Above the law: How Chinese logging firm Bai Shan Lin operates in Guyana, with the support of Bharrat Jagdeo

Guyana
As in a number of other countries (notably Mozambique) China's impact on Guyana's logging and timber processing industries is transforming local markets. The latter industry is being undermined by imports from China of cheap, modern furniture having a probable life much shorter than that of furniture made in Guyana which it is displacing. The apparent market within Guyana for logs of the species previously used in making such furniture is contracting to the point at which exports (typically to China) are almost the only option available to logging companies (other than letting the trees live).

The government of Guyana could deploy a range of fiscal and policy measures to sustain its timber processing industry []] and thus avoid the social and economic cost of loosing this. However, it appears that the government has chosen to apply such measures in ways which suit certain vested interests, both local and foreign.

One of the two largest logging groups operating in Guyana (both are foreign) has plans to log a very a large proportion of Guyana's forest area and to mine gold. Such operations are likely to conflict with Guyana's Low Carbon Development Strategy and REDD+ initiatives supported by Norway. The company describes as "]" the cost of constructing the infrastructure which will enable this asset stripping. However, it ] that that same company is exporting volumes of logs well in excess of that which is expected from State Forest Exploratrory Permits[]][]] - and therefore without proper authorisation, and doing so both directly (from KwaKwani) and after transportation to Georgetown in containers on lorries driven not by Guyanese but by east Asians.

The "spiralling demand" for tropical logs in China[]] (and to a very much lesser extent India) is attributable largely to the continued willingness of both China and other countries (including those which prohibit illegal wood-based products, such as the USA and the 28 EU member states) to turn a blind eye to the legality and sustainabilty of those logs' provenance. The legality of concession allocation, subcontracting of logging or logging by front companies, the export of species in volumes exceeding quota, the independent inspection of consignments prior to export and the rights of forest peoples should be cornerstones of the VPA which Guyana is negotiating with the EU - unless both intend the VPA to be window dressing.

If, ], the government does not have records of the projected and actual fiscal balance between the benefits and cost (to Guyana's treasury) of special tax incentives and the like in relation to particular logging groups, then this might simply reflect weak government capacity. However it might imply corruption. The likelihood of the latter would presumably need to be assessed by those carrying out due diligence under EC Regulation 995/2010 and the Lacey Act given their obligation to minimise the risk that products they place on the markets of the EU and USA respectively are illegal.
The Guyana Forestry Commission has not published sufficient recent forest inventory, roundwood production and export data to judge whether, as seems likely, the rate at which a number of tree species are being exploited is leading to their exhaustion - particularly those in which there is substantial interest from China (notably wamara and other Swartzia spp.).

Relations between the Chinese group which controls most of Guyana's industrial-scale logging concessions and the government of Guyana appear close - that group is also providing ], thereby denying Guyanese contractors and their workforce those business opportunities. That group's control over relevant policy-making in Guyana appears to have become so extensive as to warrant ].

Recent reports referring to Guyana's timber industry and its exports (including one concerning its competitiveness as a cluster - funded by the UK, Canda and the Inter-American Development Bank) seem to ignore or downplay the dominance of the industry by foreign interests, particularly those from China, and to focus on sawn wood rather than logs - despite the latter being much more controversial than the other timber products which Guyana exports. This contrasts with other ] of dubious ventures in Guyana for which China provided or has offered to provide debt. Indeed there appears to be increasing ] about the level not only of Guyana's debt to China but also of China's concommitant control over Guyana's economy.

] of the financial accounts of the Guyana Forestry Commission suggests the prevalence of large scale impropriety. This analysis makes the timing of a substantial grant from the Inter-American Development Bank ostensibly to support REDD+ in Guyana all the more remarkable. Due diligence would presumably require the Technical Co-operation ] under that grant to report whether malpractice by the authorities is - as in a number of other countries - in effect the greatest threat to Guyana's forest.

The Forestry Sector Information Reviews for the last three years indicate that log production during the month of December tends to be between two and five times as great as during other months of the year. Temporary surges at year end - when Guyana Forestry Commission ("GFC") inspectors are likely to be on holiday - do not seem to have taken place during previous years. The most high profile changes in the industry during the least few years has been increased interest by "Asian" enterprises. Inevitably perhaps, this makes it seem not only that those enterprises are cynically exploiting the established routine of the GFC but that they lack committment to Guyana and its peoples' forest.

