Other major investors started up the same way as Beal
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Other major investors started up the same way as Beal
- Hinds
Criticises Hoyte's attacks
Prime Minister Sam Hinds says that other major investors here established their companies in the same way that Beal Guyana Launch Service has proceeded.
Stabroek News
July 15, 2000
In an Office of the Prime Minister (OPM) statement, the PM was responding to charges about the Beal space launch deal by PNC leader Desmond Hoyte.
With reference to the continuing labelling of Beal Guyana Launch Services (BGLS) LLC as a "shell company" by Hoyte, OPM recalled that the agreements entered by Hoyte's government with Omai Gold Mines Ltd (OGML), Barama Company Ltd, and Guyana Telephone & Telegraph (GT&T) Co Ltd established them as limited liability companies in virtually the same circumstance as BGLS.
OPM noted that though OGML registered locally, it was initially established with a shareholding of $10,000. OGML's parent company is Cambior with Golden Star as principle shareholders. It has since invested some US$260 million, OPM said.
The initial share capital for Barama was $1 million and this increased to $3 billion after the signing of the agreement and transfer of the lease.
GT&T's equity and loan capital was financed after the signing of its agreement, OPM pointed out.
Since its establishment on May 19, BGLS has invested US$75,000 ($13.5 million) and signed a survey agreement for US$100,000 ($18 million), the statement said.
"Hoyte's selective extraction of articles from the Beal agreement aimed at questioning the status of the BGLS is less than honest," OPM declared.
It noted that the agreement required Beal to affirm "that it has the power to own its assets, carry on its business as conducted as of the date hereof, and to enter into and perform its obligations under the agreement."
It also noted that Beal had averred in the agreement that "it has not committed any act of bankruptcy, is not insolvent, has not proposed a compromising arrangement to its creditors generally, has not had any encumbrancer take possession of any of its property and has not had any execution or distress become enforceable upon any of its property."
The financial status of BGLS, a new company, and that of the French government-owned Arianespace in Kourou, French Guiana, is not comparable because of the differing circumstances surrounding the two investments.
"To make a comparison between the status and financing of BGLS, which is less than two months in operation, and the French Guiana spaceport facility and transport company, in operation for 20 years, is ludicrous," OPM stated.
The statement further pointed out that BGLS is a private company with no government of Guyana investment or partnership. In contrast, Guiana Space Centre (GSC) in Kourou was established by the French government under France's National Centre for Space Studies (CNES) 36 years ago. The original cost of building the GSC was met by the French government. Thirteen other European countries then joined France to form the European Space Agency. The agency funds the development and operating costs of the space centre.
Arianespace is a commercial space transport company, incorporated in 1980. It is owned and operated by the French CNES and 53 European industrial firms involved in the Ariane programme. France owns 57% of CNES. Arianespace funds and manages the production of the launch vehicles, markets the sale of its launch services and runs the launch operation.
The French Guiana spaceport development and operation is a highly complex and massively funded European country and company investment involving billions of dollars, OPM noted.
Its first launch was on April 9, 1968. It has taken 36 years to its current stage of development as the world's largest commercial space launch facility. Some 32 companies are directly involved in the Kourou space centre, employing 1,400 people with about 50% from the local French Guiana population.
OPM said government has undertaken to lay the Beal agreement formally in Parliament at its first convenient parliamentary business opportunity.
The agreement was, however, made available to the opposition, the Trades Union Congress, civil society organisations and the media "yet Hoyte persists in describing the agreement as a state secret," the statement stressed.
OPM sought to remind Hoyte that his own government observed considerably less stringent standards for transparency.
"His government never made public, nor ever laid in Parliament any of the agreements signed by OGML, Demerara Timbers Ltd, Barama, or Aroaima Mining Company. It was left to the PPP/Civic government to take these agreements to the National Assembly," OPM said.
With respect to the sale or assignment of the use of land purchased by Beal for the spaceport, OPM said it is obvious that any company can be purchased or taken over and referred to "the very real possibility" of OGML changing hands.
The release said the Beal agreement does not permit Beal to sell, lease or otherwise make available any of the purchased land without Guyana's prior approval. Additionally, the agreement retains the right of first refusal for Guyana to re-purchase the land if Beal receives a bona fide offer for its sale.
The agreement, therefore, provides that Guyana may refuse approval of a proposed sale, assignment or lease of the land or may elect the option to re-purchase the land at the same price and the same terms which Beal is offered. OPM said Guyana's rights are paramount in this respect.
It said in the unlikely event that Beal Aerospace Technologies Inc., (BGLS' parent company) should change hands, the agreement forbids the land to be used for any other commercial activity than the space launching operation. The land cannot be used for mining or forestry and Beal cannot use the land without it first being environmentally assessed.
OPM said Hoyte was correct when he said that the land has a special significance for development into a spaceport. It pointed out, however, that there is no credible or accepted means of placing a speculative commercial value on the land. It can only be sold in accordance with its actual commercial value.
The land is mainly swamp, it is exceedingly remote and inaccessible, it is not good for farming and forestry and it has no known mining nor housing development value.
According to OPM, "Beal has paid appreciably more that its present commercially rated value."
It pointed out that the value of the land leased to OGML was not assessed on its probable value for extracting gold deposits. The direct return to Guyana is from royalties paid after the gold is extracted.
The direct return to Guyana for the Beal spaceport will be the compensation paid by Beal for its use as a spaceport, OPM said.
About the PNC leader's query on whether the agreement allows Beal to borrow from the local banking system, the statement said the prime minister has already stated that the agreement grants no special privileges in this regard.
"The Beal company is subject to the same law and regulation governing borrowing from the banking system as any other international investor. The inclusion of this Article in the Agreement is purely to anticipate the possibility of Guyana's currency being internationally marketable and accessible sometime in the future," the statement said.
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