Plunder and Pillage: The Menace to our Natural Resources

DAYCLEAN, Vol 1, No. 2
29 March 2007

Plunder and Pillage: The Menace to our Natural Resources

By all accounts Guyana is a stereotypical model of classical colonial natural
resource exploitation of under-developed regions. This fits our experience in
forestry, bauxite, gold, diamonds, and even the prospecting for oil that is
presently taking place.

Dayclean plans to run a series on these colonial forms of natural resource
exploitation beginning with forestry. Here we attempt to portray some of the
major elements of the colonial model.

First, natural resources are routinely extracted at a primary level
with little
or no value added through further processing. Second, such primary extraction
constitutes the main pillars of the economy and the main engines of whatever
growth is supposed to take place. In the main this growth has been
distressingly miniscule, and because of the operations of the world market for
pricing primary products, the pillars have been highly unstable.

Third, the leading firms in this primary extractive sector are usually foreign
owned and/or controlled. Sometimes there is a residual local ownership, mainly
through the state. But this can by no means be considered the basis of a truly
joint-venture operation.

Modalities
Fourth, there are several modalities, which are central to the operations of
these firms. One is that there is always some element of subsidisation through
the state: low or no taxes are paid, importation of goods and equipment
is duty
free, and foreign management and skilled workers operate in the technical and
managerial sphere and low order labour is provided by the local market. This
labour is exploited extensively through relatively low pay and long working
hours, in comparison with world standards. In addition, when these firms
install infrastructure such as roads, hospitals, schools they are only
to serve
their own employees. They remain as islands of ?privilege? in the poor
communities in which they are located.

Fifth, these arrangements generate significant profits, even when no
profits are
formally declared locally. This is often because masking commercial
transfers by
way of ?transfer pricing? and income tax manipulation is what the
multinational firms in these sectors do.

Regulation and Oversight
Sixth, a highly distinguishing feature of these arrangements is weak
regulation
and oversight. This reflects on the one hand a limited capacity to
provide this
on the part of the host Government and on the other hand a lack of political
will to enforce regulation. Firms therefore engage in what is known as
?regulatory capture?. That is the regulatory offices serve the biddings of
the firms and not the other way around. Not surprisingly these arrangements
ignore the external costs and diseconomies associated with the industry. The
most flagrant of these is environmental abuse and degradation.

Because of this set up very little real transfer of technology takes place and
on a world scale local operatives perform low technology functions. There are
also instances where the indigenous rights of the people in those communities
where the natural resources are being exploited are violated. The local
judicial process rarely offers them any protection because of backward and
out-of-date legislation. Often the best recourse is to try to take the case to
an international tribunal. This has become an important strategy for those
engage in the struggle to bring an end to this plunder and pillage of natural
resources.

Work on Guyana/Brazil bridge to commence next week

Kaieteur News, 30 March 2007


Work to complete construction on the Takatu Bridge , which will link
Guyana and Brazil in the Rupununi, will commence in earnest on April 1.

Already Brazilian engineers from the firm Arte Leste of Curitiba from
the State of Parana, north Brazil , are engaged in preparatory work,
mostly on the Brazil side of the border.

The company is a sub-contractor for the project which is being
supervised by the 6th Engineers Battalion of the Brazilian Army, who
will themselves carry out the approaches to the bridge.

According to Ms. Conceieao Paixao, Public Relations Officer of the
company, the bridge is expected to take 12 to 16 months to complete and
will engage the services of about 45 employees.

Kaieteur News understands that the Takatu Bridge will be 230 metres
long and 14 to 15 metres wide.

Already, electrical wires have been run across the Takatu River to
facilitate day and night work at the site.

According to Paixao, although the company has constructed several
bridges in Brazil , including two in Maranhao, this is the first bridge
building project that links two countries which the firm has
undertaken.

The official said that they are anxious for the structure to meet the
satisfaction of both Guyana and Brazil .

Paixao said that should any queries be needed for assistance, she could
be contacted at the Mayor's office in Bom Fin.

While the bridge will facilitate easy crossing of vehicles and cargo to
and from Brazil , there is need to have a proper roadway linking Lethem
to Linden .

Last week, officials from the Ministry of Transport in Brazil and the
Inter-American Development Bank met to explore the possibility of
improving the road.

Sour milk

Stabroeknews
http://www.stabroeknews.com/index.pl/article?id=56517366

Saturday, March 31st 2007

In the wee hours of Monday morning, a crime was committed so shocking in terms of bizarreness and cruelty that it can perhaps be termed a hate crime, particularly as it was perpetrated against members of a minority group-the indigenous people. If it was, then Guyana has ventured into very dangerous waters indeed. But even if it was not it should be firmly and condignly dealt with in such a way as to act as a deterrent to anyone harbouring similar thoughts. The incident as related to this newspaper by the victims involved them visiting a city nightclub on Sunday night. After spending some time drinking at the club one member of the family of four-the only male in the group-became so inebriated that he spilt drink or drinks on a group of men at a nearby table in the establishment. The men demanded that the spilt drink be replaced along with "extra", the reporter was told which the family refused to do. They said they had no problem replacing the spilt drink, but saw no reason why they should have purchased extras and perhaps sensing that trouble would ensue, they proceeded to leave the place. What happened next defies comprehension. The men did not seek to prevent them from leaving by insisting they pay for the drinks. So one imagines that they sat there for a few minutes and quickly hatched a plot to 'get back' at the people they felt had wronged them. By the time the group of men exited the nightspot the group of four - a husband and wife and the wife's mother and sister - had already managed to secure a taxi and were sitting in it about to go home. Why that taxi driver did not just drive off when the men first accosted his passengers will forever remain a mystery, unless he decides to come forward and speak about it. However, the four people were dragged out of the cab, most likely, kicking and screaming. The victims said their attackers numbered about 20. Anyone being dragged out of a car by a group of men whom they do not know and with whom they had just had an altercation would know that they are not being dragged out to have a conversation. There would be panic; there would be terror the victims would not go passively. So, we have a scenario of four people being forcibly removed from a taxi they have hired by a group of men. This is not taking place in a dark lonely street, it is in Sheriff Street, which had years ago earned the title "the street that never sleeps". This street has the most nightclubs/bars in any single street in the city and the most restaurants as well. It is almost never devoid of people and traffic as it is the main thoroughfare that connects the east coast and the east bank. At 2 am on Monday, several other people would have been exiting bars and clubs and heading home. The victims said they saw many people on the street but no one went to their assistance. How damning. Has the milk of human kindness so soured in us that not a single soul thought s/he could intervene? Even if they did not want to get involved, because, as the victims said, two of their attackers had guns, could no one else in the vicinity have rung the police? What about the taxi driver who so abruptly lost his fare? Did he not think to ring the police? And this is a city where nearly every other citizen owns a cellular phone. Where were the police that morning, one wonders? Mind you, this is two days before the start of Cricket World Cup, when according to the hype put out by government officials we should have had thousands of visitors already in the city. Why were there no police patrols on Sheriff Street? One imagines that if the city has guests waiting to see the first cricket match on Wednesday they would have been sampling some of the nightlife. So why were there no regular police patrols on that busy street? After they were dragged out of the car, the four people were beaten and robbed. The male in the group was stabbed after he put up a fight and two of the females were stripped of their clothing, robbed and physically assaulted in a sexual manner. What kind of a sick mind does that? We were told that after the assault, the attackers returned to their partying and the victims were left shivering with fear and embarrassment on the street. And even then they were ignored. No one ventured forward to help them get a taxi, or to help the women to cover themselves. What is very sad about this aspect is that there must have been other women on the road at the time. Unfortunately, not one of them was a good Samaritan. Then to crown it all off, when they finally were able to secure transportation, the taxi driver demanded payment to take them to the hospital and took one of the women's earrings as they had been robbed of all their cash. How uncharitable! Calls by the Guyana Human Rights Association for a nightclub's licence to be suspended pending an investigation and its announcement of plans to hold a vigil on Sheriff Street yesterday, resulted in independent corroboration that the incident did take place-and from an unlikely source. The owner of the nightclub named by the victims said: "Those people were never in my place because I asked my security… they said the incident happened next door to the club." The silent indictment here is and they did nothing to help. One hopes that the ventilation this incident had received so far will stir the police to action and that justice will be served and soon.

