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