Introduction
Very little would be known about Synergy Holdings Inc but for a remarkable display of journalistic persistence that deserves an award for champion investigative reporting, not derisive and unpresidential talk about the fabulous five unnamed “bitter old people.” The only “official” information available on the whole saga, other than the heady and often misleading pronouncements from the President and the Head of the Presidential Secretariat are:
1. the Request for Proposal issued by the Government of Guyana/National Industrial and Commercial Investments Limited (NICIL); and
2. a press release issued by the Ministry of Finance dated April 15, 2010 seeking to justify the award of the road contract to Synergy.
The successful bidder has been largely invisible, incommunicado and silent, apparently out looking for equipment and setting up an office it can call its own. From there it will direct and oversee the upgrading of 85 km of roadway, construction of 110 km of virgin roadway through forests and pontoon crossings at the Essequibo and Kuribrong rivers, and clearing a pathway along the roadways to allow for the installation of 65 km of transmission lines. No easy task.
Cake-shop, rum shop or talk shop
The roads and bridges have to meet certain standards that would allow for the passage of heavy vehicles under all conditions, including the torrential and sustained rainfall which takes place during several months of each year, often making even well-constructed roads impassable. The roads are not only for the purpose of transporting machinery, plant, personnel and supplies to the site located on the Kuribrong River which is a tributary of the Potaro River. They will need, over decades, to be in a constant state of repair to allow for regular traffic in some of this country’s most difficult terrain.
That the nearest current access point is the airstrip at Kaieteur Falls gives an idea where the hydro-project site is located, and what would be involved. Mr Motilall and his company are in diverse businesses with a range of skills, but road-building capacity and experience are not among them. How he managed to convince President Jagdeo and Winston Brassington’s NICIL that he could also build roads is a mystery. To actually build roads in such harsh and demanding conditions within the timeframe would require a miracle.
But for Guyanese this is not a matter of words in the cake shop, rum shop or talk shop, among the young, or any group of grumpy and bitter old people. If the road works do go wrong – and it will not need Murphy’s Law for that to happen – the entire hydro-project will be at risk and the centrepiece of the country’s LCDS in trouble. If we are to avoid that, we have to get it right every step of the way, every metre of it. Like the people of Uganda where Synergy’s connections are labouring over the construction of the Bujagali hydro-power facility, we will be left with a white elephant and a massive debt. The economy is already carrying the cost of the GuySuCo’s investment debts. Another mistake of that magnitude will be crippling. As the largest investment this country has even undertaken, this project cannot absorb further incompetence or corruption.
The bond and the insurance company
The construction has to take place within eight months, an ambitious and possibly unrealistic deadline set by no less a person than the President himself. To demonstrate the government’s seriousness, the RFP specifies that time is of the essence for the completion of the contract. If the contract is not substantially completed within that time the government of Guyana/NICIL can call in the bond issued by the Hand-in-Hand Insurance Company for the performance of the contract. But there is where things get murky and messy.
Part of the package to be submitted by the bidder is a bank bond (emphasis mine). Such a bond was not submitted by Synergy. It is possible that Mr Fip Motilall’s attempt to secure a bank bond did not succeed for the simple and practical reason that the country’s several banks did not consider Synergy a good risk for the project. Since the bank bond is a required content of the proposal submitted for consideration, failure to submit one should have led to an immediate rejection of Synergy’s bid.
Synergy could not get a bank bond so it presented to the Government/NICIL an insurance bond instead. No one knows what went on behind the closed doors of NICIL and whether there were any consultations among Synergy, NICIL and the Hand-in-Hand Insurance Company Limited (HIH) that led to an agreement that a bond issued by an insurance company would be accepted by NICIL as a substitute. This has never been publicly addressed by any of the parties and all we have is an unidentified source in the insurance company saying that it is relying on the commitment of the government/NICIL to the project as its security for the issue of the bond. None of the parties has sought to deny this. What happens if things go wrong and the government seeks to enforce the bond?
The Bank of Guyana’s role
The implications go beyond non-compliance with the RFP. It exposes policy holders of the insurance company to a potential loss of three hundred million dollars which would imperil its capital base and its operational capacity. It is as though Hand-in-Hand has learnt nothing from the experience of its subsidiary the Hand-in-Hand Trust (HIHT) which lost several hundreds of millions of dollars in Stanford and would have to consider itself lucky that the Bank of Guyana, as the financial sector regulator, did not step in and enforce the law regarding the impairment of capital.
Since that hit to HIHT’s financial statements, the Bank of Guyana has been assigned the role of regulator for the insurance sector and it ought to have considered whether the bond places the insurance company under any significant risk. The BoG should be concerned about the poor track record of the insurance company to carry out proper due diligence as so damningly demonstrated by Professor Clive Thomas in an exchange with Hand-in-Hand CEO Keith Evelyn.
Act 2 Scene 1 NICIL
But such considerations only matter to the few who are concerned whether the bid process was serious and legitimate. The steps towards, and the circumstances surrounding the award of the contract, invite the question as to whether or not the winner of the bid was decided in advance.
Enter NICIL, a state-owned company increasingly at the centre of much of government action that is wrong, illegal and unconstitutional and for which it has become a vehicle of convenience.
NICIL was never formed to do what it is now doing. It is a company operating under the Companies Act and the Public Corporations Act set up with its first purpose being to subscribe for, take or otherwise acquire and hold shares, stocks, debentures or other securities of any company, co-operative society or body corporate. To divert sewerage pipes, to hijack and hold public monies, to build roads and administer funds of the Guyana Geology and Mines Commission are simply out of its remit.
Here is a company that cannot keep its own books but was retained to keep the accounts of the Berbice Bridge Company Inc. In umpteen years it has not filed an annual return in accordance with the law but its CEO can find the time to perform corporate secretarial services to another company. As recently as March 2010, it continued to display its commingling role in state assets by shuffling property between Property Holdings Limited, NICIL and the Privatisation Unit, all of which are headed by Winston Brassington.
Its very role in the Synergy contract makes the whole transaction malodorous.
The Procurement Act
I now turn to an examination of that role. The Procurement Act 2003 regulates the procurement of all goods and services by a procuring entity. “Procurement” under the act means acquisition by any means, including purchase, rental, lease or hire-purchase, of goods, or services, or of construction services. A “procuring entity” is any ministry, department, organ or other unit, or any subdivision thereof, of the government that engages in procurement.
The Procurement Act allows for various types of tender boards while the Procurement Regulations 2004 sets out the value threshold that determines the type of board under which a particular tender would fall. With a value of $3 billion, the Amaila Falls Road Contract brings it squarely under the jurisdiction of the National Tenders Board.
NICIL is not the procuring entity but according to the RFP is the vehicle through which the Government of Guyana has acted to advertise for tenders and select the successful bidder. It is not known whether the government obtained advice on the matter from the Attorney General, its principal legal adviser, or whether NICIL acted on the advice of its in-house attorney Ms Marcia Nadir-Sharma, or whether the matter was considered by anyone.
What is known is that there is no provision in the Procurement Act for the National Tenders Board, or the government, or indeed any other tender board to delegate any of its powers and obligations under the act. I have seen correspondence issued by NICIL in respect of the Amaila contract and in none of it does NICIL indicate that it is acting as an agent for the government or any ministry.
To be continued
