A mining deal involving Presidential Advisor on Empowerment, Odinga Lumumba and the GGMC continues to raise ethical questions including whether there was a conflict of interest from the outset, and the propriety of President Bharrat Jagdeo’s intervention.
It recently came to light that Lumumba and his business partner Grantley Walrond – himself a former Commissioner of the Guyana Geology and Mines Commission (GGMC), had set up a company last year, Mariwa Mining, to which a prospecting licence for mining for gold and other minerals was approved. The approval of the mining licence came following a petition by Lumumba and Walrond to President Jagdeo and it has now been further disclosed that the two will now sell 100% of the company to Shoreham Resource Ltd of Canada for US$1M ($200M).
Following a report in the January 8, 2010 edition of Stabroek News headlined `Lumumba mining deal raises queries’, Lumumba and Walrond responded via a letter in the Sunday Stabroek of Janaury 10, 2010 in which they revealed among other things that the mining licence had been accorded to them after they petitioned President Jagdeo. Observers have said such a petition and its granting are clearly out of order as the matter should be strictly in the purview of the GGMC and the minister with responsibility for mining who is Prime Minister Sam Hinds.
In their letter, Lumumba who is the proprietor of McNeal Enterprises and Waldron, principal of Roraima Mining Company (RMC), stated that they entered into a deal and petitioned the President on the 10,880-acre property positioned on the left bank of the Mariwa River in Region Seven in the Essequibo. The pair stated that McNeal Enterprises was awarded a prospecting licence for gold and precious minerals in the Mariwa Sardine Hills area in 1991. McNeal then entered into an agreement with RMC whereby the latter acquired 85% interest in the property and this was approved by the GGMC.
The letter stated that RMC carried out some US$2,000,000 worth of exploration and other works on the property but the licence was revoked by the GGMC because the company failed to carry out its statutory obligations (rental payments) in a timely manner.
Stabroek News had reported on January 8, 2010 that the property in question was put up for auction by the GGMC sometime in 2007 and the property was purchased by miners Chunilall Baboolall and Alfro Alphonso for some $80M. RMC subsequently applied for and secured an injunction in the courts preventing the commission from proceeding with the sale of the property to Alfonso and Baboolall. This was acknowledged by Lumumba and Walrond in their letter and subsequent to the injunction, the sum paid on the property by Alfonso and Baboolall was requested by the pair and it was returned in full. It is unclear what caused Alphonso and Baboolall to withdraw from the matter. When contacted by Stabroek News, Alphonso said he had noted the matter but had nothing to say on it. Baboolall was in the interior and could not be contacted by Stabroek News. Stabroek News understands that RMC had paid a sum of US$20,000 to the GGMC for outstanding payments on the property prior to the injunction being applied for in 2007.
Walrond and Lumumba stated in the letter that they petitioned, President Bharrat Jagdeo to have a prospecting licence for gold and other valuable mineral on the property in question to a company to be incorporated by them by the name of Mariwa Mining Company Inc (Mariwa) and the President acting on the advice of the Prime Minister granted the petition and thereafter, the property was awarded to Mariwa by the GGMC after legal procedures were carried out as well as the GGMC advertising the property in the Official Gazette. GGMC Commissioner William Woolford gave testimony to this in a letter which appeared in Tuesday’s edition of the Stabroek News where he noted that prospecting licence holders are at liberty to enter into joint venture arrangements which he said is common in order to offset exploration works. It is unclear whether the Lumumba/Walrond petition entailed the payment for the property – considering the $80M that had been paid by Alphonso/Baboolall or the petition simply covered the continuation of prospecting similar to the earlier arrangements.
Lumumba’s position in the deal is being questioned on ethical grounds; with some asking whether his involvement isn’t a clear conflict of interest.
Lumumba is the presidential advisor on empowerment in President Jagdeo’s office and as such observers say there should be an arm’s length relationship between the two in terms of business arrangements. In this case there was no such distance – Lumumba/ Walrond appealed directly to Jagdeo. It is unclear whether Cabinet had any role in this process. Further, observers note that as the empowerment czar Lumumba should be fully engaged in empowering less well-off communities but this particular deal relates to his personal empowerment. Lumumba had previously gotten into hot water when he exported dolphins, while employed as a presidential advisor at the Office of the President, even though he was not a licensed wildlife exporter. Despite calls for his resignation over this matter, he remained in his post after offering an apology. Ironically, it was the controversy over the dolphins export which led to then Auditor General Anand Goolsarran resigning from the post.
