Sanata Complex deal… ‘We made a mistake’

Sanata Complex deal… ‘We made a mistake’ - We THOUGHT it was covered in law - Da Silva
Kaieteur News, July 30, 2008. | News
http://www.kaieteurnews.com/?p=3773

…Rovin Deodat stymies questioning at tax seminar

“We made a mistake…We thought it was covered in law.”
This admission was made by Head of the Guyana Office for Investment (Go-Invest) Geoff Da Silva, yesterday, during a discussion segment of the long-awaited seminar on Guyana’s Privatisation and Taxation Policies and Practices.
This position was confirmed by a piece of legislation tabled in the National Assembly last Thursday to amend the principal Act to include the Queens Atlantic Investment Inc deal.
The event was attended by scores of eminent businessmen and women, and was organised by the Privatisation Unit in collaboration with the Guyana Revenue Authority.
Notably absent was Chief Executive Officer of Demerara Distillers Limited (DDL), Yesu Persaud.
President Bharrat Jagdeo had suggested the forum on June 5 during the launch of the latest daily to hit the streets, namely the Guyana Times.
The forum was suggested in response to statements eminent businessman Persaud had made. In his remarks at the forum Persaud had said that concessions similar to those granted to QAII should be given to other local companies.
Opening the questioning segment of the seminar yesterday, Chartered Accountant Christopher Ram told the panel which included head of the Privatisation Unit Winston Brassington, GRA’s Commissioner General Khurshid Sattaur and Da Silva among others that there was a lot of talk of transparency but it appeared that there was a coordinated effort to misrepresent information with regard to a particular investment (QAII).
According to the eminent chartered accountant, “Had information not been leaked to the press there would have been no outcry for information that contributed to the seminar.”
Ram also posited that the deal with the adjoining six acres of land which John Fernandes Limited caused raised eyebrows.
JFL paid some $320M which was never placed into the consolidated fund so that its use would have to be approved by the National Assembly.
He posited that either somebody was over charged or somebody undercharged but it could not be both.
Regarding QAII investments, Brassington told the seminar that after the Chinese occupancy of the Sanata Textiles Complex in Ruimveldt came to an end in 2006, the government decided to tender out for investment proposals.
He said that the advertisements for the proposals were issued in December 2006 and ran until February 2007 after it was extended from January.
He also added that given that there was no suitable response from investors, at that time the government approached QAII to formulate a proposal.
In May 2007, QAII submitted its business proposal which the Privatization Unit approved that very month. On May 15 Cabinet approved the lease proposals.
Brassington also admitted that what was advertised and the negotiated deal was different.
When questioned as to how it is that a Memorandum of Understanding (MoU) between the two parties was entered into months after an investment deal was approved, Da Silva told the gathering that all investments do not require a MoU.
The MoU brought into force several subsidiary concessions and tax waivers such as a five-year tax free holiday, he said.
Brassington noted that with any long term lease there are two stages, namely the agreement for lease and the lease deal.
“The Cabinet decision said that tax incentives are to be granted in accordance in the law.”
He noted that the process of tax deals and concessions would be referred to then be left in the realm of the investor and Go-Invest, and sometimes other agencies such as GRA and the Privatisation Unit.
“It did take a while for the MoU to be concluded.”
He noted that the document that dealt with the incentives was only completed in March of 2008 although investment agreement was completed in 2007.
At this point in time Dr Rovin Deodat who was the Master of Ceremonies informed a member of the media who was posing questions about the investment that, “I don’t want this to become a press conference on a particular issue (QAII).”
This, he said, was due to the fact that there were several members of the private sector present who may want to question other issues.
Da Silva then went on to say that in an investment deal a MoU is not necessary.
“The MoU has to do with tax matters.”
According to Da Silva, the appealing part of the legislation was the Bio technology and the Textile aspect of the investment.
These, he said, were the investments that required the tax holiday. “We made a mistake…We thought it was covered in law.”