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Foreign companies finding new ways to cheat Local Content Law
Minister of Natural Resources, Vickram Bharrat (Foreign companies finding new ways to cheat Local Content Law)
Kaieteur News- Minister of Natural Resources Vickram Bharrat has disclosed that foreign companies operating in the oil and gas sector continue to find new ways to sidestep Guyana’s Local Content Law which was enacted in 2021 to safeguard benefits for Guyanese.
Speaking at the Private Sector Commission’s second annual Local Content Forum, Bharrat addressed the escalating tactics some companies are employing to meet local content requirements on paper while continuing to channel the benefits outside Guyana, through deceptive practices.
The Local Content Act currently features 40 areas for services carved out for Guyanese businesses including rentals, supply of goods, accounting, catering and welding. Foreign companies wanting to operate within those areas are required to partner with local companies. However, the law stipulates that the Guyanese partner must have 51% or more beneficial ownership, among other benefits.
During his address, the minister acknowledged ongoing concerns from the local private sector regarding gaps in the legislation. He talked about how certain companies use strategies such as “rent-a-citizen” or “fronting,” where foreign entities rely on locals as superficial fronts to comply with local ownership laws.
“We do know of some of the loopholes…” Bharrat said adding that “fronting, this is something that I think we have managed it well. I think we have managed it well, so much so that I think some companies are getting smarter by the day too.”
He underscored that his ministry, through the Local Content Secretariat always get feedback and/ complaints about new mechanisms foreign companies use to flout the local content requirements.
However, companies have grown more sophisticated in their methods, according to Bharrat, evolving from the “blatant” use of front men to tactics like creating shell companies and partnerships with newly naturalised citizens.
“So, the persons who are guilty of that realize that we have caught up with that one… that one can’t work anymore,” Minister Bharrat stated.
The minister added that the Secretariat, has observed new approaches. “So, there are different methods now, naturalization of people who’ve been in Guyana and making them partners, establishment of shell companies with no assets or no liquidity,” the minister said.
Notably, to counter these evolving practices, Bharrat credited the Local Content Secretariat, led by Dr Martin Pertab, with identifying and addressing suspicious activities. “I think Martin and his team… has been doing a wonderful job in identifying these issues when they occur and try to nip them in the bud,” he affirmed.
Moreover, the issue had previously prompted a strong response from the government in June when the Ministry of Natural Resources issued a public statement warning against such practices.
The statement explained that the Local Content Secretariat had intensified its monitoring efforts of ensuring compliance with the legislation.
“This practice undermines the objectives and spirit of the Local Content Act, which aims to ensure that the citizens of Guyana benefit meaningfully from and participate actively in the nation’s natural resources sector,” the ministry declared.
(Foreign companies finding new ways to cheat Local Content Law)
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