The President’s refusal to assent to the Local Government (Amendment) Bill should not hold up the hosting of Local Government Elections (LGE)

The President’s refusal to assent to the Local Government (Amendment) Bill should not hold up the hosting of Local Government Elections (LGE). All that is required now is for the President to instruct the Attorney General to move the case to the judiciary. There, the court can decide whether certain functions conferred on the Local Government Commis-sion (LGC) exceed the constitutional authority of Article 78A, thus making Local Government (Amendment) Bill No. 12 of 2012 “null, void and of no effect” as articulated by the Attorney General.

No amount of political grandstanding, rhetoric and declarations in the press will resolve this issue, as we approach a year since parliament approved the four local government reform bills. If the President and his government are serious about determining the legislation’s constitutionality, then move to the courts quickly for resolving, once and for all, the essential legal questions.

Notwithstanding the need to clarify the bill’s constitutionality, there is no compelling reason to delay establishing and announcing a date for holding LGEs. The government must act now.

I say this not only because I agree with the statement that “three-quarters of a loaf is better than none,” as advanced by opposition parliamentarian Khemraj Ramjattan but also because the disputable issues do not affect the hosting and execution of local elections.

In fact, while we wait for a ruling on the outstanding bill’s constitutionality, the government and parliamentary opposition can agree, in terms of mutual national interest, to proceed with the elections under the old laws where the powers still reside with the Minister of Local Government instead of the LGC. A healthy dose of political maturity and political will from our elected policy-makers can facilitate this process quickly.

I have seen in the press and in other public forums the belief of some that the contested pending bill is the one containing the provisions establishing the LGC’s roles and functions. I wish to reiterate that this is not so. The Local Government Commission Act was passed and assented to last year by the National Assembly and the President, respectively, and the structure and roles of the Commission have been elucidated. Among its many powers is the LGC’s responsibility to “deal with all matters relating to staffing of local government organs” including “employment, transfer, discipline and dismissal of staff” and approving “remuneration, superannuation, training, leave and promotion of staff.” What the outstanding bill seeks to do is confer additional powers on the Commission. Moreover, once the Minister of Local Government signs the commencement order, then the nomination process of commissioners under the LGC Act would begin.

I personally have an issue with either the Minister of Local Government or the LGC deciding on who gets to run the administrative affairs of the municipalities around the country. That responsibility should be left to those elected authorities who are closest to the citizens, and which, in this case, would be the elected mayor and councillors.

The buck should stop with the Mayor, in particular. This is what local self-government is all about: the ability of local authorities to regulate and manage a substantial share of public affairs under their own responsibility and in the local population’s interests. Powers given to our municipalities should be full and exclusive, allowing discretion for them, as far as possible. One pragmatically cannot expect to hold our mayors and councillors responsible for the overall interests of their respective areas and communities and then deny them the right to decide who gets to execute policy on their behalf. Thus, the Minister or the LGC should only have a supervisory role in this process.

However, that is a discussion for another time. At the moment we have sufficient laws to work with and it is time for the Minister to call a date for LGEs.

A Caricom Private Sector Commission is Needed

The regional private sector movement is near death on minimum life support and no number of bandages and doses of dubious medicine can resuscitate it in its current incarnation. I have chosen the words carefully, avoiding the phrase “bring it back to life” because it is questionable that it ever had life-sustaining vigor in its entire existence.

Notwithstanding, the current effort by some private sector leaders around the region to revive an institution called the Caribbean Association of Industry and Commerce (CAIC) is a commendable one. However, I hold little faith in the effort gaining success. From the outset, there is a 4,000-kilogram elephant in the room that many have avoided deliberately; and that is the decision by the major private sector organisations in Trinidad and Tobago to publicly disassociate themselves from the CAIC and its current resuscitation efforts.  This is a significant hurdle to overcome. If this project has any chance of achieving its goals, its current leaders might want to make the mission of convincing the region’s largest economy to come back on board its immediate priority.  Anything short of this will only mean those good gentlemen are bound up in an exercise of futility.

For the regional private sector movement to work, it must become simultaneously regional in scope while remaining fiercely committed to its local purview.  There should be a center/periphery relationship structure. At the center there should be a Caricom Private Sector Commission (CPSC) and at the local level, the respective private sector agencies in each country should be consolidated into one group (akin to our Private Sector Commission).

