Brassington wobbles over Guyana Stores privatization

Feb 23, 2013 News

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…Court hears assets dipped by $400M before deal
…Brassington kept key documents away from investor

 

Winston Brassington, the man who signs off on Government’s privatisation deals faced the heat in the High Court yesterday as he was grilled over his handling of the privatization of Guyana Stores Limited (GSL).
Businessman Tony Yassin acquired the property in October 2000 and agreed to pay the sum of US$6 million. However, the government is suing him for an outstanding balance of US$2 million.
Brassington was the key negotiator in the privatisation, being the Executive Secretary of NICIL, the arm of government that controls the sale of state assets.
In the court yesterday, Brassington admitted that he kept crucial documents away from the investor.
Manniram Prashad, who was chairman of GSL before it was privatized, had warned that the company would face a serious cash flow problem if the company went ahead and paid out the interim dividend that Brassington ordered – an authority which he didn’t have in the first place.
Prashad had said that if the dividend of $358 million was paid out, it would have implications for the company’s debt status, that cash flow would be affected and working capital would be reduced.
A certain Mr Sharma, the Finance Manager, had also written about the negative impact on the financial status of the company.
Senior Counsel Edward Luckhoo, Attorney for Yassin, asked Brassington if it wouldn’t have been important to hand those documents over to the investor before the deal was signed.
Brassington said that while he did not include the document, the matters were “discussed” and that Yassin was aware of those issues.
Brassington further said that while he “partly” found the complaints by Prashad and Sharma to be serious, he did not necessarily respond in writing, even though he is most times a “careful and methodical” person.
Brassington denied that he deliberately kept the documents away from Yassin because he did not want him, Yassin, to know what was happening.
The Privatisation Unit had submitted a bundle of documents to the investor for him to consider when submitting a bid for the property, but Brassington said that the documents were not to be relied on.
Pressed further by Luckhoo, Brassington first said that the documents were not meant to “enable” the investor to make a proposal. He had to eat those words when he was directed back to the documents which said exactly that the documents were meant to “enable” the investor to make a decision to put in a bid.
However, Brassington insisted that the information which he provided could not have been relied on by the investor to put in a proposal, but yet he vouched for the accuracy of the information he provided.  Brassington said that the investor was required to do his own investigation to verify the accuracy of the documents.
Things took another turn when Brassington vowed to have shown Yassin a document that the net current assets as of May 23, 1999 was $200 million. While the investor has denied receiving the information, Brassington said he could produce a copy with the signature of a representative of the investor. He agreed to provide the court with the letter.
However, investors were told of the company having net current assets of $603 million. And while Brasington revised that to say that certain assets were hived off to a company called Property Holdings Limited, reducing the net currents assets to $200 million, at a board meeting in December 1999, he presented the company as having $624 million.
It was at that meeting that Brassington ordered the payment of dividends. Asked by Senior Counsel Luckhoo if he would recommend payments of dividend even if it meant having to borrow to repay it, Brassington said, “Yes, in certain circumstances.” Brassington returns to court on Monday.
The case is being heard by Justice Roxanne George-Wiltshire. NICIL is being represented by Rafiq Turhan Khan, while Yassin is being represented by Senior Counsel Rex Mc Kay and Edward Luckhoo.
In an affidavit signed by Mr. Tony Yassin, he admitted that on October 4, 2000, he entered into an agreement with National Industrial and Commercial Investment Limited (NICIL) to purchase the shares in Guyana Stores Limited which was owned by the Government of Guyana.
Furthermore it was stated that before entering into the agreement with National Industrial and Commercial Investment Limited, Yassin was given various information memoranda on June 5, 1996 and packages in March 1999 in respect of the matters and facts which were peculiarly within the knowledge of the NICIL, the Government and Privatisation Unit.
To these, the defendant stated, he had no access method of verifying through his own investigation and inquiry.

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