The activities of alleged Guyanese drug kingpin, Shervington Lovell, and his subsequent arrest in Jamaica last month on drug related charges, illustrates why Guyana has been classified as both a money laundering and a drug haven – two inextricably linked activities – resulting in the country being blacklisted by the international financial system. The case is also indicative of why Guyana’s banks have come under increasing scrutiny, probably because they have been unwittingly caught up in the web of

money laundering activities; and why it is extraordinarily difficult for residents to open a simple bank account. In addition, it is also why some individuals have suddenly shown visible signs of wealth which cannot be substantiated by their incomes; why the mining sector is coming under stiffer controls; why illegal sales of gold have become a major problem; and why total gold production has periodically spiked without viable reason.
The truth is, the US State Department has been aware of drug-related and money laundering activities in Guyana for some time and consequently penalized the country because its Financial Intelligence Unit (FIU) was lax in taking positive action to detect, prevent and deter money laundering activities. Actually, until the Lovell case, no major arrests had been made, with mostly small-time, unsophisticated dealers getting nailed.
The government agencies have also been cited for failing to ensure compliance with the country’s anti-money laundering laws, including tracking and reporting of suspicious transactions and wire transfers, and for not conducting adequate due diligence on money-related transactions.
Incidentally, several major agencies in Guyana are currently involved in anti-drug and anti-money laundering efforts, including the Office of the Attorney General, the FIU, the Ministry of Finance, the Bank of Guyana, the Guyana Police Force, the Guyana Revenue Authority, the Customs Anti-Narcotics Unit, and the Special Organized Crimes Unit (SOCU).
Last year, the government contended that there was no evidence to support the country’s dubious label as a laundromat for illegal money and claimed that it had done everything to comply with international best practices to prevent money laundering. Obviously, the government was not fully aware of the extent of the problem.
Evidently, one of the reasons for the failure to curtail drug trafficking, as implied by the US State Department in its March 2017 “International Narcotics Control Strategy Report – Money Laundering and Financial Crimes” report is that narcotics trafficking is evident in the country’s criminal justice system and other sectors. Numerous local press reports have alluded to this allegation, including the involvement of police officers in the drug trade.
But the past now appears to be water under the bridge, with CANU vowing “to bring down” the major players involved in the local drug trade, following the arrest of Lovell who was on the radar screen of both CANU and the US Drug Enforcement Agency for many years.
To illustrate how the Lovell case is symptomatic of Guyana’s money laundering problem, it is useful to look at some of the facts reported in the local press.
Lovell acquired the Tower Suites Hotel in Georgetown in 2015 at a reported cost of $766 million and undertook major renovations. The acquisition was made through a mining company, S&S Mining. Three years later, in 2018, Lovell opened the Leisure Inn Hotel in New Amsterdam, which had a price tag of around $450 million. He reportedly has other properties in Guyana, and also a hotel in Jamaica.
If we were to extrapolate from the information in the Lovell case and apply it broadly to money laundering and drug trafficking, we can discern some interesting trends.
Hypothetically, more than $1.2 billion was invested in real estate, with $766 million invested by a mining company. Anecdotal evidence indicates that mining, money laundering and drugs are closely tied. It seems as though some individuals have established mining companies which actually do not engage in mining. Yet these companies report the discovery of large quantities of gold.
Apparently, these companies use cash obtained from drug trafficking to buy gold from legitimate producers and then sell the gold through official sources, thereby legitimizing the dirty drug money.
Therein lies a few problems. One, reported gold production rises; two, legitimate producers sell gold illegally, thereby robbing the government of royalties; three, dirty drug money enters the banking system legally; and four, the supposedly legal money is used to acquire real property.
One of the due diligence requirements of banks is to establish source of funds. It is rather difficult for them to actually dispute source of funds if it comes from the actual legitimate sale of gold. So they actually legitimize what is truly dirty money and facilitate the acquisition of property.
But when an individual suddenly displays sizeable wealth, doubts should arise, which brings into question the role of the anti-money laundering and drug enforcement agencies.
It is believed Guyana’s banks hold numerous accounts for which the source of funds have not been diligently established. In some cases, funds might have been wired or transferred to foreign institutions through official channels.
The banking system has therefore been placed under pressure to establish source of funds for accounts they hold, which has become problematic for them. This, in turn, has forced them to raise the bar on the opening of bank accounts to the point that can be deemed punitive.
It would seem that the Lovell arrest follows months of investigations by local, regional and international authorities. Now, it is very likely that further arrests of drug lords could potentially be made.
While the Lovell case illustrates the main features of large scale drug trafficking and money laundering, there exists numerous other methods of laundering money. There is actually a culture among Guyanese of using informal networks to move money between Guyana and the North American diaspora through cash couriers or familial networks.
Other methods of cleaning money include smurfing, layering, co-mingling, and paying cash for large ticket items.
In the case of smurfing, large amounts of cash are broken up into smaller less conspicuous sums and deposited directly into one or more bank accounts over time. With co-mingling, criminal proceeds are mixed with deposits from cash-based businesses such as retail stores, bars, restaurants and businesses typically associated with tourism.
Money is also laundered through a process termed layering which involves separating illicit proceeds from their source by creating complex layers of financial transactions designed to obscure an audit trail and the original source of the funds to provide anonymity.
In many cases layering involves the movement of funds across borders to make tracing the source more difficult for law enforcement. This is usually achieved by wiring the funds to several different cross-border accounts.
Typically, the funds are converted into a different asset class by acquiring assets such as real estate or investable securities. Securities transactions are generally attractive for money launderers because the illicit funds can be converted to highly liquid assets which can be commingled with legally acquired assets. The securities can be sold in the open market, thereby cleaning the illicit funds.
Though money can be laundered in numerous ways, the Lovell case might very well mark the beginning of a trend to stamp out large scale activities in the space.

