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….says president has no authority to dub NRF Act unconstitutional
Hours after President Irfaan Ali dubbed the Natural Resource Fund Act of 2019 “unconstitutional and illegitimate,” Leader of the Peoples National Congress Reform (PNCR) Aubrey Norton said the President has no authority to determine legality or illegality of the legislation.
“The President is part of the Executive branch, and it is the Judicial branch that has the sole authority to rule on the constitutionality of an Act. Therefore, the President has no authority to determine which Act is unconstitutional,” Norton said in a statement on Tuesday.
The President, in an earlier statement on Tuesday, pointed out that the Natural Resources Fund Act was passed after the December 2018 No-Confidence Motion, but Norton was keen on noting the then Opposition – the People’s Progressive Party/Civic (PPP/C) – chose not to show up to Parliament though it was still in session.
“If they believed that the assembling of parliament was unconstitutional, they should have taken the matter to court and should have refused to collect their member of parliament salaries from the date of the No Confidence Motion(21st December 2019) to the formation of the new parliament under this government (August 2020),” the PNCR Leader said.
Further, he said the claim that the Act provides for no governing oversight is far from the truth.
In support of his statement, Norton pointed out that under Section 11 of the Act, the Minister of Finance is responsible for the overall management of the Natural Resource Fund (The Fund).
Moreover, in Section 14 of The Act, the Investment Committee, comprising of investment professional, advises the Minister of Finance on the overall objectives of the Fund; conditions, constraints, and opportunities in the financial markets. Additionally, the Committee is designed to ensure sufficient monies are available for withdrawal from the Fund, and that there is full adherence to international best practices in investment portfolio management, which includes The Santiago Principles).
Additionally, in Section 12 of the Act, the Bank of Guyana is responsible for the operational management of the Fund.
“Clearly The Act has a governing body, and it complies with Principle 6 (Governance Framework) of the Santiago Principles.All the President is really saying is that under the proposed Bill, the Minister of Finance will delegate Overall Management and Investment Mandate responsibilities to the Board of Directors and that board will enter into an operational management agreement with The Bank of Guyana. However, the Board of Directors still needs to seek approval from the Minister of Finance before it executes the Investment Mandate and the Operational Agreement with the Bank of Guyana,” Norton reasoned.
President Ali in support of the proposed legislation, which has received major push back from all sectors of society, said the Parliament, particularly the Public Accounts Committee (PAC)and the Auditor General will all have oversight responsibilities but Norton said this is nothing new under the Act.“These bodies have always had oversight responsibility over The Fund,” Norton maintained.
He pointed out that in the existing legislation, the Public Accountability and Oversight Committee, an independent committee that represents a broad-based section of Guyanese society is responsible for the overall oversight of The Fund.
It was noted too that the committee is required to provide public consultation on the overall management of The Fund as provided for in Section 6.
The PNCR Leader said President Ali failed to disclose his Government’s intention toplace the oversight responsibilities into the hands of the same Board of Directors which is also responsible for the management of The Fund.
“How can a board provide oversight and hold itself accountable? This is a clear violation of principle 6 (Governance Structure) of the Santiago Principles,” Norton said.
According to Principle 6 of the Santiago Principles, “The governance structure should be set out in the Sovereign Wealth Fund’s (SWF) legal framework, for example, in the relevant legislation, charter or other constitutive documents. It should ensure appropriate and effective division of oversight, decision making, and operational responsibilities.”
According to Norton, under the Bill, the new role of the “independent” committee will be relegated to receiving and being briefed on the quarterly reports of The Fund.
Notably,under Section 41 of The Bill, the Minister of Finance will craft the code of conduct of the Public Accountability and Oversight Committee. “This diktat by the Finance Minister makes the PAOC dependent upon the Finance Ministry to determine how to conduct its affairs,” the PNCR Leader said.
Further, Norton pointed out that under Section 20 of the Act, the responsibility of determining the Economically Sustainable Amount was placed in the hands of the Macroeconomic Committee, which comprises of experienced economists, however, it is now Government’s intention to do away with the Macroeconomic Committee.
He said as a result there will be no way to determine if the amount of funds government wants to withdraw from the Fund will have negative impact on the economy.
Similarly, he said the Government has scrapped the Fiscally Sustainable Amount.
“For example, if US$2.5 Billion came into the fund within the previous year, this government can withdraw as much as $1.5 Billion or as much as 60% of the amount that came into The Fund for its own spending purposes. Keep in mind this amount does not include any emergency spending for events such as a natural disaster.This arbitrary approach to withdrawing the Guyanese people monies will ensure that nothing is left over for our children and our grandchildren,” Norton submitted.
The bill is expected to come up for debate on Wednesday. Norton has called for it to be withdrawn from the House.