Attorneys for controversial Chinese logging firm Baishanlin have written to the Guyana Revenue Authority (GRA) seeking the return of vehicles seized in April and have accused Georgetown of breaching treaty obligations with China.
The company has accused the David Granger administration of seeking to “cripple” its investment in Guyana and said its actions were “unlawful.” Baishanlin wants Georgetown and Beijing to open discussions with a view to resolving the issue under the ‘Agreement between the Government of the Republic of Guyana and the Government of China on the Promotion and Protection of Investments’ which was inked between the two countries in March 2003. Up to press time, there was no reaction from the Granger administration on the Baishanlin letters.
Meantime, the letters signed by attorney C.V. Satram, also revealed that the investment agreement under which Baishanlin received billions of dollars in concessions but failed to fulfill major commitments, was renewed by the PPP/C administration in January last year for a further three years. The firm has been operating in Guyana since 2006.
Baishanlin has long been under the spotlight for exporting vast quantities of logs and benefitting from concessions despite its failure to fulfill its obligations including setting up a wood processing plant. It has been accused of focusing only on the export of logs while making lofty promises of value-added production. The previous PPP/C government had been accused of facilitating this.
This year, Baishanlin was at the centre of a scandal surrounding Minister of State Joseph Harmon who had intervened on behalf of the firm to halt the seizure of two luxury vehicles by GRA which was seeking to do so because the company failed to pay import taxes on the two vehicles. Baishanlin remains under investigation for tax evasion. Further, the company is set to be taken over by the Long Jiang Forest Industries Group, a state-owned company that had acquired 55 percent of the shares in Baishanlin and which, Harmon had said, intends to fully take over the company this year.
It is not clear what impact Baishanlin’s actions will have on the proposed takeover.
The company, via its lawyers Satram & Satram, wrote four letters to complain of the actions being undertaken by the government. It wrote to the GRA Commissioner-General Ingrid Griffith, Minister of Foreign Affairs Carl Greenidge, the Ambassador of China to Guyana Zhang Limin and UN Secretary General Ban Ki-Moon. The letters were copied to President David Granger.
In the letter to Griffith dated May 16th, 2016, the firm called on her to release and return to the company all property which has been seized from it or has been possessed or confiscated within seven days. “The investment agreement under which concessions were granted has not expired as you alleged in your letters. It was renewed in January 2015 for a further period of three years,” the letter said.
It asserted that the seizure of Baishanlin’s property, which the GRA has undertaken to enforce a disputed tax liability, is unlawful and the imposition of it triggered a dispute between Baishanlin and the Government of Guyana (GOG) which is to be dealt with under the March 2003 agreement between Guyana and China.
“The Revenue Authority’s action is in disregard of the international obligations of Guyana under the Agreement with China,” Satram declared.
Meantime, in a letter to Greenidge and Limin, Baishanlin called upon the officials to commence diplomatic consultations to resolve all disputes between the company and the GoG.
It said that a dispute has arisen between Baishanlin International Forest Development Inc and the GoG and there are treaty obligations between China and Guyana under the March 2003 promotion and protection of investments agreement, which have been triggered by the dispute.
“This is a matter of concern not only to the company but to all investors who wish to undertake investment in Guyana but the concern of the company in particular is heightened because it has invested heavily in Guyana in reliance on the agreement which in the absence of diplomatic resolution allows the disputes to be settled by an arbitral Tribunal under Article 9 of the Agreement,” the letter said.
“The company hereby requests pursuant to Article 8 of the Agreement that diplomatic channels be opened to allow for consultation in the hope that a resolution of the dispute between Guyana and the company may be resolved within six (6) months of the date hereof,” it said.
According to Baishanlin, it has and continues to suffer severe and burdensome losses and “faces action by the State to cripple its business in Guyana.” It said the matter is extremely urgent and urged that a response to the request will be made with the treaty obligations of Guyana and China in mind.
The letter had said that subsequent to the execution of the agreement, Baishanlin started investing enormous sums of money in Guyana in the development of forest products.
“The government under which the investments commenced has changed after a general election in Guyana on the 11th day of May, 2015. The new administration has embarked upon a course of activities designed to cause a forfeiture of the company investment and to cripple its business in Guyana,” the letter to Greenidge and Limin, said.
It said that the GOG acts through several agencies and instrumentalities but all the complaints being made by Baishanlin against the Government are the result of state action “on account of which the company is a victim.”
It said that the action of the government commenced with the imposition of tax liabilities in respect of matters in which duty free concessions were granted to Baishanlin by the previous government. “The new government seeks to dismantle the concessionary structure, and has commenced to seize property which is under the ownership, management and control of the company. In pursuance of its tax liability, which the company claims to be unlawful, the government through its Revenue Authority has embarked upon seizures to enforce the tax liability which is denied and is strongly contested,” the letter asserted.
“The investment agreement under which the concessions were granted has not expired. The government through other agencies has made further monetary demands against the company with intent to seize or deny entitlements to licences and/or permissions over forest areas,” it said.
Baishanlin alleged that lawful procedures under domestic law have not been followed but said that all disputes between it and Guyana are the subject of the March 2003 Agreement which, it said, is on record with the United Nations as a treaty between China and Guyana.
The intent of the agreement is that disputes if any when they arise are to be settled by diplomatic efforts and if no resolution is reached within six months the dispute can be referred to arbitration, the company noted. It said the GRA in complete disregard of the agreement has begun to seize Baishanlin’s property and to cripple its business.
Meantime, in a letter to the UN Secretary General, Ban Ki-moon in which it referred to the breach by Guyana of its treaty obligations under the agreement between “the Government of the People’s Republic of China and the Government of Guyana,” Satram reported that the GOG has commenced operations “beginning with the seizure of property and the threatened loss to forfeit the company’s investments and to cripple its business in Guyana.”
He noted that under the Agreement, disputes are to be settled after consultations through diplomatic channels and in the event of failure by arbitration. The letter pointed out that Baishanlin was established as a Chinese investment with funds from China.
“The Government of the Republic of Guyana has commenced action in breach of the treaty and a call has been made upon the Minister of Foreign Affairs of Guyana and His Excellency the Ambassador of China to commence diplomatic consultations to settle the disputes,” the letter said.
“I shall be grateful if action can be taken to remind the Government of Guyana and China of their obligations in this regard. The matter is causing severe losses to the company I represent but it may extend to create impediments to foreign investment in Guyana to the prejudice of the national interest when it becomes known that treaty obligations are not honoured here.
The company represents Chinese investments in Guyana and Guyana’s relationship with China is threatened by these events,” Satram informed the UN Secretary General.