Only President can approve forest subletting - Bulkan

http://www.stabroeknews.com/index.pl/article?id=56524854

Only President can approve forest subletting - Bulkan
Stabroek News
Thursday, July 19th 2007

Forest researcher Janette Bulkan says there is no evidence in the
public domain suggesting that Barama Company Limited has formally
requested or has been granted Presidential approval for subletting of
long-term concessions and that there should be a competitive bidding
process to dispose of concessions whose holders cannot afford to work
them.

In a letter in the Stabroek News on July 10 she said also that there is
no evidence that such privileges were debated by the Guyana Forestry
Commission's (GFC) Board of Directors.

She pointed out that only the President of Guyana can approve the
subletting of long-term concessions. Repeated attempts by Stabroek News
to contact the Commissioner of Forests, James Singh on this point were
futile.

Bulkan pointed out that Barama "illegally" rents three classes of
forest harvesting concession: three long-term, "supposedly" sustainable
Timber Sales Agreements, one Wood Cutting Lease and at least two
short-term State Forest Permissions (VI-68 in the IPO prospectus).

Bulkan reminded that the post-audit SGS-Qualifor report is explicit on
the matter of Barama's control over harvesting in the landlorded areas:
"BCL has a few other areas in Guyana 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).

She said that "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'.

Bulkan also contended that landlording is illegal under Condition 13 of
the Timber Sales Agreement which states "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, she wrote, is also illegal under Condition 2 of 16 of the
State Forest Permissions. This states: "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."

Bulkan said that landlording can be permitted only with express
presidential authority. She said in this case, 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."

She explained that landlording is differentiated from "sprinting" which
was a long-standing practice by which concession holders would contract
labour for specific tasks, but without in any way passing on managerial
control. She said that "sprinting" is a way of keeping recurrent costs
low while being able to respond to specific orders for timber.
Sprinting, she said, is useful to companies, which do not positively
market Guyana's timbers.

On the competitive bidding process, she said that the April 1993
statement on forest concessions by the GFC, 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,"
Bulkan said. She added that 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).

Bulkan is of the view that 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." It has also been
pointed out that Barama was engaged in subletting when huge parts of
its own concession have not been utilised.

Further, she stated that her previous estimates of Barama's renting of
other forest logging concessions represented a lower figure than what
is taking place. "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.

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," she wrote.