Ali defends rush to pass flawed oil fund bill

Dec 29, 2021 News

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– ignores gaping loopholes for massive abuse, corruption

Kaieteur News – Despite numerous criticisms in the past two weeks that he is rushing legislation which the citizenry hardly had time to scrutinise and which would ultimately pave the way for massive corruption, President, Irfaan Ali remains defiant, saying that the public has nothing to fear.

In an almost 30 minute presentation in defense of the Natural Resource Fund Bill 2021 which seeks to replace the existing law passed by the previous government in 2019, Ali stressed that the new legislation seeks to improve the disclosure of money received from the oil industry.
He said too that it allows for the government to implement its infrastructural and social projects which would not be derailed under any circumstance.

In his opening defense, Ali said the new law seeks to improve the governance structure of the oil money. The Head of State recalled that the existing law is severely deficient in this regard as it reposes all the powers for determining the fiscally and economically sustainable amounts from the oil fund in the Finance Minister. Critics of the new bill have not insisted that the old one should remain the law of the land, but rather support broad consultation on any changes and for the canning of the amendments being proposed as they give Ali and the Natural Resources Minister enormous powers to appoint persons to the various committees.

With the new law, Ali said the government is seeking to implement a Board of Directors which will have no less than three and no more than five persons. Ali said this Board would remove from the minister, the powers to determine the moneys to be withdrawn. He said too that this approach is in keeping with the Santiago Principles; a set of international norms that prescribe how oil funds should be effectively managed. Ali however, failed to note that the new law gives him exclusive power to appoint the members of the board, from groups many Guyanese are suspicious will be handpicked by the PPP/C from among its followers and handmaidens in the private sector and elsewhere.

Turning his attention to the power vested in the said board—the members of which would be solely appointed by him — Ali said it would be responsible for the investment mandate for the oil money. He insisted that this is a fair role since it is the PPP/C that was elected to office and should determine how the investment mandate ought to be prepared. The President said too that the formula that governs the amount of money that could be withdrawn from the oil fund has been simplified while noting that there is a three to 10 year jail sentence if the Minister breaches this aspect of the law.

Continuing on the accountability line, Ali said the National Assembly which provides a space or platform for scrutiny from the media and opposition is also catered for. He said too that the Auditor General will also have a role to check how the money is spent and his report would be scrutinized by the Public Accounts Committee (PAC). Furthermore, Ali gave the commitment that the oil money would also be spent on accelerating his government’s agenda for infrastructure, healthcare and education. He said, “I will not allow the development trajectory of the country to be derailed. I campaigned on a manifesto that must be delivered to the people…we have a moral responsibility to ensure that manifesto is delivered. We have a binding contract with the people who supported and voted for us.”

ABUSIVE CONTROL

Despite Ali’s claim that the new law seeks to improve transparency, other local and international stakeholders believe otherwise. Just recently, International Consultant and Co-Director of Energy Practice at Americas Market Intelligence (AMI), Arthur Deakin said, he is of the firm conviction that the PPP/C Government’s Natural Resource Fund Bill 2021 gives a worrying degree of power to the President which is not catered for in the existing law.
In his latest commentary, Deakin wrote, “The proposed Natural Resource Fund legislation is concerning. Although the original law gave too much power to the Minister of Finance, the new law simply transfers those powers to the President.”
Deakin flagged the fact that the oil money will be controlled by a Board of the Directors with no less than three and no more than five members, all of whom would be appointed by the President. The analyst also raised concerns about the fact that government has done away with the 22-member Public Accountability and Oversight Committee and replaced it with a 13-member version, all of whom would be appointed by the President with no clear confirmation process. To ensure proper accountability, the Co-Director said, members should be selected by non-political institutions. Either the private sector or multilateral organisations, and confirmed by the National Assembly. Overall, Deakin said the bill has moved towards less oversight, instead of more.

Over the past two weeks, Kaieteur News has been at the forefront of exposing several weaknesses of the Bill which include a noticeable absence of consequences for the misuse or abuse of the oil money that can be withdrawn for emergencies or green economy initiatives.
When Guyana pursued the creation of its first NRF legislation back in 2018, it was warned to have clear penalties or the fund could run the risk of failing to serve current and future generations. This advice was provided by the Natural Resource Governance Institute (NRGI), which also cited numerous examples from around the world of how often Natural Resource Funds become easily mismanaged, and the perpetrators go unpunished.

The 1Malaysia Development Berhad (1MDB) fund, established in 2009, has proven to be a major source of alleged corruption and mismanagement. Designed to attract investment into Malaysia through joint ventures with foreign firms, 1MDB acquired over US$11 billion of debt by 2014. Among its more suspect transactions are a US$1 billion investment in a Saudi oil company in 2009, which has gone missing; funds that were diverted in 2012 from an Abu Dhabi state fund to a firm in the British Virgin Islands (a secrecy jurisdiction); and US$4 billion that has been misappropriated from Malaysian state firms. Malaysia, the US, Switzerland, Singapore and the UK are still trying to unravel the web of corruption and money laundering schemes that are related to the fund and which robbed current and future generations of their wealth.
Taking the foregoing into account, among other cases of blatant mismanagement, Guyana was urged to have “clear consequences for malfeasance.”

 

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