AXE THE DAX

In 1962 the slogan ‘axe the tax’ became well known in then British Guiana. The United Force adopted it in its campaign against a tax on beer in the Kaldor Budget and against the PPP Government. The campaign was the beginning of a successful three-year, multi-national effort, marked by tremendous violence and property damage, to remove the PPP from office.

 The PPP had justice on its side in 1962 but in terms of strategy and public relations, shot itself in the foot. Fifty years later, shooting itself in the foot has become an occupational hazard for the PPP and its Governments.

Accused by the Opposition of a lack of transparency in many matters, the announcement of the contract between the Government and Dax Engineering Company Inc. (“Dax”) in relation to the E-governance Georgetown to Brazil fibre optic cable, drew loud objections by both APNU and the WPA, both vowing to rescind it. Far more generous than originally alluded to by Dr. Luncheon, the contract published on Saturday provides for Dax to have use of the entire fibre optic cable, not pairs as said by Dr. Luncheon, as well as repeater stations, infrastructure, and equipment for 25 years, with an option for 15 more years, with enormous tax benefits, in return for repairing the cable. Contrary to what Dr. Luncheon said, Dax will be given licences to transmit and receive data and information, which even Digicel has not been promised, despite an application made as soon as it opened business here several years ago, which has never been responded to. Extensive tax concessions will be provided.

While there is no constitutional or other legal objection, entering into important contractual obligations or arrangements by the Government after the announcement of elections, is prohibited by convention. The Government is fully aware of this but it is clearly unbothered by principles of transparent governance.

This particular project was enmeshed in controversy from the time it was unveiled. Dubbed the E-Governance Project, its announced objective was to provide Government agencies with the capacity to develop ICT capability. Having regard to the GT&T fibre optic cable, which had the capacity to satisfy all of Guyana’s needs, the Government was accused of undermining GT&T from which it could have purchased ICT capacity and which would have been far more cost effective. It was also accused of intending to privatize the use of the fibre optic cable to its cronies after it had been installed. The Government denied these accusations. Nevertheless, suspicions remained and continued to be voiced.

The E-Governance Project has experienced tremendous difficulties on account of the delays and the fact that the cable was improperly laid. I was told about a year and a half ago that the cable was not being laid at a sufficient depth and that it would eventually be exposed as a result of soil erosion, which appears to have eventually occurred.

The contract has all the hallmarks of criticisms made against the Government in relation to procurement. Three issues stand out. The first is entering into a major contract so close to the elections. The second is that the terms appear to have been already negotiated and is a complete giveaway, contrary to Dr. Luncheon’s indication that the numbers of ‘pairs’ of cable that Dax would receive is still to be negotiated. The third is the failure of the Government to transparently advertise the project for bids. Dr. Luncheon in his usual disingenuous manner asked: Why do you need to advertise a project which is free? It is not free. Dax’s has received remuneration in the form of enormous benefits which were negotiable. The project ought to have been advertised for bids and the most competitive bid accepted.

The persons who objected to this project in the first place, in the suspicion that it is being set up in competition to GT&T to benefit cronies, have finally been vindicated. The Government may claim that such was not the original intention but force of circumstances necessitated the privatisation. This will clearly result in a destructive competitive environment with respect to a product which will be in oversupply as a result of this deliberate Government action. It will result in an undermining of market forces and loss of confidence by the business community in the Government’s bone fides with respect to creating fair conditions for creative competition to flourish.

This episode can bring no comfort to those who have long been complaining about the lack of transparency in Government procurement. At this election period, it brings into focus the question as to whether the Government has the commitment to tackle the burning issue of corruption which it has highlighted in its manifesto or whether, as many believe, it is just fat talk.  Its promise to the electorate would be inevitably viewed against the background of this contract with Dax.

While simultaneously making a promise to deal with corruption, the Government proceeds in the same old way, in secret, with no transparency, to award a contract, eminently suitable for competitive bidding, which has implications for an entire industry, and negative consequences for the largest important company active in that industry. The other companies which have been granted permission to lay fibre optic cables have also been undermined by this act.