H@RD TRUTHS BY GHK LALL – US$7.3B Exxon audit, self-correction

Nov 28, 2023 Features / Columnists, News, The GHK Lall Column

Kaieteur News – It is my painful duty to retrace steps in the audit of US$7.3 billion of Exxon’s expenses for the period 2018-2020, relative to the Liza-1 and Liza-2 oil projects. There is no choice but to walk back some of the guarded praise extended to the audit team of Ramdihal &Haynes Inc., Eclisar Financial, Vitality Accounting and Consultancy Inc., with advisory services provided by Martindale Consulting., in collaboration with SGS (Ramdihal & Haynes). A letter from the Oil and Gas Network (OGGN) in KN dated Nov 25^th set me back on my heels. I admit to the error of premature generosity to the Ramdihal & Haynes audit team, some of which was not due.

GHK Lall

The volume involved in the Exxon audit exercise speaks for itself, with a staggering 260,000 transactions. While many could have been routine invoices, there were sure to be other attachments to quite a few of that over quarter of a million transactions. As an aside, and for whatever it is worth, I am putting on the table whether Exxon pulled that old IBM trick that earned a sharp reprimand from a US federal judge. IBM was canny enough, and reckless enough, to try to overwhelm the court with a large container of documents to obscure the kind of deep scrutiny of its activities. Exxon’s 260,000 transactions have a close resemblance.

Whatever the sampling methodology (random, stratified, some reasonable percentage, or some kind of combination of those, or something alien to those conventions), it still had to be a veritable mountain of paper standing before the audit team. It had to be dug into, sifted through, reviewed and interpreted, consulted over and sometimes corrected, with possible additional digging and following-up necessary. Also, I had expressed misgivings from day one of the utility of an audit period of four months for something of this magnitude (US$7.3 billion). Now the realization dawns, thanks to the people at OGGN, a couple of whom are known and respected, that four months represented nothing but a chime in the full audit clock that was needed. No wonder some foreign people who knew about the demands embedded in audits of this kind and bulk had openly ridiculed the four-month audit timeframe. Scope limitations held in suspension, it boggles the mind about what could get done, assuming that a meaningful sample was taken, when there were 260,000 transactions hanging overhead. That US$100 million in findings suddenly look like small potatoes, the flashing fairy lights that they ended up being. I cannot help but to wonder about the quality of the guidance given by the consultants.

Another admission is in order at this juncture. There was fascination with expenses for the equivalents of bungee jumping, rope dancing, and stress busting (exercise classes). There was a good laugh at the findings bared about improper expenses for brandy sniffing and cigar smoking and caviar gorging (T & E), and all on Guyana’s scarce oil dollar. At 75% skimmed from off the top of revenues, it was an open invitation to self-help. Exxon did not hesitate, as the audit trail has since revealed. But, as OGGN emphasized, this is still allowing oneself to be carried away by glossy miniatures. The big damage by Exxon could have been lurking in the big-ticket items.

How many of those were targeted, isolated, and examined? It would be interesting to learn the sampling method selected for those items and what was the threshold, or the floor, used for such expenses to qualify for scrutiny. With so many of what I would term ‘small fry’ items having received so much attention (and applause), how much time in the four months allowed for the audit was earmarked for what could have been hidden expenses that were smoking guns? Though the audit ran past the initial allotted time, to check, double check, and crosscheck the probable expense machinations of Exxon still had to be an insurmountable undertaking. In the US$100 million in findings, did the Guyanese people get a pig in a Santa Claus suit? As a decoy, US$100 million in audit findings, does have its share of gaudy attractiveness. Further, when consideration is given to the sensational items unveiled, as they related to the Stabroek Block offshore operations, and with fierce insistence about their appropriateness by Exxon, it is clear that Guyanese got some Christmas trees, but that they lost sight of the forests. I did.

Last, this US$7.3 billion audit exercise was supposed to be the first ‘deep dive’ into Exxon’s unrestrained and unmonitored spending. I regret that I am compelled to reach this unhappy conclusion: That deep dive led to the audit team hitting its head on some jagged rocks that lurked beneath Exxon’s expense murk. I can’t only anticipate the worst for the audits that follow, and I noticed that Ramdihal & Haynes has already made known its availability. Exxon bled Guyana through the ears and eyes, and the audit findings are now the source of some nosebleeds. I could use some Kleenex. Thanks, but I will get my own; I will do without any from Exxon, for it could be included in Stabroek Block expenses, and categorized as a rescue operation.

(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.)

Eclisar Financial, Exxon’s, Oil and Gas Network (OGGN), Ramdihal & Haynes Inc., Vitality Accounting and Consultancy Inc

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