments of any fund or scheme established for the provision of annuities to designated persons.

But his real opportunities for acting in the most unaccountable and irresponsible manner lie in his power to grant tax holidays and two other lesser known provisions of the laws, one in the Income Tax Act and another in the VAT Act. Under the Income Tax Act, the Minister has the power to reduce the rate of withholding tax on any distribution or payment for the purpose of giving effect to any agreement relating to tax between the government and any person not resident in Guyana. Neither the GRA nor the Commissioner General has any say in the matter but must simply do as the Minister says. Nor is there any reporting of the exercise of this discretionary power.

And under the VAT Act, in order to zero-rate a supply of goods and services, all the Minister has to do is sign with a person an investment agreement for which there is no definition, specified contents or penalties for non-compliance with any promises by the investor.

Additionally, the Minister of Finance makes all the delegated legislation under the Value-Added, Excise and the Customs Acts and appoints directly or indirectly all the members of the Revenue Board which exercises wide policy-making powers over the administration of all the revenue collecting agencies.

These are enormous powers that are hardly regulated, if at all. True, the Financial Management and Accountability Act has certain guidelines on the charging of expenditure on the revenue of the country; how sums due to the revenue be remitted; and the authority for the remission, concession, or waiver of taxes.

Conclusion
The Minister has shown himself time and again to be irresponsible and willing to bend and if necessary to circumvent the law. There is hardly a qualified accountant in the traditional public service, and both the posts of Auditor General and the Accountant General are held by unqualified persons. It is not the ideal environment in which the Minister of Finance is a Dr Ashni Singh. Rather than allowing Deodat Sharma to misdirect them with petty cash issues, the PAC must make a concerted effort to rein in the excesses of Dr Singh which have cost this country tens of billions.

The Economic Affairs Committee has work to do.