Business Page –  Who are the drug barons, Madame Minister?- Please tell the President

Sunday, February  26th, 2006

Introduction:

Twice in the recent past the Minister of Home Affairs has done the bold thing and admitted to the existence and by implication the operations of drug barons in our country. Given her portfolio, it is an amazing admission and one has to wonder what she has shared with her President who seems to prefer moving around the country handing out footballs and gifts of $5,000 to maladjusted juveniles than dealing with critical issues of governance, corruption, law and order, the appointment of key judicial positions, narco-trafficking, money laundering, fuel smuggling, tax evasion, etc. From a few pockets of the economy, criminality is moving rapidly into every sector causing some real competitive dilemmas. As the Government becomes hobbled with its poor performance desperation will drive it to turn to this new breed of businessmen - the Minister did not speak of baronesses. They ask no questions such as where did the money come from and who are the major backers.

GO-Invest has publicly admitted never to have referred a single investment application to the central bank, the money laundering regulator (to the extent that one has been permitted by the Government to operate) or any other regulatory authority such as the Insurance Commissioner. Imagine giving some $5B to $10 B in tax concessions in a single year and not asking a single question. What kind of signal is sent when very senior members of the government nightclub at a facility of a businessman who is charged with fuel smuggling? Worse, that same businessman comes up trumps with a permit to build a major hotel, almost out of the blue, in a most advantageous location. What was the application and approval process and at what level was the decision made? How many concessions and what other government largesse is involved?

The economy has spoken:

Five years ago, flush from the 2001 elections victory, Minister of Finance Saisnarine Kowlessar, in his 2001 Budget speech said: "The people have spoken... They have given the PPP/C Government a renewed mandate to consolidate the gains that have been made over the past eight years." He went on, "mindful of the impatience of our people and acknowledging the enormity of the tasks that lie ahead, we have developed a comprehensive economic strategy for implementation over the next five years. We envisage that by 2006, we will have a very robust, diversified economy that is both capable of withstanding adverse external shocks and competing effectively within the new globalised environment."

Let us fast forward to 2006 and see how the Jagdeo Government has performed. Bear in mind that this period covered many years of PNC inactivity whether in the National Assembly or on the streets, removing a major and recurrent excuse of this Government. Bear in mind too that the country continued to receive major debt-write offs - sometimes without even trying. The Government was so poorly monitoring international developments that it did not know it was in line for the bottom poorest countries' debt relief at the 2005 Gleneagles G8 meeting!

Diversified economy:

Where is the robust, diversified economy predicted by the Government in 2001? First let us look at the sectoral performance of the economy and see how diversified we have become, using the projections in the 2006 Budget rather than 2005 figures which were affected by the floods.

The money-laundering rat

The official statistics show that only one sector, transport and communication - the measurement of which is particularly suspect - grew by more than 5% on a compound basis since 2000. Where then is the drug money? First bear in mind that drug people like to stay behind secure walls, loathe publicity and find financial accuracy anathema. Their tax returns are a mixture of magic and further criminality and much of what they do stays out of official statistics. But there appears to have been heightened activity in 2005 and with some apparent official acquiescence. Inadvertently, the Minister revealed more than he might have wished when instead of smelling the money-laundering rat in his 2006 Budget Speech, he attributes the "extraordinary increase in net private transfers (US$152.6 M) to expanded coverage of the money transfer agencies and the response of the Diaspora to the flooding last year." On this basis, every household of five received more than $200,000 from relatives and well-wishers last year. And the Minister believes!

Robust economy:

Whatever robust means it certainly does not mean declining. The chart below covers a longer period including the last two years of the PNCR. It is a depressing tale of incompetence and poor performance, just the opposite of what the country badly needs. Of course we will hear about oil shocks (excuses of the past) and sugar price cuts (excuses of the future) but do other countries not have similar problems? We have more ministers and advisers receiving huge and unlawful tax-free dollars than the economy can afford. Can you believe that the head of the Guyana Poverty Reduction Strategy Programme earns more than the head of the US Federal Reserve Board? And to make it even better he is paid tax free while the US man who up to last month was Alan Greenspan - rated one of the best central bankers ever - has to pay tax. In fairness to Mr Kowlessar, the decision regarding this US$ denominated, tax-free income is the judgment of President Jagdeo.

Quick fix:

In what seems a clear act of desperation, the Government has drafted legislation to introduce casino gambling. The word is that it is considering three licences for each of our ten regions - devolution in action - and has already made promises of casino licences to those who are prepared to save the Government's embarrassment to provide hotel rooms for the Cricket World Cup. The naive response to expressions of fears about the social implications of gambling is 'don't worry, it is not for Guyanese. It is for the Brazilians.' Are you kidding? Who will bar the big ones and their spoilt kids who in many cases have dual citizenship, from any of these gambling houses? And, if it is so bad for the Guyanese how come it is good for our neighbours, or is it that we consider the Brazilians of a lower species? Do these people know what they are doing?

Facilitating money-laundering:

Why would a country that boasts an enviable range of natural resources want to have a casino for every 25,000 people? Or is the thirty (10x3), a cover to give licences to those the Government favours? Even those who ignore the religious and moral concerns accept that casino gambling is hardly a primary development strategy and in any case requires a well regulated society with laws that are properly enforced. A country where there are guns and gunmen for sale, where you can pay your friendly journalist for a favourable news item or column, where lawyers and accountants are ready to sell their souls, where regulators are scared to even whisper certain names, where unemployment and trafficking in persons are rampant and where the police are under-resourced and demoralised, is no place for casino gambling. Six years after assenting to the Money Laundering (Prevention) Act, the Jagdeo administration is yet to operationalise that act which has as its objective 'the prevention of money laundering and for matters connected therewith.' By the time anything is done, the drug barons referred to by Ms Teixeira and others of the same ilk would have been well ensconced at all levels of society.

This is an issue on which all who are concerned about the future of this country need to take a firm stand. Some major bodies including the Catholic, Anglican and Muslim Churches and certain trade unions are strongly opposed to this move which was never part of the PPP/C Manifesto or economic programme. The Hindu organisation led by retiree Minister of Parliamentary Affairs and which has failed to take any position on social issues affecting its membership has, not surprisingly, not responded to two requests for an indication of its position on casino gambling.

This column has for years been calling for the abolition of the non-bank cambios which have clearly outlived their usefulness. Those have been major vehicles for money-laundering and tax evasion. Now we are making it even easier for the drug barons, smugglers, tax dodgers and money launderers. Will they now show their appreciation by contributing to the war chests of the political parties and so buy further immunity from official action? Are the lessons from other countries where politicians and barons co-mingled not salutary enough for us to realise that there is nothing good that comes from that devilish alliance?

The piece on India which was promised last week will be published next week.