H@RD TRUTHS BY GHK LALL – Ramdihal and Haynes’s Audit Report: Looking ahead

Nov 11, 2023 Features / Columnists, News, The GHK Lall Column

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Kaieteur News – The recently publicized audit report from Ramdihal & Haynes Inc., Eclisar Financial, and Vitality Accounting and Consultancy Inc., with support from Martindale Consultants (Ramdihal & Haynes) provided Guyanese with insights into the lengths to which Exxon went to snare every last dollar out of Guyana’s oil revenues for itself.  Those costly insights are a start, likely the tip of the iceberg, which a deeper and wider audit scope would have laid bare much more, regarding how Exxon Guyana gouges Guyana.  Because of its work, I foresee that the Ramdihal & Haynes group would be first in line for future audits of oil expenses. As the group said, it encountered some difficulties deciphering the company’s accounting systems and ways of doing things, but like a battlefield warrior passing his first test, much seasoning has resulted from the experience.  In other words, it knows the territory better than others who could be lining up to compete for a piece of Guyana’s financially rewarding audit work.

From my perspective, what is gone is gone, viz., how much more could have been touched, and then reported as findings.  A particularly glaring example of which is that office for the company in Guyana. Given the exposure of the Ramdihal & Haynes group, I think it now much better positioned to take deeper dives into Exxon’s billions in expenses to be delivered to Guyana.

For one, the fullest grasp of the agreement between Guyana and Exxon is of the utmost importance.  Two of the four elements have a non-negotiable (absolute) power to them relative to expenses.  That is, what is allowed, and what is not.  A third is the role of the subject minister, in whose hands resides significant power.  My expectation is that an audit, by any audit team, focuses on how well the minister managed with his sensitive roles.  To put differently, what was approved, how often, costing how much, and how much such aligned with what is permitted in the agreement.

Separately, I am troubled by something that prompts several questions, but on which there have been no answers. The hope is that a future audit (by anybody) would zero in on this, and address it in the most comprehensive and convincing manner.  These are the facts.  Guyana and Exxon have a half and half partnership.  Yet, Guyana’s oil profits, as deposited in the New York held Natural Resources Funds, does not compare to the dollar to what the Exxon-led consortium reported for 2022; it does not even come close.  In fact, when the profits from the individual financial statements of Esso Guyana, Hess Corporation, and CNOOC are added up, what they report is four times more than what Guyana got as its share of its oil profits for 2022.  I doubt that I am mistaken, so what am I missing here?  What is the explanation for this?  I think that this is massive enough that it merits some comment now. It should be noticed that this is for 2022, which was outside the scope of the Ramdihal & Haynes audit covering 2018-2020.  We wait for when that comes up in a full scope audit of oil operations.

Interestingly, the Ramdihal & Haynes group made an eye-opening point about the accounting reports of Exxon. The Ramdihal and Haynes group spoke less than glowingly about Exxon’s accounting systems (records), describing them as ‘tedious’ and ‘time consuming.’  The question that comes to mind is whether this was tailor-made for the company’s Guyana operations.  If so, then why was this necessary, what were the objectives harboured?  Was it to slowdown the audit, have the team members going back and forth in their efforts to get a grasp of the company’s systems/records and related clarifications?  Meaning, efforts designed to dilute the substance of the audit, which limited what and how much the team could look at, and pursue further, as necessary.

Gathering all of this together, it seems that Guyana is paying through the nose to learn the hard way. One public contributor has called what Exxon is doing, as revealed in the findings in the US$7.3 billion Ramdihal & Haynes audit report, as ‘abuse’ and denounced the company’s behavior as “dishonourable.”  I fully agree, and do so with an appreciation that so much more possibly went abegging, due to time and scope limitations.  It is my belief that Exxon is going to push the envelope still further with oil project expenses, having seen what it can get away with, and how it can steer or bring to a slow crawl (‘tedious’ and ‘time consuming’) any audit exercise.  If there is one plus for the Ramdihal & Haynes group from this now concluded audit, it is that Exxon is more of a known quantity today.  Hence, the worst should be expected, and as armed by the fullest familiarity with the 2016 agreement, an audit team should know where to go, and how deep, in the audits to follow.  Though not as comprehensive as it could have been, a blueprint of sorts is now in hand, and some hard lessons have been learned.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• Eclisar Financial, Exxon, Ramdihal & Haynes Inc., Vitality Accounting, Vitality Accounting and Consultancy Inc

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