Guyana lacks capacity to handle huge influx of invoices from Exxon - Visiting experts

Guyana lacks capacity to handle huge influx of invoices from Exxon – Visiting experts

Jul 11, 2017 News

To protect the country’s interest, the Government of Guyana would do well to make swift moves to hire trained professionals in the legal and financial fields. These should have experience working with big oil companies or for oil-producing countries.

This advice was offered by several industry experts at a recent oil and gas symposium which focused on the relationship between corruption and oil. Professionals at that forum included international lawyers, professors, forensic accountants and security experts.

The symposium was coordinated by the Caribbean Institute of Forensic Accounting (CIFA) in collaboration with the Guyana Oil and Gas Association (GOGA).

It was highlighted that Guyana lacks the capacity to deal with the huge influx of invoices that is expected from oil giant, ExxonMobil. The super company is expected to begin submitting invoices within a few months.

The experts who facilitated the symposium said that invoices and payments by international oil companies must be examined in detail.

United States attorney-at-law, Vicky McPherson said that it is imperative for governments to hire lawyers who are experts in the oil and gas sector.

Mc Pherson said that if countries make the mistake of not keeping track of all expenses they can end up receiving far less than expected revenue.

According to the lawyer, the price paid to hire experts will “essentially be recovered by the oil company as part of their accounting every year and this goes to the point of making sure that you have the accountants in government, in particular, where you can actually use the mechanisms that are included in the contract to ensure that the cost that the oil companies are trying to recover are legitimate costs which may again include your legal cost.”

She said that at the end of each accounting year, oil companies are allowed to deduct all costs for developing, exploration and production. She then explained, “If you don’t have someone from your accounting department who is capable of making sure that those are legitimate costs, then your percentage of the actual revenue goes down, because you haven’t properly vetted the cost that they are trying to deduct.”

She gave as an example, government officials travelling overseas to negotiate, being a deductable expense by the oil company.

Mc Pherson stressed the need for government to have officials who are “keeping clear tabs on what is being cost-recovered, essentially, and that’s not done by someone who doesn’t have the special oil and gas training.”

Eric Williams was another expert present at the symposium. He made it clear that he is not a politician, but a Geo-scientist who once served as an Energy Minister in Trinidad and Tobago. He echoed the need to have specialized accountants and lawyers at the table with oil companies examining documents. He highlighted the danger of having general accountants operating on this level. He said that this could result in auditors “auditing things that they can’t even pronounce” and engaging in calculations that they are unaccustomed to.

Stephon Grey, a forensic accountant and CIFA consultant said that unfamiliar accountants can be led astray without even recognizing that that is what has happened. Grey told participants “if they ask a question they can be given an answer that does not even make sense.”

British security expert, Dr. Perry Stanislas said that countries need to set up strong negotiating teams instead of being vulnerable to counterparts who may go to the table very prepared and still have expert lawyers on standby.

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Guyana lacks capacity to handle huge influx of invoices from Exxon – Visiting experts

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