The Vaitarna matter

A report by the Times of India earlier this month that an Indian company, Vaitarna Holdings, controlled 1.82M acres of Guyanese forest deservedly captured media scrutiny here.

First, had there been a functioning Access to Infor-mation Act as promised umpteen times in the breach by the government the media might have been able to unearth much earlier and progressively, information on this transaction thereby helping to obviate concerns that the deal was secret and with dark underpinnings. After more than 18 years in office this government remains deaf to the manner in which agreements of this type ought to be publicized. The blackout was even stranger since Vaitarna is reportedly investing US$18.7M, the type of figure that the government is always keen to trumpet in view of the limited investments flowing into the country.

Second, in the backdrop of President Jagdeo’s feverish effort to secure traction and financing from Norway and the international community for avoided deforestation and a Low Carbon economy, the deal with Vaitarna which was presented in the Indian press as predominantly one where the company would be exporting logs from Guyana to India for transformation into furniture jarred excruciatingly. Albeit the deal with Norway doesn’t prohibit commercial forest activities that conform to the timber extraction framework but shouldn’t the state aim higher for the commercial use of its forests rather than simply the export of logs with the ever vague and distant promise of downstream processing on Guyana’s land?

Perhaps this was the real reason that the government was not brimming with excitement to have this deal publicized as it betrayed less than a courageous commitment to avoided deforestation and the oft-expressed national goal of value-added forestry. Is the deal perhaps also an admission that mainly conservation concessions in the form of Iwokrama and another assigned to Conservation International are not yielding the type of value that would militate in favour of more of these or even extended acreage for them? What is also clear from the Vaitarna deal is that the investment climate and conditions here are not attracting experienced and capable investors in droves so Guyana is left to settle for a company which while already in the furniture business has primarily been a coffee maker.

Third, was this company treated preferentially and had access to information that others didn’t? Despite the protestations of government officials, the sequence of events would suggest that Vaitarna was exceedingly lucky to be in the right place at the right time or was accorded some help. Simon and Shock, a US group had under its State Forest Exploratory Permit set itself the onerous standards of not exporting logs and building an advanced milling complex in Linden failing which it would return all logging concessions uncut. It was upon this failed proposal that Vaitarna was able to introduce its acquisition offer to Simon and Shock and the government without offering anywhere near the former holder’s commendable aspirations. At this point the state had the option of re-advertising the SFEP which it failed to do and Vaitarna was then able to close the deal. The
re-advertising of the SFEP would have been the most appropriate course of action for the state given the desirability of a project similar to Simon and Shock’s.

Sometime later, Vaitarna became aware that the Caribbean Resources Limited’s Timber Sales Agreement was in trouble and made a move on it. The forestry commission has said that this was advertised but the manner in which the state advertises these days is no guarantee of wide publicity. To the contrary it aids directly the limited transmission of information in a manner that favours certain investors. Whatever the sequence, Vaitarna was also able to clinch a deal for the CRL TSA giving it control of 1.82M acres.

Fourth, it has now been disclosed by the government that $600M from the Vaitarna deal in respect of CRL’s TSA has now been applied to the debt owed to CLICO’s customers in cognizance of the fact that CRL was part of the troubled CLICO parent company. That in itself should have been disclosed earlier considering the serious questions raised in Guyana about the manner in which the local CLICO collapsed, who might have had privileged information on its pending demise and the questions as to why taxpayers of this country were being made to bail out investors who should have borne the risk associated with their investments.

For all these reasons and many more the government-spun secrecy about this deal entrenches the view that unsavoury occurrences such as the acceptance of a gift from the Chinese firm Huawei, just after it had won a lucrative deal in a non-competitive process, are acts that the Jagdeo administration is comfortable with and all the more reason why the populace must be on the alert for deals such as the one with Vaitarna.

While the government has released some documents pertaining to the Vaitarna deal including the SFEP and the TSA, the public has an intrinsic right to learn the details of the financial agreement between the two sides.

How was the sum of $600M arrived at for the TSA? Was there a considered valuation of the viable stock in the concession and an assessment of the options that were available?

Does the US$18.7M refer solely to the TSA or also to the SFEP? How is this broken down and what are the commitments in terms of how soon the company is expected to begin downstream processing and the schedule of investments. Is there a limit on the amount of logs Vaitarna will be able to export while it prepares for downstream processing? Has Vaitarna gifted anything to the country?

The public awaits with great interest more information on this deal.