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Govt. audit into Exxon’s bills missed US$92M in inflated expenses
“What is clear is that Exxon cannot be trusted with money, with oil, and with interacting with Guyanese persons overseeing the execution of the petroleum agreement.” – Chris Ram
Kaieteur News – British company, IHS Markit, which flagged US$214 million in questionable spending after examining ExxonMobil Guyana Limited’s US$1.7B expenses, appears to have overlooked US$92M in inflated sums. This was recently pointed out by Chartered Accountant and Attorney-at-Law, Christopher Ram in two letters carried by Stabroek News.
Chartered Accountant, Chris Ram
In his first Letter to the Editor, Ram reminded that in Annex C of the Production Sharing Agreement (PSA) governing the Stabroek Block, ExxonMobil which leads a consortium with Hess and CNOOC in the concession included a charge for US$460M in pre-contract costs. It said these expenses were incurred from 1999 to 2015. The PSA inked in 2016, states that Guyana’s oil must cover this cost.
However, Ram said his examination of the records for Exxon and its partners, Hess Corporation and CNOOC Petroleum Guyana Limited, show that they only expended a maximum of US$368M. It therefore means that Exxon included in the 2016 PSA, a bill that was inflated by US$92M.
In a subsequent letter, Ram made another damning revelation—the US$92M inflated sum was not flagged by IHS Markit, which was appointed back in 2019 to audit Exxon’s bills. It should be noted that IHS not only examined US$460M in expenses but also another set incurred from 2015 to 2017 totalling US$1.2B.
Despite such an oversight by IHS Markit, Ram also highlighted that TSD Lal & Co., the external auditor for the three Stabroek block partners, “has consistently given clean opinions on patently inconsistent and irreconcilable financial statements…”
Questioned on the implications of this oversight on two fronts, Ram said that he is upset that Exxon is carrying on with business as usual. He said to Kaieteur News, “The government needs to be firm and deal with the US$214 million under the table fix and the US$92 million pre-2016 overstatement. What makes the situation even more sickening is that the government has to finance all the audit costs to detect the improper conduct of Exxon.”
The Chartered Accountant also stressed that these matters should not be ignored. He told Kaieteur News that this is a painful and costly episode which should never be allowed to be repeated. “What is clear is that Exxon cannot be trusted with money, with oil, and with interacting with Guyanese persons overseeing the execution of the petroleum agreement,” the Chartered Accountant said.
Ram also added as a non-negotiable that Exxon must give a schedule under oath of the moneys received from Shell (twice) and from Hess and CNOOC for participating interest in the Stabroek Block. Those monies he contended should be paid back to the government, not in part, but in total. “We have to stand up for what is right but to sanction what is an egregious wrong, amounting to a fraud and a crime,” Ram concluded.
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