Berbice Bridge, CLICO investments were “criminal” – Finance Minister

– NIS lost US$9M as a result; Consolidated Fund may have to rescue scheme from drowning in losses

By Kiana Wilburg

The business of the National Assembly was wrapped up yesterday afternoon, with Finance Minister Winston Jordan reading the Income Tax (Amendment) Bill for the second time and it was passed.

But since he was on the issue of tax, Jordan felt it necessary to speak about the state of the National Insurance Scheme (NIS), with particular reference to the investments made by the company into CLICO and the Berbice River Bridge during the rule of the People’s Progressive Party Civic.

The Finance Minister said that the billion-dollar investments into those two entities have “hurt us all”. He described them as being rather “reckless” investments, but said that it is even beyond this. His colleagues on the eastern side of the House suggested to him, a more fitting term. They told him, “It’s not reckless, it’s criminal.”

To this Jordan retorted, “Yes I like that word, criminal. It was indeed criminal.”

The Finance Minister said that when Guyanese make their contributions to NIS, it is expected that during times of difficulty and old age, that money would be there to assist. He said that it is expected that NIS would be prudent with its investments, especially with taxpayers’ resources which are faithfully contributed every month.

“So Mr. Speaker, all of us were hurt at the reckless investment by NIS into CLICO resulting in the impairment of over $5.6B. Between 2009 to now, NIS has lost $1.8B and if this was not criminal enough, NIS again made another suspect investment into the Berbice Bridge of nearly $1B to which they are still to collect income on,” Jordan said.

He added, “So essentially, NIS is now in the position where it is eating into its capital to make even the minimal benefits to its contributors. This cannot continue…We will have to move swiftly and come up with a strategy, and it won’t be easy. That approach includes entrenching in NIS, mechanisms to ensure it can never again do anything as reckless as this. ”

Members on the Government’s side slammed their desks in approval.

The Finance Minister continued, “We don’t want the scenario that when we are ready for our benefits we can’t get it, and actually that is the situation now because it continues to lose. It can’t give full benefits and I believe that the Consolidated Fund at the end of the day may be asked to make good on this loss”.

But Jordan’s statements apparently incensed Opposition Leader, Bharrat Jagdeo. Jagdeo could not resist the temptation of taking the floor to defend the investments made into the two companies under the PPP.

He accused the Finance Minister of using the time allotted to read a Bill to score political points. The Opposition Leader then attacked the contents of the 2015 budget which was passed on Friday last, and even sought to bring the integrity of the Finance Minister into question with various accusations.

Jagdeo then called for a debate on the matter after what seemed to be his budget debate presentation—Part two. But Jordan refused to respond to Jagdeo and his allegations.

“I said what I had to, but I did enjoy the honourable opposition leader,” the Finance Minister uttered while ending his statement with a hearty laugh.

Jordan told Kaieteur News that he has no time to enter into any debate with the Opposition Leader. He emphasized that Jagdeo cannot escape the fact that the investments were criminal and that NIS suffered as a result of it.

“I have no desire to give Jagdeo any more prominence than he gets in this honourable House,” Jordan concluded.

As for the Income Tax Bill which seeks to remove the tax levied directly on personal income, the Minister said that this is part of the quest by the coalition government to give a good life to the Guyanese people by “putting back money in their pockets so to speak.”

In explaining how this measure will work, Jordan said, “Let us assume that a person is working for $60,000 at the moment. They will be given a take home of $50,000 a month which leaves chargeable income of $10,000 a month. Now they are asked to pay 30 percent of that chargeable income which is $3000 plus, they will also be asked to pay $3360 a month in NIS contributions. So in essence their take-home pay will be $53,640. When this Bill is passed and the measure goes into effect, the chargeable income of $10,000 will have the NIS contribution deducted and that will leave $6640 and 30 percent of that is $1192, giving this person a take home pay of $54,648.

He said that this means that this person will have a saving or will have extra money in his pocket of $1008 a month or $12,096 a year. This earned him loud applause from members of the House.

He emphasised that this measure takes place this year.

The House then examined the Bill clause by clause and it was subsequently passed.

Prime Minister Moses Nagamootoo thanked House Speaker, Dr. Barton Scotland for his calm demeanour during the “stormy” budget debate and deliberations.

Quoting Shakespeare, the First Vice President said, “You ‘sat like patience on a monument, smiling at grief.”

Nagamootoo also extended thanks to the staff of the Parliament and the media and finally moved the motion for the Parliament to enter a period of recess for one month.

