Guyana puts no jail time for misuse, abuse of oil funds

Jan 01, 2022 News

– Ghana assigns 15 years imprisonment plus fine

Kaieteur News – Despite heavy criticism, the PPP/C Government has remained steadfast in its belief that there is no need for specific penalties for the misuse of oil revenues. According to the administration, the existing laws such as the Fiscal Management and Accountability Act (FMAA) are more than enough to address any malfeasance in public office. As a result, it hurriedly passed on December 29, 2021, the Natural Resource Fund legislation which was assented to hours later by President, Irfaan Ali.

President Irfaan Ali

It is significant to note however that while the Ali administration insists that there is no need to outline explicit penalties for abuse or misuse of funds in the legislation, its Western counterpart, Ghana, which it claimed to have consulted on the NRF law, has shown a completely different approach toward the protection of the nation’s oil revenues.
According to Ghana’s legislation governing its Petroleum Fund, “A person who (a) misappropriates the Petroleum Funds; (b) defrauds, attempts to defraud or conspires with another person to defraud the Republic in relation to the Petroleum Funds; (c) uses, attempts to use or conspires with another person to use information on the Petroleum Funds or documents relating to the Petroleum Funds for personal benefit or advantage or for the personal advantage or benefit of another person; commits an offence and is liable on summary conviction to a fine of not less than five hundred thousand penalty units or to a term of imprisonment of not less than 15 years or to both.”
It goes on to state that, “(2) A person who abets in the commission of an offence is liable on summary conviction to a fine of not less than two hundred and fifty thousand penalty units or to a term of imprisonment of not less than seven years or to both.”
When Guyana had 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, mostly politicians, go unpunished.
For example, 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 legislation recently passed fails to acknowledge the foregoing advice and therefore leaves the wealth of current and future generations, open to wanton abuse.

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