By Kiana Wilburg (Kaieteur News)
As Guyana makes moves to review the model for its Production Sharing Agreement (PSA), international transparency groups like the Natural Resource Governance Institute (NRGI) is urging the Government to increase the size of signature bonuses it intends to collect for the burgeoning oil sector.
Its call for attention on this issue is premised on the fact that the coalition government collected a mere US$18M signing bonus from American oil operator, ExxonMobil. The NRGI categorically stated, “Guyana needs to stop collecting chicken feed in the form of signature bonuses. It must demand what it deserves…”
The NRGI explained that bonuses, which are one-off payments that may be fixed or negotiated should always be sizeable. In this regard, it noted that in 2006, Angola, which is “not as richly blessed as Guyana” received more than US$1 billion as a top bid in its award of petroleum rights.
NRGI said, “It is important for the Guyanese authorities to bear in mind that bonuses serve to boost the government’s take. And these bonuses need to be sizeable because weak dimensions of the country’s fiscal regime plus poor negotiation skills may result in the country leaving money on the table…And indeed, Guyana did leave considerable money on the table when the contract it renegotiated is examined…”
The Institute continued, “Let it be clear, getting a sizeable bonus is no excuse for not ensuring that you have a comprehensive fiscal regime for the oil sector. Also, the authorities should not think that if they ask for a sizeable bonus, it has any effect going forward on investment or production decisions. Bonuses are neutral once paid…”

No Exclusion
Even though Minister of Natural Resources, Raphael Trotman, had said that the US$18M signing bonus is nondeductible by ExxonMobil, the contract the oil company has with Guyana does not explicitly state so. This was recently pointed out by Chartered Accountant, Chris Ram.
In his recent writings, Ram noted that Section Three of the Guyana-ExxonMobil contract deals with costs, expenses, expenditures and credits of the contractor.
Ram stated that Section 3.1 itemises the costs, which are recoverable without further approval of the Minister including all costs attributable to the acquisition, renewal or relinquishment of surface rights acquired and maintained.
The Chartered Accountant said, “Minister Trotman has asserted that the controversial signature bonus of US$18 million is non-deductible, without offering any basis in the Agreement. There is no clear exclusion in Section 3.3, which speaks to Costs not Recoverable under the Agreement.”
Ram said that it does therefore seem that a signature bonus constitutes a legitimate cost of acquiring a surface right.

Criminal Matter
The government’s approach towards the signing bonus has earned it nothing but scathing criticisms. In fact, Ram deemed it to be a criminal matter. He had said that the police must be called in and the Head of State, David Granger, must issue an apology to the nation for the diabolical act committed by his Ministers.
Ram said that the forced admission by the Government, some months ago, is a shocking revelation of a conspiracy to deceive the people of Guyana about billions of dollars.
The Chartered Accountant said that there are immediate and longer-term implications of this saga from which Guyana may forever suffer. For the immediate, Ram said it means that Article 216 of the Constitution of Guyana has been knowingly violated.
The Chartered Accountant said, “May I add here that when in Opposition, this Government, and very specifically the AFC of which Natural Resources Minister, Raphael Trotman is now leader, had repeatedly claimed that former Finance Minister, Dr. Ashni Singh, should be taken before the courts on a criminal charge under the Fiscal Management and Accountability Act.
“It is as clear as day to me that those offences have been committed under Section 85 of that Act by more than one person. This is now a criminal matter and the Guyana Police Force should be called in.
“It should be clear that as much as one half of the potential public revenues of this country should not be left in the control of Ministers engaged in criminal and other improper conduct.”
Ram added, “This Administration has disappointingly shown that such standards of common decency, let alone integrity, do not apply to it and its Ministers. So what about the longer term?
“Well, in a significant transaction with ExxonMobil – with which they need to operate on an arm’s length basis – these same Ministers have shown a willingness to engage in a conspiracy of deception on the people of this country.”
Ram said that ExxonMobil has a monopoly of known and established oil production of Guyana for the foreseeable future. He said that those Ministers cannot be trusted to engage any person, let alone an oil giant who knows that the persons who engage and are required to oversee its conduct are compromised and that their conduct borders on corruption.

