Planned GGMC $3b transfer intended for GuySuCo


Former President Bharrat Jagdeo yesterday confirmed that the Guyana Sugar Corporation (GuySuCo) was the final destination for $3 billion which government has been attempting to transfer from the Guyana Geology and Mines Commission (GGMC) to the Central Housing and Planning Authority (CHPA).

According to the former president, the funds are state funds and do not belong to the mining sector and the transfer was solving two problems at the same time. He said that the money in the GGMC treasury currently is earning less than 2% interest as opposed to the 5% per annum stipulated under the originally intended agreement with the CHPA and the struggling GuySuCo would be receiving a much needed influx of money. Jagdeo made the comments at a news briefing at PPP headquarters Freedom House, the first he has held since he demitted office in 2011.

Since January, the government has been trying to access the $3 billion from the GGMC for the CHPA – first by a loan agreement which has been challenged in court – and then by a direct transfer on the basis of Cabinet approval. The proposed loan was abandoned and Cabinet instead approved the transfer of $3 billion. The Cabinet decision said that the transfer was to support the “development of Housing Infrastructure projects in Mining Communities and other areas where Miners settlement occur.”

However, in the eye of the controversy, the GGMC sought legal advice from law firm, Cameron and Shepherd which advised that the agency couldn’t be directed to move money to another agency.

Government is still trying to access the money and Stabroek News understands that on Monday, the government solicited the help of two senior counsel and met with members of the GGMC to find alternative ways to tap the money.

Jagdeo’s comments yesterday marked the first time that the $3 billion was tied directly to the CHPA’s recent purchase of 1000 acres of GuySuCo lands which are to be transformed into house lots. Stabroek News has made multiple attempts to contact GuySuCo’s CEO, Rajendra Singh on the matter to no avail. Prior to yesterday’s press conference, there had been no public mention that the $3 billion was always intended to be transferred to GuySuCo.

According to Jagdeo, the opposition was starving the sugar industry and by extension, sugar workers. “There is no Parliament now and we know that GuySuCo needs help…the account now earns less than 2% so they (GGMC) are getting a commitment investing this money that will bring greater return to GGMC, we then help GuySuCo to get over their difficult period,” he said.

Analysts have argued that two state agencies should not be permitted to enter such a transaction outside of the Consolidated Fund. Such inter-agency transactions, they say, would lead to chaos in the public accounts and make a mockery of parliamentary oversight.

The revelation of the proposed loan in the media sparked concerns about government seeking to circumvent constraints on spending ahead of the May 11th general elections. The GGMC has claimed that it should not be seen as an isolated case and it has cited 33 instances where it provided financial assistance totalling over $8 billion between 2012 and 2015. The GGMC’s loan to the CHPA is the single largest outlay disbursed by the commission during that period. Additionally, the GGMC has said it made contributions to the Consolidated Fund in the sum of $6.8 billion from 2006 to 2012.

However, a legal challenge was filed and on February 27, acting Chief Justice Ian Chang directed the GGMC and the CHPA to account for the contentious $3B loan agreement signed by both agencies.

Following the court action, authoritative sources say that the Minis-try of Natural Resources and the Environment and the Ministry of Housing and Water presented a memorandum to Cabinet which approved the transfer of $3 billion to the CHPA to support the development of housing infrastructure projects in mining communities.

Cabinet’s approval of the $3b transfer differs from what the original intent of the loan was. The GGMC and the CH&PA in a joint statement on February 27th had said that the CH&PA project was “pivotal to the realisation of the Government of Guyana strategic target of allocating 30,000 lots under the Adequate and Affordable Housing Programme in order to maintain momentum in the provision of service land in several areas on the East and West Demerara.”

Sources say Cabinet’s decision referred to housing in mining communities and other areas where settlement by miners occurs. This amendment to the purposes of the financing appears aimed at making it relevant to the GGMC Act.  Some critics had argued that the proposed financing for housing in general was ultra vires the GGMC Act.

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