Former Auditor General Anand Goolsarran says the procurement laws must be followed by government-owned Atlantic Hotels Inc (AHI) in the development of the US$58 million Marriott Hotel, while challenging the claim by Director Winston Brassington that the financing is a privatisation transaction.
When asked in a recent interview with Stabroek News whether the Marriott transactions should not be governed by the Procure-ment Act, Brassington said that because it is a public-private partnership, which he called one form of privatisation, it was properly carried out under the Privatisation White Paper of 2003 and not under the Procurement Act.
“Public-private partnerships are actually considered to be one form of privatisation. We generally adhere to the principles of transparency and public advertisement. The Procurement Act is not specifically applicable in this situation. What we did is consistent with the Privatisation White Paper,” Brassington said during the interview.
Goolsarran, the President of Transparency Institute of Guyana Inc. (TIGI), begged to differ, noting that there is no element of privatisation in what the National Industrial and Commercial Investments Limited (NICIL), through AHI, is doing.
“With AHI carrying out the construction of the hotel – that is not privatisation,” Goolsarran said. “The government, through NICIL, has 100 percent ownership of AHI. In effect, AHI is owned by the government and therefore a state-owned entity and therefore procurement rules governing state-owned entities must apply,” he explained.
“We are not talking about privatisation…. What have they privatised as far as AHI is concerned? We are talking about an entity which has been created as a state institution [and] therefore must follow the procurement rules,” he said.
Asked whether according to Brassington public-private partnerships could be considered a form of privatisation, Goolsarran said, “Absolutely not.”
He explained that privatisation is where you have a state institution and you want to give it up, sell it or remove state control. “Therefore the Privatisation White Paper talks about how you identify the entities, what procedures you must follow to sell the entity to ensure the state gets the best price. That is privatisation,” he said.
“NICIL is a state-owned institution. NICIL has created AHI to build a hotel. This has nothing to do with privatisation. This is where a state institution is involved in building a hotel. Whether or not it is public-private partnership, it is a state institution that is involved,” he said. “Public-private partnership is one of the methods used for [project development]. It is not privatisation,” he said.
While Brassington cited the 1993 Privatisation White Paper as governing the transaction, since then “so many things have happened,” Goolsarran said.
“In 2001, we had the Constitutional review. In 2003, we had the Procurement Act of 2003, and Fiscal Management and Accountability Act of 2003. Then we had the Audit Act of 2004,” he said. “Obviously, any privatisation paper would be overtaken by subsequent legislation. A privatisation paper does not have the effect of law. Any legislation will supersede the requirements of the Privatisation White Paper,” he argued.
He noted that the privatisation paper speaks about procedures for the identifying and privatising state entities in an accountable and transparent way, with a view to ensuring that the state gets the best deal.
Goolsarran said that back in the early 1990s, he was part of the discussions to set up the rules for the Privatisation White Paper “because I had queried the privatisations done under the PNC.” He said that absence of transparency and secrecy characterised those PNC privatisations. “Nobody knew whether the state was getting value for money. The legislators and the public had no say in what should and should not be privatised,” he said. “This was under [former President] Desmond Hoyte and when then Minister of Finance Carl Greenidge was there,” he said.
Goolsarran said that these privatisations were rapid and opaque in a rush to meet International Monetary Fund (IMF) requirements for reducing the public sector through privatisation. “The 1992 elections were coming, so they had a short window of time to do things to turn the economy into a market economy. So there was this mad haste to privatise and therefore they did not follow all of the procedures,” he said.