As a result of the institution of criminal charges for Misconduct in Public Office against Dr. Ashni Singh, former Minister of Finance and Mr. Winston Brassington, former Chief Executive Officer (CEO) of NICIL, the privatisation and divestment of state assets have come to the fore, once again.
During the latter years of the PNC Government (1989-1992), confronted by economic bankruptcy and a financial crisis, the Desmond Hoyte Administration rushed to the IMF for assistance. The IMF, immediately, issued a cease order against public funding of certain state entities and recommended the divestment of these entities. Absolutely no policy or guidelines were established for the disposal of these assets. Similarly, no singular agency was tasked with the responsibility of executing this divestment drive. Most of these Agreement of Sales were signed by the then Confidential Secretary to President Hoyte!
When one examines the transactions, certainly, market value was not a consideration upon which these sales were predicated. Most of these transactions were so egregious and reeked of corruption.
It is apposite that I set out the details of some of these transactions, not only to jolt memories of those who may have forgotten them but also to educate our young people. The following excerpt is taken from the Guyana Journal 2007, authored by Odeen Ishamael (The Rush towards privatisation 1989-1992).
1. Demerara Woods Ltd.
There were indeed some controversial privatization deals which took place. The one that received the most publicity was the sale of Demerara Woods Ltd. Lord Beaverbrook, a former treasurer of the British Conservative Party, bought the entity in February 1991 for £9.7 million. He also negotiated and obtained a 50-year lease for 1.1 million acres of rain forest. Just two months later, in April 1991, he sold his interests to United Dutch Company for £61 million worth of equity in that firm. The new complex was re-named Demerara Timbers Ltd. Even though Beaverbrook had up to mid-1992 not finished paying the Guyana government for Demerara Woods, he merged the enterprise into the giant United Dutch Company which took control of Demerara Timbers of which he remained a major shareholder.
By 1992, United Dutch valued Demerara Timbers at £74 million! The rainforest concession alone was estimated at between US$160 million to US$206 million.
2. Guyana Timbers Ltd.
The book value of the firm was stated at US$130 million, but it was sold for only US$23.2 million in 1991. Registration fees for its Houston operations amounting to US$178,590 were waived, as were the duty of US$892,900, for the property transfer, and fees of US$555,810 for the firm’s Winiperu operations – a cumulative sum of US$1.6 million.
The new firm, styled Caribbean Resources Ltd., continued operations under its new owner, the Caribbean Life Insurance Company (CLICO) of Trinidad and Tobago.
3. National Paint Company Ltd.
This efficient profit-making entity was sold in May 1991 to Stephen Giddings, an overseas-based Guyanese, for US$1.15 million. Giddings lodged US$200,000 as a down-payment and was given until 1993 to pay the rest at 6 percent interest, at a time when the market rate for interest on industrial loans and credit ranged from 35 percent to 40 percent.
Workers at the company had actually made a bid for the entity since 1989. Their bid on May 10, 1989 was US$1.0 million, but after some hesitancy on the part of the government, they increased their offer to US$1.2 million. This sum was equivalent to G$150.2 million in 1991, as compared to Giddings’ offer which was equivalent to G$142.6 million.
Naturally, the workers were very peeved over this sale since their offer involved a down-payment of US$404,000 at the signing of the agreement and US$808,000 in two equal annual instalments.
Interestingly, another bidder was a Caricom paint company, Mc Enearney Alstons Group, which offered US$1.5m, with the group owning 51 percent of the equity, government 24 percent and the workers 25 percent.
It should be noted that the down-payment of US$200,000 by Giddings was less than the net value of the stock, outstanding debts owed to the company and other pre-payments minus payments to creditors, which meant that the government of Guyana, in real terms, actually financed the purchase of the company by the new owner!
4. GRMMA complexes
The GRMMA complexes at Black Bush Polder and Corriverton were sold off in August 1991 to the foreign firm, Curacao Investment Trust Company Ltd., for US$3.8 million. But these companies were valued at US$14.9 million. The same firm had earlier bought other GRMMA complexes at Ruimzigt and Wakenaam for US$2.5 million. The value of both complexes, complete with installations and fertile lands, was US$8.5 million.
At Anna Regina, the GRMMA complex, valued at US$14.2 million, was sold to a St Vincent firm for US$4.2 million and was renamed “Caricom Rice Mills Ltd.”
The sale of these complexes raised much concern among local investors. The problem was not only the sale price, but also the fact that local investors who made higher bids for the entities were ignored. No reasons were given for the rejection of their higher bids.
5. Guyana Telecommunications Corporation
The Guyana Telecommunications Corporation (GTC), which was a profit-making business and net foreign exchange earner, was sold off in late 1990 to Atlantic Tele-Network (ATN), based in the US Virgin Islands for US$16.5 million. The GTC was at the time suffering from bad management, but at the time of sale, it had some G$400 million in bank “liquidity” and outstanding sums due and payable to it, and was earning a net figure of about US$2 million to US$4 million annually.
Based on the sales agreement, ATN acquired 80 percent of the enterprise, with the government retaining the remaining 20 percent. There was much local criticism of the government for disposing of the company for such a low price, and the PPP expressed the view that at least 20 percent of the entity should have been offered to the Guyanese private sector.
The new privatized entity, under the name Guyana Telephone & Telegraph Company Ltd. (GT&T), began operations in January 1991.
When the PPP assumed Government in 1992, the IMF programme was still in place. However, in contrast to the PNC approach, one of the first things that the Cheddi Jagan Administration did was to lay in the National Assembly, a White Paper that comprehensively set out the principles by which the Government will be guided, in relation to disposal of state assets. Primary among those guidelines were that the assets were to be disposed of by a Privatisation Unit and the Government owned and controlled NICIL, and the mechanism for disposal was a transparent public bidding and tendering process. This White Paper was unanimously approved in the National Assembly. Significantly, the combined composition of the Privatisation Unit and the NICIL board consisted of a partnership between representatives of the Government and representatives of the labour movement, the private sector, the Parliamentary Opposition and the consumer organisations. Finally, every sale was to receive the imprimatur of Cabinet. The PPP also re-introduced the scrutiny of the Auditor General, who enjoyed an unhindered mandate, to audit these sales and transmit the audit report to the National Assembly for it to be examined by the Public Accounts Committee (PAC), chaired by an Opposition Member of Parliament (MP). Audited Financial Statements of NICIL were also laid annually by the Minister of Finance in the National Assembly. Additionally, periodic publications of the details of these sales, including a description of the properties, the purchase prices, the purchasers and the dates of the public tender/advertisements were done and disseminated to the press and the public and laid in the National Assembly.
The three transactions, which formed the subject of the criminal charges filed against Singh and Brassington, largely, complied with the aforementioned procedures. There is no allegation of dishonesty in the charges because there is no evidence of the same. Certainly, the properties were sold at prices determined by market forces. In short, these men are charged for simply discharging the functions of their office and executing the directions of their superiors. Had they not done so, they would have been liable to be dismissed and perhaps liable to be charged for Misconduct in Public Office.
The charges are therefore, at best, a travesty of justice and at worst, nonsensical. The Director of Public Prosecutions’ (DPP) refusal, thus far, to terminate these charges remains one of the crudest abdications of the constitutional responsibilities of that office, in recent times.