Dr. Ashni Singh justifies two-week review period for flawed oil fund law

Dec 31, 2021 News

– says penalties for abuse covered under other legislation

Kaieteur News – Since tabling the Natural Resource Fund Bill 2021 in the National Assembly two weeks ago, Senior Minister with responsibility for Finance, Dr. Ashni Singh, has faced two major criticisms. Industry stakeholders have sharply criticised the short timeframe for consideration of the Bill thereby inhibiting input from the citizenry; and they have also flagged the absence of explicit penalties for misuse of the revenues.

Senior Minister with responsibility for Finance, Dr. Ashni Singh

During a press conference yesterday at the Arthur Chung Convention Centre (ACCC), Dr. Singh addressed both concerns. To the former, Dr. Singh said he believes that the Bill was table in a reasonable time, especially when one considers the fact that it replicates more than 20 of the provisions in the previous legislation that was passed by the Granger government, after the passage of the No-Confidence Motion. He said too that the Bill is not one that is complex.
In keeping with what the Standing Order prescribes about the tabling of Bills, he said the government was in compliance with the timeline and therefore the Bill was in the House for two weeks. He alluded that this was reasonable time for consideration.
The Minister said too that if the political opposition which led a chaotic protest to obstruct the Bill’s passage had any valid objections, it could have raised those via the tabling of amendments. Since no compelling arguments or contentions were made, the Minister said there was no reason for the Bill to be sent to a Special Select Committee.
As for the need for penalties in place, the Finance Minister noted that this is covered in other legislation. Expounding further, he noted that the money from the oil fund has to be transferred by law, to the Consolidated Fund after which, parliamentary approval must be sought for any expenditure of the oil revenues.
He noted that if there is any misuse of the money following approval from the House, penalties can be imposed under the Fiscal Management and Accountability Act.
The Minister said he was pleased to be able to address this matter as he believes it has been misrepresented in some sections of the media.
Since the Bill was tabled on December 16, Kaieteur News has been at the forefront of highlighting some of the key loopholes that could give way to massive corruption, borrowing frenzies, as well as spending sprees. In the Bill, there are various methods of calculations for the withdrawal of the nation’s oil dollars. But if there is a major natural disaster, the government has the power to override those rules in place and withdraw any amount it deems fit for the said emergency. Importantly, there is no provision for any abuse of this “emergency” mechanism.
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 by forming joint ventures with foreign firms, 1MDB ended up being in 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 that robbed current and future generations of their wealth.
The Azerbaijani and Iranian funds are other examples of extra-budgetary funds, which have been used to fund the legacy projects of political parties instead of being prudently saved for future generations. In Azerbaijan, for instance, government authorities have used the State Oil Fund (SOFAZ) to directly finance strategic government projects, such as the railway between Azerbaijan, Georgia and Turkey. These expenditure items were not subject to the same reporting or public procurement requirements as those financed through the regular budget process, nor were they subject to as much parliamentary oversight.
In Iran, that country’s US$40 billion National Development Fund provided loans to private-sector companies, cooperatives and economic enterprises owned by non-governmental institutions through agent banks. While the fund managers did not provide information on the specific investments, news reports revealed where they actually went. Importantly, the executive directly controlled the fund and, therefore, some decisions bypassed normal budgetary and parliamentary procedures.
Taking the foregoing examples into account, among other cases of blatant mismanagement, Guyana was urged to have “clear consequences for malfeasance.” The Bill, in spite of these and other concerns being raised, has been passed with numerous loopholes.