Due diligence on investments must become a priority

Feb 08, 2025 Features / Columnists, Peeping Tom

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Peeping Tom…

Kaieteur News- In 1985, the Forbes Burnham government looking for economic salvation, entered into a memorandum of understanding with a fugitive from US justice. The promise of an offshore bank, a mining enterprise, and an international hotel was too enticing to ignore.

This fugitive had come knocking with a proposal to establish an offshore bank. The PNC government was so desperate for the investment and the purported benefits, that it did not do sufficient background checks on the man. Little did the PNC know that the man had a five-year conviction over his head for serious financial crimes!

Having later discovered the bona fides of the man, and in a rare instance of prudence, the PNC government abandoned the scheme, implicitly acknowledging that dealing with a known financial criminal was both ethically indefensible and a threat to the nation’s economic credibility. It was a moment of clarity in an otherwise murky period of governance.

Fast forward to today, and it seems that such lessons have been conveniently forgotten by the incumbent PPPC government. Last Thursday, the General Secretary of the PPPC was questioned about the government’s dealings with someone who was convicted of serious financial crimes in the United States.

The PPPC’s General Secretary employed diversionary tactics in response to the legitimate concerns about the government’s association with someone who had faced a conviction for serious financial crimes. The General Secretary’s answer raises troubling concerns as to the standards governing investment decisions in Guyana.

This, however, is not a trifle matter which can be dismissed by diversionary tactics. The stakes today are far higher than they were in 1985. Guyana is now a signatory to international agreements designed to protect its economic system from possible contamination of dirty money. The scrutiny is more intense, the risks more pronounced, and the consequences of negligence potentially catastrophic.

Guyana can face sanctions from the United States if it is found that dirty money is entering our economy. So far there is no evidence of this happening. There is no evidence that dirty money is financing foreign investments in Guyana. Nonetheless it is the government’s responsibility to undertake proper due diligence when dealing with investors and investments.

The question, then, is not just whether the government is willing to do business with persons convicted of serious financial crimes, but whether it has established clear and enforceable ethical benchmarks for investment. Who is allowed to invest in our country? Is it open to any and every one? What safeguards exist to prevent the infiltration of illicit funds into the local economy? What due diligence is conducted on the proceeds of funds invested by individuals and companies benefitting from state lands and fiscal concessions?

If the government is willing to do business with someone convicted of serious financial crimes in the United States, where does it draw the line? Would it welcome investments from the likes of John Gotti or Pablo Escobar, provided they promise employment and infrastructure? These are not rhetorical questions but pressing concerns in an age where financial crime has evolved into a sophisticated and global enterprise.

The necessity of clear investment benchmarks extends beyond mere optics; it is a matter of economic survival. Guyana’s burgeoning oil wealth places it squarely within the crosshairs of international money launderers, tax evaders, and corporate raiders who see opportunity in weak regulatory environment and a government eager to attract investment. Without robust due diligence, the country risks becoming a haven for illicit finance. Such risks should not be underestimated.

Dirty money distorts the economy, fuels corruption, and undermines the legitimacy of financial institutions. It corrodes investor confidence, and invites the scrutiny of international regulatory bodies, potentially leading to sanctions and restrictions on financial transactions.

To avert this dystopian future, Guyana must adopt a framework that establishes clear, non-negotiable criteria for investment. First, the government must categorically refuse to engage with individuals who have been convicted of serious financial crimes. This is not a radical proposition. It is a basic principle of sound governance. The reputational damage incurred by associating with criminals far outweighs any potential economic benefits.

Second, a rigorous due diligence process must be institutionalized to vet investors seeking land and fiscal concessions. This should include comprehensive background checks, and an assessment of the source of investment funds. Any investor unwilling or unable to disclose the origins and to satisfy the authorities of its legitimacy should be shown the door.

The United States, through its Department of State and Justice Department should take careful note of the PPPC’s General Secretary’s answer to that question at last Thursday’s press conference. Guyana has to demonstrate greater seriousness when it comes to those who the government does business with and the degree of due diligence on investors and source of financing before allocating state lands and fiscal concessions.

A nation that fails to define the limits of acceptable investment is a nation that invites problems.  If Guyana’s government demonstrates a willingness to accommodate individuals with criminal pasts, it invites scrutiny and potential diplomatic consequences.

The lesson from 1985 is clear: there is no economic benefit so great that it justifies entanglement with the persons who were convicted of serious financial crimes. The Burnham administration, for all its faults, recognized this. The current administration, intoxicated by the allure of immediate financial gain, appears to have lost sight of this fundamental truth.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

(Due diligence on investments must become a priority)

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• Forbes Burnham government, Peeping Tom, PNC government, The promise of an offshore bank

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