We must do more with our natural resources

Friday, March 30th 2007 Stabroek News http://www.stabroeknews.com/index.pl/article?id=56517218

Dear Editor, The agricultural sector must be closely linked with and serve as a base for manufacturing activities. This kind of economic activity offers wide scope and opportunities for the involvement of individuals, households, groups and communities-apart from formal entities such as co-operatives and public corporations like the New Guyana Marketing Corporation (N.G.M.C.). The Guyana Pharmaceutical Corporation has shown what can be done by successfully processing and marketing preserved fruits like the N.G.M.C. Our rivers and the waters-off shore teem with fish and other marine life. We have not yet begun to exploit these resources as fully and efficiently as we can for our benefit. We have to expand and make more efficient the fisheries sector, and establish a number of links with manufacturing. The manufacturing linked with the fisheries sector can be carried out by small scale as well as by large scale activities. Our forests abound with various species of woods which provide an ample base for a network of manufacturing activities. Many of these activities can be carried out on a small or a large scale too. The land is a great benefactor to us. It provides us with food and valuable timber. It also provides us with clays, minerals and sands which are important inputs in a wide range of manufacturing activities. We are already exploiting some of these materials. We must exploit more of them and expand our industrial base by processing them, to a further stage of manufacturing more by-products. Our strategy also requires us to accept as irrebuttable the proposition that there is no such thing as waste materials. All materials have some economic value or use. We have constantly to apply our ingenuity to the problem of discovering that economic use. For us, bagasse is "Waste Material"; rice husk is waste material; sawdust is waste materials; etc. In other countries these "Waste Materials" provide the basis for large and important manufacturing activities. Our industrial development must be stimulated and supported by a vigorous programme of scientific and technological research. This programme must seek to discover new and better economic uses for our raw materials; new and better methods of processing them; new and better techniques for improving the output and efficiency of the productive sectors. We have to harness science and technology to the cause of national development. The great objective must be to acquire the ability to process our raw materials to the highest stages possible so that we can enjoy the full benefit of the value-added. We must also produce as many as possible of the articles in common everyday use in the country. Yours faithfully, Mohamed Khan

Human rights group calls on Republic Bank to review dismissals

Thursday, March 29th 2007
Stabroek News
http://www.stabroeknews.com/index.pl/article?id=56517143

The Guyana Human Rights Association (GHRA) condemns the manner in which Republic Bank recently dismissed six employees and has since requested that its management review its decision. The request comes after the bank's Chief Executive Officer Michael Archibald reportedly said "he had nothing to add to what he already said" in response to a GHRA request to discuss the issue, the association said in a statement yesterday. Six employees (five women and one man) were said to be implicated in the disappearance of $8 million from the bank's Kitty/Guyoil ATM and were subsequently dismissed with an offer of severance pay. No reason was given for their dismissal. The GHRA said it is concerned by two dimensions of this issue: the violation of workers' rights and civil liberties and whether such behaviour can be expected routinely from the Caricom Single Market and Economy. The GHRA made a call for local and regional authorities to pay attention to the questions raised by this incident even as it condemned the bank's actions. The dismissed employees, the association said, all poised for success in the banking industry, have worked with the bank between four and ten years. "All have been steadily promoted within the bank. Young stable professionals form the critical core for the development of this country. It is difficult to envisage a scenario more likely to encourage them to look elsewhere," it said. The GHRA said it is concerned too that the employees were denied due process. During the course of the bank's investigations, three of the accused women were taken in open back vehicles, accompanied by armed police officers, to each of their homes, which were then searched without warrants. The two other women and the man were taken in an unmarked police car, by two plainclothes police officers, to their homes, which were also searched without any warrants being shown to their families. The GHRA executive committee also questioned the bank's authority in relation to bringing in "outside security" who interrogated the employees, with contempt, and asked them questions including "whether they were having affairs with each other". "That a bank which seeks to distinguish itself as 'caring' towards its customers should operate in such a callous manner towards its own employees would seem bizarre, were it not for the fact that reducing job security is a prominent part of the globalised corporate culture," the human rights body said. And it questioned: "Is this the future all workers can expect in the CSME?" The GHRA said Republic Bank is not the worst offender in the local private sector and indeed compared with the Asian companies operating in forestry it could be considered enlightened. "But the need to make such comparison is itself a chilling prospect. The long-standing dream of an expanding middle-class is becoming a nightmare in Guyana of the very rich on one hand and everyone else on the other," the statement said. Meanwhile, the association said, government's silence on the dismissals contrasts sharply with its efforts to facilitate banks and businesses by creating a commercial court to repossess goods from hire-purchasing workers and loan defaulters. "Enable business: disable labour is a more appropriate motto for the CSME than any reference to the Caricom Social Charter," the GHRA contended. It said there is a rising incidence of fraud occurring in business places in Guyana, particularly in banks and insurance companies with their huge cash flows. "We encourage legal, impartial and consistent methods of combating this problem. Our basic concern is that governments in the region and our own in particular must demonstrate some effective concern over incidents such as these dismissals and take more seriously their legal obligations to protect workers' rights against companies which treat Guyana primarily as a source of plunder and profit and Guyanese as a disposable commodity," the GHRA said.

Amerindian leaders complete workshop on land rights, other issues

http://www.guyanachronicle.com/news.html

Guyana Chronicle, 29 March 2007

AMERINDIAN village leaders are now more empowered to deal with issues
pertaining to land rights, forestry, mining and governance, on
completion of a three-day workshop, yesterday, at the Foreign Service
Institute, Ministry of Foreign Affairs in Georgetown, the Government
Information Agency (GINA) reported.

At the forum, the facilitator, international lawyer Ms. Melinda Janki
worked with Community Development Officers (CDOs), toshaos (chiefs) and
councillors to educate them on the new Amerindian Act, as it applies to
the Guyana Constitution and the lives of Amerindians, the agency said.

Janki said the training was conducted because the Ministry of
Amerindian Affairs felt more of it was needed, in relation to the Act,
to further sustainability and governance within their communities.

According to her, the intention was to strengthen and foster problem
solving skills among the leaders and enable them to become more
proactive in dealing with such matters in their respective communities.

GINA said participants felt it was an excellent, educative process
which allowed them to better understand the legislation and would help
them execute their duties with greater efficiency when they return to
their various communities.

Moraikobai Toshao, Mr. Colin Andrews agreed it is going to aid in the
implementation of the new law.

“What we are doing here is putting systems in place to deal with issues
arising in our different communities,” he told GINA.

Among the other communities that participated were Santa Mission,
Orealla, Waini and Muritaro.

The legislation gives Amerindians control of their lands and resources
which include forestry and mining and sets out their responsibility for
managing and maintaining them in a sustainable manner, to improve the
lives of community members.

The President and the foreign logging companies

Kaieteur News, 16 March 2007


Dear Editor,


As reported by SN on March 9, the President's long address to the
Guyana Defence Force included reference to apparent inaccuracies in
the latest edition of the International Narcotics Control Strategy
Report, March

2007, from the US Department of State – URL

http://www.state.gov/p/inl/rls/nrcpt/2007/vol!/html/80857.htm.

The US report says that the Government of Guyana had announced that
it would propose legislation requiring stronger background checks on
investors applying for timber concessions.

The President told the top brass of the GDF that he did not promise
that. Indeed, why should he, because the Guyana Forestry Commission
(GFC) has had legislation and procedures since 1997 to do just what
the President now says that we should not have; that is, investor
screening checks.

The murky case of Aurelius Inc. is a good illustration of why we need
the transparent, objective, equitable and consistent application of
that GFC legislation (the Forests (Amendment) (Exploratory Permits)
Bill which amended the Forests Act 1953 in July 1997, and updated the
GFC associated procedures in April 1999.

This law provides opportunity for potential investors to bid for the
rights to explore in detail the possibilities of commercial logging
of our natural tropical forest and prepare logging and business
plans. It provides opportunity also for the GFC to check on the
capacity of the enterprise to undertake forest management for
sustained yield over 25 years.

The State Forest Exploratory Permits (SFEPs) are for areas advertised
by the GFC for competitive bidding, and GFC procedures manual tells
its staff how to evaluate the bids.

The GFC manual says that exploratory permits will not be issued for
any area that is occupied, claimed or used by Amerindians.

In this murky case, the GFC advertised areas (designated by the GFC
as A, B, C and D) which had been claimed during the hearings of the
Amerindian Land Commission 1966-69.

Also, these areas south of the 4th parallel of latitude should not
have been opened by the GFC for logging and exploration in the
absence of a national land use plan (President Cheddi Jagan to Nigel
Sizer of World Resources Institute in 1996, and SN editor's note to
GFC, letter: October 21, 2005).

Curiously, there was just one bid for each of three of the four areas
A-D, and the extensive checking which the GFC procedures required
were completed apparently in only two days (May 30 and 31, 2005).

These procedures should have included checks on the financial status
of applicants, and the GFC procedures manual provides the names of
international auditors able to advise on investor credibility. Those
names had been requested by Prime Minister Sam Hinds in 1996.

The substantial application fee for an SFEP is US$20,000, and was
calculated to cover the cost of international scrutiny of investor
finances and probity. The evaluations should have included written
evaluations by agencies such as the Guyana Geology and Mines
Commission, Guyana Lands & Surveys Commission, and Ministry of
Amerindian Affairs, but apparently none was received for Aurelius
Inc.