Given that export volumes do not exhibit such a spike, it may be that the logs produced at year end are stockpiled for export or transformation later in the year. Such stockpiles if not clandestine, would presumably be easy to find.

If the declared FOB price at which logs of certain species are exported were much less than the price at which those species were advertised in relevant newspapers for sale to the market in Guyana, then this might indicate that those who seek to export logs are exploiting loopholes in Guyana's policy concerning the export of logs. The lower chart above illustrates the extent to which that policy (which seeks to promote the export of processed timber, not logs) is being flouted. (If the price advertised to the local market were exorbitant, there would appear to be no local interest, thereby making it easier to argue that the logs should be exported.) Assuming that there is no collusion, it would presumably be in the GFC's interest if such as an assessment were carried out.

Presumably, the Voluntary Partnership Agreement which Guyana is starting to negotiate with the EU will resolve whether the EU is to regard as legal the illegalities with which a number of foreign logging groups in Guyana are allegedly associated. Guyana's motivation in seeking that VPA might change once funds ] under an agreement between Norway and Guyana are released.

During 2012, a roundwood equivalent volume of approximately 120,000 cubic metres of timber was exported from Guyana. China and India each account for about one quarter of the total, almost entirely as logs. A further 3% was destined for the EU, predominantly as "undressed" sawn wood having an export value of little more than US$ two million. This accounts for a large majority of the roundwood equvialent volume which is exported from Guyana.

Nevertheless, a Chinese enterprise seems to have negotiated rights to log ] - twice as much as this - in order to supply a proposed saw mill, consequently casting doubt about sincerity of Guyana's Low Carbon Development Strategy. Further, there is unlikely to be a market for the output of that mill (or the logs from a number of the concessions which ] appears to have taken over), This is because there is non-negligble risk that taking over those concessions is contrary to ], which would presumably be unacceptable under the VPA and which is unacceptable under the USA's Lacey Act and the EC's Regulation 995/2010 (which prohibit the placement, on the USA or EU market respectively) of wood-based products which have a non-negligble risk of being illegal, whether supplied directly or indirectly, e.g. via India or China).
The Guyana Forestry Commission is reported to be keen to support those who exploit forest through Community Forestry Organisations in increasing the supply of timber for export.[]] This might reflect exhaustion of commercially attractive species in industrial-scale concessions ("Timber Sales Agreements"). Prior to allowing such explotation, communities should reflect on the profit which those further down the supply chain are likely to make at their expense.
Formal consultancy ] are said to identify not only numerous defects in the Legality Assurance System which the Guyana Forestry Commission "GFC" proposes (and in how the GFC interprets the law) but also ] in forest management practice in Guyana.

Recent ] articles indicate that Guyana's informal trade in timber (by the ethnic Chinese diaspora, some of who's residency status is likely to be questionable, as in ]) is increasingly manifest and has become an integral component in the export of Guyanese timber. This is contrary to the policy of the GFC - and probably illegal. This and other probable illegalities concerning Guyana's timber exports seem to be condoned by the authorities - and to contradict ]. This does not necessarily reflect Guyana's reputation for corruption (score 2.5 on TI's most recent ]).

Although the volume of plywood which is exported from Guyana (roughly 400m3 monthly) is currently a small fraction of what it used to be, there has been no change in the fiscal concessions which have for a number of decades been granted to one of the largest logging groups operating in Guyana - this apparent generosity by those at the highest levels of government (supposedly on behalf of the peoples of Guyana towards that logging group might reflect powerful vested interests.
Neither GFC reports nor the media appear to mention how and to whom the c.700,000ha increase in Timber Sales Agreements was assigned during the second half of 2010 (presumably from previously Unallocated Forest).[] and ]] This and the other apparently unexplained changes in forest allocations might reflect manipulation by those in authority, and as such might compromise the ] and ].. That the Minster for Forestry is the current President begs interesting questions in this respect.

Guyana is negotiating a Voluntary Partnership Agreement with the European Union "VPA", one component of which would require implementation of a Timber Legality Assurance Scheme "TLAS". Remarkably, assessment of such processes (fundamental to governance) as those by which (a) forest has been designated for logging or conversion, (b) concessions have been allocated, and (c) the logging entity authorised, do not seem to be required in the TLASs which the EU is negotiating elsewhere.[] ] ]] Documents rubber-stamped by relevant officials are deemed sufficient. If such rubber-stamped documentation is deemed insufficient evidence of legality under the EU's Regulation 995/2010 (which requires due diligence to exclude Illegal Timber from the EU market) it would seem to be in Guyana's interest to establish a VPA - from the 3rd of March 2013, that regulation will make it illegal to place Illegal Timber on the EU market, unless consignments (or illegal components thereof) derive from countries which are implementing a VPA.

