Public Accounts Committee blasts home ministry, police over contract splitting
Stabroek News news item. Tuesday June 3, 2008 In News
http://www.stabroeknews.com/?p=14081
The Public Accounts Committee (PAC) of the National Assembly yesterday lambasted the Guyana Police Force and the Ministry of Home Affairs for the practice of contract splitting to avoid adjudication by the Departmental Tender Board.
And in response, the ministry said it has taken note and will take steps to correct the situation.
The PAC is currently considering the Auditor General’s Report for the year 2005 and is perusing the sections for the regional administrations, ministries and government departments.
Winston Murray, who yesterday performed the duties of Chairman as Volda Lawrence was out of the country, had cause to chide Permanent Secretary of the Ministry of Home Affairs Angela Johnson for irregular procurement practices and poor adherence to laid down rules governing aspects of spending for that ministry – including the Guyana Police Force.
“You need to be cognizant of the Procurement Act and ensure compliance since there are penalties,” Murray told the team which included officers from the Guyana Police Force, the Guyana Fire Service and the General Registrar’s Office. “You have to be careful. These are not proper procedures for procurement,” Murray said.
He further inquired whether the police had instituted systems for double checks to be made so that procedures would be followed to the letter.
In one instance, the police purchased military kits in 90 instances totalling $7.94M. The Auditor General’s Office in its report for 2005 said these purchases were sub-divided to avoid the adjudication by Departmental Tender Board. According to the report, the head of the budget agency explained that this practice had since ceased and corrective action had been taken.
Further, the report had found that the sum of $151.558M was spent on office materials and supplies. There were 41 instances of breaches of tender board procedures. The report said that an audit examination revealed that Ministerial Tender Board approvals were not seen for five payments amounting to $2.7M and 28 payments valued at $2.2M were subdivided to avoid the adjudication of the Departmental Tender Board.
The Auditor General also commented that for the year 2006, tender board procedures commented on in 2005 were still not being adhered to.
Replying to the PAC, Johnson said the breaches were regrettable and that public tender had been invited for other supplies. She promised to make the necessary changes that will ensure compliance with established norms with regard to procurement.
Tuesday, June 3, 2008
EU micro projects held up after gov’t withholds support
EU micro projects held up after gov’t withholds support
Stabroek News news item. Tuesday June 3, 2008
By Nigel Williams
http://www.stabroeknews.com/?p=14079
The Guyana Government has withdrawn its endorsement of a number of micro projects being funded by the European Union (EU), frustrating more than 30 groups across the country, and putting in jeopardy close to $200M, which was set aside for the programme.
As the deadline for the implementation nears, project coordinators are fearful that Guyana would lose out on the EU funding.
It is not clear why government has withdrawn its endorsement of the proposals. This newspaper was told that in late April the administration had agreed to some 39 projects but subsequently withdrew its approval late last month. Contacted for a comment yesterday the EU Delegation in Guyana would only say that the Guyana government was managing the programme, which is being implemented by the Micro Project office and a board. The EU could not say why the projects were being held up.
Stabroek News was unable to make contact with Minister of Finance Dr Ashni Singh who is the National Authorising Officer, his deputy, Tarachand Balgobin said he could not speak about the withdrawal of the government endorsement. Efforts to get a comment from Cabinet Secretary Dr Roger Luncheon proved futile.
Programme Manager of the Micro Project Office, Jimmy Bhojedat, when contacted on the matter told Stabroek News that he had been aware of an earlier endorsement by the government, but he was subsequently advised to hold off on inviting applicants to sign their contracts. Bhojedat said like many other persons he did not know why there was a change, although he acknowledged that he had sought to find out, but got no answer. He said however, as far as he was aware there might be some discussion going on regarding the hold up.
“I have received several calls from persons who submitted proposals… every day people are calling,” Bhojedat commented.
Stabroek News was told that the decision to withhold support for the contracts was made at the level of cabinet. A source close to the programme told Stabroek News that ever since the initiation of the programme the Jagdeo administration has had problems endorsing some projects, which according to reports are from groups that it has concerns over. The source said it was a pity that government would choose to use politics against such groups.
“If the process is further delayed without any explanation from the government the money will go back to Europe,” the source said, adding that civil society should be given support in any society. According to the source, for this round of projects which started in February some 100 proposals were submitted. The board however approved 52 from which 11 were eliminated when they reached the Ministry Of Finance and the EU.
“Both the EU and Government agreed to 39 projects and the government wrote to the board late April indicating this,” the source said. However late last month, the board received word from the administration that it had revoked its ‘no objection’ to the proposals under the full applications scheme where funding is at a higher value of $95.36M and the fast track scheme valued at $78.160M. This newspaper was told that following government’s April endorsement of the applications the micro project office was preparing to invite the applicants to its office to sign their contracts, but this had to be put off.
Lloyda Angus of the Trafalgar/Union Communion Development Council, one of the several groups that applied for funding to run off projects told Stabroek News yesterday in an invited comment that she was appalled at the hold up of the projects. She said that she had vented her frustration at the Micro Project office for the delay, but later she got to realize that it was the government that was responsible. The West Coast Berbice group had proposed to set up a poultry-rearing enterprise with the view of bringing relief to residents of Numbers 28, 29 and 30 Villages. Sixteen persons from the respective communities were to benefit from the project, which Angus said was needed in the communities where jobs are scarce and the living standard poor. The group had requested just over $7M, but was granted $5.3M, Angus told Stabroek News. “I know all along that something was going wrong because some of the agencies like Go-Invest and Ministry of Agriculture who had agreed to partner with us are now showing no interest,” Angus lamented.
The Ithaca Agricultural Land Development Associa-tion; Maria’s Lodge Voorburg Shantille Cane Farmer’s Cooperative on the West Bank Demerara; First Assembly of God Wortmanville-Genera-tion Next group and the Blankenburg Women’s Group for Social and Economic Empowerment are among the 39 applicants whose projects had been approved but are now being held up.
Under the programme, which began in 2005, groups are invited to submit proposals for funding on micro projects. Bhojedat said his office would ensure that all the requirements were met by applicants before passing on the proposals to the micro project board, which would review and evaluate the proposals before crafting a short list, which is sent to the European Commission and the Guyana Government. He said the final decision rests with the administration to approve the contracts.
Vulnerable
Giving a little background to the programme, Bhojedat said that this round of contracts would have been the third since the programme was launched in 2005. He said so far they had approved 104 contracts, noting it was the first time they had encountered this difficulty in administering the scheme. The thrust of the programme is to improve the socio-economic conditions of vulnerable groups through the development of sustainable and participatory self-help schemes. The programme will come to an end later this year and according to Bhojedat, August 17 was the deadline for the implementation of all projects. Asked what would happen if the situation remains the same, Bhojedat said the money would likely be returned to Europe. He said if government gives a belated endorsement the parties (EU and Government) could agree to an extension of the implementation dead line. “But that is entirely out of my remit it is a matter for the government,” Bhojedat asserted.
In an advertisement earlier this year inviting proposals from members of the public, the Micro project office had indicated that within the available budget frame the bilateral financing of micro projects is based on a 75% government support with a ceiling of $2.6M under the Fast track procedures and the remaining 25% coming from the beneficiaries can be cash or kind. For this round of contracts that has been held up proposals were only considered in the employment/income generation sector.
Stabroek News news item. Tuesday June 3, 2008
By Nigel Williams
http://www.stabroeknews.com/?p=14079
The Guyana Government has withdrawn its endorsement of a number of micro projects being funded by the European Union (EU), frustrating more than 30 groups across the country, and putting in jeopardy close to $200M, which was set aside for the programme.
As the deadline for the implementation nears, project coordinators are fearful that Guyana would lose out on the EU funding.
It is not clear why government has withdrawn its endorsement of the proposals. This newspaper was told that in late April the administration had agreed to some 39 projects but subsequently withdrew its approval late last month. Contacted for a comment yesterday the EU Delegation in Guyana would only say that the Guyana government was managing the programme, which is being implemented by the Micro Project office and a board. The EU could not say why the projects were being held up.
Stabroek News was unable to make contact with Minister of Finance Dr Ashni Singh who is the National Authorising Officer, his deputy, Tarachand Balgobin said he could not speak about the withdrawal of the government endorsement. Efforts to get a comment from Cabinet Secretary Dr Roger Luncheon proved futile.
Programme Manager of the Micro Project Office, Jimmy Bhojedat, when contacted on the matter told Stabroek News that he had been aware of an earlier endorsement by the government, but he was subsequently advised to hold off on inviting applicants to sign their contracts. Bhojedat said like many other persons he did not know why there was a change, although he acknowledged that he had sought to find out, but got no answer. He said however, as far as he was aware there might be some discussion going on regarding the hold up.
“I have received several calls from persons who submitted proposals… every day people are calling,” Bhojedat commented.
Stabroek News was told that the decision to withhold support for the contracts was made at the level of cabinet. A source close to the programme told Stabroek News that ever since the initiation of the programme the Jagdeo administration has had problems endorsing some projects, which according to reports are from groups that it has concerns over. The source said it was a pity that government would choose to use politics against such groups.
“If the process is further delayed without any explanation from the government the money will go back to Europe,” the source said, adding that civil society should be given support in any society. According to the source, for this round of projects which started in February some 100 proposals were submitted. The board however approved 52 from which 11 were eliminated when they reached the Ministry Of Finance and the EU.
“Both the EU and Government agreed to 39 projects and the government wrote to the board late April indicating this,” the source said. However late last month, the board received word from the administration that it had revoked its ‘no objection’ to the proposals under the full applications scheme where funding is at a higher value of $95.36M and the fast track scheme valued at $78.160M. This newspaper was told that following government’s April endorsement of the applications the micro project office was preparing to invite the applicants to its office to sign their contracts, but this had to be put off.
