GuySuCo responds to Kaieteur News articles on Price-fixing and Inventory

May 23, 2018 Letters

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DEAR EDITOR,
The Guyana Sugar Corporation Inc. (GuySuCo) is disappointed that the Kaieteur News has allowed its media agency to be used repeatedly by forces whose motives seem to be intended to destabilize the Corporation, bring the management into disrepute, and cause irreparable damage to the business.
Since December 2017, and particularly, over the past weeks, the newspaper has been publishing information, which is being twisted and manipulated for the purpose stated above.
On 16th May, an article was published titled ‘Probe launched into price-fixing racket at GuySuCo’; then on 17th May, another was titled ‘Tip of the iceberg…Local sugar distribution was manipulated to favour GuySuCo friends’, another on 20th May, titled ‘In four years, GuySuCo spends over US$11M on outdated spare parts’ and on 22nd May, ‘GuySuCo has over $3B in outdated Fiat tractor spares in stock-growing evidence of massive procurement fraud over time’.
The Corporation has absolutely no difficulty with the publishing of its information; however, it is concerned as to the source and intention of the source of the information, as well as, the fact that the Kaieteur News seems not to be interested in seeking clarity from the Corporation before publication.
It was reported on 16th May, that a probe was launched into what the newspaper calls a ‘price-fixing racket’, the Corporation would like to state that no probe was launched, since there was no illegality done relative to price or any other aspect of the business. It is important to note that GuySuCo manages a business, and makes decisions based on the best available prices and seeks to secure longstanding markets based on the capacity and other considerations relative to its distributors and customers.
Pricing is dependent on market conditions and volume and at times in order to secure a market, temporary adjustments may be required to remain competitive, globally and regionally. Regarding local sales, given the prices that could be obtained elsewhere, it makes better business sense at times to increase our local sales. For example, the Corporation may decide to sell more sugar on the local market than on the World Market. For instance, the current World Market prices are less than 50% less of what the Corporation would get on the local market; the World Market price per tonne of sugar on 22nd May, was US$255 per tonne while on the local market the price is over US$500 per tonne.
With reference to the article published on 17th May, titled ‘Tip of the iceberg…Local sugar distribution was manipulated to favour GuySuCo friends’, which stated that one of the Corporation’s distributors does not have a bond at De Willem, this information is grossly inaccurate, the bond is in existence at De Willem.
In relation to the articles which stated that ‘In four years, GuySuCo spends over US$11M on outdated spare parts’ and ‘GuySuCo has over $3B in outdated Fiat tractor spares in stock – growing evidence of massive procurement fraud over time’.
These articles are erroneous and mischievous, to say the least, and exposes the limited knowledge of the source of the information, on the scale of the operation of GuySuCo; as well as the limited research done before publishing same. The Corporation’s total inventory is G$3.6 Billion of which G$61M is Fiat spares, therefore the US$11M (G$2.6 billion) and the G$3 billion in outdated Fiat tractor spares reported, is ridiculous and highly malicious.
The article on 20th May, stated that ‘Kaieteur News recently perused the inventory list of spare parts that GuySuCo bought during 2008 and 2012…according to the list, GuySuCo spent over 2.3 billion on various pieces of spare equipment’, the same article stated that ‘the majority of the outdated spares were bought in 2008’; if the Kaieteur News had given GuySuCo the courtesy and enquired, it would have been discovered that in 2008, the Corporation changed its computer system to ‘Oracle’ Inventory software, hence in 2008, entries of the items which were in the inventory at the time, were made into the new software. As such, if one looks at the list of inventory, it reflects 2008 for receipt of these items, reflecting the entry onto the software and not when they were bought, as stated by the newspaper article.
Another point to note is that when an estate closes, the inventory of that estate is transferred to another estate; thus in 2012 when the La Bonne Intention (LBI) estate closed, a large quantity of spares were transferred to the Enmore Estate inventory.
Over the years, spares were also transferred from Leonora and Diamond Estates, to the inventory of other estates.
Further, on the point of spares, it is important to note that the parent company Case New Holland (CNH), produces Case harvesters, New Holland tractors and Ford tractors, all of which are included in the Corporation’s fleet of machinery, hence the need for Fiat spares which are compatible with and are used in the New Holland tractors as well as in the Fiat tractors. In addition, the industry still has Fiat tractors, which are operational in cane transport, mill dock operations and drain digging, contrary to what is reported in the Kaieteur News articles.
Also, it is important to note that in any industry such as ours, in engineering, it is recommended that 10% running spares are available in inventory for effective maintenance and operations; this is 10% of the capital cost of the equipment. Based on the scale of the operations of the Corporation, the G$61M in Fiat spares in the inventory of GuySuCo, is well below that 10% required.
The Management of the Corporation is well aware that its information is being twisted and manipulated and this is causing irreparable damage to the business. Since the publication of sensitive pricing information on the Corporation, a price reduction is being sought by another large customer, citing the same reasons as the previous customer reported in one of the articles.
The Management wishes to note that they are entrusted with the responsibility to manage a business, also the Corporation has over 11,000 employees and is currently in a challenging transition period and they intend to manage and lead the Corporation and its employees during this difficult period into a resilient and sustainable business and will not be deterred or become distracted.
Yours faithfully,
Audreyanna Thomas
Corporate Communications Manager
Communications Department
Guyana Sugar Corporation Inc. (GuySuCo)

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