Guyana is getting shafted

Mar 18, 2019 Features / Columnists, Peeping Tom

The multinational corporation, both in the periods before and after Independence, has been the symbol of that exploitation. Bookers in sugar, Reynolds and AlCOA in bauxite defined the exploitation of Guyana’s natural resources. Later there was OMAI, Today there is BOASI and RUSAL in the bauxite sector and a number of powerful large scale mining firms in the gold industry. Tomorrow it is going to be the oil companies. The age of multinational corporations is far from ended.
Guyanese have become inured to exploitation. They have been fed the idea that it is only through this exploitation that wealth can be created. They have been fooled. It is one thing to believe that the foreign multinational corporation will bring investments and jobs; it is another thing to be complicit in allowing foreign multinationals to bleed the country dry.
In the 1970’s, Burnham began to fear the rise of Black Power in the Caribbean. He was petrified by what he saw in Trinidad and by the Rodney riots in Jamaica. He felt that the discontents would lead to social unrest since the old relations of production had continued after Independence.
Burnham calculated that unless there was a radical change, he would face a backlash from the Black Power Movement. As such, he moved to radicalize the economy by nationalizing the bauxite and sugar industries. The results was mass mismanagement of these cornerstone industries. Jagan supported the nationalization of the commanding heights but for ideological reasons.
Even though Burnham was critical of foreign private enterprise in Guyana, he began secretly negotiating with foreign companies to extract gold in Guyana. One such investment which had its origins just before he died was Omai Gold Mines.
When the deal was made public, there was both outrage and hope. There was shock at the time about the pitiful royalties which were negotiated and the overly generous tax holiday and other fiscal concessions which were given to the Canadian company.
However, there was singing and dancing. The eyes of Guyanese lit up when they heard how much gold would be extracted. They wrongly assumed that the investment would make every Guyanese a millionaire overnight.
Omai never delivered the riches which people expected. Like most foreign multinationals, past and present, this company extracted millions of tonnes of ore, exported hundreds of millions of US dollars in gold bars enjoyed tax holidays and massive fiscal concessions, yet never declared a profit throughout the entirety of its gold mining production. And the only real benefits which Guyanese got from the billions which were forgone in taxes were about 1500 jobs and the taxes which these workers paid.
The PPP in 1992 inherited a bauxite industry on its knees. After bailing out the industry to the tune of billions of dollars, it opted to privatize the industry since local management could not stem the losses.
Russian and Chinese multinational companies became the new owners Guyana had come full circle from nationalization to de-nationalization.
As was reported in yesterday’s newspaper, RUSAL, now caught up in an industrial dispute, enjoys generous fiscal concessions. The local entity, the Bauxite Company of Guyana Incorporated (BCG) was exempt from the payment of income, corporation and property taxes for its first five years. It was also exempt from the payment of withholding taxes on interest, dividends and lease payments for the entirety of its life. It also enjoys exemptions from import taxes on its operational equipment. This means it does not pay any customs duties, and taxes including purchase taxes on equipment, machinery, motor vehicles and supplies.
These tax benefits when aggregated would amount to billions. And what does Guyana get from it? It gets a few hundred jobs for workers.
The common denominator in all of these deals with multinationals is that the foreign companies cart out Guyanese riches in exchange for providing a few jobs. It is a most lopsided arrangement.
What is compounding the problem is that these carte blanche concessions can be easily abused. The import a concessions, for example, are uncapped. They are not linked to either the number of jobs created or the volume of ore produced. As such, the government has no control on the amount of concessions which the company can claim.
Forget about the corporation taxes. There is nothing to get here because the companies are not declaring any profits.
Guyana is being recolonized by large multinational corporations. What really has changed since Independence?

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