The application evaluation noted that Aurelius, a new company
registered in Guyana in April 2004, had no experience of logging in
Guyana and little technical skills (SN March 18, 2006) but was
proposing to open a 25-year logging operation over 119,000 hectares.

The GFC Board of Directors was presented on August 10, 2005 with the
Commissioner's recommendation for approval, noting that Aurelius
intended to establish a sawmill at Annai (a titled Amerindian Village
); although no evidence was produced that the Annai Village Council
had given its approval for this mill. The applications were forwarded
to the Minister of Forestry (at that time, Satyadeow Sawh), and even
>> though financial information was missing,
>>
>> the applications were brought back to the Board on October 5, when
>> approval was again given by a majority vote. SN reported on October
>> 14, 2005 that the exploratory permits had been approved, but this was
>> denied by the Commissioner of Forests in SN on October 21, 2005 as
>> application procedures were incomplete.
>>
>> SN returned to the matter of Aurelius on March 18, 2006, reporting
>> that the GFC Board of Directors had questioned, on and after October
>> 5, 2005, the adequacy of due diligence checks by the GFC, including
>> the ownership of shares in the ownership of Aurelius Inc.
>>
>> The Board agreed that “in relation to future applications for SFEPs a
>> more rigorous examination of the bona fides of the applicants would
>> be done”. Note that there was no question then about the adequacy of
>> the manual of GFC procedures, only about its application.
>>
>> SN reported on March 28, 2006 that the Aurelius application had not
>> received a response from Cabinet. It is unclear why Cabinet should be
>> involved; it is not a requirement in law.
>>
>> The Commissioner of Forests confirmed in a Press statement on March
>> 31, 2006 (SN April 1) that Cabinet had not given approval. A letter
>> to SN on April 4 asked who had carried out the external due diligence
>> check but the Commissioner of Forests declined to respond to that
>> question in his reply (SN April 7, 2006).
>>
>> So there remain unanswered questions about the thoroughness of the
>> application of their own procedures by the GFC staff.
>>
>> This was acknowledged by Minister Sawh, as reported by SN on June 12,
>> 2006.
>>
>> So, the President is right - as reported by SN on March 9 - “I didn't
>> promise that [new screening legislation for potential investors in
>> the forest sector]. I don't know who promise that, but I am not
>> passing no legislation”.
>>
>> Well, we knew that anyway, as the Forests Act, revised substantially
>> in 1996 and ready since 1997, has still not been passed for enactment
>> by the National Assembly, because it is held up in the higher reaches
>> of the
>>
>> Executive for reasons not disclosed.
>>
>> The annual reports of the US International Narcotics
>>
>> Control Strategy lay emphasis on Guyana 's absence of subsidiary
>> legislation to make effective anti-narcotics and
>> anti-money-laundering laws. We should also be concerned
>>
>> about the failures in Government Commissions to implement properly
>> their own procedures. Lack of laws, and lack of use of laws, really
>> aren't good for the international reputation of Guyana . And the
>> President saying that screening of potential investors discourages
>> inward investment suggests that our Number One Economist is
>> unfamiliar with international codes for investment; such as the OECD
>> Guidelines for Multinational Companies and the international
>> commercial banks' Equator Principles.
>>
>> And keeping secret the terms of the foreign direct investment
>> arrangements for Asian-owned loggers such as Barama, JaLing, Bai Shan
>> Lin, etc. is surely contrary to Article 13 of the National 1980
>> Constitution, amended in 2003, about open and transparent government.
>> The President should be reminded also of Article 17 of our National
>> Constitution, which states: ‘Privately owned economic enterprises are
>> recognised, and shall be facilitated in accord with their conformity
>> with the aims and objectives stated or implied in Articles 13, 14, 15
>> and 16.'
>>
>>
>>
>> Mahadeo Kowlessar

Guyana and the Wider World Pt2

Trading in forest concessions 2 - against forest policy and law

By Janette Bulkan

Sunday, March 25th 2007
Stabroek News
http://www.stabroeknews.com/index.pl/article?id=56516926

This column resumes last week's discussion of the trading in forest concessions in Guyana by FDI-benefiting (Foreign Direct Investment) companies, in disregard of the specific prohibitions set out in Guyana's forest law. In September 2006 when Seapower Resources International Limited purchased 51 per cent equity interest in Jaling Forest Industries Inc. for a consideration of HK$154 million (US$19.8 million), the company also obtained an 'Option' to acquire 51 per cent of the shares in 'Garner,' a forest concession in Guyana, within five years. 'Garner,' like Bai Shan Lin, is another player on the logging-of-prime-timbers-for-export block. 'Garner,' is both forest concession holder and timber trader. For some years now, Garner has been in the business of shipping logs to the People's Republic of China, including bulletwood (Manilkara bidentata), which is both a protected (in law) and keystone species (a species on which many animal species depend ecologically). Garner's principal(s) have negotiated logging concession(s) under secret FDI arrangements. As reported in last week's Guyana and the Wider World, the 'President' of Bai Shan Lin stated that his company was "also in the process of acquiring its own forest concession" ('New Chinese forest company pledges to invest US$100M,' Stabroek News, February 9, 2007) http://www.stabroeknews.com/index.pl/article?id=56513688). According to Seapower's 'definitions' (see below) Garner's State Forest Exploratory Permit (SFEP number 03/04) was rolled over into a Timber Sales Agreement (TSA 03/05) in less than a year. Incidentally this is a violation of SFEP legislation which mandates a three year exploratory lease (Article 7B (2) in the Forest Regulations). A Draft EIA was briefly available on the Environmental Protection Agency's website and contains one reference only to the company's principals: "Garner Forest Industries Inc. is a privately owned company operated and managed by its subsidiary company Karlam South American Timber (Guyana) Inc. along with the Board of Directors." There is no public evidence that due diligence on financial status, probity or good citizenship (which is required by the Guyana Forestry Commission's (GFC) own procedure for evaluating an application for a SFEP) was carried out on 'Garner' before the award of the TSA. Garner = Jaling = Karlam. Guyana's State Production Forests are becoming consolidated under a small number of foreign ownerships via the pretence of awards to different companies. These concessions are then freely traded nationally and internationally, in disregard of specific clauses in the concession agreements which disallow such practices, and in violation of Guyana's forest law. Garner is also discussed in Seapower's September 2006 Letter from the Board to its Shareholders. As part of its deal in acquiring 51 per cent equity in 'Jaling,' Seapower secured the 'Garner Forest Option Agreement' according to which "the Guarantor (Danny Chan) shall not and shall procure Garner not to conduct, carry out and undertake any business and other operations and activities of Garner, including but not limited to the exploratory activities and any logging and forest exploitation, operation and management within a period of five years from the Completion Date" (page 15). In plain English, while a Timber Sales Agreement is premised on the understanding that its holder will sustainably log the concession to feed a downstream in-country operation which creates added value and jobs in the State of Guyana, Garner's principals (also the principals of 'Karlam' and 'Jaling' and perhaps other concessions) immediately entered into a separate agreement with Seapower to keep Garner's forest concession dormant in the interests of profits for Seapower and its shareholders. Not only are logs being diverted from feeding industries in Guyana, they are also being under-priced in Guyana Customs data relative to Asian market prices, as mentioned several times during the last year in articles and letters published by Stabroek News. One Indian log trader said to a forestry consultant who was present at the off-loading of logs from Guyana: 'If the Guyanese are so stupid as to sell their prime hardwood logs at low prices, they deserve all the contempt we privately heap on them. Guyanese are so ignorant, it is beyond belief. They make us laugh." Some relevant definitions from Seapower's Letter follow: " 'Garner' - Garner Forest Industries Inc., a company incorporated in Guyana, South America, with limited liability." " 'Garner Forest' - the forest, including but not limited to those granted under the State Forest Exploratory Permit dated 18 June 2004 and the Timber Sales Agreement [number 03/05] dated 11 June 2005 executed by Guyana Forestry Commission in favour of Garner, of an area approximately 92,737 hectares mainly located in the left bank of Mazaruni River, the right bank of Puruni River, and the left bank of Putareng River of Guyana." " 'Garner Forest Option Agreement' - an option agreement dated 16 May 2006, entered into between the Company and Mr Danny Chan, pursuant to which the Guarantor has granted the Company a call option to purchase 51 percent of the shareholding of Garner at a nominal consideration of HK $1 which is exercisable by the Company within five years from the Completion Date, at the purchase price of HK $60 million [US $ 7.8 million]." " 'Company' - Seapower Resources International Limited, a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the main board of the Stock Exchange." " 'Guarantor' or 'Mr Danny Chan' - Mr Danny Chan, father of Mr Peter Chan, is the chairman and director of the Target [Jaling Forest Industries Inc.] and the beneficial owner of 44.55 percent equity interest in the Target as at the Latest Practical Date." " 'Option' - a call option granted by Mr Danny Chan to the Company at a consideration of HK $1 to purchase from Mr Danny Chan 2,550 ordinary shares of Garner, representing 51 percent of the issued shared capital of Garner at a total price of HK $60 million, equivalent to approximately HK $23,529 per Option Share." Guyana's forests also underpinned the launch of the parent company of Barama Company Limited on the Hong Kong stock exchange in February 2007. Samling Global Limited raised US $280 million through an initial public offering (IPO) of about 25 per cent of the company on the Hong Kong stock exchange. Samling Global Limited, like Seapower in 2006, emphasized its forest holdings: "It [Samling Global Limited] has gross forestry concession areas (natural forest land it leases from the government) of approximately 1.4 million ha in Malaysia and 1.6 million ha in Guyana. In addition, it has harvesting rights for a further 445,000 ha in Guyana…" ('Malaysian timber company on track for HK listing,' Financeasia.com, 15 February 2007, http://www.financeasia.com/article.aspx?CIaNID=45887). That article effectively acknowledges that the Barama company is illegally renting forest harvesting concessions in Guyana - a further 445,000 ha. The Financeasia article also noted that, "The company does, however, purchase some of the timber it needs for its manufacturing business in China to reduce transport costs, among other things. Typically it feeds about half of its harvested timber into its own operations, while the rest is sold as logs. The split can be adjusted to make the most of demand and selling prices for different products at any given time" (ibid.). During his presentation of the GFC's Discussion Paper on Log Export Policy on February 17, 2007, the Commissioner of Forests said that between 2003-2006, the GFC calculated that log exporters had earned US $48.6 million from log exports, and that this sum was adequate for re-tooling in Guyana. Other estimates suggest that this figure is a gross underestimate of real earnings through export of unprocessed logs, but the GFC is unwilling to allow independent investigation. Isn't it odd that an indebted government refuses opportunities for increasing its forest and customs revenues and for fulfilling its own forest, industrialization, competitiveness and revenue policies? But I am happy to applaud the GFC for its recent policy of increasing the minimum royalty charges, to stimulate more intensive logging per hectare. From the various figures quoted above, there are evidently considerable sums of money sloshing around - but for Asian principals and shareholders, not for the Guyana exchequer or for Guyanese workers. By the way, who in Guyana can have missed the incessant advertisements in all three daily newspapers requesting the purchase of hardwood logs for processing in Guyana? What these advertisements do not say is that the offer price is way above the export prices declared to Customs in Georgetown. And have the regulatory agencies taken note that a number of these suppliers are delivering logs direct to a wharf - whence they too are bound for China? Inaction and lack of coordination on Guyana's part support the Chinese takeaway at firesale prices. 'Locking the stable door after the horse has fled' may well be the Guyana epitaph.

