Govt. to clampdown on foreign companies renting citizens

Jun 11, 2024 News

Kaieteur News – As companies continue to flout Guyana’s Local Content law by engaging in the practice of ‘rent-a-citizen’ or ‘fronting’ the Government of Guyana on Monday issued a stern warning for them to desist.

Minister of Natural Resources, Vickram Bharrat

In a statement, the Ministry of Natural Resources (MRN) stated that as part of their diligent monitoring of Guyana’s petroleum industry, through the Local Content Secretariat, has intensified its tracking for practices known as “rent-a-citizen” or “fronting”. The issue refers to the unethical practice where foreign companies use local individuals or local entities as mere fronts to meet local content requirements, while the actual control and benefits remain with the foreign entity.

“This practice undermines the objectives and spirit of the Local Content Act, which aims to ensure that the citizens of Guyana benefit meaningfully from and participate actively in the nation’s natural resources sector,” the ministry said.

To address these issues, the government, through the ministry, is actively pursuing measures to curb instances of rent-a-citizen. Notably, one of the steps being taken by the ministry is enhancing collaboration with the Guyana Revenue Authority (GRA). “This closer working relationship aims to identify and penalise those engaging in fronting, ensuring that all stakeholders adhere to the legal and ethical standards set forth by the Local Content Act,” it was stated.

Moreover, the ministry stated that it remains committed to fostering a transparent and equitable petroleum industry that benefits all Guyanese. “We urge everyone to support these efforts and uphold the integrity of our local content framework,” it was further stated.

In an invited comment, the ministry told Kaieteur News that while the offence of fronting is not expressly defined in the Interpretation Section of The Local Content Act, it is provided for in Miscellaneous: Part V1 of the Act. Section 23 (1)-(3), with the marginal note, Offences and Penalties, provides for the offence of submitting false or misleading information to the Secretariat knowingly and for the offence of any Guyanese national aiding and abetting anyone to contravene any provision of the Act in order to defeat the local content obligations under the Act.

To this end, the Ministry explained that the two offences are in nature Summary Offences, therefore not indictable, and attract a penalty, in the case of an individual, a fine of five million dollars, and for a body corporate, a fine of ten million dollars.

The Act, gives the Local Content Secretariat, the authority, by instituting criminal legal proceedings, to charge individuals or corporate bodies for submitting false or misleading information or aiding and abetting anyone to contravene any provision of the Act in order to defeat the local content obligations under the Act.

Section 23(1)-(3) states: “A person who submits, or causes to be submitted, a local content plan, report, record, or any other information pursuant to this Act knowing, or ought to reasonably have known, that the submission is false or misleading, commits an offence and is liable on summary conviction — (a) In the case of an individual, to a fine of five million dollars; (b) In the case of a body corporate, to a fine of ten million dollars.”

Consequently, the Local Content Secretariat has issued Guiding Principles, in the form of Local Content Register Registration Information, which are the criteria, pursuant to the Act for registering/operating a joint venture company in the Upstream petroleum industry, and pursuant to the provisions of the Act. As part of the requirements, a Guyanese company forming a joint venture with a non-indigenous company must have a minimum of 51 per cent equity participation in the joint venture arrangement; submit Declaration of Beneficial Ownership and demonstrate evidence of equity contribution to the Joint Venture.

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citizens, fronting, Local Content Law, Minister of Natural Resources, Vickram Bharrat

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