Logging company Baishanlin owes the Guyana Forestry Commission (GFC) tens of millions of dollars and has made no effort to pay despite being requested to do so.
Stabroek News understands that the troubled logging company owes at least $79 million to the GFC and while the GFC Board and the GFC itself had written the company regarding the debts, no-follow up measures have been taken to ensure that they are paid. According to a GFC source, for the now-expired State Forest Exploratory Permit SFEP 01/2013, penalties for 2014-2015 were calculated as $29.7 million of which only $3 million was paid by April 5 this year.
Stabroek News was told too that that for the seven forest concessions controlled by Baishanlin, the company owes $40.8 million. This newspaper was told that after Baishanlin representatives met with some members of the GFC Board in early April, a formal demand for completion of all outstanding payments by April 30th was sent by the GFC Board to Baishanlin. The GFC also sent another letter asking that the payments be made by April 29th.
Stabroek News understands that Baishanlin, in its response to the GFC Board, asked for a reprieve of three months or for the GFC to take over two logging skidders in lieu. How-ever, in May, the firm’s attorneys wrote to the Guyana Revenue Authority (GRA) seeking the return of vehicles seized in April and also accused the government of breaching treaty obligations with China.
The company had accused the David Granger administration of seeking to “cripple” its investment in Guyana and said its actions were “unlawful.” Baishanlin, in its letter, said it wanted 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.
Shortly after, the GFC wrote to Baishanlin on May 24, rejecting the company’s proposal regarding the three months’ reprieve or for the GFC to take over two logging skidders in lieu. The GFC demanded full payment by June 13th.
Stabroek News understands that Baishanlin has not replied to the GFC nor paid the debt. The GFC has also not made any attempt to take legal action to recover the unpaid debt as it threatened in its May 24th letter. This newspaper was told that almost all the logging companies are allowed to be in debt to the GFC for huge amounts and for many years. The GFC audit report had made no mention of this and Stabroek News understands that there are significant debts still owed to the GFC.
Stabroek News had previously reported that officials from Long Jiang Forest Industries Group are expected in Guyana this month for a “fact-finding mission” as it seeks to fully take over the operations of Baishanlin. Long Jiang Forest Industries Group has already acquired 55 per cent of the shares in the troubled logging company and intends to fully take over the firm this year. Minister of State Joseph Harmon had made the disclosure in April following an uproar over a photo of him and officials of Baishanlin in a private jet in China. 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. However, they did not come and are now expected this month.
Baishanlin has failed to fulfil several commitments made under its investment agreement here. Since coming here in 2006, it announced big plans in various sectors for Guyana but concerns have been raised by some analysts that its primary interest is logs for export, with little downstream processing. The company has failed to live up to commitments to do value-added processing despite benefiting from billions of dollars in tax concessions. Several of the company’s projects have ground to a halt as it faces financing difficulties.
Earlier this month, Minister of Natural Resources Raphael Trotman had told Stabroek News that he was waiting to be advised by the Board of the GFC on the way forward for Baishanlin. Asked about the next steps for government in relation to the company, Trotman said he is awaiting a number of reports.
“At this time I am unable to say what government’s position is and will await having both a report from GFC and on the Long Jiang Co’s visit as well as the views of the ministries of Finance and Business before taking a report to Cabinet for its consideration and guidance on the way forward,” he said.
According to GFC data, Baishanlin’s TSAs include Haimorakabra Logging Co Inc covering 52,896 hectares and Sherwood Forrest Inc covering 167,075 hectares of forest.
Further, Baishanlin is the majority shareholder in Kwebanna Wood Products Inc, Puruni Woods and Wood Association Indus-tries Co whose TSAs cover 221,108 hectares of forest in total. This newspaper understands that the GFC Board has taken a decision to terminate these ventures.
Recently, President David Granger said that Baishanlin is in the process of transformation. “It will disappear as a corporate entity and that will bring an end to any controversy involving Baishanlin as a company. A new entity will take it over and we will have to renegotiate…. Baishanlin is coming to an end. I cannot say what the situation is in China but I believe Baishanlin is undergoing some corporate transformation within China itself,” he said.
