AFC mulls court action against Govt. for failing to conduct timely audits of Exxon’s expenses

Mar 11, 2023 Court Stories, Features / Columnists, News

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Kaieteur News – The Alliance For Change (AFC) on Friday said that it is mulling court against the government of Guyana for failing to conduct timely audits of the expenses billed to the country by U.S. oil giant, ExxonMobil.

The party at its weekly press conference told reporters that it is most egregious that tax payers are funding the development of the oil sector but are uninformed about what they are paying for.

Guyanese are yet to be privy to the details of an audit report conducted to review the expenses Guyana is paying for.

Further, the party posited that the country is losing billions due to inaction by the government to conduct the audits in keeping with the provisions set out in the 2016 Production Sharing Agreement (PSA) with the oil company and its affiliates, Hess and CNOOC.

Section 1.5 in Annex ‘C’ of the PSA states “The Minister shall have the right to audit upon ninety (90) days written notice, at his sole cost and expense, accounts and records of the Contractor, maintained hereunder with respect to each Calendar Year within two (2) years from the end of each such year. For purposes of auditing, the Minister may audit, examine and verify, at reasonable times during normal business hours but not more than once per calendar year, all charges and credits relating to the contractor’s activities under the Agreement…”

Former Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams believes the lack of timely audits could be costing the country billions.

“Government is losing money by the billions and it’s just as if the government really doesn’t care,” Adams told reporters Friday.

He explained that this inaction by the administration is benefitting the oil company, confirming doubts that may have lingered that “Exxon is fundamentally now running this government.”

Dr. Adams, a Petroleum Engineer, also pointed out that by not scrutinizing Exxon’s bills, government is committing the most egregious act. In fact, he noted that while Exxon is reluctant to publicly share its expenses, “government is aiding and abetting them by hiding this cost.”

The former EPA Director reasoned, “We have to know what these costs are for every single thing that you do. That’s the way that normal governments are run, I was part of it in the United States government. We used to have our people sitting there, sitting in the same offices with the contractors, sharing the same software, access to the same information, so there couldn’t have been any hiding.”

Meanwhile, in responding to a question from this publication as to what steps the AFC is willing to take to force the government into conducting timely reviews of its expenses, Former General Secretary of the AFC, David Patterson said legal action is among options that may be considered as the elected officials have not been prioritizing the audits.

The Shadow Minister of Natural Resources said the Opposition party will await the deadline in which the government is expected to receive a final report for the audit reviewing the years 2018 to 2020 before deciding on a legal recourse.

“First thing is, we gonna wait on the last deadline which is supposed to be at the end of the month- it’s another 21 days and then obviously I do think that maybe we may even look to move to Court or something like that because obviously they have a contract. We can probably even ask the public procurement commission to examine the outcome because we have two contracts. Two sets of contracts which they have given out, one for pre-contract and now the second one for the post (discovery) and none have been made public. None have been completed so therefore we can probably start looking at either legal action or even asking the public procurement commission to address it because obviously this is the people’s money has been paid,” Patterson explained.

Kaieteur News reported earlier this week that two years after approving ExxonMobil’s US$9B budget to produce 600 million barrels of oil from the Payara project in the Stabroek Block, Guyanese authorities are yet to commence a critical audit that would ensure the country is not paying more than it should.

The People’s Progressive Party (PPP/C) Administration had approved the project on September 30, 2020.

Vice President, Bharrat Jagdeo was asked recently about the projected start of the audit, but he indicated that he was not aware of the state of play on this front. He directed this newspaper to seek further clarity from the Natural Resources Ministry.  As stated above, the 2016 oil contract for the Stabroek Block only furnishes the government with a two-year deadline to complete critical audits of Exxon’s expenses. If it fails to do so, it would have to accept costs as is.

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• Audit, court, expense, ExxonMobil, oil

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