There are systems and checks in place to prevent corruption in relation to payment of timber royalties

http://www.stabroeknews.com/index.pl/article?id=56528371

There are systems and checks in place to prevent corruption in relation
to payment of timber royalties
Stabroek News,
Friday, September 7th 2007

Dear Editor,

We wish to respond to an article in the Kaieteur News of Wednesday,
August 22, 2007 headlined 'Guyana robbed almost 80% of timber royalties
- source.' The Forest Products Association is gravely concerned when
utterly baseless stories of this kind, attributed to unidentified
sources, are so readily published without the reporter, at least,
checking the facts with the association or other relevant agencies
which represent the industry.

A claim that 80% of the revenues due to the government payable from
royalties "are robbed" as a result of collusion between the industry
and customs is patently ridiculous.

The systems and checks in place, from the point of felling a tree,
removing it from the forest, holding it in log yards (where the logs
are held on the concession prior to removal for processing or export)
transporting it for milling or for export in log form would make it
impossible for the degree of corruption alleged in the article to take
place.

Unlike almost any other export product, it is virtually impossible to
conceal a product the size of a log from being identified in any
significant numbers.

The article claims that "the present system allows for corruption" and
that "it is impossible for government to really know what Guyana's
potential is as far as timber exports are concerned." This is sheer
nonsense. In fact the entire report displays a total ignorance of the
industry.

Every concessionaire is required to submit an inventory to the Guyana
Forestry Commission enumerating every tree that is intended for
extracting for approval prior to harvesting. When a tree is felled,
both the stump left in the ground and the log are tagged. At the log
yard, where logs are first held every log is listed by tag number,
species, measurement and volume and these lists are subjected to
inspection and randomly checked by the GFC against tag numbers on the
stumps in the forest.

Logs are identified and counted for the purpose of royalty payments by
the GFC prior to removal from the log yard. The customs department and
customs officers do not, as your article states, collect royalties. The
primary interest and purpose of the customs department in checking the
loading of a container, is to ensure that the contents of the container
is what has been declared.

A removal permit listing the full details of the logs, including the
means of transportation vehicle ID, volume, species, number of logs,
destination and signed off by a GFC officer must be issued before a
single log can be transported from the log yard to the processing mill
or directly in log form for export.

Manned forest stations are placed at strategic locations along typical
routes for moving logs and lumber. Loggers must present permits at
these stations and pay royalties or provide proof of payment.
Concessionaires are required to pay within 24 hours. The total number
of removal permits are frequently checked against declared production.

At sawmills species, volume, tag numbers, seller's name, removal permit
number and dates must be recorded and are periodically checked.

Customs and GFC officers are permanently based on site at the larger
concessionaries where containers are loaded and sealed on site. Special
arrangements must be made with customs and GFC for loading outside of
designated areas.

Every log destined for export from the point of felling and extraction
from the forest to the point of actual shipping can be traced and is
frequently randomly checked by the GFC. The penalties for extracting
logs without their being tagged and recorded are extremely severe. Any
concessionaire indulging in cheating the system on the scale described
in the Kaieteur News article would be very quickly caught and lose his
licence.

In terms of logs being floated downriver to sawmills described in the
report, such shipments are infinitesimal and in any case, would not
escape being counted at the log ponds where the count for royalties
takes place, unless the logs are illegally extracted.

Since every log extracted must be tagged at the point of felling, it is
sheer nonsense for the report to claim that, when shipped by water,
"there isn't anything much that allows for anyone to prove" where the
log was taken from.

The article makes the claim "that for every container of lumber that
leaves Guyana, some $500,000 in revenue is lost due to fraud." A single
40 foot container holds roughly 20 cubic metres of sawn lumber. The
duty on rough sawn greenheart for export is $5.08 per cubic metre. That
is $101.60 per container.

The total export of dressed and undressed greenheart lumber for 2006
was 17,223 cubic metres. Even if all of this lumber had been exported
outside of Caricom (for the purpose of payment of duty) it would have
attracted just $87,492 in Customs duty. So just how foolish can this
article get?

The forest industry provides direct employment for over 20,000 persons
and a livelihood for approximately 80,000 and contributed approximately
$360B last year to the nation's Gross Domestic Product.

Unfortunately, an immeasureable amount of damage is done by this kind
of thoughtless, irresponsible and unprofessional report to the
integrity and reputation of the companies who have invested many
billions in a high-risk, highly competitive industry with very low
rates of return on investment.

The article is, of course, equally damaging to the reputation of the
Guyana Forestry Commission and the Guyana Revenue Authority and the
officers of these organizations, who, in the main, perform their duties
professionally.

The Kaieteur News should either provide documented evidence to support
its report, or apologise for the publication.

Yours faithfully,

Mona Bynoe

Executive Director

Forest Products Association of Guyana