The President is in a tangled web

Dec 15, 2017 Features / Columnists, Peeping Tom

Either the President is terribly misinformed or somebody is confusing him when it comes to the signing bonus paid by Exxon Mobil to the government. The President has said that the money is in an escrow account in the Bank of Guyana. Somebody needs to explain to the President just what constitutes an escrow account.
The Government of Guyana (GOG) is a party to the signing bonus. Exxon is the other party. An escrow account is held by a third party, not an interested party. The Bank of Guyana is not a third party to the agreement between Exxon and the GOG, and therefore the sums deposited cannot be deemed to be held in escrow.
The funds deposited or held in an escrow account are intended to ensure specific performance of the terms of a contract. If there is a breach of specific performance, then the amount in escrow can be escheated. This is why escrows are held in third party accounts.
Another reason why the funds cannot be deemed to be held in escrow is because this is a signing bonus. It is payment to the GOG for the renegotiation of the contract with Exxon. The oil giant has said that it is for the government to decide how the money is to be spent. The spending by the government is not dependent on any specific performance by Exxon Mobil. The money cannot be escheated; it is Guyana’s money. As such, it cannot be deemed to be in escrow.
The President is being misadvised. The money is being held in a foreign currency account, and is to be invested in “secured interest-bearing securities”, according to the letter from the Secretary to the Treasury to the Governor of the Bank of Guyana, dated September 20, 2016.
There has been some attempt (not by the President) to claim that the money is not yet in the Consolidated Fund and therefore is not yet public money. This is a most disingenuous proposition.
The Fiscal Management and Accountability Act defines “public moneys” as all moneys belonging to the State received or collected by officials in their official capacity or by any person authorized to receive or collect such moneys. It includes, without limitation, all moneys collected by or on behalf of the State.
The signing bonus of US$18M is money collected by or on behalf of the state and therefore represents public moneys. It does not require transfer to the Consolidated Fund to be deemed as public moneys.
The Fiscal Management and Accountability Act (FMAA) classifies public moneys as received moneys, moneys in the Consolidated Fund or Contingencies Fund, moneys in an extra-Budgetary fund, drawn moneys or moneys in Deposit Fund. The argument therefore that the moneys do not need to be accounted for until they are deposited in the Consolidated Fund is erroneous.
Once the moneys are received they ought to be accounted for since the FMAA provides that all moneys received shall be paid promptly into the Consolidated Fund except where they are being held in an extra-Budgetary fund stipulated by legislation or in a deposit fund.
The signing bonus is not being held in either an extra-Budgetary Fund or a Deposit Fund established by statute. It is being held in a foreign currency account which means that drawings can be made from that account to other accounts, including private accounts.
The President therefore needs to recheck the advice and information which he has been given. Having done so, he should decide whether he will stick to his argument that the moneys are in an escrow account. He will have an ample opportunity to do so today when he hosts his first press conference in two years.
His comments on Wednesday do not bring closure to the controversy over the Exxon signing bonus. They added further intrigue to the issue, since the President has accepted responsibility for what he deems non-disclosure rather than deception. A tangled web is being woven around the President.

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The President is in a tangled web

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