Guyana should halt log exports and push for value-added production

Tuesday, March 27th 2007

Stabroek News
http://www.stabroeknews.com/index.pl/article?id=56517028

Dear Editor, Mr. Trevor Atkinson's defence of Barama, a logging company in Guyana for many years in his letter captioned "Omai also made no profit" (07.03.17) attempts to justify Barama's zero profits. This is precisely the kind of rationale one gets from understating the real income and expense in the export of Guyana's crude - logs and low value added semi-finished products in the logging industry. Both Barama and Omai have more than 'zero profits' in common. They have benefited substantially from Guyana's list of concessionary line items granted to Barama or Omai: - Zero cost of each log - Zero cost of crude gold ore - Zero cost of other species cleared or dam- aged collaterally - Zero cost of forest regeneration following harvesting - Zero cost of replanting of harvested or other species - Zero cost of new forests - Zero corporate taxes - Zero imputed tax on gross receipts or net income - Guyana's loss of local value-added in using natural resources to produce finished or semi-finished goods for domestic use or exports with 100 percent of timber harvested, etc. - Fixed fees based on Guyana dollars instead of a global currency unit - Non-market exploitative pricing of raw materials unrelated to finished goods prices Forestry lease payments to government are hardly sufficient to cover monitoring and transportation costs in government's forestry management programme. The resources at the disposal of Government are thin, while the benefits to Guyanese are pitiful with zero profits and 'no price or zero price of crude,' logs and raw gold. Barama and any future Omai's investments should disclose its value-added processes and distributive shares of their operations to the public, not just its zero profit and certification achievements. Guyana's loss of value, rather than Barama's losses should be assessed. With losses any investor can claim an indefinite period for its investment recovery over an indefinite number of zero profit years. A no-profit methodology is neither good economic accounting nor long-term financial prudence for Guyana. Well-known international lenders encourage countries to increase their share of tax revenues from crude oil and gas production and exports as in the case of Trinidad and Tobago (Country Assistance Strategy: http://web. worldbank.org/..). They also discourage subsidies and concessionary contract terms to the private sector when government must itself borrow at going market rates or when government is making a case for concessionary loans. During the Fall of 1996, it was recommended by well-known international agencies that Guyana should revisit the terms of its past contracts related to the production and sale of its crude resources in timber and gold. This position arose not only because of the low value-added arising in the domestic economy from export of raw gold or timber, but because those contracts arose under non-market and impoverished circumstances that Guyana faced at that time. As Guyana is weaned off concessionary finance, it must itself seek market pricing and tax revenues from its limited natural resource base. With Guyana's debt write-off the situation today is more demanding for better terms under non-renewable natural resource production contracts. Avoiding future debt could be achieved by raising the share of tax revenues from value-added production activities using Guyana's logs or raw gold production and exports. Such a strategy could be supported by halting log exports and requiring a greater percentage of value-added in finished and semi-finished goods production arising in the logging industry than the current low value-added, zero profit outcomes A known amount of Guyana's forest cover for commercial exploitation, with replanting and discretionary regeneration should be utilized profitably and taxed. Raw gold exports could be discouraged with tax, while the tax on jewellery could be lowered in order to encourage higher value-added in the jewellery industry. On Barama's technical expertise in harvesting logs, that is admirable, but it is hardly any consolation for depleting Guyana's non-renewable resources for zero profits and nothing to tax. Less resources to government means less funding to monitor and manage the logging sector itself and for unleashing revenues for building and maintaining Guyana's flood prone environment. The exporting of crude timber or logs will keep Guyana as a primary producer until the logs run out. There are other attitudes toward the environment beyond low value, zero profit logging. The Canadians have seen much of that in Nova Scotia, New Brunswick and in British Columbia. Up north attitudes are changing and assessments of the forestry sector look beyond technical efficiency in cutting trees and selling them abroad for private gain and zero profits on the crude logs. New goals are not to harvest the forest as quickly as possible, but rather to develop alternative high-end uses of the forest through conservation and tourism etc. In Bhutan, with a $765 or less national income (Guyana, US$1,010), the constitution protects the forest; with the country keeping 60 percent of its forest cover intact forever (http://www.fao.org/DOCREP/005/AC805E/ac805e08.htm). The idea is to practise both forestry and risk management solutions. "Currently, all commercial harvesting is based on cable logging systems. Cable logging, using fixed skylines, was first introduced in the early 1970s. Gradually, other equipment was introduced such as skidders, mini-tower yarders, hydraulic loaders and backhoes (for road construction)." Barama's forest harvesting and replanting new forests or species should be compared with other countries for a full assessment on the technical efficiency front. On the value and profitability front, Guyana should end all zero-profit and negative-returns concessionary and wealth transfer activities by seeking a satisfactory share of liquidated wealth (economic rent as in the World Bank's advice to Trinidad and Tobago) from its 'crude' through profitable value-added activities arising within Guyana's borders. A production share or market share is not a new concept when we are dealing with crude ore, such as fossil fuel oil that has a high market demand like timber and gold. The process of enhancing Guyana's development could benefit by halting all log exports and taxing value-added on finished or semi-finished goods under a level playing field for all logging firms' in their country-wide high valued production operations. This would signal a new thrust in industrial development, along with more efficient use of Guyana's scarce non-renewable resources. Yours faithfully, Ganga Prasad Ramdas

Omai was allowed to operate unchecked even after the environmental disaster

http://www.stabroeknews.com/index.pl/article?id=56516822
Saturday, March 24th 2007
Stabroek News

