I remember that all through history the way of truth and love has always won. There have been tyrants and murderers and for a time they seem invincible, but in the end, they always fall – think of it always.
Truth alone will endure; all the rest will be swept away before the tide of time.
Mahatma Gandhi
Recently, I was asked to give my views on the dispute surrounding the ownership of the well at the Sanata Complex. I had stated that since the well is a revenue-earning asset, it should be reflected in the balance sheet of the entity that owns the well. In this regard, I had suggested that we examine the financial statements of both the Guyana Water Inc. (GWI) and the Sanata Textile Ltd. prior to the privatization of the Complex as well as the agreement of sale and purchase to conclusively determine ownership of the well.
What followed was a scathing attack on me by I-News, an on-line news outlet with close links to the new owners of the Complex. The news outlet referred to a recent statement from Finance Minister Jordan in response to my lamentation about the lack of progress in instituting disciplinary and other forms of action against those who have violated our Constitution and other legislative frameworks. This was in specific reference to the forensic audit of NICIL that was completed almost a year ago. Minister Jordan did not react too kindly when he considered me a “so-called anti-corruption advocate” who in recent times has “set himself up as a transparency and accountability czar”. I-News had a field day on the Minister’s statement about me and rehashed the previous Administration’s attempts to discredit me and the forensic audit of NICIL. But according to Gandhi, truth will always remain the truth, even if the seeker is reduced to a minority of one!
Controversy over the ownership of the well
GWI has been maintaining the well at the Sanata Complex and paying the electricity charges for its operations. In addition, it collects water tariffs from some 9,000 residents in the surrounding area. GWI technicians attempted to conduct an inspection of the water connection to the buildings in the Complex. This led to a confrontation with the new owners, Queens Atlantic Investments Inc. (QAII) which saw the intervention of the Chairman of GWI’s board. The technicians were asked to discontinue the inspection until the issue surrounding the ownership of the well is established. The Chairman subsequently issued a statement confirming that: (a) the well was no longer under GWI’s control; and (b) QAII had bought the Complex which includes the well but inherited the daily checks of the well by GWI. However, it is not clear whether the Chairman’s statement had the full endorsement of GWI’s board.
Upon learning about the controversy, the Head of the State Assets Recovery Unit (SARU), Prof. Clive Thomas, commented that he finds it “alarming that a public well can be sold as part of a deal to a private citizen. I can understand if the well is being leased but I just can’t wrap my head around the idea that Ramroop was gifted this state asset as part of some deal with the former regime…”
Vesting of assets and liabilities in GWI
The Guyana Water Authority was established in 1972 with the objective of constructing, operating and maintaining water distribution systems in order to supply potable to the public. By Order No. 14 of 2002 dated 30 May 2002, the Authority and the Georgetown Sewerage and Water Commissioners (GS&WC) merged to form the Guyana Water Inc. All assets and liabilities relating to the GS&WC and the Authority have been transferred to GWI. These include immovable property and buildings, and “all assets relating to the undertaking of the Commissioners and the Authority held by the Government or by an entity owned by the State or in which controlling interest is vested in the State or any agency or other entity on behalf of the State”.
There is a balance sheet attached to the Vesting Order setting out the opening position of GWI as of 28 May 2002. It includes an amount of $8.047 billion shown as fixed assets. However, specific details are not reflected in the Order, and GWI’s website does not have audited financial statements of the entity. It is nevertheless reasonable to assume that the well at the Sanata Complex is included in the above amount. I have also seen schedules for subsequent years indicating that the well is reflected in the assets register of GWI.
Memorandum of Understanding
In the late 1990s, Sanata Textiles Ltd. experienced financial and other difficulties as a result of which the State-owned entity was dissolved and replaced by G & C Sanata Company Inc. Prior to the merger of Guyana Water Authority and GS&WC, a Memorandum of Under-standing dated 23 October 2001 was entered into between G & C Sanata, GS&WC and NICIL whereby:
(a) G & C Sanata agreed to pay the monthly power bill incurred by GS&WC for the operations and use of the well;
(b) GS&WC agreed to waive all tariff payments for water to be used by G & C Sanata in lieu of the payment of the proposed tariff payment of G$60 per cubic meter or G$0.06 per liter of
water consumed;
(c) GS&WC agreed to supply water at a rate of 1,000m3 or 152.78 gallons per minute;
(d) Except for electricity charges, all costs of operations and maintenance of the well were to be borne by GS&WC; and
(e) GS&WC agreed to provide training to one staff member of G & C Sanata on how to use and operate the well.
