Guyana is in uncharted territory

Jun 15, 2024 Features / Columnists, Peeping Tom

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Kaieteur News – As is now public knowledge, the United States government has imposed sanctions against two members of a Guyanese family and its associated companies and has warned that entities or individuals that do business with the designated local company and principals are liable to be subject to sanctions.

One of the blacklisted companies is involved in the local financial sector. It trades in foreign currency.  From all accounts it is a significant player in that sector.

In response to the sanctions imposed by the United States, the government of Guyana, acting it says upon advice, announced that it will be revoking the licence of the local company to operate a cambio. The Bank of Guyana has since published a notification announcing the revocation.  The government says that it did so to protect the country’s financial sector.

It was improper for a politician to make that announcement. This decision is a regulatory one and should not have been announced by a political operative. The decision to revoke is a statutory power that lies with the banking regulator, the Bank of Guyana. The Bank only needs to consult with the Minister, not obtain the consent of the Minister.

However, another issue arises, a fundamental issue. The withdrawal of the license represents a deprivation of property. And this is not allowed by the Constitution of Guyana.

The Constitution of Guyana guards against the deprivation of property. Article 142 provides that, “No property of any description shall be compulsorily taken possession of, and no interest in or right over property of any description shall be compulsorily acquired, except by or under the authority of a written law and where provision applying to that taking of possession or acquisition is made by a written law requiring the prompt payment of adequate compensation.”

The CCJ in Bisnauth v. Shewprashad (2009) had noted that Section 142(1) of the Constitution clearly considers the protection from arbitrary deprivation of property as a fundamental right worthy of the highest form of judicial relief.

Protection against deprivation of property, as with all rights, is subject to exceptions. But none of those exceptions provided for under the Constitution gives the government the right to deprive someone of property because of an edict from the United States that has extra-territorial effect.

A license to transact financial business, including the buying and selling of foreign currency can be considered “property” under the Constitution. As such, it is protected from unlawful deprivation by the State.

In legal terms, property encompasses a wide range of interests that include not just tangible assets, but also intangible rights and privileges. A license granted by the government to engage in financial transactions and currency exchange represents a valuable economic interest, conferring upon the holder the right to conduct specific business activities.

This license is often obtained through considerable investment of time, money, and effort, and it is crucial for the holder’s ability to earn a livelihood. Deprivation of such a license would effectively strip the holder of this economic benefit, which can be equated to taking away a physical asset.

In fact, the Dealers in Foreign Currency Act only provides two conditions under which the government can revoke a cambio license: contravention of the conditions of license or non-operation for a period of six months or more. None of these conditions presently exist and as such the Bank of Guyana has no legal limb upon which to revoke the cambio licence of the black-listed entity.

Further, the said Dealers in Foreign Currency Act require that before a license is revoked a hearing must be afforded to the dealer. This is why it was inappropriate and misguided for an announcement to have been made about the planned revocation when no such hearing has been given and the conditions for revocation are absent.

A legal conundrum therefore exists as regards revoking the license. But there are also the wider economic interests of the country’s financial sector towards which the United States and its extra-territorial sanctions were insensitive.

For one, the company involved is a significant trader – both buying and selling – in the country’s foreign exchange market. The company is not only a major buyer of foreign exchange but is also a major trader.

Removing it from the trade in foreign currency can lead to instability in the market or push substantial trading underground.  And we know what happens when this occurs.

As much as the government may wish to demonstrate responsiveness to United States concerns, it has to do so within the laws of Guyana. Given the sanctions in place, Guyana is in uncharted territory but even that in itself does not give the government to right to violate the Constitution, and its own other laws, by acting arbitrarily.

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• companies, currency, Government, Guyana, United States

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