Forensic audit report on GFC recommends…Repossess state forests, recover cost of concessions to BaiShanLin

Mar 25, 2016 News

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-halt all agreements with company

By Kiana Wilburg
Very soon, the Granger administration will have to make a crucial decision on whether it will bring the hammer down on a Chinese company found with a history of corruption in Guyana, or continue to treat with it diplomatically.  
The current administration was recently in receipt of a forensic audit report prepared by Chartered Accountant, Anand Goolsarran. This report documents numerous irregularities which go as far back as 2006, when BaiShanLin International Forest Development Inc was incorporated.
The main objective of the company, when it came in 2006, was to set up downstream wood processing operations in Linden and on the East Bank Demerara.
In his audit report, Goolsarran revealed that on November 4, 2011, the Guyana Forestry Commission granted a State Forest Exploratory Permit (SFEP ) to the Chinese company. This covered 104,783 hectares of State forest.
On the surface, everything seemed well with this arrangement. But what alarmed the forensic auditor  BaiShanLin was blessed with the permit (SFEP) for which it failed to meet the necessary requirements.
The criteria the Chinese firm failed to meet included (a) the submission of audited financial statements for the last five years; (b) evidence of technical and financial qualifications; and (c) a history of compliance.
Goolsarran revealed that a key consideration for the grant of the permit was the reassurance BaiShanLin gave the government to build a state-of-art wood processing facility in Linden. It intended to do so since 2006.
The forensic auditor revealed that the company had leased 200 acres for this purpose and had given a commitment to complete the facility by the end of 2013, following which the Government of Guyana would make available a further 100 acres for additional value-added processing.
As a condition for the grant of the permit, the auditor  discovered that the company was required to carry out an Environmental and Social Impact Assessment (ESIA) before any extraction could begin.
It was also required to prepare a business plan and do a forest inventory. However, at the time of the expiration of permit on November 4, 2014, the company had not honoured its obligations.
The auditor said that documents show that BaiShanLin contended that it faced a number of constraints including the need to repair and upgrade roads.
As a result, the forensic auditor found out that on October 1, 2014, BaiShanLin requested an extension of one year to fulfill these obligations under the permit and to set up the wood processing facility.
He emphasized however that Section 9 (9) of the Forests Act 2009 specifically prohibits any renewal of such a permit. He said that there is also no provision in the Act for an extension once the expiry date reaches.
In spite of this, the laws of the Forest Act were ignored and the Commission approved BaiShanLin’s request for an extension of the permit.
Goolsarran noted that BaiShanLin’s extended permit expired on November 4, 2015, but there was no board in place to address the issue. He said that Minister of Natural Resources, Raphael Trotman, indicated that the company applied for a further extension of two years to set up the wood processing facility.
“The Ministry of the Presidency later clarified that the Government had not taken any decision and that it has requested information from the company about its proposed business plan and evidence of financing.
“Upon receipt of this information, BaiShanLin’s request would be reviewed and a decision taken,” Goolsarran noted.
Up to the time of reporting, Goolsarran said that the company was yet to provide the business plan and evidence of financing.
He said that if this second request for extension is approved, the company would have enjoyed the benefit of the grant of an exploratory permit covering a period of six consecutive years whereas the law allows for a maximum period of three years for such a permit.
Taking into consideration that the Chinese company has failed to fulfill its obligations to Guyana, and the fact that the Forests Act does not permit a renewal  of a SFEP at the end of three years, the contract with the company Goolsarran said, should be terminated forthwith.
Goolsarran also recommended that State forest should be returned to the Commission for reallocation.
In addition to this, he said that the coalition administration should consider terminating the investment agreements with the company and recover the value of the fiscal concessions granted to it.

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