As the upper chart above shows, the quantity of timber being exported from Guyana has risen strongly since the signing of the MoU between Guyana and Norway (November 2009), particularly as logs whose export is officially discouraged. Under that MoU, penalties will be triggered if timber production annually exceeds the average for 2003-2008[]] and if the percentage of timber production which is illegal exceeds 15%[]] (the Illegal Timber content of Guyana's timber exports to India and China is likely greatly to exceed 15%).

Further evidence that Guayana is not serious about reducing deforestation or forest degardation derives both from the number of logging concessions being granted - which has increased - and the nature of the enterprises which have been allocated the new concessions (- see below).

In addition, it ] that cocaine is being smuggled out of Guyana in containers with timber illegally [] ]] supplied by Chinese nationals (linked to well-known restaurant). Disputes about where the different authorities' jurisdictions start or end, and a previous order to reduce surveillance, would be consistent with high level interest. Failure to notice the fraud (illegal timber) tends to indicate that routine monitoring systems being used by the Guyana Forestry Commission are not fit for purpose, and this begs questions about claims submitted by the GFC under the MoU.

Remarkably, the MoU requires that measurment of forest degradation ignores one of the most fundamental chatracteristics of forest vitality - their mix of species (both of trees and their mode of reproduction, including the recycling of their nutrients).[]]

Since late 2009, the only destinations willing to accept Guyana's plywood exports have been local - the former primary markets of the USA or the EU now have or will soon have legislation which in effect prohibits the import of Illegal Timber. The benefits which Guyana has secured from its tax concessions to foreign enterprises in the timber industry seem negligible - though their cost is substantial.

The government of Guyana, a country which is both one of the ] in South America and noted for links to the ], is to receive a grant of US$30 million from the government of Norway. The grant is an initial instalment of a much larger payment which is supposed to reward the people of Guyana particularly for the retention of their forests' eco-system so that other countries can continue causing climate change through their consumption of carbon.

The much larger payment would be made even if deforestation increases - as is likely given plans to construct a controversial hydro-electric project. Norway will reward Guyana for increasing deforestation by between 50% and 400%.[]]

The Amaila Falls project is to be funded partly by the China Development Bank[]], and likely to use imported Chinese labour rather than Guyanese[]]. Although the ostensible purpose of this project is to substitute for electricity generated by current fossil-fuel power stations, the project might instead supply export-oriented refineries which have yet to be built.[]]

The route chosen for a new road to the project site conveniently passes through a mature forest ecosystem. The likely sub-contractor for the road is one of the three foreign logging groups which supply the great majority of the timber which is exported from Guyana to China and India. The government refuses to publish the mandatory environmental impact assessment of the project and this access road.[]] Norway's initial payments will presumably help commit Guyana to implementing this costly hydro-electric project prior to general elections in 2011...[]]

The Norway-Guyana agreement does not seem to require Guyana to address the primary drivers of forest degradation in Guyana - mining (particularly of gold) and, less lucrative, logging, both of which tend to be not only illegal and unsustainable but also associated with poor governance.

In so doing, Norwegian taxpayers snub their counterparts in the UK who, particularly during the 1990s, provided extensive funding and technical assistance to the Guyana Forestry Commission in order to help ensure sound management of Guyana's forest and timber trade.

Opportunites to take advantage of poor governance under REDD have already attracted criminal interests.[]] Under REDD, forests are being treated as if they were merely agents for the sequestration of carbon (rather than for their social and environmental services locally and globally) and, as such, tradeable by those who wish to continue to supplement the already dangerously high levels of greenhouse gases in the atmosphere. The Auditor General of Guyana has commented on financial chicanery by the office of the President of Guyana.[]] Instances of a similar character relating to funds disbursed under the MoU between Norway and Guyana are apparent.[]]

Despite major flaws, the government's Low Carbon Development Strategy has some encouraging points.[]] However, a McKinsey report[]] concerning incentives to avoid deforestation in Guyana appears to be based on a flawed appreciation of the potential of Guyana's forest land and the reality of Guyana's forestry sector.[]]

