Latest update December 2nd, 2024 1:00 AM

Guyana's largest selling daily and New York's most popular weekly

Latest News

SWEET MAN DEAL

May 28, 2014 Features / Columnists, Peeping Tom

Imagine you have an idea which you think will be successful. This idea is to establish your own business.
You have good reason to believe that if you go ahead and establish this business, it will be highly profitable for you. So make the decision to go ahead. There is however one obstacle. You have no money.
However, all is not lost. There is now hope, newly discovered hope. You see the government has come up with a new model. In this model, they put up over two-thirds of the money for any enterprise. All you have to find is one-third and then you end up owning the enterprise. It is simple as that.
Take for example the business idea that you have. You estimate that it will cost some four million dollars. All you have to do is find half a million dollars. The government will put in two million seven hundred thousand dollars and the remaining three hundred thousand will be invested directly by the government as shares in your business. Thus the total equity is one million three hundred thousand dollars and you hold one million of these. Even though the total cost of the enterprise is four million and the government is putting up in total two million seven hundred thousand, it still ends up being a minority shareholder because of the financial model in which only one million three hundred thousand of the total investment is equity and thus subject to the ownership of shares, the remainder is being given to you by the government as a loan. Now, which investor is going to refuse a deal like this, especially when one considers that the rate of return on your investment is very good and the interest rate for the repayment of the loan given by the government is very low.
This is the model that the government is using for the Marriott Hotel. The government is putting close to four billion dollars into the venture. The two private investors are placing a mere 1.6 billion but this 1.6 billion is translated to a 67 per cent ownership, a controlling ownership in the hotel. And the reason for this is simple, the government is investing only 800 million in equity. It is lending the hotel the rest of the money, in excess of three billion dollars.
When the hotel as anticipated goes bust, all this money will go down the drain and the people of Guyana will be the losers. The private investors will smile all the way to the bank because if the company forecloses and many expect it to, they will have the first claim on the liquidated funds.
This is the same model that was used in the Berbice River Bridge. The government put the most money in but has ceded control of the Board of the Bridge Company. It therefore has little influence over the company because of the model it has pursued.
What this model does is allow for private investors to profit through the use of public funds and this is clearly an untenable situation. The problem is that these deals have been firmly cemented in contracts between the various investors and therefore have the protection of the law. They are legal deals which cannot be overturned.
During the era of the PNC, the then PPP opposition spoke about sweetheart deals. These deals being made by the PPP are not sweetheart deals. They are better described as sweet man deals because it is just like having a lover on the side. In order to support this lover you take money from the home, in this instance the people, and you use it to support the lover on the side.

Similar Articles

The Glenn Lall Show | November, 20th, 2024

Follow on Tik Tok @Glennlall

 

THE BLUNT OF THE DAY

Sports

Wharton’s brilliance propels Chase’s Academic to another Republic Bank U18 title

Wharton’s brilliance propels Chase’s Academic to another Republic...

Dec 02, 2024

Kaieteur Sports- Chase’s Academic Foundation reaffirmed their dominance in the Republic Bank eight-team Under-18 Football League by storming to an emphatic 8-1 victory over Dolphin Secondary in the...
Read More
Seales’ 4 for 5 gives West Indies control as Bangladesh fold for 164

Seales’ 4 for 5 gives West Indies control...

Dec 02, 2024

WARRIORS BOUNCE BACK AGAINST HAMPSHIRE

WARRIORS BOUNCE BACK AGAINST HAMPSHIRE

Dec 02, 2024

Victoria go top with second win

Victoria go top with second win

Dec 02, 2024

GFF and Namilco officially launch Maid Marian Wheat Up Women’s Cup

GFF and Namilco officially launch Maid Marian...

Dec 02, 2024

GFF celebrates the successful completion of Georgetown Girls’ Football Festival

GFF celebrates the successful completion of...

Dec 02, 2024

Features/Columnists

Publisher’s Note

Freedom of speech is our core value at Kaieteur News. If the letter/e-mail you sent was not published, and you believe that its contents were not libellous, let us know, please contact us by phone or email.

Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]