For the CPSC, the individual private sector agencies would comprise the board of directors taking on a supervisory role while its administrative functions are carried out by a Commissioner empowered to represent the regional private sector at the highest decision making level of CARICOM. To make this role fully legitimate, this should include a seat at the Heads of Government’s table. It is baffling to think that the CSME is supposed to be an economic programme which should be led and executed by the private sector but, in reality, politicians always have determined all of its major decisions and timelines.  Some might say this is wishful thinking. However, if we seriously want to establish a strong regional economic space, it’s about time the respective Heads of Government view the private sector as an equally important partner at the most senior level of regional economic decision making.

The same thing can be said for negotiating trade agreements. The CPSC should employ a senior trade negotiator who also would serve on the Caribbean Regional Negotiating Machinery (CRNM) panel to ensure the collective input of the private sector is represented throughout the entity’s process of deliberations and negotiations.

In addition to hiring the best qualified staff, the CPSC should leverage the available toolbox of technology to execute its mandate. For instance, the need for physical travel can be replaced effectively and efficiently through teleconferencing facilities.

As for funding, a combination of individual country private sector organisations and the Caricom Heads of Government can make the necessary allocations. This should not be a problem, as the private sector pays the bulk of taxes in each territory and thus allocating some of that money to strengthen and make them competitive on an international scale should make immediate sense. Simply, the better our private sector performs the more taxes the territories would collect.

At the local level, the capacity of the central private sector agency and its constituent members should be fortified, so they effectively can execute and implement in their respective countries the programmes and activities arising from the Caricom project or from trade agreements. We must move away from the model of government, regional, and specialised agencies implementing and executing what are essentially private sector development projects. Rather, the Chamber of Commerce organisations in individual countries should be well equipped to manage and execute programmes that build their constituent members’ capacity for global and regional trade.

Private sector leaders around the region also should push to grow their respective Chambers by making it mandatory for all businesses to join at membership fees prorated to the size of the business. This will sustain and expand private sector organisations, empowering them with the credibility and legitimacy they need to compel governments to listen and to respond to the demands and issues associated with business and economy.

To achieve these goals, we will need significant shifts in structure and our mindsets to achieve what really are pragmatic goals. Let us hope both our regional political policy makers and private sector leaders have the will and resolve to lead such a transforming effort.

Our Politicians Owe an Entire Generation Local Government Elections

Ive recently teamed up with a group of young people and formed an NGO called the Blue CAPS (Change, Advocacy, Policy and Service). Here is our first letter to the editor on the need for Local Government Elections.

Dear Editor:

It now has been two decades since we last held local government elections in Guyana. Putting this into an urgent practical context, it means that we have had an entire generation who were born and who grew into adulthood, all while never experiencing the local elections process as a unique opportunity to become directly involved in their community’s political and civic culture.  The effects actually have stretched into yet another generation. For those who were just 17 at the time of the last elections, they are now at least 37 years old. As individuals who likely are important mentors and role models to younger generations, this generation has never voted in a local election nor has it experienced the often exciting aspects of a local political campaign that can be critical to how communities envision their prospects for progress, growth and prosperity. We are representing a broad section of Guyana’s population who is 37 and younger. So vital is this goal, that all of us have signed this letter, as we begin a mission of advocacy to reverse this disappointing reality that has lasted far too long in our country.

As idealists who see an unprecedentedly exciting future for our country, it boggles our minds that the elected guardians of our democracy have allowed this travesty to go on unresolved. Setting the immediate priority of calling for local government elections does more than just energize the political process. 

Guyana is in the midst of extraordinary economic promise and we understand the ramifications of letting the local political process atrophy and lose its critical strength. If young people become hopelessly disconnected, the consequences for the nation could prove costly. If young people know opportunities to connect to their communities do not exist, the local environment could become a feeding ground for negative behaviors that lead to delinquency and a lack of motivation to continue their education. On the other hand, having the experience of an active local political process in which elections become the catalyst for public engagement, young people develop a clearer sense of identity, a positive focus on recognizing their individual merit and worth, and renewed feelings that motivate them to look for ways to be successful.

The good news is that many of us in the younger generation have faith in the democratic process and we hope that our elders recognize just how important local governmental elections are not just for our individual communities but also for keeping Guyana’s democratic prospects as strong and as fruitful as possible. 