The unit prices cited in the ITTO's fortnightly "Tropical Timber Market Report" indicate that the difference between the unit prices for Guyana's log exports are remarkably small relative to unit prices for equivalent products exported from other producer countries. The difference might well be attributable to transfer pricing fraud. Given that, during 2005, logs account for almost all India's (and half of China's) timber imports from Guyana, and that India and China (primarily India) account for more than half of Guyana's log exports, entities in India and China might be unwittingly party to such fraud. The loss of export revenue attributable to transfer pricing fraud probably now amounts to very approximately US$50 million per annum. Although that amount is substantial in relation to Guyana's official export revenue of US$ 500 million (roughly half of which was then attributable to gold, diamonds and sugar, and a further 10% to timber), Guyana's losses from fraud in the export of gold and diamonds is probably much more substantial.

Such a large percentage in lost revenue should prompt donors to at least claim to be applying effective pressure on the government of Guyana to substantially reduce those losses. Remarkably, donors do not seem to be doing so.

Logs, sawn wood, and plywood accounted for approximately 35%, 45%, and 15% of the RWE volume of Guyana's timber exports during 2009.[]]

It seems likely that an increasing proportion of the logs exported is supplied other than directly from forest concessions - by shops and other small enterprises across the country (run by Chinese immigrants or ethnic Chinese domiciled in Guyana) which, implicitly, have diversified away from the business which they are authorised to conduct. Such informal commerce is unlikely to be acceptable if and when Guyana implements a credible Voluntary Partnership Agreement "VPA" with the European Union under the latter's Forest Law Enforcement Governance and Trade "FLEGT" action plan. ]

Bai Shan Lin []]
], since late 2012, with the support of Guyana Forestry Commission, Baishanlin has refused to obey three instructions from the Guyana Geology and Mines Commission to cease unauthorised work preparing for a mine. The company expects to obtain US$1,800 per hectare in profits from logging in Guyana,[]] where it admits to holding roughly 960,000 hectares of logging concession,[]]. There is doubt that it is legal for Baishanlin to have rights to log a number of these concessions - landlording being illegal. The company's saw mill ] to now process logs of a diameter which would previously have been illegal. Publicity by the company[]] tends to confirm allegations that residence in Guyana facilitates migration into other countries, notably the USA, and that the company intends to promote migration from China to Guyana and facilitate tax and other matters for businesses established in Guyana. A ] to be facilitating the company's forest-related business - which tends to imply that, according to the bank's due diligence, BaiShanLin is not in breach of the "]".

A state-owned timber enterprise from Wuchang (Northern China) was to log Jaling's concessions despite having no experience of tropical forests. It is likely - see the next paragraph - that Guyana BaiShanLin International Forestry Development Co. might have logged Jaling's concessions. These arrangements are akin to "landlording" which is illegal in Guyana (unless officially authorised by the President). The resulting timber was to be exported through a ] partly owned by a Mr Chu Wenze - a hardwood floor dealer - who was ] and who has been arrested in China. Mr Wenze has forecast that BaiShanLin's annual output of processed timber from Guyana would exceed 300,000 cubic metres at its peak.[[url=http://www.statisticsguyana.gov.gy/pubs/Key_Econ_Events_[Feb07%29.pdf]p5[/url]]

It is said that BaiShanLin now (2010) has interests in a concession (which Barama used to log []]) under arrangements which include a change in underlying control of the concession (implicitly illegal unless authorised by the President).

BaiShanLin (part owned by "]", a ]) ]
] whose ] during 2007) has also ] (the location of the Karlam mill). ] for workers and visitors to those operations has been a disgrace and BaiShanLin's workforce is treated badly. There is concern that the timber businesses associated with BaiShanLin and Jaling are using chinese workers (some of whom are indentured/bonded - as in Dubai) instead of employing local counterparts - and withdrawing support for community services.

BaiShanLin was registered during the month in which 51% of Jaling's shares were acquired from the Chan family. Its subsidiary, BUCC Wood, asserts that ] - an area considerably larger than that of concessions granted to Jaling, Garner and Demerara Timber combined... It is likely that this exaggeration was intended to increase intererst from Chinese investors - i.e. to con them. Alleged financial difficulties helped BaiShanLin to secure (from Guyana's Republic Bank) a US$200,000 mortgage over the Karlam sawmill. BaiShanLin subsequently defaulted on its repayments.

