A new government can cancel contracts

Jan 23, 2012 Letters

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Dear Editor,
Dr. Luncheon and the PPP are wrong on the contract issue. Their position that Guyana is tied to the Jagdeo contracts and cannot cancel those contracts is flawed. A new government has the executive power to review previous contracts and to cancel those contracts. It is within the inherent authority of a new executive/government.
Some of the Jagdeo contracts were obviously made in breach of the established convention that governments will not enter into new contracts during the election season. That convention has been honoured by previous Guyana governments including previous PPP administrations. These deals plant the new government, Parliament and the entire nation at a disadvantage and impose fundamental unfairness and hardship on those arms of the nation. Secret deals made by a suspect outgoing administration cannot stand.
Most critically, this is not the configuration of old. The executive and the legislature are not married like under previous PPP administrations. These two functions are controlled by different political entities and if one partition fails to review and cancel a contract, the other has the power to do so. If they differ on the contract and play political jujitsu of approving and cancelling the contract, the contract is effectively suspended and cannot be executed while in legal limbo. If the current PPP administration is somehow afraid of reviewing and where necessary cancelling these contracts, Parliament can exercise that right.
It is hollow for the PPP to contend that it is bound by these existing alarming deals yet it cancelled Fip Motilall’s Amaila road contract with great alacrity to avoid the embarrassment and exposure that an opposition-controlled Parliament would have facilitated.
The same power that is vested in the current Ramotar administration to terminate Synergy’s contract resides in the administration to terminate other horrendous deals entered into by the Jagdeo regime.
The Ramotar government cannot pretend to claim that it possessed the power to cancel a contract which was already executed by Synergy but it somehow is devoid of such force to cancel contracts for the Marriott or the Timehri airport extension, which have not yet been started.
It is devious and nefarious to suggest those contracts cannot be stopped when they have not yet been started or barely commenced.
The PPP has to stop telling us about penalties for cancelling these suspect contracts and provide the public with calculated penalties for each contract. We need to know the figures in question. Motilall’s disastrous Augean task of a road to nowhere has a ludicrous US $120,000 penalty attached to it after we, the Guyanese people, have paid Motilall of sari shop and road-building fame some US $5.8 million (KN claims it is US $8.5 million). It will take millions of US dollars to fix this debacle.
So, the PPP cannot ever tell us that penalties pose a problem to the cancellation of these contracts. Sometimes it is cheaper to pay penalties than to continue a contract that leaves a staggering legacy of fiscal servitude and raw failure. The Amaila Falls project has jumped US $200 million in several months.
The last number was US $835 million or $167 billion Guyana dollars. That is $222,666 owed by every Guyanese and counting. Why shouldn’t taxpayers pay a few million US dollars in penalties to cancel this contract rather than watch this behemoth become a yoke that drags them through the mud of financial indentureship? The PPP must make these contracts public so that the every man can review it and see what these nightmarish provisions are that Luncheon insists prevent their termination.
The argument that the Ramotar administration is hobbled by atrocious Jagdeo contracts is a fallacy. I can understand the new administration not wanting to offend the Chinese government, which has provided cheap loans to Guyana and with whom we want to maintain a good relationship. But the Chinese government fully understands the inherent authority that resides with a new government and Parliament duly elected by the people.
When the People’s Republic of China was formed, it refused to be restrained by the contracts of the previous administration. It is time Parliament reviews these contracts with a fine tooth comb. It must be pointed out that a mere mistake or even non-performance of a minor aspect of the contract by either party can be used to cancel the contract.
I cannot see any jeopardy to our Chinese investors and more importantly the Chinese government in cancelling these contracts and in fairness and as a form of workable appeasement, have these contracts re-tendered in an open and transparent bidding process that involves Chinese companies.
The Chinese government would not oppose this approach as Chinese companies still benefit in an open process and our relationship with a vital financing partner remains intact. Roger Luncheon must really believe he is preaching to a choir of fools.
 M. Maxwell

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