-judge orders GRDB to pay $US 77,000 over flawed Panama rice deal

A recent High Court ruling, ordering the Guyana Rice Development Board (GRDB) to pay Vilvoorden Investment Inc $US 77,000 ($16.2 million) for unpaid rice exports to Panama, has shed light on the flawed deal struck by the APNU+AFC administration in 2018.

The consequences of this ill-fated agreement have now come to the fore, exposing the negligence and lack of due diligence on the part of the former government.

Under the APNU+AFC administration, a trade agreement was made with the Panamanian government, encompassing the supply of approximately 9,000 tonnes of rice through the GRDB. However, this deal has proven to be deeply flawed, leading to financial turmoil and legal battles for the GRDB.

The key issue arising from the agreement was the failure to establish robust payment terms and safeguards. As the recent court case highlighted, the GRDB contended that it could not pay Vilvoorden Investment Inc for the rice as it had not received payment from Panama. They cited a “pay-when-paid” clause in the contract as a justification for their non-payment.

However, Justice Gino Persaud, in his ruling, deemed this clause to be unspecific and ambiguous. Justice Persaud ruled in favour of Vilvoorden Investment Inc, ordering GRDB to pay a sum of $US 77,000 ($16.2M).

Justice Persaud, while delivering the verdict, highlighted the complex nature of the case, terming it a classic “Heller’s Catch-22 situation.”

He noted that the ongoing imbroglio had left Vilvoorden Investment Inc unpaid due to GRDB’s own non-payment predicament. The GRDB had received and exported the rice to Panama for sale, but unfortunately, payment was not received.

Currently, the Panamanian government owes the GRDB over $1 billion for rice purchases and there is uncertainty surrounding the outstanding payments. Guyana has already expressed its intention to seek recourse through the International Chamber of Arbitration in France to recover the money it is owed.

“The respondent cannot rely on the pay-when-paid clause since the clause is unspecific and ambiguous. Moreover, the applicant completed its obligation under the contract four years ago. Thus, the applicant is entitled to be paid within a reasonable time for the rice supplied.

“The pay-when-paid clause did not absolve the respondent’s liability to pay the applicant even if it had not been paid. This, therefore, defeats the Respondent’s contention that its duty to pay the applicant had not yet arisen,” the judge said in his ruling.

Based on the foregoing, Justice Persaud granted judgment in favour of the applicant in the sum of USD $77,000.20 or its equivalent together with interest on that sum. Additionally, the GRDB was directed to cover the costs of the legal proceedings, totalling $1 million, within six weeks.

Upon assumption of office, the People’s Progressive Party Civic (PPP/C) government, through the Ministry of Agriculture, committed to recovering the monies owed and has already tried several avenues, including through the Ministry of Foreign Affairs and International Co-operation. However, these have been unsuccessful.

Rice millers have filed legal proceedings in the High Court against the GRDB to have the agency pay monies for the rice sold to the Panamanian government.

“These are farmers who delivered their rice to the rice board as instructed by the government of the day; the government of the day boasted that they secured a new market for rice, sold and delivered the rice farmers’ rice and the millers’ rice on credit and never attempted to recover any payment,” Attorney-General and Minister of Legal Affairs, Anil Nandlall, S.C., had said.