USE THE DEPOSIT FUND TO ACCOUNT FOR THE US$18M SIGNING BONUS

Mar 15, 2018 Letters

Dear Editor,

Much have been said and written about the transfer of ExxonMobil US$18 million signing bonus to a bank account of the Bank of Guyana (BOG) instead of the Consolidated Fund of the Government of Guyana.
Article 216 of the Constitution and Section 38 of the Fiscal Management and Accountability Act (FMAA) have been cited as being breached for this transfer of those funds to the BOG.
In effect, my understanding of the Government’s position is that no monies have yet been appropriated to an expenditure head (account). When this is done the funds would be paid into the Consolidated Fund, hence there will be a delay in complying with the Constitution and the FMAA.
What indeed is of utmost importance and has apparently not been addressed is that monies received by Government are required to be included in a bank account as an asset and as a liability on the “Annual Statement of Assets and Liabilities of the Government of Guyana.” At this point of time, it has not been shown on the 2016 Statement, and the same may hold for 2017 when that Statement is published.
There is however another procedure to be considered and be followed in accounting for this US$18m and that is, to utilize the Deposit Fund. The Deposit Fund is an accounting entity established through Section 42 of the FMAA. This Fund is for non-budgetary transactions such as auto and personal advances, deposits made by entities such as GuySuCo, Dependents Pension Fund, Etc.
Hence, Section 42 provides for accounting of this US$18m non-budgetary transaction, by establishing an account. When appropriation(s) of expenditure is/are made in a Financial Paper(s) or in the Annual Budget(s), then those funds will be transferred from the Deposit Fund bank account to a Consolidated Fund bank account and expended thereafter.
There is no statutory time limit for accounts to be transferred from the Deposit Fund. Further, while the funds are being accounted for in the Deposit Fund, they can be invested in interest bearing securities until they are appropriated to expenditure account(s).
Depositing this $US18m in a Deposit Fund will result in it being recorded as an asset account and as a liability account in the Annual Statement of Assets and Liabilities along with other Deposit Fund Liability Accounts such as the “Dependents Pension Fund, the Sugar Industry Labour Welfare Fund,” only to mention two. In so doing, it would be complying with the principles of accountability and transparency of funds received by the Government.
That being said, the Government of Guyana is required by the Constitution and the FMAA to account for this US$18m on its Annual Statement of Assets and Liabilities. It is therefore suggested that the Government Officials address the use of the Deposit Fund for this transaction in compliance with Section 42 of the FMAA.
Yours sincerely
John Seeram

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