Guyana has moved forward thanks to many whom we know have a healthy appreciation for democracy and what it can accomplish. As a younger generation, we share that same love and respect for these principles. We stand as ready, eager students willing to listen and ready to participate. And, through the process of local government elections, we see wonderful opportunities to gain work experience, skills, and valuable lessons about responsibility and accountability, all of which help our local communities thrive.

We believe in our country’s potential for great positive developments even as we sometimes have been disillusioned and disappointed. Our love and hope for Guyana runs deep within each and everyone of us and we are confident that our elders and leaders believe in our national potential just as strongly. We believe that there is no greater platform for investing in our nation than in carrying forward a compelling vision that improves the lives of all people. Furthermore, it is that compelling vision which can become one of the most powerful magnets for attracting resources and investments which benefit the nation’s economy throughout all communities in Guyana.

From the bosoms of our hearts and depths of our conscience, we plead with love for our country and respect for our national heritage in urging our Local Government Minister to please set forth the date and process for local government elections.

Faithfully,

For Blue CAPS

Clinton Urling

Chontelle Sewett

Sara Bharrat

Marissa Lowden

Vishnu Doerga

Aretha Majeed

Marvin Wray

Mark Murray

Keoma Griffith

Krysten Sewett

Dmitri Nicholson

Troy Edmonson

Christine Bennett

Christopher Gooding

Can Keith Borrowes Succeed as Go-Invest’s CEO?

I have started back writing my column for Stabroek News and here is the first entry that was published on May 02.

Last week, Mr. Keith Burrowes was appointed the non-executive Chief Executive Officer of the struggling national investment agency Go-Invest. A quick aside, I’m still perplexed as to what constitutes a non-executive CEO and therein lays the introduction to the following concerns. It is not clear if Mr. Burrowes will continue as chairman of the agency’s board of directors but if he continues in that capacity, he will both manage and coordinate the agency’s day-to day affairs and lead the team responsible for supervising his performance as chief administrator. This approach does not align with good corporate governance standards and we hope the government will conduct the proper search to find a qualified successor to Mr. Burrowes as chairman of the board of directors.

Another recent development surrounding the agency arises from the acknowledgement that the combined parliamentary opposition in Parliament did not lend its support toward approving the agency’s budgetary allocations. This leaves the future and faith of the agency in limbo and we will have to wait and see how the agency will continue to operate.

The unfortunate approach of rejecting budgetary funding will affect the functions and operations of many critical state and parastatal agencies, some of which are essential to Guyana’s mission – notably, Go-Invest and the Institute of Applied Science and Technology (IAST) – for achieving and sustaining a position of global competitiveness. In IAST’s case, we read in a public letter from that agency’s head to the dailies complaints about the loss of funds for his agency. He squarely placed the blame at the feet of the parliamentary opposition.  It also is debatable why Mr. Suresh Narine believed that publicly blaming the opposition exclusively for the infringement was a good strategy. The fact is both government and political opposition forces must be accountable for this situation. Both sides have failed during the past few years to engage in meaningful, constructive engagements before budgetary estimates were laid that would have led to political compromise and agreement.

Mr. Burrowes might want to follow suit, but by adopting a slightly different approach from that of Mr. Narine, he could articulate a prudent, pragmatic public plea to both government and opposition to engage in talks for the purposes of assigning supplemental funds to the agency. This could be then followed up or executed in concert with behind-the-scene talks and engagements with all political policy making stakeholders. These talks should include Mr. Burrowes presenting his detailed plan of action for moving the agency forward.

This proposed programme of action is needed and its endorsement should be examined not only by political policy makers but also by private sector organisations and their leaders. In recent years, the agency has been extensively criticised from the private sector, which contends the agency is underperforming and does not represent a bona fide one-stop agency for investors. Moreover, as chairman, Mr. Burrowes has been criticised severely by leaders in the private sector, who have placed the blame for the organisation’s ineffectiveness squarely on his shoulders, as he has served as the highest-ranking officer in the absence of a permanent CEO.  Many have called for an agency shakeup and the immediate appointment of an effective CEO. Many in the private sector were surprised that Mr. Burrowes was appointed CEO, as they believe he was a major part of the concerns surrounding the agency’s inability to function optimally.