The Europen Commission (under its Linden Economic Advancement Programme) has subsidised China's timber industry with a US$10 million loan []] to promote the export of flooring strips from a controversial sawmill in Guyana.[Karlam ]]. China can easily afford to provide such susidies itself. The enterprise in which the loan is now invested, BaiShanLin ]], is related to the government of China. Given this and BaiShanLin's track record, it is remarkable that the European Commission continues to support this enterprise - indeed it is unlikely that BaiShanLin's products would be acceptable for import into the EU under the EC's []] "Timber" (due diligence) regulation.

During April 2007, BaiShanLin was ], partly as a consequence of its failure to comply with its obligations. Two weeks later, Jaling's Timber Sales Agreement was suspended due to ] by whoever was then logging on behalf of Jaling.

BUCC Wood, established at the end of 2006, is a jointly-owned subsidiary of BaiShanLin and BUCC. It claims to sell 200,000m3 of imported logs annually (the ] expected to extract from Jaling's concession) and to process some of this into veneer and flooring in Beijing. ] that Guyana is its sole supplier, that its logs enter China through ports near Zhangjiagang, Shanghai and perhaps Tianjin, and that at least some of the products made from those imports are subsequently exported. However, China declared the import of little more than 60,000m3 of logs and 4,000m3 of sawn wood from Guyana as a whole during 2007.

BUCC Wood appears particularly to promote logs of locust wood (Hymenaea courbaril) from Guyana in its ]. The export from Guyana of logs of this species - and crabwood/andiroba (Carapa guianensis) which ] markets - ], both for reasons of conservation and in order to safeguard supplies for Guyana's furniture industry. Authorities in China have been obliged to "correct" the statistics of imports from Guyana which they declare to the ITTO so as to exclude reference to this species. BUCC Wood ] of bulletwood (Manilkara bidentata) from Guyana - a ] and ecologically important "keystone" species, for which the Guyana Forestry Commission nevertheless quite readily grants permission to log.]

Barama (Samling Global)

During early 2006, Guyana's ], Barama, received an FSC certificate pertaining to the management of ] of its forest concessions. This ] in January 2007 after it became apparent that Barama had failed to comply with improvements required to maintain that certificate. Of Barama's 218,000m3 log production during FY2005/6, only ] were FSC-certified and ] of forest (and a further 60,000ha or so of Amerindian lands) over which Barama claims harvesting rights. Given that Barama's 1.6mi hectare concessions expire in 2016, it is remarkable that such a small proportion of Barama's log production derives from its own concessions. However, the window of opportunity for such exploitation is short (such "rights" tend to be illegal and they expire ], making it unlikely that management of these forest areas is sustainable. Indeed, Barama has stated that it ] [§12] (which is contrary to the law). It is probably from these areas that it fells most of thelogs which it exports.
Barama is now wholly owned by ], its former joint owner ] (a major conglomerate from Korea) having withdrawn. Samling, based in Sarawak, is a ] logging group (particularly due to its record for disrespecting native customary rights) which has ] by one of the world's largest investors - the government of Norway. Samling's listing in February 2007 on the Hong Kong Stock Exchange[]] ] which arranged that listing. Most of Barama's key workers and labourers are Malaysians and Indonesians - some of whom are said to have worked for Rimbunan Hijau in Papua New Guinea - fuelling resentment within Guyana.

Such employment practice, allegations of economic crime (concerning transfer pricing fraud and the granting of the very large area of its forest concessions and its remarkably generous tax treatment), failure to respect the rights of workers and indigenous people, and procuring wood from dubious sources, all in relation to Barama, breach "]" - which is said to be applicable to enterprises operating from Hong Kong as well as mainland China.

Subsequent to a formal review of its relationship with some officials which investigated illegal logging operations and fraud, Barama was ] with a token fine and by having some of its operations suspended. More recently, Barama has been ] - for failing to submit credible forest inventories and operation plans. It seems that Barama has not paid all its fines. It would appear that Barama's continued operation in Guayana - including without even ] []] - is consistent with high level corruption and the consequent risk of blackmail.