Lumumba is also a member of the natural resources sub-committee of Cabinet, and this, observers say, would pose a serious conflict of interest. For example, Lumumba might be aware of which companies are interested in exploring and on which properties.
Further, the Code of Conduct of the Integrity Commission Act states that, ‘No person in public life shall- Provided that this provision shall not apply to gifts received on behalf of the State by any person in public life in the course of the performance of his official functions, (a) allow private interest to conflict with his public duties or improperly influence his conduct in the performance of his public duties;(b) allow the pursuit of his private interests to interfere with the proper discharge of his public duties’.
In addition the Act states that, ‘No person in public life shall, Provided that any conflict between his private interests and his public interest shall be resolved in favour of his public duties –(a) use his official influence in support of any scheme or in furtherance of any contract or proposed contract or other matter in regard to which he has an interest;(b) for his personal advantage, benefit or gain, make use of, or communicate to anyone except in the performance of his official duties, the contents of any document, or any information or matter acquired in the course of his official duties which are not available to the public’. The petitioning of the president is seen to clash with these provisions of the Integrity Act.
In addition, the matter of Lumumba and Walrond petitioning the President with the intention of carrying out mining activities on the property only to re-sell the property immediately to a foreign entity raises question about the seriousness and sincerity of their petition.
In a letter appearing in Thursday’s issue of the Stabroek News, activist Janette Bulkan stated that neither the Mining Act of 1989 nor the GGMC Act of 1979 gives the President power to grant prospecting licences. She stated that Article 31 of the GGMC Act allows the responsible minister, in this case the Prime Minister, to give ‘directions of a general character as a policy to be followed by the Commission in the performance of its functions’. She questioned by what authority the President granted a petition for a prospecting licenses ‘to one of his paid advisers on empowerment in his own Office of the President?’, a reference to Lumumba’s position in the deal and his post at OP.
Some within the industry are also asking how many times the GGMC could reasonably grant prospecting licences to RMC for the property in question, since according to them the mining regulations state that a licensee is expected to carry out works on a property being prospected within a required time, being a period of 3 years after a licence is granted, following which, the miner can make a request for extension of 1 year in advance of the 3-year deadline if he/she foresees that the requirement date cannot be met. After a 5-year period the licensee cannot apply for another extension unless a special order is granted by the authorities.
According to the Mining Act, under ‘Application for renewal of prospecting licence’, a person who holds a prospecting licence may apply, in accordance with the Regulations, for the renewal of the licence, but such application shall be made not more than twice. In essence, McNeal and RMC have held rights this property for 19 years without extracting minerals.
Some are also continuing to question a clause within the agreement between Shoreham and Mariwa where the former is expected to pay to Mariwa a sum of US$250,000 ($51.2m) for exploration data and work programmes of previous work carried out on the property when this information becomes the property of the GGMC when a property is put up for auction.
It becomes available to those interested in the property, in this case Shoreham Resources.
Shoreham Resources announced late last month that it is pursuing a letter of intent (LOI) which would ultimately see the company acquiring 100% interest rights in the Mariwa Mining company which had applied and had its application for a prospecting licence in the Sardine Hill property in the Essequibo approved by the authorities here. The licence was approved by the GGMC on December 28 last and Shoreham issued its release on December 30.
According to the release from Shoreham Resources, the Sardine Hill property is subject to a systematic evaluation and the company plans a compilation of all previous work and rapid advancement to systematic drilling this year.
The company, based in Langley, British Columbia, Canada, stated that the Sardine Hill property is a high priority opportunity for the company as a result of its heritage of previous work, proximity to established infrastructure and a style of mineralization amenable to large scale development.
Shoreham has also entered into an agreement with another overseas–based company, Mulgravian Ventures Corp., in which the company has granted Mulgravian the option to acquire a 51% working interest in its pursuit of the Sardine Hill Property.
According to the company’s website, a budget of US$1M has been allocated for the first year’s work on the Sardine Hill property.
Observers say that if the deal is finalized it could come immediately under scrutiny by the Extractive Industries Transparency Initiative (EITI) with which Guyana is supposed to enter into formal dialogue based on the recent Memorandum of Understanding between Guyana and the Kingdom of Norway on the protection of forests.
The EITI is a global standard that promotes revenue transparency. It monitors and reconciles payments and government revenues at the country level. The process is overseen by participants from the government, companies and civil society.
EITI says the investment climate is enhanced by implementing the initiative. “The commitment to reconcile company payments and government revenues via a multi-stakeholder process signals a commitment to good governance.
Companies benefit from the improved investment climate that follows from transparency and good governance.”