Latest update February 4th, 2025 9:06 AM
Jagdeo’s excuse for Govt.’s failure to audit US$10B in Exxon’s expenses “misleading and unfortunate”– Chris Ram
Kaieteur News – “Misleading and unfortunate” were the words Chartered Accountant and Attorney-at-Law, Christopher Ram used to describe the excuse recently proffered by Vice President, Dr. Bharrat Jagdeo for the government’s failure to audit ExxonMobil’s expenses within the two-year deadline prescribed in the lopsided Stabroek Block deal.
Chartered Accountant, Chris Ram
Vice President, Dr. Bharrat Jagdeo
Ram recalled that the Vice President during his latest press conference had said the government is disappointed that it has not been able to push through with critical audits, which cover over US$9B in expenditure for the Stabroek Block’s Liza Phase One and Two Projects.
Expounding further, the Vice President said, “We have been very disappointed that we have not been able to select a group to do the audit of the post-2017 expenditure by Exxon. The reason is that we didn’t have strong local content. We had two groups, two local groups that came in but they were not strong enough. We want to build the capacity in Guyana to do this audit. We think that our people have enormous skills, forensic skills and auditing capacity.”
The former President added, “…we’re looking to see if we can’t have an arrangement where we have a consortium of our local people to come together to do part of this work while working alongside an international group…”Upon noting the foregoing, Ram told Kaieteur News during an exclusive interview that it is “both misleading and unfortunate” for Jagdeo to lament the absence of local capacity to audit the costs reported by the oil companies. Significantly, Ram said the statement is inconsistent with the Government’s own advertisement inviting bids to audit the contract costs. Ram said, “It was directed to ‘internationally recognised accounting and audit firms with extensive experience in … auditing petroleum costs under production sharing contracts and other petroleum agreements and its (sic) fiscal implications.’ Were firms expected to lie about their status and capacity, or was it a condition of the World Bank’s US$20 million for a project which includes the audit?”
Speaking to the history of audits of petroleum costs, the Chartered Account said this goes back to the 1999 Agreement signed by the PPP Government, which imposed a two-year limit on the Minister responsible for petroleum to audit the costs, expenses, accounts and records of the oil companies. He said that restriction was further entrenched in the 2012 Model Petroleum Agreement published by the Natural Resources Ministry under Robert Persaud during the Donald Ramotar presidency. “And of course, Raphael Trotman, Persaud’s successor under the APNU+AFC Government, sleepwalked into signing a pre-discovery contract for a post-discovery situation. That no such audit has been done in seventeen years of the PPP and five years of APNU+AFC signaled to the oil companies that they were free to do as they please, in all matters concerning their operations, including Local Content, an absolute requirement of the law,” an impassioned Ram stated.Now that successive governments have failed to protect the country’s interest, rein in Exxon, and verify the billions of US dollars charged every month against oil revenue, Ram alluded to the absurdity of the Vice President’s excuse to now blame the absence of “strong local content”.
The Chartered Accountant stressed the matter of conducting these crucial audits is not an academic, theoretical issue. He described it as a most serious one that deals with real money. On this note he said, “Just think what even 10% of US$1 billion can do. Why would any Government be so casual with billions of dollars when from day one, those same oil companies have refused to explain the US$92 million discrepancy between the pre-contract costs as at December 31, 2015 and their own audited financial statements?”
Instead of blaming the accounting firms, the Chartered Accountant said the criticisms should be admitted by both the PPP/C and the APNU+AFC governments, which have failed consistently to have audits of the costs reported and claimed by the oil companies.
As a result of Guyana’s failure to audit the Liza Phase One and Two Projects which now total approximately US$9.3B, as well as an estimated US$900M in pre-contract costs up to 2016, ExxonMobil and its partners get to recover those sums in full.
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