– workers resign, returning to China

By Ariana Gordon
THE majority of workers of Baishanlin International Forest Development Inc. (BIFDI) have resigned and returned to China, a Chinese national living at the company’s Providence, East Bank Demerara (EBD) office told the Guyana Chronicle on Wednesday.“Here used to be the head office, but right now all the persons resigned and went back to China already,” the Chinese national said, noting that the remaining persons stationed at the Providence location will be returning to China in October.
“We are leaving next month,” he said. He told the Guyana Chronicle that the company has closed operations there a “while ago,” but could not state specifically when. When asked the whereabouts of Baishanlin’s general manager Chu Hongbo, the young man said: “I don’t know.” He told the Guyana Chronicle that he was not in a position to neither provide additional details nor contact information for the hierarchy of the company. The Providence location appeared to be more of a housing quarters for the Chinese nationals as opposed to office space. Clothes were seen hanging to the side of the premises, as anxious Chinese nationals peered through the windows and down the stairway as we enquired about the company.
On Tuesday, the Guyana Forestry Commission announced that it will be repossessing concessions held by Baishanlin. In a statement to the media, the GFC said its decision to repossess Baishanlin’s concessions follows the company’s inability to deliver on agreed actions to introduce investors to the GFC, as well as failing to address its liability despite having been given time to prove that it had an acceptable plan to clear its GY$80M debt. Representatives of the company were invited to a meeting with the GFC in April 2016 to provide an update on its plans to clear its debt. At that meeting, officials of the company stated that they had financial constraints which affected the establishment of the wood- processing facility and noted that the company would be engaging a new partner on the subject.
GFC’s board was assured of the financial strength of the new partner who committed to pay off the debt owed by Baishanlin. “The BIFDI was requested to submit information about its operations in Guyana, settle its arrears, and submit a letter of commitment from the new partner. To date the BIFDI has failed to fulfil any of its commitments to the government of Guyana, effectively failing on obligations it made, which were accepted in good faith.”
When contacted on Wednesday, Chu Hongbo told the Guyana Chronicle that he will answer all questions today. At the time the Guyana Chronicle contacted him, he said he was in neighbouring Suriname.

Guyana/China relations strong
Meanwhile, Minister of Foreign Affairs Carl Greenidge said Guyana does not expect any fallout from China following the decision to cut ties with the Chinese firm. In an invited comment, Greenidge told reporters on Wednesday that relations between Guyana and China are in good stead, but noted that the laws of Guyana are paramount. “…if a company has encountered financial difficulties, there are processes via which the company has to treat with those in order to either change their status or to re-establish their financial viability. The Guyana government has not done anything to the company Baishanlin to have rendered them financially unstable.”
The minister noted that like Guyana, China has rules and regulations that govern its companies within China and farther afield. “So companies operating in Guyana whether they are Chinese or German have to live by the laws they agreed to embrace when they entered into this regime. They are governed by both sets of either laws or regulations; the ones that are paramount in Guyana are not and have not been applied in any discriminatory manner against Baishanlin. The responsibility of the company is to live within the law.”
Minister Greenidge described Baishanlin’s circumstances as “unfortunate,” noting that “however warm relations we have with the state, the company will have to live within the law and one will not expect that to affect relations between the two countries, because both governments adhere to the rule of law and would expect their officials as their enterprises to live by the law.”

Terminate agreement
Meanwhile, former Auditor General Anand Goolsarran had recommended that the government consider terminating investment agreements with Baishanlin and recover the value of the fiscal concessions granted it. Goolsarran made that recommendation among others in his report on the forensic audit conducted into the operations of the Guyana Forestry Commission (GFC). The report was made public by the Ministry of Finance in March. According to Goolsarran, the Chinese logging company has not fulfilled its obligations under State Forest Exploratory Permit (SFEP) 01/2011 and due to the fact that the Forests Act does not permit a renewal of such permits at the end of three years, the SFEP 01/2011 is invalid. “Accordingly, the related State forest should be returned to the commission for reallocation,” the report stated.
The Forests Act prevents the transfer of ownership or control of a forest concession without the specific approval of the commission. As such, the five concessionaires that have transferred such ownership or control to the officials of Baishanlin “should be made to surrender their concessions to the commission for reallocation to other potential concessionaires.” Between 2007 and November 2015, Baishanlin and four companies owned or controlled by it exported a total of 50, 928 cubic metres of logs with a Free on Board (FOB) value of US$4.483M. According to the report, the amount accounted for only 43, 868 cubic metres or 86.1 per cent valued at US$7.410.
“Baishanlin has, however, failed to fulfil its obligations to set up a downstream wood-processing plant despite assurances it had given since 2007 to do so, as well as generous fiscal concessions the company was granted. The commission calculates export commission on the FOB value of the logs, which is standard practice internationally.”
The GFC in granting export licences ensures that the FOB invoice prices are not below the benchmarks set and when concessionaires ship logs to other destinations, the final cost takes into account costs related to insurance and freight, as well as other costs for transporting the logs to locations within the countries where they are sold. The forensic audit report has stated that the Guyana Revenue Authority (GRA) has indicated that the government granted Baishanlin fiscal concessions on a number of machinery, equipment and construction materials valued at $7.464B or US$37.320M.
The granting of the concessions was based on “Investment agreements” between the Government through the Minister of Finance and Baishanlin for the construction of the wood-processing facility in Region 10. The total value of concessions granted amounted to $1.827 billion. “A review of the list of items of machinery, equipment and construction materials for which fiscal concessions were granted indicates that many of the items were either unrelated to, or were significantly in excess of, the requirements for the construction of the wood-processing facility. Indeed, the evidence suggests that the fiscal concessions granted were substantially in relation to Baishanlin’s ownership/control of the five logging companies having TSAs, as well as its proposed investment at Providence, East Bank Demerara. This is not withstanding that the investment agreements were exclusive to the wood-processing facility in Linden,” the report noted.