Lloyda Angus of the Trafalgar/Union Communion Development Council, one of the several groups that applied for funding to run off projects told Stabroek News yesterday in an invited comment that she was appalled at the hold up of the projects. She said that she had vented her frustration at the Micro Project office for the delay, but later she got to realize that it was the government that was responsible. The West Coast Berbice group had proposed to set up a poultry-rearing enterprise with the view of bringing relief to residents of Numbers 28, 29 and 30 Villages. Sixteen persons from the respective communities were to benefit from the project, which Angus said was needed in the communities where jobs are scarce and the living standard poor. The group had requested just over $7M, but was granted $5.3M, Angus told Stabroek News. “I know all along that something was going wrong because some of the agencies like Go-Invest and Ministry of Agriculture who had agreed to partner with us are now showing no interest,” Angus lamented.
The Ithaca Agricultural Land Development Associa-tion; Maria’s Lodge Voorburg Shantille Cane Farmer’s Cooperative on the West Bank Demerara; First Assembly of God Wortmanville-Genera-tion Next group and the Blankenburg Women’s Group for Social and Economic Empowerment are among the 39 applicants whose projects had been approved but are now being held up.
Under the programme, which began in 2005, groups are invited to submit proposals for funding on micro projects. Bhojedat said his office would ensure that all the requirements were met by applicants before passing on the proposals to the micro project board, which would review and evaluate the proposals before crafting a short list, which is sent to the European Commission and the Guyana Government. He said the final decision rests with the administration to approve the contracts.
Vulnerable
Giving a little background to the programme, Bhojedat said that this round of contracts would have been the third since the programme was launched in 2005. He said so far they had approved 104 contracts, noting it was the first time they had encountered this difficulty in administering the scheme. The thrust of the programme is to improve the socio-economic conditions of vulnerable groups through the development of sustainable and participatory self-help schemes. The programme will come to an end later this year and according to Bhojedat, August 17 was the deadline for the implementation of all projects. Asked what would happen if the situation remains the same, Bhojedat said the money would likely be returned to Europe. He said if government gives a belated endorsement the parties (EU and Government) could agree to an extension of the implementation dead line. “But that is entirely out of my remit it is a matter for the government,” Bhojedat asserted.
In an advertisement earlier this year inviting proposals from members of the public, the Micro project office had indicated that within the available budget frame the bilateral financing of micro projects is based on a 75% government support with a ceiling of $2.6M under the Fast track procedures and the remaining 25% coming from the beneficiaries can be cash or kind. For this round of contracts that has been held up proposals were only considered in the employment/income generation sector.
Monday, June 2, 2008
Govt. acknowledges Freedom of Information Act is inevitable…AFC leader says he is now optimistic
Govt. acknowledges Freedom of Information Act is inevitable…AFC leader says he is now optimistic
Kaieteur News news item. 2 June 2008
Leader of the Alliance For Change (AFC), Raphael Trotman, says that following four days of deliberations, where the Freedom of Information Act (FOIA) was given significant prominence, he was now more comfortable that the process of implementing the act constituted moving forward.
This was noted by Trotman in an invited comment at the close of the Guyana Workshop on Parliament and the Media on Friday.
The activity was well attended by Members of Parliament from both sides of the House, as well as international resource personnel, including Baroness Valerie Amos; Toby Mendel of Article 49, a London-based organisation for freedom of expression; renowned Caribbean journalist Sasha Mohammad; Trinidad and Tobago’s Minister of Information Neil Parsanal; John Barrit, a Bermudan MP, as well as John Heppel, a UK MP.
In an interview with this newspaper following the workshop, Trotman said that he was heartened to hear Prime Minister Samuel Hinds and other Government ministers acknowledge that the implementation of the Act was inevitable.
He posited that even though he is a lot more comfortable with the process now, he is being cautiously optimistic. He added that in a way he feels vindicated that an idea is gaining momentum towards becoming a reality.
He, however, posited that the gained momentum will see him forcing the Bill through the National Assembly in a hurry.
According to Trotman, the idea of freedom of information must now be expanded from the political realm to that of a multi-stakeholder-driven agenda, noting that everyone -- not just politicians -- must become involved in the process, and consensus must be arrived at.
The move to pass and implement the bill is even closer to reality, given that the participants of the workshops drafted a list of recommendations to be addressed.
Some of these are that “Guyana should enact Freedom of Information legislation within a clear time frame, and should thereafter make efforts to implement it fully.”
The move comes one day after Mendel challenged the Government’s side of the House, saying that it would be an embarrassment to any Government to choose not to implement the FOIA.
In reaffirming his point, he noted that the information on public authorities was a fundamental right of the populace; and further, capacity constraints must not be looked at as any reason not to adopt the legislation.
Guyana Press Association President Denis Chabrol also made his input on behalf of media workers, saying that having the freedom to access information is a human right that is enshrined in Article 146 of the Constitution of Guyana, and Article 19 of the United Nations Universal Declaration on Human Rights.
According to Chabrol, the legislation would be a welcome tool for a journalist’s tool-kit. “If we are to be more authentic, fact-based, and credible…these are essential ingredients in a country that is often saturated with allegations of corruption, racial discrimination, racially and politically-motivated crimes, nepotism, death-squads and the like.”
The workshop also benefited from a presentation by Trinidad and Tobago’s Minister of Information, Neil Parsanal, on the Freedom of Information Act that was recently introduced in that country.
According to Parsanal, the populace of that country has responded well to the idea and facilities to access information on public companies.
Sasha Mohammad, a journalist based at TV 6 in Trinidad, who also had an input on the topic, said that despite the teething problems in implementing the FOIA, it has proven to be a powerful piece of legislation.
Trotman, who is primarily the driving force behind the legislation, tabled a draft of the FOIA in 2006.
Subsequently, on December 14 last, he took steps to have the Bill deferred in order to save it from being thrown out during its first reading.
He later told reporters that this was done to allow Government time for study and assessment of the administrative implications of the bill, and to allow for broad-based consultations.
According to Trotman, a compromise with Government will be crucial if the bill is to see the light of day.
During the debate on the 2007 Budget, Trotman had indicated that the passage of legislation to allow access to information is more important than personal endeavours, and indicated his willingness to step aside and allow the Government to take up the initiative.
Vice Chair of the party, Sheila Holder, wrote in an AFC column in the Kaieteur News that once Government supports the passage of the Bill, Guyana will join some 60 other countries in this hemisphere that have enacted freedom of information legislation.
She stated that freedom of information has become the international consensus deemed to be the impetus needed to bolster transparency and accountability, to curtail corruption, and raise the standards of governance in developing countries struggling to alleviate poverty.
The bill proposed by Trotman is based on the Trinidad model.
The call for freedom of information legislation has been widely made, especially resounding from the media corps, which find it difficult to access information related to Government spending and various projects.
The bill clearly spells out the objective to extend the right to members of the public to access information in the possession of public authorities by making available to the public information about the operations of public authorities.
In particular, the bill holds public officials to ensuring that the authorizations, policies, rules and practices affecting members of the public in their dealings with public authorities are readily available to persons affected by those authorizations, policies, rules and practices.
While the bill generally states the right of access to information in documentary form in the possession of public authorities, it also states that such documents could be withheld for the protection of essential public interests and the private and business affairs of persons in respect of whom information is collected and held by public authorities.
To protect Guyana’s territorial integrity, the bill states, documents could be withheld on the ground that the release of such information would prejudice relations between the Government and that of any other state.
The bill also states that documents could be withheld if their release would prejudice relations between the Government and an international organisation of states.
If documents would divulge information or matters communicated in confidence, or on behalf of the Government of another state to the Government of Guyana, or to a person receiving a communication on behalf of the government of that state, then the bill allows for those documents to be withheld.
Documents that would disclose matters in the nature of opinion, advice or recommendation prepared by an officer or Minister of Government could be withheld.
The bill will allow a person to seek legal action against documents that are withheld by public officials.
The bill states that a person who willfully destroys or damages a record or document required to be maintained and preserved commits an offence, and is liable, on summary conviction, to a fine of $5,000 and imprisonment for six months.
However, if a person knowingly destroys or damages a record or document which is required to be maintained and preserved while a request for access to the document is pending, that person has committed an offence and is liable, on summary conviction, to a fine of $50,000 and imprisonment for two years.
Kaieteur News news item. 2 June 2008
Leader of the Alliance For Change (AFC), Raphael Trotman, says that following four days of deliberations, where the Freedom of Information Act (FOIA) was given significant prominence, he was now more comfortable that the process of implementing the act constituted moving forward.
This was noted by Trotman in an invited comment at the close of the Guyana Workshop on Parliament and the Media on Friday.
The activity was well attended by Members of Parliament from both sides of the House, as well as international resource personnel, including Baroness Valerie Amos; Toby Mendel of Article 49, a London-based organisation for freedom of expression; renowned Caribbean journalist Sasha Mohammad; Trinidad and Tobago’s Minister of Information Neil Parsanal; John Barrit, a Bermudan MP, as well as John Heppel, a UK MP.
In an interview with this newspaper following the workshop, Trotman said that he was heartened to hear Prime Minister Samuel Hinds and other Government ministers acknowledge that the implementation of the Act was inevitable.
He posited that even though he is a lot more comfortable with the process now, he is being cautiously optimistic. He added that in a way he feels vindicated that an idea is gaining momentum towards becoming a reality.
He, however, posited that the gained momentum will see him forcing the Bill through the National Assembly in a hurry.
According to Trotman, the idea of freedom of information must now be expanded from the political realm to that of a multi-stakeholder-driven agenda, noting that everyone -- not just politicians -- must become involved in the process, and consensus must be arrived at.
