Exxon and broker face GYD$25000 fine if found guilty of inflating US$12.1B invoice

Apr 29, 2024 News

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…Guyana’s oil to pay Exxon’s lawyer fees and the fine – oil contract

Kaieteur News – If convicted of making a false declaration to the Guyana Revenue Authority (GRA) in the sum of US$12.1 billion, ExxonMobil Guyana Limited (EMGL) and its former broker Ramps Logistics Guyana Incorporated (RLGI), face a mere GYD$25,000 fine, together with imprisonment for three years.

It was recently reported that Exxon and Ramps are facing similar criminal charges over a November 2023 declaration made by Ramps on behalf of Exxon to GRA. Ramps acted as the broker for Exxon importing oil well equipment valued US$4,467,662, but declared to Customs that the equipment was valued at US$12,192,103,923.91.

According to copies of the summons filed by the Commissioner General of GRA, Mr. Godfrey Statia, both Exxon and Ramps were summoned to appear in court in relation with the false declaration made to the Revenue Authority. It was stated that Exxon on the 16th day of November, 2023 at Lot 200-201 Camp Street, Georgetown, a place in the Georgetown Magisterial District, caused to be made and subscribed a false declaration to the Revenue Authority, to wit the defendant caused the value declared on invoice number INV# MVYT_1P07HP-006 dated on the 16th day of November, 2023 for a quantity of oil well equipment and supplies to be valued at USD$12,192,103,923.91. Similarly, Ramps’ summons stated that on the same date Ramps made an untrue declaration to the Revenue Authority.

The statement of offence listed on the summons is, “Made an untrue declaration to the Revenue Authority, contrary to 215 (1) (c) of the Customs Act, Chapter 82:01.” According to the section 215 (1) of the Customs Act, “Any person who, in any matter relating to the customs, or under the control or management of the Comptroller- Penalty for false declaration…. (c) makes or signs any declaration made for the consideration of any officer on any application presented to him, the same being untrue in any particular…shall be liable on summary conviction to a fine of twenty five thousand dollars together with imprisonment for three years.”

While the penalty for the alleged offence is miniscule, the inflated declaration is of significant concern as it could impact oil profits had it been approved.  According to the 2016 Production Sharing Agreement (PSA) Guyana signed with the Exxon-led consortium for the Stabroek Block. A provision in the PSA allows Exxon to deduct 75% of the revenues earned towards cost recovery or repaying the investments by the company. The remaining 25% is then shared with Guyana as profit, meaning the country receives 12.5% along with a 2% royalty.

It is instructive, that should ExxonMobil be taken before the courts in Guyana or even before a regional or international court for any reason that has direct relations to the company’s operations in Guyana, the cost incurred for all legal fees or judgment handed down will be paid by Guyana. This is stipulated in the 2016 Production Sharing Agreement (PSA).

Kaieteur News has reported that Exxon was informed that during the investigation Ramps submitted a missive to the Revenue Authority stating that it was contracted by Exxon to provide brokerage and freight forward service and attributed the erroneous declaration to information obtained from Exxon’s KABAL system.

This publication understands that on December 11, 2023, Exxon representatives visited GRA to assist with the investigation, where enquiries were made in relation to Exxon’s conduct. Further, in response, Exxon in a letter dated December 13, 2023 claimed that it learned that Ramps, “incorrectly inputted USD as the currency of the commercial invoice on the referenced Customs declaration, in place of GYD; and the error resulted in an overstatement of the value of the items listed on the commercial invoice and consequently on the Customs declaration submitted by your broker.”

In response to this, the Revenue Authority indicated that Exxon’s claims/explanation cannot be deemed as accepted in law, particularly since a statutory duty is imposed on Exxon to verify and ensure that all information declared to GRA by its broker is true and correct.

“In addition, evidence was obtained to prove that the untrue declaration was caused to be made and subscribed to the Revenue Authority by your company. As such, be guided accordingly that this act constitutes a breach of Section 217 (1) (a) of the Customs Act, Chapter 82:01,” GRA told the company.

Exxon was given an opportunity to show cause why proceedings should not be instituted against them in accordance with the Customs Act. Notably, it was stated that if Exxon fails to respond within 14 days of the letter, the Revenue Authority will be forced to take the necessary action against the company. Additionally, according to another document submitted to the Revenue Authority by Exxon stated, “We thank you for your letter of 18th March, 2024, in which you have invited ExxonMobil Guyana Limited (EMGL) to show cause why proceedings should not be instituted against EMGL in accordance with the provisions of Section 217(1)(a) of the Customs Act Cap. 82:01 in connection with Customs Declaration GY 410 2023 C2612 dated November 16, 2023.”

Exxon response to the Revenue Authority made several claims: that it was not the declarant and has not made any false declaration, that the declaration was made by Ramps, that it (Exxon) has not made and subscribed or caused to be made and subscribed any false declaration, that any error made by Ramps was a typographical error which did not inure to the detriment of or cause any loss to the Revenue Authority, that to the best of EMGL’s knowledge all information that was available to Ramps from the KABAL platform was accurate and any error was not caused by Exxon.

Moreover, the oil company also told GRA that under its contract, Ramps had an obligation to review and verify all inbound shipping documentation (such as bills of lading, commercial invoices, packing lists, certificates of origin, etc) and work to ensure that all such documentation was accurate and correct and met customs requirements of the Co-operative Republic of Guyana. RLGI was contractually obligated to review and verify all relevant shipping information before preparing and submitting the declaration.

“In these circumstances there are no apparent circumstances why proceedings ought to be instituted against EMGL as a matter of fact or law. EMGL is ready to engage with the Guyana Revenue Authority in the spirit of dialog and cooperation to address any remaining concerns that the Authority may have on this matter,” Exxon further stated. Additionally, back in 2022 GRA’s Law Enforcement and Investigations Division instituted 10 charges in the Georgetown Magistrates’ Court for false declarations made by Ramps Logistics. In April 2023, Ramps in a statement said that it had been cleared of all charges brought by the Revenue Authority.

 

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• EMGL, ExxonMobil, Godfrey Statia, Production Sharing Agreement (PSA)

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