$50B NICIL funds… Brassington says: Govt has no obligation to transfer money to Consolidated Funds
There is nothing in law that says that Government is obligated to transfer what is believed to be
over $50B from the coffers of the National Industrial and Commercial Investments Limited (NICIL) to the Consolidated Fund, according to Head of NICIL, Winston Brassington.
The monies, representing largely the privatization proceeds of Government assets, has been a subject of contention with growing calls for more transparency and for it to be moved to government’s central accounts- the Consolidated Funds.
According to Government’s spokesman and Cabinet Secretary, Dr. Roger Luncheon, the legal regulations that direct the operations of NICIL do not speak of the proceeds having to be transferred to Central Government.
“No obligations on the government. There are 20-something articles that underpin the creation of NICIL and none of them says that money from NICIL has to be put into the Consolidated Fund.”
Luncheon was responding to questions following his weekly press briefing last week.
The opposition has been accusing Government of abusing NICIL’s resources. Government has announced plans to build an almost US$60M Marriott Hotel in Kingston with part funding from NICIL.
The announcement has not been going down well with especially the Alliance For Change (AFC) and A Partnership For National Unity (APNU), opposition parties in the National Assembly which together hold the majority over the People’s Progressive Party/Civic.
It was one of the number of instances in which NICIL’s transactions have come under the microscope.
Others include the sale of the Sanata Textile complex, the Duke Lodge annex sale and the privatization of a number of other properties.
Both opposition parties have been indicating a growing intolerance to a number of government projects and policies with over $21B slashed from the National Budget recently during weeks of heated debate.
Between 1994 and 2008, NICIL said that it raked in over $23B from the privatization process.
During a taxation and privatization seminar in August 2008, NICIL’s head, Winston Brassington, had defended that body’s system of holding on that amount of monies saying that previous privatization processes have created ad hoc accounting processes in Guyana.
At the time of making the statement, Brassington was responding to questions about proceeds from privatization transactions being transferred to the Consolidated Fund.
An example of such a transaction is the sale of some six acres of land at Industrial Site, Ruimveldt, for which the monies ($350M) were yet to be deposited in the Consolidated Fund. According to Brassington, previous accounting processes have seen some proceeds being deposited in consolidated and divestment accounts, but he noted there was a deficiency.
“What you did not have was adherence under the law of how you distribute a company’s assets.”
According to Brassington, proper accounting requirements dictate that money from the sale of assets should first be placed in the company account, provided that it can adequately discharge all of its liabilities
“With the Company’s Act, the company would then do a distribution by way of dividends, with all of its shareholders…That process happened in earlier years, and was very ad hoc because it did not adhere to principles.”
Using current accounting principles for monies from privatization deals to be placed in the Consolidated Fund requires the completion of the accounting process.
The Head of the Privatization Unit had also during that forum, admitted tardiness on the part of NICIL as it relates to submitting annual returns since, according to him, the entity has not received audited reports from the Auditor General.
When monies go to the Consolidated Fund, the National Assembly must decide on its release.
However, when it goes to other funds, such as a holdings firm, there is no need for Parliamentary intervention.
The Privatization Board is chaired by the Minister of Finance with its membership, the Cabinet of Ministers.