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Sale of GTT shares… Guyana loses over US$7.5M in three years – audit
NICIL CEO, Winston Brassington
The merit of the National Industrial and Commercial Investment Limited (NICIL)’s decision to sell Government’s 20 per cent shares in the Guyana Telephone and Telegraph Company (GTT) is being questioned by auditors. The NICIL audit report revealed that a considerable amount of revenue has been lost due to that sale.
In 2012, NICIL sold Government’s shares in GT&T for US$30M of which the sum of US$25M was received. The balance of US$5M was to be paid within a period of two years, but that account is yet to be settled.
A section of the audit report on NICIL has pointed out that during the period 2002-2011, the Government received $5.261B in dividends from the shares, or an average of $526.1M per annum. However, it was stated that government suffered a major loss in the disposal of the shares and that that sale was a blunder.
The Auditor said that by disposing of the shares, “the Government would have lost $1.578B, equivalent to US$7.616M, in revenue during the period 2012-2014.”
Further, it was pointed out that the purchaser of the shares, Datang Telecom Technology and Industry Group would therefore recover the cost of the investment in less than 12 years by way of dividends, while at the same time retaining the investment.
“This calls into question the merit in the Government’s decision to dispose of GTT shares.”
Even Head of NICIL, Winston Brassington, had admitted that government sold the shares at a time when it was reaping heavy dividends. He said this at his most recent press conference, held two days before Government announced a decision to send him on leave.
At that forum, Brassington could have given the media any logical reason why government was so eager to sell the GT&T shares.
The eagerness to sell was called into question when Brassington said that the government was forced to take the deal with the Chinese company as it was getting no better offers at the time.
Even though he could not have defended the reason for sale, Brassington said that he thinks that government made a good call in selling.
“We sold at a good time, because dividends have not been so bright since,” said Brassington.
The embattled official claimed that since he sold government’s shares, GTT has not been giving very handsome dividends in comparison to what was given before.He claimed that his sources at GT&T indicated that only US$1M ($200M) has been paid in dividends since the sale.
Brassington admitted that government used the money collected from the sale to offset expenses of the Marriott Hotel.
Additionally, financial analysts questioned why NICIL consented to an agreement that forces Guyana to petition a United Kingdom (UK) court to resolve financial issues.
Guyana’s options in trying to recover the outstanding US$5M from Datang Telecom Technology and Industry Group are limited. To recover this money, Guyana finds itself in a begging position.
Up to recently, no known actions were actively being taken to recover the sums owed. This is despite the fact that the payment is long overdue.
Minister of State, Joseph Harmon, who is a NICIL board member, had told Kaieteur News that the options are limited.
“We have only two options one of which is to take Datang to court.”
However, the Minister said that if the court route is pursued, the government will have to spend millions of dollars to get the outstanding sum from the Chinese company.
Harmon said, “The jurisdiction, set out in the agreement itself, is the United Kingdom, so we would have to go and get a lawyer in the UK and so on.”
Alternatively, the government can seek the intervention of China’s Ambassador to Guyana, Zhang Limin. Harmon said that is the course currently being pursued and he has undertaken the task to speak to the Ambassador.
Brassington had told Kaieteur News that it was “normal” for an agreement to have those sorts of arrangements.
The name Datang had previously remained obscure as a result of the confidential agreement which was entered into in early 2011 with the PPP Government. It only came to light following the finalization of the sale.
Datang had come in for scrutiny after it was discovered that the company actually featured in a US intelligence report as a company with links to the Chinese Military and was accused of spying.
When the shares were initially placed on the market, GTT employees had offered to buy them, but this was rejected by the Jagdeo government, which was adamant that the shares had to be purchased en bloc.
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