However, Mr. Burrowes should be allowed space to establish a leadership role and be given the sufficiently practical opportunity to prove he can turn the agency around with fresh energy and vigor. But for that to happen, Mr. Burrowes will have to be proactive, taking his plan of action to both political and private sector stakeholders in order to obtain their input and to convince them that the agency plays a significant role in Guyana’s development. Thus, this would make for the stronger case to have the agency’s activities funded. 

Additionally, Mr. Burrowes should be given complete reign by the government to implement and execute his mandate without any unwelcomed interference. The government has to provide Mr. Borrowes and his team reasonable space and time to develop and craft appropriate strategies to woo and facilitate investors according to the laws and established frameworks governing the agency.

Only time will tell how effective Mr. Burrowes will be as CEO of what should be one of Guyana’s most important agencies for improving the nation’s competitive position in the world economy and markets. Thus, I wish him the best of fortunes.

Guyana Needs Local Government Elections Now!

Letter to the editor I sent to Stabroek news and was published on May 01.

Dear Editor,

I write to fully endorse the sentiments expressed in the SN April 30th Page One Comment and also congratulate your newspaper for the initiative to carry on its front page, news stories and references which agitate for the Local Government Minister to call and set a date for the urgently needed local government elections. After years without such a critical democratic component, it’s about time that changes!

Yours faithfully,

Clinton Urling

Founder

Blue CAPS

Quality of Education Should be the Focus

The government recently announced during the Minister of Finance's Budget presentation that it will be offering $10,000 to families to send their kids to school. This works out to a few billion dollars anually.

The idea is a good one in principle, but it will end up costing taxpayers more money because the ministry will have to ensure there is a monitoring, accountability and transparency system. The monies could have better been allocated to pay teachers higher salaries. The actual cost of doing that to say raise each teacher salary by $30,000 a month would have still been way cheaper than this approach and  it  will require a simple and straightforward way to implement, i.e. just increase payroll. Simple!

Moreover, the primary focus should be on the quality of education our kids receive than trying to increase the quantity getting to school through a process that offers no guarantee.

At the moment, teacher quality is pretty low because no one wants to become a teacher or those who are leave and migrate to better pastures. The equation is simple: Better teacher means better students means higher education success.

I'm not sure Guyana's current or most immediate education challenge is getting kids to school. Over the years, gov't has invested immensely in building physical schools, which has made them more accessible than ever. I don't see this policy resulting in a better quality of education in Guyana, although it might succeed in increasing the number of kids going to school with poor and demotivated teachers..but that increase is premised on the assumption that the parents do in-fact spend the money on school items…..

My Notes on Nation Budget 2014

§  -Budgets should not be reviewed in isolation, but rather as a continuation of government’s economic and development programme during its current period of office. With that being said, this budget can be summed up as a continuance and extension of the previous two budgets under the Donald Ramotar administration.

§  -With the above context under consideration, this budget can be described as steady, attractive and people friendly building on the achievements of its predecessors.

§  -We in the private sector would have wanted to see more initiatives that increased consumer spending and provided savings for the private sector to reinvest into the economy through expansion and new activities. We would have wanted to see a drop in corporate taxes to around 5%, which was done two years ago and even though some had feared a drop in revenues as result, we saw that last year, corporate tax collection increased by 16%. Also, the PAYE income tax rate should have been reduced further. Last year, as a result of the 3 1/3 percent reductions in this rate, the economy lost around $1 Billion in revenues. The government could have further reduced that rate another 3 1/3 percent and look at other ways of offsetting the revenues lost. Another initiative the government could have considered is reducing the high tariffs on imported meats (Chicken, Beef, Pork) so that prices for those commodities on the domestic market could reduce and save consumers billions in disposable income annually.

§  -Reassuring to see that current government revenues went up by 4.8% and specifically, tax revenues increased by 7% to $126 Billion.

§  -While tax changes have to be implemented gradually, it is important that the government is guided by a comprehensive tax reform proposal. This proposal should be shared with the entire population so that everyone knows what to anticipate over a number of years as it relates to tax reform.

§  -FDI receipts reduced by US$79 Million in 2013. Measures should be put in place to spur this and can include tax relief to large international/multinational companies based on size of investment and number of actual employment created as reflected on payroll. Other favorable measure to attract FDI should also be considered.

