As Mega-projects unravel, Guyana Dollar “junkified”

Luncheon and his ploys
Before turning to this week’s piece I will respond to a statement attributed to Dr. Roger Luncheon who at his press conference last week named Messrs. Ronald Ali, Anand Goolsarran and me in a “ploy orchestrated against Mrs. Singh [wife of Dr. Ashni Singh, the Finance Minister] of the Audit Office of Guyana.” The moniker “politician” can hardly exempt or justify careless and untruthful speech particularly when making serious allegations about others.

Dr. Luncheon should be aware that a formal complaint was lodged with the Institute of Chartered Accountants of Guyana (ICAG) by Robert McRae CPA, a partner of Ram & McRae, alleging a “conflict of interest between the Ministry of Finance and the Office of the Auditor General involving members Dr. Ashni Singh and Gitanjali Singh.” That complaint, lodged since July 9, 2012, had to name the two persons since investigations are held into conduct of members of the Institute, not offices. Mr. McRae lodged on the same date not one but two complaints with the ICAG, only one in which Mrs. Singh is named along with Dr. Singh.

With regard to Mr. Ali, I am not aware of any statement being made by him at any time on the matter. If any criticism can be directed at Mr. Ali, it is that the ICAG of which he is the President, has been unforgivably slow in pronouncing in a matter of national and professional importance falling within its functions. The ICAG has a duty not only to the public but also to the Singhs to rule on the complaints since it is totally unfair to its two highly ranked members to have professional complaints hanging over their heads.

As for prejudice to the investigation, it can hardly have escaped Dr. Luncheon that he and other members of the Cabinet are interfering with the investigations and in the process compromising the Audit Office. He must realise that Cabinet is not a disinterested party and for it to attempt to pronounce on a matter involving one of its own members is committing several improper acts – undue influence on the ICAG and on the Audit Office, as well as conflict of interest. Maybe this is Luncheon’s ploy to win further loyalty from an Auditor General who owes his appointment more to the political machinations in the PAC than to any professional qualification or competence.

My advice to Dr. Luncheon is that rather than speak on a matter on which he is so poorly informed, he should devote his attention to fixing the billion dollar mess in which the NIS has found itself during his 21-year tenure as Chairman.

Introduction
We may not have noticed it but a quiet revolution has been taking place in Guyana: a revolution that places wealth accumulation as the national ethos. This revolution is not being led by a right-wing party like the TUF but by some leading members of the PPP/C whose founder was a committed Socialist and champion of the small farmer, the worker and the artisan. So ingrained is the new philosophy that a former President could refer disparagingly to a bicycle shop operator and the Minister of Agriculture could carelessly describe the country’s farmers, telling them they have to leave their subsistence mindset and aim to become wealthy.

Even if the Minister did not intend to write-off the thousands of farmers his choice of words reflected a paradigm that was a world different from that of Cheddi Jagan. That shift becomes apparent from a review of the manifestos of the PPP/C with each succeeding one reflecting reduced emphasis for farming and agriculture and an ascendant concept of megaprojects. Farming is not only about mindset but also about landholdings, access to capital, a national policy on imports and markets for their products. If farmers cannot sell five bags of Bora how will they sell ten, or fifteen or twenty?

The rationale for the shift in national policy – for which we should read party policy – has never been too clear. Maybe it is a local version of the Reagan-Thatcher philosophy, or the economic counterpart to top-down politics. Or the strange logic that if the government cannot manage or supervise smaller projects it is because it is really cut-out to deal only with mega-projects. But the architects of these grand projects must know that the scale of the failure becomes correspondingly greater as the size of the project increases. Of course, if the scale of the project is in any way related to the culture of corruption, then some kind of logic begins to emerge.
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Forty-four years of the NIS

Introduction
September marked forty-four years since the National Insurance Scheme was launched by Prime Minister Forbes Burnham’s Government. It also marked twenty-one years of the control of the NIS by the PPP/C Government and the Chairmanship of another Forbes, this time bearing the surname Luncheon. The latter and a hard core of directors have led the NIS into a state where the Pension Reserves are now being used up by about two billion dollars per year. The saving grace for the reserves is that short-term and industrial benefits paid out annually are generating surpluses that help to compensate for the reductions in the Pension reserves.

The NIS was established as an actuarial scheme, i.e. one that seeks to balance out its long-term liabilities against its assets and revenues. The way this is achieved is by way of periodic – usually five yearly – evaluations carried out by external independent actuaries. The process is very scientific and involves a review all the data on active and past contributors, past and projected future income and expenses – of which pension benefits are always the more significant item – leading to recommendations generally designed to maintain/restore the actuarial balance of the Scheme.
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The fiasco over at Kingston

Berbice Bridge Company update
In the introduction to last week’s post, I related an exchange of letters I had with the Berbice River Bridge Inc. in which I had requested access to certain public documents of the Berbice Bridge Company Inc. In response to the reply by the Company Secretary of BBCI that I provide justifiable reasons, I indicated that the law did not require me to give any and I restated my request, giving the company two working days to provide me with access. I am pleased to report that within that time, I received a letter from the Company Secretary advising me that the company had been advised that I am entitled to access and could visit the registered office within normal working hours. I commend the directors of the Bridge Company for their responsible action in this matter. 

