PNC/R takes govt to task over sale of New GPC shares
Brassington says everything above board
Stabroek News
January 31, 2002

Government has come in for criticism over the manner in which its 30% shareholding interest in the New GPC was sold to the principals of the company for $200 million.

At a press conference last week hosted by the PNC REFORM (PNC/R), parliamentarian Jerome Khan said the sale raised questions about the operations of the Privatisation Unit and the administration.

Head of the Privatisation Unit, Winston Brassington, told Stabroek News on Tuesday that the sale of the government shares was above board and had been approved by the Privatisation Unit and Cabinet.

Khan said: "It may be recalled that at the time Guyana Pharmaceutical Corporation (GPC) was privatised with Queens Atlantic being sold 60% of the company, government had stated that it was happy to retain a 30% shareholding interest in the company, as it wanted to ensure that the Guyanese taxpayers' and the general public's welfare was protected."

He charged that government had ensured that state-run hospitals bought many of New GPC's products.

"It is strange, therefore, that the Bharrat Jagdeo administration would now give away this 30% shareholding for a ridiculously low amount of $200 million. How did the Privatisation Unit, the Ministry of Finance, and the Jagdeo Cabinet arrive at this mystery figure?" he queried.

Khan asserted that the true value of the 30% shares could only be determined on the open market and ought to have been offered to the general public for bidding.

He stated that this approach would have given other Guyanese an equal opportunity to invest in a Guyanese entity instead of looking at ways and means of moving their monies out of Guyana.

He added that it would have assisted government's declared intention to establish a securities market and send a strong signal that it was serious about establishing a capital market.

Khan pointed out that there was a lot of cash floating around and government was forced to sterilise some of the liquidity in the system through the issue of treasury bills.

He said it was likely that government would have received substantially more for its 30% shareholding.

The transaction lacked transparency, he said, and by selling its interest to one group, a virtual monopoly has been created after government had provided carefully directed assistance.

The transaction has removed government's influence on pricing by New GPC, particularly on the HIV and AIDS drugs which it recently began to produce and which the Georgetown Public Hospital Corporation has already begun to purchase.

Brassington explained that the sale of the 30% government shares was based on a provision in the agreement signed when the company was privatised that the first option to buy would go to the principals.

The Privatisation Unit's head pointed out that the company had suffered losses and the $200 million figure was considered a fair price in the circumstances and was approved by Cabinet.