The House is expected to meet on October 11.

http://www.kaieteurnewsonline....al-finance-minister/

Anyone has figures on how many people will be positively affected by this increase in the minimum wages for government employees?

This is a battle between two local capitalists who both own partisan and largely unprofessional newspapers. It is simply wrong to drag one company into the conflicts of another even if the shareholders are overlapping. What does New GPC have to do with Berbice Bridge company? They are different companies.

They are making political hay while the sun shines. You know how it is Guyana. Throw kaka everywhere and hope some sticks.

If you go back long before 1838 you will see the white planters went to Guyana for extraction purposes, not really to live and die. They sent second tier white managers to run the estates. Another group would spend time there and migrate to the Carolinas in US or go back to England. Then yet  another group preferred living in Caribbean islands like Barbados and Antigua and transfer profits there. So, capitalists have always migrated from Guyana. Nevertheless by independence you had a nascent local capitalist class. Then came the Jagan-Burnham socialist wrecking truck. Another group migrated. Then fast forward to 1997 to 2006 period of racial warfare intertwined with drug pushers. I know three families who had successful manufacturing operations who packed up and migrated. Others like 20 of my UG classmates self-sponsored to Canada (high education folks)

The point I am making is entrepreneurs, especially those who do manufacturing and high end services, don't fall like manna from heaven. A clever PPP ought to have used industrial policy - like single sourcing - to make sure that nationalist goals were reached: like equitable ethnic employment, research targets, equitable share ownership in the local stock market, etc. Instead, they used the surplus to race-bait (through efforts to control the media space) to whip up fear of blackman among East Indians.

The risk now is the baby will be thrown out with the bathwater.  Whatever is said about the group of pro-Jagdeo capitalists they did not park their money in Miami or Toronto. They were reinvesting in Guyana no matter how crude their projects might have been.

Entrepreneurs are a very, very, very scarce factor of production. Yea...they have the gold...but they don't have the entrepreneurs.

TK, long ago I learned from Cheddi Jagan the concept of interlocking directorships. He had shown how certain influential members of the colonial legislature were directors of several companies and were upholding the class interests of those companies.

Now, it's true that the New GPC and the Berbice Bridge Company are two separate entities. But Dr Bobby Ramroop is the major investor of both the New GPC and Queens Atlantic Investment Inc, both of which are major shareholders of the Berbice Bridge Company. In effect, Bobby Ramroop's two companies together make up the second largest shareholder of the bridge company after NICIL. So, it is apt to bring New GPC into the discussion.

Sorry...Cheddi is dead wrong. In any case, Cheddi is the last person I would rely on for my lessons in corporate finance, of which corporate governance is subfield.

How yuh could seh suh, man? Cheddi did study da Sweezy and Baran book Monopoly Capital. Da same book was recommended reading for economics courses at UG and American universities.

The problem here is government subsidizing companies and paying up front to initiate the BOOT with the investors in the BOOK paying in minimally and are actually contractually hired to manage the bridge over a period rather than being actual builder/owners of the bridge who have  real capital investment in the bridge. Every part that these people play could be played by a government holding company. This is horrible economic practice. All our BOOT project is being funded by the People themselves and are handed over to management firms claiming "ownership" with minimal asset at risk. This bridge is actually a milk cow to these companies.

??

what are you talking about here?

I am surprised that paragraph has you befuddled.

There is a very important piece of wisdom that can be taken from the Sweezy-Baran book. It is a well researched book, BTW, but I disagree with the notion that all monopolies/oligopolies are bad. You see oligopolies want something. But it is the task of the state to give something for nationalist goals. I don't see better alternative.

Who are the two?  Ramroop and Lall?  What is the battle about?

According to the article New GPC and QAII are major shareholders in BBC so why would you think that Ramroop has no role in delaying the toll reduction?

Let's see the outcome of the next alternative. My argument is they can't move forward without nurturing some local capitalists who will subscribe to nationalist goals. Capitalists are not benevolent folks...but the state has much leverage.   

Read the Stabroek News article please...it is the only reliable paper they have in Guyana.

Alright, let's get back to the issue at hand. The Berbice Bridge Company is supposed to reduce the toll fees on Tuesday morning but there will be a delay. The government promised in writing to make up the difference with the company. The company wants the subsidy up front quarterly and the government has agreed to comply. What's da prablem? De company now seh it gotta consult shareholders. Okay, that consultation should not take long because the shareholders could be counted on two hands. Let them consult and approve the reduction, no?

