Category: Public sector

Introduction
In the first part of this article I wrote that I did not see a copy of the final contract between Atlantic Hotel Inc (AHI) and SCG International (Trinidad and Tobago) Limited (SCG/the contractor) for the construction of the Kingston hotel property financed by the Government of Guyana, owned by AHI and proposed to be managed by and operated under the name of Marriott, the international hotel chain. In fact there is no single contract but rather ten separate documents, including one described as the Contract Agreement, that together constitute the contract. At all times Mr Winston Brassingston operated as the shareholder representative, chairman, sole director and Chief Executive Officer of AHI. In addition, these and other documents which I have seen indicate that Mr Brassington was the point man for negotiations with the contractor as well as government agencies. It is almost unthinkable that a single individual who in law has no obligation but to the company would be allowed such vast and unrestricted powers over expenditure exceeding ten billion dollars.

What is not unthinkable and indeed was foreseeable is the ‘shamateurishness’ of the negotiated documents and the potential implications for the Guyanese taxpayers who bear the full cost of the investment and any potential losses. To understand why it is not unthinkable and was indeed foreseeable, we have only to look at the example of the Skeldon Sugar Factory. With its large and powerful board and with inputs from Booker Tate, GuySuCo could not prevent a lopsided contract with a Chinese contractor in a matter in which the balance of expertise resided in Guyana. Sadly, the taxpayers continue to suffer the consequences of that mistake. And yet, even before that mistake is rectified − if it ever can be − we are, as Santayana warned, repeating it.

Marriott’s role
Let me also clarify why I am hesitant to call the property the Georgetown Marriott Hotel and Entertainment Complex despite this nomenclature in the Contract Agreement initialled by Brassington for AHI and Michael Zhang of SCG. Marriott is not putting a cent into the project. While the several documents provide for the property to be built to specifications established by Marriott International, the group’s principal role is to manage the property from which it will gain indirectly from the expanded global coverage and directly, from the hotel’s operations. No details have been released of the terms and conditions and the payment arrangements to Marriott for the services it currently provides in the construction phase, and what it will receive under its management contract. In the documents’ package there is a bare reference to Technical Services Agreement of April 23, 2010 between AHI and Marriott International. Interestingly, the financial statements which are audited by the benign and bemused Audit Office show no payment to Marriott in either 2010 or 2011, suggesting that Marriott worked gratis in those two years − a highly unlikely possibility.

What is certain is that Marriott bears no risk and is guaranteed its income, even if the hotel makes a loss. I hesitate to think that the contract with Marriott does not include a termination clause under which Marriott can withdraw their name from the operation. The fact that Brassington may very well sell Guyana’s majority holding in AHI suggests that termination can never be ruled out, in which case the label will inevitably change.

Tax exemptions − déjà vu all over again
Last week I noted that in order to meet a request for a price reduction, the contractor SCG quoted a price which excluded, among other things, PAYE, i.e. the system by which income taxes are deducted and remitted to the Guyana Revenue Authority. For PAYE to constitute exclusion of cost and therefore a saving, it means that Mr Brassington would have had to agree to an exemption of employment income of the labour force from income taxes. Surely even Mr Brassington, whose little knowledge of taxation impressed then President Jagdeo, must know that the law does not allow for any such exemption. In fact, PAYE is collected by and held in trust until paid over to the Guyana Revenue Authority. I would not have thought Mr Brassington would agree to such a preposterous provision but for the fact that the Memorandum of Understanding which Mr Brassington signed with SCG includes PAYE as a cost reduction device.

And on the question of exemption from corporate taxes, one would have thought that Mr Brassington might have learnt from the QAII embarrassment that any exemption has to fall within the tax laws. If he knew that and went ahead and agreed to exemption from all forms of taxes for a construction company, he is guilty of a grievous violation of the laws of Guyana by agreeing to concessions which neither he nor the government has the power to give. If he did not know one has to ask if Finance Minister Dr Ashni Singh, who played a triple role in the QAII fiasco, is also similarly deficient.

