Minister of Natural Resources Raphael Trotman yesterday defended government’s continued engagement with controversial logging company Baishanlin saying that a “do wuh you want with me” scenario is not happening and the firm will be taken over by a Chinese state-owned company.
Ask yesterday why, given the history of the company which has not fulfilled major commitments to do value-added processing despite benefitting from billions of dollars in tax concessions and in light of it being under investigation for tax evasion, government was continuing to engage with the company, Trotman said the firm could not be ignored altogether.
It was pointed out that Minister of State Joseph Harmon met with representatives of the firm during a recent trip to China and Trotman said that specific engagement had to do with acquiring a new buyer or someone to take over Baishanlin.
“An engagement to take over, an engagement to continue with are two completely different things,” he said while adding that a “do wuh you want with me” scenario is not happening. According to Trotman, last year, he had reported that the Chinese ambassador had said that Baishanlin had applied for financing, that the China Exim Bank was looking into refinancing for the company and the State of China had acquired more than 50% of Baishanlin. “I think that has been borne out by a Chinese owned company, owning now, controlling interest,” he said.
Trotman suggested a scenario where “a rogue company is in default and government has to step in. Does it ignore that company altogether” he asked saying that workers, an agreement and other things are involved.
“It is inevitable in a transition from old to new that you have to have some dealings with the company,” he emphasised.
He said it is not business as usual at Baishanlin and there has been no shipping of logs because he had placed a restriction on this since last year.
He also said that the Guyana Revenue Authority (GRA) has written an assessment and made a demand for taxes owed. The GRA has moved to take what equipment they could find, he said.
According to Trotman, the situation is at a point where there will be a new entity which could perhaps breathe some life into the project by putting up money and fulfilling the commitments made such as building a value-added factory.
The “new entity” is the Long Jiang Forest Industries Group, a state-owned company that had acquired 55 percent of the shares in Baishanlin and which intends to fully take over the company this year. Following an uproar over a photo of Harmon and officials of Baishanlin in a private jet, Harmon had said that Vice Director of the company, Wong Dong Xu, in the presence of officials of Baishanlin, gave the assurance that the company’s officials will be in Guyana by May 2016 to complete due diligence for the takeover, and to satisfy and expand on the obligations of Baishanlin to Guyana.
Details of the company’s plans have not been made available. It is not clear when Long Jiang Forest Industries Group acquired majority shares in Baishanlin. Further, at various times in the past Baishanlin officials had indicated that China, through various State-owned companies have had some amount of shareholding in the company so in effect, China would have had a role in the company not fulfilling its obligations here.
As it relates to the majority shareholder, in 2014, China had halted commercial logging by state firms in forests in its Heilongjiang province and Long Jiang Forest Industries Group was one of the firms affected. The UK Guardian newspaper had reported that Heilongjiang province is home to much of the country’s timber industry. According to the Guardian, the ban in Heilongjiang affects two important state-owned logging firms, Long Jiang Forest Industry and Daxing Anling Forestry Company with the two companies together managing 18.45 million hectares of forests, covering 39% of the entire province of Heilongjiang.
Meantime, Trotman said that it “is a matter of opinion” that Harmon’s intervention for the GRA to pause its move to seize two of Baishanlin’s vehicles in the tax evasion case, was inappropriate. He said that he believed that the context in which it was done has been explained.
A forensic audit of the Guyana Forestry Commission (GFC) had revealed that during 2012-2015, the PPP/C government had granted Baishanlin concessions amounting to $1.8 billion despite its failure to fulfill obligations under its investment agreements. Forensic auditor Anand Goolsarran who made the finding recommended that the Government of Guyana consider terminating the investment agreements with the company and recover the value of the fiscal concessions granted to it.
Asked about moving forward with the recommendations, Trotman said that the audit report is with the GFC board and it is for the board to advise the minister on the way forward and he will not interfere. “I am awaiting and have tasked the board with determination of these and similar matters that is pulling back on some of the concessions and even termination of contracts,” he said.
Trotman added that termination lies within the bosom of the Ministry of Finance because the investment agreement was inked between the former Minister of Finance and the company so coming out of that agreement, “forest concessions were given so even if the concessions are taken away, the agreement is still in existence.” It is for the Finance Minister to make that determination of termination, he emphasised.
He noted that the GFC board is actively reviewing all concessions and he expect a full report before the end of the month.