The move to pass and implement the bill is even closer to reality, given that the participants of the workshops drafted a list of recommendations to be addressed.
Some of these are that “Guyana should enact Freedom of Information legislation within a clear time frame, and should thereafter make efforts to implement it fully.”
The move comes one day after Mendel challenged the Government’s side of the House, saying that it would be an embarrassment to any Government to choose not to implement the FOIA.
In reaffirming his point, he noted that the information on public authorities was a fundamental right of the populace; and further, capacity constraints must not be looked at as any reason not to adopt the legislation.
Guyana Press Association President Denis Chabrol also made his input on behalf of media workers, saying that having the freedom to access information is a human right that is enshrined in Article 146 of the Constitution of Guyana, and Article 19 of the United Nations Universal Declaration on Human Rights.
According to Chabrol, the legislation would be a welcome tool for a journalist’s tool-kit. “If we are to be more authentic, fact-based, and credible…these are essential ingredients in a country that is often saturated with allegations of corruption, racial discrimination, racially and politically-motivated crimes, nepotism, death-squads and the like.”
The workshop also benefited from a presentation by Trinidad and Tobago’s Minister of Information, Neil Parsanal, on the Freedom of Information Act that was recently introduced in that country.
According to Parsanal, the populace of that country has responded well to the idea and facilities to access information on public companies.
Sasha Mohammad, a journalist based at TV 6 in Trinidad, who also had an input on the topic, said that despite the teething problems in implementing the FOIA, it has proven to be a powerful piece of legislation.
Trotman, who is primarily the driving force behind the legislation, tabled a draft of the FOIA in 2006.
Subsequently, on December 14 last, he took steps to have the Bill deferred in order to save it from being thrown out during its first reading.
He later told reporters that this was done to allow Government time for study and assessment of the administrative implications of the bill, and to allow for broad-based consultations.
According to Trotman, a compromise with Government will be crucial if the bill is to see the light of day.
During the debate on the 2007 Budget, Trotman had indicated that the passage of legislation to allow access to information is more important than personal endeavours, and indicated his willingness to step aside and allow the Government to take up the initiative.
Vice Chair of the party, Sheila Holder, wrote in an AFC column in the Kaieteur News that once Government supports the passage of the Bill, Guyana will join some 60 other countries in this hemisphere that have enacted freedom of information legislation.
She stated that freedom of information has become the international consensus deemed to be the impetus needed to bolster transparency and accountability, to curtail corruption, and raise the standards of governance in developing countries struggling to alleviate poverty.
The bill proposed by Trotman is based on the Trinidad model.
The call for freedom of information legislation has been widely made, especially resounding from the media corps, which find it difficult to access information related to Government spending and various projects.
The bill clearly spells out the objective to extend the right to members of the public to access information in the possession of public authorities by making available to the public information about the operations of public authorities.
In particular, the bill holds public officials to ensuring that the authorizations, policies, rules and practices affecting members of the public in their dealings with public authorities are readily available to persons affected by those authorizations, policies, rules and practices.
While the bill generally states the right of access to information in documentary form in the possession of public authorities, it also states that such documents could be withheld for the protection of essential public interests and the private and business affairs of persons in respect of whom information is collected and held by public authorities.
To protect Guyana’s territorial integrity, the bill states, documents could be withheld on the ground that the release of such information would prejudice relations between the Government and that of any other state.
The bill also states that documents could be withheld if their release would prejudice relations between the Government and an international organisation of states.
If documents would divulge information or matters communicated in confidence, or on behalf of the Government of another state to the Government of Guyana, or to a person receiving a communication on behalf of the government of that state, then the bill allows for those documents to be withheld.
Documents that would disclose matters in the nature of opinion, advice or recommendation prepared by an officer or Minister of Government could be withheld.
The bill will allow a person to seek legal action against documents that are withheld by public officials.
The bill states that a person who willfully destroys or damages a record or document required to be maintained and preserved commits an offence, and is liable, on summary conviction, to a fine of $5,000 and imprisonment for six months.
However, if a person knowingly destroys or damages a record or document which is required to be maintained and preserved while a request for access to the document is pending, that person has committed an offence and is liable, on summary conviction, to a fine of $50,000 and imprisonment for two years.
Deals (2)
Deals (2)
Published June 2, 2008 In Stabroek News Editorial
http://www.stabroeknews.com/?p=14001
In the aftermath of the questions raised about the deal for the Sanata Complex the Privatisation Unit (PU) and the Guyana Office for Investment (Go-Invest) have made admirable efforts to explain the reasoning behind the decision.
Those efforts are laudable and they signal a willingness to address criticisms raised about a very important area – the disposing of the assets of the state. Nevertheless, the explanations fall short in one vital area i.e. the pathway towards the opening of discussions with Queens Atlantic Investment Inc. (QAII).
The PU and Go-Invest have stressed the point that discussions with QAII were initiated after a well-publicised advertisement seeking investors to run the Sanata complex failed to attract a single bidder.
In the latest of a series of interviews in Saturday’s edition of this newspaper, the Head of the PU, Mr Brassington said that in the last quarter of 2006 advertisements ran for the operation of the facilities at G&C Sanata but no bids were received on the extended closing date of February 28, 2007. The bid box was opened on February 28, 2007 in the presence of a representative of the Office of the Auditor General.
Mr Brassington then argues that in accordance with the Privatisation Policy Framework Paper (PPFP) of July 1993 where an entity has been advertised and no bids received direct negotiations can be held and it was in that context that discussions began with QAII.
The date of the PPFP is important. It came only nine months or so after the PPP/C registered its historic 1992 win and amid the crescendo of concerns in the then opposition and civil society that many of the important privatization deals struck by the PNC in its waning years had been tainted by corrupt decisions. In keeping with its lean and clean outlook, the PPP/C then set about laying down its law and the framework paper was drawn up. Whether it has been religiously adhered to over the last 15 years is something that no one can vouch for. However in relation to major deals like QAII, the public’s interest would be high in ensuring that the privatisation adhered to the letter and spirit of the framework.
Investment spotters and those who harvest high finder’s fees know that a key part of any deal is matching an investor with an appropriately, lucrative investment prospect; one that creates synergies and optimizes the strengths of the investor. And if only that investor is aware of what is on offer and can hammer out an arrangement in private without having to factor in competitive bids the deal would likely be sweeter for all. That was however not the intent of the 1992 PPP/C administration of Dr Jagan. That administration was concerned that all should be given a fair and equal opportunity to bid for state assets and to invest in them.
So, was the PU in the right to approach QAII? The only guidance for this in the PPFP is contained in Appendix 1 which covers the Rules of Competitive Bidding. If bids had been received for the Sanata complex but were below the floor price fixed by the government or were ruled unresponsive for legal, technical and financial requirements then “the government may choose to conduct the disposition of its interest through negotiation. Accordingly, the government will appoint a special ad-hoc committee to conduct the negotiations with interested parties on a one-on-one basis, or as a group.
This negotiation will be undertaken with a view to ensuring that the Government obtains the best price, which should not be lower than the highest bid submitted at the failed bidding”.
The aforementioned clearly conceives that negotiations would begin with the failed bidders. In this instance there were no bidders so the PPFP’s road map did not provide the pathway to QAII. Moreover, what the PU eventually discussed with QAII was not what was originally advertised in the last quarter of 2006. It was an entirely new offer. Given the disgraceful condition that Sanata had been kept in by the state it was small wonder that not a single bid was received following the original advertisement.
That should have signalled to the PU that its original advertisement was hopefully misconceived and considering the protracted failures at Sanata over the decades it would be foolhardy to expect that sane and savvy investors would be interested in it.
A new advertisement should then have been placed inviting investors to present proposals for the dismantling of the degraded parts, the removal of asbestos, investment in light manufacturing, job creation etc. This was not done by the PU. Even if one were to concede that it entered good-intentioned discussions with QAII there was nothing stopping it from advertising that QAII was interested in investing in the complex in a manner different from that originally advertised and gauging if there might have been better qualified investors who were also interested. That, too, was not done by the PU.
Instead, negotiations proceeded in secret with QAII. It is unclear who spearheaded the discussions and what deliberations proceeded at the level of the Privatisation Board which is supposed to include members of the business and consumer sectors.
What complicates the matter is the admission by President Jagdeo that a principal of QAII is a personal friend of his and as a result he withdrew from discussions that were held at the level of Cabinet on the deal. Given President Jagdeo’s well known zeal for command control of a number of portfolios and his great interest in all governance matters big and small, it is difficult to see how the discussions with QAII would have been adequately insulated from his style and shadow.
The direct approach then to QAII therefore raises troubling questions and given that the principal is a friend of the President and this would have been known, those making the approach to QAII should have been far more careful. There was a fundamental obligation to ensure that everything was done transparently and in a fair manner. That standard set by the `92 PPP/C government was unfortunately not met and the questions about this deal will continue about the way it was devised and the finally approved terms.
Investment of this scale has been hard to come by in this country and considering the several manufacturing plans of QAII it must be welcomed and supported. It is however starting off under a cloud over how decisions to sell the state’s assets were made, questions that the `92 PPP/C government was hoping that it would not be dogged by.
Buddy’s
As to the Buddy’s deal, it is clear that the state made a lousy decision. It was led to believe that Mr Shivraj was making a life-long investment in the hotel business in this country; not for him to turn around a year later and sell it for a tidy profit after an interest-free loan of $165M from the government when he was clearly cash-strapped.
It would have been far more sensible for the government to hire a contractor, an interior decorator, a management firm and sell the hotel after the world cup for a tidy profit to Mr Okzan if it was so inclined. The deal between the government and Mr Shivraj should be the subject of scrutiny at both the Public Accounts Committee and the Economic Services Committee of Parliament.
