Latest update December 25th, 2024 1:10 AM
Apr 01, 2017 News
In the past, many investors were allowed to offer up dazzling promises in exchange for premium cuts of Guyana’s resources and millions worth in concessions.
However, Chief Executive Officer (CEO) of the Guyana Office for Investment (GO-Invest), Owen Verwey, is categorically stating that there is no place for such behaviour from investors in Guyana’s future.
Verwey told this newspaper yesterday that there are currently checks and balances to ensure that investors will be held accountable for not only the concessions they were granted, but also the promises they make.
Verwey reflected on the fact that companies such as the controversial Baishanlin Forest Development Inc. made Guyana wait in vain for 10 years for a promised wood processing factory. Throughout those years, the Chinese logging company was allowed to rule the roost through the wanton abuse of the nation’s forestry sectors and with the aid of billions worth in concessions.
The GO-Invest CEO insists that going forward, Guyana will be protected from such abuses.
“The Investment Agreements will clearly state what the requirements are and the necessary actions that would be taken upon the failure of fulfilling obligations under the Agreements. I believe that there is a need for constant monitoring and at a minimum, annual monitoring of Investment Agreements and how investors are progressing with their agreed obligations or promises. We have this sort of monitoring in place at the moment.”
He continued, “If an investor fails to deliver, we would try understand at first, why this is the case before talking about punitive measures. We would even see if there is anything we can assist with, but barring such circumstances, then we can take action.”
According to its rules and regulations, 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.
But instead of carrying out this important function, GO-Invest in previous years, 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 their Investment Agreement, 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 totalling $1.8 Billion during the period under review 2011-2015.
In another instance, the forensic audit report cited Diamond Tropical Wood Products Inc. which 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 which was to establish and operate a wood processing facility. The concessions granted to Diamond Tropical Wood Products Inc. were over $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, Potaro Siparuni in Region Eight. As at July 31, last year, the wood processing facility was not engaged in any significant production of wood products.
The forensic audits said that an examination of the files of just those four investors – Baishanlin 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 investors are worth more than $1 billion.
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