Roger Khan's exploratory permit

Extracted from http://guyanaforestry.blogspot.com/



The issue of an exploratory permit to Roger Khan's company Aurelius was approved by the Board of Directors of the Forestry Commission
Wednesday, March 14th 2007

Dear Editor,

As reported by Stabroek News 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.

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 the GFC associated procedures updated in April 1999. This law provides opportunity for potential investors to bid for the rights to explore in detail the possibilities of commercial and large-scale 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, US$20,000, 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 Land & Survey Commission, and Ministry of Amerindian Affairs, but apparently none were 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 for Forestry (at that time, Satyadeow Sawh), 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. Stabroek News 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 1 April) 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 by the GFC staff of their own procedures. 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 promised 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 isn'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 Constitution 1980, 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 recognized, and shall be facilitated in accord with their conformity with the aims and objectives stated or implied in articles 13, 14, 15 and 16.'

Yours faithfully,

Mahadeo Kowlessar