Published June 2, 2008 In Stabroek News Editorial
http://www.stabroeknews.com/?p=14001
In the aftermath of the questions raised about the deal for the Sanata Complex the Privatisation Unit (PU) and the Guyana Office for Investment (Go-Invest) have made admirable efforts to explain the reasoning behind the decision.
Those efforts are laudable and they signal a willingness to address criticisms raised about a very important area – the disposing of the assets of the state. Nevertheless, the explanations fall short in one vital area i.e. the pathway towards the opening of discussions with Queens Atlantic Investment Inc. (QAII).
The PU and Go-Invest have stressed the point that discussions with QAII were initiated after a well-publicised advertisement seeking investors to run the Sanata complex failed to attract a single bidder.
In the latest of a series of interviews in Saturday’s edition of this newspaper, the Head of the PU, Mr Brassington said that in the last quarter of 2006 advertisements ran for the operation of the facilities at G&C Sanata but no bids were received on the extended closing date of February 28, 2007. The bid box was opened on February 28, 2007 in the presence of a representative of the Office of the Auditor General.
Mr Brassington then argues that in accordance with the Privatisation Policy Framework Paper (PPFP) of July 1993 where an entity has been advertised and no bids received direct negotiations can be held and it was in that context that discussions began with QAII.
The date of the PPFP is important. It came only nine months or so after the PPP/C registered its historic 1992 win and amid the crescendo of concerns in the then opposition and civil society that many of the important privatization deals struck by the PNC in its waning years had been tainted by corrupt decisions. In keeping with its lean and clean outlook, the PPP/C then set about laying down its law and the framework paper was drawn up. Whether it has been religiously adhered to over the last 15 years is something that no one can vouch for. However in relation to major deals like QAII, the public’s interest would be high in ensuring that the privatisation adhered to the letter and spirit of the framework.
Investment spotters and those who harvest high finder’s fees know that a key part of any deal is matching an investor with an appropriately, lucrative investment prospect; one that creates synergies and optimizes the strengths of the investor. And if only that investor is aware of what is on offer and can hammer out an arrangement in private without having to factor in competitive bids the deal would likely be sweeter for all. That was however not the intent of the 1992 PPP/C administration of Dr Jagan. That administration was concerned that all should be given a fair and equal opportunity to bid for state assets and to invest in them.
So, was the PU in the right to approach QAII? The only guidance for this in the PPFP is contained in Appendix 1 which covers the Rules of Competitive Bidding. If bids had been received for the Sanata complex but were below the floor price fixed by the government or were ruled unresponsive for legal, technical and financial requirements then “the government may choose to conduct the disposition of its interest through negotiation. Accordingly, the government will appoint a special ad-hoc committee to conduct the negotiations with interested parties on a one-on-one basis, or as a group.
This negotiation will be undertaken with a view to ensuring that the Government obtains the best price, which should not be lower than the highest bid submitted at the failed bidding”.
The aforementioned clearly conceives that negotiations would begin with the failed bidders. In this instance there were no bidders so the PPFP’s road map did not provide the pathway to QAII. Moreover, what the PU eventually discussed with QAII was not what was originally advertised in the last quarter of 2006. It was an entirely new offer. Given the disgraceful condition that Sanata had been kept in by the state it was small wonder that not a single bid was received following the original advertisement.
That should have signalled to the PU that its original advertisement was hopefully misconceived and considering the protracted failures at Sanata over the decades it would be foolhardy to expect that sane and savvy investors would be interested in it.
A new advertisement should then have been placed inviting investors to present proposals for the dismantling of the degraded parts, the removal of asbestos, investment in light manufacturing, job creation etc. This was not done by the PU. Even if one were to concede that it entered good-intentioned discussions with QAII there was nothing stopping it from advertising that QAII was interested in investing in the complex in a manner different from that originally advertised and gauging if there might have been better qualified investors who were also interested. That, too, was not done by the PU.
Instead, negotiations proceeded in secret with QAII. It is unclear who spearheaded the discussions and what deliberations proceeded at the level of the Privatisation Board which is supposed to include members of the business and consumer sectors.
What complicates the matter is the admission by President Jagdeo that a principal of QAII is a personal friend of his and as a result he withdrew from discussions that were held at the level of Cabinet on the deal. Given President Jagdeo’s well known zeal for command control of a number of portfolios and his great interest in all governance matters big and small, it is difficult to see how the discussions with QAII would have been adequately insulated from his style and shadow.
The direct approach then to QAII therefore raises troubling questions and given that the principal is a friend of the President and this would have been known, those making the approach to QAII should have been far more careful. There was a fundamental obligation to ensure that everything was done transparently and in a fair manner. That standard set by the `92 PPP/C government was unfortunately not met and the questions about this deal will continue about the way it was devised and the finally approved terms.
Investment of this scale has been hard to come by in this country and considering the several manufacturing plans of QAII it must be welcomed and supported. It is however starting off under a cloud over how decisions to sell the state’s assets were made, questions that the `92 PPP/C government was hoping that it would not be dogged by.
Buddy’s
As to the Buddy’s deal, it is clear that the state made a lousy decision. It was led to believe that Mr Shivraj was making a life-long investment in the hotel business in this country; not for him to turn around a year later and sell it for a tidy profit after an interest-free loan of $165M from the government when he was clearly cash-strapped.
It would have been far more sensible for the government to hire a contractor, an interior decorator, a management firm and sell the hotel after the world cup for a tidy profit to Mr Okzan if it was so inclined. The deal between the government and Mr Shivraj should be the subject of scrutiny at both the Public Accounts Committee and the Economic Services Committee of Parliament.
Rent-a-gun, contract killings make crime busting that much more difficult
Rent-a-gun, contract killings make crime busting that much more difficult- cops, security expert say
Stabroek News news item. Sunday June 1, 2008
http://www.stabroeknews.com/?p=13957
Police have acknowledged that guns used for criminal activity are trading hands, which is probably why specific spent shells show up at various crime scenes. But a security expert said it was not just about the rent-a-gun phenomenon, as some criminal gangs work on contracts.
The police had long acknowledged that criminals operating here would at times rent certain weapons to undertake specific tasks, making it difficult for law enforcers to track down the real killers.
However, security consultant, Clairmont Featherstone told Stabroek News in an interview on Friday that while he had no doubt guns were being rented and sold cheaply here, he believed the issue was less about ballistics and more about the operations of gangs. He said that from his own investigations he had discerned that there are no more than three well-trained, well-armed gangs operating in this country, with foreign input. Apart from these, he said, there are several other small groups, but these did not have the weaponry and the skills and were more associated with the street crimes.
According to Featherstone, many of the criminal groups do their own work, but often they took on contracts for other groups and corrupt individuals. “So when you see the same shells turning up everywhere it might be the same group working for different persons with different motives using the same we-apons,” Featherstone, proprietor of Intelliguard Specialist Security Services said.
Police had recently released the findings of ballistics examinations conducted on the 12 5.56 x 45 calibre and the nine 7.62 x 39 calibre spent shells found at the scene of the murder of Arjune Narine, which occurred on May 14, at Drury Lane and Middleton Street, Campbell-ville. The tests revealed that the 12 5.56 x 45 spent shells matched four spent shells found at the scene of the murder of Internet Café owner Lennox Drakes who was shot and killed on January 8, 2008 in Church Street, George-town. They also matched two spent shells found at the scene of the discharging of a loaded firearm on February 12, in the Buddy’s Pool Hall Car Park on Sheriff Street; five spent shells found at the scene of the attack on Police Head-quarters, Eve Leary on January 25 and the shooting-up of the Ministry of Culture. In addition, the police said, the nine 7.62 x 39 calibre spent shells found at Narine’s murder scene matched two spent shells found at the Buddy’s Pool Hall incident. It is widely believed that the shooting at the Police Headquarters was the work of the Buxton/Agricola criminals being led by wanted man Rondell ‘Fineman’ Rawlins. But the Narine and Drake killings did not match the scale and modus operandi of that incident.
A senior police officer, who wished to remain anonymous, said it was possible that the weapons used in the three incidents had traded hands, but he noted that there was no proof. “Whoever the police find with the gun at the time would have to answer so even if the guns were rented the police would work on who they find with them,” the officer said.
He said that criminals, in an attempt to conceal their operations would use one type of weapon and ammunition in multiple crimes and if they had an established network where they could rent or lease their weapons this would be done.
A trend has developed recently where the findings of ballistics tests point to one direction — the gunmen of Buxton, but the officer said this might be so because of public perception and not necessarily the way the police operate. “We know that criminals rent guns and it is quite possible that some of the killings blamed on one group of criminals may not be so,” the officer asserted.
However, he said that because of the nature of the operations of criminals here, where no one claimed responsibility for acts, whoever was found with a gun would most likely be charged with the killings committed with that weapon.
The police officer said criminals around would have links, whether they are involved in drug trafficking, gun smuggling or street crimes. According to the officer, each needed the other in the conduct of their nefarious deeds and it might be a case where they worked for each other on specific tasks.
Legal experts argued that there were many suspects before the court, charged with crimes they had not committed; they had been hauled in because they were found with guns used to commit those crimes.
Featherstone said gun-runners sometimes sold weapons that had been used in other killings, but they often did not tell the purchaser.
Several persons had, in the past, raised serious questions about the credibility of the police ballistics findings, but the force had stoutly defended it.
Crime Chief Sewlall Persaud and Assistant Com-missioner of Police Paul Slowe had both argued that the force had the equipment capable of conducting ballistics examinations with Persaud arguing that the results were never manufactured.
Police had announced shortly after the Lusignan massacre that 35 spent shells found at the scene had matched 18 found at the scene of the April 2006 killing of agriculture minister, Satyadeow Sawh, who was also a former ambassador to Venezuela. Sawh’s killing was blamed on the Buxton/ Agricola gang and several of the alleged operatives of the criminal enterprise were named in a police bulletin.