If Barama, the owner of the country's only plywood mill, finds it more profitable to export logs rather than plywood then this might partly explain why Guyana's plywood exports have collapsed - and would tend to reduce management effort in the mill, causing the quality of Barama's plywood to deteriorate. Barama's ] will have contributed to a reduction in buyers' interest in that plywood. That collapse might also be attributable partly to exhaustion of suitable species in Guyana's forest - reflecting unsustainable management and a failure of government oversight. The mill processed logs from numerous sources.

As indicated in the ], the volume of plywood entering end-use each year within Guyana has fluctuated around an average between 5,000 and 10,000 cubic metres.

The mill was a fundamental component of the very generous investment incentives granted by the then Guyana government to Barama (Barama commenced operations in 1991). The mill seems to have been used by Barama as a political tool. Soon after being ] (and perhaps in response), Barama threatened to ]. The reason cited - insufficient supplies of logs - (]) implies an unwillingness to buy in suitable logs, and has ] (perhaps when negotiating access to concessions which it had not been granted). Given Barama's ownership by a major tropical logging group whose operations include plywood production, it would be odd if Barama had offered to build a mill whose capacity exceeded the likely supply of suitable logs and/or that it so overestimated potential log production from its own and others' concessions. However, it might have done so as a (fraudulent) tactic to secure favourable terms of engagement in Guyana. Similar tactics may explain why the ] prepared for the Samling Global IPO in 2007 (see below) states that there are plans to expand the mill from 108,000 to 153,000m3/a - the increase being in stark contrast to the publication a few months later of plans to close the mill, and the steep decline in production by the last decade (see table below). The government forced Barama to close its Buck Hall mill during 2010 subsequent to the death of an employee in the mill's timber shredder.

Barama closed its mill for the foreseeable future during October 2010, subsequent to damage to part of the mill which had a fundamental design fault.[]] The President has expressed willingness to renew the subsidies from which Barama has benefitted for many years despite their cost to Guyana especially if the plywood mill is reopened.[]]

Barama has been subsidised by (externally supported) technical assistance []; ]] and, for almost twenty years (as a consequence of its various ] and de facto legal exemptions), by the people of Guyana. It has been said that the set of company accounts which Barama submits to the Registrar of Companies tend to show that Barama's business is unprofitable, despite all this assistance (and its competitive advantage in relation to profitable Guyanese timber companies). Like most timber companies listed on the Hong Kong stock exchange, Samling Global is incorporated in a British Overseas Territory (Bermuda), presumably for reasons of transparency and tax efficiency.

Despite the above, it would not be surprising if, prior to standing down during 2011, the President were to renew Barama's financial priveleges for a further ten years.

Comparison between the import statistics of China and India and Samling's export statistics[]]suggests that, during 2009, Barama supplied one third of the volume of logs which were exported from Guyana to China and two thirds of that supplied to India. Samling plans to produce 220,000 cubic metres of logs during 2011,[]] not much less than the total produced nationwide in Guyana during recent years.[]] ]

Vaitarna / Dark Forest Company (Simon and Shock; Caribbean Resouces)
An Indian enterprise Vaitarna Holdings has, through a local subsidiary - "Dark Forest Company" - acquired Simon and Shock's business in Guyana - which consisted of a State Forestry Exploratory Permit (valid for up to three years) for concessions of total area c.392,000ha.[]] It has also acquired the former concession of Caribbean Reources Limited (part of the CLICO group) whose area is c.346,000ha.[]] It is not legal for the government to transfer concessions in this way. These transfers, which took place during 2010, do not appear to have been made public until 2011.[]]

It is also not legal to allocate concessions to enterprises - like Dark Forest Company - which have no experience of tropical forest logging. Further, it is not legal for a concessionaire to subcontract the logging of its concession (unless authorised by the President) - as the Minister implies [ ], and even more questionable if the two concessions were to be logged by affiliates of Barama or Bai Shan Lin. The Minister responsible for forests would appear illsuited to his role given that, as Minister, he has implied that cultivating tree crop monocultures on accessible plantations requires similar experience as logging in remote, bio-diverse forest.[]]

The allocation to Simon and Shock was made during ] on condition that it established a major sawmill before carrying out any logging. No such investment appears to have been made. Although Dark Forest indicates that it might establish a mill, the enterprise seems intent on exporting logs (contrary to Guyana's forest and export policies) for the foreseeable future.[p2] It is unclear why the Guyana Forestry Commission has not withdrawn either the concessions acquired by Dark Forest. Having taken three years to carry out the requisite checks on the ] of Simon and Shock (an established timber business), it is odd that the GFC does not appear to have carried out similar due diligence concerning the eligibility of this enterprise. Further, it is unclear to which CLICO policy holders the G$600mi payment on which has been made on behalf of the Coffee Day group for CRL has been allocated.[]]

