BaiShanLin misused US$70M from Chinese bank for wood processing plant

Aug 30, 2015 News

– invested in gold mining, housing instead

Four years ago, Chinese-owned logging company, BaiShanLin International Forest Development Inc., reportedly received almost US$70M in financing from China’s Development Bank (CDB) to build a wood processing plant off Linden, in Region 10.
This year, the plant is still to take shape and it appears now that the company is in deep financial problems.
In the meantime, the showpiece exhibition centre at Providence, East Bank Demerara, is at a standstill for several months now. The nearby housing development is also on hold with no major activities seen.
But while all of this is happening, Baishanlin has been aggressively competing in the local market using its trucks to fetch logs for operators and barges to transport stones and other commodities for hardware suppliers to bolster its apparently dwindling revenues.

GFC Commissioner, James Singh

Baishanlin’s local boss, Chu Hongbo

The disclosures that BaiShanLin collected the US$70M financing would contradict statements earlier this month that the company is facing problems accessing financing from China Development Bank.
Commissioner of the Guyana Forestry Commission (GFC), James Singh, disclosed a few weeks ago that the company indicated to him that the holdup of the wood processing project is as a result of “financial difficulties.”
“They told us that they have been experiencing some financial difficulties in the sense that they were unable to meet some benchmarks for certain lending agencies…We met with them and they had some concerns. They indicated to us that they met with some Government officials and are expected to submit a revised programme in relation to the facility for review.”
Singh said, too, that a team from the China Development Bank (CDB) also accompanied the Chinese company to the meeting.
The wood processing plant is reportedly a key requirement that BaiShanLin has committed to in its investment agreement with the Government of Guyana and the company had promised to make the wood processing facility their priority within months.
However, despite its presence here for a decade, the company has failed to establish any processing facilities despite benefiting from hundreds of millions of dollars in duty free concessions, tax breaks, fuel waivers and even lands for developments.
According to officials close to the operations of BaiShanLin, the US$70M was used to invest heavily in gold mining, housing and an exhibition centre for Chinese products at Providence, East Bank Demerara.
The lands in Providence have reportedly been acquired under controversial circumstances.
BaishanLin has aggressively been moving in the logging arena, acquiring over 700,000 hectares of forest areas under the PPP/C administrations.

The ship yard in Linden

This planned exhibition centre site at Providence, E.D.B. has been stalled since December.

The company’s aggressive logging operations, which has seen residents of Kwakwani, Upper Berbice River, saying that they have benefited positively because of a ready market, has sparked questions and protests by forestry experts.
The company has been granted concessions in Region 10 and allowed to enter into joint venture arrangements with companies in Essequibo.
After Barama Company Limited, BaiShanLin would be the second largest holder of forest lands.
It has been allowed to also acquire vast lands for gold mining and has reportedly been diverting its logging equipment for this activity.
Last year, it was announced that Chu Hongbo, BaiShanLin’s boss in Guyana, had become a citizen, which allows him to apply for ownership of properties for mining and logging.
The new Government has reportedly been looking at whether BaiShanLin and other foreign investors involved in especially logging and mining have been fulfilling their commitments regards to job creation, and the proper utilization of concessions.
A fly-over by Kaieteur News of BaiShanLin holdings last year found a massive log yard in areas east of Kwakwani, Upper Berbice River and to a lesser extent in Region One, Essequibo.
The extent of operations had shocked Guyana but the GFC and the previous Government insisted that nothing was wrong and BaiShanLin was being regulated.
The PPP/C government had also denied it had a cosy relationship with BaiShanLin.