Dear Editor, I read a disturbing letter by one Trevor Atkinson, titled "Omai also made no profit" (07.03.17). Apart from his other non-sequiturs, he charges that Dr Beharry "continues to mislead the Guyanese and international communities that with the presence of Barama in our country our forests will be plundered or are undergoing destruction or depletion". All I can say to this is that I have also read what Dr Beharry has written and can confirm that the suggestion that he is misleading us is a myth. Is it not true that the Barama Company has failed to meet both the Guyanese and international standards? Were it not for Mahadeo Kowlessar, Janette Bulkan, Seelochan Beharry and other writers would we have been publicly informed as to what is going on? And were it not for these writers would Barama be announcing recently in public that it is now putting itself in order? Mr Atkinson assumes that because Dr Beharry once lectured in chemistry at the University of Guyana he is disqualified to "tell the difference between non-conformity with FSC principles and forest destruction." By this Mr. Atkinson is attempting to disqualify all intelligent readers by virtue of their being in another profession. Mathe-maticians, medical doctors, mechanical engineers, you name it. How is it that the state allows judges and juries to make life or death decisions based sometimes on what they learn from expert witnesses in professions other than their own? I well remember Mr NO Poonai, who used to regularly write "A Naturalist's Notebook" up to the time of his death. He had an MS in Conservation, but he was a lawyer by profession. Omai made no profit? To cap it all, Mr Atkinson wants Beharry to tell him why Omai Gold Mines Ltd (OGML) made no profit after 10 years. I suppose Dr Beharry is quite capable of researching the matter, but I was in a better position to know from the local point of view; and I don't suffer from the lack of qualification, irrelevantly applied to him. The lesser spill There was an open forum after the first (smaller, May 1995) cyanide spill to which members of the public were invited. I discovered there that OGML said it could give neither the hour nor the amount of the spill. I was the only person who saw what was wrong with that claim. All the others, including the government officials and the press, concentrated on the environmental impact of the spilled cyanide, not the cause. OGML readily went along with this. The danger, however, was in the complete trust the government gifted Omai, for it was allowed to monitor itself. I learnt there that, apart from the expatriate(s) emp-loyed by OGML, I was the only qualified chemical engineer who knew details of the complex chemical processing of gold ore (I lectured on it in Advanced Inorganic Chem-istry at the University of Guyana). As a chemist I am able to determine what and how much. But as a chemical engineer I am also able to know when, and if not, then why. If OGML did not know how much, then it had failed to apply an elementary mass balance. Simply put, what goes in must come out. In a responsibly run chemical plant, especially where lethal substances like cyanides are involved, all the inputs must balance the outputs. If there is a spill, then the remainder to make up this balance can be calculated. In many ways, except for repulsive toxicity, it is like money. If OGML could not make up a balance it meant that it did not have the flow meters that were supposed to be in place in such a chemical factory. If it did not have the flow meters, it would have contravened basic safety regulations. If it did have the required number of working meters, then it was at the very least, negligent. Not only that: the rate of flow could have allowed an estimate of when it happened and how long for, depending on the nature of the spill, details of which were never released to the public. So why did no one heed what I said? Well, not quite no one: the chemical engineer(s) on the OGML staff would most certainly have paid close attention. At that time I spoke too politely. The government was not wanting to lose an investor that promised much, so in effect it gave OGML the franchise for holding the public forum, all expenses for which the latter would no doubt have had to pay. OGML would also naturally have had to pay for the cleanup, the official enquiry, and the calming of the fears of the public. This meant OGML was going to call the shots in the name of a government investigation. And guess who it was most certainly not going to call on. Saddam Hussein had the same strategy. He claimed his chemical factories were producing agricultural chemicals, not chemicals for warfare, but the UN inspectors were repeatedly not allowed to see what was going on. Unfortunately for him, the USA and the UK took the consequences of the lack of monitoring very seriously. The big spill Guyana is too small to attract that kind of attention. So then came the big spill. Nobody had done any monitoring between the spills, only public relations, because nobody but OGML had the money to employ monitors. I would have done it for free, but there was no hope of me overcoming such vested interests. Nevertheless, soon after the big spill, one enlightened person, knowing my expertise, sent me the results of the measured concentrations of the cyanide as it made its way inexorably up the Essequibo River, and I produced the first charts. These showed that the toxicity had diminished to tolerable levels by the mighty Essequibo River; but I had no means of validating the sampling methods. I got no more data after that. Someone above must have realized the consequences of allowing a properly qualified outsider in. Unaccountability You may well ask if the Environmental Protection Agency (EPA) was not set up to do the monitoring for the citizens of Guyana - but you must remember who is its overseers. After I read that astonishing claim by OGML that it was not making a profit, I enquired of the EPA specifically how much cyanide was being used by OGML over what period of time. After not getting an answer for some time I put my questions in writing. The written answers came a month later. All were provided by OGML. The EPA was simply passing on information. It generated none of its own on this important environmental case. So much for monitoring! OGML was in effect allowed to operate unchecked (some would say sovereignly) even after the environmental disaster. Who can believe that OGML would invest to become the second largest gold producer in the Americas with what it called in its own brochure 'a low grade mine'? My point is that only the top people in such an internally highly regulated enterprise would know the truth. And we cannot prove otherwise, because we allowed them to monitor themselves without any real regulation. It has been said that everyone makes mistakes, so governments can also make mistakes. But I draw the line at the implication of Mr Atkinson's use of Omai's lack of profit. One mistake does not justify another. Please, Dr Beharry and others, continue to enlighten us. Perhaps it will motivate the politicians to properly staff and equip the Guyana Forestry Commission to do its job of monitoring the use of our heritage in the land of the free. Yours faithfully, Alfred Bhulai

Barama corrects forest management deficiencies

expects reversal of suspension

Sunday, March 18th 2007

Barama Company Limited (BCL) is confident of being back in good stead with the Forest Stewardship Council (FSC) after a pre-audit inspection by the World Wildlife Fund for Nature (WWF) shows that the company has fulfilled most of the corrective actions required. The company's five-year FSC certification had been suspended for three months after it failed to live up to stringent environmental and safety standards. Both BCL and its auditor SGS-Qualifor were found to be deficient at varying levels by Accreditation Services International (ASI) after an audit late last year leading to the three-month suspension of BCL's certification. The FSC's Annual Surveillance of SGS for 2006 found that BCL had been deficient on a number of fronts, including harvesting on Amerindian reservations, logging outside of its concession, basic health and safety requirements for workers, no evidence of sustainability in harvesting, failure to perform the relevant environmental impact assessments and the unsafe disposal of environmentally hazardous waste. This newspaper spoke to General Manager of BCL Girwar Lalaram on the steps the company has taken to get back on track with the certification, which would guarantee certain markets in Europe and North America and he said the feedback from the WWF inspector has been positive. "We had a meeting with the auditors in South Africa SGS-Qualifor, and they accepted in writing that there was a lack of communication in terms of the procedure. Further to that, there were procedural lapses where the management of Barama was not given the opportunity formally to make a response to issues raised by the audit team," Lalaram said. Following that meeting, "we went to Germany where we discussed some of the corrective action requirements (CARs) and after prolonged discussion on the issues we agreed that Barama will not seek FSC reinstatement until such time that all the CARs and criteria have been met." ASI's report said areas outside BCL's compartments of forest under evaluation were not managed in the spirit of the FSC and major nonconformities were witnessed. During the ASI surveillance audit, SGS did not adequately evaluate the company's compliance with the company's own procedures regarding illegal activities and FSC requirements. It said too that there was evidence that local indigenous communities had no control over forest management on their land in the areas under direct control of the company outside of compartments 4 and 5. The report said this was because of an exclusive contract signed between the community and a company called IWPI. "Due to this exclusive contract some local people are not allowed to perform forest management operations on their own land and it is BCL that is currently harvesting on these indigenous lands. BCL has a harvesting contract with IWPI and the ASI audit team witnessed the fact that BCL machinery and BCL staff [are] performing harvesting operations in this Amerindian reservation," the report said. According to ASI, BCL said there is nothing it can do because of the contract, but the communities stated that they have not been paid for the last six months for timber that BCL harvested. The affected Amerindian village of Akawini is at the moment seeking to break this agreement with IWPI and has sought the ears of the President and the Minister of Amerindian Affairs. Lalaram said there are signs that Barama will be fully compliant in a very short time. He emphasised that the FSC certification scheme is a voluntary one that is very rigorous with tough hurdles that go far beyond the requirements of the GFC Codes of Practice and national laws related to forestry, environment and safety. "Barama commits itself to this internationally recognised process not only to gain market access but to ensure and to give assurance to the international public that we are performing best practices in forestry," he said. He added that the company was not going to turn back on the FSC programme, whatever the cost. The company has a total of 570,000 hectares certified under the FSC programme, but this is the only portion of concession certified of the company's total 1.6 million hectares. "We are going to proceed in stages as we move towards certification of the entire forest," he said, adding that it will be costly. "But as the biggest player in the sector we have to show leadership by going the way of certification through the FSC," he said. Source : Stabroeknews. http://www.stabroeknews.com/index.pl/article?id=56516373

Why was Barama negotiating mining contracts on its forestry concession?

Kaieteur News
23 March 2007


Dear Editor,



The forestry business world knows that Barama Company Ltd (Parent
Company - Samling Group) has a forestry concession of 1.69 million
hectares (1/3 of the State Production forests) in the small
impoverished South American nation called Guyana .

What is also acknowledged is that this concession was granted to Barama
with some unbelievable deals, totally in favour of Barama. These
giveaways in effect created a mini-State within the State of Guyana.
Apparently, Barama did not hesitate to use its influence as is
documented below.

