Audit report on Exxon’s US$1.6B costs not final – GRA Boss

Apr 05, 2023 News

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…preliminary report has several financial inaccuracies

Kaieteur News – An audit report that was recently quoted extensively by Stabroek News regarding US$1.6B in expenses racked up by ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) from 1999 to 2017, is not a final document.

This is according to Commissioner General of the Guyana Revenue Authority (GRA), Godfrey Steve Statia.

In a statement to the media last evening, Statia said the report that was leaked and reported on is filled with financial inaccuracies, and moreover, deficient in a number of other areas.

His clarification followed two articles that were published by Stabroek News on the report, both of which highlighted that there was US$214M in questionable costs that were flagged by the auditor, IHS Markit.

In both pieces, it was stated that the IHS report was hidden from public scrutiny for two years by the People’s Progressive Party (PPP) regime.

Statia said unequivocally that this is not the case. He said the report was not released as it is a preliminary document.

The GRA Boss recalled that in November 2019, the Government of Guyana entered into a contractual arrangement with IHS Markit to audit EEPGL’s expenses from 1999 to 2017.

He said several agencies collaborated to form Guyana’s Audit team. It included the Guyana Revenue Authority (GRA), Guyana Geology and Mines and Commission (GGMC) and the former Department of Energy (DE) which is now a technical department within the Ministry of Natural Resources (MNR).

Statia said the UK auditor had three distinct reports to deliver: An Initial Audit Report, an Intermediate Audit Report and a Final Audit Report.

The Commissioner General said the Initial Audit Report was received on March 20, 2020. Kaieteur News understands that work then began for the Intermediate and Final Audit Reports.

On July 31, 2020, he said IHS submitted a combined report which it referred to as the ‘Final Audit Report’. Upon reviewing this document, Statia said IHS was informed that it committed a breach of contractual terms, as well as, audit standards and good practices since it tried to by-pass the Interim Audit Report requirement.

It was further related to IHS that a report cannot be considered final without Exxon’s response.

Further to this, the GRA boss said two iterations of the ‘Audit Report’ were subsequently issued by IHS between July 2020 and November 2020. In each instance, Statia said the Guyana Revenue Authority reviewed the respective reports and conveyed official comments. He said too that in depth reports were compiled and submitted to IHS.

In particular, in early 2021, he said GRA penned its concerns to IHS of major deficiencies that recurred throughout its report, namely: “the lack of recommendations in the report; failure to refer to industry standards and good practises for specific findings; inaccuracies as it relates to analysing and reviewing the financials; general inconsistencies and deficiencies; and failure to adopt suggestions and recommendations, as well as, address concerns emanating from government of Guyana representatives”.

Statia said IHS was advised to correct the foregoing issues since they “had significant adverse effects on the quality of the report and its ability to attain the desired outcomes of arresting unsound financial practises on the part of the contractor (ExxonMobil) and improving Governmental controls.”

Statia said GRA further requested IHS to revise the draft Audit Report, once again, to take account of the issues highlighted.

During 2020 and 2021, Statia said legal advice was solicited by the Government and obtained as it relates to significant issues arising during the audit and the forms of recourse available to the State.

Premised on the advice of the Guyana Revenue Authority, he said the Ministry of Natural Resources presented the audit report on July 2, 2021 to Exxon’s subsidiary.

He said, “During the period July 19, 2021 to March 4, 2022, there were ongoing correspondences between EEPGL, the Ministry of Natural Resources and IHS. In an effort to conclude the audit, in November, 2022, the Ministry of Natural Resources reached out to GRA to obtain its no objection to the Cost Audit Report.”

Statia said there were legal, procedural and accounting concerns which deterred the authority from granting its no objection.

The Commissioner General said GRA and the Natural Resources Ministry are still working on the “Final” Audit Report. Upon completion of its review, he assured that its findings shall be made public.

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• Commissioner General, Esso Exploration and Production Guyana Limited (EEPGL), Godfrey Steve Statia, Guyana Revenue Authority (GRA), number

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