Guyana heading down a dangerous road if auditors think they must merely check Exxon’s bills - Attorney-at-Law ,Chris Ram

Guyana heading down a dangerous road if auditors think they must merely check Exxon’s bills – Attorney-at-Law ,Chris Ram

Dec 04, 2022 News

Kaieteur News – Chartered Account Christopher Ram believes that Guyana is on a dangerous path if auditors believe that they are merely required to check United States (U.S.) oil giant ExxonMobil’s expenses to verify some US $7.3B in expenditure for the period 2018-2020.

The Chartered Accountant was responding to a recent report published by the Kaieteur News on November 27, 2022 and headlined “Auditor only reviewing Exxon’s US$7.3B bills, not doing forensic audit”.

In that article, Financial Analyst and Certified Accountant, Floyd Haynes said that the audit of costs incurred by ExxonMobil in the Stabroek Block is not a forensic audit or a witch hunt.

Attorney-at-Law and Chartered Accountant, Christopher Ram

In a recent interview on Kaieteur Radio’s Programme, Guyana’s Oil and You, Haynes said that, “a forensic audit is done with the aim of identifying fraud and embezzlement with the goal of gathering evidence to be used in a court.”

He said, contrarily, a cost recovery audit of ExxonMobil’s bills is being done pursuant to the parameters of the 2016 Production Share Agreement (PSA) governing the Stabroek Block.

“The goal is to verify the accuracy or rather the legitimacy and validity of costs claimed…there is a huge difference…,” he said.

However, Ram, in a guest editorial published on page four of this newspaper today, said while it is true that the audits have to be conducted in accordance with the Stabroek Block Production Sharing Agreement (PSA), the auditors are not restricted.

“Mr. Haynes is dead right about the audit being undertaken under the PSA but is totally wrong about the scope of the audit. It is not only about costs, but about the entire financial operations of the 2016 Agreement. The right of the Government to have an audit is provided for under Article 23 of the Agreement as being “the right to audit their counting records of the Contractor in respect of petroleum operations in accordance with accounting procedure.” This right is further amplified in Section 15 of Annex C – Accounting Procedure, which forms part of the Agreement.”

Ram, who is also an attorney, is adamant that Haynes, the Guyanese spokesperson on the audit panel, along with his team must be aware that oil production ran for a full year in 2020 and all the records pertaining to the production, allocation of production share, costs incurred, recoverable and non-recoverable expenditure and costs to be carried forward all form part of the records of the oil companies that should be subjected to scrutiny.

To this end, Ram noted, “The suggestion by Mr. Haynes that this is merely a cost recovery audit is dangerously wrong. [I] never thought it would be necessary to point out to a team of Chartered Accountants that they have a duty to familiarise themselves with the technical details of the Agreement under which they have undertaken a professional engagement; that costs are classified, defined and allocated across six specific heads; that claims for recoverable expenses must satisfy three conditions; that records have to be maintained to allow for the preparation and submission of seven Statements to the Government.”

As a consequence, he argued that Guyana should be conducting more than just a cost recovery audit.

In May, the Government signed a four month contract with VHE Consulting- which is a registered partnership between Ramdihal & Haynes Inc; Eclisar Financial; and Vitality Accounting & Consultancy Inc. – along with international firms SGS and Martindale Consultants for the ‘Cost Recovery Audit and Validation of the Government of Guyana’s Profit Oil Share’.

This includes costs incurred for the Liza One and Liza Two Projects which are currently producing over 360,000 barrels of oil per day. Importantly, the audit will cost Guyanese some US$751,000.

Early last month, President Irfaan Ali told reporters at the sidelines of an event that the audit process was delayed and the first report is expected to be handed over to government before yearend.

The Head of State said, “They expect the first report before the end of December and the delay was because of coordination issues with the auditors themselves which is natural in these circumstances so before the end of the year we expect the first report.”

Haynes told Kaieteur News that an interim report will be issued in the first week of December to government.