WHAT WAS THE PRICE PER SHARE?

Jul 19, 2009 Features / Columnists, Peeping Tom

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There has been a serious reversal of the PPP’s commitment to the Privatization Policy Framework Paper (PPFP) which was initiated by Dr. Cheddi Jagan and which outlines the principles and methods underlying the divestment of public assets. If the Jagdeo administration is no longer committed to the process as adumbrated within the PPFP it should signal to the Guyanese people that it is pursuing the disposal of State assets under its own terms and should delete Cheddi’s PPFP as the official White Paper on Privatization.
The PPFP was openly violated through the manner in which the Sanata Textile Complex was divested. It is equally worrying that the government, seemingly in violation of the principles outlined in the PPFP, opted to offer Atlantic Tele-Network, the principal shareholder of the Guyana Telephone and Telegraph Company, the 20% shareholding that is held by the government.

The government is justifying the decision to sell on the grounds that the shares allow it very little influence over the company – an indisputable and historic fact – and inconsistent and relatively unattractive returns in the form of dividends.
The government should let the public decide by publishing the value of the shares and the returns it has received over the past few years from the company. There is no problem with confidentiality here because this can be done by any accountant armed with a copy of the company’s most recent annual report. Let the public decide whether these shares are worth holding on to.

If these shares are no longer attractive to the government, I wonder why they would be attractive to the private sector. Unless, the reason is that they will be sold at a significant discount on the face value.
If the shares are no longer profitable to hold by the government, if alternative uses can be found for the money to be gained from the disposal of these shares, there still remains the question as to why in the first place the government opted to sell it to the telephone company.
The PPFP is opposed to what it terms privileged positions in the divestment process, and specifically mentions monopoly rights. It was therefore highly unfortunate that the government, which is supposed to be in negotiations with the telephone company to break that company’s stranglehold on overseas telephone calls, should be strengthening the hands of the company by offering the parent company the option to buying the government’s 20% interest in the utility.

The company has refused the offer. The company may be playing for a lower offer since it knows that whoever buys those shares will do so only for the dividend since the 20% shares, while entitling the purchasers to representation on the Board, does not secure any major influence over what takes place within the firm. Thus why buy at the price asked when the company can hold off and wait for a better offer.
The government has said that it reserves the right to sell the shares to whomever it pleases should the offer to ATN be declined. I am calling on Mr. Winston Brassington to point out under which section of the PPFP, the government has such a right to sell to whomever it pleases.

The PPFP is very clear that to ensure transparency of operations and whenever feasible, any disposal of government property, whether in the form of shares or assets, shall be through competitive bidding.
The PPFP makes provision for the sale through public offering of shares and also makes provision for 10% of any capital stock for privatization to be reserved for employees. While this later provision is specified in relation to public enterprises, the principle that underlies it is the empowering of workers and thus there is no inconsistency with the PPFP if minority shares held by the government are sold to workers.
The Leader of the Opposition must therefore be commended for the admirable stand he has taken in calling for the workers of the company to be offered the right to buy the shares. He must further be congratulated for his decision to bring this matter before the National Assembly.

He should however be armed with all the information necessary before he engages the ruling party in a debate in the National Assembly. He should not presume that the government will be forthcoming with the details of the price at which they offered the sales to ATN.
This information is critical. It is important that it be made known whether ATN was offered the shares at an inflated price. It is important also because if the government decides to sell these shares to its friends and cronies, the price at which it offers to do so must be compared with the price it offered to sell to ATN.

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