President accuses GT&T of bad faith, blackmail over IDB loan
Floats prospect of arbitration over monopoly
By Gitanjali Singh
Stabroek News
June 19, 2002
President Bharrat Jagdeo said yesterday that arbitration has been floated to
resolve the impasse with the local phone company over its monopoly and he
accused the firm of trying to blackmail the country over a proposed US$18M
loan from the IDB.
The President said if he agreed to arbitration by the International Centre for
Settlement of Investment Disputes (ICSID), he would not just seek to have the
issue of whether the firm was getting a fair rate of return on its investment
considered but will include the non-fulfillment of its expansion plan, the
controversial six per cent advisory fee and tax issues.
"What I see this as [the lobbying against the IDB project] is an attempt by
GT&T to blackmail the country and to prevent ordinary Guyanese from having
improved services at competitive rates and access to service," Jagdeo told
reporters yesterday, detailing what the project means for the country.
The President pointed out that the government was considering the proposals
from the Guyana Telephone and Telegraph Company Ltd (GT&T) and its
parent company, Atlantic Tele Network (ATN) on introducing market reforms
into the sector when the firm approached the US government to block the
US$18M loan from the Inter-American Development Bank (IDB) for the
Information and Communications Technology (ICT) project for Guyana.
Stabroek News had reported several times last week on GT&T's lobbying
against the loan and the President's statement yesterday was the first official
response from the government on it.
"We see this as an act of bad faith on the part of GT&T. If I don't get this loan,
it is ordinary people's access being blocked... it is an act of bad faith on the part
of the company," the President underscored yesterday. He said despite the
government having had problems with the firm creaming off US$60 million in
advisory fees against the price of US$16 million it paid for 80% of the old
Guyana Telecommunications Corporation and the tax and expansion issues, it
never allowed these to spoil its relationship with GT&T and in good faith
entered into dialogue to break its monopoly and introduce market reforms in the
sector. He said ATN's actions would definitely affect the negotiating process
which had been underway until recently. Chief Executive Officer of GT&T,
Sonita Jagan, is overseas and Deputy General Manager for Communications,
Terry Holder, could not be contacted yesterday for a response to the
President's statement.
The President's remarks were made at a media briefing at the Office of the
President where he dealt with his recent trip to Washington for the Caribbean
Group for Cooperation in Economic Development (CGCED) meeting and his
engagement with the IDB over the ICT project. The project, up for
consideration two weeks ago, was twice taken off the Executive Board's
agenda based on lobbying by ATN. The US Executive Director, Jose Fourquet
made the first request for a postponement and IDB president, Enrique Iglesias
the second.
Jagdeo confirmed Stabroek News' reports that GT&T through its parent
company ATN was saying to IDB officials that the project infringed upon its
monopoly rights. However, the President said his government did not share the
view that the firm had monopoly rights in some of the areas it was claiming.
The firm is claiming that its licence gives it a monopoly on international voice and
data transmission, which will now include Voice Over Internet Protocol and
downloads via the internet. But the government's position is that the
Telecommunications Act under which the licence was given could not possibly
include technology which had not been available at that time and that
commercial use of the internet was not a consideration when the licence was
given. GT&T's position is that the statutory interpretation of the Act has to be
one where future technology is incorporated but the government is saying that
while the Act itself covers future technology, GT&T's licence could not
encompass that and it would need a separate licence for the technology now
unfolding.
The President said he spoke with Fourquet on the issue but the meeting was
private and he would not divulge what transpired. However, he said that the
issue was engaging his daily attention and he was in touch with Guyana's
executive director, Roderick Rainford on the matter to devise a way forward.
He said he has pointed out to the IDB officials that ATN/GT&T has had myriad
problems, including with the US Federal Communications Commission, the
major carriers in the US including AT&T, the Government of Guyana, as well as
with cellular service companies in Guyana. He noted that by virtue of the higher
interconnection rate the firm was exercising a monopoly on the cellular market.
The President said IDB officials supported the project and he was certain that
the US government will assess all of the information at its disposal before
coming to a decision.
He pointed out that if Fourquet blocked the project, this would run counter to
the US programme of liberalising telecommunications inside the US and US
President George W. Bush's lobby at the Free Trade Areas of Americas
(FTAA) level to close the digital divide internationally. He said he was
convinced the US government would be fair in its review.
Jagdeo insisted that the ICT project, premised on data liberalisation, was in no
way an expropriation of the property of ATN as it was claiming. ATN's lobby is
based on the Helms Amendment contained in Title 22, Chapter 22 of the US
Foreign Assistance Act which allows the US Executive Director to veto projects
to developing countries if there is nationalisation or expropriation of property of
a US person; repudiation or nullification of any contract with a US person; or
any action which has the effect of seizing ownership or control of the property of
any US person. The President indicated that once the government agreed to go
to arbitration with ICSID, following the Costa Rica example, the way would be
cleared for the processing of the loan. He said that the project would not be
back on the IDB's agenda until the method of resolving the issue was decided
and that matter has his full-time attention.