The New Today

Commentary

Keeping an eye on the people’s business

We the people were informed of the hosting of a press conference on Thursday, February 17th, 2022 by Prime Minister Mitchell and Chancellor Modica to advise we the people of the SGU initiatives to create opportunities and employment for Grenada.

The Press Conference was quite revealing. It is useful to note that this Press Conference followed one week after the passage of the St. George’s University (Amendment), 2022 to provide for a “grant” payment of USD30 million to the Government of Grenada as a result of February 2022 changes in ownership of the University and provisions for “grant payments” re future changes in ownership/control of the university.

In his opening remarks, the Prime Minister noted that the SGU was one of the top contributors to Grenada’s GDP, averaging 22 percent over the past three years and higher in “normal” times. The contribution transcended many sectors – real estate, entertainment, wholesale and retail services, construction, and hotel entities.

It was the single, largest private sector employer in the country and provided a number of scholarships to facilitate studies at the School of Public Health, School of Veterinary Medicine and the School of Arts and Sciences.

What did the Chancellor announce

I noted the following announcements/information shared by Chancellor Modica:-

USD30 million. Grant

SGU Awarded a Grant: Chancellor Modica advised that SGU had “awarded” a grant of USD30million to Grenada. Noting that it was a significant amount, he also observed that it was a “time of great need” in the country.

Erosion of the Tax Base: The Prime Minister explained to him that the country’s “tax base” had been eroded and the ability to operate Grenada had never been more constricted. It was not the place of SGU to dictate how the grant should be used nor how quickly but assured the Prime Minister that “it is there for you to use”.

Expanding Opportunities for SGU Grenadian Graduates

Tourism and Hospitality:   Expanding opportunities for graduates was about expanding job opportunities. Therefore SGU had started to focus on tourism and would help with any tourist schools that are being developed, including the initiative with Cornell University.

Making Grenada an IT Nation: Chancellor Modica announced the SGU’s intentions to make Grenada an IT nation. Starting next week, he would be working with Grenada’s Ambassador to the USA on developing IT companies that could be in Grenada. He would be working on developing relations with some giants as well as smaller companies. These companies would influence the content of the training programme that SGU would be offering. The companies would then be able to employ the graduates – based in Grenada – at a third or half the rate that these companies would have to pay graduates in the USA. Grenada would become a leader in this area. Among opportunities would be coding, software development and developing cloud based companies for independent countries such as Caribbean nations.

Greater Involvement in the Provision of Health Care Services: SGU’s faculty would be providing services to the general hospital and its students would also be rotating in the health centres throughout the island. The first charter gave SGU the right to be in the hospital.

Comments/ Queries/Observations

Award of a Grant

Note well that at the Press Conference the Chancellor announced that the SGU had awarded the Government of Grenada a grant of USD30 million. It sounded therefore that this grant was not an obligation of the University nor an entitlement of the Government of Grenada.

Erosion of Tax Base:
Based on the Chancellors’ comments, it would appear that Prime Minister Mitchell made a case for the payment of this grant from the SGU, citing the erosion of the tax base as one of the factors reducing the revenue available to government. Isn’t that ironic?

Exemptions from Duties and Taxes
Agreement of December 2010:
The SGU has been in operation for over 40 years but continues to enjoy indiscriminate exemptions from duties and taxes.   Based on information contained in Cap294 A, Schedule 2, the Agreement of December 2010,   the SGU was granted 100 percent exemptions from the payment of all corporation taxes, annual stamp taxes, withholding taxes, property taxes or other taxes that may be implemented in the future. This was in addition to duties and tax concessions on a number of purchases and sales related to operating expenses of the university.

Agreement of August, 2014, However, the Agreement of August 7th, 2014 , Article 14. No. 7 made provision for the payment of property taxes if the transfer of ownership passes from St. George’s University LLC.   This amendment was a required action, revenue enhancing measure required by the Structural Adjustment Programme entered into by the Government of Grenada, with the International Monetary Fund, in July 2014.   It is useful to note that the timing of this amendment co-incides with the news that Altas Partners and a Fund advised by Baring Equity Asia had purchased shares in the SGU.

Property Transfer Taxes vs. “Change Grants”
Cap. 257 C, the Property Transfer Tax Act, provides for both citizens and non-citizens to pay property transfer taxes in the event that they are engaged in the transfer of property, either as vendors or as purchasers. Under this Act, the following would apply:-

Shares Issued by a Company: Under this Act, “property” means land (including any estate, right, title or interest in, to or over land, and includes a lease for a period of ten years or more) and shares issued by or on behalf of a company;

Ten (10) percent of Value of Transaction Payable by both the Purchaser and the Vendor who are non- citizens.

Value of February 2022 Changes, USD1billion? One can estimate an approximate value of USD1 billion of the February 2022 changes in ownership given that the change grant is equivalent to three percent of the transaction. The change grant payable to the Government of Grenada is USD30 million.

Payment of Property Transfer Tax would be equivalent to 20 percent – 10 percent payable by the purchaser and vendor respectively, USD200 million. Compare with amount of tax payable with the “grant” of USD30million.!

