SPU Head admits Republic Bank complained about misuse of funds
$30B GuySuCo bond
With the recent revelation that Republic Bank (Guyana) Limited has made known several of its concerns with how the $30 billion bond that was loaned to the Special Purpose Unit (SPU) of the National Industrial and Commercial Investments Limited (NICIL) is being spent, SPU Head Colvin Heath-London has confirmed this to be true.
Heath-London told Guyana Times on Tuesday that while he cannot comment extensively on the issue, he did say the Bank had registered an official complaint and asked that some of the matters be corrected with some level of urgency. “They registered a complaint. I cannot comment further, because those things are presently being dealt with,” he added.
The SPU head was at first reluctant to state whether indeed the issue raised by the Bank as reported in sections of the media were true. However, Heath-London later admitted that everything alluded to in the news report was accurate and captures most of what was raised, but clarified that “Republic Bank has not suspended any funding to NICIL.”
The $30 billion bond arrangement with the Bank is aimed at helping to finance capital works for three Guyana Sugar Corporation (GuySuCo) estates. These include: Albion, Blairmont and Uitvlugt.
But it has been reported that Managing Director of Republic Bank, Richard Sammy wrote to General Manager of the Hand-in-Hand Trust Corporation, Maurice John, over GuySuCo reportedly using part of the bond proceeds to repay interest on another debt at a bank. The Bank also called for a full explanation as to the apparent breach of the terms of the Trust Deed.
Hand-in-Hand had written to Republic Bank requesting that the purpose of the Trust Deed be changed regarding how the proceeds of the bond shall be applied. While Republic Bank has stated it’s no objection to the proposed changes to the Trust Deed, it said it remained disappointed that proceeds from the bond were utilised for a purpose other than what was approved.
The SPU has not taken lightly criticisms, which seek to suggest that the bond would be wasted and that it was acquired at an unreasonable rate. In fact, the SPU had said it should be noted that, as standard for any debt financing, security is required to secure payments to bondholders.
The terms of the bond are five years, since it is expected that the proceeds of the land sale for GuySuCo would be used to repay the facility, and NICIL wanted to secure the lowest possible interest rate. The NICIL bond was later issued at 4.75 per cent interest.
In August, it was reported that almost $2 billion has been disbursed to GuySuCo for operational expenses of its three estates. Previous to that, GuySuCo’s Chief Executive Officer, Dr Harold Davis, Jr, had told sections of the media that GuySuCo was slated to receive proceeds from the initial $17 billion the SPU has secured from the $30 billion bond facility.
Davis claimed that GuySuCo had requested a substantial amount to advance its strategic plans, but monies received so far have catered only for wages and fuel expenses; and no other monies have been received.
The SPU later said the monies from the bond facility will be used to purchase equipment for production of plantation white sugar, including the purchase of nine tractors, and to address the co-generation plants’ operational expenses.
“The monies obtained from the bond facility were not obtained to facilitate the payment of debt, as was ventilated time and again by the Minister of Finance and stakeholders,” the SPU has said.
Since announcement of the bond, concerns have been raised about Government’s vision for the industry and the genuineness of its actions thus far, since that very $30 billion could have gone towards restructuring the industry while keeping all of the estates open and GuySuCo’s workforce employed and engaged.
Some 5700 workers from Skeldon, East Demerara (Enmore) and Rose Hall Estates were dismissed after GuySuCo had terminated their employment in 2017. Before then, over 1000 Wales Estate workers were similarly dismissed when the entity officially ceased operation in December 2016. These moves were in keeping with what Government has said were “cost-cutting measures”.