The gunmen had invaded Sawh’s home with almost military precision shortly after he, his brother Rajpat Sawh and sister Phulmattie Persaud had returned from a late-night family function. His wife, who hid in the bathroom, and two sons who were not at home escaped the grisly attack.
Days after the Bartica massacre, Home Affairs Minister Clement Rohee had announced that ballistics tests conducted on spent shells found at the crime scene had firmly established that the same weapons had been used to commit killings and robberies at three other locations last year: Better Hope on August 21, 2007; Sheribana on October 1, 2007 and Triumph, ECD on December 16, 2007.
He did not mention the Lusignan slayings in that initial brief, although President Bharrat Jagdeo had gone ahead and announced that the same band of criminals who had committed the Lusignan slaughter was also responsible for the Bartica attack.
Stabroek News news item. Sunday June 1, 2008
http://www.stabroeknews.com/?p=13957
Police have acknowledged that guns used for criminal activity are trading hands, which is probably why specific spent shells show up at various crime scenes. But a security expert said it was not just about the rent-a-gun phenomenon, as some criminal gangs work on contracts.
The police had long acknowledged that criminals operating here would at times rent certain weapons to undertake specific tasks, making it difficult for law enforcers to track down the real killers.
However, security consultant, Clairmont Featherstone told Stabroek News in an interview on Friday that while he had no doubt guns were being rented and sold cheaply here, he believed the issue was less about ballistics and more about the operations of gangs. He said that from his own investigations he had discerned that there are no more than three well-trained, well-armed gangs operating in this country, with foreign input. Apart from these, he said, there are several other small groups, but these did not have the weaponry and the skills and were more associated with the street crimes.
According to Featherstone, many of the criminal groups do their own work, but often they took on contracts for other groups and corrupt individuals. “So when you see the same shells turning up everywhere it might be the same group working for different persons with different motives using the same we-apons,” Featherstone, proprietor of Intelliguard Specialist Security Services said.
Police had recently released the findings of ballistics examinations conducted on the 12 5.56 x 45 calibre and the nine 7.62 x 39 calibre spent shells found at the scene of the murder of Arjune Narine, which occurred on May 14, at Drury Lane and Middleton Street, Campbell-ville. The tests revealed that the 12 5.56 x 45 spent shells matched four spent shells found at the scene of the murder of Internet Café owner Lennox Drakes who was shot and killed on January 8, 2008 in Church Street, George-town. They also matched two spent shells found at the scene of the discharging of a loaded firearm on February 12, in the Buddy’s Pool Hall Car Park on Sheriff Street; five spent shells found at the scene of the attack on Police Head-quarters, Eve Leary on January 25 and the shooting-up of the Ministry of Culture. In addition, the police said, the nine 7.62 x 39 calibre spent shells found at Narine’s murder scene matched two spent shells found at the Buddy’s Pool Hall incident. It is widely believed that the shooting at the Police Headquarters was the work of the Buxton/Agricola criminals being led by wanted man Rondell ‘Fineman’ Rawlins. But the Narine and Drake killings did not match the scale and modus operandi of that incident.
A senior police officer, who wished to remain anonymous, said it was possible that the weapons used in the three incidents had traded hands, but he noted that there was no proof. “Whoever the police find with the gun at the time would have to answer so even if the guns were rented the police would work on who they find with them,” the officer said.
He said that criminals, in an attempt to conceal their operations would use one type of weapon and ammunition in multiple crimes and if they had an established network where they could rent or lease their weapons this would be done.
A trend has developed recently where the findings of ballistics tests point to one direction — the gunmen of Buxton, but the officer said this might be so because of public perception and not necessarily the way the police operate. “We know that criminals rent guns and it is quite possible that some of the killings blamed on one group of criminals may not be so,” the officer asserted.
However, he said that because of the nature of the operations of criminals here, where no one claimed responsibility for acts, whoever was found with a gun would most likely be charged with the killings committed with that weapon.
The police officer said criminals around would have links, whether they are involved in drug trafficking, gun smuggling or street crimes. According to the officer, each needed the other in the conduct of their nefarious deeds and it might be a case where they worked for each other on specific tasks.
Legal experts argued that there were many suspects before the court, charged with crimes they had not committed; they had been hauled in because they were found with guns used to commit those crimes.
Featherstone said gun-runners sometimes sold weapons that had been used in other killings, but they often did not tell the purchaser.
Several persons had, in the past, raised serious questions about the credibility of the police ballistics findings, but the force had stoutly defended it.
Crime Chief Sewlall Persaud and Assistant Com-missioner of Police Paul Slowe had both argued that the force had the equipment capable of conducting ballistics examinations with Persaud arguing that the results were never manufactured.
Police had announced shortly after the Lusignan massacre that 35 spent shells found at the scene had matched 18 found at the scene of the April 2006 killing of agriculture minister, Satyadeow Sawh, who was also a former ambassador to Venezuela. Sawh’s killing was blamed on the Buxton/ Agricola gang and several of the alleged operatives of the criminal enterprise were named in a police bulletin.
The gunmen had invaded Sawh’s home with almost military precision shortly after he, his brother Rajpat Sawh and sister Phulmattie Persaud had returned from a late-night family function. His wife, who hid in the bathroom, and two sons who were not at home escaped the grisly attack.
Days after the Bartica massacre, Home Affairs Minister Clement Rohee had announced that ballistics tests conducted on spent shells found at the crime scene had firmly established that the same weapons had been used to commit killings and robberies at three other locations last year: Better Hope on August 21, 2007; Sheribana on October 1, 2007 and Triumph, ECD on December 16, 2007.
He did not mention the Lusignan slayings in that initial brief, although President Bharrat Jagdeo had gone ahead and announced that the same band of criminals who had committed the Lusignan slaughter was also responsible for the Bartica attack.
Sunday, June 1, 2008
The evolution of Guyana’s defence policy
Bookshelf- The evolution of Guyana’s defence policy
(David A. Granger National Defence: A Brief History of the Guyana Defence Force 1965-2005. Georgetown, Guyana : Free Press, 2005.) By R M Austin
Stabroek News Features, Sunday June 1, 2008
http://www.stabroeknews.com/?p=13931
David A. Granger
Very few academics and commentators seem to have found the study of Guyana defence policy an attractive proposition. Indeed, one is hard put to find any major study of Guyana in this regard. David Granger in the introduction to his book National Defence: A Brief History of the Guyana Defence Force has noted the impediments encountered in researching national defence matters in Guyana. It “has been hampered by the difficulty in gaining access to information which may be classified as a state secret and the natural disinclination of scholars to pursue studies without sufficient sources of evidence.” But he himself is undaunted by these difficulties and has used both his theoretical and practical experience to write an instructive book of the Guyana Defence Force of which he was once a Brigadier, and the evolution of Guyana’s defence policy.
Retired Brigadier David Granger is eminently qualified to write such a book for he has spent a considerable period of his life in the army and has done research and written numerous papers on defence issues for such institutions as the Institute of International Relations, The University of the West Indies (St Augustine), the Research and Education and Defence and Security Studies (REDS), conferences of the Center of Hemispheric Defense Studies (CHES) of the National Defense University (NDU) of the United States. His theoretical understanding of defence matters and the afore-mentioned experience in the army as well as his interaction with other defence scholars have enabled him to deliver a highly readable account of the GDF and Guyana defence policy in 248 pages, which is decorated by an excellent bibliography, a valuable index and footnotes which instruct as well as edify.
The impending withdrawal of the colonial power, the disturbances in February 1962, the revival of Venezuela’s claim to Guyana’s territory forced the then PPP administration to bring before the Legislative Assembly, a bill to establish a British Guiana Army (BGA), of six hundred men, which would be mandated to function “as a reserve to aid the civil power in times of civil commotion and disturbances when law and order are threatened and as… helping a constitutional government to maintain law and order.”
Even though it is not explicitly stated it is clear that the looming threat from Venezuela helped to inspire the creation of the BGA. It is interesting that the PPP and the PNC which disagree about so much, seemed to have arrived at a common position that the security forces of Guyana would always carry out the role of defending the nation’s territorial integrity and aiding the civil power to maintain internal order. Indeed, it is more than interesting that when the PPP assumed the reins of power in 1992 the main lines of the existing defence policy were maintained, with Mrs Janet Jagan as President, insisting that the GDF should evolve “to perform a substantial and committed role in law enforcement.”
It was the PNC/UF government which oversaw the creation and institutionalisation of the GDF. By the middle of the sixties the structure of the GDF had been settled and defence policy was being elaborated. Even though Brigadier Granger does not say it, this period represented an important learning curve for Burnham and his government. Positioning the army on the coast and focusing exclusively on internal developments in the wake of the searing disturbances of 1964 translated into a neglect of the external dimension of defence policy. Also, the administration believed that the Geneva Agreement of 1966 and the understanding with Suriname in the same year had laid to rest the ghost of Venezuela and Suriname’s claims respectively. This is Brigadier Granger’s judgment: “The indications are that, at the outset, the administration had no clearer strategic vision about the external dimension of national defence than its predecessors.”
