The Barama Deal

How could the deal with Barama Company Ltd. be favourable to Guyana ?

Dear Editor,

I am very glad that Mr. Trevor Atkinson (SN Dec 16th, 2006) pointed out the harsh/cruel and difficult circumstances under which the Barama deal was negotiated with the Hoyte/PNC Government.

Under the Burnham/PNC regime, the economy had collapsed, educational and health services had severely deteriorated, and people were fleeing to wherever they can, in search of a livelihood, etc.

This dire situation existed all over the country. And, as Mr. T. Atkinson so graphically pointed out, the situation was even worse in the interior communities. Subsistence living was the norm of our people. We were in dire poverty, for the first time, comparable to the chronic poverty situation in Haiti . (The staggering national debt was $2 billion, a sum equal to 10 times Guyana 's gross domestic product.)

When Mr. Desmond Hoyte took over the reins of government, he was, therefore, faced with enormous problems - economic, social, crime, political, loss of trained personnel etc. He probably moved to secure his position by granting large concessions to his PNC cronies (Ministers, Members of Parliament, and supporters of the PNC), in the absence of other financial perks.

The political situation was still unstable. There was jostling for leadership within the party, and the angry voices of the extremists and those who grew up with the ‘culture of entitlements' were demanding their share. Because of the lack of democracy, since his government was not democratically elected, it was difficult to attract desirable foreign investments, as Mr. Atkinson so rightly pointed out.

Therefore, in order for Mr. Hoyte to get any foreign investment or capital here, he had to make major concessions with the less attractive and/or reputable companies. He was faced with some very difficult choices. Barama, knowing the prevailing conditions, had the upper hand, and therefore drove a very hard and ruthless bargain. Mr. Winston King (Mr. Hoyte's negotiator) was totally outmatched, or asleep, or unconscious, or whatever. The bottom–line was that Guyana got sucker-punched. Dr. M Colchester ( Guyana , Fragile Frontiers. Pub.1997, page 102) said: “The Barama agreement grants the company a 25-year lease – automatically extendable for a further 25 years… the Company also enjoys a ten-year tax holiday, including income tax, corporation tax, withholding tax, consumption tax, property tax, and income duties on just about everything, including machinery, fuel, building materials, office equipment, and medical supplies. Export taxes are only payable on greenheart, while royalty payments have been fixed in Guyanese dollars, over the first 20–year period, a gift to the company as the currency devalues.”(In 1991, G$112.00 = US$1.00; and in 2006, G$205.00 = US$1.00. This means that Guyana only gets about half as much of the original bargained rate).

“Yet the company is also permitted to hold external accounts, foreign currency accounts within Guyana, employ 15 percent foreign workers (more if local labour with the right skills is unavailable), and, in the event of disputes with the Government, have recourse to the arbitration of the ‘International Centre for Settlement of Investment Disputes' in Washington DC, in which case the company ‘shall be deemed as a national of a State other than Guyana' (basic Agreement 1991: article 21).”

It is as if the company has diplomatic immunity status. (No wonder the NGOs and the British Government thought that the contract was too generous and should be revised.)

Mr. Hoyte was counting on receiving this limited finance to fund the restoration and re-development of the country and his people. Despite being given all that it wished for, Barama claimed that it has not made a profit over the past 15 years; and therefore does not have to pay the measly 2% tax. The company did not act in good faith and did not meet its side of even this most flawed bargain (totally in Barama's favour) to Mr Hoyte's Govt. and the Guyanese people.

Mr. D. Hoyte and the Guyanese people were learning the hard way that most international business enterprises are not good corporate citizens. They find every way and means to avoid paying, unless they have to do so. With no functioning corporate law and/or agency to enforce compliance and impose penalties to defaulters, the payment/collection of negligible dues/penalties is left up to the whims of the members of the ruling party. The Govt. politicians (current and past) and officials are seduced, duped, and led by the Company (or the mini-state within the state). The political opponents (current and past) are probably silent for similar reasons, or reasons best known to them.

What is most interesting is that even Bookers in the sugar industry did not have such a generous deal in the years just preceding nationalisation. Bookers paid what was due into the National coffers.

