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Loan to Guyana opposed by U.S. company

By John Collins (1)

Action in U.S. court seeks to block Inter-American Development Bank loan for another U.S. firm; U.S. government in middle.

GEORGETOWN, Guyana – Atlantic Tele-Network (ATN), parent company of the Guyana Telephone & Telegraph Co (GTT), is asking the U.S. District Court for the District of Columbia to block an $18 million loan to Guyana by the Inter-American Development Bank (IDB), charging that the funds will be used to break its monopoly there.

ATN, which is headquartered in St. Thomas, U.S. Virgin Islands  received a 40-year exclusive license in 1991 when it bought the state-owned GTT for $16 million (CB April 12, 2001). Since then its total investment in GTT has reached $150 million, it has more than 700 employees, 82,000 wireless and 55,000 cellular subscribers, according to Cornelius Prior, ATN chairman. Telephone penetration is Guyana now is 10 per 100 inhabitants compared with only 2 per 100 in 1991. In the U.S. its 65 per 100.

ATN is seeking an injunction directing U.S. Treasury Secretary Paul O’Neill to instruct Jose Fourquet, the U.S. executive director at the IDB to vote against the loan. ATN is also seeking a temporary restraining order to block all other IDB loans to Guyana.

Puerto Rico-born Fourquet is a Bush Administration appointee (CB May 23).

“We want to protect our investment and we have turned to this route because we have had no success in trying to resolve our differences with the Government of Guyana,” said Prior.

Cited by ATN for justification in the case is Title 22 of the U.S. Code Section 283 which defines U.S. participation in the IDB. It states that the President shall instruct the U.S. executive director “to vote against any loan or other utilization of the Bank for the benefit of any country which has taken steps to repudiate or nullify existing contracts or agreements with any U.S. citizen or any corporation….or imposed or enforced…restrictive maintenance or operational conditions, or has taken other actions, which have the effect of….otherwise seizing ownership or control of property so owned.”

The preliminary hearing in the case, scheduled for yesterday (July 24), is in the courtroom of famed Judge Thomas Penfield Jackson who recently tried the Microsoft antitrust case.

Insisting that ATN “is not against the IDB loan to Guyana per se,” Prior said “we’ve got to negotiate the introduction of competition and if that is what they want then we must get compensation if our monopoly is broken.”

Another U.S. company involved

Details about the  proposed project, to be financed by the $18 million loan from the IDB and an additional $4 million to be put up by the Guyana Government., have not been provided but another firm, Caribbean Wireless Telecom LLC of Minneapolis, Minnesota, is also a party to the suit. Caribbean Wireless is headed by a Guyanese-American lawyer Earl J. Singh.

He insists that its time to open up Guyana to competition and afford Guyanese more economical access to abroad as well as to make the country more attractive to outside investment. As in a number of other developing countries, GTT is often the target of abuse by its subscribers who have a litany of complaints about it. But its defenders, citing the state of service when ATN entered the country, insist that people have short memories.

When the purchase of GTT by ATN occurred 12 years ago the Internet was in its infancy and was virtually unknown in Guyana. Today lining many streets in Georgetown are Internet store fronts and cyber cafes which offer customers economical access to the Internet. While some of the connections are via GTT, an increasing number of them bypass it by pulling down the signal by wireless. This situation is not only eroding GTT’s revenues but creating a thriving industry in pirated Internet access.

While business centers in the few major hotels charge First World prices, the stores fronts and cafes routinely charge $1 per hour which is ridiculously cheap but about what the market will bear in a poor country with an annual  per capita income of $986. The innovative manner in which the Internet is utilized for different forms of communication is quite impressive.    

Prior acknowledges that its 1991 sale agreement did not cover Internet but insists that it didn’t have to because it clearly states that “all international voice and data access must be through GTT.”

President Bharrat Jagdeo of Guyana said ATN’s decision to have a U.S. court intervene comes as the government was negotiating with ATN. “I see this as an attempt to blackmail the country and to prevent ordinary citizens from having access to these services,” said Jagdeo.

Negotiations stalled

Indicating that there are no negotiations going on, Prior said “a year ago the government told us they wanted to remove the exclusivity clause from the contract. We told them we’d have to negotiate a new agreement. We last met in Trinidad in April and were told they’d get back to us with a memorandum of agreement to sign in two weeks. We’re still waiting.”

The government is insisting that it has to open up telecommunications to competition in order to develop the vast country of 83,000 square miles  and only 782,000 inhabitants, more than 90% of whom live near the Atlantic coast. It says it wants to use the $22 million project to open 200 Internet access points around the country and give free service to those who can’t afford it.

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1) Other articles by the well known Caribbean author John Collins can be read at:

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July 22, 2002


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