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ODINGA and CAPITAL GAINS

May 31, 2010 Editorial

Several weeks ago the Stabroek News exposed the sale by the Government to Presidential Adviser and Cabinet Member, Mr. Odinga Lumumba, of a portion of land in Durban backlands for $1.5 million dollars, which he resold for $38 million after revaluing the land upwards to $38 million, the sale price. He made a profit of $36.5 million.

The Government has made no response in relation to the steps which may have been taken to ensure the transparency of this transaction or of any possible conflict of interest.

In a subsequent editorial, “Capital Gains”, this newspaper raised two issues: the conflict of interest posed when a member of the Cabinet engages in business transactions especially when it involves government properties and the tax implications of the transaction in question.

The editorial analysed the relevant provisions of the Capital Gains Tax Act and pointed out that under those provisions, capital gains tax of approximately $9 million dollars was payable on the transaction. It argued that capital gains tax was payable at the rate of 20 percent on the difference between the cost of acquisition and the sale price if both transactions occurred within less than 25 years.

There was no response from Mr. Lumumba as to whether Capital Gains Tax was paid on the transaction. Instead we have had a public campaign by Mr. Lumumba to prove that the PNC and its Minister, Dr. Pat McKenzie, approved tens of thousands of acres of land in Berbice and Essequibo to him.

This campaign, having raised more questions than answers – did Mr. Lumumba comply with the terms of the lease of the Berbice lands? Does the Lands and Survey Department have any record of the Essequibo lease? – has diverted attention away from the more important issue of his payment of Capital Gains Tax which has now disappeared from the headlines. We are not saying that this was deliberate but it is a fact.

We expect that Mr. Lumumba, being an elected Member of Parliament and holding important public offices, including being a member of the Cabinet and an Advisor to his Excellency the President, would have paid Capital Gains Tax on the transaction.

The consequences of not doing so, especially in the light of the revaluing of the property to the identical price of the sale before the sale actually took place and after the agreement of sale was signed, would indeed be very serious both for Mr. Lumumba and the Government and Party, the PPP, which he serves.

Because of the offices and positions that Mr. Lumumba holds, because he is the only known holder of a salaried public office permitted to engage in private business, because of his public profile as a regular member of the presidential team on local visits and foreign trips, Mr. Lumumba owes the nation a response on this matter. If he does not choose to respond, his employer, the Government, or his party, the PPP/C, owes the public an explanation.

This explanation is not owed merely because Mr. Lumumba was engaged in the transaction. It is owed because Mr. Lumumba paid in the vicinity of $800,000 to have the property revalued so that the transport value to him from the Government would be the exact sale price he obtained for the property. Why was this done?

This takes the matter beyond the realm of the private, quite apart from Mr. Lumumba’s positions and the issues of transparency and conflict. This is why if Mr. Lumumba feels that he does not owe the public an explanation then the Government and the PPP does.

If Mr. Lumumba or the Government feels that he has no public obligation to reveal if he has paid Capital Gains Tax, then all he has to do is follow developments in Trinidad and Tobago. This will not go away, Mr. Lumumba, no matter what racially tinged slogans you hurl!

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