The SGU has been in operation for over 40 years! It is a mature and profitable company, whose shares are being traded outside of Grenada. There are now layers of shareholders – direct and indirect parents (???).

SGU is more than able to pay the taxes that other businesses, particularly local businesses have to pay – corporation taxes etc. And if this company is going to be traded abroad, then it is time for the Government of Grenada to ACT like a government and PROTECT Grenada’s interest. It is now dealing with an international business. Papa Chancellor will not always be in charge!

Scholarships in Lieu of Taxes:
In response to a question, Chancellor Modica advised that the SGU paid taxes in the form of scholarships awarded to Grenadian students. In reviewing and updating agreements with the SGU, have negotiations ever been informed by a study re LEAKAGES via all the exemptions from duties and taxes vis-à-vis the value of scholarships and the payments made to Grenada?

Grants from Other Companies Enjoying Tax Breaks:
Prime Minister Mitchell lamented the fact that other companies which came to Grenada and got enormous tax breaks. As they added up their profits, he wished that they would do as the SGU and make grant payments to the government.

This was a rather surprising statement coming from the Prime Minister in a press conference. It confirms the concerns as to who is in charge – whether it is these companies getting all manner of tax breaks or the Government elected by we the people to take care of our business including the right and responsibility to impose the appropriate taxes to raise revenues to facilitate the operations of government.

It also indicates that our government has apparently abdicated its responsibility, preferring to go, “cap in hand”, soliciting grants or perhaps there are other arrangements to which we the people are not privy.

Housing Materials and Elections:
During the question and answer session, Prime Minister Mitchell mused that housing was a great need, elections were coming up and that perhaps the grant could be used to expand the provision of materials. But the decision would be a decision of Cabinet.

The Prime Minister’s statement suggests that, deliberately or inadvertently, he confirmed that the distribution of housing materials was an election tactic and that he did not distinguish between party and government.

Therefore, it is reasonable to question whether the ‘grant” of USD30 million“awarded” to the Government of Grenada would be used to facilitate electioneering by the party holding office?

Expanding Opportunities for SGU:
While SGU was advising that it will be expanding opportunities for Grenadians, note that Grenada has already expanded opportunities for the SGU. SGU is benefitting from significant opportunities and grants from international agencies. E.g. grants for research in climate change and other areas.

In 2011, under Grenada’s UNDP- Global Environmental Fund 4 Programme, a grant of USD1.1 million allocated for Grenada went to support a Renewable Energy and Energy Efficiency (REEF) project to be undertaken by the Windward Island Research Foundation (WINDREF) at SGU was announced.

Since then, other significant opportunities targetting Grenada are available to WINDREF and the University. Is the data generated by the SGU research available to Grenada/Grenadian institutions? What are the agreements between the SGU and the Government of Grenada in this regard?

Greater Involvement in Grenadian Health Care:

Training Doctors for the USA:   Chancellor Modica was very proud of the fact that the SGU trains the most doctors for the USA which has a shortage of doctors. He thinks that Grenada should be proud to this accomplishment. Good for SGU! But how has SGU impacted our health care system. There seems to have been a steady decline while SGU experienced steady growth.

General Hospital/Health Centres et al:| The SGU has the right to use the General Hospital and Grenada’s other health-related facilities for the conduct of its clinical programmes. What exactly does “getting more involved” in Grenadian health care mean? Are the facilities being given over to the control of the University? Are we moving into the “privatization of health care”?

St. George’s University and Grenada’s Blue Growth Master Plan:
What is the BIG picture? There are a number of references to the SGU in Grenada’s Blue Growth Master Plan, a plan that developed without the input of we the people and a plan which really seems to be the appropriation of the people’s natural assets and their exclusion from its use.

The following references to SGU are instructive:-

Blue Growth Planning, Development of Incentive Zones:

  • “Southern Grenada – Focus on Science and Technology and include SGU program growth and expansion, new national teaching hospital, and new international business ventures.”

Blue Growth Centres of Excellence:

“Science and Technology: “This area, with proximity to the airport, major businesses in St. Georges, and St. George’s University, is envisioned as a high-tech knowledge corridor for new international ventures and services in concert with the proposed new Google partnership.”

Health Science and Technology Zone:

“Southwest Grenada is envisioned as a Health Science & Technology Zone that will further build upon the success and recognition of St. George’s University (SGU) as one of the world’s top international medical schools.

The development of a new National Teaching and Medical Tourism Hospital is a key driver to seeing that vision come to reality. In partnership with SGU, the two institutions will guide and direct the growth of the Health Science industry in Grenada to include numerous related fields related to medical technology.” (own emphasis)

Southwestern Zone Activities: Among the activities identified for this Zone are:- St. George’s University: pharmaceutical/biomedical; medical ICT; medical manufacturing; hospital/wellness centre; national teaching hospital/medical tourism; hospital/wellness centre ; wellness & convalescence.

Minding the People’s Business:
What really is the BIG picture re the transfer of shares and ownership of the SGU? To whom? What are the implications for Grenada beyond the glitter of the “USD30million award” and promises of potential employment?

The St. George’s University is minding its business. Who is minding the people’s business and representing their interests?

Sandra Ferguson