Companies involved in ‘fronting’ refused local content certificates – Bharrat

Some companies that were hoping to get local content certificates were denied those documents because the government discovered that they were involved in fronting, a loophole to bypass legal requirements.

Minister of Natural Resources Vickram Bharrat said this issue is one the government is examining closely and is likely to be part of eventual revisions to the Local Content law.

“Once we have enough evidence (of fronting), we don’t issue certificates.

“…One man complained to me that he waited six months (for a local content certificate) but when we do investigate it, it was a similar situation,” Bharrat said.

Through Guyana’s 2021 Local Content law, hundreds of Guyanese have benefited from increased access to opportunities carved out specifically for them. Local content certificates are issued to Guyanese companies allowing them to provide services on a preferential basis.

But there are some companies that sought to exploit a loophole in the system, through a practice known as fronting or rent-a-citizen.

This practice involves using Guyanese listed as executives of the company to meet local participation targets but in reality, they do not have a big stake in the company. Many local businesses and even business representative bodies have complained about this occurrence.

Bharrat said penalties for fronting are among the areas that will be reviewed and considered when the government decides to update the 2021 Local Content Act.

“…What I have committed to you is that we are going to start the local content sensitisation workshops around the country which would also give us an assessment of our capacity on the ground and how much we would’ve advanced and how much people are benefiting from it too,” Bharrat highlighted.

These nationwide workshops are expected to inform any decision to update the law to allow Guyanese suppliers to get preferential access to opportunities. Currently, 40 areas- from transportation to legal services- have been carved out for Guyanese. The law details the percentage requirement of Guyanese that must provide these services in the oil and gas sector.

Meanwhile, an exact number of companies denied local content certificates should be provided on Wednesday by the Director of the Local Content Secretariat, Dr. Martin Pertab.