Probe launched into price-fixing racket at GuySuCo

May 16, 2018 News

Over the years, the state-owned Guyana Sugar Corporation (GuySuCo), numbering seven estates as at 2015, has been facing a steady downward spiral.
Despite the use of different directors, and the rotating of managers, the dismal figures painted an all-too-clear picture of an industry on the decline.
Evidence is now emerging that the problems of GuySuCo was not all about strikes, weather, poor agriculture, aging equipment and factories. Rather, there appears to have been deep-rooted rackets with procurement, dumping and stealing of fertilizers, and kick-backs from prices and allocations of quotas.
With regard to price fixing, sources from within GuySuCo said that the matter has been raised this year. There are recommendations that because of what was found, some major changes be made in the remaining three estates under GuySuCo – Uitvlugt, Blairmont and Albion.
It was explained that GuySuCo has a system that was supposed to be transparent in the overseas markets.Using a variety of tools, including future prices for sugar, officials were supposed to have come up with the price that was agreeable to both sides.
Once the price was determined, it would be discussed and decided upon, and the customer would be contacted. The system was supposed to reduce corruption.
It was disclosed that during the negotiations, major customers would be invited to Guyana.They would include Tate and Lyle, from Europe; Gopaul Company from Trinidad; Combe Market of Suriname; the Demerara Distillers Limited and West Indies Rum Distillery of Barbados.
To strengthen the system, GuySuCo’s sugar brokers, Czarnikow, was supposed to visit Guyana annually and brief local sugar officials in Guyana on the forecast for the global situation.
According to GuySuCo’s internal correspondence, calling for action, recent transactions have caused alarm and have the potential for significant harm to the industry.Officials at GuySuCo are very clear about how prices are supposed to be set.
It was disclosed that about two weeks ago, the price for sugar sold to Gopaul and Company Limited of Trinidad and Tobago was unilaterally reduced from US$530 per metric tonne to US$485, Freight On Board (FOB).This contract locked Guyana down for the period April 19 to June 19, 2018.
The internal report said that the price reduction appeared to have been undertaken without any due diligence done in the market to determine the veracity of the customer’s request.
Should the price hold for two months, the corporation would see a reduction of revenues to the tune of US$90,000, as the customer takes about 1,000 tonnes monthly.GuySuCo is facing major problems now with four estates closed in the last eighteen months.
They are up for privatization, with only three now being operated. The idea is to make the industry more efficient.
However, the disclosures now that Guyana was not pulling out the stops to ensure it received the best prices possible, would raise questions whether it was a major factor in causing GuySuCo to be where it is now.
The Coalition Government says it has no monies for GuySuCo, with just over 10,000 workers on the payroll now from the 16,000 who were working at the end of last year.
There are several offers for the various estates of GuySuCo.

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