Georgetown – Following last week Monday’s local government elections, the opposition People’s Progressive Party/Civic (PPP/C) now controls more Local Authority Areas (LAAs) and it picked up over twice the number of Proportional Representation (PR) seats as its main competitor, A Partnership for National Unity (APNU), according to preliminary results released by the Guyana Elections Commission (GECOM) last Friday.
Unlike in 2016, GECOM has not released the number of votes cast in each LAA but an analysis of the number of seats earned under the PR component of the election shows that the PPP/C won more than twice the number of seats as the APNU.
The elections were held under a hybrid system First-Past-The-Post (FPTP) and PR system, with each voter allowed to vote twice: once under the FPTP component and once under the PR component. Each system accounts for 50% of the seats available in each local government area. Of the 596 PR seats available countrywide, the PPP/C won 386 or 64.76% compared to the 188 or 31.5% won by APNU. The Alliance For Change (AFC) managed to win 14 seats, while four different Voluntary Groups won a combined total of eight PR seats.
In 2016, the PPP/C won outright control of three of the then nine municipalities – Anna Regina, Corriverton and Rose Hall, while the APNU+AFC coalition won in five, including Georgetown, the traditional stronghold of its main constituent, the PNCR. In the then new municipality of Mabaruma both parties gained six seats on the twelve seat council.
This year, the opposition has been able to increase its position on each municipal council, earning outright control of Mabaruma, Anna Regina, Rose Hall, Corriverton and Lethem.
According to the data provided by GECOM, the party, which had managed a mere three of ten seats in Lethem, has been able to double its share, earning six seats and control of the new council. In Mabaruma, the party has been awarded eight seats, a gain of two, pending an investigation into allegations of fraud.
GECOM is currently investigation allegations that applications for proxy voters in Mabaruma were approved based on fraudulent documents and without requisite checks. Chief Election Officer Keith Lowenfield has explained that GECOM hopes to conclude the investigation before the next meeting of the commission on Wednesday (today) so that official results can be declared.
Meanwhile, in Anna Regina, Corriverton and Rose Hall, where President David Granger had made calls for voters to elect leaders with a vision to transform their areas, the PPP/C was able to maintain and increase its control. In Anna Regina, it won 14 seats in 2016 and 15 seats in 2018. In Rose Hall, it now has ten seats, a gain of one, and it has held on to all 14 of the seats it previously won in Corriverton. The APNU has managed one, four and two seats, respectively in these municipalities, while the AFC won none.
The data also shows that the PPP/C has been able to gain ground in all the municipalities controlled by APNU. The most ground has been gained in Georgetown, where the party moved from two seats after the 2016 elections to seven seats in 2018. In Linden, where it won no seats in 2016, it has won one seat in 2018; in Bartica it now has four seats, which is two more than it gained in 2016; and in New Amsterdam, it now has three seats, after winning only two in 2016. In the new municipality of Mahdia, the PPP/C earned only one seat.
The AFC, meanwhile, has earned two seats in Georgetown, two in Linden and one each in New Amsterdam, Bartica and Mahdia.
A total of 70 Neighbourhood Democratic Councils (NDCs) were contested at the polls.
The PPP/C has increased the number of NDCs it controls from 43 to 46 and gained control of a traditional PNCR stronghold, Buxton/Foulis, where it has won ten seats to APNU’s eight. APNU won control of 21 NDCs, while there were ties in eight. In one area, there was a tie between APNU and an independent group.

