Govt. to rid Guyana of ‘BaiShanLin syndrome’-Natural Resources Minister

Jun 02, 2016 News

….Local loggers promised a level playing field

By: Kiana A. Wilburg

Just a handful of foreign companies operating within Guyana’s lush, rich forests have been able to benefit like

Minister of Natural Resources, Raphael Trotman

kings mainly because they were granted concession packages worth billions of dollars.
This had led to an outrage among local logging entities, some of which have noted over the years that there has been grave bias and discrimination within the forestry sector.
But for Minister of Natural Resources, Raphael Trotman, this state of affairs will not be allowed to go on any longer.
Trotman said that the Ministry of Natural Resources, in conjunction with the Ministry of Finance, the Guyana Forestry Commission (GFC) and the Guyana Revenue Authority (GRA), will combine their efforts to ensure that a level playing field in the sector will be established.
He said that this will be done in a number of ways, one of which includes due diligence exercises which, he said, will be carried out to ensure that the nation attracts “credible investors”.
“And after we do, we will ensure that there is strict compliance with laws, regulations and investment agreements where tax concessions are granted. Local logging companies will be held to the same high standards and in this way the field will be leveled.”
Given all that took place with foreign companies such as BaiShanLin Forest Development Inc, the Natural Resources Minister also assured that he intends to do things differently especially as it relates to contracts signed with foreign companies.
He said that the best way to address the so called “BaiShanLin syndrome” is to be constantly vigilant and to ensure better regulation.
“Many people blame BaiShanLin alone but fail to recognize that right here in Guyana, others allowed many of the things complained about to transpire.”

Manager for BaiShanLin, Chu Hongbo

The Natural Resources Minister maintained that when he examined the sector upon taking office last year, he was concerned about the overall sense of a “free for all.” He assured however that the Government is working to bring order to the sector.
Trotman said that there is no doubt that some foreign companies did not honour their investment agreements and were given a “free pass” by the former administration.
He said, “This again is something that we have put a stop to. However, we remain ready, willing and able to work with any foreign company that is prepared to respect our laws, the workers they hire and the investments agreements they sign.”
The forensic audit report on the operations of Bai Shan Lin Forest Development Inc. had brought numerous worrying findings into the spotlight. It was noted for example that this very company was granted concessions for machinery, equipment and construction materials which were just too excessive and in many instances, had nothing to do with its work.
The data provided by GRA shows that during the period 2012 to 2015, the People’s Progressive Party/Civic (PPP/C) administration granted BaiShanLin fiscal concessions on a variety of machinery, equipment and construction materials.
These items carried a value of $7.5 billion, equivalent to US$37.3 million. The total value of concessions granted amounted to $1.827 billion. The report which was prepared by Chartered Accountant Anand Goolsarran, noted that GRA was unable to provide information relating to the earlier years because of computer problems.
The concessions for the equipment and other machinery was based on investment agreements entered into between the former Government and BaiShanLin for the construction of a wood processing facility in Region Ten.
Goolsarran said, “A review of the list of items of machinery, equipment and construction materials for which fiscal concessions were granted indicates that many of the items were either unrelated to, or were significantly in excess of the requirements for the construction of wood processing facility.”
The forensic auditor said that indeed, the evidence suggests that the fiscal concessions granted were substantially in relation to BaiShanLin’s ownership and or control of five logging companies which had Timber Sales Agreements (TSAs) as well as its proposed investment at Providence, East Bank Demerara.
The Chartered Accountant noted that up to the time of reporting, BaiShanLin had not fulfilled its obligations under the investment agreements and was requesting an additional two years to construct the long awaited wood-processing facility.
The APNU+AFC administration is yet to say whether it will grant the Chinese company a two-year extension.
Goolsarran said that it is important for one to remember that the company in a letter to the former Prime Minister, Sam Hinds, promised that the wood processing facility would have been completed since 2007.
A further assurance was given in July 2012 in a letter to the former Minister of Trade, Industry and Commerce that the facility would be ready by the end of 2013.
The forensic auditor said that the investment agreements specifically provide for termination where there has been a failure to undertake the business proposal without providing a reasonable explanation.
He said that when this happens, BaiShanLin is required to repay the value of all fiscal concessions granted.
Goolsarran said that despite the persistent failure by the Chinese company to honour its obligations under these agreements, and without reasonable explanations, no action has been taken to terminate the agreements under the previous regime.
In addition, the Chartered Accountant said that the Guyana Revenue Authority and/or Go-Invest was/were required to visit the business premises and inspect assets that benefitted from the fiscal concessions. However, there was no evidence that this was done.
Goolsarran has since recommended that the government terminate the investment agreement with the company as it has failed to honour any of its obligations to the nation.