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Former Member

APNU says…BOSAI contract designed to

rob country of billions

December 6, 2013 | By | Filed Under News 

 

The “illegal” Mining Agreement between the government and the Chinese bauxite mining company has been classified as, “a product of corruption.”

Joseph Harmon

Joseph Harmon

This assertion was made by Financial Analyst and former tax officer, Ramon Gaskin, who was also supported by A Partnership for National Unity (APNU)’s Joseph Harmon who stands in the capacity of Shadow Minister of Public Works and Telecommunications.
The duo asserts that, “The contract was clearly designed to rob Guyana of the revenue it was entitled to.”
Harmon also purports that the Chinese company owes Guyana over US$5.4M in royalties.
When BOSAI had taken over the Omai Bauxite Company, its operations were then governed by a signed agreement which Harmon claims was drafted by the National Industrial and Commercial Investments Limited (NICIL).
The contract which was signed in December 2004 says, “For greater certainty, any amount of corporate tax paid by the Company for any given year shall reduce correspondingly the overall amount of royalty to be paid thereafter by the Company.” According to Harmon, this simply means that the royalty to be paid to GGMC will be reduced based on the corporate tax paid to the Guyana Revenue Authority (GRA). He said, “That part of the contract means that if you are paying a $100 in corporate tax and your royalty is $120, your tax will be subtracted from the royalty and it will be reduced to $20.”
He added, “Nothing in the contract or even in that part, says anything about a waiver.”
Harmon explained that this contradicts what the Company Secretary reportedly said. Mr. Norman McLean said that after five years, the company (BOSAI) is required to pay royalties but if it makes a profit, the rate of the royalty is reduced by the corporate tax. This he claims is intended as another incentive to encourage companies to be profitable and pay Corporate Tax which is much higher than the 1.5 percent royalty.
Moreover, The Commissioner (ag), Mr. Rickford Vieira of the Guyana Geology and Mines Commission (GGMC) who is supposed to collect the royalties from BOSAI informed this publication that GGMC is unaware of any agreement between government and the company which says that the corporate tax would offset the royalties to be collected by them.
Mr. Vieira revealed that a copy of the contract was not even in their possession, despite several efforts to contact the Bauxite Company to provide them with one.
However, Mr. Harmon who provided an extract of the agreement contended he finds Vieira’s statements to be quite odd, since he had obtained the said document from one of the directors of the Commission.

Khemraj Ramjattan

Khemraj Ramjattan

Nevertheless the Commissioner says that regardless of the arrangement between the government and the company, they are supposed to pay royalties to GGMC.  He said that any other arrangement simply contradicts the Bauxite Act.
“We are not aware of any waiver or even the specifics of the arrangement as it was done between the government and the bauxite company. We don’t have the records and we have tried for some time to get the records from them, but to date they have not provided us with the proper documentation. An economist was hired to calculate how much bauxite was extracted and shipped, and that report was sent to the GGMC already. At this point we are unable to accurately calculate the amount of royalties owed based on the arrangement between the two parties. However, we will be able to estimate, according to normal standards, how much they are supposed to pay.”
“This piece of document is very important and even if we wanted to, our reaction to this is very restricted at this time, as it relates to taking legal action because the copy of this contract is not being provided to us.”
Further, Mr. Gaskin as well as Mr. Harmon firmly believe that the contract is illegally drafted as, they both contend that despite the fact that corporate tax is supposed to be paid, nowhere in the laws of Guyana makes a provision for royalties to be reduced because a company is paying an increased tax.
Gaskin stressed that the laws of Guyana are clear on the issues, and royalty and corporate tax are separate. “According to the Income Tax 85.01, the Commissioner General of the GRA is supposed to collect all taxes on income whilst the Mining Act says that GGMC is supposed to collect royalties on all minerals being shipped out of this country. These companies are simply being allowed to drain this country of its resources without paying a cent. The company already had five years free of taxes and it is four years now since it had that free period as it came to an end in 2009. What more does it want?”
Moreover, it was reported that McLean had submitted Articles 9 and 12 of the Mineral Agreement together with the audited Statement of Accounts to the Leader of the Opposition which showed that the Chinese company was profitable over the last four years and therefore did not have to pay royalty.
When Mr. David Granger, the Leader of the coalition, APNU, was contacted yesterday, he told this publication that he was not in possession of the said documents and that checks should be made with Mr. Harmon to verify if he had received them.
Harmon then provided this publication with copies of the Statements titled, “Financial Statements as at 31 December 2011 together with report of the auditors.” Another two-page document was also given the same title, but for the year 2011. However, what was deemed as highly insulting was that the two-page statements for each year only contained information on the amount of dividends paid for January, April, November and December for both years. But missing from the document was the report of the auditors, which Harmon said, was not a part of the statement when he received it.
Chartered Accountant, Mr. Christopher Ram, who also supports the position taken by Harmon and Gaskin, made reference to the fact that the Bauxite (Production Levy) Act clearly says that, “Notwithstanding anything in any law, a tax to be known as a production levy shall be paid in accordance with this Act on all bauxite… won or extracted in Guyana on or after January 1974.”
Whilst McLean says that BOSAI paid up its share of corporate taxes in keeping with the agreement, there has been no disclosure as to how much tax has been paid thus far and how much royalty is owed.
Meanwhile, at a press conference facilitated by the Alliance for Change yesterday, Party leader Mr. Khemraj Ramjattan said, “If the law states that you have to pay a royalty, and another law states that you have to pay income tax, then both have to be paid. But it just goes to show where this country is going…”
On the issue of the actual waiver, Ramjattan stressed that it is absolutely illegal.
“I have been doing some research on it and I have seen nothing in the contract document which says that there had been a waiver.”

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