Sep 13, 2016 News
The Government of China had gone out its way to assist BaiShanLin International Forest Developments Inc. in its expansion throughout Guyana.
According to a report of the China Development Bank (CDB) prepared in November 2014 and shared with the Government of Guyana, the Chinese government had granted the BaiShanlin’s wood processing plant project a 10% sea freight subsidy and a loan discount.
The company also benefitted from export tax rebate for its materials to Guyana.
In turn, the Government of Guyana implemented duty-free concessions for the imported equipment.
The report would signal how high an interest that Chinese had in the operations of BaiShanLin.
The logging company is turning out to be a major embarrassment to both China and Guyana as it owes CDB US$67M in loans it took for the wood processing plant. That plant was crucial to BaiShanLin receiving billions of dollars in duty free concession from the Government of Guyana.
However, there is no wood processing plant and there are no signs of the money that BaiShanLin took from the Chinese bank.
With China promising to be major funding source for projects in Guyana, the BaiShanLin’s episodes have taken significance.
Last week, the Guyana Forestry Commission with blessings from the Cabinet, sent BaiShanLin letters of its intent to repossess all forest concessions-over 600,000 hectares of it– that is controlled by the company and its subsidiaries.
On Sunday, officials of the Guyana Revenue Authority (GRA) descended on BaiShanLin’s Coomacka, Linden operations, to seize steel and other items.
There were reportedly a square off between GRA officials and the heavily armed security at the Coomacka compound.
Yesterday, GRA officials were seen busy off-loading a large quantity of steel at the entity’s Eccles bond.
GRA wants to collect millions of dollars in outstanding taxes it is owed.
Earlier this year, the authority seized two of BaiShanlin’s vehicles, including a Lexus SUV that is used by the company’s local General Manager and part owner, Chu Hongbo.
There are unconfirmed reports that GRA on Friday also took possession of at least five vehicles from BaiShanLin’s headquarters at the Cacique Palace and Banquet Hall, an unfinished hotel that had been sold to that company. BaiShanLin still owes almost $600M for it.
The CDB report made it clear that BaiShanLin’s total investment for the wood processing plant was for US$85.88M while the loan applied for was US$66.9M. The monies were to finance logging, construction of the wood processing plant and other auxiliary buildings.
“As a result, the company decided to focus on timber production, transportation and sales to generate cash flow,” the CDB report said.
As a result of the GFC’s warnings about production, BaiShanLin in October 2014 decided to suspend the construction of the office building- the Exhibition Centre, the main building frame and brick works has been finished already- and concentrate on its Linden Wood Processing Plant.
The CDB report said that the plant was mainly to process timber cut the previous year and are easy to sell in Guyana.
“Meanwhile, the company also decided to finish the construction of the dock of the Wood Process Plant within two months. As for now, the major civil works of the dock has been completed, and other projects are put on hold.”
CDB said that in late 2014, in the middle of intense media scrutiny, BaiShanLin started focusing on the sale of wood.
CDB said it found no evidence the loan funds was invested into stock market, housing market and other areas.
“None of the loan funds was found to be misappropriated to projects that CDB did not commit for.”
As a matter of fact, CDB said, according to communication with BaiShanLin Company and desktop review by the bank’s overseas working group, all the payment application documents provided by the borrower appear to be valid and complete.
“No other misappropriation use of the loan funds has been found up to date,” CDB insisted in that November 2014 report.
GFC had said last week that the decision was taken after the cash-strapped BaiShanLin failed to deliver on agreed actions to introduce investors to the commission, and failing despite being given time to prove that it had an acceptable plan to clear an approximately $80M debt.
It owes the government of Guyana hundreds of millions of dollars for properties it bought, including the Cacique Banquet Hall behind Ramada Princess Casino, in Providence. It was taken to court by BK International, a local contractor for hundreds of millions of dollars owed for housing lands at Providence.
Last year, Government halted log exports for the company.
GFC, in explaining its decision to repossess the 618,000 hectares which BaiShanLin has managed to snap up, made it clear that it has been engaging the company since April 8, 2016 to provide an update on its plans to clear the $80M debts.
”To date, the BIFDI has failed to fulfill any of its commitments to the Government of Guyana; effectively failing on the obligations it made, which were accepted in good faith,” the statement explained.
In addition to housing and real estate, BaiShanLin had misused its trucks and equipment granted under duty free concessions to compete against local operators.
Its river vessels also competed to fetch stones for local hardware operations.
Chu Hongbo himself had managed to acquire a Guyana passport through citizenship and has bought up several plots of gold mining lands.
BaiShanLin’s presence in Guyana had been an extremely uncomfortable one for especially the last administration of the People’s Progressive Party/Civic (PPP/C), under President Donald Ramotar, after it became known that the company was virtually given a blank cheque to carry out operations here.
It was allowed to bring in hundreds of Chinese workers without much attention paid by local authorities to ensure that they returned home after their contract ended.
The situation was so bad that British and German immigration authorities were convinced that BaiShanLin had stretched its tentacles to human trafficking. The company even attempted to bring women in on flights from China but a number of them were detained, with immigration authorities saying they did not fit the profile of being logging workers.
There are indications, too, from correspondence to the Ministry of Foreign Affairs, that certain officials of the Clement Rohee-led Ministry of Home Affairs may have been bribed to facilitate visas for BaiShanLin.
The Guyana Embassy in China had over time warned BaiShanLin that it was not complying with visa requirements which called for reports to be filed with the embassy when the workers returned to China.
In Guyana, BaiShanLin is the third largest holder of state forests behind Barama Company Limited, a Malaysian company, and the Indian-owned Vaitarna Holdings.
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