If present and future generations are to benefit from oil, Guyana has to embrace radical transparency

Jun 02, 2020 News

– Natural resources sector governance pioneer, Daniel Kaufmann

By Kiana Wilburg

If present and future generations are to benefit from the extraction and exploitation of Guyana’s oil, its leaders have to look beyond the dollars and cents. World-renowned economist Daniel Kaufmann says that the authorities of the day need to embrace radical transparency and embark on a rigourous governance reform campaign.

Pioneer of Governance in natural resources sector, Daniel Kaufmann

Kaufmann who has been at the head of the Natural Resource Governance Institute (NRGI) for seven years, made these and other statements during a recent webinar on the governance of natural resources during the COVID-19 crisis.
In offering his perspective on Guyana, the pioneer in the field of governance and anticorruption worldwide, was keen to note that oil was discovered at breakneck speed by ExxonMobil while being overshadowed by a deal that is not considered to be in the nation’s best interest. With the country producing oil in record time, Kaufmann who received his PhD in economics at Harvard, said that Guyana’s success goes beyond the matter of doing a proper cost-benefit analysis.
“In terms of benefitting Guyana, and not only current but future generations with the major oil find is the improvement of governance frameworks. This is going to be critical,” the revered economist noted.
Kaufmann said Guyana will have to also embrace every effort to increase accountability and safeguard its wealth while noting that a critical part of the puzzle will be a proper legal and regulatory framework. The Chilean said it is no secret that there are serious concerns about the political dynamic surrounding the elections which are yet to conclude. He cautioned however that if governance which has not been very high in the past continues to deteriorate, then Guyanese are not going to benefit from their resources which are overshadowed by risk.
With the help of the World Bank, Guyana has been able to access a US$20M loan to improve the legislative and regulatory framework which Kaufmann said is critical to Guyana’s success. However, the law firm of the Energy Department’s choosing is an ExxonMobil lobbyist. A recent exposé this newspaper published showed that American law firm, Hunton Andrews Kurth LLP, shares a very close relationship with ExxonMobil.
Kaieteur’s investigation found that on July 19, 2016, the law firm had filed a lobbying registration form to represent Exxon Mobil Corporation. The specific issues they would lobby for in ExxonMobil’s interest included Clean Air Act Regulatory Issues, Clean Water Act, Regulatory Issues, Early Action Compact Legislation, Ozone National Ambient Air Quality Standard Deadline Harmonization Act, Clean Air Implementation Act of 2015, and the Ozone Standards Implementation Act of 2016. The lawyer who is listed on the document to represent the client is Charles H. Knauss, a partner at the firm.
The 40-year relationship between ExxonMobil and the American law firm was first raised by British news agency, The Guardian, and subsequently picked up by a German Non-Governmental Organization (NGO) called Urgewald. The NGO questioned how Guyana’s authorities could allow an ExxonMobil affiliate to write the nation’s laws when those very laws would be used to regulate Exxon and many of its subcontractors. Urgewald also questioned the World Bank’s role in the matter. Urgewald said that an investigation is needed urgently as the use of an ExxonMobil sub-contractor to write laws for the country is an affront to genuine efforts to bring rigid governance frameworks into being.
Despite being made aware of this potential conflict of interest, Guyana’s authorities have failed to cut ties with the Virginia-based law firm and return to the drawing board for a company that does not share such a close relationship with Exxon.