THE SECOND CORRUPTION DEBATE

Aug 24, 2012 Features / Columnists, Peeping Tom

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If the opposition had a strong basis for accusing the government of sinking in corruption, then the opposition does not need access to any more information before it can take part in the seven part debate series on corruption which is being hosted by the National Communications Network (NCN).
By retreating into making excuses about information, the opposition may be underrating its own performance in the two debates so far, and more especially the second debate when the AFC representative, Mr. Khemraj Ramjattan, was in vintage form.
The AFC leader held his own against a powerful lineup of government speakers and a representative from the private sector.
The fact that the panel was imbalanced cannot be blamed on the organizers. The main opposition, A Partnership for National Unity (APNU), did not turn up and therefore left it all to the AFC to hold off the tigers from the government side. The AFC representative held his own.
Had Glenn Lall been present, the government’s case would have fallen to pieces. Glenn Lall would have been too much for the panelists to handle, especially when it comes to his pet peeve, the Marriott Hotel Project. Glenn Lall believes that he knows what is behind that project and he has had the courage to make that known publicly. He was, however, not given that opportunity to be on the panel despite his newspaper being the one that has systematically exposed corruption and malfeasance within the government and done so consistently, and despite him being invited on a previous panel discussion where he was able to bring the debate back to focus when the government was engaging in all manner of irrelevancies.
However, the AFC representative despite not having the support of APNU and surprisingly not having his views shared by the private entrepreneur on the panel, still managed to convincingly debunk the arguments made by the government side.
The AFC’s position was simple. It does not support the hotel project because it is not commercially viable and the government should be using the monies that it is investing; in other projects- for example a bridge across the Demerara River.
The government, in turn, tried to argue that the project was commercially viable pointing to the endorsement of the project by the Marriott grouping. The problem with this argument is that the Marriott Hotel is not endorsing or pronouncing on the financial viability of the project. The Marriot chain is simply branding the hotel and they will be paid a fee for this.
So the Marriott is not going to lose as a result. If standards fall and the hotel runs broke, Marriott can make a seamless exit without affecting their overall brand. There is little risk to the Marriott Grouping branding this hotel. The Marriott’s participation cannot therefore be used as a sign that this investment is viable. Viable or not viable, Marriott will not lose.
On the other hand the taxpayers of Guyana have a great deal to lose. The bearers of the greatest risk are the taxpayers whose funds are going to be invested into this highly suspect project.
The government side was very weak in establishing that the hotel was viable. The AFC pointed out the poor hotel occupancy rate for hotels in Guyana and wondered how, given this reality, the hotel project could be feasible.
The government kept insisting it was, without providing any convincing evidence. The government side kept referring to a feasibility study which because it contains sensitive commercial information cannot be made public.
However, the government was willing to share the information in a closed-door session. The AFC should take the government up on that offer because it would be interesting as to just how a hotel of this nature can be profitable when so many other hotels are struggling for survival at the moment and have been doing so for a number of years.
The AFC also damaged the government’s case when it argued that if the hotel project was so viable as the government is claiming, why were private investors not investing in this project? Why if this project is so feasible was it necessary for the government to invest rather than foreign, regional and local investors?
The explanations offered by the government were very disturbing. The first explanation was that the local private sector did not have the capacity to raise the funds for a project of this nature nor the experience in putting together financial consortia to build the hotel.
This is not so at all. The financial capability is there. The commercial banks are highly liquid; the non-banking financial sector is also keen on investments that would guarantee a fair rate of return. So the money is there.
And the ability to form consortia is also there. Was it not a consortium of local private investors, along with the government, that invested in the Berbice River Bridge?
So how come now there is no such capability? What is missing is not the capability but the political will to involve the wider private sector and even the average citizen in investing in this very “viable” hotel project.
The second excuse for government substantial investment in this hotel project was that while the project was viable it was not sufficiently viable to generate the desired rate of return for the private investors. As such government had to come in with its investment.
Is this argument, suggesting that the taxpayers’ investment in this project is going to cross-subsidize the other private investors so that these syndicated investors can enjoy a favorable rate of return while the taxpayers are offered a less favorable return on their investments? The government needs to clarify just what is the rate of return for the government on their investment.
The government also needs to explain what is going to happen if this hotel project fails. Is it a case that the syndicated investors are going to have a first lien on the assets and the taxpayers whose contributions has been deemed as being so vital will have to absorb the losses. Is this what the government is saying?
While the government is at it, it needs to make public during the next series of debates on NICIL just what has been the rate of return for the government’s investment in the Berbice River Bridge and whether any dividends have been paid to the government and if so does this rate of return compare to what the private investors have been earning?
In that debate, it is hoped that APNU will join the AFC in demanding accountability on these and other issues and not opt out with some feeble excuse.
To be continued.

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