– Dr Luncheon tells court
The rationale behind government’s move to privatise the bauxite
industry was explained in detail to the court yesterday by Head of the
Presidential Secretariat (HPS) Dr. Roger Luncheon, chief witness in
President Bharrat Jagdeo’s libel case against Freddie Kissoon and the
Kaieteur News.
Defence lawyer Nigel Hughes, in his cross examination of Dr. Luncheon
at a previous hearing, had asked about the capital investments in the
sugar industry as opposed to privatisation in the bauxite industry.
The questions were rehashed by lawyer for the plaintiff Anil Nandlall
who continued his re-examination of Dr. Luncheon yesterday, but was met
with objections from Hughes on the ground that privatization and
capital investment were dealt with separately.
Allowed a response, Dr. Luncheon said while the sugar industry up to
the 2000s had proven to be profitable, bauxite operations in Linden
and Berbice were quite the opposite, even as there continued to be a
considerable budgetary outlay on an annual basis, and this was long
before the plaintiff assumed the presidency.
He made reference to the International Monetary Fund’s (IMF’s)
programme that imposed the conditionality for cessation of public funds to
the bauxite industry (LINMINE and BERMINE) as a prerequisite to the
debt recovery process.
“If we didn’t execute the IMF agreement, we would have had no debt
Agreement, and debt relief donors would not do so without an IMF
agreement,” Dr. Luncheon explained.
For want of capital, the bauxite industry was inevitably exposed to
privatisation which Dr. Luncheon said turned out to be successful, and
helped the bauxite industry to acquire investments that exceeded the
amount acquired for the Skeldon project.
The IMF programme was inherited by the People’s Progressive
Party/Civic (PPP/C) when it took office in 1992, according to President
Jagdeo, who at the launch of GuyExpo on September 29, noted that Guyana
is no longer dependent on such a programme.
“The IMF was invited into Guyana when our country became bankrupt…
un-credit worthy (and) we could not pay our bills and we worked our
way out of that programme. Today, we do not have an IMF programme when
quite a few countries in our region are contemplating getting into
one because of their balance of payment and other difficulties,”
President Jagdeo said.

Privatisation policy

Dr. Luncheon also explained the main components of Government’s
privatization policy executed by the National Industrial and
Commercial Investments Limited (NICIL) to dispose of government
properties, an issue that arose from the cross-examination by Hughes.
Hughes objected to the question and plaintiff’s lawyer, Nandlall,
reminded that he (Hughes) had raised this matter in his line of
questioning. The question was subsequently allowed by the judge.
The HPS said that the privatisation unit, working in conjunction with
NICIL, applied several considerations in the disposal of government’s
assets; these include identification of a ‘privatisable’ entity (one
that is deemed unprofitable and had to be subsidised), an entity that
needed investment to maintain market presence, and entities that are
not strategic and where privatisation would not lead to an
unacceptable impact on the national economy.
Dr. Luncheon assured that the privatisation process is publicly
carried out in accordance with the provisions of the Procurement Act.
He explained that a market valuation is done of the assets and
positive recommendations from the privatisation board are taken to
Cabinet for consideration. Once approved, a public tendering process
follows.
This includes an advertisement published inviting bidders to bid for
the property at market price.
Nandlall then asked how the transaction with regard to disposal of
several properties was carried out, including for a property to Roraima
Airways, Queens Atlantic, National Hardware, Precision Woodworking,
John Fernandes Ltd, Farouk Feroze and Roraima Airways.
With respect to Roraima Airways, the HPS explained that Cabinet
approved for that particular property to be disposed of by sale and a
public tender ensued, attracting four tenders all of which were
evaluated and Gerry Gouveia was deemed one of the most responsive
bidders and was sold the property after negotiations.
The decision was largely influenced by the fact that Roraima Airways
owned and operated a business that was adjacent to the property that
was sold.
On the issue of assets that were acquired by Precision Woodworking,
owned by the Bulkan family (another issue that came out in the
cross-examination), the HPS said that market valuations were done for
all leased properties at the Ruimveldt estate.
The lease hold properties were in existence for a long time and they
were reviewed and redone and rent adjusted to reflect current market
values; and in each of these, a clause was put in giving the lessee the
option to purchase at market value. Most of these lessees referred to
above exercised the option to purchase and NICIL carried out the
transactions. Leases were then renewed and in some instances, entities
were given the option to buy.
With regard to property acquired by Queens Atlantic, the HPS said
that it was leased to a Chinese firm by Sanata Textiles Limited. The
lease was subsequently abandoned and despite re-advertisement the
asset remained without uptake.
NICIL then offered a direct negotiation on conditions under which a
new lease could be made for the assets. On this basis, Queens Atlantic
acquired a lease with an option to buy, once the conditions under which
the lease was granted were implemented by the purchaser. These
conditions included certain development to the property.
Subsequently, over a period of three to four years, those conditions
were met and the company exercised its option to buy.
Nandlall also re-examined the issue of the 103.88 acres acquired by
National Hardware Limited in Liliendaal.         Dr. Luncheon said that a
public tender was carried out and the most competitive bidder, based on
the current price per acreage in that specific area, was awarded the
property.
Nandlall then asked the HPS if, in his capacity as Director of NICIL,
any asset was purchased by any person of African descent under
government’s privatisation policy other than Standford Solomon,
previously mentioned during the cross-examination.
Dr. Luncheon responded that NICIL sold property located immediately
north at the corner of Holmes and Main Streets, Georgetown to Victor
Greene.

When the proceedings concluded yesterday afternoon, Nandlall informed the
court that Dr Luncheon’s contributions are most important to the
Cabinet, and that he agreed with a statement made by Defence lawyer
Hughes that Dr Luncheon is Cabinet, and therefore, Cabinet is scheduled
to sit today and asked that he be excused.
The case was then adjourned to tomorrow at 10:00hrs.