§  -Proportions for sector allocations are trending in the right direction with education, health, security and infrastructural upgrades topping the list.  These address critical social and infrastructural upgrades that are necessary for a stable and prosperous society.

§  -We are particularly pleased with the social programmes contained to help struggling families get their kids to school. However, government will have to find appropriate mechanisms to ensure that the funds allocated reach its intended targets and that the monies once received by the family, is spent for the purpose intended. This could cause logistical and resource problems during implementation and monitoring. To ensure efficacy, government would have to spend and utilize additional resources, both financial and human. Additional funds might have to be allocated for this.

§  -This measure also raises the question as to whether the monies allocated could not have been allocated to increase teachers’ salaries or increase the salaries of the Guyana Police Force. It would be much easier to do so in terms of implementation and the cost of doing so would have been cheaper.

§  -The subsidies to GPL is welcomed since the high cost of fuel and electricity generation would be too burdensome on consumers were it not for the subsidy.  In terms of the Linden electricity subsidy, government should have taken the opportunity to tie that subsidy and declare Linden as an Electricity Free Manufacturing Zone to encourage manufacturers to set up operations and pursue the industrial diversification of the economy. These electricity zones could offer free electricity for a number of years and gradually include charges as companies’ financial and operational performances improve.

§  -The Linden-Lethem road upgrade and the CJIA expansion programme are also welcomed as they provide critical logistical and transportation efficiencies for our private sector and in particular the mining and tourism industry.  It is also hoped too that the road upgrade would lead to increased cross border trade with Brazil.

§  -Need to keep a watch on decrease in remittances that was US$141.1 million less last year than in 2012. That means a significant sum of money not circulating in our economy and this is money that is usually used as disposal income.

-GUYSUCO subsidy is necessary considering the state of the agency and the consequential social and economic consequences were it to stumble further. Annual Government subsidies to GUYSCO are an un-sustainable strategy and measures would have to be put in place to diversify the products manufactured by the entity. For instance, energy, confectionaries, molasses, animal feed, etc. Additionally, underperforming estates can be sold or offered at concessionary rental to multinational firms looking to invest and set-up their manufacturing and industrial operations. This would absorb any employment that is lost as a result of the estates’ closure

Reflection on Tenure with the GCCI

It is hard to believe that two years have passed since I became President of the Georgetown Chamber. In the interview below to Stabroek News, I recount my experiences as leader of the country's premier private sector organization.

1.      Your two most significant accomplishments as Chamber President:

During my tenure, I have seen the Chamber’s national profile rise prominently as one of Guyana’s most visible, active and efficacious civil society organisations. Much of this effective exposure has been achieved through the many advocacy positions taken by the Chamber over the past two years. Many of these positions were chronicled in the Chamber’s publication, “The Top 20 Barriers to Competitiveness” and advanced through media briefings, press releases, luncheons and dinners, television interviews, face-to-face discussions with policy makers, the Chamber’s new website, social media platforms such as YouTube and Facebook, and our own television programme.

This exposure has opened doors to numerous opportunities for the Chamber. Many members, stakeholders, investors, policy makers, civil society members are reaching out to the Chamber to share or receive information or to act as partners for hosting activities and events. Moreover, the steady streams of publicity and attention have reinforced the perception for members that the Chamber will always work on their behalf. This has made it easier for the Chamber to obtain member-based support and funding for many new events.

The second major accomplishment is that I have been able to increase significantly the Chamber’s programme of activities while also expanding the Chamber’s revenue base. This ensures that we are able to achieve our current goals while accumulating the requisite financial surplus to provide for the organisation’s long-term sustainability.

2.      Two things which you wish you had accomplished:

First, I had set sights on building a stronger, expanded Chamber secretariat with the requisite staffing to become more effective in realising our goals. This was curtailed amid the competition for resources between current expenditures and the impending reconstruction of the Chamber’s secretariat building. The Chamber allocated a large percentage of our surplus revenue to savings for the reconstruction project, which restricted our capabilities to hire staff including a legal advisor to draft policy positions, a researcher to gather and analyse data important to the private sector, and a support officer dedicated to help small- and medium-sized enterprises. In the end, it was a small sacrifice to pay because we were still able to achieve much. Going forward we will have a modern world-class facility with a stronger secretariat staffed with the capabilities just mentioned.