Incidentally one of the criteria for tax holidays is the creation of employment. No more needs to be said on this.

The contractor is showing more cleverness than our one-man heavyweight team. SCG has chosen to incorporate in Trinidad and Tobago and thereby benefits from the Caricom Double Taxation Treaty under which the profit it earns in Guyana but which is not taxed here is exempt from taxes in Trinidad. But those same profits are taxable in China, so in effect we are, absurdly, forgoing revenue in favour of the cash-laden treasury of China. To think that the PPP’s father of the nation used to rail against such tax concessions to American, British and Canadian companies! It would be a great day when the GRA decides to step in and let any company know that it will not recognise any tax exemption that is granted outside of the law.

Duped
But on the issue of foreign labour, the contractor was more than clever. Understandably SCG became the target of protests and expressions of concern from several interest groups in Guyana, including the government-leaning FITUG. The Chinese contractor asked in its exchange with Mr Brassington that a clause be inserted in the initial draft contract available to bidders to provide that “the Contractor may [emphasis added] import any personnel who are necessary for the execution of the works.” Taking advantage of what may appear to be a standard and apparently innocuous provision in the contract, the contractor then imports all its labour needs from China. To add stupidity to insult, when the public in Guyana protests, Ms Teixeira with typical irrationality, shouts racism. Well Ms Teixeira, ask yourself who is being racist? The company had a choice of workers from Trinidad and Tobago, its country of incorporation and Guyana, two obvious sources. Instead it chose to import all its labour from China. But unfortunately, those who exposed us to the contractor’s deviousness and ethnic employment preference are too ashamed to admit that they have been duped and their masters now blame the country’s workers as unfit for employment on a construction site.

But Ms Teixeira was not alone in absurdity. Dr Gopaul, the labour man in the PPP/C said the construction of the hotel is a high-tech business, suggesting that it is beyond the competence of Guyanese. I find it hard to believe that having read the contract documents, any Minister would think that Guyanese are unable to contribute to the contractor’s obligation to ensure indigenous species of plants and grass and all aspects of landscaping. Twenty years on, there is no higher tech building in Georgetown than the US Embassy in Kingston, a building that was constructed with at least a 95% local work force. But for their own risible admission of reporters to their facilities, I would mention too the newly constructed spy centre in the compound of Castellani House which as far as the public is aware was built by Guyanese. Dr Gopaul’s defence of all-Chinese labour simply does not stand up.

Insulted once, twice and then thrice
As if to show that the 100% Chinese workforce had its PNC parallel, yesterday’s Stabroek News quotes GINA as stating that “the OMAI Gold Mines project had over 300 Canadians on site in the initial construction phase and no fuss was made.” The reason for the no fuss is that at no time did Cambior have any number close to 300 at the Omai site. My information on both the US Embassy as well as on OMAI was derived not from third party sources or speculation but from actual working knowledge. That those in control of GINA would resort to such fabrication is a measure of how weak they know their argument is. And even if GINA believed that to be the case, it seems to suggest that GINA believes that more than 20 years later we have fewer skills in Guyana!

I have learnt that since Ms Teixeira’s comments, a decision has been taken to cease any further protests at the construction site since they “come across as anti-Chinese.” I understand that further protests will take place at the Office of the President, but not at the office of Winston Brassington who signed the contract with the contractor. It is a strange decision given the facts set out in the several documents I referred to last week, documents to which I am sure certain members of the political opposition have had access. The labour movement must feel thrice insulted – first by the Chinese contractor who shunned them; second by the government and its vacuous spokespersons who said in as many words that local labour is unfit to work on a construction site; and finally by opposition politicians who put Chinese feelings before the interests of the Guyanese workers. The Chinese have every reason to be contemptuous of Guyanese.

