IMF deal barred investment in unprofitable bauxite industry

- Luncheon says in $10M libel suit

Dr Roger Luncheon said yesterday that there were no moves to make any capital investments in the bauxite industry, as was done with the sugar industry, because bauxite was unprofitable and a pact with the IMF precluded any such investment.

Luncheon, Head of the Presidential Secretariat, was responding to questions during re-examination by Attorney Anil Nandlall as the $10 million libel suit filed by President Bharrat Jagdeo against Kaieteur News and columnist Freddie Kissoon continued before Justice Brassington Reynolds.

“I had indicated that the sugar industry was profitable until early 2000. I also indicated that the bauxite industry both at Linden and Berbice [was] unprofitable and attracted the considerable budgetary outlay that the central government funded annually to sustain the industry,” he said. This was in response to a question from Nandlall, seeking an explanation as to why government chose to privatize the bauxite industry rather than make capital investments as was done with sugar.

Luncheon said further that this was happening even before Jagdeo took office. He explained that central to government’s economic recovery policies, was an IMF programme and “the principal product of the Government of Guyana/IMF agreement was that recovery”.

As a consequence, he said, conditions the IMF imposed in the agreement with the government, called for the cessation of the transfer of public funds to the bauxite industry specifically Bermine and Linmine.

Luncheon told the court that it was due to this that the government could not have “retained ownership of the unprofitable bauxite industry at Bermine and Linmine and at the same time have an IMF agreement. The industry, needing capital, was exposed to the unenviable privatization.” He added that privatization was successful and the industry acquired investors that exceeded the $180 million that was received for the Skeldon Modernization Project.

Reference was later made to a number of state properties that were disposed of by the National Industrial and Commercial Investment Ltd (NICIL). Luncheon said he was aware of the transaction with Roraima Airways Limited. He explained that NICIL had the approval of Cabinet for its disposal and sale. As a result there was a public tender and from his recollection several tenderers responded and there was an evaluation. After this, Cabinet gave its no objection to the award. He said this tendering process had Gerry Gouveia (of the Roraima Group of Companies) as one of the responsive bidders. After negotiations with him, Luncheon said, the .5 acres was sold to the Roraima Company.

Explaining the disposing of property to Precision Woodworking, a company owned by the Bulkan family, he said that in this instance the asset was owned by NICIL and leased to the occupant. He said prior to NICIL acquiring this asset the agreement was essentially abandoned as the occupant was in arrears. An evaluation, he explained was done and the occupant was given an option – to take a lease or buy. Luncheon explained to the court that the occupant accepted the evaluation and agreed to accept the land by sale.

This was also the case with land now owned by John Fernandes Limited and Shaheed and Zameeda Feroze.

As regards the NICIL deal with Queens Atlantic Investments, Luncheon said that the Sanata Textiles Holding asset had earlier gone through the process he had earlier described. He said there was a lease to a Chinese firm which was abandoned. He said re-advertisement of the asset was futile and as such NICIL entered direct discussions under which a new lease could be offered.
It was on that basis that Queens Atlantic acquired a lease for that asset, Luncheon said.
Later, he was asked if he could identify an African Guyanese other than Mr George of Herdmanston Lodge to whom a piece of commercial property in Georgetown was transferred. Attorney for the defence Nigel Hughes objected saying that Luncheon had already answered the question during cross-examination. Nandlall’s contention was that the word “single” was used when the question was put to his chief witness. He said he was merely trying to find out if there were more.

The judge then crafted the question: “From your recollection are there any other African Guyanese who acquired property in commercial Georgetown?” Luncheon then responded with a location and a name. However, the judge said that he would only go as far as to record, “Yes, there were others”.

Following a series of objections, Nandlall asked for an adjournment. The case was set to continue today but according to Nandlall, Luncheon has to attend a Cabinet meeting and also had a post cabinet press briefing.
The case continues tomorrow.

The libel suit was prompted by a June 28, 2010 Kissoon article titled, ‘King Kong sent his goons to disrupt the conference’, in which Jagdeo is portrayed as an ideological racist who heads a government that practises racism.