Dear Editor,
Vivek Persaud writes in his letter captioned “There is ansolutely no evidence of transfer pricing of timber” (07.01.11) in terms which are eerily reminiscent of the export log industry in Papua New Guinea (PNG) at the time of the judicial inquiry (Supreme Court Judge Tos Barnett’s 1987-9 “Commission of Inquiry into Aspects of the Timber Industry in Papua New Guinea”). Transfer pricing was a major issue in that inquiry. The lawyers focused on the unexplained discrepancies between declared export prices (FOB) and the recorded prices landed in the importing countries, and demonstrated that transfer pricing had indeed occurred over a long period and on a massive scale. The deputy Prime Minster was found guilty on 76 counts for his dealings with expatriate logging companies while he was Minister for Forests. Other politicians and civil servants were also indicted on many counts.
Here, as in PNG, an apologist for the timber industry seeks to distract by offering non-comparable data concerning timbers which are less likely to be subject to transfer pricing. Mr Persaud refers to his “solid presentation” and “extensive analyses” but unfortunately those have not been published. My analyses published by Stabroek News and other papers have concentrated on purpleheart, the fine furniture and flooring timber which is being overcut and exported massively as unprocessed logs. Although purpleheart generally comprises less than 1 per cent of the standing volume in Guyana’s forests, it comprised 12 per cent of the log volume produced during January-October 2006 (41,000 cubic metres out of 331,181 cubic metres total) and of that 41,000 cubic metres no less than 87 per cent was exported as unprocessed logs. The numbers and proportions were very similar for all of 2005. These are data from the Guyana Forestry Commission.
The Minister for Forestry promised at his press conference on 8 December to institute an inquiry into log exports, although not a judicial inquiry as in PNG. Minister Robert Persaud also promised to make data available for this inquiry. Almost immediately, that promise was countermanded by the Commissioner of Forests, in his refusal “GFC not releasing cargo details” Stabroek News January 3, 2007, page 12. Vivek Persaud appears also to seek to prevent debate, on a matter which may involve monthly losses to Guyana of US$ 3-5 million in transfer pricing. Over 10,000 cubic metres of prime logs left just one log pond of one Asian-owned logging company in December 2006; landed in China, those logs would be worth about US$ 5.25 million.
This is a matter for public concern.
Why is Vivek Persaud so anxious to forestall a national enquiry into transfer pricing of timber logs? Anyone who is truly interested in the national public good would welcome Minister Persaud’s stated commitment to launch a full impartial enquiry into transfer pricing. I await the announcement of Minister Persaud’s enquiry.
Yours faithfully,
Mahadeo Kowlessar
