…questions ‘lost’ profits from entity despite growth
The Parliamentary Opposition – People’s Progressive Party – has called out Guyana Stockfeeds Limited (GSL) in what it says is a scheme to con the State of its rightful share of revenue.
According to the party here have been instances where GSL, whose principal shareholder is businessman Robert Badal, bought over assets for companies owned by Badal himself.
Here the Party pointed to National Edible Oil and Fats Incorporated (NEOFI).
“When NEOFI, an edible oil company, solely owned by Badal, ran into financial trouble, it had Guyana Stockfeeds (Guyana) buy over the assets of NEOFI thus bailing out this company owned 100 per cent by Badal,” the Party related.
The PPP contends that the Popeyes franchise, once owned by Badal, was sold to Stockfeeds Limited’s local branch. But according to the PPP, the deal was later flipped and GSL was left with little to show for it. The Party stated that while there has been significant growth of GSL, the profits of the company tell another story.
“When Popeye’s was later sold at a handsome profit, instead of the profit going to GSL, Badal reversed the sale from GSL, and concluded the sale in his own name for his own benefit, thus depriving GSL of the gain,” the Party stated in its release.
“Under Mr Badal’s leadership, despite significant growth and new investments that saw GSL revenue grow by multiples over the last 20 years since privatisation, the profits of GSL did not reflect this same growth. Instead margins shrunk, and costs escalated. A comparison of imported material prices from related companies show that the cost of inputs paid by GSL were higher than that paid by competitors.”
According to the PPP, these actions shortchanged the State of taxes and the minority shareholders of profits. The Party, therefore, questioned where these “lost” profits were going and whether they were being enjoyed by other companies.
It is in fact the National Industrial and Commercial Investments Limited (NICIL) that is expected to collect dividends from its shares in Guyana Stockfeeds Limited (GSL). The company, whose majority shareholders are private, still has to pay the requisite taxes.
The Guyana Stock Feeds Inc (GSFI) was established in 1960, with the main purpose of supplying animal feed to Guyana’s livestock sector. In 1975, the then Government nationalised the GSFI and thus it stayed until 1998 when it was put back into private hands.
At the time, the State brought in a strategic partner to reorganise the business, which was losing market share to imported feeds. Today, after an initial consolidation period under new management, new rebranded Guyana Stockfeeds Limited is a conglomerate with interests in the livestock, rice, and edible oil sectors. The enterprise itself is located in an industrial park at Farm, East Bank Demerara.
But NICIL’s time as a shareholder in the GSL has not been a smooth ride, with repeated clashes over the years with principal shareholder Badal, who also owns the Pegasus Hotel.
In fact, NICIL once took the GSL to court and obtained an injunction against the enterprise.
Those issues recently gained new life in the public eye after questions were raised by Opposition Leader Dr Bharrat Jagdeo about the Government’s failure to approach the Caribbean Court of Justice (CCJ) after the Appeals Court overturned the restoration of Government’s 38 per cent shares in GSL.
The decision would favour Badal, a known supporter of the coalition Government, while relegating the State to just seven per cent in shares.
In response, Badal was reported in sections of the press referencing hearsay that Jagdeo had threatened the initial judge to restore the shares and that “after I realised what happened, I appealed the decision and late last year the appeal court reversed that decision”.