Dormant and scrap metal accounts

June 15, 2015 | By KNews | Filed Under Features / Columnists, Peeping Tom, Source

The headline spoke about ten billion dollars being found in dormant accounts held by the previous government. The impression created in the minds of those not fully knowledgeable about how the finances of government operate was that this money was somehow stashed away by the PPP administration for God knows what purposes.

The public got carried away by the reports on these dormant accounts. One taxi driver asked another taxi driver “What them man (PPP) gun do with all that money- ten billion dollars?” It did not dawn on him that the fact that the monies were in dormant accounts and were found meant that the funds were not “missing.”

The public needed to be edified. The PPP did issue a statement indicating that what all this means is that the present government was continuing what it, the PPP, had been doing all along, and that was to close a number of outstanding accounts.

It pointed to previous reports of the Auditor General which has called for many of these dormant accounts to be closed and which had reported on the progress made in closing these accounts.

If you go as far back as 1970, you will find that the reports of the Auditor General had pointed to the existence of numerous dormant accounts in the accounting system. There was also a number of accounts for which no reconciliation were done.

We therefore have to be careful in jumping to conclusions about the 10 billion dollars that was “discovered”. There has been a process, instituted now for years to allow for dormant accounts to be closed.

This is simply an accounting process that is taking place. It is not a discovery of funds that were somehow stashed away as some people believe.

Most of the accounts relate to statutory agencies and therefore one has to question whether these agencies are involved in the process of closing these accounts because these accounts should not be intermingled with those of Central Government.

This of course is a conundrum that the present government will find itself in because during the PPP’s time in office it had taken the position that outstanding balances held by corporate bodies should not be held by these bodies but be passed through the Consolidated Fund.

This column had argued that this position had no basis in law. The argument for example was that the funds held by NICIL should be passed through the Consolidated Fund.

This would have allowed for uses of these funds to be subject to parliamentary approval. This column had argued that there is no basis in law for that, and had pointed out that if this were indeed the case then there would have been no need for a sugar levy to have been instituted in the years when Guysuco was a profitable concern and billions were extracted from its profits and paid into the national coffers.

If the principle had been that corporate bodies should automatically transfer their outstanding balances to the treasury, there should have been no need for a levy and all the expenditure of Guysuco would have had to have been approved by the parliament and not the Board of the corporation.

It is therefore important that these dormant accounts, most of which belong to statutory bodies outside of the public service, most of which are subvention agencies, should rightly be closed by the agencies themselves and not necessarily by Central Government.

If monies are available as a result of the closure of these funds, lawfully these monies belong to the statutory bodies and not to central government.

People may be assuming that the discovery of these accounts means that the coffers of the treasury are flush with ten billion dollars and therefore the government can spend as it pleases.

Not necessarily so and therefore there is a need for someone within the government to explain to the public what the closure of these dormant accounts mean.

Now we come to the two hundred million dollars which was said to have been transferred from the Bank of Guyana to a private bank. There may be reason for this. Accounts in Bank of Guyana are profit earning accounts and therefore moving it to a private bank would allow for it to earn profits. But there could also be some other reason also why the money was moved.

It is more important to ask whether any funds were ever withdrawn from this account and to what uses it was put. It is also important to question why the money was collected in the first place from those involved in the scrap metal trade.

Were these funds legally obtained and if so why put a tax/ fee on the export of scrap metal trade? This is not a natural resource where a small tax may be necessary.

We should be encouraging the export of scrap metal not digging two hundred million dollars out of the proceeds of exporters. In this case, there are more questions than answers.