The sale of the Casique Hotel has been put on hold along with all other investments here controlled by Chinese logging company Baishanlin, pending talks between the company’s potential new owners and government, Chief Executive Officer Hungbo Chu says.
“No, the hotel will wait on what government decides and what our new owner decides, if they will come and use it. We won’t sell right now,” Chu told Stabroek News last week.
“The new owner and China Bank and our partner, that owns 51% shares, are meeting and to decide on the way forward but it all depends on government here. If government gives back the concessions and everything and equipment, they will come to the investment but if not and they have nothing, it makes no sense coming,” he added.
Chu pointed out that his father, Wenze Chu, still owns 49% shares in the company.
He explained too that while the hotel was up for sale, it was not sold because it has been a “very difficult” period for the real estate market.
Last year, Baishanlin had arranged a meeting with its investors and a team from the Exim Bank of China to discuss the new ownership and potential investment here.
Government had said that the meetings went well but members of the Chinese team informed that they had to return to their country to discuss a way forward for the company here.
Chu said that there is no timeframe for when the deliberations would be completed since a financial analysis is needed due to the large sums of monies that are involved. The fact that this is also a holiday period in China—a two week celebration of its New Year—has also delayed the work.
But the Baishanlin CEO emphasised that while discussions are being had by the Exim Bank of China and the new owner of the company, an establishment in Guyana hinges on the Guyana government’s decisions on how to move forward. “Everything, yes, everything, depends on if government will release back everything. I think only then they will come to this investment but right now the government has not returned anything; none of the vehicles or equipment of anything. If they get back the vehicles and investment, I think they will come but right now we need some time to see,” Chu asserted.
Baishanlin’s head said he wanted to make clear that the company’s investors want to do business in Guyana. “I hope they can solve the problem and continue that investment because Guyana needs that project to continue. Please say that,” he added.
A naturalized Guyanese citizen, Chu left Guyana last week to be with his family during the holiday period but noted that he will ensure that while he is there he will get a status update from the respective business parties involved.
Following the yanking of concessions by the Guyana Forestry Commission (GFC) and seizure of vehicles and machinery and equipment from its facilities last year, the company had pleaded with government to allow their stay for three more years to make good on promises it committed to since 2012.
Chu had assured that by the end of 2019 the company would have also created jobs for 500 locals. “We need three more years. Say, up to 2019. We would appreciate if the Guyanese people and government show patience with us. They will see the returns on their investment,” Chu had told Stabroek News in an interview, last year, at the company’s Region 10 operation, following a Guyana Revenue Authority (GRA) raid.
“Our financing in China depends on the investment conditions here in Guyana and if they feel that they cannot be guaranteed those conditions, then we cannot move forward…the way the GRA acted yesterday, by just seizing our machinery and even personal property of staff and even the car of a friend who was visiting, that is not a good sign for our investors,” he added.
But the APNU+AFC government felt that the time requested was too much and its patience had been exhausted. “I think that government has been more than reasonable with Baishanlin. We have done all that we physically or possibly could to give them, to hold out the hope to them, that things could happen, Minister of Natural Resources Raphael Trotman told Stabroek News, in response to the company’s pleas. “It would be quite wrong for us to hold concessions which are not being utilised for another three years, simply on a request,” Trotman also posited.
Trotman has said too that government has to make a decision based on Guyana’s best interest rather than one “based just on a narrow view of getting at the company….”
He said if the company is interested in investing in the country, then the rules would be laid out. “Respect our laws, respect the people, respect the contract that you sign and if we have commitment that these can be honoured then we are prepared to entertain them,” he said.
Baishanlin, said to control some 1.3m hectares of local forests prior to the GFC moving against it, established a presence here in 2006 and has been accused of making big promises to add value to forestry but failing to do so. Instead, it kept on gathering forests and increasing the export of logs all the while gaining huge fiscal concessions under the former PPP/C government.
During 2012 to 2015, the PPP/C government 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 following an audit commissioned by the APNU+AFC government, 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.
Many of the items for which tax waivers were granted were either unrelated to, or significantly more than the requirements for the company’s project, the report on the forensic audit and review of the operations of the Guyana Forestry Commission said.
Following the change in government in 2015, the APNU+AFC administration had come under severe pressure to act against Baishanlin for not delivering on value-added promises and over the manner in which it expanded its forest acreage.