Jagdeo calls for swift naming of new GuySuCo board

-flays debt ceiling hike

Opposition Leader Bharrat Jagdeo has called for the swift naming of a Board for the Guyana Sugar Corporation even as he questioned how the $30B sourced for the corporation’s revitalization is being spent.

“Appoint the board, that is my advice,” Jagdeo urged the government yesterday.

He also bemoaned government’s recent $50B loan hike ceiling saying that not only was it now tied to GuySuCo’s $30B but that it signals future increased borrowings and those plans are troubling.

Signaling intense scrutiny of the $30B bond taken for GuySuCo, Jagdeo said that the corporation needs an accountability body more so now given the significant revenues borrowed.

“We heard they collected an advance, we don’t know how it is being spent, we don’t know what assets are being used to collateralize it, we don’t know what the backroom negotiations were so we have huge problems with this one,” he said.

“They have not defined even for the future how they intend to spend it, in fact there is no board at GuySuCo up to now. I don’t know who is borrowing all that money for Guysuco who is on what decision and there is no board,” he added.

But Minister of Agriculture Noel Holder yesterday said that the selection of a board cannot be rushed and its formulation was being worked on.

“It is a work in progress…the Board should be in place by the end of May. Now get me correctly because I didn’t say would I am saying should,” he told Stabroek News when contacted.

While noting that the government has the authority to intervene in the appointment of the board of GuySuCo, Minister of State Joseph Harmon, late last month said that the matter was engaging the attention of Cabinet, while informing that government was seeking to select persons who have knowledge about the industry.

“The matter is before Cabinet. Cabinet is deliberating on it and at the appropriate time a cabinet decision will be made,” Harmon said.

Last month, confusion erupted after it was advertised that Colvin Heath-London, who heads the Special Purpose Unit (SPU) overseeing the divestment of some of GuySuCo’s assets, was the new Chairman of the GuySuCo Board. The impression was created that Professor Clive Thomas was no longer performing that function. However, Minister of Finance Winston Jordan later clarified that Thomas remained Chairman as Cabinet had deferred a decision on a replacement. Cabinet documents appointing Heath-London and a new board had been sent out without approval of the full Cabinet and these appointments were to be recalled.

Harmon had pointed out that Cabinet was having “healthy discussion and debate on the matter.”  He said that Chief Executive Officer of GuySuCo Paul Bhim and Heath-London had subsequently been before Cabinet. He said that it was then that Cabinet was “given a full brief as to the state of the company … and so we believe that based on that information, which was provided to us, that cabinet could cogitate on the matter very seriously and we will get an announcement of a board for GuySuCo in a very short space of time.”

And using the $30B bond taken by GuySuCo and the Marriott Hotel financing as examples, Jagdeo blasted government’s recent decision to raise the current loan guarantee ceiling to $50B saying that the move has increased government’s liability risks.

“After the speaker said the business was done for the day I packed up and I left. They reopened the whole issue. They passed this amendment to be applicable to any loans that they take. I suspect this is to facilitate the $30M bond and maybe the bridge across the Demerara River [The New Demerara River Crossing],” he said.

“Then Jordan…gave an extraneous explanation on how they are doing better on this bond, and we are not sure this is a bond as yet because they use the words bond and loan interchangeably and they’re very, very different things. But he said we had a lower interest rate than they had at the Marriott. In case of the Marriott’s failure to service the loan then the government will have to step in and service the loan. The intention was to sell that project in the first place. So once you sold that property it was the private developer’s responsibility to service the loan not the government. The hotel’s assets would be used to collateralize the loan. In case that person, who owns … they fail to service the loan, the bank can levy on the property. But he has now brought that into the treasury. The loan was collateralized using the assets of the Marriott not the consolidated fund. This is like a simple explanation. He has just exposed us to a huge liability again on the Marriott by taking the loan and bringing it to the treasury. I suspect he is going to do the same thing for this $30B facility they are negotiating now,” he added.

‘Better place’

In presenting the motion last Thursday, the Minister of Finance had noted that in light of government’s impending guarantee of a $30 billion syndicated bond for GuySuCo “it has become urgent” that government is able to stand guarantor.

He cited the Guarantee of Loans (Public Corporations and Companies) Act Sections 3 (1), 2(2) and 4 (1) which before Friday specified that the aggregate amount of liabilities of government as guarantor shall not exceed $1 billion.

However Jordan told the House that “It has become necessary to specify a greater sum for the purpose of enabling aggregate amount of the liability of the government in respect of the guarantees to be increased in respect of those incorporated bodies to which the act applies in accordance with developmental policy”.

He noted that in 2013 an increase to $50 billion was approved in relation to the Amaila Falls Hydropower Project but now the need is for the same provision to be available to other developmental projects as determined by the government.

But Jagdeo rejected Jordan’s arguments saying that in 2013 the increase was for a single project and not for aggregated commitments, the latter point he feels opens the country to liabilities since all corporations’ loans can be tied to the state’s coffers.

He echoed statements his party made in relation to the motion where it expressed fear that the nation will only learn of the bankrupt state of the country when it is too late.