By: Sase Singh; M.Sc. – Finance, ACCA.
Introduction
WHY is it so hard for any business transaction in the State Sector to be done ethically in Guyana? After closing 4 sugar estates and destroying the lives of some 10,000 families in rural Guyana, the sugar industry is no closer to being stable. After borrowing G$30 billion partially in the name of those same people on the breadline, we find that the “arranger of the loan has already collected fees of G$116 million, and the bond trustee (has collected his/her) fee of some G$60 million, but the industry is no closer to stability. So, before a dollar was disbursed to GuySuCo (the intended beneficiary), some G$200 million was leaked to various non-value-added sources. Where is the value for money spent?
Why did Team Granger go to market for G$30 billion for the sugar industry? I was advised to invest in some identified projects, to stabilise what is left of the functional sugar industry, including some capital works at Albion, Blairmont and Uitvlugt, a co-generation plant and a white sugar plant. But has any of these sums of money started to progress any of these projects? We are reading that the first tranche of the funds was misappropriated to pay off another bank loan. How is this possible? The bottom line remains that Team Granger is proverbially digging a hole to fill another, as if such financial semantics is the solution to the challenge in the industry. The approach is rookie at best!
With such financial strategies being practised by Team Granger, the debt-ridden, loss-making, mismanaged GuySuCo is no closer to seeing the light at the end of the tunnel. The enormity of the challenge confronting the company (including low productivity, substantial financial deficits, a demotivated staff, increased levels of debt, and low raw-sugar prices) means that, more than ever before, GuySuCo needs to be able to focus on moving up the value chain as a means to maximise investment returns without distraction. But this is exactly what is NOT HAPPENING under Team Granger.
The quarrel over this money continues to serve as a blight to the turnaround of the sugar industry. Too many people in the sugar industry, NICIL and the Ministry of Finance are not thinking at a strategic level, but that is a prerequisite when you are dealing with such a complex project.
GuySuCo’s only reliable tangible assets today are its lands (which are under sea-level and are subject to flooding if the D & I system fails). Any sensible banker would know the bank can lend to the industry only on the future cash inflows from the intended investments. So if he lends the funds to build a co-generation plant, he wants to see a co-generation plant being built; not a sports club, or an overdraft at another bank being paid down.
What was done in GuySuCo by the new management team — by taking money intended for capital works and reallocating it for current expenditure — is tantamount to fraud, and it really stains the reputation of the current CEO, Dr Harold Davis. He must clean up this propensity within the GuysuCo hierarchy to engage in blatant misappropriation of funds. The company did it before with the workers’ tax deductions and social security payments, which were never paid to the GRA and NIS respectively.
The fundamental feature of every business is to provide profits to the shareholders and stakeholders, but in GuySuCo’s case, for years no one seemed to have benefited from it, save and except the politicians and their business buddies. That is how it was 10 years ago, and that is how it is today, and a change of Government achieved absolutely no gains for the shareholders and the workers. Actually, they are all worst off today under this Granger Government than they were under the PPP.
What we are seeing today is an intensification of the dark side of the business, as there remains weak corporate governance (can you imagine GuySuCo had no board for six months?) and massive acts of continued misappropriation of funds becoming a cultural norm, rather than an exception. Will GuySuCo ever learn from its past mistakes?
