Sale of GTT 20% shares…New Govt’s hands tied due to reckless sale contract – Odle

Mar 13, 2016 News

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This was not the usual sort of agreement. They sold the shares as if they were selling a car or a piece of furniture.

By Abena Rockcliffe

From all indications, the National Industrial and Commercial Investments Limited (NICIL)—under Winston Brassington’s management—was in such a haste to sell Government’s share in the Guyana Telephone and Telegraph (GTT) Company that it failed terribly to formulate a proper sale agreement.
As a result, the new government is having a hard time trying to secure the outstanding sum owed by Datang Telecom Technology and Industry Group.
In 2012, NICIL sold Government’s shares in GT&T for US$30M of which Datang paid up US$25M. The balance of US$5M was to be paid within a period of two years, but that account is yet to be settled.
Brassington failed to get the Chinese company to settle its debt. Because NICIL’s management has been unable to secure the outstanding sum, the Board of NICIL has intervened.
However, even the Board is having a hard time in this regard. Chairman of NICIL’s Board of Directors, Dr. Maurice Odle, told Kaieteur News that Datang is now saying that it will not pay up unless it is given more seats on GTT’s Board of Directors.
The 20 percent shares it now owns only entitles Datang to one seat on the Board. However, the company is holding out that it must inherit all that the Government of Guyana enjoyed while it was in possession of the shares.
It was a case of government having a privileged position and was given two seats on the Board.  But according to Dr. Odle, GTT is not willing to give Datang more than that to which it is entitled.

Dr. Odle, who described GTT as an “innocent partner” said that the telephone company is maintaining that Government and Datang have to sort out their own problems. However, he said that the company is only willing to give Datang a seat commensurate with the amount of shares it owns. “Nothing more, nothing less”.
There is a stalemate. “That is what is holding up resolution on the matter and Datang is adamant that it will not pay until it gets what it wants.”
Dr. Odle said that NICIL is now pondering its next move in this regard.
The Chairman explained that sale agreement is of no use to NICIL as it was not formulated in the best interest of Guyana.
The Chairman said, “This was not the usual sort of agreement. They sold the shares as if they were selling a car or a piece of furniture.”
In this regard, Dr. Odle pointed to the fact that the shares were sold in a manner that resembles a hire purchase agreement.
He said, “It was not done professionally. There should have been a definitive price and NICIL should have stood firm on collecting all the money at once.
Now that Guyana finds itself in this position it is hard to find a solution because of the fact that NICIL consented to an agreement that forces Guyana to petition a United Kingdom (UK) court to resolve financial issues.
The merit of NICIL’s decision to sell the shares was questioned by auditors.  The NICIL audit report revealed that a considerable amount of revenue has been lost due to that sale.

During the period 2002-2011, Government received $5.261B in dividends from the shares, or an average of $526.1M per annum. The audit report stated that government suffered a major loss in the disposal of the shares and that the 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.”
At a press conference he held a little before his retirement, Brassington could not 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.
Brassington admitted that Government used the money collected from the sale to offset expenses of the Marriott Hotel.
Asked about the fact that he agreed for Guyana to petition the UK court for resolution on any financial matter, Brassington had told Kaieteur News that it was “normal” for an agreement to have those sorts of arrangements.
Minister of State, Joseph Harmon, who sits on the NICIL Board, had explained 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.
Alternatively, Harmon promised to approach China’s Ambassador to Guyana, Zhang Limin for his intervention.
It is not clear what role the Ambassador is playing at this time and whether Harmon had indeed approached him as promised. Countless attempts made to contact Harmon proved futile.
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.

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