Gold Board must improve on weak regulatory systems - Goolsarran

Gold Board must improve on weak regulatory systems – Goolsarran

Nov 26, 2017 News

Chartered Accountant, Anand Goolsarran, believes that in order for the Guyana Gold Board to effectively do its job, it must improve on its regulatory systems.

Chartered Accountant, Anand Goolsarran

He made this comment in light of recommendations that the Guyana Gold Board is operating at a loss as such, it should no longer engage in the purchasing of gold.
Goolsarran said that the Guyana Gold Board Act specifically provides for the Gold Board to trade in gold as its main function.
In order for it to cease buying gold and focus more on its regulatory functions, he said that the Act will have to be either substantially amended or repealed in its entirety and replaced by a new Act.
The Chartered Accountant said, too, that there are foreign currency implications in that the Gold Board earns valuable foreign currency when miners sell their gold to the Gold Board.
The former Auditor General said it is true that the Gold Board has been making losses because of several reasons. He attributed the losses to the use of the daily dual rate system for payment to miners and the associated manipulation of the rate to the financial disadvantage of the Gold Board.
He said that the losses are also as a result of the Board retaining large quantities of gold at a time when market prices are depressed.
Goolsarran noted too that forensic auditors have recommended the use of a single daily rate with which he agrees with.
The Chartered Accountant said, “The Gold Board appears very weak in the exercise of its regulatory functions, especially in terms of monitoring compliance with the terms and conditions under which licences are granted to dealers.
The forensic audit report listed 11 licensed dealers, some of which are not incorporated under the Guyana Companies Act.”
Goolsarran added that unincorporated entities are not obliged to have audited financial statements. He agrees that licences should only be granted to dealers whose businesses are incorporated under the Companies Act.
Natural Resources Minister, Raphael Trotman, has also noted that the coalition administration believes that the Gold Board should continue to retain its role.
The Minister told Kaieteur News, recently, that there is always a suggestion about the role of the Board. He noted that Cabinet however considered this matter and believes that the board should continue purchasing in order to guarantee the supply of foreign exchange while paying more attention to the regulatory functions.

Natural Resources Minister, Raphael Trotman

Trotman said, “That is the direction we are going in…The gold board ran up a huge debt during the tenure of the last government and we have been slowly working to bring order and discipline to the board. Our efforts are paying off.
“Our new measure of introducing a processing fee has already shown benefits in cost recovery.”
The Natural Resources Minister noted that his Ministry will be working closer with dealers in 2018 to have greater cohesion and regulation.
IRREGULARITIES
A forensic audit report prepared by Ram and McRae Chartered Accountants, details a number of worrying financial irregularities by the Guyana Gold Board.
The report says that Section 5 of the Gold Board Act provides the mechanism for the purchase price and the selling price for gold used by the Gold Board and requires notification in the Gazette. However, auditors said that there has been non compliance with this requirement since 1983.
The forensic auditors noted that the Board consistently failed to monitor compliance with the conditions under which licences are issued to dealers.
Furthermore, forensic auditors noted that from 2012 to 2014, the Board made losses totaling $10B. Of this the Board recorded a gross loss of $9B in 2013 compared with a gross loss of $281.4 million in 2012 and $79.6 million in 2014.
At May 2015, the Gold Board owed the Ministry of Finance $8B for advances received in September 2012. At the same date, the balance on the Gold Board’s current account with the Bank of Guyana was an overdraft of $8B, making a total of $17B.
The auditors said that it does not seem that the Gold Board would be able in the foreseeable future to discharge its obligations to the Ministry of Finance or to liquidate its overdraft with the Bank of Guyana.

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