The statement on the Exxon contract

Dec 28, 2017 Features / Columnists, Peeping Tom

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The Guyana Government issued a statement in the National Assembly in early December in response to public concerns over its secretive agreement with Exxon Mobil. The statement itself obfuscates more than it clarifies.

The statement brought little or no clarity to the issues which have evoked such widespread controversy within the media – the alleged deception in denying that there was a signing bonus and the justification for it not being accounted for in the various public statements and financial records, including in the National Budget.

The statement does not bring closure or disclosure to the issues under contention. It is therefore hoped that when the National Assembly resumes that the opposition would ask for a debate on the statement. The renegotiated contract with Exxon Mobil is far too important to not have a debate on this issue in the National Assembly.

That debate would help to clarify a number of questions which emerge from the statement. For one, why was the statement issued under the hand of the Minister of Foreign Affairs? The contract with the Exxon Mobil does not fall under the remit of the foreign ministry. It falls under the Ministry of Natural Resources. It is that Ministry which ought to have been offering the explanations and clarifications sought by members of the public. Why was this task delegated to the Minister of Foreign Affairs?

The lead role of the Ministry of Foreign Affairs in issuing this statement is yet another manifestation of the preoccupation with the payment of legal fees, to which we are told the bulk of the signing bonus is being dedicated, rather than the overall national interest which goes beyond the payment of legal fees. In fact, later in the statement the need for legal fees and the need for an easy mechanism to facilitate the payment of such fees was underscored, thereby emphasising that the prime consideration in the signing bonus was about the need to secure sufficient resources to pay Guyana’s legal bills should the controversy with Venezuela be referred to the International Court of Justice.

The statement goes on to state that whether or not a contract was necessary is a matter of opinion. In other words, the statement makes no attempt to justify the need for a renegotiation of the original contract. Whether there was a need for a contract cannot be a matter of opinion.

The statement provided the opportunity for the government to explain why it opted to renegotiate the contract. Unfortunately, the government treated this as a matter of opinion. This leaves open to speculation the reasoning behind the signing of the contract and if it was purely concerned with ensuring that the country got monies for legal fees rather than a larger lump sum which commit the investor to the agreed timelines for production.

The statement goes on that there is no standard arrangement or formula concerning the quantum of procedures for signing bonuses. The Ministry of Foreign Affairs obviously does not appreciate that one of the principal purposes of signing bonuses is to allow the signatory country to get monies upfront delinked from the production process.

It is also a means, as stated before, of tying the investor to a commitment to proceed with the contract.

The statement goes on to the state that the full Cabinet had agreed to the terms negotiated and the arrangements to receive the funds. This is in contradiction to the statement by the President who stated that not all the Ministers of the government were privy to the contract and that it was he who took the decision to have the monies placed into an account at the Bank of Guyana. So what really is the truth? Did the entire Cabinet have knowledge of the contract? If so why did the President state that not all the Ministers knew about the contract?

The statement goes on to add that nothing about the levy (signing bonus) was secret of illegal. Many agreements, it noted, are signed each year without being made public. The real issue, however, was why did the government dodge and later deny that it had received a signing bonus? Just what was it being deceptive on this issue?

The statement goes on to make false equivalency by equating the holding of the funds outside of the Budget to that being held by GGMC or GFC. The GGMC and the GFC are bodies corporate. Their funds are not intermingled in the Consolidated Fund even though they very government which is now using this fact as  a defence for holding the signing bonus in a separate account in the Bank of Guyana had insisted, when in opposition that another corporation, NICIL, should pass its funds through the Consolidated Fund. Now that it is in office, it is singing the same tune that the PPP correctly used as its defence for holding funds outside of the Consolidated Fund.

The signing bonus is public money as defined by the Fiscal Management and Accountability Act. So long as it is not held in an extra-budgetary fund created by statue or a deposit fund, in which case it has to be reported to the National Assembly at the point of receipt, it has to pass through the Consolidated Fund.

No one needs a debate for that to be understood. But surely a debate will shed light on the more burning issue as to the extent to which Guyana signed away its future in its anxious pursuit for a signing bonus to settle legal fees to win a case which is not yet before a court.

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