Apr 17, 2016 News Comments Off on No evidence that BaiShanLin plugs back profit into Guyana
By Abena Rockcliffe- Campbell
Local businesses have been a staple of economies all around the world ever since people first began trading
goods and services.
Baishanlin International Forest Development Inc. was incorporated in September 2006 under the Guyana Companies Act of 1991. It is indeed a local company despite the fact that its owners are Chinese.
However, there is nothing to suggest that the operation of BaiShanLin in Guyana is helping the country’s economy which is being described as sluggish. In fact, there is evidence to suggest that all profits earned by BaiShanLin, through it exploitation of Guyana’s forest, go to the People’s Republic of China. Not a cent has been returned here.
BaiShanLin’s Managing Director, Chu Hongbo, has on several occasions said that the company is experiencing serious financial difficulties.
The audited Financial Statements of Baishanlin International Forest Development Inc, show the company to be financially unsound.
However, a serious gap in the finances presents itself when the company’s financial statements are compared to documents which reflect the value of logs exported over the years.
Former Auditor General and Chartered Accountant, Anand Goolsarran, in an audit report on the operations of the Guyana Forestry Commission, supported claims that the company is indeed experiencing losses.
He reported, “A review of the audited financial statements of BaiShanLin indicated that the company was in dire financial difficulties.”
The auditors acknowledged loans BaiShanLin received totaling $1.903B. Interest was also charged on some of the loans.
Auditors said the company continued to make losses which amounted to $313.763M and there was an accumulated shareholders’ deficit of $1.187B as at December 31, 2011.
Kaieteur News learnt that the “loans” which the company secured were granted by none other than Chu Wenze—the father of Chu Hongbo. Chu Wenze is also a part owner of BaiShanLin.
Of the $1,903B granted, Chu Wenze doled out $1.177B, Wang Jan loaned $4.5M and a company called Bucc International Wood Industries Limited lent the company $721M.
Kaieteur News understands that the loan arrangement is nothing new. It is the culture in the Chinese community in Guyana to pool resources when needed and the money is reimbursed to the various families or entities in China.
Documents seen by this newspaper as regards the export of logs during the period 2007 to November 16, 2015 by BaiShanLin and companies controlled by it indicated that the company is indeed making huge profits out of Guyana.
Between 2007 to 2015 BaiShanLin and companies under its control exported logs valued well over US$8.4B
That figure just represents the Free on Board (FOB) value. The Cost Insurance Freight (CIF) value is way more.
Also, Goolsarran had stated in his report that “when the logs are shipped to the destination countries, the final cost takes into account costs relating to insurance and freight as well as other costs for transporting the logs to locations within the countries where they are sold.
In addition, the company exporting the logs will have to apply its own mark-up in order to derive a profit. Therefore, the final price of the logs would be significantly higher that the FOB invoice price on which the export commission is calculated.”
Kaieteur News understands that the company’s financial statements in Guyana are reflecting a serious deficit because of the fact that nothing is returned to Guyana, nothing at all. When the logs arrive at China and are sold at a much higher price, all that cash remains there.
There are several benefits to be derived from local businesses. Two main benefits are the provision of employment and boost to the economy. BaiShanLin is not presenting either.
BaiShanLin was incorporated on with the main objective of setting up downstream wood processing operations in Linden and on the East Bank Demerara. This would have produced value added furniture and indeed would have provided jobs. Nothing of the sort materialized.
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