Secondly, I wished the Chamber would have received donor financing to set up trade facilitation and capacity building grants for export oriented companies and micro and small businesses. We applied to the agency for Caribbean exports during my first term for a facility to help small businesses but while the application was successful, we were informed the agency did not have sufficient funds to move the grant forward. I’ve spent most of the past year trying to persuade every donor and the international representatives in Guyana about the utility of allocating loans, grants or matching funds to the Chamber to help build our local private sector’s capacities.

3.      Two things you would most like to see the Chamber accomplish during the tenure of the next executive:

First would be for the Chamber to access donor funding for the purpose I mentioned in the previous question.  I hope the Chamber adopts a multipronged approach to determine if private sector companies are willing to provide the necessary funding through sponsorship agreements.

Second, I would hope to see the construction of the long awaited new Chamber Secretariat building completed. The current facility is inadequate to keep pace with the organisation’s increased, more extensive, and complex work demands and provision of enhanced services to our members. This will be critical in continuing the efforts to build confidence with all of our stakeholders.

4.      Your views on the way in which the political culture impacts on the country’s social/economic development:

In the time since independence was achieved, our political culture has come to be  dominated by ethnic insecurities at the electoral level and distrust at the political leadership level. Over the course of our history, this combination of distrust and insecurities has led to politically motivated disturbances and, in some cases, violence. The occurrence of Guyana’s politically unstable environment also has coincided with periods of negative economic growth. The times where Guyana has recorded its highest growth rates occurred when the political environment was stable.

The current political environment where the combined opposition parties control the legislature and the government controls the executive requires enormous negotiations and compromises for moving the country’s economic and development agenda forward. Unfortunately, after two and a half years, compromise in critical instances has proven to be elusive, resulting in an unstable political environment that has negatively affected the country’s economic prospects.  If the situation persists, we will eventually have to face costly early general elections along with the concomitant fears and economic slowdown that accompany it. 

5.      The major impediments to private sector development in Guyana:

My position on these issues have been repeated elsewhere and reaffirmed in the Chamber’s many surveys over the years. The most pervasive concern will be the human resource challenge of finding and retaining good employees, especially highly skilled individuals. The reliability of utilities such as electricity and high costs, crime and security issues, political discord, and the country’s excessive dependence on primary producing commodities that are vulnerable to external price shocks round out the most harmful challenges facing our economy.

6.      Anything you would do differently:

The only thing I would do differently is focus a bit more on motivating and getting my private sector colleagues involved in formulating and executing the Chamber’s activities and events.

7.      Critical lessons learnt during your tenure:  

There are quite a number of lessons learned over the past two years:

1.)   Objectivity and impartiality are important prerequisites when articulating advocacy positions and dealing with stakeholders. This may not win you popularity all the time and occasionally will offend and criticise a stakeholder at one point while praising it at another. However, this approach ensures in the end that the same stakeholder respects you for your objectivity and is more likely to trust and work with you during your tenure.

2.)   Political issues take up a tremendous amount of a private sector leader’s time and energies because of the fragile and instable nature of our politics as previously described.

3.)   The combined private sector covered under associations and the Private Sector Commission plays an important role in advancing Guyana’s development and is the most vocal of all the civil society organisations. Much of the work is done behind the public’s view and organizational interventions over the years have resulted in net positives for Guyana’s social and economy stability.

4.)   Political issues are more “sexy” for media operatives who give a disproportionate amount of coverage towards politicians and political commentary as compared to business, social, cultural, and human interests represented in the most pertinent issues. This leads to a situation where private sector advocacy positions do not get the level of front page publicity they rightly deserve.

5.)   The interests of the whole – or, more specifically, the country – should always take eminence over individual or partisan interests. This mantra has served me well when contemplating the advocacy positions for the Chamber to consider.

8.      How would you rate your performance as Chamber President:

While I would remit obvious bias and rate my performance as exemplary, I believe the undisputable record of activities and achievements, history and time will be the most formidable judges regarding my contributions and legacy during the time that I served as Chamber President.

