Jordan had been cautioned that sale to BK could trigger criminal charges against him
Former APNU+AFC Minister of Finance Winston Jordan who was yesterday charged (see other story below) over the sale of waterfront property to BK International at a price allegedly far below market value had been cautioned in January of 2019 that the transaction could lead to charges against him and other culpable officers.
The advice was proffered at Jordan’s request by attorney-at-law Ronald BurchSmith but Jordan nevertheless went ahead with the deal which yesterday landed him in court. According to the advice which was circulated to the media yesterday, Burch-Smith said that he had been informed by the Transport and Harbours Department (T&HD) that the properties were of general importance as they abut property currently used by T&HD and the sale would impede the expansion of those properties.
He added that the T&HD was of the general view that the proposed terms of the sale would result in the transfer of property to private ownership at disproportionately low rates.
“The properties are considered to be of very high commercial value and the terms of sale offer no obvious public benefit. The State and the T&HD/Ministry of Public Infrastructure would be deprived of scarce Georgetown riverfront at below market rates”, Burch-Smith stated in his advice.
He said he had been instructed that National Industrial and Commercial Investments Limited (NICIL) had entered an agreement with BK International Ltd on 4 December 2006 for the lease of these properties for 20 years at an annual rent of $10,000,000 per annum with an option to purchase at $110,000,000. It was a term of the lease that the lessee seeks city (M&CC) approval for certain construction to be done and within 4 years of such approval complete same. If it failed to complete this construction, the option price to purchase would become null and void and the price subject to mutual agreement.
“I am informed that the development plans of the lessee were altered from a hotel/wharf project to certain general wharf/industrial activities. The construction has not been carried out in the manner projected and part of the difficulty relates to the approval of the M&CC and the financing for the project, either as originally intended or as modified by the lessee. The lessee has sought permission to vary the terms of the lease but this was not granted. “In or around 2011 the lessee stopped paying rent and the lessor (NICIL) sued for rent in 2013. I have been unable to review the statement of claim to ascertain the exact reliefs sought. The matter has not yet been determined by the Commercial Court”, the lawyer said.
Burch-Smith added that from the documents perused by him, it appeared that BK international owes almost $100,000,000 million in accrued rent and interest is payable on unpaid rent at the rate of 12% per annum. He added that it appears from a letter dated 31st March 2017, that BK international proposed to pay the original option price, 1 year’s annual rent of $10,000,000 and to receive transport. He noted that similar terms had been rejected by NICIL in the past.
He added that NICIL’s position in the legal proceedings and correspondence appears to be that BK International has not complied with the terms of the lease and is not entitled to the option at the same rate as per the agreement.
He further said that he was informed that Cabinet had been asked to consider approving the settlement of the litigation and approval of the sale to BK International. Burch-Smith stated that generally, it is a matter of mainly commercial/policy considerations whether an agreement should be varied or litigation settled on terms similar to those proposed.
“In recent times, the sale of land by the Government of Guyana or its agencies such as NICIL has become the subject of criminal and public law litigation and the consideration of the completion of the sale to BK International requires careful review of the possible legal implications. As such the sale of land should not be regarded solely as a … commercial matter, but the possible criminal implications of generous commercial terms should be given appropriate consideration.
“In the exercise of their joint or several discretions, public officers should be concerned about whether a decision to sell government land at overly generous prices can result in civil or criminal sanction to them personally. This is so particularly where the sale involves no obvious benefit to the public by facilitating important or valuable investment or as the result of a public tender. In the latter case, a public tender creates no obligation to sell and may not be an appropriate legal justification for entering generous commercial terms. This is an evolving area of law in Guyana and is unlikely to be settled any time soon”, Burch-Smith stated.
He asserted that the criminal law offence of misconduct in public office is committed where:
1. A public officer acting as such;
2. Willfully neglecting to perform his or her duty and/or willfully misconducting himself or herself
3. To such a degree as to amount to an abuse of the public’s trust in the office holder; and
4. Without reasonable excuse or justification
He pointed out that in pending High Court litigation, Brassington v Persaud HCA No. 2018-HC DEM-CIV-FDA-757, the Chief Justice had been asked to consider whether to grant a stay of proceedings or quash the charges against the former CEO (Winston Brassington) and Chairman of NICIL/Minister of Finance. The Minister of Finance signed the order transferring property of NICIL. The transactions for which the applicants were charged relate to the sale of property to MultiCinemas Inc. for a theatre/shopping complex, National Hardware Limited for a residential property development scheme and Scady Business Corporation for personal/residential use. (Those charges were withdrawn by SOCU on December 19, 2020)
Burch-Smith also noted that the same defendants (Brassington and Singh) have been charged for the offence of misconduct in public office in relation to the sale of the Sanata Textile mill complex to Queens Atlantic Investments Inc., in completion of a lease agreement which contained an option to purchase somewhat similar to that contained in relation to BK.
In all cases, Burch-Smith said that it was contended that the sale was made at prices below market value and/or without a valuation.
“The parties contended that they were carrying out the mandates of their board and cabinet. It is not clear why the prosecution has not been preferred against the Board and/or Cabinet as the decisions were made by the Board and approved by Cabinet. “It is entirely reasonable that similar justification will be used to contend that the completion of the sale to BK International in circumstances where NICIL is of the view that the existing option is not binding, makes the decisionmakers open to allegations of misconduct.
“There is no formal information available to me about the market value of property. In the Brassington matters, the State’s
contention was that the parties failed to obtain a valuation or sold below market value or sold knowing the market value was higher. In the Sanata Textile Mills sale, an elaborate option to purchase was written into the lease agreement. This option created a mechanism which led to the determination of the selling price”, Burch-Smith said.
He added that the sale of waterfront property in and around Georgetown for $110,000,000 “seems particularly generous in the current economic climate”.
He said that a decision to revert to the 2006 rate where the intended tourism development has been abandoned may be difficult to justify on economic or public interest terms.
“Ministers or other public officers who consent to these terms will be exposed to criminal prosecution. This applies to officers of NICIL and members of Cabinet, (save the President who is immune from prosecution). Where a decision is taken by Board of NICIL and/or Cabinet to proceed with the sale, it would be prudent for any dissent to be recorded in writing”, he advised.
Observers note that now President Irfaan Ali had also been charged similarly in relation to the Pradoville Housing Scheme but 19 charges against him were dropped after he acceded to the presidency on the grounds of his presidential immunity