Ten billion dollars money, ten cents professionalism
Let us return to the contract documents. The first thing that comes across is the amateurishness of the documents signed by AHI whose officers are its director Winston Brassington and Attorney-at-Law Marcia Nadir-Sharma. Bear in mind that the contract is for over ten billion dollars, excluding a whole range of costs as set out in Part One last week. With such sums involved, you would think that some professionalism would go into the documents. In fact, professionalism is as excluded as Guyanese labour. Surely the contract documents should have been referred to one of the law firms with expertise in high-value construction contracts for finalisation. In fact the documents have all the hallmarks of people with no experience, expertise or concern for ensuring that taxpayers’ money is protected.

In fact there appears some amount of cut-and-paste going on in the preparation of the documents. Here is a classic example: Paragraph 4 of the MOU states that “US$21 million will be provided by AHI shareholders in the form of equity and subordinated debt, such that Zublin will invest the majority of the equity. Pending the execution of the Design-Build Contract, AHI is controlled by the Government of Guyana. Once the Design-Build Contract is executed and financial close is achieved, it is expected that Zublin will be the majority shareholder with the Government of Guyana having a minority stake and proportional representation on the Board of Directors.”

In May 2010 Zublin Grenada Ltd had announced that it was invited by the government to undertake this development and had given the Zublin team three weeks to consider the offer. There has been no indication from Zublin that it had accepted the offer but the June 14, 2011 MOU suggests that while Zublin is still involved it is not prepared to take any risk at the construction stage, all the financing for which has so far been provided by the Government of Guyana through AHI. As the public is aware, the US$25 million received from the disposal of the government’s share in GT&T was earmarked for the hotel and this is in addition to the US$10 million advanced by NICIL to SCG towards their $51 million contract price.

Viability not determined
Someone should surely be asking Mr Brassington and/or the Finance Minister for details of the Marriot and Zublin contractual arrangements, including the basis for valuing any shares to be issued to Zublin. I shudder to think that it will be at the price which Ms Nadir-Sharma has placed in the Articles as the price per share. She needs to be told that the share price in a company’s Articles of Incorporation should be the minimum issue price, to allow market flexibility to the directors. Is Ms Nadir-Sharma aware that nominal price per share was abolished in 1995 when the 1991 Companies Act came into force?

A review of the documents reveals other concerns: the June 2011 MOU admits that the revised contract price of US$51 million for a reduction in the scope of work is “not fully acceptable to AHI”; that AHI is confronted with a shortfall based on the Marriott projections; that there needs to be further capital costs reduction, increased revenue from the operation of the casino and more optimal financing terms. In other words, the construction began even before the viability of the project had been determined! This may explain why NICIL is providing interest-free loans to AHI.

What it does not explain is how and why Mr Brassington could give to Dr Ashni Singh, Minister of Finance, six months later, an undertaking that AHI “will procure or provide all the investment [and other] financing required [by AHI] estimated at US$58 million.” Mr Brassington and Dr Singh both appeared to be pretending that they were entering into an arm’s length agreement and that they did not know that it was Dr Singh’s NICIL that was improperly providing AHI with whatever money it accesses.

Vying for the most elementary but not costly error made by the Brassington-Nadir-Sharma combination is their failure to ensure that SCG has a legal presence in Guyana. It is one of the first assertions in the preamble in any properly drawn-up agreement. Two separate checks at the Deeds Registry this past week suggest that SCG is not incorporated or registered as an external company in Guyana as it is required to be under the Companies Act. There is no evidence that Mr Brassington agreed to waive the mandatory statutory duty.

To be continued

Introduction
The so-called Marriott Hotel, a scheme conceived by former President Bharrat Jagdeo − after one of his friends failed in his bid to buy the Guyana Pegasus – blessed by Mr Jagdeo’s successor President Ramotar, facilitated by Dr Ashni Singh, his Finance Minister and Chairman of National Industrial and Commercial Investments Limited (NICIL), executed by Mr Winston Brassington, NICIL’s CEO, and defended by political heavyweights like Drs Luncheon and Gopaul, puts in the shade the questionable transactions undertaken in the name of the people of Guyana since 1992. That is no small achievement.

