Introduction
If NICIL – the National Industrial & Commercial Investments Limited – was a play, it would be one that challenges Othello and King Lear for the dubious distinction of saddest tragedy ever written. And this is how the dramatis personae would be introduced:
Chairman of the Board: Dr Ashni Singh has the distinction of reporting to himself; credit for the undermining of the last vestiges of confidence in public accounting; lead authority on the use and mostly abuse of the Consolidated Fund and its offspring the Contingencies Fund; and credit for the largest financial sector failure under his watch;
Director: Dr Roger Luncheon, who thinks running a government and country is an opportunity to display verbosity and jest; who has merrily led the country’s National Insurance Scheme to the brink of the cliff and then casually denies reality; and who cannot distinguish a government company from a private company;
Executive director: Winston Brassington, who has been the architect or centre of almost every concoction or government initiative in the past fifteen years – the Queens Atlantic Investment Inc and its illegal tax holidays (later accepting the assignment to teach a private sector icon about the country’s tax laws); railroading the most costly financial package in setting up the Berbice River Bridge Company Inc and inducing and bribing investors with generous tax incentives; and the longest transitioning from the public sector to the private sector in Guyana’s history;
Auditor General: the benign Deodat Sharma, who moves from the stream of auditing (or not auditing) government transactions to the ocean of auditing where statutes on taxation and governance rule; where familiarity with deferred taxation and ever-changing IFRSs challenge the most seasoned accountants; who audits some of the country’s largest (government) companies in accordance with the Companies Act 1991 which does not recognise him as qualified to do such audits;
Regulators: such as the Registrar of Companies who was frightened off from demanding annual returns from the company for close to twenty years; the Commissioner General of the Guyana Revenue Authority who has not been able, for more than twenty years to collect a penny of Corporation Tax from Dr Luncheon’s “private company” despite several billion dollars of profit before taxation; or Property Tax despite the company owning at various times some of the most valuable state assets; or Capital Gains Tax despite the company acquiring premium assets at nil value and disposing of them at market value (except in the case of some friendly sales); and the national accounting regulator who has sat on two complaints for the equivalent of one year, unable or unwilling, maybe because the financial interest of its members, to pronounce on alleged egregious breaches of ethical and accounting rules and the Companies Act.
Making hay of delay
Apparently the Institute, applying a logic best understood by them only, decided to treat with the two complaints sequentially. From follow-up enquiries on these complaints, there appears some equivocation or evasion on whether or not this approach was reversed following stalling tactics employed by counsel retained by Ms Gitanjali Singh to deal with the complaint against her on the fundamental question of conflict of interest. After all, more than Ms Singh’s conduct is at stake here and it was no surprise that she resorted to Senior Counsel.
Minor players whose names or faces are supposed to lend credibility to NICIL: These include former Chairman and Minister of Finance Mr Saisnarine Kowlessar who would hardly have suspected how the company would come to define and represent some of the very values he represents; Mr Geoff DaSilva, Head of Go-invest, Ms Sonya Roopnauth, Budget Director and Ms Marcia Nadir-Sharma, NICIL’s Company Secretary, ever ready to sign corporate documents and defend the most offensive of corporate practices.
Ms Nadir-Sharma we recall was on television in September 2012 on the NCN’s outstandingly ironic debate on corruption, vociferously denying that NICIL had been in violation of the Companies Act and then rushing just over one year later to sign off on the statutorily mandated directors’ report for nine years – 2002 to 2010 inclusive – bearing no date but only the month: November 2012. Consequently, what NICIL and its directors could not and did not do in years could suddenly be done in just two months, a demonstration of political expediency trumping the law and governance. It is probably more than idle speculation that NICIL might have been taking advantage of the craven slothfulness of the Institute of Chartered Accountants which has delayed any consideration of a number of issues on the financial statements of the company and the conflicts of interest between the company and the Audit Office.
The plot
More important to the players however is the plot to take an entity established by the PNC government of Desmond Hoyte to oversee the privatisation process and make it in an instrument of circumventing the Constitution and other laws of Guyana. More specifically, it ensures the ignoring of Article 216 of the Constitution that requires all government revenue to be placed in the Consolidated Fund and bypass Article 217 which requires parliamentary approval for all public expenditure. The plot is devilish in its simplicity: vest state assets in the company which it then sells and uses as its own money to do as it pleases, whether to develop Pradoville 2, divert sewerage or mismanage road contracts or build a hotel.
Sitting in the pit of the theatre of the absurd are the politicians, including the main opposition party APNU, demonstrating a failure to understand or appreciate the deviousness with which their concerns over NICIL and other financial issues have been circumvented, and announcing in late 2012 that the government had become “more accountable”; the professional class more concerned about their economic well-being or about being victimised for their courage rather than standing up and speaking out for the financial well-being and fiscal rectitude of the country; and the public bewildered and bemused that the kind of maladministration for which NICIL has become a poster child continues to this day.
Financial summaries
Against this background Business Page commences a review of the financial statements and directors’ reports of NICIL for the years 2002 to 2010, the last year for which annual reports have been tabled in the National Assembly by Dr Ashni Singh. To carry out this function Dr Singh seamlessly changed hats from being the Chairman of NICIL to that of Minister of Finance. Here is a summary of the financial statements of the company – not the consolidated accounts of the group – for the ten years 2001 to 2010 as disclosed by the audited financial statements.
Statement of financial position
2001 2004 2007 2010
G$ M G$ M G$ M G$ M
Non-Current Assets 4 3,206 3,578 3,553
Current Assets 0 3,567 3,834 4,840
Total Assets 4 6,773 7,412 8,393
Capital & Reserves (52) 5,214 5,300 4,924
Non-Current Liabilities – 2 133 289
Current Liabilities 56 1,557 1,979 3,180
Total Equity & Liabilities 4 6,773 7,412 8,393
Statement of the Comprehensive Income
2001 to 2010
G$ M
Revenue 13,081
Profit Before Taxation 8,599
Taxation (473)
Profit After Taxation 8,126
Statement of Cash Flows
2001 to 2010
G$ M
Investing Activities
Acquisition of Investments (4,401)
Acquisition of Property, plant& equipment (2,321)
Disposal of Investments 2,065
Proceeds from Disposal of Property, plant & equipment 990
Movement in Investments 222
Reclassification of fixed assets 29
Net Cash flows from Investing Activities (3,415)
Financing Activities
Prior period adjustment (56)
Restatement to reflect unrecorded assets 3,381
Dividends Paid (7,577)
Grant Received 2
Revaluation Reserve 1,044
Net Cash flows from Financing Activities (3,205)
However, before addressing and analysing these I will use next week’s column to conclude the twenty year review of the banking sector in Guyana which I started last month. I do apologise for the untidiness of not completing that review before beginning the examination of NICIL’s financials, but my own efforts at data collection and research were less efficient than I had anticipated.
