Gov’t should have settled with S.M. Jaleel

Dear Editor,

On May 9, 2017, the CCJ ordered Guyana to refund to S.M. Jaleel and Co Ltd. and its local subsidiary, Guyana Beverages Inc., all environmental tax which these companies paid from 2011 to 2015. The aggregate sum is not yet known. No doubt, it will run into millions of US dollars. The CCJ, in following its decision in Rudisa Beverages MV v Guyana, ruled that the Environmental Taxes collected by Guyana was in violation of its treaty obligations under the Revised Treaty of Chaguaramas. The history of this matter is worth repeating so that readers can appreciate how the political arrogance of a then Joint Opposition, driven purely by a naked hunger for political power, continues to bleed the taxpayers of this country.

Before Rudisa filed its claim, Minister of Finance, Dr. Ashni Singh, tabled an amendment to the Customs Act to remove the offensive provision contained therein, which ran afoul of the Treaty of Chaguaramas. I made public, that unless this Bill is passed, Guyana will be forced to refund all the taxes levied under this provision of the Customs Act. By this time, I had already received a letter from Rudisa threatening litigation. I made the letter public. The Joint Opposition was fully apprised of the facts and consequences, if the Bill was not passed. Yet, they used every opportunity to dilate. When the Bill was eventually debated, they voted it down.

By this time, Rudisa filed its claim at the CCJ. I appeared and extracted an undertaking from Rudisa’s lawyers that were the Government able to pass the Bill in a second attempt in the National Assembly, the company would withdraw its claim. As a result, Rudisa’s lawyers were magnanimous enough to join me in an application to adjourn the matter for a period of three months to facilitate the Government of Guyana putting the Bill before the National Assembly a second time. Further, Rudisa’s lawyers informed the Court of their intention to withdraw the case and relinquish their claim completely, if the Bill is passed. In those circumstances, the Court was kind enough to grant an adjournment for a period of three months for the Bill to be enacted.

Again, I disclosed all the aforementioned facts, publicly, and they were widely carried in the press. A few days thereafter, Dr. Ashni Singh re-tabled the Bill in the National Assembly.

Again, the Joint Opposition embarked upon their stalling tactics, pretending to be consulting with local manufacturers. Eventually, the debates came. In my presentation in the National Assembly, I painstakingly explained all which transpired before the CCJ; I emphasized that this is Guyana’s last opportunity to enact the Bill; I warned that a failure to do so would result in drastic financial consequences. All the speakers

but in nearly every other oil-dependent developing nation similar evidence of corruption and mismanagement abounds. In Saudi Arabia – which has the world’s largest proven oil reserves – per capita income declined from US$28,600 in 1981 to a mere US$6,800 twenty years later. Over the last four decades, similar patterns are noticeable in Nigeria and Venezuela, and to a lesser extent in Algeria, Angola, Congo, Ecuador, Gabon, Iran, Iraq, Kuwait, Libya, Qatar and Trinidad and Tobago. One study that examined the per capita GDP of OPEC members between 1965 and 1998 found that it decreased on average by 1.3% per year compared with an average 2.2% increase in non-petroleum countries during the same period.

The “resource curse” has been attributed to many factors; a few deserve special attention: oil price volatility – which wreaks havoc on governments’ budgetary discipline; stronger national currencies – which make non-petroleum exports much less competitive; inadequate skills transfer to local workers, and the failure to use oil revenues to bolster other parts of the economy. Terry Lynn Karl, a Stanford professor of political science and author of The Paradox of Plenty: Oil Booms and Petro- States, notes that while there are intelligent responses to all of these issues (commodity stabilization funds, investments in human resources, greater transparency, better tax policies), these require “capable states and relatively high levels of governance” to succeed. In their absence, as was the case in Mexico, Venezuela and many other parts of the Americas, petrodollars will instead fuel a corrupt and bloated bureaucracy and create a state that “looks powerful but is hollow.”

Gloomy outcomes are not, of course, inevitable. Norway and Canada, among others, have used oil

on our side advanced similar presentations. Like the first time when the Bill was debated, our plea fell on deaf ears. Mr. Carl Greenidge led the onslaught for the APNU. He boldly asserted that the CCJ could not dictate for the Guyana Parliament. Mr. Khemraj Ramjattan argued along the same vein, “the CCJ does not run this Parliament, we do!” he declared. They, eventually, voted the Bill down.

As a result, taxpayers’ of this country were forced to pay over six million US dollars to Rudisa during the years 2016 and 2017. This money could have been used to do so many things, for so many people of our country in this hard guava season.

Unfortunately, it did not end there. Taxpayers’ now have to pay another foreign company millions of US dollars. A prudent Attorney General, with a sound understanding of the Rudisa ruling, would have never contested the S.M. Jaleel case. He would have recognized, very early, that the CCJ would not depart from its previous ruling, lightly and in the Jaleel’s case, there were no exceptional facts for them to do so. Therefore, a tactful Attorney General would have approached the Company and worked out an amicable resolution, including the payment of a reduced sum and a generous payment plan. But not our AG. He proceeded to publicly boast that, “the Government assembled a team

revenues to improve infrastructure and develop other sectors of their economy. But many of these countries already had strong institutions and fairly advanced levels of governance, and transparency. Trinidad, which has now squandered the profits from two separate natural resource booms, is closer to what we should expect if we cannot reform our institutions in time. But even if we do create a national oil company comparable to Petróleos de Venezuela S.A. (PDVSA) – a byword for efficiency and independence in the 1980s and 90s – sustained vigilance will remain essential. PDVSA’s performance plunged soon after president Chávez replaced its senior management with cronies and its unravelling helped to sow the seeds for much of the current chaos in Venezuela.

What seems to matter more than the size of an oil find, or its current and projected value, is how scrupulously governments prepare themselves for the sudden influx of wealth. Those that share it judiciously, develop other sectors of the economy and modernize infrastructure and labour, tend to do well. Those that hoard it, or use it to shore up existing elites and social and political divisions, tend to fail, and waste what might have been a transformative moment in the histories of their young nations. Before the oil starts to flow, it is still up to us collectively to determine which of these paths we will take.

of persons, who would testify on the question of whether environmental tax was transferred to the consumer”; obviously, failing to recognize that this issue was already conclusively determined in the Rudisa case.

He imposed additional millions of dollars of expenditure upon the backs of taxpayers’ by hiring ‘experts’ to advise him on the matter and also retained high-priced lawyers in Trinidad to present the arguments at the CCJ. In the end, the Court ruled against Guyana and ordered Guyana to pay the other side’s costs in the litigation. This will cost taxpayers yet another set of millions of dollars. But it does not end there. ANSA McAl, Grace Kennedy and others are next in line to sue. I have no doubt that the blundering will continue.

The moral of this story: arrogance coupled with political vendetta executed by incompetents is a recipe for disaster. The same agenda and persons currently drive the Special Organized Crime Unit and the State Assets Recovery Agency. The results are bound to be the same. Yours faithfully, Anil Nandlall Former Attorney General