Over the years Business Page has lamented the manner and extent to which the PPP/C Government, having criticised the PNC for its conduct of the privatisation programme, has been willing to sell the public assets of the country, often under very questionable circumstances and not infrequently, to questionable people. One criticism that I have not heard of the PNCR was any failure to account for the proceeds of those deals.

The actions of the PPP/C have been contrasting. Sometimes the transactions were so extraordinary as to arouse public attention, resigned scepticism and outright accusations. Think of those illegal concessions to Mr Jagdeo’s friend Dr Ramroop, transactions which prompted Mr Jagdeo to describe Mr Yesu Persaud as needing re-education. It turned out that the ones who were ignorant of the tax laws were Mr Jagdeo himself, Dr Singh and Mr Winston Brassington. On other occasions Guyanese came to learn of the transaction from abroad, as in the award of large swathes of our forest to Vaitarna of India and the diversion of more than $600 million. Even after the major disclosure in the Times of India, the Jagdeo/Singh duo never informed the nation that the money was used to plug a hole left in the wake of the Clico debacle in which Mr Jagdeo and Dr Ashni Singh were joined by another Singh − Gita − as lead characters. And from Jamaica we learnt that the Government of Guyana had committed this country to borrowing billions of dollars from the Chinese − most of which will never reach Guyana − to carry out works at the CJIA, works the country neither needs nor can afford. Just let us ask Delta.

Trading Guyana
Business Page from time to time has lamented that the Government was selling out the store and later, that it was selling out the store again. We warned that there is no such thing as a free chowmein, prompting a tirade of abuse directed at me by a senior government official, accusing me of lack of patriotism, and working against the development of Guyana. Only this week I was reminded of Samuel Johnson’s aphorism “patriotism is the last refuge of a scoundrel.”

The Marriott project has all the hallmarks of the several misdeeds inherent in the Queens Atlantic imbroglio, the transgressions of Vaitarna and the silence and non-accountability of the airport expansion transaction. So what makes the Marriott Hotel so special? It is that unlike the other transactions that merely sold out the store, the contract for the construction of the so-called Marriott Hotel involves selling out Guyana and its soul. And as you read on you will marvel at the brass, the contempt and the lawlessness demonstrated by the officers of a company called Atlantic Hotels Inc.

‘Egregious’ is a word Business Page has often used to describe what has passed for accountability in Guyana. I now need to find a term that surpasses egregious in scale and scope. To date the Marriott revelations have centred on the Chinese whose appetite for Third World resources causes it to act like the beads-for-precious stones policy of the Europeans in the early days of discovering foreign lands. And it is a skill they have honed with great success in Africa, first because of that continent’s resources and second, because they found that where there is weakness, incompetence and corruption by the government and silence among the people, a football stadium or a road can go a long way. Especially if the road leads to a mine or forests.

A scheme called Atlantic Hotel Inc.
The recent protests against the misnamed Marriott Hotel project – Marriott is not putting a blind cent in the investment – have paid little attention to the role of two individuals, Winston Brassington, the sole director of Atlantic Hotel Inc (AHI) and Ms Marcia Nadir-Sharma, the company’s corporate secretary and in-house attorney. It is their hands and signatures that adorn many of the Marriott documents in which Guyana has relinquished sovereignty to the Chinese. Everyone knows that Mr Brassington and Ms Nadir-Sharma could not do what they continue to do without the express authority of the two Presidents, Dr Ashni Singh and the Cabinet.

But the importance of the role of Mr Brassington and Ms Nadir-Sharma is that Mr Brassington is the sole director, Chairman and CEO of AHI while Ms Nadir-Sharma is its only other officer, information published in these columns on August 8, 2010.

Here are some facts about AHI that seem worthy of ventilation. AHI is a 100% subsidiary of NICIL, for years a corporate outlaw. AHI was incorporated on September 3, 2009 with a share capital of one million Guyana dollars (sic). From its incorporation to its latest filing on record three days ago, the only shares issued have been 10,000 shares at $100 each in the name of NICIL. By Resolution of 28th September 2010 the company increased its share capital from $1M (10,000 shares @ $100 each) to $3 billion (300,000 shares at $10,000 each) prompting questions about Ms Nadir-Sharma’s familiarity with section 5 of the Companies Act 1991.