There was to be an education in office. Four seminal events would change the defence posture of the nation: the seizure of Guyana’s half of Ankoko in 1966; the incursion into the New River zone by Suriname in 1967; the promulgation of the Leoni Decree annexing a belt of sea off the Essequibo coast in 1968; and the Rupununi uprising of 1969. Brigadier Granger feels that these developments displayed “at best, a lack of vigilance and, at worst, poor intelligence and negligent contingency planning.” No defence ministry existed to promote the development of a national defence strategy or draft defence plans to cater for contingencies. It is amazing that some forty years later the same situation still exists. After these adverse developments the Burnham administration laboured to ensure that the controversy with Venezuela and the dispute with Suriname were integrated into the foreign policy and defence plans of the nation. These events also, especially the seizure of Ankoko island by Venezuela, effected changes in Guyana’s defence policy in terms of the increase in the number and diversification in the training of troops and their deployment to the major hinterland areas. The period of the seventies and eighties when Guyana was challenged within and without are interestingly told by Brigadier Granger and he analyses how the requirements of diplomacy and defence clashed with the reality of Guyana’s economic circumstances. As the economy declined and discontent grew the focus of the Burnham administration, in the wake of relative stability on the frontier with Suriname and Venezuela, ensured that the focus of defence policy was on the internal situation. This is highlighted by the appointment of Norman McClean as head of the army, instead of a professional soldier, underlining the fact that the security forces would be concentrating on internal order. McClean’s appointment followed the cashiering of a number of senior officers who were considered to be negligent in preventing the destruction of the PNC headquarters by fire in 1979.
Again he does not say, but Brigadier Granger must have known that there was advance intelligence given to both the army and special branch on the possibility of arson at the PNC headquarters, but nothing had been done to prevent it. It was a grim and angst-ridden Burnham who therefore stood in front of the National Development Building in 1979.
Brigadier Granger is relatively reticent about the appointment of McClean as head of the army, but I distinctly recall that it caused consternation at various levels in the society and the cabinet. He did however concede that with the emergence of the WPA the relationship between the army and the wider society became problematic as most of the officers of the GDF were old QC boys as were leading members of the WPA. Burnham took no chances. Another word may be said here about another appointment which affected the career of Brigadier Granger. The appointment of Joe Singh as head of the army resulted from representations made to President Hoyte that Granger was no longer interested in the military and wanted to continue his studies. It is one of the mysteries of the recent history of the GDF. From my vantage point, one of the important developments of the eighties, including the adumbration of the doctrine of “defence in depth” which Brigadier Granger describes in some detail is the change in Venezuelan diplomacy. After the belligerence of Presidents Leoni and Caldera, there was a shift in Venezuelan policy. President Perez, like his successors, was determined to get the very access to the Atlantic which his predecessors fought for and which is a long-term goal of Venezuelan foreign policy. Perez offered to finance a major hydroelectric power project in Upper Mazaruni in return for “a symbolic cession” of territory, giving Venezuela the northern portion of Guyana. Brigadier Granger comments on the significance of this move: “The strategic significance of this territory is the prospect that it would give Venezuela access to the Atlantic, salida al Atlantico, from the Orinoco delta. This was the same thinking behind Raul Leoni’s decreto No. 1152 of 1968 which had laid claim to the Atlantic waters off the Essequibo coast.”
It was at this period too that Brazil proved itself receptive to overtures from Guyana and President Burnham paid a visit to Brazil in 1981. Brazil was clearly concerned at this time about the growing role of Venezuela in the region and its designs on Guyana’s territory. During the preparatory phase of this visit in which I was involved, the Brazilian representatives in the Foreign Ministry were keen to have an analysis of Venezuelan aims and objectives in the region and it was clear that they had reservations about the goals and objectives. It was no surprise when the final communique was signed the Brazilians expressed an interest in establishing a joint commission and extending a line of credit, and, as Brigadier Granger has written “…the construction of a highway through the Essequibo region linking the Brazilian state of Roraima with the port of Georgetown. The significance of such a highway through the so-called zona en reclamacion would not have been lost in Caracas.”
Then, as now, Brazil in terms of policy and defence doctrine has remained a counterweight to Venezuela. It has long been accepted that Brazil is a key nation in South America and will have a great role to play in the evolution and destiny of the continent. In the relations between Guyana, Brazil, Venezuela and Suriname, Brasilia could be critical to the outcome of any adverse interaction between any of these two states. The politicization of the GDF is clearly a concern of Brigadier Granger and rightly so. The GDF is one of the critical national institutions of the country and should not be subject to political direction and dominance. This was not the case in the eighties. Brigadier Granger has related how the involvement of the GDF in national elections in 1973, the strike in 1977, and its protection of polling officials and ballot boxes in 1978, did not enhance the national image of the army. In the case of the strike, the involvement of the army “had the effect of stigmatising the defence forces as strike breakers in an industrial dispute between workers and employers.” In the case of the army’s involvement in the elections the impression was conveyed that it was “a partisan, rather than a national, force, concerned more with public order than with national defence.” Indeed, the GDF would become subject to the strictures of the PPP when in opposition and remain under suspicion when it became the government. In 1998 the PPP government would accuse the GDF of seeking to overthrow it, and only the robust response from the then Chief-of-Staff Joe Singh, put an end to the flow of allegations. This section of Brigadier Granger’s book is a timely reminder that important institutions like the GDF must have national legitimacy and be above suspicion like Caesar’s wife.
Guyana is now pursuing a defence policy in circumstances remarkably different from when the national army was created. The nation enjoys good relations with most of its neighbouring countries and has military agreements with the United States and other Western countries. It is now incumbent on those who lead the army to rid it of absenteeism, illiteracy and other ills, and to prepare it for the challenges of the new century. In the concluding chapter of his book, Brigadier Granger offers this agenda: “Defence policy in the new century must be driven by a new thinking and serious planning by competent people who recognise the changes taking place on our frontiers, who understand that the fundamental threat to any state is an attack on its territoriality and who appreciate the old adage that, like liberty, the price of security is eternal vigilance.”
(David A. Granger National Defence: A Brief History of the Guyana Defence Force 1965-2005. Georgetown, Guyana : Free Press, 2005.) By R M Austin
Stabroek News Features, Sunday June 1, 2008
http://www.stabroeknews.com/?p=13931
David A. Granger
Very few academics and commentators seem to have found the study of Guyana defence policy an attractive proposition. Indeed, one is hard put to find any major study of Guyana in this regard. David Granger in the introduction to his book National Defence: A Brief History of the Guyana Defence Force has noted the impediments encountered in researching national defence matters in Guyana. It “has been hampered by the difficulty in gaining access to information which may be classified as a state secret and the natural disinclination of scholars to pursue studies without sufficient sources of evidence.” But he himself is undaunted by these difficulties and has used both his theoretical and practical experience to write an instructive book of the Guyana Defence Force of which he was once a Brigadier, and the evolution of Guyana’s defence policy.
Retired Brigadier David Granger is eminently qualified to write such a book for he has spent a considerable period of his life in the army and has done research and written numerous papers on defence issues for such institutions as the Institute of International Relations, The University of the West Indies (St Augustine), the Research and Education and Defence and Security Studies (REDS), conferences of the Center of Hemispheric Defense Studies (CHES) of the National Defense University (NDU) of the United States. His theoretical understanding of defence matters and the afore-mentioned experience in the army as well as his interaction with other defence scholars have enabled him to deliver a highly readable account of the GDF and Guyana defence policy in 248 pages, which is decorated by an excellent bibliography, a valuable index and footnotes which instruct as well as edify.
The impending withdrawal of the colonial power, the disturbances in February 1962, the revival of Venezuela’s claim to Guyana’s territory forced the then PPP administration to bring before the Legislative Assembly, a bill to establish a British Guiana Army (BGA), of six hundred men, which would be mandated to function “as a reserve to aid the civil power in times of civil commotion and disturbances when law and order are threatened and as… helping a constitutional government to maintain law and order.”
Even though it is not explicitly stated it is clear that the looming threat from Venezuela helped to inspire the creation of the BGA. It is interesting that the PPP and the PNC which disagree about so much, seemed to have arrived at a common position that the security forces of Guyana would always carry out the role of defending the nation’s territorial integrity and aiding the civil power to maintain internal order. Indeed, it is more than interesting that when the PPP assumed the reins of power in 1992 the main lines of the existing defence policy were maintained, with Mrs Janet Jagan as President, insisting that the GDF should evolve “to perform a substantial and committed role in law enforcement.”
It was the PNC/UF government which oversaw the creation and institutionalisation of the GDF. By the middle of the sixties the structure of the GDF had been settled and defence policy was being elaborated. Even though Brigadier Granger does not say it, this period represented an important learning curve for Burnham and his government. Positioning the army on the coast and focusing exclusively on internal developments in the wake of the searing disturbances of 1964 translated into a neglect of the external dimension of defence policy. Also, the administration believed that the Geneva Agreement of 1966 and the understanding with Suriname in the same year had laid to rest the ghost of Venezuela and Suriname’s claims respectively. This is Brigadier Granger’s judgment: “The indications are that, at the outset, the administration had no clearer strategic vision about the external dimension of national defence than its predecessors.”
There was to be an education in office. Four seminal events would change the defence posture of the nation: the seizure of Guyana’s half of Ankoko in 1966; the incursion into the New River zone by Suriname in 1967; the promulgation of the Leoni Decree annexing a belt of sea off the Essequibo coast in 1968; and the Rupununi uprising of 1969. Brigadier Granger feels that these developments displayed “at best, a lack of vigilance and, at worst, poor intelligence and negligent contingency planning.” No defence ministry existed to promote the development of a national defence strategy or draft defence plans to cater for contingencies. It is amazing that some forty years later the same situation still exists. After these adverse developments the Burnham administration laboured to ensure that the controversy with Venezuela and the dispute with Suriname were integrated into the foreign policy and defence plans of the nation. These events also, especially the seizure of Ankoko island by Venezuela, effected changes in Guyana’s defence policy in terms of the increase in the number and diversification in the training of troops and their deployment to the major hinterland areas. The period of the seventies and eighties when Guyana was challenged within and without are interestingly told by Brigadier Granger and he analyses how the requirements of diplomacy and defence clashed with the reality of Guyana’s economic circumstances. As the economy declined and discontent grew the focus of the Burnham administration, in the wake of relative stability on the frontier with Suriname and Venezuela, ensured that the focus of defence policy was on the internal situation. This is highlighted by the appointment of Norman McClean as head of the army, instead of a professional soldier, underlining the fact that the security forces would be concentrating on internal order. McClean’s appointment followed the cashiering of a number of senior officers who were considered to be negligent in preventing the destruction of the PNC headquarters by fire in 1979.
