Four non-performing foreign entities get $2B in concessions

Feb 05, 2017 News

-Instead of imposing sanctions, logging companies were rewarded with billions worth in concessions

The Guyana Office for Investment (Go-Invest) is mandated to review all Investment Agreements on an annual basis. This is to ensure that investors who receive concessions use it for the purpose intended.

BaiShanLin’s Managing Director, Chu Hongbo

But instead of carrying out this important function, Go-Invest watched on as investors breached their Investment Agreements for years. This state of affairs was revealed in a damning forensic audit that was conducted by Nigel Hinds Financial Services (NHFS).
The group further emphasized that Go-Invest failed to sanction any investor for breaching his Investment Agreement, by not properly renewing the Investment Agreement. The auditors then gave a breakdown of how certain companies blatantly breached their Investment Agreements.
BAISHANLIN
Forensic auditors noted that BaiShanLin Forest Development Inc. was incorporated in Guyana in 2006. This was under the Guyana Companies Act. According to its business plan, BaiShanLin’s main objective was to ensure the commercial use of Guyana’s forest resources through the processing of a wide range of finished products.
The forensic audit report said that during the period 2007 to 2012, BaiShan Lin was cutting and exporting raw lumber without processing it or creating value added products.
This was a complete contradiction of its Investment Agreement. The forensic auditors said that it is evident that BaiShan Lin’s real objective was to export raw lumber. Nevertheless, BaiShan Lin still benefited from concessions totaling $1.8 Billion during the period under review 2011-2015.
DIAMOND TROPICAL WOOD PRODUCTS INC.
According to the forensic audit report, Diamond Tropical Wood Products Inc. was incorporated in 2011 to establish a wood processing operation at Diamond East Bank Demerara.
The auditors said that the company was granted concessions in August 2012 but has since failed to honour its part of the Investment Agreement signed in July 2012. It was to establish and operate a wood processing facility. The concessions granted to Diamond Tropical Wood Products Inc.; totaled more than $60M.
ZHONGHAO SHIPYARD INC.
According to forensic auditors, this company was incorporated in 2013 with the principal object of establishing a shipyard to build and repair local and foreign registered vessels.
The auditors noted in their report, that the investor applied for concessions related to the principal activity. The concessions were subsequently granted in October 2013.
During the period under review the investor benefitted from concessions to the value of $82.4M. The auditors said that the investor was granted concessions to engage in value added economic activities.
However, the auditors found that all evidence suggests that except for building a model vessel, the investor was in breach of the Investment Agreement it entered into with Go-Invest.
They added, “We were unable to access all the information relating to Zhonghao Shipyards Inc. because the entire file could not be found by Go-Invest staff.”
VAITARNA
Forensic auditors also found that Vaitarna Holding Private Incorporated (VHPI) was in breach of its Investment Agreement. They said that according to the agreement, the company committed to setting up a wood processing facility at Wineperu, Esequibo.
As at July 31, last year, the wood processing facility was not engaged in any significant production of wood products.
NO BENEFITS
The forensic audits said that an examination of the files of just those four investors—Bai Shan Lin International Forest Development Inc, Vaitarna Holding Private Inc., Diamond Tropical Wood Products Inc and Zhonghao Shipyards Inc.— revealed that Guyana did not benefit from concessions granted to these Investors since they all breached their Investment Agreements without any sanctions .
The concessions for the four investors amounted to more than $2 billion.
The aforementioned is what took place during the time of former CEO and Chairman of Go-Invest, Keith Burrowes.