Some Bai Shan Lin joint ventures may be illegal – experts

Some of the Joint Ventures (JV) involving logging company Bai Shan Lin may be illegal as provisions in the Forest Act 2009 did not come into force until 2012, forestry experts Janette Bulkan and John Palmer have said.

“The choice of 2009 by the GFC staff as the first year for approval of joint ventures appeared to be based on a belief that the passage of the Forest Act 2009 by the National Assembly in January of that year meant that it entered into force immediately. In fact, Presidential assent was delayed by a possible world-record-breaking 628 days by then-President Bharrat Jagdeo, and the commencement order required by section 1 of the Act was only signed by Minister Robert Persaud on 08 August 2012,” Palmer and Bulkan wrote in the Stabroek News last week.

“In law, therefore, the Forests Act 1953/1997 continued to be the operational forest law until August 2012. Activities contrary to that law and its associated Forest Regulations 1953 were illegal until August 2012. All the so-called ‘joint ventures’ – actually, landlording – devised until August 2012, and all the approvals of such landlording by the GFC Board until August 2012, were illegal unless approved for TSAs by the Minister of Forests (the President). There is no evidence in the public domain that former President Bharrat Jagdeo gave prior formal approval to any transfers under Regulation 12 of the Forest Regulations or Condition 13 of the Timber Sales Agreements. The emphasis is on ‘prior’; there is no legal provision for retroactive approval,” the duo wrote.

Commissioner of Forests James Singh told reporters at a press conference recently that Bai Shan Lin has four joint venture (JV) arrangements. In 2007, Danny Chan transferred all the shares in Haimorakabra Logging Company Inc as well as Karlam Sawmill to Chu Wenze, the chairman of BSL, and in April 2009, the JV with Wood Associated Industries Company (WAICO) was approved. The GFC board in March this year approved the JV with BSL and Puruni Woods Inc and in April approved the JV with Kwebanna Wood Products Inc.

Bulkan and Palmer identified several dealings involving Bai Shan Lin – renting or private sales of forest concessions – ‘joint ventures’ – which they said were “probably illegal” pending contradiction by formal publication of such prior approvals, with date-stamping of signatures before the dates of any joint venture contracts.

The duo said that the total area of these probably illegal rentings or joint ventures is 762 000 hectares which represents over half of Bai Shan Lin’s “forest empire” in Guyana.

Bulkan and Palmer identified the Haimorakabra State Forest Permission (SFP) as well as the WAICO Timber Sales Agreement and Karlam South American (Guyana) Timber as among the transactions that were likely illegal. They also identified the case of Demerara Timbers Ltd’s TSAs 02/1991 and 03/1991 in 2007 covering 492 000 ha as an undertaking that may be afoul of the law. “That no shares may actually have been transferred is not a defence because Condition 13 of the TSA licence refers to ‘any interest’, not just the company shares,” they wrote.

The duo also cited the case of the A Mazaharally TSA 02/1990 or TSA 04/2009 which covers 87 000 ha, “when rented variously to Barama and to Ram Ali,” as likely illegal but when it was passed to Bai Shan Lin in April 2014, that transfer was legal.

“Possibly illegal were the rentings of Nagasar Sawh’s TSA 02/1985 (29 000 ha) and Garner’s TSA 03/2005 (93 000 ha) but information is not confirmed,” they wrote. They added that there is also no evidence in the public domain that the GFC Commissioner gave prior formal approval to transfer of State Forest Permission Bce 15/1987 to Bai Shan Lin, as required by Condition 2 of 16 of State Forest Permissions.

The duo noted 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. The practice is illegal under Forest Regulation 12, 1953 which stated that “No transfer or 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 and Palmer pointed out that eight years after the drafting of the Forest Bill 2007, “the GFC has still not prepared regulations subsidiary to what is now the Forests Act 2009 (activated in August 2012 and backdated to October 2010). So the Forest Regulations 1953 are still in legal effect.”


Condition 13

They also pointed out that landlording is illegal under Condition 13 of Timber Sales Agreements which states that “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.”

The duo pointed out that much the same wording is found in the third edition of the GFC Code of Practice for forest operations for Timber Sales Agreement and Wood Cutting License holders: “The concessionaire shall not transfer, sublet, mortgage or otherwise dispose of any interest arising under the concession agreement.”

Bulkan and Palmer noted that although the illegalities of renting logging concessions were exposed repeatedly in the independent Press in early 2007, at the time of the Barama ‘bad-faith contracts’ with Amerindian communities Akawini and St. Monica in Region 1, the GFC continued to allow the other three Asian-owned logging companies to rent concessions: Bai Shan Lin, DTL and Jaling.

“The chaotic situation resulting from uncontrolled renting of concessions, and the evident loss of control by the GFC over the State Forests which it is mandated to administer on behalf of the people of Guyana, contributed to the citizens’ petition against the technically weak Forest Bill 2007,” they said. The National Assembly failed to take heed, Bulkan and Palmer noted.

They also said that in addition to the illegalities, the accumulations of rented logging concessions are contrary to national policy. “The 1993 timber concession policy is clear that ‘No additional areas will be granted to TSA holders until they have demonstrated their ability to work existing concessions for maximum sustained yield’ (GFC timber concession policy 1993, page 3). And ‘the grantee shall work the area to the satisfaction of the Commissioner in accordance with the terms of this Agreement’ (Timber Sales Agreement template in the second schedule ‘A’ of the Forest Regulations 1953/1982, clause 6). This clause is reiterated as ‘The concessionaire shall work the area to the satisfaction of the Commis-sioner in accordance with the terms of the concession agreement and only in accordance with the Forest Management plan, as approved by the Commissioner, . . .’ in the third edition of the GFC Code of Practice for forest operations for Timber Sales Agreement and Wood Cutting License holders,” they said.

“Neither during the management by the original Guyanese concession holder nor subsequently under Bai Shan Lin have any of these concessions been worked to the maximum sustainable yield,” the duo declared.

“The field audits prescribed in the same 1993 policy would have shown that the loggers were not cutting at those intensities, and therefore the concessions were not being worked in accordance with GFC prescriptions, and therefore there were no grounds for adding more concession area by adding more rented TSAs. The under-cutting in overall terms was readily acknowledged and shown in data tables during the presentation by the GFC Commissioner at the Press conference on 18 August. Thus the illegal renting of Haimorakabra in 2007 has been aggravated by the against-policy additions of other TSAs to the Bai Shan Lin forest empire,” Bulkan and Palmer said.

Bai Shan Lin has announced big plans in various sectors for Guyana but concerns have been raised by some analysts that its primary interest is logs for export, with little downstream processing. Its operations have come under increased scrutiny in recent times. The company has failed to live up to commitments to do value-added processing but government officials, including President Donald Ramotar, have defended the company. Bai Shan Lin’s access to key parts of the economy has also raised questions about the regulation of its business by the forestry commission and associated bodies.