SARA seeking to recover $2.7B from QAII, $274M from GBTI
The State Assets Recovery Agency (SARA) yesterday announced that it was seeking to recover $2.7 billion from Queens Atlantic Investment Inc over its controversial acquisition of the former Sanata Textiles complex and $274 million from the Guyana Bank for Trade and Industry (GBTI) for the purchase of the Kingston property that is now its headquarters.
“On Thursday 22nd August, SARA filed proceedings in the High Court seeking Civil Recovery Orders against Queens Atlantic Investment Inc. (QAII) by way of Fixed Date Application, and against Guyana Bank for Trade and Industry (GBTI) by Statement of Claim. Both claims are made under the State Assets Recovery Act 2017 and are for the recovery of GY$2,701,619,960 and GY$274,117,404 respectively, including interest,” a statement from the anti-corruption agency said.
Stabroek News had last week reported that SARA had taken the principals of QAII to court and is asking the company to pay a differential on the price it paid for the old Sanata Textiles complex and what SARA believes is its market value. QAII Corporate Secretary Zulfikar Ally had told Stabroek News, when contacted, that the sums asked for was exorbitant and said that the company would challenge the claim.
Head of SARA Dr Clive Thomas, told Stabroek News that the $2.7 billion sum is justified and was calculated using a 6 per cent compound interest rate from the time the deal was sealed.
“That is standard practice in commercial courts. If you don’t want to pay the interest rates, then give back the land. We might find ways to get even more,” he said in an interview with this newspaper yesterday, prior to the agency issuing a statement on the matter.
“We can’t condone thievery. You can’t steal my house and then turn around and tell me ‘I clean it every day and I want you to forgive me’. And if you stole $100 from me 10 years ago, you cannot want to give me back $100 today and say, ‘I am giving you back your $100’. Can you see the ridiculousness in that?” he questioned.
Meanwhile, in the statement, SARA recalled that QAII was leasing the Sanata complex and entered negotiations for its purchase. This would have occurred in 2010. “[The then] Cabinet approved a formula for the terms of the sale that required a US$27M investment over 3 years and a sum of money reflecting a valuation of the property. NICIL however concluded the sale based on a formula suggested by the purchaser, resulting in an investment of just US$21M being accepted and QAII paying some GY$344.5M less than would have been payable further to the formula approved by Cabinet,” it said.
With regards to GBTI, the statement said that the bank had submitted only the fourth highest of 14 bids in a tendering process, but was awarded the right to purchase the property that is now its headquarters for $224 million less than the most recent valuation of the property at that time. Cabinet, at the time, had determined that the valuation would be the basis of the floor price in the event of a sale of that property, it noted.
GBTI, in a statement issued yesterday on its Facebook page, characterised the contents of SARA’s statement as “spurious allegations engineered to further attack GBTI in a gross and unconscionable manner.” It further added that the use of such legislation after so many years is inimical to the interests of justice and smacks of intimidation. “The Bank therefore intends to commence appropriate legal action to vigorously defend itself against these malicious claims. GBTI has full confidence in the judicial system, and that it will be fully vindicated as per recent false charges which were duly dismissed,” it noted.
GBTI said it has been serving Guyana for over 180 years and is regarded as one of the most trusted and loyal banks in the country and the largest indigenous bank in Guyana. “In all its dealings with its many stakeholders, GBTI has always discharged its responsibilities with professionalism and integrity as we continue to hold our tagline with the highest level of standards as “We See Guyana though your eyes,”” it further said.
The SARA statement highlighted that the State Assets Recovery Act mandates the agency to recover, through civil proceedings, State property unlawfully acquired by a public official or any other person.
“The Act provides for investigations leading to the granting by the High Court of Restraint and Civil Recovery Orders in respect of unlawfully acquired property. The Act also allows SARA to engage in international cooperation in the recovery of stolen assets of State that are outside of Guyana,” the statement said. It further highlighted that SARA was created in consonance with the United Nations Convention against Corruption (UNCAC).
“Guyana is one of 140 signatories to UNCAC which is a multilateral treaty negotiated by member states of the United Nations (UN) and promoted by the UN Office on Drugs and Crime (UNODC). It is one of several legally binding international anti-corruption agreements. UNCAC requires state parties to the treaty to implement several anti-corruption measures that focus on five main areas: prevention, law enforcement, international cooperation, asset recovery, technical assistance and information exchange. The State Assets Recovery Act is part of the Guyana government’s efforts to fight corruption,” it added.
QAII has been given one month to file a response and is engaging its lawyers, even as Ally had stressed that the purchase will be proven to be aboveboard when the matter comes up in court. “We will do what we have to do to defend the company. We know we haven’t done anything wrong and I am pretty sure when it goes to the court, we will be vindicated,” he had said.
Former Minister of Finance Dr Ashni Singh and former head of the National Industrial and Commercial Investments Limited (NICIL) Winston Brassington were last year charged with misconduct in public office in relation to the controversial sale.
The charge alleges that Singh, performing the duties of Minister of Finance and Chairman of NICIL, and Brassington, as CEO of NICIL, between October 26th, 2010 and December 20th, 2010 at Lot 126 Barrack Street, Kingston, Georgetown, by way of agreement of sale and purchase, acted recklessly when they sold the Sanata Textiles Complex with building and erections thereon, being 18.1871 acres, to QAII for $697,864,800 plus VAT, knowing that the said property was valued at the sum of $1,042,403, 500 and was therefore sold at a price that was grossly undervalued, thereby creating a breach of their duties.
The sale occurred under the Bharrat Jagdeo-led PPP/C government and faced immense scrutiny given the close link between the then president and QAII CEO Dr Ranjisinghi ‘Bobby’ Ramroop.
A 99-year lease had initially been granted to QAII for the development of printing, dyeing and textile operations at the Sanata complex. However, the group eventually bought the complex in 2010.
Brassington, in 2008, had said that once QAII came good with its US$30 million investment in the complex, it was free to exercise the option to buy the property at a price of $700 million after three years. He had also said that the price quoted was the average valuation between that which government obtained from an independent valuator and one contracted by the investors.
The then government said that prior to the investment at Sanata, the annual upkeep costs in 2006 were almost $20 million: $8 million in security, $6 million in rates and taxes, and over $5 million in cleaning and miscellaneous repairs, including perimeter lighting. While parts of the complex had been rented out on
short term leases, the fees collected were never sufficient to cover the upkeep.
The sale was hugely controversial and it was revealed that the PPP/C government granted duty-free concessions and tax waivers for hundreds of items including a printing press, five vehicles, three containers of building materials and equipment representing millions of US dollars to five QAII subsidiaries before it had even signed investment agreements with the company.
It was subsequently discovered that the concessions were approved despite not being in conformity with the tax laws of the country. The Jagdeo-led former government then amended the Income Tax (In Aid of Industry) Act to facilitate QAII retroactively benefitting from the concessions.
Thomas said that the court will ultimately decide how much should be given to the State, if their case of malfeasance is proven. “It is not for us to decide, it is for the court. We are making that claim. The court may say not 6 per cent but 5 or they may say 7 per cent interest,” he said.