Dear Editor,

Your editorial entitled "Business Failures"[ please note: link provided by LOSP web site ] (SN 6/11/01) demonstrated a certain

naivete on your part as to why certain businesses fail in Guyana.

One sympathises with a company such as Willems Timber and Trading Company

Limited. The reasons advanced by you in your editorial may very well apply to that company.

The fact which you however failed to touch upon is that the principals behind some of these companies that have been put in receivership, borrowed money from the local banks and shipped the money out of Guyana and started business or bought properties in the names of family members in the United States of America.

This is not only a fraud upon the banks, it is a fraud upon the people of Guyana. We must remind ourselves that it is not the banks' money that is being borrowed, it is depositors' money.

One company which is now in receivership was advanced over $200 million upon a debenture only last October. Where, I ask, did all that money go in the space of a year?

We have to understand a simple truth about business in Guyana, that is that there are very few true businessmen. We have a plethora of small time traders who made money by underinvoicing goods and by corrupting the customs department.

With the advent of the crackdown on this kind of corruption, some of these individuals tried to carry on business under the guise of legitimacy. However they were ill equipped to deal with the vagaries of running businesses legitimately in an unfavourable economic climate. Consequently many of them were doomed to failure even before they got started.

Others saw the removal of foreign currency restrictions as an opportunity to move vast sums of money out of this impoverished nation.

Many of the properties, businesses and factories which were put up as security for these loans were systematically stripped leaving mere shells of little value.

But the banks themselves are not entirely blameless. Many of the individuals involved in this systematic monetary rape of Guyana are well known bad risks. They move from bank to bank, borrowing from one to pay off another, but never really intending to discharge their indebtedness.

Yet these banks continue to lend to these individuals instead of blacklisting them as the insurance industry does to bad risk persons.

Moreover the Bank of Guyana has failed miserably in its supervisory function over the commercial banks. If the Central Bank had played a more pro active role by enforcing the provisions of the FIA and its own guidelines thereunder, a lot of the nonsense that is being allowed to happen in the commercial banking sector would be severely curtailed.