What the Gas to Energy Project teaches on business Due Diligence
Recent news, especially reports from the Kaieteur News (KN) have revealed, several troubling details about the company executing the Gas to Energy (GTE) project Lindsayca formerly Lindsayca/CH4. One of the issues raised in the KN articles is whether sufficient due diligence was conducted on the GTE contractor. In light of that question, we take the opportunity to discuss the importance and the difficulties that currently exist in conducting due diligence in Guyana.
For clarity’s sake, due diligence is the verification or vetting of vendors, clients or potential partners before commencing any business arrangement.
With the integration of foreign business and partners, the age of the handshake arrangement is being interred. The business paradigm required a shift in mindset towards a thorough understanding of the business and the people involved before initiating plans.
In Guyana, due diligence can be conducted on a limited basis. It is fairly straightforward to acquire the company documents and compliance documents such as the Annual Return with audited financials and the BO declaration. It is also possible to require the due diligence target to provide NIS and GRA compliance documents. These documents will layout the financial health, legal and tax compliance of the Company.
What is sometimes not possible to ascertain is any active or past litigation and/or judgements against the company, as the records of the Court are physical up to 2016.
Local parties need to take the same tact with due diligence of Non-Guyanese business. Guyanese fortunately have more options as most companies seeking to do business in Guyana come from countries that have online registries or tools which make it easier to ascertain that the companies are fit to do business with.
All businesses should take the Lindsayca matter, as a cautionary tale to treat due diligence with the same seriousness you would take the diagnosis of a life threatening illness as the consequences are similar.
