Inflation of Data

Oct 22, 2022 Editorial

Kaieteur News – The record of some companies leaves with a deep sense of disgust at the lengths to which they will go to deceive others, and enrich themselves at the expense of those untutored in the ways that the commercial world really works. The record of predatory companies is of unimaginable greed, of unending self-enrichment, and of trampling on the rights of any who are in their way, so that they make as many dollars as they can and by any means. When the records of oil companies are looked at, ExxonMobil stands out as a leader in what is rapacious and twisted, and against the law. As this is said, it must also be borne in mind that for every instance of exposure for a company like ExxonMobil, there are many others that never see the light of day, with great wrongs perpetuated.

America’s Department of Labor moved against ExxonMobil for a matter that surfaced over two years ago. It involved the inflation of production estimates, and the reported valuation of oil wells in Texas. ExxonMobil was so incensed by those disclosures that it fired the Scientists who took it up themselves to blow the whistle on wrongdoing, even as they knew that the powerful men and women at ExxonMobil would be harsh and unsparing. They got fired for doing what was right. But they are now being reinstated and made whole for the punishments inflicted illegally on them by ExxonMobil for whistleblowing. Employees who blow the whistle on corporate illegality are a protected group in America, and this was the message that rang out from the US Labor Department.

To increase production estimates is to paint a picture that doesn’t exist, and facilitates favorable reviews by industry analysts and media. In turn, favorable reviews push up the company’s stock price, and this is one of the measures of performance. The performance of Senior Corporate Officers, their compensation packages, and the exercise of their stock options, could lead to huge personal windfalls for Executives and others. This is the first driver of the greed lurking in the breasts of Corporate Leaders, which prompts them to cut corners, and pull fast ones, such as inflating production estimates.

According to a September 13, 2020 article in the ‘Wall Street Journal’ (‘Exxon used to be America’s most valuable company. What happened?’), some employees were questioning the company’s raising of production estimates from 600,000 barrels a day to 1 million a day by 2024. The employees were saying that it was ‘overly optimistic’, and that some assumptions could not holdup, and this is part of the reason that the Scientists got themselves fired. Further, ExxonMobil’s workers had difficulty with the US$60 billion valuation of holdings, which included wells, in the Delaware area of the Permian Basin in Texas. They felt that that valuation was closer to US$40 billion, which ExxonMobil had inflated by 50% in its public filings, clearly a sizable differential. The decision makers at the company eventually decided to split the difference and settled for aUS$50 billion valuation of the assets.

Nevertheless, production estimates and valuation of oil wells are the kinds of information on which investors depend on, as they weigh investment choices in various companies and sectors. When unethical people in companies play games and mislead with such estimates and valuations, then a whole chain of harms are passed on and when they work hard to keep the secrets of their shenanigans from coming to light, by firing employees, then the wrongdoings continue.

The concern for us, and it should be the same for all Guyanese, is that if ExxonMobil can engage in such trickeries in sophisticated America, then there is no limit to the swindles that it would pile on this still unprepared and unknowing country. ExxonMobil is a known predator, yet many Guyanese swear by it, would even attack their fellow citizens, who expose the failures of the company here. ExxonMobil is not a friend of Guyanese, but an entity that would drain all our riches, cheat us through inflated expenses, deliberately corrupt data, and get local Politicians to squeeze those who object to their crookedness. Unless and until that registers deeply, then ExxonMobil will defeat us.