More on Island Development Company Ltd (IDC)
GLENNY SAVY’S LETTER REVEALS ABUSE OF PUBLIC FUNDS
The Island Development Company Limited is a strange beast. It is a commercial company under the Companies Act 1972 but its shares are owned entirely by the Government. As a result, its finances are subject to public scrutiny, especially because ever since its creation it has received government subsidy. Article 158 of the Constitution requires that any account “related to moneys withdrawn from the Consolidated Fund … shall be audited or reported on by the Auditor General to the National Assembly...” Since IDC’s subsidies come directly from the Consolidated Fund, it is the responsibility of the Auditor General to make a report on it to the National Assembly. So far this has never happened.
The amount of government subsidy IDC received for the past four years alone has reached over SR 36 million. IDC has been receiving government subsidy ever since it was created in 1980. While during the one party state, President Rene did not have to account only the SPPF for the money his government spent and transparency was not a word that had reached the seashores of
In addition the company also generates revenues from its activities. In 2002 alone (the last statement of account it filed with the Registrar) this was SR 9 million. So assuming it generated the same amount in each of the last 4 years alone, this brings the total income of IDC to SR 72,000,000. What did IDC do with all this money, you may ask? The 2002 financial statement filed with the Registrar of Companies gives a clue.
When IDC was created on April 24th 1980, during the one-party state, the memorandum of association of the company set out the following purposes:
a) to carry on the business of the managers (sic) and developers of islands and estates either as owners or lessees;
b) to carry on farming and land settlement activities;
c) to carry on the business of manufacturers of copra, coconut oil, soaps and detergents, animal feeds and of any other products;
d) to carry on the business of fishing and processing of fish;
e) to act as consultants on the management and development of islands and estates;
f) to act as importers, exporters and distributors of goods and materials;
But in their report attached to the 2002 financial statement, signed by Glenny Savy as Executive Chairman and CEO, the directors of IDC have stated that “The principal activities of the company during the year were the management on behalf of the Seychelles Government of outlying islands and transportation related thereto.” It is clear that IDC not only has failed to achieve the objectives it was set up for, but in the process, they have moved the third largest island of the Seychelles archipelago hundreds of miles out in the Indian Ocean, for IDC also manages Silhouette Island which is only 8 miles from the coast of Mahe.
If transportation to and from the islands is what IDC has been doing, this seems to have been and is an obsession. According to the 2002 published financial statement IDC claims it spent SR10, 000,000 on “transportation management”. Compare that figure to the declared revenue from commercial activities (SR 9 million) and government subsidy for the year (SR 15,000,000) and one gets a picture of a bizarre undertaking by a state own entity, who is no longer trying to achieve its true objectives. Just who and what IDC transported for that amount of money beggars belief.
Why has the government been so loyal to IDC to spend so much state funds on it, funds that could be spent on building houses or modernising
One interesting element of the published financial statement of IDC (for 2002) is contained in the firm of auditor’s own report on the account. The auditors, Messrs Pool & Patel made the following qualification: ” Where independent confirmation of the completeness of the accounting records is not possible, we have accepted assurances from management or appropriate representative of Seychelles Government that their representations together with the company’s records accurately reflect such transactions undertaken during the year.” What the auditors were saying that they have found that the directors of IDC did not keep proper records and therefore, the auditors had to rely on the words of Glenny or a government official. But the Company’s Act also “requires the directors to keep proper accounting records which disclose with reasonable accuracy at any time the financial position of the company.” Faced with this state of affairs, it is incumbent upon the Auditor General to intervene directly with IDC to give an adequate explanation which he must then report to the National Assembly, the body the Government is accountable to. So far this has not happened.
In 2005, IDC sold a landing craft to a foreign buyer for the sum of US$ 350,000 or SR1, 750,000 according to a report in Seychelles Nation of 25th January of that year. 2005, it seems was also a busy year for the company. That same year IDC directors signed a floating charge pledging the assets of the company to the Mauritius Commercial Bank (MCB) in return for a loan of US$ 130,000 as well an overdraft facility of US$ 150,000. This agreement virtually allows a commercial bank the legal right to repossess state property, an issue which should interest the Auditor General. Although IDC is registered under the Seychelles Companies Act, under government rules it cannot and should not be able to pledge its assets as a private company can, because by definition they are State assets. But IDC, it seems, continues to operate outside the realm of accountability of government finances as required by the Constitution.
In its 2002 financial statement the company also reported that it paid Glenny Savy a salary of SR 206,100. It also gave Glenny Savy a pay rise of SR 33,000 over his 2001 salary in the process. We do not know if Mr Savy received a pay rise in 2003, 2004, 2005 and 2006.
In the 2007 government budget passed by the National Assembly last December, IDC is expected to receive another SR 12,000,000 in government subsidy over and above the income it generates. After the tropical cyclone which hit Farquar and
IDC is a beast which needs to be slaughtered. It operates outside the accountability required by the Constitution as an entity which receives money from the Consolidated Fund. After all, there are alternative uses that can be made with the government funds that IDC utilises in pseudo commercial activities. In the last census les than 300 people were counted as residing on the outlying islands.
But first, President Michel must be able to explain to the people of