Despite evidence that a major investor was in deep financial trouble and had failed to meet deadlines, the Donald
Ramotar administration still went ahead months before the May 2015 elections and signed an updated agreement allowing that company to continue its operations.
That same agreement gave the company billions of dollars in concessions.
The investment agreement signed last year between the Ramotar administration and BaiShanLin International Forest Development Inc. has now come to light. According to the conditions set forth in the agreement, it is clear that the Government of Guyana has the right to terminate the arrangements for breaches.
According to a copy of the agreement that Kaieteur News has managed to acquire, BaiShanLin agreed that failure to build a wood processing facility at Conception, Soesdyke-Linden Highway, in keeping with its business proposal, could see the agreement being terminated and all exemptions cancelled or revoked without liability to the Government of Guyana.
BaiShanLin also agreed that the arrangements could be terminated if the items, including vehicles and other concessions, are not used for their intended purposes.
BaiShanLin International Forest Development Incorporated, the agreement said, is a company incorporated and registered in accordance with the Laws of Guyana with its offices in Providence.
The company is facing fire in Guyana for its activities here.
Unveiling ambitious plans over five years ago to invest millions of dollars in the country in various sectors, ranging from forestry, housing to shipbuilding, the company is reporting that it is now facing financial troubles,
with several of its projects stalled, including its wood processing plant.
In the meantime, the company has drawn down on its duty free concessions, importing scores of vehicles, equipment and building materials to the tune of billions of dollars.
In fact, between 2012 and 2015, over $1.8B in tax waivers were granted by the Guyana Revenue Authority. It is unclear, today, how much was granted before 2012. BaiShanLin started up in Guyana in 2006.
According to the investment agreement signed between Minister of Finance, Dr. Ashni Singh, and BaiShanLin’s General Manager, Chu Hongbo, on January 28, 2015, the arrangement could be terminated if the items for which tax exemptions are granted are sold or disposed of without prior approval of the Commissioner-General of the Guyana Revenue Authority (GRA).
“Should the company wish to sell or dispose of an asset which was granted tax exemptions, then permission must be sought from the Guyana Revenue Authority, and at the time an assessment would be made in regards to the duties and taxes owing on the items and that money will become payable to the Guyana Revenue Authority before their disposal.”
BaiShanLin also agreed that it would breach the investment agreement if it fails any of its promises without an adequate explanation and if these are not corrected within 30 days of the breach.
The agreement could also be terminated if the company is declared or becomes insolvent.
It appears from the clauses of the investment agreement, that BaiShanLin breached a number of areas.
It has been using its equipment in mining and has even been caught using its trucks and other equipment on the Timehri airport expansion project. It has been competing in the local transportation sector.
In its commitments to the Government of Guyana, BaiShanLin in that updated investment agreement signed last year January, promised to undertake the developments in keeping with the particulars of the business proposal submitted to the Guyana Office for Investments (GO-Invest).
BaiShanLin has also offered to find financing of over US$130M within a three-year period and create 150 jobs, focusing on residents of Region Ten.
The investor also promised to comply with all laws of GRA and take steps not to breach environmental laws.
It also agreed for officials from GO-Invest and GRA to visit the business operations and inspect assets that would have been imported under tax waivers concessions.
With regard to its finances, as far back as 2011, BaiShanLin was in deep trouble, with its financial statements for that year showing a $313M loss with the company owing its shareholders $1.1B.
A local auditor hired to prepare the audit figures of 2011 warned that the continuation of the company as a “going concern” is dependent on the ability of the company to make profits in the future and to obtain sustained financing.
Despite this, the former Finance Minister, still went ahead and agreed last year January for BaiShanLin to be granted even more duty free concessions and other waivers, in addition to the billions of dollars more that it had been given previously.
Just recently, Minister of State, Joseph Harmon, travelled to China to negotiate with the new owners of BaiShanLin.
Meanwhile, this week, BaiShanLin through its lawyers, wrote GRA, demanding the vehicles be returned in seven days. It has also written the Ministry of Foreign Affairs and the United Nations complaining that the seizures conflicts with a 2003 agreement on investments signed between Guyana and China.
Local companies have been complaining bitterly that they have not been benefitting from those levels of tax breaks and concessions.
Recently, President David Granger said that his administration was concerned about the levels of tax concessions being granted. He signaled an intent to reduce the levels and place tighter controls to ensure the country benefits more.
But the company has managed to ship out thousands and thousands of containers of raw logs.
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