It transpires that Dark Forest Company is an afifliate of an Indian group whose core business is the management of cafes - Coffee Day - which seeks to expand its (currently in-house) furniture business, ]. Its plans to do so and float DAFFCO will presumably benefit from investments made during April 2010 by the private equity funds of Standard Chartered and ].[]] Perhaps these funds and those involved in promoting the flotation (including the relevant stock exchange) are unaware of or have discounted the reputational risk to which they are or will be exposed given the probable illegality of the furniture which DAFFCO presumably intends to make from wood supplied by its logging business in Guyana - a business which would seem to belie and threaten the ] which underpins Coffee Day's brand.

It appears that the authorities have waived the requirement that Vaitarna establishes a saw mill[]][]] and, for reasons which are not yet clear, the company has requested that its concession agreement be transfered to an affiliate of almost the same name[]]. It is understood that the company has started to export logs from Guyana. ]

Demerara Timbers

The owner of Guyana's second largest timber company, Demerara Timbers, was at one time thought to be Prime Group - a holding company ] the Malaysia's notorious Rimbunan Hiijau group. Demerara Timbers' ] executive, S K Chan, used to be chief executive of (Malaysian-owned) Barama..

BaiShanLin (see above) has an ] inter alia to assist in marketing, upgrading the equipment of the latter's saw mills at Mabura and broadening the range of products which it manufactures, and now appears now to admit[]]that it controls Demerara Timbers. Demerara Timber has an associate company (named Rich Resources) which ] - which is illegal unless it has the explicit approval of the President. Demerara Timbers' own concessions ].

SK Chan is understood to have seized control of Guyana's Forest Products Association in order to use this as a front to lobby the government. A particular concern is his plan for government to rescind all underperforming concessions (/"Timber Sales Agreements" - annual access to which are currently "negotiated" with the Guyana Forestry Commission instead of being under contract for 25-years as required by law) to a foundation which will control and sub-let viable areas for logging. Given the supposed unprofitability of the timber businesses which Mr Chan has operated in Guyana, it would be remarkable if those areas would be logged to the benefit of Guyana. ]

Jaling and Garner (China Timber Resources)

Jaling Forest Industries and Garner Forest Industries have forest concessions of 164,800ha and ] respectively. An almost bankrupt, persistently loss-making investment company with no experience of forestry, China Timber Resources (listed on the ] but incorporated in the Cayman Islands and, ], known as ]) owns 95% of Jaling and 100% of Garner through subsidiary shell companies - Wide Resources (also referred to as Wild Resources) and Vastrich respectively. Ownership of Jaling and Garner had previously been fronted by the (ethnic chinese) Chan family which has interests in the Karlam ]. Mr Danny Chan is chief executive of Jaling. China Timber Resources increased its ownership of Jaling from 51% to 95% by acquiring shares from a ] who, remarkably, had acquired those shares from the Chan family subsequent to it loosing apparent ownership control of Jaling in September 2006. During 2005, Seapower had an arrangement with the government concerning the exploration and exploitation of oil and mineral in Guyana[]].

Perhaps coincidentally, a Mr Liu Feng Lei was a major shareholder in Seapower Resources at the time when another ] (Chan Chun Hing / Kenneth Chan) was the company's ] chief executive and principal owner.

Prior to acquiring Jaling and Garner, Seapower made an arrangement with the government of Guyana to explore for and exploit petroleum, natural gas and mineral resources in Guyana.[]]. Perhaps coincidentaly, China Timber appointed to its Board of Directors Neil Bush, a member of the family of two recent Presidents of the USA who has been ]. ]

Sherwood Forrest
Sherwood Forrest was granted a ] concession shortly after it was established. It has no experience of logging and plans to subcontract logging to Bai Shan Lin - which is likely to constitute "landlording". One of its key directors Chu Hong Bo (understood to be a relative of Chu Wenze) is also a director of Bai Shan Lin. Another director has frequentlty been used as a consultant by the Guyana Forestry Commission.[]]

A partly Malaysian enterprise ] has been obliged to leave its former concession (TSA) in the same region as Sherwood Forrest, having failed to compy with the terms of its concession. ]