What is troubling is that Dr Marcus Colchester (Guyana Fragile Frontier
– (Pub.1997) page 90) reported that: “Also in August 1996 it was
revealed (Caribbean Insight, August 1996) that Golden Star Resources
had entered into an agreement with the Barama Company Ltd to explore
for gold and diamonds in the whole of the logging company's 1.7
million-hectare concession, and the following month a joint exploration
between Broken Hill Properties Co. (BHP) and Golden Star Resources
(GRS) was revealed.” This report if true has serious implications.

Other published sources have also mentioned this deal. Here is some of
the published information (taken from various sources) on the deal
between Barama and the mining Companies.

Indo Caribbean World (Edition of July 17, 1996. Detailed Guyana News
(http://www.guyana.org/GuyNews/icw12.htm) - Golden Star, Barama to sign
mining exploration agreement reported: “Georgetown - Golden Star
Resources and the logging company, Barama, are close to signing an
agreement for gold and diamond exploration in the North West District…”

Forest Peoples Programme Information Update (19 February 1997)
(http://abyayala.nativeweb.org/guyana/guyana2.html) in : ‘Little
progress in the recognition and demarcation of Indigenous lands in
Guyana' reported: “Two mining companies, Golden Star Resources and
Broken Hill Property (BHP) Co. recently entered into a deal with the
Malaysian, Barama, timber company to prospect for gold and diamonds in
Barama's timber concession. Presumably one will cut timber while the
other explores or mines for minerals….”

In the USA's Country Commercial Guide Guyana, Fiscal Year 1999
(http://www.guyanausa.org/Imported/commercial_guide_guyana.htm) it is
reported: 4. ‘Mining Industry Equipment'…‘Another Canadian firm has
been actively engaged in talks with the government about plans to open
a similar operation. Golden Star has also recently signed an agreement
with the Malaysian timber company, Barama, to begin prospecting for
mineral extraction on some of Barama's property. Barama holds timber
concessions for 4.4 million acres, many of which are believed to
harbour significant diamond deposits….”

The Toronto Stock Exchange (TSE): GSC News Release Nasd- Otc Bb: ‘GSRSF
Golden Star and BHP enter into joint venture on the Cuyuni property in
Guyana'(all currency amounts in United States dollars unless otherwise
stated) Denver, Colorado – April 25, 2002 , reported: “Golden Star
Resources Ltd. (“Golden Star” or the “Company”) is pleased to announce
that Golden Star and BHP Minerals International Exploration Inc (“BHP”)
have entered into a joint venture to acquire two prospecting licences
in the Cuyuni district in Guyana, which is located approximately 140
kilometers from the country's capital, Georgetown (the “Cuyuni
Property”). BHP is a member company of BHP Billiton Limited. BHP will
have an 80% managing interest in the joint venture and will fund 100%
of all project expenditures up to the completion of a bankable
feasibility study. Golden Star will have a 20% interest in the joint
venture and will be free carried until the completion of the bankable
feasibility study.”

“The Cuyuni Property, which covers an area of 104 square kilometers, is
prospective for copper and gold and is being acquired from Barama
Company Limited (“Barama”). Under the agreement with Barama, BHP will
pay to Barama (i) $65,000 upon the signing of the agreement, (ii)
$10,000 upon the transfer of the prospecting licences for the Cuyuni
Property into the name of BHP, (iii) $25,000 per year on the
anniversary of the signing of the agreement as an advance royalty
payment, (iv) $250,000 for each mine site developed by BHP as a further
advance royalty payment, (v) 1.0% of the capitalized exploration and
development cost of each new mine site as a cash payment upon
commencement of commercial production, and (vi) a net profits royalty
of 5%. The advance royalty payments are deductible from the net profits
royalty. In addition, BHP may spend up to $3.5 million on direct
exploration activities within the first five years following the issue
of the prospecting licences….”

Stabroek News (April 27, 2002
http://www.landofsixpeoples.com/gynewsjs.htm) reported (in ‘Golden
Star, Billiton eyeing gold, copper mining in Cuyuni US$3.5M could be
spent in five years'): Golden Star Resources Ltd has entered into a
joint venture to acquire two prospecting licences in the Cuyuni with
BHP Minerals International Exploration Inc, which will plug US$3.5
million into exploration in the first five years. In a press release
issued by Golden Star (See abovementioned statement) earlier this week,
it was stated that the Cuyuni property, covering an area of 104 square
kilometres, is believed to have copper and gold and is being acquired
from Barama Company Ltd. …”

Dr. Keith Barron (in STRAIGHT TALK ON MINING, No.16, April 28, 2002.)

http://www.straighttalkonmining.com/docs/pdf/stom16.pfd in “There's
gold in them hills!” stated: “Golden Star Resources Ltd. and BHP
Minerals International Exploration Inc. have announced a 20:80 joint
venture over an area of 104 square kilometres in Northwestern Guyana.
The “Cuyuni Property” as it is known, is being acquired from the Barama
Company Ltd. for cash, a royalty interest, and other considerations.

Golden Star closed their Georgetown office a few years ago, and BHP
left Guyana back in 1999. They had formerly been joint venture
partners….”

The almost identical abovementioned reports (from different sources -
local and international) show that Barama was making, or attempting to
make deals with the mining companies. Under Guyanese law, not even a
Guyanese Company or any Guyanese individual (Amerindians included)
is/are allowed to make large private deals with international mining
companies. Mining deals must be approved by the relevant Government
authorities – deals cannot be done independently without Government's
authorisation and involvement. Yet in all the above reported deals, we
see that Barama apparently thought that it had the legal powers (or
maybe Government's approval) to negotiate separate deals openly with
mining companies. We must ask who gave Barama the necessary permission
to enter into such negotiations without Government's authorisation and
involvement. If no permission was given then would this not be a
violation of Guyanese Law by Barama? How could the State of Guyana not
know what is going on before negotiations got that far? (The
information was coming out since 1996.)

One would have thought that, it should have been the Government of
Guyana that would be negotiating mining rights.

The interests of the state of Guyana were apparently not represented in
the negotiations between Barama and the Mining Companies. Mercifully,
for some reason(s) the deal was stopped. Maybe Barama and the
Government officials can enlighten us as to what happened.

What the proposed agreement also showed is that Barama knew how to
skillfully negotiate a contract favourable to itself - unlike the one
given to it by the Government of Guyana in1992. The Barama Company
Ltd.'s negotiators : (1) wanted all payment in US dollars.; (2) initial
signing bonus, (3) advance royalty payments; (4) payment for each mine
set up on its concession; and (5) five percent on any profits. Barama
also knew that if mining followed forestry, then there would be no need
for any reforestation efforts or any need to observe the Guyana
Forestry Commission (GFC) and or Forestry Stewardship Council (FSC)
forestry harvesting and environmental guidelines.

Barama's illegal actions were ignored by the Guyanese Government and
Business community. Instead the Barama Company was commended: “The
foreign-owned Barama Company Limited (BCL) has, for the second time in
three years, won the President's Award for the Export Achievement at
the Guyana Manufacturers' Association (GMA) 2002 Annual Dinner.”
(http://landofsixpeoplpes.com/news022/ns211258.htm)

Too bad the Guyanese negotiators (in their Barama deal) did not make a
similar deal for their ‘green' gold, viewing each tree as a mini gold
mine. It also reveals something about the Guyanese authorities (GFC,
Guyana Geology and Mining Concession (GGMC), and Government), that they
are sadly asleep at the switch. The FSC guidelines require Companies to
be incompliance with local laws in order to get a FSC certification of
good forestry management and practices.

Is attempted robbery still a criminal offence in Guyana?

Was Barama ever penalised (charged, fined) for breaking or attempting
to circumvent the laws of Guyana? If not, why were no charges ever
laid? Is it a question of diplomatic immunity? Can any Guyanese get
away with trying to claim and sell the country's assets?



