Category: Letters to the editor

Posted on

Questions have made many in government uncomfortable

This letter was submitted to the Guyana Chronicle as a response to an extensive article captioned, ‘Finance Ministry slams Christopher Ram’s latest journey of speculation and misleading statements.’ Seven days after it was sent in, it still has not appeared.

The only reason I can think of for the three-page April 20 response by the Ministry of Finance (which appeared in GC on April 21) to my letter appearing in the Sunday Stabroek and the Kaieteur News of April 18 is that my exposure of the corrosive effect of first and second generation corruption, conflicting actions within Low Carbon Development Strategy (LCDS) policies, the questionable award of the Amaila Falls Road Project contract to Synergy, a mini-company owned by a political friend, Mr Fip Moitlall, the dubious role of the politically-directed National Industrial and Commercial Investments Limited (NICIL) and the repeated, costly and embarrassing mistakes by Finance Minister Dr Ashni Singh, has made many personally uncomfortable, to the extent that a rancorous public rebuttal became necessary. I refuse to reciprocate by descending to that level. Instead, out of respect for the Guyanese public’s right to the truth, I will rebut, point by point the April 20 diatribe by the Ministry of Finance.

The ministry challenges me on the LCDS implications of the NICIL-awarded road contract given to a friend of the political family, so reminiscent of another such case involving the Ramroops, friends of the President. In that case, tens, and possibly hundreds of millions of dollars of tax concessions, rent reduction and other benefits were engineered for the Ramroops by NICIL whose board is chaired by Dr Singh.

In a famous misunderstanding of the law, the concessions were subsequently approved by Cabinet and granted under the hands of the same Dr Singh.

When Mr Yesu Persaud asked for such concessions to be made widely available, President Jagdeo publicly abused him, directing NICIL’s CEO Winston Brassington to lecture Mr Persaud about the tax laws. Two days after Jagdeo’s abuse, in Business Page I examined for readers the relevant concessions legislation and pointed out that it was the President, Drs Luncheon and Ashni Singh, Messrs Winston Brassington, Geoff DaSilva and the entire Cabinet and Board of NICIL that needed some tax education. No one should harbour more embarrassment from that exposure than Dr Singh who, wearing three different hats, should have been aware of the provisions of the legislation and of the extent of his powers to grant such concessions. Synergy seems to be a case of history repeating itself.

Neither of the two drafts of the LCDS contains any calculation of the carbon emissions from the construction or operation of any of the development schemes outlined in the second draft.

Under the Guyana-Norway Agreement, there are two penalties which could apply – one for increasing deforestation, and the other for the timber cleared for the access road to the dam site. How I arrived at the USD 14.2 million for a road-associated potential penalty is technical and takes up valuable editorial space.

I have posted the details on my website chrisram.net (see box below), but I doubt that the Ministry of Finance is concerned about facts and figures.

Note on Penalty calculation
In the two drafts of the LCDS there is no calculation of the carbon emissions from the construction or operation of any of the development schemes outlined on pages 25-36 of the second draft, December 2009. It is not possible to derive the Ministry’s statement today from the single paragraph on Amaila Falls on page 25 of the LCDS document.

Under the Agreement, there are two penalties which Norway could levy. One penalty is for increasing deforestation, and one penalty is for the timber taken off the upgraded 85 km and new 110 km of all-weather access road to the dam site. The 110 km of new road would generate 0.19 MtC (million tonnes of forest carbon). The MoU values the forest carbon at USD 18.35/tC, and the penalty rate is four times the value, so the road-associated penalty is USD 14.2 million. This penalty is due if the deforestation from the roadworks pushes our total for 2009-2010 above the generous Norwegian allowance of 0.45 per cent of total forest area. As the draft LCDS does not discuss the deforestations associated with the development projects listed on pages 25-36, and the President’s Office of Climate Change has issued no calculations, we should be prudent in pointing out this hazard.

