Jan 10, 2016 News
– forces company to pay $100M for leased land
Guyana is getting ready to celebrate its 50th anniversary of independence this year.
The administration, which took office in May last year, has announced big plans for the celebrations on May 26th, even shifting some events from Mashramani, including some of the float parades.
But for one company, the celebrations would not be much.
Modern Industries Limited (A. H. & L. Kissoon) is getting ready to take Government to court over a piece of land at the Ruimveldt Industrial Site. The land was leased to the company in 1961, by former premier, Dr. Cheddi Jagan, while Guyana was still under the rule of the British.
Three other companies took the plunge to develop the sugar lands – Continental Agencies, Lysons Industries (now occupied by National Hardware) and New Guyana Company (printer of The Mirror newspaper – now occupied by New York-based Guyanese businessman, Edul Ahmad.
The companies were promised by Dr. Jagan, transfer of the land to the company after 25 years for a $1.
Modern Industries Limited, using the industrial site as the base, invested heavily and built an empire that later included hotel, home construction and furniture making. The company reportedly was the first one to offer hire purchase.
But today, more than 50 years later, the company said it was pressured to pay over $100M for the same land, and back rent of $55M.
It is the payment of the rent to the controversial National Industrial and Commercial Investments Limited (NICIL) that is raising questions.
NICIL, a state-owned company charged with privatizations and managing Government’s investment, in 1999 arbitrarily took control of the entire industrial site, under what is known as a vesting order, including the buildings that Modern Industries had constructed and which had been there for decades now.
The company only learnt of the questionable transfer in 2001- after it was publicized in the Official Gazette.
Former President Bharrat Jagdeo himself signed the vesting order confiscating the lands to the state.
According to Hemraj Kissoon, Managing Director of Modern Industries Limited, NICIL’s chief, Winston Brassington, wrote his company informing him that he has an option – either buy the entire estate for $200M or pay an exorbitant rent.
The company pointed out to Brassington and Jagdeo, during several meetings and correspondence, that this was grossly unfair and in direct contradiction to the promise made by Dr. Jagan and later confirmed by former President Forbes Burnham.
Kissoon said that during a meeting that included the other disgruntled companies which occupied the industrial site, he pointed out that Jagdeo had created one of the best industrial sites in the Caribbean at Eccles. That industrial site boasted of water, electricity, roads and all amenities.
Yet, Government was charged a measly $13,000 (Guyana dollars) per annum for a lot – on a 99- year lease.
Kissoon said that he urged the ex-president to grant the Ruimveldt Industrial Estate the same concessions. The businessman also noted that next door to him a piece of land at the Industrial Site was sold for next to nothing.
Jagdeo ended the meeting and said Kissoon will be contacted later. But there was never any word from Jagdeo in relation to the meeting.
NICIL then started writing Kissoon and the company demanding $200M as payment for the land and buildings or rental of $10-12M per annum.
According to Kissoon, he had several back and forth meetings, with NICIL eventually agreeing to reduce the $200M sale price by 25 percent.
After continuous negotiations, former President Donald Ramotar, who took office in 2011, also agreed to further reduce the amount by another 25 percent.
“Mr Brassington insisted that we had no choice but to accept this final offer. It would been the end of the Kissoons’ family had we not taken the offer. They would have sold the property lock, stock and barrel. We were forced to accept this arbitrary offer.”
The businessman said that worse yet, NICIL also arbitrarily decided to declare the Ruimveldt Industrial Estate a commercial zone.
“This was a slap in the face of investors as the area is an industrial zone. It meant that we would have been charged high commercial taxes for an industrial estate where we have our factory.”
Kissoon said that incident has left a scar on the company.
“What would Dr. Jagan who was a visionary say if he was alive today? Alston Kissoon, my brother, and his wife who started this business in the early 1952… had he been alive, would have been ashamed. It was 50 years ago that he died in an Air India crash.”
Kissoon said that it took hard work, back in the 1950’s, to clear the area, with some amount of frustration. The factory was completed with over 500 persons employed. The company was building furniture for Guyana, a young country that was hungry for jobs.
According to Kissoon, consecutive governments managed the Estate using Guyana Development Corporation, Small Industries Limited, Guyana Agricultural and Industrial Development Bank and the Guyana National Cooperative Bank.
“Not one of these ever attempted to take away the property.”
The businessman noted that throughout the last 60 years, the company faced many challenges.
Political disturbances in 1953 saw its flagship store at Camp and Robb Streets looted. In 1957 it was badly damaged by protestors and in 1962, during disturbances, looters stormed the store, leaving the company reeling.
In 1974, the company’s factory at the industrial site burned to the ground. In 2001, the Camp Street store was razed during election riots. Park Hotel also was destroyed by fire in 2000.
“Yes, we had our struggles but NICIL has crowned it all,” Kissoon said.
The company has since taken the matter of the $55M rent it was forced to pay to NICIL to the Office of the Ombudsman which is investigating the matter.
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