Seelochan Beharry

Guyana And The Wider World

http://www.stabroeknews.com/index.pl/article?id=56516380

Stabroek News


Guyana’s Poverty
Reduction Strategy Programme (PRSP)
and the forestry sector

The Guyana Poverty Reduction Strategy Paper (PRSP),
crafted out of nation-wide participatory consultations
and published in 2001, set out the parameters of
poverty in Guyana, analysed the contributory factors
and detailed a road map for poverty alleviation or eradication.
President Jagdeo announced late last year that “Guyana will
commence negotiations with the IMF next year, with a view to
coming up with a successor programme to the just concluded
Poverty Reduction Growth Facility (PRGF)” (Stabroek News,
December 24, 2006).
At the turn of the millennium, Guyana was still suffering
from a continuing high incidence of poverty: “In 1999, Guyana
completed a Living Conditions Survey [which] indicated a
reduction in poverty levels. The proportion of the population
living below the poverty line was found to be 35 per cent
with 19 per cent living under conditions of extreme poverty”
(PRSP, p. 5). While no more recent data on poverty have been
published, the Guyana economy has not grown in the ensuing
years.
The PRSP set out the causes of poverty thus: “Although
no one factor, or group of factors, may be singled out as the
cause and effect of poverty, the evidence in Guyana suggests
that low and/or negative economic growth accounted for
the pervasive and persistent level of poverty in the country.
This, in turn, stemmed from (i) poor economic policies; (ii)
poor governance; (iii) non-complementing growth-oriented
infrastructure; and (iv) deterioration in the quantum and
quality of social services” (PRSP, p. 7).
Like all other national policy documents, the PRSP
celebrated Guyana’s natural resource endowment. According
to the PRSP, most of the poor in Guyana live in the interior
Regions, coterminous with Guyana’s forest cover. This article
begins to consider the question: Why is there persistent poverty
in the interior alongside the parcelling out of Guyana’s best
endowed forests in large-scale forestry concessions? Do the
reasons for persistent poverty, as diagnosed by the PRSP, apply
to the forestry sector? This article examines the fi rst two causes
of poverty according to the PRSP.
Poor economic policies
During the late 1960s and early 1970s the UN’s Food and
Agriculture Organization (FAO) assisted the Guyana Forest
Department with reconnaissance inventories of forests.
Compared with much of African and Asian tropical rainforests
the forests of Guyana have low stocking and a high proportion
of hard and heavy timbers.
Almost uniformly the FAO specialists believed that these
limitations called for economies of scale, with low intensity,
low cost, low impact logging at long intervals, with value
added through effi cient industries, undertaken by private
sector concessionaires and managed with much greater
technical understanding and marketing skills than the local
timber industry then displayed; what might now be termed ‘a
knowledge economy.’ FIDS also suggested provision for smallscale
operators having limited capital, but the main emphasis
was on economy of scale.
In the middle of these technical developments, in 1970, the
then government took control of ‘the commanding heights of
the economy’ and civil servants were appointed to run private
sector operations.
As the economy faltered, massive and ill-advised ventures
such as the Demerara Woods enterprise at Mabura soaked up
money. Loans and credits from Canadian CIDA failed to restore
profi tability to the majority of private logging operations
or sawmills that lacked political connections. Spare parts
and working credit were so scarce that the forest industry
became moribund. The almost unbelievable decision by local
sawmillers to install sash gang saws (suitable for perfectly
sound conifer logs but entirely inappropriate for defective
tropical hardwoods) contributed to loss-making enterprises.
Liberalisation of the economy after 1985 was not
accompanied by an understanding of the national safeguards
for foreign direct investments (FDI). OECD guidelines for
multinational enterprises and on transfer pricing were
apparently overlooked when the give-away arrangement with
Barama was negotiated in 1991.
Although they are not in the public domain, the later FDI
arrangements for other foreign-owned loggers seem to have
been equally incompetent, judging by the way in which the
expatriates have been allowed to export unprocessed logs
instead of demonstrating best practice in timber processing.
The 1997 National Forest Policy (NFP) provides for operation
of small mobile in-forest sawmills, but only very recently is
this policy being put into practice in any notable way.
Poor governance
The second criticism in the PRSP concerns the weak and
inconsistent application of law and policies. Studies for the GFC
during 1994-6 showed that resource access taxes had failed to
be adjusted for the falling exchange rate and for infl ation and
were then amongst the lowest in the world. Political lobbying
has prevented correct updating of taxes, so the country is
receiving only around ten per cent of the volume-based tax
revenue from resource access rights compared with Malaysia.
It gets worse. Even our low taxes are not actually collected
effi ciently by the GFC and over US$ 1 million was owed by the
major logging companies up to August 2005. The NFP requires
the GFC to pay area-related forest taxes into the Consolidated
Fund, but external reviewers confi rmed that up until 2001
the GFC had not done this. There is no report on whether
the Ministry of Finance has demanded its due or whether it
demanded the 20-year backlog of taxes. The 1979 GFC Act
requires the Minister of Finance to tell the GFC what to pay
into the Consolidated Fund but the NFP requires the GFC to
take the initiative.
The 1980 national constitution and four national policies,
plus the PPP/C’s own 2006 manifesto, all promote in-country,
value-added processing of our natural resources. However,
what we see is an increasing proportion of prime hardwood
timber logs being exported without processing. Of course this
is the most profi table action from the point of view of personal
private gain. But national policy requires our natural resources
to be used for maximum net social benefi t, the public good,
not private gain. Until we invest in modern machinery and
marketing for furniture and fl ooring, highest technical
effi ciency in transformation from timber log to furniture may
be achieved by exporting logs to the modern mills in China
and the ramshackle but integrated industries in India. But
economic theory then requires that we tax the excess rent
obtained through log exports, so that it is the nation rather
than the foreign logger who benefi ts most.
This is not happening. The proposal of the Minister of
Agriculture for “forming a ministerial committee to look at
developing and advising on a log exporting policy for Guyana”
in the future does nothing to solve the increasing problems
today (‘No evidence so far of forestry transfer pricing -Persaud,’
Stabroek News, Monday, January 29, 2007).
Janette Bulkan
CFA Governing Council
guyanaforestry.blogspot.com


Source :
Commonwealth Forestry Association Newsletter number 36, March 2007, pages
8-9.

Old (Previous) Guyana Forestry Blog

This blog was first started at:

http://guyanaforestry.blogspot.com/

Guyana - Barama - "Hard to get reliable information" - labour recruitment by Barama or its agents

Stabroeknews
Wednesday, March 21st 2007
http://www.stabroeknews.com/index.pl/article?id=56516553

Dear Editor,

I am grateful to the many writers who have brought the improper exploitation of Guyana's forestry resources to the notice of the public. I share their deep concern.

Exploitation

A 16-year-old former ward of the charity for which I worked, told me he and two others were 'employed' by persons claiming to be recruiting for Barama. On their first assignment they were left stranded for three days on the riverside in a remote Essequibo region without food. They were only rescued after risking their lives on the river to get to within hailing distance of a passing boat. They were too poor and too illiterate to get justice, or even the supposed pay for their first 3 days of 'work'.

It was difficult for me to have made a check on the identity of the recruiters, so this can in no way constitute an accusation against Barama, but the company has done its credibility no good by failing to uphold its end of the overly generous concessions it obtained from our politicians.

This story is at least evidence that exploiters well know where to go to get their labour. In this case it was from North Sophia. It can also be used as an example for trying to convince street children and other truants of the importance of at least a basic education.

Information?

Perhaps, editor, or reader, you can advise me as to which agency of the State might exist to investigate and rectify such an injustice should it happen again. I did once in desperation, after fruitless runnings around, telephone the then Government Information Service (GIS) to find out which ministry or agency addressed a certain difficulty. I was put through to the manager, who readily admitted to the logic of my request, but oh so regretfully informed me that the agency was not outfitted to help me get that information. Within a year of that the Ministry of Information disappeared and GIS probably morphed into GINA.

Ability to think

If nothing else that ministry, from my acquaintance with it since the 1970's, has been mainly responsible for the successful propaganda to a sufficient number of especially young, impressionable citizens, who could otherwise have been motivated to contribute to their own and to our collective development, that

1. We as Guyanese really know very little: 'Massah' (the government or overseas expertise) knows best.

2. We are not (therefore) important enough to merit being answered, even tokenly, by Massah; so don't bother to ask; just hope you don't get into trouble. The poets have, I believe, written in vain about such mental environments.

And so, in the 21st century, 40 years after independence, apart from those who see no option but to take matters of their own and our existence into their hands, I find the vast majority of students looking for knowledge that is deducible or otherwise obtainable by simple observation. And they get it by copy - from official government sources, or from overseas sources (internet, etc.), or from what the most influential of them has copied.

Mr. Clarence Trotz has done us a favour in co-authoring that new Physics textbook. I look forward to reading it. Unfortunately the subject has too few students (who then tend to go and remain overseas) because it forces us to deduce results from scientifically established principles, all based on accurate observation. Let us hope the book helps to advance the self-belief in the ability to think that that indefatigable educator, now author, has always sought to encourage in his students.

Yours faithfully,

Alfred Bhulai

Editor's note

The proper place to report a job-related abuse of the kind you mention would be at the Labour Department in the Ministry of Labour, Human Services and Social Security at 1 Water Street, Georgetown. The Chief Labour Officer is Mr. M. Akeel A.A.