It is Mr Brassington and not the Govern-ment which signed every agreement with the Chinese company, Shanghai Construction Company, through its Trinidad and Tobago subsidiary, for the construction of the hotel. To get a good sense of the documents we can look at a letter dated October 1, 2011, supposedly sent by Mr Brassington in his capacity as Chairman of AHI to Mr Michael Zhang, General Manager of SCG International (Trinidad and Tobago) Limited presenting ten documents to Mr Zhang for “initialing.” Included in the package is an undated Letter of Acceptance from Mr Brassington to SCG informing it that its earlier tender was considered and resulted in a Memorandum of Understanding (MOU) for a Design-Build Contract for the precise sum of US$50,918,112.89. I have not seen a copy of the final contract, but it is likely that any further changes would be in SCG’s favour and not that of AHI or the Government of Guyana.

The MOU
The Memorandum of Understanding, dated June 14, 2011 and signed by Messrs Brassington and Zhang, notes that SCG had submitted a tender of US$65 million based on an original design but that the amount was considerably above the $41 million budgeted cost for the construction. The MOU goes on to state that SCG − and apparently no one else − was allowed to submit an alternate design meeting Marriott international design standards.

The MOU reflects a situation in which SCG went for the kill, realising that it had all the cards and that its opponent was either weak, compromised by circumstances or grossly incompetent. It demanded, in exchange for a reduction of US$14 million in the contract price, the following amendments to the initial contract document:

1. The removal of any obligation on SCG to pay all taxes, duties and fees, and obtain all permits, licences and approvals … placing these on AHI. Moreover, SCG demanded that it receive full exemptions from all taxes. Mr Brassington agreed.

2. That it be allowed to import any personnel who are necessary for the execution of the project. Mr Brassington agreed. It turned out to be 100%!

3. That its obligation to repay an Advance Payment under clause 14. 2 of the agreement be removed. Mr Brassington agreed.

4. That the principal provisions regarding Claims, Disputes and Arbitrations be deleted in their entirety. Mr Brassington agreed.

The result is a complete sell-out of every principle that served Guyana’s interest, an agreement that was re-written by SCG for SCG. And Mr Brassington agreed.

Conclusion
SCG in a letter to Mr Brassington dated May 18, 2013 said that its revised bid price does not include the cost of the promenade/boardwalk, LEED certification cost, PAYE package, health charges, NIS contribution, work permits and visa fees required by law.

It is not clear why it was necessary to refer to PAYE as an exclusion, since PAYE is borne by the employee and further, effectively granting to SCG a waiver of all or any part of NIS, a cost which by law is shared between employer and employee.

The contract price seems to exclude both. In return, all SCG was required to do was assist AHI to secure funding for the project of US$7 million to US$30 million.

Just what else the directors of AHI have done, how they managed to do it and the further absurdity of the Marriott project will be the subject of the next Business Page.

Introduction
Today I return to the article on NICIL (National Industrial & Commercial Investment Ltd) which I started two weeks ago but which I interrupted to conclude my 20th anniversary piece on the banking system. In what was referred to as Act 1, the directors were identified and financial summaries set out. It became apparent that the preparation of financial statements was a matter of political convenience and provided no information that could be considered useful to understand how and for whom NICIL operates. Events since January 6 have convinced me that the Institute of Chartered Accountants of Guyana has no serious interest in addressing the complaints against the Chairman of NICIL and his spouse and even worse that some members of the institute actually advise the executive of NICIL.

We recall that NICIL was incorporated as a company under the Companies Act Chapter 89:01 on July 18, 1990, but began functioning in 1991. NICIL enjoyed an incestuous relationship with what was called the Privatisation Unit of the Ministry of Finance which had been set up to carry out the Government’s privatisation programme. Moneys earned from the privatisations, including the shares in GBTI were paid into the Consolidated Fund.

