A QUESTION OF POLEMICS VS. A FACT IN LAW

May 10, 2012 Features / Columnists, Peeping Tom

---

 

A senior operative of the Government of Guyana has been quoted by letter columnists to have said that the National Industrial and Commercial Inc Limited (NICIL) is a private company.
This statement whether or not actually originating from the government official– he has in other instances indicated that he was consistently being misrepresented in the media– has caused a tizzy in some circles since some persons find it difficult to understand how it is that an enterprise in which the government owns 100% of the shares, is not considered as part of the government but is described as a private company.
The only logical explanation is that whoever made this assertion that NICIL is a private company or that NCN is a private company was attempting to make a distinction between an entity that is part of Central Government and a company that is not.
Legally speaking it is defensible for someone to assert that a 100% government-owned public corporation is not part of the government. But saying that it is a private concern may be a bit inelegant when addressing laymen.
In the case of Wifentinga V. Insurance Corporation of Sri Lanka (1985), Sharvenanda ACJ held that: “It is a matter of significance that the corporation employs its own servants and officers and exercises disciplinary control over them. Its servants and officers do not belong to the public service… Where the employer is a department of government, no question of separate legal entity arises. The question however becomes different when the business is carried out through a separate legal entity, for example, statutory corporations, because in such a case the employee is a servant of the legal entity other than the Government.”
In this regard both the NCN and NICIL may for legal purposes not be considered part of the Government.
There is within the opposition a great deal of interest in NICIL. And this concern stems purely from the statutory role that NICIL plays in the retention of the funds from privatization. But the agency that really does the technical work as regards the divestment of state assets is the Privatization Unit.
The Privatization Unit has attracted its fair share of criticism over some of its divestment deals. NICIL in turn is giving certain members of the old oligarchy in Guyana headaches because of the possibility of it sinking equity financing into a major hotel project that is to be branded by the Marriott chain.
As such, there are persons out to ensure that this deal does not go through since it threatens vested interests within the old oligarchy which is being overrun by the new oligarchs ( more about the war of the oligarchs in a subsequent column).
In these circumstances, both NICIL and the Privatization Unit have found themselves more in the public eye than ever before and while there is a legitimate claim that both agencies should be allowed to defend their divestment deals, a distinction between the propriety of these deals and the legality of NICIL retaining funds accrued from divestment are two separate issues.
There is without doubt a need for greater disclosure and transparency as regards deals regarding divestment and NICIL investment. The government itself has been opening up and recently even held a special briefing for the opposition on the Amaila Falls Project.
Since then the funding for this project has been cut from the Budget even though the criticisms of this project have fallen off the radar of the opposition in so far as criticisms are concerned.
The government also released a number of contracts which involved the Privatization Unit. So there is improved transparency and there is nothing to prevent the opposition from using its majority in parliament to press for greater explanations as regards other contracts.
However, even if it is found that these deals had major problems, this does not trigger a legal obligation on the part of NICIL to dissolve itself or to pass its proceeds through the Consolidated Fund. Legally it cannot, once it exists as a public corporation, pass its proceeds through the Consolidated Fund, except for the payment of dividends.
In so far as NICIL is concerned nothing has been presented that establishes a case for the proceeds held by NICIL to be transferred into the Consolidated Fund. And nothing is likely to be presented to establish a strong legal basis for such action.
In the circumstances, the status quo will have to remain and NICIL, like NCN, can in strict legal parlance be deemed as separate legal entities from the Government. Whether they can be called private, is a question of polemics.

---

---