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US flags lack of oversight in mining sector joint ventures
…Finds such arrangements carry high level of risk
The United States Department, specifically its Bureau of Economic and Business Affairs, has flagged the lack of oversight for joint ventures in Guyana’s mining sector.
Chartered Accountant, Chris Ram
GGMC Commissioner General, Newell Dennison
In one of its latest reports, the Department pointed out that restriction on foreign ownership of property exists in the mining sector for small-and-medium-scale mining concessions. But foreign investors interested in participating in the industry at those levels may enter into joint venture arrangements with Guyanese nationals, under which the two parties agree to jointly develop a mining property.
It was at this point that the US Department stressed that these arrangements are strictly governed by private contracts, and there is no oversight of them by the sector’s regulatory agency, the Guyana Geology and Mines Commission (GGMC). The US State Department said that this type of relationship carries a high level of risk. The U.S. Embassy also sought to strongly encourage investors to exercise proper due diligence when exploring their options in this regard.
Commissioner General of the Guyana Geology and Mines Commission (GGMC), Newell Dennison acknowledged that while there is some level of risk involved there is a mechanism in place for reporting.
Dennison said, “We try as much as possible to treat such transactions diligently. We have certain obligations and we try as much as possible to ensure the transactions between the two comply with this and that documentation brought to us is authentic. So from that perspective, we have a level of oversight. There is also a level of reporting that has to be done by those involved in joint ventures. But indeed, we have to make sure the companies involved in commercial arrangements do report properly and are honouring their obligations under the law.”
JOINT VENTURES
Earlier this year, Chartered Accountant Chris Ram sought to raise awareness in harnessing the advantages of joint ventures while avoiding its pitfalls.
Ram said that companies interested in joint ventures should always ask certain questions. These include, “Do they have assets and where are these assets? Can I deal with these people and are they too big for me? Are they just trying to use me and then leave? Is this person the key driver in the entity…?”
The Chartered Accountant said that these questions are helpful guides in ensuring that major pitfalls are avoided.
Furthermore, the Chartered Accountant stressed that in any partnership arrangement one chooses, a proper shareholder’s agreement, a trusted auditor, and a strong partnership /joint venture agreement are necessary.
Ram also insisted on the need for joint partnerships to be characterized by proper record keeping. In this respect, he said that companies should employ the use of international financial reporting standards. (KIANA WILBURG)
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