But then someone had the bright idea that NICIL could function in capacities other than an incestuous relationship; it could actually raid the Consolidated Fund by the mechanism of vesting. So, convoluting and contaminating the relationship further, the same parties, the Ministry of Finance, Cabinet, the Privatisation Unit and the directors of NICIL, all of whom were appointed by Cabinet, signed in 2002 a Management Co-operation Agreement appointing the Privatization Unit, described as a semi-autonomous organ, as exclusive manager of NICIL. Under the agreement all privatization expenses would be funded by NIICIL, even though, let it be remembered, director Luncheon said NICIL was a private company. But demonstrating its unique brand of integrity, NICIL agreed that any privatization of NICIL’s assets would be in accordance with Privatization Policy Framework Paper (PPFP) of 1993.

What does NICIL do?
When NICIL was incorporated it had to include in its constituent documents the objects of the company and its financial statements disclose that “the primary objectives of the Company ‘NICIL’ is that of subscribing for, taking or otherwise acquiring and holding the Government shares, stocks, debentures or other securities of any company, co- operatives societies or body corporate.”

Now how NICIL moved into diverting sewerage, building roads in the hinterland on behalf of the Guyana Geology and Mines Commission, setting up a company to build a hotel and paying NCN to move its transmitting facilities, is not clear. But this was not the only perverse matter disclosed or not disclosed in successive annual reports of NICIL. Its financial statements disclose that properties vested or transferred by the Government to the company are brought into the books at a nominal value, in accordance with IAS 20 (para 23). A closer read of IAS 20 (para 23) tells us differently.

IAS 20
IAS 20 says that a government grant can take the form of a transfer of a non-monetary asset, such as land or other resources, for the use of the entity (my emphasis), and that it is usual to assess the fair value of the non-monetary asset and to account for both grant and asset at that fair value. Fair value is closer to market value and is clearly different from nominal value. The paragraph goes on to state that an alternative course that is sometimes followed is to record both asset and grant at a nominal amount, but this alternative treatment must surely be justified by circumstances. Since many of the properties are vested with a view to sales negotiated even before vesting, nominal value is clearly an inappropriate policy.

Some accountants might even argue that IAS 20 does not apply to NICIL because IAS 20 deals with government grants which it defines as “assistance by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating to the operating activities of the company.”

The transfer of these assets has nothing to do with the operating activities of NICIL which by its own admission is not an operating company but at its most honourable, serves to facilitate the disposal of state assets in an orderly manner.

The law
It seems to me that from a legal standpoint the so-called vesting takes place in a principal-agency relationship with NICIL acting as the agent of the Government whose assets they are. The perverse convolution is simply to use NICIL as the vehicle to circumvent Articles 216 and 217 of the Constitution which set out clear rules for accounting for government revenues and incurring government expenditure.

Let us assume that neither the CEO nor his deputy understand some of these technicalities or practices. But surely Ms Nadir-Sharma, who was expounding on the Companies Act 1991 and its application to NICIL only a few months ago, must be aware that the Act specifies the contents of the directors’ annual reports. These must include the following:

1. the affairs of the company, each of its subsidiaries and their principal activities;
2. changes in fixed assets of the company and each subsidiary;
3. a statement by the directors on their proposals as to the application of the profits of the company and of its subsidiaries.

To ensure that these matters are not excluded the Companies Act requires very specifically that where “the directors’ annual report does not contain a statement required by [the] section to be included in it or contains a statement which is false, deceptive, misleading or incomplete, the auditors of the company shall, so far as they are reasonably able to do so, include in their report on the accounts of the company … a statement or correction giving the information required by this section.”

There is a high probability that Mr Deodat Sharma, the Auditor General has no knowledge of this requirement and consequently is unable to fill in the information. Mr Sharma serves not as an independent auditor but chooses not to contract out NICIL’s audit. He does the same with NCN, another rogue company when it comes to compliance, good governance and accountability.

