Fired: GuySuCo’s boss, board sent packing

Jun 04, 2015 News

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– former CEOs tipped for IMC

– COI to be established before month-end to chart industry’s future

Government yesterday fired the Chief Executive Officer (CEO) and the entire board of the Guyana Sugar Corporation (GuySuCo), citing increasing losses and waste in recent years.

An Interim Management Committee (IMC), to be headed by former CEO Errol Hanoman, will take the reins of what is the country’s largest single employer. Also tipped to return is former CEO, Paul Bhim, who will work under Hanoman in the IMC.
The decision to dismiss CEO, Dr. Raj Singh, and ask for the resignation of the Board was taken by the Cabinet on Tuesday.
A Government of Guyana statement said that on the directive of Cabinet, Agriculture Minister, Noel Holder, yesterday issued the letter of dismissal to Singh. It takes immediate effect.
“In addition, members of GuySuCo’s Board of Directors have been instructed to send in letters of resignation with immediate effect.”
Explaining the decision, Government stressed that GuySuCo has been suffering increased losses over the years. “In 2014, the sugar Corporation received a $6B bailout. For this year, the Corporation has requested a $16B bailout package.”
Kaieteur News was told that following a request from GuySuCo last week, Minister Holder went to the Cabinet meeting Tuesday and reported that the Corporation was asking for a $16B bailout.
The Cabinet of Ministers bluntly refused, not convinced that the current dismal situation would be reversed even if such the bailout proposal was entertained.
“Over the years GuySuCo has been sinking further into debt due to ineffective operations both at the financial and production levels,” the Government statement said.

Management Committee
To ensure that the Corporation continues to survive, the Government will be putting in place an IMC that is expected to take effect from today and which will oversee the Corporation for at least six months.
“Before the end of this month, the Government will establish a Commission of Inquiry (COI) to look in to

the operations of GuySuCo and chart a way forward.”
According to a Government official yesterday, President David Granger and the Cabinet of Ministers were “not happy with the bailout request. The CEO and the Board were dragging the industry down. It was well ventilated in the press but no actions were taken. As a country, we cannot continue this way.”
The Cabinet of Ministers was convinced that such a massive amount of funding will only be mis-spent.
According to the Government statement yesterday, workers should not worry. “The Government wishes to assure workers of GuySuCo that they will be paid and there will be no closing of the sugar corporation.”
The mandate of the COI will be tasked to make recommendations to return GuySuCo, with its seven estates in Berbice and Demerara, and 16,000-strong workforce, back to profitability.
Kaieteur News was told that Hanoman and Bhim only agreed to return if Dr. Singh, a former Chairman of the Board, was no longer around.
Hanoman, who has extensive knowledge of the local sugar industry, was hired by GuySuCo as CEO before he resigned in 2010. He has worked with EU’s sugar giants, Booker Tate.
Bhim, whose background is in finance, resigned last year after he was replaced by Dr. Singh.
Singh, who was brought from the US by the Bharrat Jagdeo administration, had been under fire since he stepped down as Chairman and was appointed the CEO last year.

Sinking Ship
Under his watch and that of the Board, GuySuCo stumbled to a two decades low in production despite billions being pumped into the state-owned entity, which at one time was the country’s biggest foreign currency earner.
As CEO, he mounted the platform, openly campaigning for the People’s Progressive Party/Civic during the recent General and Regional Elections. His party lost.
Last week Monday, in the first indication that there would have been clashes, Singh reportedly told the workers’ union that the Corporation was preparing to close the operations of the seven estates until its gets an urgent cash injection by the end of the month (Sunday). The cash was to pay junior and senior staffers and suppliers.
However, Minister Holder made it clear that he was not informed of the dire cash situation by the CEO despite a meeting earlier that day.
Through Government’s intervention, US$2M loan from a Jamaican bank averted the crisis over the weekend.
But it became increasingly clear that the new Government was not comfortable with the CEO.
Last week also, Prime Minister Moses Nagamootoo called on Singh and the Board to resign because of their dismal performance.
Sitting on the Board were Shaik Baksh- Chairman and members Dr. Dindyal Permaul, Chief Executive Officer of the Guyana Livestock Development Authority (GLDA); Badri Persaud, Managing Director, Guyana Oil (Guyoil) and Geeta Singh-Knight.
GuySuCo is projected to record a $17B deficit this year. The Corporation is in deep trouble and was a major talking point leading up to the elections.
The David Granger-led Government has made it clear that there will be no closure of the industry despite its woes but GuySuCo will be have to be led in a different direction altogether.
Consecutive sugar crops along with a poor string of performance for its new flagship US$200M factory at Skeldon has sunk the industry to a two decades low despite the release of billions for the Corporation.
GuySuCo has failed to release a turnaround plan almost a year after promising Parliament.
Recently, the five-year-old Skeldon managed to only produce half of the targeted production for the first crop.
The industry is producing sugar at a cost double what it is selling for. Technical and agricultural problems continue to plague the industry.
Its biggest customer, the European Union, has slashed the price of sugar by some 36 percent and is set to open its markets to other players, forcing Guyana, a preferential customer to now improve its dismal efficiency.
With over US$50M sunk into GuySuCo within recent years, the previous Government, under the PPP/C, had promised to invest more than US$100M over a five-year period to help the industry.
Recently, GuySuCo sold its Wartsila co-generation facility at the new Skeldon factory, just over five years old, to the Guyana Power and Light Inc. for US$30M.
It collected about US$20M ($2B) and is awaiting the remaining US$10M ($2B).
Two weeks ago, GuySuCo announced that its first crop fell short of the 86,201 tonnes of sugar by some 5,000 tonnes.
The Management, however, failed to disclose that Skeldon had done so badly, only managing about half of the 17,214 tonnes it had set for that factory.

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