SARU conducting inventory of high-rise buildings in Guyana

Jan 08, 2017 News

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“The reality is that we have an underground economy and we need to ascertain who are the people involved,”-Professor Thomas

“We want to know who own these buildings; how they got the money to finance them and if they

are paying their taxes.”
This statement was made by Head of the State Asset Recovery Unit (SARU), Dr. Clive Thomas. He said that the Unit is currently mapping all the high rise buildings in Guyana. It has commenced works in and around Georgetown.
The Chairman said that this will be part of SARU’s work when it becomes the nation’s anti-corruption agency after its legislation is passed in the National Assembly.
Minister of State, Joseph Harmon recently told the media that the draft legislation for SARU is finished and is before Cabinet for consideration before making its way to the National Assembly.
Professor Thomas said that the reason behind doing an inventory of all the high rise buildings in Guyana is to ensure that “they are legit”.
“We want to ensure that the money used to construct them was clean, that the building is not a shell company, that the owners are paying their taxes , that the building is not being used as a conduit for corrupt activities; and that even the land was lawfully obtained.”
He added, “We aren’t aware if this initiative is something that other agencies are also pursuing but as far as we are aware, it is a key focus. A lot of the revenues of the state, or a lot of the underground economy sees capital being invested in these buildings; money laundering so to speak.
“The reality is that we have an underground economy and we need to ascertain who are the people involved.”
Chief Executive Officer of SARU, Aubrey Heath-Retemyer, said that already, the department of the Ministry of the Presidency has been able to do an inventory of over 100 buildings in Guyana. He said the work of Guyana’s anti-corruption unit will be comprehensive and it will be far reaching.
He said that as an anti-corruption entity, it is going to be their responsibility to know the legal businesses in Guyana, and to ensure that those businesses obtained assets of the state, such as land, in a lawful manner.
“How do you justify building a complex several stories high and you are only using the ground floor and there is no other activity going on in the upper floors? If you are paying a mortgage, you can’t afford to just use the ground floor of a four or six storey building…
“I lived in America for 23 years and anything of that nature would raise eyebrows. This is really a bizarre society that we are living in,” expressed the CEO.
Heath-Retemyer said that this is just one of the many things SARU is doing while it awaits the passage of its legislation.
He said, “We are not sitting back, arms down and counting the time. We are working and doing a lot of research so that when we become an agency, we can hit the ground running.”
Additionally, Dr. Thomas said that what has been posing a difficulty is that during the mapping of some of the high rise businesses, agencies such as the Deeds Registry are unable to provide the relevant documentation to say whose name the land or business is registered in.
Heath-Retemyer said, “We repeatedly went to the Deeds Registry regarding a particularly mysterious high rise building in the city of Georgetown and they were pathetic, they just couldn’t tell us anything much. We had to end up using a different approach.”

UNDERGROUND ECONOMY
Based on a study he conducted over the period 2001 to 2008, Dr. Clive Thomas has found that the underground economy yields a size of approximately $188B or US$940 million.

He said that the government really needs to concentrate a lot of its efforts towards this worrying area, so as to demonstrate its commitment towards reducing corruption.
He explained that Guyana’s underground economy refers to corrupt transactions that are prohibited by law and/or are undertaken by unauthorized providers. It has two main drivers: tax evasion and regulatory non-compliance.
The economist said that operators, ranging from individuals to highly organized criminal enterprises such as those trafficking narcotics, persons, arms and gold.
Professor Thomas said too that government needs to also place special attention on two other areas of significant illegality and corruption in Guyana, which generate massive economic hemorrhaging; namely, illicit capital flight and the criminal underground economy.
Dr. Thomas explained that in Guyana, illicit capital flight refers to assets, whether legally obtained or otherwise by residents, which are intentionally transferred, smuggled, or sent abroad without the knowledge of the Guyana Revenue Authority and other oversight authorities.
These, he said, are not generally intended to yield proceeds that will be returned to the country. Because these transactions are illegal, they are kept secret. “Therefore, when capital flight occurs, the capital disappears from Guyana’s financial/asset records, even though it might turn up in records elsewhere.”
He told Kaieteur News that he firmly believes that this has occurred by the billions under the PPP/C and stressed that as the new government pursues all its forensic audits, this aspect should also be given attention.
“During the 1980s and 1990s, capital flight was widely acknowledged as a major problem confronting Guyana. During the 2000s however, it has been barely referenced by the Authorities. During that time, capital flight resumed with a vengeance.
“This took place because the previous ruling political elites promoted collusion, through mutually-supporting networks, with criminal endeavours seeking to evade the regulatory and oversight functions of the state,” Dr. Thomas said.
He added, “As I have argued elsewhere, this constitutes the starkest reminder of the ongoing criminalization of the state…”
While the drivers of the collusion between state officials and criminal operators were too many for him to mention, Dr. Thomas cited some of the key ones: the realization of the gains from crime, ranging from individual raiding of state coffers to the transfer of organized crime proceeds, the evasion of political and economic uncertainty and most importantly, fears caused by bad governance.
The economist said that these drivers reveal that illicit capital flight is deeply intertwined with other criminalities such as procurement fraud, money laundering and the criminal underground economy.
He then made reference to data accumulated from two international sources responsible for annual tracking and reporting on aspects of global capital flight, including Guyana. One is the United Nations, and the other is the Global Financial Integrity (GFI) founded in 2006.
Dr. Thomas said that for the years 2010-2012, Guyana’s illicit financial flows had averaged US$443million or about $90billion. Although these flows do not fully account for total capital flight, he said that they provide an order of magnitude for that sum.
He said that by any standard, this is a humongous amount that has risen rapidly during the 2000s. “Retrospectively, the2010-2012 average compares to US$83 million back in 2003.This had doubled to US$173million by 2006, and doubled yet again by 2010 to US$575million. The recorded growth in capital flight therefore, has been explosive during the 2000s,” he added.
The new government, he said, if committed to good governance, should carefully milk this potential windfall for the benefit of Guyana’s poor and hither to powerless.

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