NICIL has been made into a parallel treasury

Feb 27, 2013 News

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– Former Auditor General

Numerous state properties were transferred to the National Industrial and Commercial Investments Limited (NICIL) from 1999 to date, but the proceeds from their disposal were not paid into the Consolidated Fund.

Rather, the proceeds, to the tune of billions of dollars, remained in NICIL, and therefore outside of the authority of Parliament which would approve spending from such funds.
There have been accusations that government, using NICIL and its monies, is controlling a slush fund of taxpayers’ monies that would not have oversight from the National Assembly. One such project is the US$51M Marriott Hotel which is being funded from the sale of the 20% shares that government had in the Guyana Telephone and Telegraph Company (GT&T). Almost US$25M has already been collected and retained by NICIL for that.
It is the decision by government to allow NICIL to retain these monies and not turn them over that has the Opposition parties and a number of critics smarting.
According to former Auditor General, Dr. Anand Goolsarran, when state assets vested in NICIL are sold, a windfall gain is achieved, since NICIL acquired them from the Government free of cost.
“This apart, the vesting of assets for the purpose of selling them is not in keeping with relevant section of the Public Corporations Act that was applied to vested assets in NICIL,” he wrote in his column in the Stabroek News on Monday.
That section, he stressed, deals with the vesting of assets in a new corporation to assist it with its start-up operations and does not give NICIL the power to retain the monies.
“The proceeds should therefore have been paid over to the Consolidated Fund, net of expenses. Instead, NICIL retained them to be used at the discretion of the directors,” Goolsarran said.
NICIL and its head, Winston Brassington, and the ruling administration, have been under pressure to account for the assets and monies that NICIL and its arm, the Privatisation Unit, handled over the last decade.  There were accusations that many of these properties found themselves into the hands of friends.
Secrecy
With annual reports of NICIL, as a company, as well as NICIL’s consolidated reports, being tabled within recent years, after delays, the shroud of secrecy over the numerous transactions has slowly been lifted. However, several questions have remained unanswered.

Government, in defence of NICIL, said that the company was allowed under the law to keep the revenues. The Opposition, on the other hand, has been insisting that NICIL has no authority to hold on to those millions and that the entity is not like other company since its very assets and proceeds from disposals belong to the people of Guyana.
According to the former Auditor General, prior to 2002, NICIL was a small administrative outfit that monitored the Government’s investments in public corporations and other entities. Its role was mainly to ensure that all revenues derived from these investments were collected and paid over to the Consolidated Fund. For this, NICIL received a small Government subvention which for 2001was $4.6 million.
The main objective of the company, as set out in its incorporation documents, is “to subscribe for, take or otherwise acquire and hold shares, stocks, debentures or other securities of any company, co-operative society or body corporate”.
However, this all changed from 2002 when Government’s shareholdings in public corporations and other entities were transferred to NICIL, and the dividends received were retained as NICIL’s revenue, instead of being paid over to the Consolidated Fund as had been the practice prior to 2002.
According to Goolsarran, government’s decision for NICIL to take over the Privatisation Unit, which was part of the Ministry of Finance, cuts across legal boundaries since one just cannot cannot “hive off” a significant chunk of a Ministry and vest it in a company incorporated under the Companies Act, notwithstanding that it is a government company.
What compounded matters was that the then President, Bharrat Jagdeo, issued a notification on July 18th, 2000, that saw a significant amount of transfers of state assets to NICIL, as well as their disposal. That notification made Section 5 of the Public Corporations Act applicable to NICIL, in spite of the fact that this section is applicable to new public corporations to assist them with startup costs. NICIL is not a new entity since it was incorporated since 1990.
Diversion… investigations
“The cumulative effect is that from 2002, a significant portion of State revenues was intercepted, diverted away from the Consolidated Fund, and placed under the control of NICIL.”
As in the case of the Guyana Revenue Authority, NICIL is merely a collecting agency on behalf of the state.

In his arguments, Dr. Goolsarran contended that NICIL was incorporated under the Companies Act to monitor Government’s investments and to ensure that all revenues derived are promptly collected and paid over to the Consolidated Fund.
However, with effect from 2002, NICIL’s operations took on a different complexion through three highly controversial actions. These include the transfer of Government’s shares in public corporations and other entities; “the hiving off of the Privatisation Unit of the Ministry of Finance; and transferring it to NICIL and the vesting of state assets in NICIL.”
The former Auditor General has a few recommendations for government to correct the situation.
These include realigning NICIL to what it was prior to 2002 or alternatively wind up its operations.
Government should also ascertain precisely how much should have been paid over to the Consolidated Fund from 2002 to present date against what was actually paid and initiate an investigation as to what happened with the difference.
Disciplinary action should also be taken against concerned officials if it can be established in a Court of Law that laws have been broken.

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