Glen Lall and the owners of Stabroek News are not, to my knowledge, shareholders in BBCI

the substance of the coverage in both papers is, in any case, essentially the same

the only "local capitalists" owning a newspaper financially involved in this affair is ramroop/jagdeo and they are not at this time 'reporting' on the issue

please indulge . . . i am still not following

So I read the SN article.  Management looks after the interest of shareholders.  Why do you think that Ramroop is not driving the management's decision?  This is Guyana we are talking about.  I think I am missing your point TK.

I am sure Ramroop might be delaying, but he can't forever as it is now policy. My point is it is a slippery slope to implicate another company, in spite of ownership, to be embroiled in the Berbice bridge conflict. In the US you know each company is a different entity and one can fail and should not be accountable for what the other does. I guess Guyanese are not yet ready for this kind of corporate governance.

LOL!  You political types are interesting...you fully well know I was not talking about SN. In any case...we know Glen would be with the PPP had it not been for Jagdeo.

There is a difference against nurturing capitalists and nurturing friends and family, The group here are omni present in lucrative give away. The bridge, the Marriott, The lease of 25 hectares of prime land at the mouth of the berbice river, are just a few. This is not facilitating capitalism it is cronyism. Note Hand In Hand is a creation of Brazzie selling in one hand and buying in another. The investment in that company is less than a condo in RH and now it is a prime player in all sorts of business.

We need to break contracts up into systems even if they are interlocking and farm them out to competent firms.

first, your stuff in bold is a red herring and irrelevant to the subject at hand even if (likely) true

second, you don't know my "type" . . . don't guess, u don't wear it well

further, i deliberately cited the non-issue of Stabroek News for context in my response

so, now that we have established that you are talking about Lall vs. Ramroop/jagdeo, please explain how the KN article (not substantively different from the SN article) represents a "battle" between the two when Guyana Times has not yet covered the issue

thanks

One observation does not make a trend, ok...figure it out!!!

you are diverting

please address the substance of my posts . . . my questions are very simple and very clear

thanks

Bro...I don't dance to your tunes...

alright den . . . u can join the naked brigade

your choice

LOL!! I look forward to seeing you hug up dem bais on here.

making jokes to cover vacuity doesn't cut it bai

u ought to be better than that

Since the Berbice bridge was made it is now a sunk cost. It is irreversible. So, I always said the subsidy is the right thing to do to offer relief for the poor. But I still have to point out that the Berbice bridge is an interesting case study of a bad investment choice. World Bank suggested a system of roll on roll off ferry that would be quick, cheaper to build and cheaper for passengers. Now anyone familiar with basic microeconomics will know if you don't have the volume you have to push up price to keep revenues and cash flows where you want it so as to influence discounted value. I said this 7 years ago in facetious tone in my "new science of jumbienomics" letter. Jagdeo and his crew decided they will make a bridge and charge the high price nevertheless. The same principle holds for Amaila. Engineers can build almost anything...but it is the final price consumers pay that matter. Now, in spite of the high price they are not making a profit to pay dividends to NIS. We know this crew has a very high propensity for lies and corruption...so by now I hope the new govt makes sure the revenues they declare are indeed what they are making at the gates. They have to man the toll stations. But I feel the simple hard-nosed laws of economics is at work here. Small market (low volume) means high price...fits right into my thesis. We will see in another year if they make profit.

to use as a jumping off point for discussion a notion that there is a hair's breadth of real-world difference intra the New GPC/QAII/Ramroop/Jagdeo/Ramcharitar axis as far as BBCI is concerned is beyond foolishness

wilfully blind the only thing close that explains this nonsense

Well...tell your boys to nationalize the bridge then.

I agree it is a sunk cost bur given the benefactors are cronies of the previous government and no one was in place to temper the decisions about future cost ( this eventuality) we need to be circumspect. I think they need to pay dividends promptly, be taxed as a corporate entity and cannot get all the benefits of what is essentially a leech job on the guyanese people now to be afforded rational economic considerations.

We also need to look to building another bridge.

your non sequitur one-liners are boring and insipid

the attempt at insult with "your boys" dis and dat is risible and a poor substitute for proper argumentation

try come again better

I think they have to audit the revenues to make sure they are telling the truth. This is an easy audit. However resources are scare. They need a second bridge across Dem river...I don't see the volumes to justify another one in Berbice.