Whether or not the road does cause that excess deforestation, the second penalty may apply. Under the MoU, the total timber extraction should not exceed the mean national total for years 2003-2008 (total extracted volume, in table 2 on Enabling Indicators of the Norway-Guyana MoU and Joint Concept Note). That mean total is 481,226 m3 and includes raw logs, roundwood (poles and posts), and chainsaw lumber converted to its roundwood equivalent with the conversion factor of 0.4 used by the Guyana Forestry Commission. If the logs from the roadworks do not lead to log production rising beyond that agreed limit, then is log production elsewhere in Guyana being limited to make space under the limit for the Amaila Falls road logs? No agency in the government, nor the Forest Products Association, has indicated an intention of localised restrictions on log production. Page 39 of the LCDS indicates presidential assurance that large-scale loggers can continue their business-as-usual.

If they were, they would also take note of Janette Bulkan’s letter published by Kaieteur News on March 29, in which she pointed out that the Environment Impact Assessment (EIA) of 2002 on the Amaila Falls project available on the website of the Environment Protection Agency was for a much smaller project.

The document acknowledges that an expansion of capacity would require a fresh EIA, but that would get in someone’s way.

Further, the ministry’s attempt to confuse my stated concern about the Synergy road contract with hydro is artful, and even dishonest. The two are clearly separate but have come to represent the modus vivendi of this ministry in particular, and the government in general.

As a private company, NICIL is not subject to the stringent rules of the Procurement Act and the Fiscal Management and Accountability Act (FMAA). It is subject to lower standards of accountability under a political board that includes Drs Luncheon and Singh and Messrs Robert Persaud, Geoff DaSilva and Winston Brassington. To divert attention from “NICIL/ Government,” the Ministry of Finance in its April 20 statement conveniently introduces the Ministry of Works, which was not once mentioned in the Amaila Project Request for Proposal issued by NICIL.

That unholy combination is not unlike the Privatisation Unit/NICIL hybrid, which allows it, chameleon-like, to be and act like a government department when it is convenient, as in this case, and like a private company when it does not want the constitution, the FMAA and the rules of accountability to apply.

Let me correct some of the other issues which the Ministry of Finance chose to distort.

Queens Atlantic
I had objected to the illegal concessions granted to that company. To the extent that a person fails to honour his/her investment commitment, the concessions should be revoked. The only investment of substance by QA has been the newspaper which was not even included in its investment proposal seeking the hundreds of millions of concessions. But if the Lord gives, who else dares take back?

The Berbice River Bridge
My objections were all of a financial nature. They were:

(1) Winston Brassington’s attempts to have me withhold a Business Page article for one week. It turned out that he needed that week to get the Roger Luncheon-led NIS to invest in the bridge.

(2) The massive tax concessions given to everyone involved, even tangentially, in the bridge.

(3) The fact that despite these concessions, a Berbician car owner pays twenty times as much to use the Jagdeo Bridge as his Demerarian counterpart pays to use the Burnham Bridge. I did not realise at the time that unlike the Burnham Bridge, cyclists and pedestrians in Berbice could not cross their bridge.

RUSAL
In negotiations led by the President and Mr Brassington, we have given away our bauxite to a company owned by a Russian oligarch Oleg Deripaska, a man with a reputation for strong tactics and for lavishly entertaining foreign officials, and who like some of our own top people, has had his own visa problems. (See London Guardian, October 31, 2008.) RUSAL is now actively engaged in union-busting in Guyana and yet earns the tacit admiration and undisguised support of this administration.

Arising out of its secret negotiations with President Jagdeo and Mr Brassington, RUSAL has been granted exemptions from just about everything, including the bauxite levy.

But to divert attention, the Ministry of Finance chooses to speak of jobs. As if Mr Deripaska came to Guyana to provide employment, rather than obtain free bauxite for his Russian plants, acquired under circumstances that can still excite!

Finally, let me remind the Finance Minister that I have challenged his knowledge of the sinister history of the VAT rate, conflicts of interest involving his ministry and the Audit Office, and his veracity in the National Assembly over a $4 billion payment to GuySuCo. No space was found in his ministry’s three page production to enlighten citizens on where he stands on any of the issues raised, or, on where any of the issues raised stand.

Posted on

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.

Posted on

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.

Posted on

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.

Posted on

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.