THE 592 GUARDIAN  ♦  ACCOUNTABILITY EDITORIAL

Rum, Roads, and the Public Purse

Komal Samaroo went to Capitol Hill to condemn subsidies. He forgot to mention the ones keeping his empire afloat.

The 592 Guardian Editorial Board

There is a particular brand of audacity that flourishes in the tropics. It is the audacity of the man who builds his fortune on public scaffolding, then mounts a podium to lecture the world about fair competition.

Komal Samaroo, Chairman of Demerara Distillers Limited (DDL) and the West Indies Rum and Spirits Producers Association (WIRSPA), delivered exactly that performance at a working lunch on Capitol Hill during the Caribbean Legislative Forum.

His keynote, draped in the respectable language of regional development and trade equity, was at its core a lobbying brief — a private sector executive asking the United States Congress to extend and deepen trade preferences that underpin his company’s competitive position. What the address conspicuously omitted was any accounting of the domestic public subsidies, infrastructure handouts, and state-financed inputs upon which DDL’s business model has long depended.

Before Georgetown and Washington hear any more from Mr. Samaroo about the unfairness of subsidized competition, the Guyanese public deserves a full reckoning of what he has already received from them.

He built his fortune on public scaffolding, then mounted a podium to lecture the world about fair competition.

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THE GUYSUCO LIFELINE

The foundation of DDL’s rum production is molasses — the by-product of sugar refining. That molasses comes almost entirely from the Guyana Sugar Corporation (GuySuCo), a state enterprise that has never, across decades of operation, been able to produce sugar at or below world market prices. GuySuCo has survived only through repeated, substantial injections of public funds. It is, by any honest measure, a permanently subsidized industry.

Yet DDL draws its primary raw material from this failing entity. Every bottle of El Dorado rum that exits the Ruimveldt bond carries within it the hidden cost of Guyanese taxpayer support for a sugar corporation that cannot stand on its own commercial feet. When Samaroo speaks of DDL’s ‘authentic provenance’ and ‘premium quality,’ he is describing a product whose cost base is artificially suppressed by state subsidy — a subsidy paid not by DDL’s shareholders, but by Guyanese citizens.

This is not a peripheral detail. It is the structural foundation of DDL’s pricing competitiveness. Without a subsidized GuySuCo supplying below-market molasses, DDL’s cost of production would look materially different. The premium narrative Samaroo markets to Washington is built, in part, on public money he has never been asked to account for.

THE MOBLISSA MODEL: INFRASTRUCTURE AS CORPORATE WELFARE

DDL’s dairy subsidiary at Moblissa offers a case study in how the Guyanese state converts public expenditure into private profit. The facility — a diversification venture by the DDL group — was accompanied by significant government infrastructure investment: roads built, a bridge constructed, tax concessions granted, and tax holidays extended.

These are not trivial inputs. Road and bridge construction in the Guyanese interior represents real capital expenditure drawn from the national budget. Tax holidays represent foregone public revenue. Together they constitute a substantial subsidy package delivered to a private enterprise whose principal shareholder is not the Guyanese public, but DDL’s ownership structure.

One searches in vain for the corporate social responsibility commitments that might justify this largesse. DDL has not distinguished itself with community investment, worker welfare programs, or environmental stewardship proportionate to the public inputs it has received. The Moblissa arrangement is the pattern made concrete: the state builds the infrastructure, a private company captures the commercial upside, and the public balance sheet absorbs the cost.

The state builds the infrastructure. The private company captures the upside. The public balance sheet absorbs the cost.

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THE CAPITOL HILL PERFORMANCE

Against this domestic backdrop, Samaroo’s Capitol Hill address requires a different reading than the one its author intended. His call for reallocation of US sugar tariff-rate quotas — specifically the unused quotas assigned to Trinidad & Tobago and St. Kitts & Nevis, countries that have ceased sugar production — is not a gesture of regional solidarity. It is a market access argument that benefits, above all, those Caribbean producers still in the sugar and rum business. DDL is foremost among them.

His advocacy for extension of the Caribbean Basin Economic Recovery Act (CBERA) is similarly self-interested. CBERA’s duty-free access provisions have provided DDL with a preferential entry point into the US market. Samaroo presents this as regional benefit; it is also, plainly, corporate benefit to his own company.

Most revealing is his denunciation of ‘tremendously subsidized products’ from the US Virgin Islands and Puerto Rico, which benefit from the Rum Excise Tax Cover-Over and dominate roughly 80 percent of the US rum market. The complaint is legitimate as a matter of trade fairness. Its irony is total. The man objecting to US government subsidies distorting the rum market draws his molasses from a Guyanese state enterprise that has never been commercially viable without government subsidy.

FACT BOX: PUBLIC INPUTS TO DDL’S COMPETITIVE POSITION

THE ACCOUNTABILITY STANDARD

None of this is to argue that DDL has not built real commercial capability or that Caribbean rum does not deserve market access. It does. The region’s distillers produce genuine quality and the preferential trade architecture supporting them has historical justification rooted in colonial economic arrangements that the Caribbean did not choose.

The problem is not that DDL benefits from state support. The problem is that Samaroo presents himself and his company as exemplars of private enterprise virtue — authentic, quality-driven, unfairly disadvantaged by the subsidized competition of others — while remaining entirely silent about the public inputs that underpin his own position. That silence is not an oversight. It is a rhetorical strategy.

Caribbean people, and Guyanese people in particular, are entitled to a full accounting. They are entitled to know the value of the GuySuCo molasses supplied to DDL at below-market effective rates enabled by state subsidy. They are entitled to know the capital cost of the Moblissa road and bridge infrastructure. They are entitled to know the quantum of tax concessions and holidays extended to DDL entities. And they are entitled to know what DDL has given back — in taxes actually paid, in wages, in community investment, in environmental compliance — relative to what it has received.

Until that accounting is produced, Mr. Samaroo’s lectures on trade fairness should be received in Washington and Georgetown with appropriate skepticism. The rum is excellent. The audacity is something else entirely.

THE 592 GUARDIAN DEMANDS

1.The Government of Guyana must publish a full accounting of all public infrastructure expenditure, tax concessions, and tax holidays granted to DDL and its subsidiaries, including Moblissa Dairy, for the period 2000 to present.

2.GuySuCo must disclose the transfer price and volume of molasses supplied to DDL, and the government must commission an independent assessment of the effective subsidy value embedded in that arrangement.

3.DDL must publish an annual Corporate Social Responsibility report detailing community investment, environmental compliance, and worker welfare outcomes relative to the public inputs the company has received.

4.Any further government infrastructure support, tax concessions, or preferential arrangements for DDL entities must be subject to Parliamentary scrutiny and public disclosure before approval.

5.CARICOM trade advocacy positions advanced by WIRSPA and its chairman must disclose the direct commercial interests of the association’s principal members in any proposed policy change.

The 592 Guardian is an independent accountability journalism publication focused on Guyana. Editorial positions represent the views of the editorial board.