Guyana and the wider world

Trading in forest concessions - against forest policy and law

By Janette Bulkan

Sunday, March 18th 2007
Stabroeknews
http://www.stabroeknews.com/index.pl/article?id=56516380

Today's column considers the (ab)use of forestry concessions as tradable commodities by Asian FDI-benefiting (Foreign Direct Investment) companies, practices that are against forest law and policy in Guyana. Why is trading against policy? Because the April 1993 Guyana Forestry Commission (GFC) policy says that, * "It is the policy of the Government of Guyana that its forest shall be managed on a sustainable basis and in an environmentally sound manner to produce the maximum benefits for the people of Guyana" - that is, the maximum net social benefit to which I have referred often. * The 1993 policy also says, "No additional areas will be granted to Timber Sales Agreement (TSA) holders until they have demonstrated their ability to work existing concessions for maximum sustained yield" and "Failure to work a concession… may lead to cancellation of the TSA." These two bullet points should have prevented the GFC from allowing under-utilised concession holders from acquiring more than one TSA. The same bullet points should also have prevented Barama from acquiring the Barama Housing Incorporated (BHI) SFEP, soon to be rolled over into a TSA, because Barama acknowledges that it harvests much less than the average of 20 m3/ha, which is what the GFC says it should. The second of the quoted bullet points and the violations of the legal articles quoted at the end of this column should have resulted in cancellation of the concessions. If the GFC actually had a strategic plan for allocating concessions as stated in the 1997 National Forest Policy and the 2001 National Forest Plan, the rescinded areas would have been re-allocated through the open bidding process. It is illogical to have an open bidding process for new concessions and allow under-the-table trading of under-used concessions, and it is also against the policy favouring net social benefit, besides being illegal. The evidence from the Asian end of the value chain shows that Guyana is treated as if a 'For Sale' sign has been hung up at our doors. Forestry concessions are being rented for large sums of money, with no regard to the terms of the agreement. The concession licence is still ostensibly with the original holder. The Asian trading companies are no doubt secure in the knowledge that the lack of coordination between regulatory agencies (Guyana Forestry Commission, Guyana Revenue Authority, Ministry of Home Affairs, Customs) gives free reign to their international wheeling and dealing. In his message on the occasion of Chinese New Year, China's Ambassador Zhang Jungao's singled out two Chinese companies for special mention: "Last year also saw a breakthrough of co-operation between the private sectors of both countries in promoting the economic development in Guyana spearheaded by Bosai [bauxite] and Bai Shan Lin [forestry]." (Guyana Chronicle, February, 2007). However, there is little evidence so far - as tracked in Guyana's GDP or local employment, or workers' salaries or contributions to PAYE or NIS - of commensurate benefits from Asian logging companies to Guyana's development. Guyana's logging and milling sector have been reduced in the past 10 years to raw commodity supplier of prime timber species in log form to Asian countries, at the lowest prices for comparable timbers globally. The Asian market, the beneficiary of this 'Chinese (and Indian) takeaway,' absorbed 98 per cent of the total volume of logs exported from Guyana in 2006. Log exports as a percentage of log production in Guyana increased from 35 per cent in 2005 to 44 per cent in 2006. 82 per cent of all log exports in 2006 went to two Asian countries - India and China - importing 41 per cent each. The remaining 16 per cent of exported logs went to seven other Asian countries (Singapore, Taiwan, Vietnam, Thailand, Hong Kong, Bangladesh, Malaysia). The Initial Public Offerings (IPO) and letters to shareholders on acquisitions in Guyana take no account of forest policy in Guyana aimed at promoting downstream in-country processing, local employment and skills creation. On the contrary, one conglomerate, Seapower Resources International Limited (listed on the Hong Kong stock exchange) which acquired 51 per cent ownership of Jaling, holder of forestry concessions in Guyana, during September 2006 stated in its September 1 'Letter from the Board': "At present, the only exporting country for the Joint Venture is the People's Republic of China and the Directors confirmed that the Company has no intention to sell the harvested timber in the local market of Guyana or any other market" (p. 29). A sense of the intricacies of the trades involving the forests of Guyana can be conveyed by the following 'definitions' of terms mentioned in the quotation above, and set out in Seapower Resources International Limited's Letter from the Board: " 'Joint Venture' - W and J Forest Resources Development Limited, a joint venture company incorporated in Hong Kong on 1 December 2005 for the purpose of, amongst other things, the operation and management of the Forest, owned as to 50 percent by the Target and Mr Chu Wenze respectively" "'Joint Venture Agreement' - a joint venture agreement dated 22 December 2004, entered into among the Target and four independent natural persons from the People's Republic of China, as amended from time to time, to set up and operate the Joint Venture." " 'Forest' - the forests granted or approved to be granted to the Target by the Guyana Forestry Commission of an aggregate area of approximately 164,800 hectares (407,000 acres) mainly located in the north bank of Amakura River, the south bank of Baramita Amerindian Reserve and Whana River, the east bank of Whannamaparu and Whana River and the west bank of border with Venezuela, State Forest of Guyana, South America, which the Target has obtained an exclusive timber concession right for a period of 25 years." " 'PRC Joint Venture Partners' - four natural persons in the People's Republic of China, including Mr Chu Wenze, whom have founded the Joint Venture with the Target." " 'Target' - Jaling Forest Industries Inc., a private company incorporated in Guyana, South America with limited liability." Ten days before the Chinese Ambassador's New Year's message, Bai Shan Lin's 'President,' Mr Chu Wenze, held a press conference in Georgetown at which, inter alia, he stated that his company would invest US $100 million in Guyana, and that it was in partnership with Beijing Uni-Construction Company (BUCC) which had a 49 per cent share and was the source of funding for the Guyana operation ('Chinese firm plans US $100 million investment here, Guyana Chronicle, February 9, 2007). A week before Mr Chu Wenze's press conference a Stabroek News report noted that Bai Shan Lin's website stated that it planned to invest US $4.5 million in Guyana ('Chinese firm to process logs from Jaling concession,' Stabroek News, January 30, 2007). How credible is the jump from US $4.5 million to $100 million in a week? The same newspaper report detailed the company's claim on its website that it had rights to 400,000 hectares of forest in Guyana, although the two blocks of JaLing's Timber Sales Agreement (TSA 02/05) amount to only 137,000 ha. At his press conference Mr Chu Wenze alluded to the 'souring' of a business relationship between Bai Shan Lin and Jaling, and further stated that his company was "also in the process of acquiring its own forest concession so that it would be assured of a reliable supply of logs for its downstream activities" ('New Chinese forest company pledges to invest US$100M,' Stabroek News, February 9, 2007, http://www.stabroeknews.com/index. pl/article?id=56513688). An auditor's report to the shareholders of Seapower Resources International Limited (incorporated in the Cayman Islands with limited liability) noted, "On 10 April 2006, the Company and Wild Forest Limited, its wholly-owned subsidiary, entered into an acquisition agreement to acquire a 51 percent equity interest of Jaling Forest Industries Inc., a private company incorporated in Guyana, South America, for a consideration of HK$154 million [US$19,794,344]." Not a bad piece of small change for Danny Chan, the principal of Jaling. This company is notorious in local press reports for its poor treatment of its very few Guyanese forestry workers (60 compared with 140 Asian workers, completely at odds with the ratio stated by Minister Robert Persaud at his press conference on December 8, 2006), non-compliance with its business plans negotiated under secret FDI concessionary terms, and single-minded focus on exporting prime timber species in log form to China. Whatever the Chinese companies in Guyana fight among themselves about, they rest secure in the knowledge that there is little government interest or oversight of their activities. In the Guiana Shield countries of Guyana and Suriname, Chinese companies are popping up at every node of the production-to-consumption market chains for timber, taking advantage of lax regulatory regimes, and the under-priced and un-monitored export of hardwood timbers. The practices detailed above of private deals which transfer forestry concessions in Guyana are illegal. The relevant legislation is detailed below: 'Landlording' is the practice in which the legal holder of a forest harvesting concession gives up managerial control and rents it out to another enterprise. This practice is illegal under Forest Regulations 1953, Article 12 - "No transfer of any lease or timber sales agreement shall be made by any forest officer without the prior approval of the President where such lease or timber sales agreement grants exclusive rights to any person over an area estimated to exceed three thousand acres or is for an unexpired period exceeding three years." Landlording is illegal under Condition 13 of Timber Sales Agreements - "The grantee shall not transfer, sublet, mortgage or otherwise dispose of any interest arising under this agreement except in accordance with the Forest Regulations and any purported disposition made except in accordance with such regulations shall be null and void." Landlording is also illegal under Condition 2 of 16 of State Forest Permissions - "This Permit is not transferable without the prior consent in writing of the Commissioner. It may not be assigned or sublet nor may the grantee allow any person to work under it on payment to the Grantee of any consideration whatsoever." Landlording can be permitted only with express Presidential authority (the President being the Minister of Forestry, as opposed to the quotidian control by the Minister for Forestry, who is usually also the Minister of Agriculture). Landlording is differentiated from 'sprinting' which was a long-standing practice by which concession holders would contract in labour for specific tasks, but without in any way passing on managerial control. Next week I shall continue to examine the Asian end of the value chain against the stated national forest policy and forest law.