Concessions facilitated by GO-Invest …Forensic auditors criticize Auditor General for absence of annual reviews

Feb 08, 2017 News

It appears that the Office of the Auditor General, to some degree, hindered the ability of the Guyana Office for Investment (GO-Invest) to properly account for the value of concessions facilitated by the said office.

Auditor General, Deodat Sharma

This was revealed in a forensic audit report that was conducted by Nigel Hinds Financial Services (NHFS).
The team of auditors said that according to Section 38 (1) of the 2004 Investment Act, it requires the Auditor General to annually conduct a process audit of incentives granted under Section 2 of the Income Tax in Aid of Industry Act of 1994.
The auditors said there is no evidence that such an audit was ever conducted by the Audit Office. They further emphasized that the non-delivery of the audit does not allow GO-Invest to properly account for the value of concessions it facilitated.
The forensic auditors added, “GO-Invest was unable to provide any evidence that the audit occurred, consistent with the information gathered from Mr. Deodat Sharma, Auditor General. The absence does not allow GO-Invest to properly account for the value of concessions facilitated by the agency nor does GO-Invest have an internal unit to monitor the amount of concessions given.”
The auditors also expressed concern over the fact that GO-Invest is operating without an Internal Audit Department or Audit Charter. As a consequence, the auditors said that GO-Invest is not prepared to improve its governance, risk management, provide checks and balances and monitor and implement internal controls.
They said, “This is a very serious shortcoming, as GO-Invest has critical data that highlight potential investments in Guyana and recommends billions of dollars in concessions to be approved by the Finance Minister.”
Furthermore, the forensic auditors also criticized GO-Invest for failing to do an annual assessment of concessions which it has facilitated.
The auditors said that this annual review is to ensure that investors who receive concessions use it for the purpose intended.
But instead of carrying out this important function, GO-Invest watched on as investors breached their Investment Agreements for years.
The forensic team further emphasized that GO-Invest failed to sanction any such investor, by not properly renewing the Investment Agreement. The auditors then gave a breakdown of how certain companies blatantly breached their Investment Agreements.
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, BaiShanLin 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 BaiShanLin’s real objective was to export raw lumber. Nevertheless, BaiShanLin still benefited from concessions totaling $1.8 Billion during the period under review 2011-2015.
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. The concessions granted to Diamond Tropical Wood Products Inc. totaled more than $60M.
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, Essequibo. As at July 31, last year, the wood processing facility was not engaged in any significant production of wood products.
The forensic audits determined that an examination of the files of just those few investors 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 investors amounted to more than $1 billion.
The aforementioned took place during the time of former CEO and Chairman of Go-Invest, Keith Burrowes.

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

Latest News