Concession holders who cannot operate their forests should lose their grants, not be allowed to transfer them without a competitive bidding process

http://www.stabroeknews.com/index.pl/article?id=56524259

Concession holders who cannot operate their forests should lose their
grants, not be allowed to transfer them without a competitive bidding
process
Stabroek News
Tuesday, July 10th 2007

Dear Editor,

I am happy to agree with the Commissioner of Forests, as reported in
Sunday Stabroek in an article captioned "Barama harvesting legally
outside its concession - Commissioner of Forests" (2007.07.08) in one
respect. My previous estimates of Barama's illegal renting of other
forest logging concessions are apparently an under-estimate. I had
calculated partly from the Initial Public Offering (IPO) prospectus of
the parent company, Samling Global Ltd., in March

2007 that about 408,000 ha were illegally managed by Barama. The
conformity assessment body, SGS Qualifor, has at last put on its
website the public summary of the report of its surveillance mission of
November 2006 (url = ). This shows that the Amerindian areas under "bad
faith" logging agreements (illegal under the Amerindian Act 2006,
Article 55 (1) (d) cover 72,000 hectares, instead of my previous
estimate of 7,978 ha. So Barama is even more illegal than I had
suggested and even more than is revealed in its IPO prospectus.

The SGS report is explicit on the matter of Barama control over
harvesting in the landlorded areas: "BCL has a few other areas in
Guyana (through joint ventures or own) where it has control over its
management" (page 63 in SGS document AD 36-A-01). Barama's IPO confirms
that Barama has no interest in sustainable management of these
landlorded concessions (VI-68 and VI-69 in the IPO prospectus).

Let us recapitulate the legal and policy requirements of Guyana which
Barama is infringing through these illegal acquisitions.

Legal

Barama illegally rents three classes of forest harvesting concession:
three long-term, supposedly sustainable Timber Sales Agreements, 1 Wood
Cutting Lease and at least two short-term State Forest Permissions
(VI-68 in the IPO prospectus). Only the President can approve
sub-letting of long-term harvesting concessions. There is no public
domain evidence that such approval has been formally requested or
formally granted, or debated by the GFC Board of Directors.

"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. "Sprinting" is a way of keeping recurrent costs low but being
able to respond to specific orders for timber. Sprinting is useful to
companies, which do not positively market Guyana's wonderful timbers.
"Sprinting" in Timber Sales Agreements is covered by Condition 14:

"The grantee [that is, the holder of the TSA concession] shall inform
the Grantor [the Guyana Forestry Commission] in writing immediately
upon engagement of the names of the agents and contractors who are and
the dates when they cease, to carry out its operations in the Area."

There is provision for suspension or cancellation of WCLs or TSAs in
the Forest (Miscellaneous Provisions) Act 1982, Section 11.

Policies

The April 1993 statement on forest concessions by the Guyana Forestry
Commission, and the associated procedural manual, cover the transparent
and competitive process by which private enterprises and individuals
can secure forest concessions. This bidding process is referenced in
Section 4 of the National Forest Policy of 1997 and Section NFP 300 of
the National Forest Plan of 2001.

It makes no sense to have an open bidding process involving the
submission of competitive price premia to acquire concessions, and at
the same time to allow Barama to by-pass these national policies by
non-transparent dealings and non-payment of additional price premia.
Concession holders, who cannot operate their forests according to the
terms of their concessions should have their licences withdrawn in
accordance with GFC procedures and the areas returned to the strategic
pool for re-bidding through State Forestry Exploratory Permits (SFEPs).

Barama is obviously attractive as a partner for failing concessionaires
because of its lower costs which are achieved through abuse of its
Foreign Direct Investment (FDI) tax concessions, compared with national
enterprises. If the Commissioner's position were to be carried to the
logical end, Barama could absorb all other concessions beyond its
current 33+ percent of State Production Forests. So we would have moved
from British Guiana through Bookers Guiana to Barama Guyana. This is
hardly compatible with the National Competitiveness Strategy formulated
under the present Administration in 2006.

This debate has been playing out in the newspapers for over a year, Mr
Editor, beginning with the Commissioner of Forests' assertions reported
in the Guyana Chronicle of 2006.04.01 ("Forestry Commission rejects
`half truths'"). It is extraordinary that the GFC is still not able to
provide an accurate estimate of the areas illegally sublet to Barama
and those held under `bad faith' agreements. Surely it is the task of
the Forest Products Association (FPA) to argue the case for special
treatment for its members while the Commissioner of Forests should be
defending and promoting the national interest. Your report suggests
that the Commissioner is more interested in supporting the illegal
harvest by the largest operator in Guyana than in forest stewardship in
the national interest.

Three other Asian-owned loggers manage illegally sub-let concessions.
Surely it is past time for the Attorney General to intervene and
provide a definitive, complete, and fully referenced public statement
on this matter, for each one of the illegally managed concessions?

Yours faithfully,

Janette Bulkan