The PPP calls on APNU/AFC Government to halt GSL privatisation until a 2008 Court decision to award 38% shareholding to NICIL is honored.
The Government recently advertised for sale NICIL’s shares in Guyana Stockfeeds Ltd. (7% ownership), in a move that the PPP views as pre-mature, highly suspect in terms of timing, and calculated to benefit one of its significant AFC/APNU political supporters and contributors, Mr. Robert Badal.
The PPP views the sale as an act of corruption given the various pending court matters surrounding the NICIL ownership interest and related matters. Most notably is the fact that in 2008, NICIL won a High Court case restoring its 38% shareholding in GSL but since Mr. Badal’s appeal, the case has languished in the Court of Appeal. Rather than resolving this matter and restoring its 38% shareholding, the Government sale of its current 7% shares (without the remaining shares), stand to deprive NICIL of its true value, worth over 1 billion dollars.
The timing is also suspect since there have been little or no privatisations since the APNU/AFC took office. No announcements were made in the budget. It is not even clear if the Privatisation Board, appointed in 2015, is operating and what’s the current policy of APNU/AFC on privatisation—one only to recall the 1992 World Bank report on the PNC privatisation era, which criticized the PNC program as lacking transparency and accountability. APNU/AFC seems destined to return to this era.
Under the PPP administration policy framework, all privatisations required the Privatisation Board and Cabinet approval. Today, the NICIL stockfeeds share-sale lacks transparency and accountability and is being pushed through, without any clear institutional framework for privatisation. One can only assume that rather than define the role of the Privatisation Board and before waiting for NICIL to regain its 38%, the AFC/APNU Government is hell-bent on depriving the State of millions of US dollars and granting through the back-door, an exit to the court matter that NICIL won over 10 years ago, but which has since been stuck in the Appeals Court, stranding hundreds of millions of potential Guyana dollars. The situation is further exacerbated by the fact that GSL is a publicly traded company, with court matters restraining the payment of dividends pending the NICIL court matter and the Stock Exchange halting trading due to these same reasons. The APNU/AFC Government is ignoring settlement of these matters in rushing through a sale.
The PPP views the proposed sale as intending to benefit Mr. Robert Badal and considers this to be a matter of political influence and payback to Mr. Badal. Why else will the AFC/APNU Government ignore the pending court matters where NICIL stands to regain its 38% shareholding, millions of dollars in pending dividends, and settlement of normal trading on the Stock Exchange before looking to sell its shares.
It is a well-known fact that GSL, although a publicly traded company, has been operated by Mr. Badal in a manner that is prejudicial to its minority shareholders, particularly the second largest shareholder, NICIL. Over the 20+ years since the privatisation to Mr. Badal of 35%, Mr. Badal has quietly taken majority control of the company, and then used the company at the expense of its other shareholders. Notable examples have been the payment to a Trinidad company (owned solely by Badal and called Guyana Stockfeeds Limited) of billions of dollars for procurement, questionable transfer pricing from overseas companies to GSL, using GSL to bail out other poor investments in other companies, the acquisition and reversal of the Popeyes deal that deprived GSL of millions in gain, and numerous other examples of minority shareholder abuse.
At the genesis of NICIL “38% shareholding”, is Mr. Badal’s efforts to undercut the Government shareholding in 2000 when it increased the authorized shareholding of GSL from 700,000 shares to 100,000,000 shares, or over 140 times. It then d through a Rights Issues of 5 to 1 followed by a 24 to 1 bonus issue just prior to the 2000 elections. Due to Government policy of divestment, and its lack of participation, Mr. Badal issued new shares at less than 1% of its real value, and diluted NICIL shareholding from 38% to 7%. After years of litigation, the High Court of Guyana in 2008 declared the rights issue and bonus issue, as void, illegal, and ordered its reversal, such that NICIL would end up owning its post privatisation shareholding of 38%. The 38% shareholding is likely worth over 1 billion Guyana dollars, particularly when Mr. Badal’s improper management practices (subject of another court battle) is removed.
Mr. Badal appealed the matter in the Appeals Court where the matter has since been stuck due to an inadequate number of judges to hear the matter. Now that the APNU/AFC Government has fixed this matter, and the case can again be heard, there appears to be collusion and conspiracy between the AFC and Badal, to remove NICIL, the plaintiff (respondent) to the court matter by ramming this privatisation through.
The PPP therefore views this sale as premature and aimed to support Mr. Badal, and strong AFC/APNU supporter and funder. If the sale proceeds, then NICIL/Government is likely to lose over G$1 B.
The PPP calls on APNU/AFC to investigate the multiple court cases brought against Mr. Badal and objections filed with the Stock Exchange and determine if Mr. Badal has abused his rights as CEO and Director of GSL. APNU/AFC should also investigate the transfer pricing used by Mr. Badal, when other major stockfeeds companies have been buying inputs at a much cheaper price that Mr. Badal. Mr. Badal has used special companies to overstate its Guyana cost and at the same time reduce its profitability, both at the expense of tax revenue and profit to its other shareholders. The US Department of Trade provides information that can be used to determine if Mr. Badal’s pricing from US companies have been fair. Mr. Badal’s creation of a Trinidad company with the same name as Guyana Stockfeeds, is a conflict of interest, and intended to further defraud the GSL minority shareholders and the tax payer. The victims: The Guyanese tax papers and the minority shareholders of GSL.
The PPP calls this privatisation without a transparent valuation and without resolving the court matter, an act of corruption intended to benefit a strong political contributor at the expense of the State.
December 4, 2017
Peoples Progressive Party