It is really painful that we tolerate such ineptitude from the government’s principal operating company. This brings to mind a question posed by a reader who enquired whether the annual reports tabled by various agencies of the state are subject to any review or scrutiny of the Public Accounts Committee. Sadly, the answer is that this has never happened and the practice is merely to place the document on public record; nothing more.

Some other comments
The paucity of information and disclosures frustrates any serious attempt at commentary on NICIL’s financial statements. Indeed, the paucity extends to disregard for entire accounting standards including IAS 10 Events after the Reporting Period. However the report for the year 2009 is interesting if only for one reason. In that year NICIL put some $166,241,000 in NCN about which nothing was ever said by the Minister of Finance who is NICIL’s Chairman and who in 2009 had allocated to NICIL in the National Estimates the sum of $54 million.

In other words, NICIL, whose Chairman is the Minister of Finance, gave to NCN three times as much as he gave to NCN as Minister of Finance. These advances coincide with the move of NCN’s transmission facilities to facilitate the construction of Pradoville 2, where Mr Jagdeo and some of his ministers have appropriated unto themselves valuable state property at below market value, or to use NICIL’s words, nominal value.

Surprisingly NICIL which from time to time holds billions of dollars in the bank discloses in its financial statements only modest sums for “Interest and other income.” It is public knowledge that NICIL also receives several millions of dollars annually in rental but without a note showing the separate amounts of interest, rentals, etc, it is difficult to determine whether all the income is properly accounted for.

Conclusion
The National Assembly has passed a motion for an investigation of NICIL. I believe that this investigation of NICIL’s operations would have to be very far reaching and include an examination of the assets of those who may have benefited. I have lost all faith in the Institute of Chartered Accountants of Guyana and it is public knowledge that certainly in respect of NICIL, the Audit Office is either inept or compromised. It is unfortunate that the Public Accounts Committee does not insist in reviewing the annual reports and financial statements of NICIL. Their rushed preparation, inept audit and simultaneous laying of NICIL’s reports for several years have nothing to do with good governance, respect for the law or accountability. It is meant to silence critics.

The real tragedy of NICIL is that it has simply got worse.

Introduction
If NICIL – the National Industrial & Commercial Investments Limited – was a play, it would be one that challenges Othello and King Lear for the dubious distinction of saddest tragedy ever written. And this is how the dramatis personae would be introduced:

Chairman of the Board: Dr Ashni Singh has the distinction of reporting to himself; credit for the undermining of the last vestiges of confidence in public accounting; lead authority on the use and mostly abuse of the Consolidated Fund and its offspring the Contingencies Fund; and credit for the largest financial sector failure under his watch;

Director: Dr Roger Luncheon, who thinks running a government and country is an opportunity to display verbosity and jest; who has merrily led the country’s National Insurance Scheme to the brink of the cliff and then casually denies reality; and who cannot distinguish a government company from a private company;

Executive director: Winston Brassington, who has been the architect or centre of almost every concoction or government initiative in the past fifteen years – the Queens Atlantic Investment Inc and its illegal tax holidays (later accepting the assignment to teach a private sector icon about the country’s tax laws); railroading the most costly financial package in setting up the Berbice River Bridge Company Inc and inducing and bribing investors with generous tax incentives; and the longest transitioning from the public sector to the private sector in Guyana’s history;

Auditor General: the benign Deodat Sharma, who moves from the stream of auditing (or not auditing) government transactions to the ocean of auditing where statutes on taxation and governance rule; where familiarity with deferred taxation and ever-changing IFRSs challenge the most seasoned accountants; who audits some of the country’s largest (government) companies in accordance with the Companies Act 1991 which does not recognise him as qualified to do such audits;

Regulators: such as the Registrar of Companies who was frightened off from demanding annual returns from the company for close to twenty years; the Commissioner General of the Guyana Revenue Authority who has not been able, for more than twenty years to collect a penny of Corporation Tax from Dr Luncheon’s “private company” despite several billion dollars of profit before taxation; or Property Tax despite the company owning at various times some of the most valuable state assets; or Capital Gains Tax despite the company acquiring premium assets at nil value and disposing of them at market value (except in the case of some friendly sales); and the national accounting regulator who has sat on two complaints for the equivalent of one year, unable or unwilling, maybe because the financial interest of its members, to pronounce on alleged egregious breaches of ethical and accounting rules and the Companies Act.

