… State robbed of hundreds of millions of US dollars annually − Phillips
The Government’s State Asset Recovery Unit (SARU) has set its sights firmly on Guyana’s logging sector, since the State is being robbed of hundreds of millions of US dollars on an annual basis through underpricing and price transfers among other unscrupulous practices.
This is according to SARU Executive Member, Dr Eric Phillips. The SARU operative was at the time responding to assertions made by Janette Bulkan and John Palmer that Government has been losing millions annually through the shady practices and called on SARU to investigate with a view to recovering what they termed lost State assets.
Speaking exclusively with Guyana Times on Tuesday, Dr Phillips said Bulkan is right and the matter is something that entity will be vigorously pursuing in the coming days.
He told this publication that the entity has already begun having monthly meetings with land stakeholders in Guyana, such as the Guyana Forestry Commission (GFC), the Guyana Land and Surveys Commission, the Guyana Geology and Mines Commission and the Mahaica Mahaicony/Abary land development group among others, to begin to rectify the annual losses being incurred by the State through varying anomalies.
Monthly meetings
He said the monthly meetings are already being held with about eight such bodies and are looking at issues such as the negligible leases being paid for large swaths of land across the country for logging and mining among other activities.
According to Phillips, the entities have begun to look at ways to have many of the applicable rates be revised so that Government can be able to benefit from its fair share of the natural resources being exploited by the many large companies – many of which are overseas-based.
On the matter of the price transfers and underpricing, Dr Phillips told Guyana Times that this is a matter that will be taking prominence on SARU’s agenda.
Phillips went on to say that Bulkan has already submitted a range of documents related to the matter at hand which the investigative body has begun looking at.
Bulkan, along with Palmer, was quoted in sections of the media on Tuesday questioning “which Government Ministry or agency deals with persistent underpricing of public assets.”
Bulkan is of the view that the matter should be dealt with by SARU and argues that the monies lost by the State through the unscrupulous practice does in fact constitute lost State assets that must be recovered.
Wamara logs
She used as an example the export of Wamara logs – one of Guyana’s premier high-priced wood species – and said that over 100,000 cubic metres (m3) of Wamara logs were exported to China in 2014 alone.
According to Bulkan, the Freight on Board (FoB) price for Wamara logs declared in Georgetown was in the range US$200-220/m3 in 2014.
Containerised log freight and insurance Georgetown to China is in the range US$25-36/m3 according to the Guyana Manufacturing and Services Association and Cost Insurance and Freight (CIF) reported by China Customs US$700-1000/m3.
Bulkan in pointing out the glaring inconsistencies, explains that “the equation FoB+freight+ insurance=CIF, clearly does not work with these values, and the obvious explanation for the US$500/m3 discrepancy is transfer pricing….100,000 m3 X US$500/m3 = US$50 million.”
According to Bulkan, no part of this sum was returned to Guyana’s Consolidated Fund and the GFC has over the years denied that large scale logging companies operating locally such as BaiShanLin, have been engaged in the practice despite the fact it offers no contrary evidence.
“Underpricing leads to lower export commissions on the logs than the law provides, and on this massive scale the loss of revenue is considerable,” said Bulkan
The illicit financial flows out of Guyana have since been estimated by the Washington-based Global Financial Integrity at US$84 million in 2003 rising almost continuously to US$440 million in 2012
It has been reported that around half of the illicit flows between 2003 and 2012 are as a result of export under-invoicing.
Bulkan in her assessment has stated that the logs harvested from State forests and shipped to China cannot be retrieved and restored to be living trees again, so to that extent, these State assets cannot be recovered, “but the lost revenue can be recovered.”
She said too that the private property and other assets acquired through the contraventions of the civil service Code of Conduct (Integrity Commission Act) would surely come under the purview of SARU and if this is the case, “let us hope to see them high up in the list for early prosecution,” a commitment now given by SARU’s head, Dr Phillips.