The Memorandum also indicated that the management and operations of the well were transferred to GS&WC in 1996 and that the ownership of well was vested in NICIL by Order No. 49 of 2000 prior to the privatization of the printing and dying section of Sanata Textiles Ltd. However, this Order would have been superseded by Order No. 14 of 2002 and therefore as of 2002 the well became the property of GWI. In 2005, the operations of G & C Sanata came to an end because of similar difficulties experienced by the predecessor company.
Leasing of the Complex
In April 2007, the Government received a proposal from QAII for the leasing of the Sanata Complex for a multi-purpose investment involving: (a) a state-of-the-art printery; (b) an antibiotic and R & D facility; (c) a bonded duty-free pharmaceutical warehouse; and (d) a hardware warehouse. The proposal did not include any consideration as regards the well within the Complex. By Cabinet decision CP(2007) 5:3:T dated 15 May 2007, the land and buildings of the Complex were to be leased to QAII for a period of 99 years with an option to purchase any time after three years, on condition that the agreed investment programme involving US$27 million has been completed. The price was to be determined either by a mutually agreed valuer or the average of two recognized property valuers named at the execution of lease agreement. The lease agreement was signed on 4 June 2007 and did not include any reference to the well.
Agreement of sale and purchase
On 10 September 2010, QAII informed the Government that it was exercising the option to purchase the Sanata Complex. At the request of QAII, a valuation of the Complex was carried out as of 26 May 2007 which valuation came up to G$370.375 million, comprising land (G$269.200 million), and buildings and erections. The schedule of property relating to land makes reference to water being supplied via the main service provider GWI and on site storage reservoirs and overhead trestles. A similar wording pertains to the service providers Guyana Power and Light for electricity, and GT&T in respect of telecommunications services. The schedule did not include the well or any photographs of it. It is evident that the valuation did not consider the well being part of the assets of the Complex.
A similar valuation was carried out as of 25 June 2007 for the purpose of calculating stamp duty and Registrar’s fees, which valuation placed the value of the Complex at G$245.175 million, comprising land (G$130 million), and buildings and erections (G$115.175 million). Again, there was no evidence that the well was included in the valuation. At the request of NICIL, a third valuation was carried out which placed the value of the Complex at G$1.042 million.
On 26 October 2010 an agreement of sale and purchase was entered into, which made no mention of the well. The agreed sale price was US$3,489,324, equivalent to G$711.822 million. This amount represents the average between the valuation obtained by QAII and that obtained by NICIL. By Order No. 40 of 2010 dated 20th November 2010, the Sanata Complex was transferred to QAII. The Order was issued in accordance with the powers vested in the Minister of Finance by Section 8 of the Public Corporations Act. However, this section was not made applicable to NICIL which is a company incorporated under the Companies Act.
Conclusion
There is no evidence to suggest that the well at the Sanata Complex was the property of G & C Sanata (or its predecessor organization, Sanata Textile Ltd.) at the time when the agreement for the lease of the Complex was entered into between NICIL and QAII. In addition, neither the lease agreement nor the subsequent sale and purchase agreement makes any reference to the well. Further, the valuations of the Complex that NICIL relied on as the basis for arriving at the sale price did not include the well.
On the other hand, the evidence clearly shows that the well is the property of GWI since: (a) it is reflected in GWI’s assets register and hence its balance sheet duly certified by the external auditors; (b) GWI is paying the electricity bills as well as the cost of operation and maintenance of the well; and (c) GWI is collecting water rates from some 9,000 residents in the area. GWI is therefore a service provider and QAII, a customer of GWI.
