Coming after years of serious questions about Baishanlin’s conduct here, the decision last week by the Guyana Forestry Commission (GFC) to repossess the Chinese company’s forestry concessions will be seen as a positive development in ensuring the accountability of foreign investors and the judicious development of the country’s resources.
Baishanlin, whose business here began at the start of the last Jagdeo term, is one of a number of companies that were able to avoid scrutiny and accountability during the former PPP/C government’s term in office. It gained questionable access to several Timber Sales Areas with the apparent sole objective of exporting as many logs to China as it could while failing to adhere to its investment commitments or its obligations relative to the forest concessions awarded to it. If value-added forestry here was not feasible then the company should not have been allowed to enter the natural resources sector as it repeatedly failed to deliver on its investment promises while ambitiously eyeing the mining and housing sectors.
This underlines again the manner in which the then Jagdeo administration prosecuted investment decisions with a range of companies including Baishanlin and the Indian company Vaitarna. The decision to only now repossess the concessions also highlights how the same GFC indulged investors like Baishanlin and allowed it and other companies to prodigiously export logs while defaulting on investment schedules and engaging in unacceptable practices.
Given the reality that the Baishanlin decision can become a delicate matter for Guyana-China relations and the country’s investment climate, both the government and the GFC should lay out to the public a detailed case underpinning the decision to reclaim the concessions. This should entail the release of the investment agreements signed between the company and the government/GFC and an explanation of the breaches. There should also be detailed information on the annual investment commitments by the company beginning in 2006 and actual amounts funnelled into its operations. It would also be important for the public to know the number of jobs created for locals per annum. Also of great interest would be the annual amounts of logs it exported, the species involved, the price quoted to the GFC and to which country the logs went. There should also be a detailed examination and calculation of the fiscal concessions awarded to Baishanlin each year and whether these could have been justified considering its broken investment promises and the fact that it was mainly exporting logs. In only four years, 2012 to 2015, Baishanlin secured $1.8b in fiscal concessions under the PPP/C government. How can this be justified?
There must also be a rigorous examination of shipping documents to ascertain whether there is any sign at all of transfer pricing on exports to the China market. There is also the matter of the $80m in debt to the GFC and why this wasn’t paid before. Baishanlin is perfectly entitled to pursue its rights here but by the same token it must be prepared to deliver the requisite information on its operations.
The APNU+AFC government itself is not unscathed from shenanigans surrounding Baishanlin. Its Minister of State, Joseph Harmon quite improperly interceded on its behalf with the Guyana Revenue Authority and then proceeded on a trip to China where he had contact with Baishanlin officials. On his return to Guyana, he said that he had been put in contact with new Chinese investors who would be taking over the operations of Baishanlin. These investors were due in May this year but are yet to be seen and this is one of the factors behind the withdrawing of the concessions. There is a most unsavory feel to this episode with the Minister and President Granger’s government needs to do more to ensure that the conduct of its senior officials in matters like these is beyond reproach.
Baishanlin must serve as cautionary tale for this government on how to conduct relations with investors. No matter the investor, there must be a straightforward agreement that is tendered to Parliament and the wider public setting out commitments and the financial arrangements. There must be regular evaluations to determine whether the company is fulfilling its obligations and where it isn’t the relevant penalties should apply. Companies like Baishanlin should not be allowed to exploit the country’s resources without being held fully accountable.
