An important development
The United States Overseas Private Investment Corporation (OPIC) has resumed support for American investments in Guyana following the settlement of a longstanding dispute between this country and Green Mining Inc. In June l992 as part of a restructuring of the Guyana bauxite industry the former government assumed US$30 million in debts owed by the Guyana Mining Company's Linden operations, including US$l4 million owed to Green Mining, and provided for repayment by the issue of l2 year government bonds. Green objected to the bond payment mechanism and filed claims under policies issued by OPIC which led to OPIC suspending coverage for US projects in Guyana pending the resolution of Green's claims. Green also sued the government challenging the constitutionality of the government's action. The case was not heard but a similar case filed by another creditor, Caterpillar Americas, was. The judge held that the issue of bonds to repay the debt violated the constitution. However his decision was reversed on appeal by a majority decision but Justice of Appeal Maurice Churaman gave a very strong dissenting judgement. Justice Churaman argued that a debt, which is a chose in action, namely the right to sue for money owing, could not be satisfied by the issue of bonds payable twelve years later. He said that the American doctrine of eminent domain did not apply here. He noted that the landmark Court of Appeal decision in the Lilleyman compulsory savings case in l964 had been ignored by the majority and had in effect been overruled and he pointed to the alarming potential effect of the decision on savings in a government bank (or indeed on government debts such as debentures generally) as it would seem that these could be expropriated and replaced by bonds. That majority decision, however flawed, stands and in fairness to citizens and investors the articles in the constitution that protect property from expropriation should be amended to remove any doubt that the government can take money, savings or debt held by citizens or companies and issue bonds in settlement. Green Mining recently reached a settlement with the government and OPIC thus making possible the restoration of OPIC's programmes in Guyana. This is important as OPIC is the US government agency that finances and insures American investments overseas. Many US companies will not invest in developing countries without OPIC insurance against political risk. One wonders how OPIC will handle the present unjustified threats by the Venezuelan government to a proposed investment by Exxon in oil exploration in Guyana's exclusive economic zone. Would it issue insurance cover to Exxon? Does its insurance cover loss of investors due to the action of foreign governments or only loss due to the actions of the government of the territory in which the company is investing? In any event, the return of OPIC is a positive development and improves Guyana's investment profile.
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