May 18, 2016 News
– demands GRA return its vehicles in seven days
– wants diplomatic solution
– claims actions have implications for all investors
The seizure of two high-end vehicles last month from a Chinese company for outstanding taxes by the Guyana Revenue Authority (GRA) is threatening to become a diplomatic issue.
This week, law firm, Satram and Satram, representing BaiShanLin International Forest Development Inc., wrote the Commissioner-General of GRA demanding that the two vehicles, a Lexus SUV and Nissan van, be released within seven days.
The lawyer insisted that the seizures triggered a dispute between the company and the Government of Guyana and is contrary to the agreement between China and Guyana, signed on the 27th day of March 2003, that dealt with the promotion and protection of investments between the two countries.
Also written to over the seizures are Minister of Foreign Affairs, Carl Greenidge, and Secretary General of the United Nations, Ban Ki-Moon.
BaiShanLin, which came here a decade ago, concentrating at first on logging, has spread its branches into various sectors, with its activities ranging from gold mining, housing development, ship building, transportation, and commerce.
It was granted almost $2B in duty free concessions and other waivers, on the condition that it invests in a wood processing plant in Linden, among other things. However, the company has failed to do that, with its housing and other developments, including a mall, at a standstill. It still owes the Government hundreds of millions of dollars for at least one property, an unfinished hotel at Providence, it has purchased. Several staffers were reportedly laid off last week, with the company claiming that negative publicity exacerbated the situation.
The company, which has registered around 20 subsidiaries, says it has run out of money with its majority shareholder, China Long Jiang Forest Industry Group, announced to take control of local operations this year.
Since entering office last year, the David Granger-led administration has been examining a number of investments that had been signed, to ensure that the foreign companies have been holding their end of the agreements.
BaiShanLin’s concessions had raised eyebrows, not only because it appeared to be extravagant, but there seemed to be no monitoring to ensure compliance with conditions.
The seizure of the two vehicles in early April was in an efffort to collect outstanding taxes.
According to Satram and Satram on Monday in its letter to GRA, the authority’s action is in disregard of the international obligations of Guyana under the agreement with China.
The lawyers made it clear that GRA should release and return all property which has been seized.
“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 lawyers said that it has already called upon the Minister of Foreign Affairs and the Ambassador of China to commence diplomatic consultations to resolve all disputes between the company and the Government of Guyana, acting through its several agencies, as the agreement requires.
The letter was copied to Minister Greenidge and the Chinese Ambassador to Guyana.
A DIPLOMATIC SOLUTION
In a separate letter to Minister Greenidge, the legal firm said that subsequent to the execution of the agreement, BaiShanLin started to invest “enormous sums of money” in Guyana in the development of forest products.
“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 charged.
The lawyers noted that the Government actions seek to dismantle the concessionary structure granted to 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.”
As a matter of fact, the investment agreement under which the concessions were granted has not expired.
The lawyers also have issues with moves by Government to take back forestry concessions of BaiShanLin. Lawful procedures under the domestic law were not been followed and would be subjected to the 2003 agreement between Guyana and China, which has been filed with the United Nations.
“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 Revenue Authority in complete disregard of the agreement has commenced to seize the Company’s property and to cripple its business.”
The law firm said that this is a matter of concern not only to the company, but to all investors who wish to undertake investment in Guyana.
BaiShanLin is particularly concerned, as it says it has invested heavily in Guyana on reliance on the agreement, which in the absence of diplomatic resolution, allows the disputes to be settled by an arbitral tribunal.
The Chinese company now wants the diplomatic channels to 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 months.
The letter was also copied to President Granger.
In the third letter to the United Nations Secretary-General, the company complained that in breach of the agreement with China, the Government of Guyana 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.
“Under the agreement, disputes are to be settled after consultations through diplomatic channels and in the event of failure by arbitration. The company was established as a Chinese investment with funds from China.”
BaiShanLin wants the United Nations 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.”
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