9.      Immediate and medium-term plans:

I hope to return to my academic studies so as to further empower myself to make a meaningful contribution to Guyana’s development either through civil society or direct political participation. However, I’m not fixed on that position and I have a few months to make the best decision depending on the circumstances as they unfold.

Is All Lost With the Non Passage of AML/CFT Bill?

I had written this a few months ago and it was published in Stabroek News

No, is the definitive answer to the question posed in the above title of this essay. However, it will require adaptive leadership on the part of government and opposition political policy makers to avoid drastic economic consequences for our country.

By adaptive leadership, I am suggesting that it would require a change and shift from the current rigid positions from both government and opposition.  This would involve engaging in discourse that leads to concessions and compromises on both sides.  Anything short of this and our country will experience material economic damage that would take a long time to recover from.

Are the consequences grave?

Since before the Bill got defeated last week Thursday, there were many who were cynical and not so convinced of the consequences of not passing the Bill. Many felt it was gross exaggeration and fear mongering by the government and the private sector to get the political opposition to sign on to the bill.  Those who hold this view are very erroneous in their contention.

One only has to take a comparative examination of the experiences of other territories that have faced such a situation.  Lets take the examples of St. Kitts and Nevis and the Cook Islands.  In 2000, both these territories were not convinced of the severity of being grey or blacklisted by the Financial Action Task Force (FATF). For them, the cost of implementing pre-emptive regulatory reforms was much greater than the not clearly defined consequences of a stated Blacklist by FATF. These countries made the assumption that a blacklisting advisory was more “bark” than “bite.” This was premise on the fact that FATF’s blacklisting creates no obligations under international law and the multilateral grouping had no authority to impose direct sanctions or legal actions. However, while that is true, they underestimated the actions that would have been taken by member and non-member states of FATF, particularly, the US, Canada and other OECD countries. For instance, the United States Financial Crimes Enforcement Network (FinCEN), which is an arm of the Treasury Department, issued advisory to its accounting, insurance, banking, and legal firms flagging both countries within one month of the blacklisting and this resulted in large financial services firms in the US withdrawing their services from these jurisdictions for fear of being tainted by association and suffer losses to their reputations and share prices. Other firms just weren’t willing to spend additional resources when it came to the extra scrutiny required to effect wire transfers through correspondent banking relationships, so they terminated those relationships. Also, the reputational damage as a result of the blacklist caused foreign investors to rethink their investment plans to both destinations as a result of the high hurdles to conduct international financial transactions, which are critical to their operations. As such new incorporations fell off significantly.

Within a few short months both countries were reeling from the economic damage caused by the blacklisting and they both recanted and came to the realization that the necessary legislative and regulatory reforms were the far more cheaper option, and thus by 2002 and 2004 respectively St Kitts and Nevis and the Cook Islands had already implemented the necessary reforms and were de-listed by FATF. The Prime Minister at the time of St. Kitts lamented the “massive threat to our economic survival” posed by blacklisting and noted that: “The impact of blacklisting goes well beyond the offshore financial sector... No foreign investor would want to invest in a hotel, manufacturing or other real sector project in a country that does not have the capacity to facilitate the payment of dividends or repatriation of capital through normal banking processes.”

Way Forward

Whether or not FATF agrees to grey-list or blacklist Guyana for not meeting the recommendation of legislating the AML/CFT, the above two examples show that the consequences while being severe, can be reversed if the affected country take the necessary steps to implement the FATF recommendations (which can be done even after a blacklist advisory is in effect). With Guyana’s example, adopting the AML/CT legislation is a critical recommendation that must be fulfilled and can be done if our political parties engage with an intention of achieving that.

In the Wednesday edition of Stabroek News (November 13), Speaker of the National                                                                     Assembly Mr. Raphael Trotman reaffirmed this when he noted that the Bill could be reintroduced if there is a pact between government and opposition parliamentarians.

The Government representatives meet at a plenary session with the Caribbean FATF authorities in the Bahamas during November 18-21 to report on progress made since the last review was done. It is expected that the government will make the case to the Caribbean FATF to put off and delay issuing an advisory that Guyana is a non-compliant country.  Similarly and commendably, our private sector is expected to aid with a petition to the CFATF authorities in the same vein.

 This is a laudable move that is worthy of a try, however, the fact will still remain that our political policy makers would have to meet and put the country’s interests first and offer concessions to arrive at a collective position.