Again he does not say, but Brigadier Granger must have known that there was advance intelligence given to both the army and special branch on the possibility of arson at the PNC headquarters, but nothing had been done to prevent it. It was a grim and angst-ridden Burnham who therefore stood in front of the National Development Building in 1979.
Brigadier Granger is relatively reticent about the appointment of McClean as head of the army, but I distinctly recall that it caused consternation at various levels in the society and the cabinet. He did however concede that with the emergence of the WPA the relationship between the army and the wider society became problematic as most of the officers of the GDF were old QC boys as were leading members of the WPA. Burnham took no chances. Another word may be said here about another appointment which affected the career of Brigadier Granger. The appointment of Joe Singh as head of the army resulted from representations made to President Hoyte that Granger was no longer interested in the military and wanted to continue his studies. It is one of the mysteries of the recent history of the GDF. From my vantage point, one of the important developments of the eighties, including the adumbration of the doctrine of “defence in depth” which Brigadier Granger describes in some detail is the change in Venezuelan diplomacy. After the belligerence of Presidents Leoni and Caldera, there was a shift in Venezuelan policy. President Perez, like his successors, was determined to get the very access to the Atlantic which his predecessors fought for and which is a long-term goal of Venezuelan foreign policy. Perez offered to finance a major hydroelectric power project in Upper Mazaruni in return for “a symbolic cession” of territory, giving Venezuela the northern portion of Guyana. Brigadier Granger comments on the significance of this move: “The strategic significance of this territory is the prospect that it would give Venezuela access to the Atlantic, salida al Atlantico, from the Orinoco delta. This was the same thinking behind Raul Leoni’s decreto No. 1152 of 1968 which had laid claim to the Atlantic waters off the Essequibo coast.”
It was at this period too that Brazil proved itself receptive to overtures from Guyana and President Burnham paid a visit to Brazil in 1981. Brazil was clearly concerned at this time about the growing role of Venezuela in the region and its designs on Guyana’s territory. During the preparatory phase of this visit in which I was involved, the Brazilian representatives in the Foreign Ministry were keen to have an analysis of Venezuelan aims and objectives in the region and it was clear that they had reservations about the goals and objectives. It was no surprise when the final communique was signed the Brazilians expressed an interest in establishing a joint commission and extending a line of credit, and, as Brigadier Granger has written “…the construction of a highway through the Essequibo region linking the Brazilian state of Roraima with the port of Georgetown. The significance of such a highway through the so-called zona en reclamacion would not have been lost in Caracas.”
Then, as now, Brazil in terms of policy and defence doctrine has remained a counterweight to Venezuela. It has long been accepted that Brazil is a key nation in South America and will have a great role to play in the evolution and destiny of the continent. In the relations between Guyana, Brazil, Venezuela and Suriname, Brasilia could be critical to the outcome of any adverse interaction between any of these two states. The politicization of the GDF is clearly a concern of Brigadier Granger and rightly so. The GDF is one of the critical national institutions of the country and should not be subject to political direction and dominance. This was not the case in the eighties. Brigadier Granger has related how the involvement of the GDF in national elections in 1973, the strike in 1977, and its protection of polling officials and ballot boxes in 1978, did not enhance the national image of the army. In the case of the strike, the involvement of the army “had the effect of stigmatising the defence forces as strike breakers in an industrial dispute between workers and employers.” In the case of the army’s involvement in the elections the impression was conveyed that it was “a partisan, rather than a national, force, concerned more with public order than with national defence.” Indeed, the GDF would become subject to the strictures of the PPP when in opposition and remain under suspicion when it became the government. In 1998 the PPP government would accuse the GDF of seeking to overthrow it, and only the robust response from the then Chief-of-Staff Joe Singh, put an end to the flow of allegations. This section of Brigadier Granger’s book is a timely reminder that important institutions like the GDF must have national legitimacy and be above suspicion like Caesar’s wife.
Guyana is now pursuing a defence policy in circumstances remarkably different from when the national army was created. The nation enjoys good relations with most of its neighbouring countries and has military agreements with the United States and other Western countries. It is now incumbent on those who lead the army to rid it of absenteeism, illiteracy and other ills, and to prepare it for the challenges of the new century. In the concluding chapter of his book, Brigadier Granger offers this agenda: “Defence policy in the new century must be driven by a new thinking and serious planning by competent people who recognise the changes taking place on our frontiers, who understand that the fundamental threat to any state is an attack on its territoriality and who appreciate the old adage that, like liberty, the price of security is eternal vigilance.”
The audit report: does it really mean anything?
Business Page- The audit report: does it really mean anything?
By Christopher Ram
Stabroek News Features, Sunday June 1, 2008 In
http://www.stabroeknews.com/?p=13942
The second oldest profession
Shareholders may not quite realise it but they not only appoint (and can remove) the auditors but the auditors are by law, required to report to them. That is the theory. The practice is that management deals directly with the auditors, fixes their remuneration, challenges them on key concerns they raise and most significantly can recommend their removal. The audit report – even to those who may have some understanding of its nature – has become so lengthy, boring and obscurely complex that it is likely that even the company secretary who reads it at the Annual General Meeting (AGM) does not quite understand what it really says. Richard Bennison, head of audit of KPMG UK in the prestigious monthly publication Accountancy of May 2008 was perhaps only a tad too cynical when he said that “The message of an audit report is, in the vernacular: These accounts are about right unless management have deliberately conspired to falsify them.”
A standard, clean audit opinion issued by the profession can run up to 500 words, about five times more than is required by the Companies Act 1991. How and perhaps more importantly, why did the second oldest profession not known for its literary skills, develop such a love for words with the result that an eight-line report in 1983 became sixteen in 1993 and some 27 in 2007? Has length added anything to shareholders’ understanding of the report or merely shielded the auditors from lawsuits for shoddy auditing work done well out of the sight of the shareholders who appoint them, and whose only communication with the shareholders is their report which is attached to the financial statements circulated with or contained in the Annual Report of the company?
Monopoly
The audit profession has had an unshakeable but arguably necessary monopoly on all companies operating under the Companies Act 1991 as successive Ministers of Finance have failed to trigger the section in the act which would have dispensed with the need for an auditor. The smallest company then is required to meet the same stringent accounting and disclosure requirements as say, a Banks DIH. Auditors are also helped in another respect by the Companies Act 1991, which simply requires the auditors to state whether in their opinion, the balance sheet and the profit and loss account show a true and fair view. In the repealed Companies Act Cap 89:01 auditors were required to state, perhaps impossibly, whether the accounts showed “a true and correct view…”
Readers of financial statements also need to recognise that while the audit profession will not say it, “true and fair” is a largely undefined term and that within case law and auditing literature there may be more than one “true and fair” view of the state of affairs and results of a business. Add this to the prolixity of the report and we find a complete absence of a key ingredient prescribed by the Financial Reporting Council (UK) for audit reporting: to provide a positive contribution to audit quality. The FRC suggests that for such a contribution to take place it would require audit reports to be written in a manner that conveys “clearly and unambiguously” the auditor’s opinion on the financial statements, and addresses the need of users of financial statements in the context of applicable law and regulations.
The first rule: cover your behind
That is eminently sensible, but is that what auditors really want or do they want to avoid lawsuits which can cripple them? The first thing an auditor seeks to do is minimise his risk including the risk of being sued. Accordingly auditors need to protect themselves and that protection comes at the expense of clarity, brevity and utility. In my decades of auditing experience with a number of international and local firms I cannot recall a single conversation among audit partners identifying communication with shareholders as even the last of their audit objectives.
But if companies legislation is so precise about the report of the auditors, how did we get here?
The first thing to note is that Guyana does not have its own accounting and auditing standards. As members of the International Federation of Accountants (IFAC) dominated by the big firms in the developed world, the local accounting regulator, the Institute of Chartered Accountants of Guyana, is committed to its members adopting and applying the standards set by IFAC. While nationalists (if they still exist) may consider this another form of colonialism, the fact is that international banks and multilateral lending agencies as well as investors, stock exchanges and domestic banks find comfort in financial statements that are prepared and audited to the highest standards of best practice, which are in effect the standards set by the major players.
The initial explosion in the verbosity of the audit opinion was a reaction to what was described as the expectation gap – auditors had to disabuse readers of any notion that the audit was somehow expected to detect frauds or that the auditors were responsible for the preparation and content of the financial statements. The report by the auditors rightly seeks to draw attention to the fact that the management is responsible for the financial statements and that the auditors’ duty is to report on those statements using such methods and techniques as would enable them to report in a most cost-effective (read profitable) manner.
Case brief
But the real reason for all the ‘wordiness’ is the fear of litigation, a fear that has dogged the accounting and auditing profession if not as far back as the South Sea Bubble (1720), certainly in cases like Kingston Cotton Mill (1896) which put the auditor as a watchdog not a bloodhound; Hedley Byrne v Heller (1963) which established the principle that when a person makes a statement in a professional capacity, he voluntary assumes responsibility to the person he makes it to unless he has put a disclaimer in his communication; BCCI (1991), referred to satirically as the ‘Bank of Crooks and Criminals International,’ one of the first cases in which the financing of international terrorism was an issue; and more recently, the 2003 Scottish case Royal Bank of Scotland v Bannerman Johnstone Maclay (‘Bannerman’), in which the court ruled that in preparing the audited accounts of their clients, APC Ltd, Bannerman may have owed RBS, one of APC’s creditor banks, a duty of care and therefore liable for any loss suffered as a consequence.