Georgetown – After being diagnosed with Non-Hodgkin’s Lymphoma and given chemotherapy treatment in Cuba, President David Granger returned home last evening (Tuesday) accompanied by his wife Sandra Granger.
Given the diagnosis of Non-Hodgkin Lymphoma, the President’s Medical Team has performed a number of medical interventions including the first round of chemotherapy. The President has responded well to the treatment and was given approval to return to Guyana.
President Granger once again expresses profound gratitude to all those who sent their well-wishes for his full and complete recovery, a release from the Ministry of the Presidency said.
It was noted that the President may be required to return to Havana in a time prescribed by his medical team in order to examine and evaluate the progress of his recovery and to extend his schedule of treatment.
Granger had travelled to Cuba to meet specialist doctors and was expected to return on November 11 to participate in the Local Government Elections but was advised against this.
Last Wednesday, the embassy disclosed that the President had been diagnosed with Non-Hodgkin’s lymphoma, a type of cancer that originates in the lymphatic system, the disease-fighting network in the body. He was placed in the Centro de Investigaciones Medico Quirurgicas (CIMEQ) on Thursday, November 1, where he underwent a surgical procedure.
The statement did not indicate the stage of the cancer.
The Guyana embassy stated that the President continues his daily routine of work, treatment and rest under the supervision of his medical team.
On Friday, he met Cuba’s First Vice-President, Salvador Valdes Mesa, who was performing the duties of the President of Cuba at the time; and Vice-Minister in the Ministry of Foreign Affairs (MINREX), Ana Teresita Gonzalez Fraga, to discuss a number of matters of mutual interest.
The President thanked the Government of Cuba for the excellent arrangements that were put in place for his arrival in Cuba and his subsequent extraordinary medical treatment in CIMEQ.
He arrived in Havana on Tuesday, October 30, initially, for a medical investigation which he deemed necessary because of an unusual physical discomfort. He was received by a Cuban Medical Team which commenced the first phase of medical examination.
Prior to Cuba, the President had travelled twice to Trinidad and Tobago and had done his annual medical check-up in May and was given a clean bill of health.
However, on his return to work, the President said that he started to experience certain symptoms, which were persistent, and took the decision to travel back to Trinidad to revisit the tests that were done in May.

Georgetown – A Partnership for National Unity (APNU) allowed its supporters to heckle and intimidate media workers who attended what was supposed to be a press conference held jointly by APNU and the Alliance for Change at Congress Place, Sophia on Friday. The party apologized for its lapse the next day.
At that forum, reporters were subjected to harsh comments hurled by well over two dozen persons dressed in green T-shirts labeled APNU. While this sort of behaviour was well pronounced, none of the many APNU and AFC leaders who were present at the forum saw it fit to ask their supporters to allow the media workers to carry out their duties without interference.
Those at the head table were Volda Lawrence, Carl Greenidge, Moses Nagamootoo, Khemraj Ramjattan, David Patterson, Minister Joseph Harmon and Minister Amna Ally.
Also present, but not at the head table, were Attorney General, Basil Williams, Ministers Winston Felix, Jaipaul Sharma, Ronald Bulkan and Annette Ferguson, incumbent City Mayor, Patricia Chase-Green and other senior PNC members.
These leaders completely ignored the behaviour of the supporters who took up most of the seats made available at the forum. As a result, media workers had to stand throughout the forum that lasted well over an hour.
The persons hurled highly inappropriate remarks at reporters who attempted to question officials at the head table.
“Go home!”, “That is a silly question,” “Man is where they think they deh;” “Leh me deal with dem for you comrade” and “Y’all asking a set of bulls***t;” were just some of the remarks hurled at reporters. Nasty comments were also made about People’s Progressive Party/ Civic (PPP/C) politicians – particularly former President Bharrat Jagdeo.
The Guyana Press Association (GPA) subsequently sent out a press statement that highlighted and condemned the occurrence.
GPA noted the “continued intimidation of media workers who attend press conferences held by A Partnership for National Unity at Congress Place in Sophia. Media workers have complained about the continued heckling and intimidation by supporters of the Party who are seated in the press conference held by the Party.
“One can only assume that this behaviour is a feature endorsed by the Party and its leaders since it happened during (Friday’s) event with PNC Chairperson Volda Lawrence, and senior APNU members and the Party’s last press conference held by PNC Leader, President David Granger.”
The GPA even threatened to boycott coalition press conferences if the unacceptable pattern continues.
The body said that it would like to “remind all political parties that media workers have the right to conduct their duties without fear of intimidation and we would not hesitate to call on our workers and media houses to boycott press events if this unacceptable behaviour continues.”
On Saturday, APNU sent out a statement saying, “A Partnership for National Unity (APNU) notes the Guyana Press Association (GPA) press statement on heckling of media workers at its press conference.
“The APNU wishes to express its apologies for the discomfort caused during the recent press conference.
“As a political partnership and coalition partner of the government, the APNU does not condone nor endorse any conduct that serves to intimidate and hinder duties of media workers. In fact, the APNU values media workers role in building our democracy.
“The APNU endeavours to ensure a more welcoming environment at future press conferences and engagements with media worker.”

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