Small as that matter may seem, it is a significant development in corporate compliance as companies, their directors and officers become increasingly aware that they are required to comply with the Companies Act to which accountability and transparency are central.  

At the time of sending my first letter to BBCI, I also sent similar letters to Mr. Winston Brassington of NICIL and Ms. Marcia Nadir-Sharma of Atlantic Hotel Inc. (AHI). Neither Brassington nor Nadir-Sharma has responded to those letters or reminders sent one week later. In the reminder letter I indicated my intention to pursue the matter as legally advised. The disregard and contempt of the law by Brassington and Nadir-Sharma can no longer be tolerated or excused on the grounds of age, inexperience, incompetence or ignorance.

NICIL and AHI have retained just about every law firm in Georgetown in the belief that they can limit the number of firms professionally free to act against them. So Brassington and Nadir-Sharma, two key officers of these entities, should know that the indemnification provisions of the Companies Act only apply to the director or officer who has acted honestly and had reasonable ground for believing their conduct was lawful.

Contempt for the law is hardly an honest act.

Introduction
Years after spending billions of dollars in clearing prime land contiguous to the Atlantic Ocean and the Demerara River, relocating sewerage lines to allow for construction on the land, and long after signing a construction contract for US$51 million, Atlantic Hotel Inc., a government company decided to have a Feasibility Study of the project done by the Miami-firm CHR Consulting Services Inc.. The report on that study was issued in September 2012. Yet one year later, and only after relentless pressure has AHI, a wholly-owned government company, has provided to the public parts of that report.

The information was released by Winston Brassington just around the same time that he finally conceded in an interview with Johann Earle of the Stabroek News what he was being warned about long before committing more than US$20 billion of public funds in the project: that the project was never as strong as Jagdeo and he had been selling like salesmen of old. In today’s piece I look at the report and discuss it against some of the statements made by Brassington on the hotel construction of which is in progress.

I have no reason to doubt that the consultant preparing the Study is anything but a highly reputable company. Which then raises the question why the (revised?) Executive Summary would fail to mention that the study was conducted in 2010 as Mr. Brassington told the Stabroek News, and refer to the key changes, if any, made to the original report. Another key omission is that no one quite knows what the Terms of Reference (ToR) of the Study are and whether this included reproducing copies of all the advertisements by Brassington to demonstrate how transparent the process has been! 
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Berbice Bridge Company Inc. – 2011 profit increase – continued

Introduction
The serious limitations and late presentation of the audited financial statements of the Berbice Bridge Company Company Inc. and its annual returns have been pointed out before. The response of the directors and the auditors has been silence. Yet as long as the issues continue, and despite the hubris and arrogance of the directors, these shortcomings must be exposed and pursued. Once again, the disdainful conduct of the company was on full display this past week when I wrote Mr. Keith Evelyn the company’s Chairman a letter, copied to the Company Secretary Mr. Steven Rambajan, requesting access to certain records of the company. That access is a right of any person under section 194 of the Companies Act. It took the company a full week to respond with a masterpiece of which no paraphrasing can do justice. I therefore quote the text of the company secretary’s response dated September 25 but faxed to me on September 27.

BBCI acknowledges receipt of your letter dated September 23 addressed to the Chairman, and the request contained therein.

The company has noted that your letter did not allow the privilege of a proper reason or rationale behind this unusual request.

Accordingly, I am writing to inform you that the Board would be happy to consider your request objectively should you be able to give proper justification for your request, stating what meaningful objective can be achieved by this exercise; especially given that BBCI has in place internal controls, external auditors, and is subject to the Berbice Bridge Act No. 3 of 2005.

Upon receipt of a satisfactory response, the request would be put to the Board for consideration.”

Yours sincerely,

[Signed] Secretary/Accountant

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Berbice Bridge Company Inc. – 2011 profit increase

Introduction
Berbice Bridge Company Inc. (BBCI) was incorporated on April 1, 2005 under the Companies Act 1991. On January 31, 2006 then President Jagdeo assented to the Berbice River Bridge Act making provision for a privately financed Berbice River Bridge and conferring regulatory authority over the company to the Minister of Public Works. In the exercise of that power, the government signed a Concession Agreement with BBCI for the construction and operation of the Bridge. And by Order No. 42 of 2008 the Government granted to BBCI, among other things, a twenty-one year concession beginning on June 12, 2006 and expiring on June 11, 2027.

It is of course interesting that while the Act was passed in 2006 the company was incorporated on April 1, 2005. The process was then led by Bharrat Jagdeo and Winston Brassington who, like true salesmen, made all kinds of public and generous commitments. And like true politicians changed their stories about costs, revenues and investors in response to demands for more and better information.

The Concession Agreement referred to above contains what I call the “Brassington clause”. This clause binds all persons engaged in the design, construction, development and operation and maintenance of the Bridge to deal with all information in the Concession Agreement as secret and confidential. You would not think for a moment that this was about a monopoly operator granted exclusive control of a principal part of possibly the country’s second most important waterway and which by law is designated a Toll Bridge.
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