It was sufficient for RBS to show that Bannerman should have been aware that the accounts and audit report would be provided to RBS for the purpose for which RBS relied on them, even though they may have been prepared for a different statutory purpose. Crucial to the court’s reasoning was the absence of any third party disclaimer in the audit report – which has come to be known as the ‘Bannerman’ statement, used by auditors to discourage third parties from relying on the audit. It is widely believed that it was the presence of such a provision that protected Ernst & Young in a £350M case involving German truckmaker MAN and a subsidiary audited by Ernst and Young, which had been bought by MAN.
Not everyone is happy with such a disclaimer, and a suggestion by the Audit Practices Board of the UK to dispense with the Bannerman statement has met with consternation among UK audit firms. The leading accounting body in the UK, the Institute of Chartered Accountants in England and Wales, is convinced that the Bannerman statement remains a strong and integral part of the audit report, and that there is nothing wrong in principle with disclaiming any duty to third parties.
Tax evasion is not a crime?
In Guyana, some auditors give their blessing to accounts which have been accepted by financial houses and the Guyana Revenue Authority, but which even Alice would consider pure fantasy. During the last decade we saw some high profile receiverships in which businesses went under shortly after receiving clean reports from their auditors, causing massive losses to the banks. The GRA is too often the victim of some of the most spurious accounts imaginable and yet neither the banks nor the GRA has taken any action against any auditor.
Using history as their guide, auditors assume that the chances of their being sued by lenders for negligence in signing off on the financial statements of their clients are about as likely as snow in Guyana. Those auditors who also prepare the tax returns for their clients must know that those returns are relied upon by the tax authorities for the assessment of taxes and that under the Income Tax Act they can be held criminally liable for aiding and abetting in tax evasion.
Since in Guyana it does not appear that tax evasion is a crime then clearly aiding and abetting it cannot be a crime either! Instead of sanctioning those auditors and tax consultants whose product is so egregiously bad, the GRA routinely issues them with annual Tax Practice Certifi-cates that are used as a licence to continue in their ways.
One of the new rights created by the Companies Act 1991 is the right of the shareholder to have the auditors answer at the AGM questions relating to their duties as auditors. So far it is the directors who have been answering those questions and it would be fascinating to witness such an encounter between shareholder and auditor! That little exercise in shareholder demo-cracy may do more for governance than all the hundreds of words in the audit report.
Previous columns can be found at www.chrisram.net
By Christopher Ram
Stabroek News Features, Sunday June 1, 2008 In
http://www.stabroeknews.com/?p=13942
The second oldest profession
Shareholders may not quite realise it but they not only appoint (and can remove) the auditors but the auditors are by law, required to report to them. That is the theory. The practice is that management deals directly with the auditors, fixes their remuneration, challenges them on key concerns they raise and most significantly can recommend their removal. The audit report – even to those who may have some understanding of its nature – has become so lengthy, boring and obscurely complex that it is likely that even the company secretary who reads it at the Annual General Meeting (AGM) does not quite understand what it really says. Richard Bennison, head of audit of KPMG UK in the prestigious monthly publication Accountancy of May 2008 was perhaps only a tad too cynical when he said that “The message of an audit report is, in the vernacular: These accounts are about right unless management have deliberately conspired to falsify them.”
A standard, clean audit opinion issued by the profession can run up to 500 words, about five times more than is required by the Companies Act 1991. How and perhaps more importantly, why did the second oldest profession not known for its literary skills, develop such a love for words with the result that an eight-line report in 1983 became sixteen in 1993 and some 27 in 2007? Has length added anything to shareholders’ understanding of the report or merely shielded the auditors from lawsuits for shoddy auditing work done well out of the sight of the shareholders who appoint them, and whose only communication with the shareholders is their report which is attached to the financial statements circulated with or contained in the Annual Report of the company?
Monopoly
The audit profession has had an unshakeable but arguably necessary monopoly on all companies operating under the Companies Act 1991 as successive Ministers of Finance have failed to trigger the section in the act which would have dispensed with the need for an auditor. The smallest company then is required to meet the same stringent accounting and disclosure requirements as say, a Banks DIH. Auditors are also helped in another respect by the Companies Act 1991, which simply requires the auditors to state whether in their opinion, the balance sheet and the profit and loss account show a true and fair view. In the repealed Companies Act Cap 89:01 auditors were required to state, perhaps impossibly, whether the accounts showed “a true and correct view…”
Readers of financial statements also need to recognise that while the audit profession will not say it, “true and fair” is a largely undefined term and that within case law and auditing literature there may be more than one “true and fair” view of the state of affairs and results of a business. Add this to the prolixity of the report and we find a complete absence of a key ingredient prescribed by the Financial Reporting Council (UK) for audit reporting: to provide a positive contribution to audit quality. The FRC suggests that for such a contribution to take place it would require audit reports to be written in a manner that conveys “clearly and unambiguously” the auditor’s opinion on the financial statements, and addresses the need of users of financial statements in the context of applicable law and regulations.
The first rule: cover your behind
That is eminently sensible, but is that what auditors really want or do they want to avoid lawsuits which can cripple them? The first thing an auditor seeks to do is minimise his risk including the risk of being sued. Accordingly auditors need to protect themselves and that protection comes at the expense of clarity, brevity and utility. In my decades of auditing experience with a number of international and local firms I cannot recall a single conversation among audit partners identifying communication with shareholders as even the last of their audit objectives.
But if companies legislation is so precise about the report of the auditors, how did we get here?
The first thing to note is that Guyana does not have its own accounting and auditing standards. As members of the International Federation of Accountants (IFAC) dominated by the big firms in the developed world, the local accounting regulator, the Institute of Chartered Accountants of Guyana, is committed to its members adopting and applying the standards set by IFAC. While nationalists (if they still exist) may consider this another form of colonialism, the fact is that international banks and multilateral lending agencies as well as investors, stock exchanges and domestic banks find comfort in financial statements that are prepared and audited to the highest standards of best practice, which are in effect the standards set by the major players.
The initial explosion in the verbosity of the audit opinion was a reaction to what was described as the expectation gap – auditors had to disabuse readers of any notion that the audit was somehow expected to detect frauds or that the auditors were responsible for the preparation and content of the financial statements. The report by the auditors rightly seeks to draw attention to the fact that the management is responsible for the financial statements and that the auditors’ duty is to report on those statements using such methods and techniques as would enable them to report in a most cost-effective (read profitable) manner.
Case brief
But the real reason for all the ‘wordiness’ is the fear of litigation, a fear that has dogged the accounting and auditing profession if not as far back as the South Sea Bubble (1720), certainly in cases like Kingston Cotton Mill (1896) which put the auditor as a watchdog not a bloodhound; Hedley Byrne v Heller (1963) which established the principle that when a person makes a statement in a professional capacity, he voluntary assumes responsibility to the person he makes it to unless he has put a disclaimer in his communication; BCCI (1991), referred to satirically as the ‘Bank of Crooks and Criminals International,’ one of the first cases in which the financing of international terrorism was an issue; and more recently, the 2003 Scottish case Royal Bank of Scotland v Bannerman Johnstone Maclay (‘Bannerman’), in which the court ruled that in preparing the audited accounts of their clients, APC Ltd, Bannerman may have owed RBS, one of APC’s creditor banks, a duty of care and therefore liable for any loss suffered as a consequence.
It was sufficient for RBS to show that Bannerman should have been aware that the accounts and audit report would be provided to RBS for the purpose for which RBS relied on them, even though they may have been prepared for a different statutory purpose. Crucial to the court’s reasoning was the absence of any third party disclaimer in the audit report – which has come to be known as the ‘Bannerman’ statement, used by auditors to discourage third parties from relying on the audit. It is widely believed that it was the presence of such a provision that protected Ernst & Young in a £350M case involving German truckmaker MAN and a subsidiary audited by Ernst and Young, which had been bought by MAN.
Not everyone is happy with such a disclaimer, and a suggestion by the Audit Practices Board of the UK to dispense with the Bannerman statement has met with consternation among UK audit firms. The leading accounting body in the UK, the Institute of Chartered Accountants in England and Wales, is convinced that the Bannerman statement remains a strong and integral part of the audit report, and that there is nothing wrong in principle with disclaiming any duty to third parties.
Tax evasion is not a crime?
In Guyana, some auditors give their blessing to accounts which have been accepted by financial houses and the Guyana Revenue Authority, but which even Alice would consider pure fantasy. During the last decade we saw some high profile receiverships in which businesses went under shortly after receiving clean reports from their auditors, causing massive losses to the banks. The GRA is too often the victim of some of the most spurious accounts imaginable and yet neither the banks nor the GRA has taken any action against any auditor.
Using history as their guide, auditors assume that the chances of their being sued by lenders for negligence in signing off on the financial statements of their clients are about as likely as snow in Guyana. Those auditors who also prepare the tax returns for their clients must know that those returns are relied upon by the tax authorities for the assessment of taxes and that under the Income Tax Act they can be held criminally liable for aiding and abetting in tax evasion.
Since in Guyana it does not appear that tax evasion is a crime then clearly aiding and abetting it cannot be a crime either! Instead of sanctioning those auditors and tax consultants whose product is so egregiously bad, the GRA routinely issues them with annual Tax Practice Certifi-cates that are used as a licence to continue in their ways.
One of the new rights created by the Companies Act 1991 is the right of the shareholder to have the auditors answer at the AGM questions relating to their duties as auditors. So far it is the directors who have been answering those questions and it would be fascinating to witness such an encounter between shareholder and auditor! That little exercise in shareholder demo-cracy may do more for governance than all the hundreds of words in the audit report.
Previous columns can be found at www.chrisram.net
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