Making hay of delay
Apparently the Institute, applying a logic best understood by them only, decided to treat with the two complaints sequentially. From follow-up enquiries on these complaints, there appears some equivocation or evasion on whether or not this approach was reversed following stalling tactics employed by counsel retained by Ms Gitanjali Singh to deal with the complaint against her on the fundamental question of conflict of interest. After all, more than Ms Singh’s conduct is at stake here and it was no surprise that she resorted to Senior Counsel.

Minor players whose names or faces are supposed to lend credibility to NICIL: These include former Chairman and Minister of Finance Mr Saisnarine Kowlessar who would hardly have suspected how the company would come to define and represent some of the very values he represents; Mr Geoff DaSilva, Head of Go-invest, Ms Sonya Roopnauth, Budget Director and Ms Marcia Nadir-Sharma, NICIL’s Company Secretary, ever ready to sign corporate documents and defend the most offensive of corporate practices.

Ms Nadir-Sharma we recall was on television in September 2012 on the NCN’s outstandingly ironic debate on corruption, vociferously denying that NICIL had been in violation of the Companies Act and then rushing just over one year later to sign off on the statutorily mandated directors’ report for nine years – 2002 to 2010 inclusive – bearing no date but only the month: November 2012. Consequently, what NICIL and its directors could not and did not do in years could suddenly be done in just two months, a demonstration of political expediency trumping the law and governance. It is probably more than idle speculation that NICIL might have been taking advantage of the craven slothfulness of the Institute of Chartered Accountants which has delayed any consideration of a number of issues on the financial statements of the company and the conflicts of interest between the company and the Audit Office.

The plot
More important to the players however is the plot to take an entity established by the PNC government of Desmond Hoyte to oversee the privatisation process and make it in an instrument of circumventing the Constitution and other laws of Guyana. More specifically, it ensures the ignoring of Article 216 of the Constitution that requires all government revenue to be placed in the Consolidated Fund and bypass Article 217 which requires parliamentary approval for all public expenditure. The plot is devilish in its simplicity: vest state assets in the company which it then sells and uses as its own money to do as it pleases, whether to develop Pradoville 2, divert sewerage or mismanage road contracts or build a hotel.

Sitting in the pit of the theatre of the absurd are the politicians, including the main opposition party APNU, demonstrating a failure to understand or appreciate the deviousness with which their concerns over NICIL and other financial issues have been circumvented, and announcing in late 2012 that the government had become “more accountable”; the professional class more concerned about their economic well-being or about being victimised for their courage rather than standing up and speaking out for the financial well-being and fiscal rectitude of the country; and the public bewildered and bemused that the kind of maladministration for which NICIL has become a poster child continues to this day.

Financial summaries
Against this background Business Page commences a review of the financial statements and directors’ reports of NICIL for the years 2002 to 2010, the last year for which annual reports have been tabled in the National Assembly by Dr Ashni Singh. To carry out this function Dr Singh seamlessly changed hats from being the Chairman of NICIL to that of Minister of Finance. Here is a summary of the financial statements of the company – not the consolidated accounts of the group – for the ten years 2001 to 2010 as disclosed by the audited financial statements.

Statement of financial position

Statement of the Comprehensive Income

Statement of Cash Flows

However, before addressing and analysing these I will use next week’s column to conclude the twenty year review of the banking sector in Guyana which I started last month. I do apologise for the untidiness of not completing that review before beginning the examination of NICIL’s financials, but my own efforts at data collection and research were less efficient than I had anticipated.