NICIL “audit”

In his report on his audit of NICIL, which took five months and is expected to cost millions, former Auditor General

Anand Goolsarran

under the People’s National Congress (PNC) from 1990, the year before NICIL was registered as a private company by Finance Minister Carl Greenidge, Anand Goolsarran has based most of his claims and eventual recommendations by insisting that NICIL should act not as a private company as it was constituted but as a unit of the Government.
However in the wake of the PNC accepting the “conditionalities” on the International Monetary Fund (IMF) in 1989, the productive entities such as Guyana Stores, owned by the Government were supposed to be privatised. The report claims “NICIL was incorporated in July 1990 under the Companies Act, Chapter 89:01 with the primary objective of “subscribing for, taking or otherwise acquiring and holding shares, stocks, debentures or other securities of any company, cooperative society or body corporate.”  But as Winston Brassington showed in a line by line analysis of the “audit” NICIL actually had 21 objectives, of which the above was only one. The point illustrates a constant defect in the audit where Goolsarran cherry picks assertions to buttress his pre-formed conclusions.
The report continues: “NICIL was also incorporated at a time when the Government was embarking on a major privatisation programme, especially as regards loss-making State institutions, and therefore the rationale for the establishment of NICIL could not have been one relating to creating another entity with a commercial and profit-making orientation. Indeed, NICIL’s establishment came at a time when the Government was receding from its involvement in commercial activities to allow the Private Sector to undertake such activities best suited to it.”
But Goolsarran ignores the obvious conclusion that the PNC Government wanted to have its cake and eat it, too: to privatise entities to comply with the IMF strictures but to place the proceeds in a private company so that they would be removed from the IMF’s and public accounting scrutiny.
Goolsarran’s biggest example of overreach is to insist that even though NICIL is a PRIVATE Company that must comply with the Company Act, it SHOULD  be treated as a public company via Art 216 and 217 of the Constitution. He writes:
“NICIL, for its part, became responsible for: (a) collecting and accounting for all privatisation proceeds, rents, dividends, and other income of NICIL, in the name of NICIL; and (b) utilising and disbursing the income of NICIL in accordance with the approval of NICIL’s Board. However, any use of these funds to meet public expenditure without parliamentary approval is a violation of Article 217(3) of the Constitution. That sub-article states that “No moneys shall be withdrawn from any PUBLIC fund other than the Consolidated Fund unless the issue of those moneys has been authorised by or an Act of Parliament.”
But Goolsarran ignores the fact that NICIL doesn’t have a “public fund”,  as a private company it is only subject to the  rules of a limited liability company which is answerable only to the companies act. The government as a shareholder, even its sole one has to also accept the rules of the Company Act.
Brassington debunks  the above claim succinctly yet comprehensively in his riposte: “Since NICIL is a company formed under the Company’s Act, it is our view that NICIL cannot be considered to be an arm of the State or as raising or receiving moneys by Guyana, and accordingly Section 217 does not apply to NICIL. Moreover, none of the revenue NICIL generates fits the definition of public moneys as defined by Sections 2 and 37 of the Fiscal Management and Accountability Act Cap 73:02. NICIL is body corporate separate and apart from the State, the term State referring to Guyana and the Government generally, and accordingly, Parliamentary approval is not required for NICIL’s expenditures.
The forensic auditor’s opinion is further contradicted by:
NICIL is a company, like the thousands or other private and public companies in Guyana, all adhering to the same accounting rules. In fact, every company owned by Government, whether a subsidiary of NICIL or otherwise is bound to apply the same accounting rules. There is no evidence that a company’s expenditure of its funds have to be approved by Parliament, where the said company is deriving its expenditure from its revenue.
Application of 217(3) of the Constitution in the manner suggested by the forensic auditor, would cause the NICIL Directors to violate the Companies Act Section 50(3) which states “no dividend shall be payable to the shareholders of a company except out of profit” and be in contravention of its Articles and By Laws .
Clean audit opinions of the Auditor General, who is responsible for auditing the accounts of NICIL.