The Union leaders (e.g. Mr. Richard Ishmael (MPCA), and Mr. Harrilal (GAWU)) knew the finances of the company, so that they compute the bonuses ‘owing' to the membership, and also know how much of a raise to bargain for. The Govt. also knew when it will receive a windfall - when sugar prices went up.

Bookers was not accused of defrauding the Govt., so mistreating its workers, displacing indigenous people, etc. (The unions were also strong.) Bookers was not involved in environmentally questionable industrial practices in its business. Yet, both PPP and PNC went after Bookers with a vengeance. (The forestry giveaways' situation makes the sugar and bauxite companies look like corporate angels. Most of us know that the benefits received and improvements in working conditions were the result of hard work by “agitators”.)

Guyanese Govts. (Both PNC and PPP – under Presidents: Mr. D. Hoyte, Dr C. Jagan, Ms J. Jagan, Mr. S. Hinds, and, Mr B. Jagdeo) have tolerated the Barama deal. In all cases, the Company did not contribute to the National coffers. As British Columbian workers said: “XXXXX got the coal, and we got the hole;” Guyanese may say: “They got the lumber and we got hunger.” (Or for mining: “They got the gold and we got the spills that kill.”) Could you imagine what Guyanese labour icons like Mr H. N. Critchlow, Mr R. Ishmael, Mr Harrilal, or Mr Ashton Chase, etc. would say about this deal and other forestry deals?

Why were/are these deals negotiated in secrecy? Why are they not going through Parliament, where we can have public scrutiny? (As is now done in Suriname .)

If the PNC State/Govt., with all its intellectual power, business acumen, legal resources, etc, could not both negotiate a fair and equitable deal, and ensure enforcement of the deal with the Company, then the overwhelming question is: How reasonably can we expect Barama to fulfill its obligations to relatively formally uneducated, legally unrepresented, financially impoverished, and isolated Guyanese?

We must also ask: Did the people have any legal representative looking after their interests? Were the people given the same secret ‘fair deal' and public non-compliance given to the Govt. by Barama?

With no functioning corporate law in place, who ensured compliance of any promised deals? How could the people defend their homes, means of livelihood, sacred cites, their natural heritage, and national interest, etc. against a big multinational company without any legal/lawful/constitutional representation? Their own Govt. had abandoned them. The Barama Company also had the legal and law enforcement agencies (Police and Army) on its side. From the above referenced documentation ( Colchester , 1997), the people had to accept their fate, there was no choice - Barama was now their landlord – the residents' status changed from owners to tenants. Who defines/determines fairness under such conditions?

Incidentally, it was not what I said about the treatment of the Amerindians, I quoted the findings of Dr Marcus Colchester and the APA. May I add that there was a joint NGO statement to the Caribbean Group for Cooperation in Economic Development, in which points #3 and 7 were: “Renegotiate disadvantageous logging and mining contracts entered into by the previous administration. Establish forthwith the promised Commission of Enquiry into the Land claims of the Amerindians affected by the Barama Company limited.” That was signed by the Amerindian Peoples Association (APA), Guyana Human Rights Association (GHRA), World Rainforest Movement (WRM), and Friends of the Earth (FOE) ( UK ). (See Colchester , page 112).

We must ask: “Is the APA not one of the internationally recognised voices of the Amerindians? Was the GHRA not a recognised and powerful voice for human rights violations in Guyana during the PNC years? Are WRM and FOE not internationally recognised organisations for the environment and the affected peoples?”

In addition, the British NGOs and World Bank environmentalists, and the PPP under Dr Jagan, The Guyanese Council of Churches, Trade Unions, Greenpeace, Survival International, and Forest Producers Association were against this deal. ( Colchester , page110).That is a very formidable and reputable array of diverse groups questioning Barama's past conduct.

So how could this ‘negotiated' deal (see above), (and other forestry giveaways) be so good for Guyana and Guyanese, especially since it took advantage of our greatest vulnerabilities and needs? We should be too experienced to be taken for a ride by now.

Seelochan Beharry

The Contributions sighted as evidence of corporate goodness are just minimum modern survival business practices or strategies.

Mr Trevor Atkinson (SN 16th Dec., 2006) sought to justify the deal and presence of Barama, by also citing the ‘good deeds' or ‘fringe benefits' of the Company to the local Community. This is an old corporate/business strategy – of offering a few crumbs to the locals while the company takes the loaves and all the drinks.

Kaietur News