Negotiations on outstanding US$5M GTT Shares still ongoing

Nov 11, 2017 News

-Minister of State says Cabinet has offered guidance
After two years of discussions, Government has not received a cent from Hong Kong Golden Telecom Company (HKGT), the Chinese company which owes US$5M for the shares it bought in the Guyana Telephone and

Minister of State, Joseph Harmon

Telegraph (GTT) Company.
In fact, the matter is still stuck at the stage of negotiations. This was confirmed yesterday by Minister of State, Joseph Harmon as well as officials at the National Industrial and Commercial Investments Limited (NICIL).
Harmon told this newspaper yesterday that the matter is being dealt with, and Cabinet has even provided guidance in relation to payment.
“Cabinet has given some guidance on how to proceed, because they (negotiators representing government’s side) have an offer which Cabinet told them is a preliminary deposit…and that they could give the people time to pay off.”
He added, “It is a work in process. It is US$5M plus interest, so the guidance is regarding how they should proceed with the negotiations.”

AUDITOR GENERAL’S STANCE
The outstanding sum was also flagged by Auditor General, Deodat Sharma in his latest report.
Sharma noted that NICIL was the registered holder of 4,125 shares valued at $474.375M in Guyana Telephone and Telegraph Company. He pointed out that this was equivalent to a 20% holding.
GT&T was treated as an Investment (Associate) in the Financial Statements for the years 2002 to 2011. An amount of $5.442 billion was paid over as Dividend to NICIL.
Sharma said that on November 6, 2012, the Government’s20% shareholding which was valued $6 billion or US$30M was sold to an overseas company. On November 8, 2012, upon signing of the agreement, an amount of $5 billion was transferred to NICIL.
He pointed out that the balance of US$5M remaining should have been paid by the company within two years. At the time of reporting, Sharma confirmed that no payment was made with respect to the outstanding balance.

REDUCED SUM
While the Government remains in negotiations, Prime Minister Moses Nagamootoo indicated that the Chinese company is not interested in clearing the debt in full.
The Parliamentarian said that a delegation from the Hong Kong Company was in Guyana and they acknowledged that the US$5M was owed.
The Prime Minister said that the Hong Kong team held talks with NICIL and they placed on the table, an offer to pay “x amount”.
Nagamootoo said that while he did not know the exact offer, it is not the full amount.
“It is a reduced amount on the grounds that they were offered senior shares in the company. This was a side agreement with the previous government. I understand that the negotiation was near breaking point. NICIL representatives insisted that they wanted the full amount.”
Nagamootoo, a seasoned lawyer, said that he asked the team if they had an addendum to the contract or something written to support the claims of a side agreement.
“But they didn’t answer that,” he said. He noted, however, that the team will be returning to Guyana soon.
Furthermore, the Prime Minister reminded that the contract regarding the controversial GTT shares had stipulated that any arbitration or court proceedings as regards the agreement should be done in England.
“The company’s fallback position is that if you had to go to trial, it will cost the Guyana government US$1.5M to take lawyers and so on, and the court could make a judgment that would give them time. Therefore they are saying we are offering you upfront now. You don’t have to spend a lot of money and we can pay you as quickly as possible.”
The Prime Minister said that the company is of the realization that “Guyana needs money” but his “private feeling” is that the costs to pursue the case should not deter Guyana from going after what it is rightfully owed.
Nagamootoo said, “You can’t possibly approach the matter this way (thinking)… that litigation may cost you. We could very well win the case and the court could award in favour of us.”
Additionally, Nagamootoo is of the belief that since the company is based out of China, there will be an inclination to “deal fairly” with Guyana.
He said that the companies from China would be under an obligation to “deal fairly with third world countries.” He said that “China wants to help countries like Guyana.”
Nagamootoo posited, “In official circles, it would not look favourable trying to cut corners with a poor country. They would come under more pressure than us to pay up.”

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