Shareholders laud $28B legal challenge

Banks DIH AGM

Even as Government has indicated that Banks DIH Limited will not be getting even “a dime” from its multibillion-dollar lawsuit that is claiming in excess of $28 billion in repayment following the controversial tax write-off given by the Guyana Revenue Authority (GRA) to its competitor – Demerara Distillers Limited (DDL) – Banks DIH Limited was lauded by its shareholders on for the step taken.

A section of the shareholders at the Banks DIH Annual General meeting
A section of the shareholders at the Banks DIH Annual General meeting

At the local beverage giant’s 61st Annual General Meeting (AGM) held on Saturday at Thirst Park, Ruimveldt, Greater Georgetown, during the question and answer segment at the end of the Chairman/Managing Director Clifford Reis’ presentation, shareholder Malcolm De Freitas commended the company for moving towards attempting a resolution in what he called a “long growing problem”, especially since DDL has been successful in doing so.
“I’m happy the Board has gone forward with this, simply because as a constitutionalist, it is indeed a major disadvantage to the shareholders of this company when we are not treated with the equality that is expressed in the law. I’m happy to see that the Board has recognised that and has done something towards it,” the shareholder remarked.
Taking note of the comment, the Chairman expressed his contentment at the support of shareholders on the actions the company took.
“We are glad to hear, as Board of Directors, that shareholders are supporting the decision the Board has taken. This is in relation to our financial duties, where we have to make sure that the shareholders Banks DIH Limited have the same equal treatment under the law where taxes are concerned,” he posited.
Meanwhile, during his presentation on the company’s performance over the past year and projections for the coming year, Reis spoke about the legal action asserting that Banks DIH Limited should be given the same treatment as its competitors.
According to the Chairman, the company has overpaid billions of dollars in Consumption Taxes to the GRA and as such, the Board of Directors has decided to move to the courts to recover the billions of dollars it has overpaid to the revenue collection body. The over-payment, he noted, was due to a mistake in the law having regard to the judgement delivered in the Court of Appeal with respect to proceedings brought by its competitor – Demerara Distillers Limited (DDL).
“Banks DIH Limited is entitled, my fellow shareholders, to repayment of all monies overpaid together with interests thereon,” the Managing Director maintained.
Furthermore, Reis disclosed that before legal proceedings were taken, the company’s legal advisors had sent pre-action letters to both the GRA and the Attorney General’s Chambers indicating its intention to seek redress in the court for a refund of the monies overpaid for the consumption taxes. However, he added, there was no response from either parties.
On the other hand, the Banks DIH Limited Chairman also indicated that its lawyers were instructed to seek constitutional redress for breach of its constitutional rights to equality before the law within the meaning of Section 149 (d) of the Guyana Constitution having regard to the terms of the consent order of April 1, 2016, entered in between DDL and GRA.
Following the highly controversial DDL tax write-off last year, it was expected that several companies would expect the same benefit from the revenue collections agency. Hence, it was no surprised that Banks DIH Limited filed a lawsuit against GRA and the Attorney General on December 16, 2016.
According to the court documents seen by Guyana Times, the corporate entity paid some $12.8 billion in taxes over the period 2001 to 2006. But since Government granted DDL a whopping $3.8 billion tax write-off from its assessed $5.3 billion owed, Banks DIH calculated that it should have only paid some $3 billion instead of $12.8 billion.
The company therefore argued that the Guyana Government would be “unjustly enriched” if it retained the approximately $9 billion (the difference between the paid amount in taxes and the net figure Banks DIH estimated it should have paid), while asking for 10 per cent interest compounded over the aforementioned five-year period.
However, AG Basil Williams last week told reporters at a press conference that Banks DIH Limited will be fighting a lost cause against the country’s tax authority, noting that all efforts will be exhausted to ensure not a dime comes out of the national Treasury to refund the beverage giant. He pointed out that the time has passed for the beverage company to take any actions against GRA even in light of the extravagant tax write-off granted to DDL.
Moreover, the Attorney General argued that he was wrongly named co-defendant in the matter because the settlement of tax cases falls outside of his jurisdiction.
Meanwhile, Finance Minister Winston Jordan also threw his support behind efforts to challenge the lawsuit filed by the beverage giant, saying “We will litigate it to its depth.”