The United States Embassy here says it continues to encourage partnerships between businesses in both countries and recommends due diligence in the selection process.
The embassy offered these invited comments in the context of a recent Sunday Stabroek report on US company, RemoteMD LLC, filing for bankruptcy in the US after incurring debts of over $100 million to local companies. One local company, Eureka Laboratories, is preparing to take legal action to recover millions owed by RemoteMD LLC. When Stabroek News reached out to the Embassy for comment, the Embassy responded, saying it has a policy of not commenting on specific enquiries, but that “we do work hard to ensure companies on both sides have productive engagements and comply with all laws while also paying all outstanding debts.”
The embassy Public Diplomacy Office added ”We recommend that all companies, Guyanese or American, do their due diligence when selecting business partners”.
In response to questions from the Sunday Stabroek, it said: “The embassy cannot comment on legal matters or suggest recourses, but strongly encourages the prompt resolution of any such matters.” As the oil and gas sector here continues to expand, the embassy said a burgeoning number of US companies are expressing interest and that a number of companies had turned to it for assistance.
In February of 2020, two months after oil production began in the offshore Stabroek Block, the embassy’s then Political and Economic Affairs Chief, Alexandra King Pile, had said that the embassy had pending enquiries from over 100 United States-based businesses about setting up operations in Guyana. The following year, remote medical services provider, RemoteMD applied for permission from the Environmental Protection Agency (EPA) to set up a medical lab in Kingston, Georgetown, as it sought to expand its services.
Case-by-case
Asked about advice given to American companies coming to do business here, the Embassy said that it encourages those companies to review Guyana’s Commercial Guide.
“The embassy works with companies interested in doing business in Guyana on a case-by-case basis, assisting as needed. The embassy is proud of the work done by many reputable companies and the development of joint ventures and partnerships. American companies are encouraged to review Guyana’s Country Commercial Guide,” the embassy said.
In listing market opportunities here, the healthcare industry is identified along with renewable energy, ICT and agriculture. “The GoG is investing heavily to improve its hospital infrastructure and telemedicine facilities. Professional services in the sector, supply chain management and telemedicine are promising prospects. Some public private partnerships have been developed to address healthcare issues and improve the quality of care offered,” the embassy stated in its overview of best-prospect sectors, major infrastructure projects, significant government procurements and business opportunities.
Due diligence
To companies wanting to enter the market in Guyana, the embassy emphasized visiting first and conducting strict due diligence.
“Companies interested in entering Guyana’s market are encouraged to visit the country on an exploratory mission as business is culturally done on a face-to-face basis. Firms are encouraged to conduct rigorous due diligence on any prospective partners and seek out reputable firms with a proven track record. A local partner can expedite the startup phase of a business, assist with regulatory applications and approvals, and facilitate a speedier transition into the market,” its market entry strategy guide states.
“Furthermore, in the oil and gas sector in some instances partnering may be viewed as mandatory to comply with the LCA (Local Content Act). Guyana’s business community is undergoing a rapid transformation due to the burgeoning oil and gas industry and joint ventures, partnerships, exclusive arrangements, and franchising agreements are becoming common business practices. The creation of special project vehicles is also becoming a popular arrangement for firms entering Guyana’s market…”
That stringent due diligence be conducted is echoed by Guyana’s local private sector bodies and government.
The Georgetown Chamber of Commerce and Industry (GCCI) has also warned businesses of the need for due diligence checks before granting credit and says that the lodging of security should be looked at.
“I would advise other companies doing business with companies to limit their credit risk exposure with those companies, especially without any bank guarantee or any kind of security or things like that to hold,” its President, Timothy Tucker, told the Sunday Stabroek in a recent interview.
“We see many companies coming that are doing business with local companies that require us, even when we are doing work for government agencies, we have to provide bid securities and these kind of things. I believe it is something we should start looking for at our end when giving somebody credit. We must have some kind of compliance in terms of a bank guarantee or a letter similar to what is required in the tendering process. It is important that we look at doing business broadly. Not because it is a foreign company we run and readily give them credit without any history,” Tucker added.
With more foreign companies expected as the oil sector grows, the GCCI President said that the incorporating of limited liability entities should be thoroughly assessed and the Local Content Secretariat should be vigilant in ensuring that locals are not used as third-person fronts for jobs they themselves can undertake. Pointing to the case of the Louisiana, United States offshore medical provider, RemoteMD LLC, Tucker said that the situation was troubling. “It is troubling and brings us back to a number of things that include the capacity of locals to undertake the same jobs the foreign companies are awarded, and the whole issue of bundling that puts our companies at a disadvantage, “ he said.
RemoteMD LLC filed for bankruptcy on the 18th of October last year and has asked the Eastern District of Louisiana Court to grant it Chapter 11 privileges to reorganize and keep its business alive. But without the existence of similar legislative privileges in Guyana, local creditors are unsure how they will be able to recoup their debts as they are equally unsure what assets RemoteMD LLC possesses in Guyana.
Guyana’s Investment Act provides that, “in cases where disputes arise among investors or with the Government of Guyana, the following avenues are
available if the matter is not amicably settled through consultation or mediation: Submit the dispute to arbitration under the Arbitration Act, refer the matter to the competent courts in Guyana. Submit the matter to the International Centre for the Settlement of Investment Disputes (ICSID) of which Guyana is a member.” Eureka chose the Courts.
RemoteMD came to notice here after Stabroek News reported that it had been charging what appeared to be exorbitant amounts for COVID tests.
At the height of the COVID-19 pandemic in 2021, RemoteMD had billed 15 oil services workers US$350 ($70,000) each for a rapid COVID test, far higher than what the local labs were charging and which raised questions again over the expense claims that ExxonMobil and its contractors will likely make as cost oil. An invoice seen by Stabroek News showed that RemoteMD submitted a bill to Gaico Construction on February 19 of 2021 for 15 rapid tests totaled US$5,250 (just over $1 million). When the company was contacted by Stabroek News, it had justified the cost then, even as it explained that by April of last year it was charging between US$65 ($13,000) and US$85($17,000) per test. In its justification of the US$350 charges, RemoteMD had explained then that it outsourced all lab services to local labs.
Most of the monies now owed by RemoteMD are for the very services that were outsourced. This newspaper was unable to verify if RemoteMD was paid by the oil and gas contractors, and if it was, the question remains why those companies that provided the services were not paid.
The labs used for COVID-19 testing in 2021, according to a RemoteMD representative, were Eureka Labs and Sheriff Medical Services. “We pay the labs in Guyana just about US$50 to US$60 for each test. If we have to offshore, it is about US$50 to US$100,” the representative had explained then to Stabroek News, pointing out that while the charges may seem exorbitant when compared to local labs, the company has an agreement that their tests be expedited and thus have to pay for those services. His explanation raised questions about why COVID-19 testing required an overseas-based broker like RemoteMD and why ExxonMobil’s contractors were not going directly to local labs for testing.
