ExxonM will have to explain inflated invoices in Court – VP Jagdeo

May 03, 2024 Court Stories, ExxonMobil, Features / Columnists, News, Oil & Gas

---

Kaieteur News – Vice President (VP) Bharrat Jagdeo stated on Thursday that ExxonMobil Guyana Limited (EMGL) will need to explain in court why a massive US$12.192 billion invoice, submitted to the Guyana Revenue Authority (GRA) by its former broker Ramps Logistics Guyana Incorporated (RLGI), was revealed to be inflated.

Last week, it came to light that Ramps, contracted by Exxon to import oil well equipment, had submitted an inflated invoice. This discrepancy caught the attention of GRA, prompting an investigation. It was reported that in November 2023, Ramps submitted an invoice for oil well equipment valued at US$4,467,662 but the declared value to Customs was a staggering US$12,192,103,923.91.

During his press conference yesterday, Vice President Jagdeo underscored that the government is fully supportive of GRA’s efforts to address the matter. In response to media reports of EMGL’s Country Manager Alistair Routledge stating that the company had not received a court summons, Jagdeo revealed that although he had been informed since last week that Exxon and Ramps would be served with the court order, that action had not been taken.

However, he said, “…I asked the Commissioner General (Godfrey Statia) why is this so, since they told me since last week, it was filed and he said that the court did not have the bailiff and they expect it to be filed, served today, the summons to go to court.” Jagdeo explained that efforts by GRA to clarify the inflated invoice were not met with helpful responses from Exxon. According to him, the oil company told GRA that given that the price on the invoice is tax-free, it would not have resulted in the loss of any taxes.  “But that was not the issue,” Jagdeo noted. Describing the inflated invoice matter as “unbelievable,” Jagdeo expressed his surprise at how the companies arrived at such an exorbitant figure. To underscore the enormity of the sum on the inflated invoice, he pointed out that it equates to the cost of two Floating Production Storage and Offloading (FPSO) vessels.

The Vice President went on to elaborate on the ramifications of approving such an inflated invoice. He first reminded of the provision in the 2016 Production Sharing Agreement (PSA) Guyana signed with the Exxon-led consortium for the Stabroek Block which allows Exxon to retain 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.

To this, he said, “We made it clear that if invoices are deliberately increase, it will have an impact on two things; it will overstate the cost bank and two, it will change the tax liabilities of the government, because as you know, in accordance with the PSA that (former minister Raphael) Trotman signed, the responsibility for paying taxes rests with the Government of Guyana on behalf of Exxon and so we are treating this matter seriously as a result of this.”

Moreover, he expressed his eagerness to hear the explanations for the inflated invoice in court. Jagdeo said, “It is a serious matter. We take it seriously. If they have explanations (they) can give it to the courts, because now we have filed charges against them…” As a result of the incident, the VP stated too that GRA have been instructed to review the invoices submitted for the previous years.

“We are now ensuring that before we finalise, any of the audit, the second audit, that the GRA will go back and check all the back invoices last several years to see that there is really no overstatement of any of these invoices,” he noted.

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. The company in 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 injure 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 was contractually obligated to review and verify all relevant shipping information before preparing and submitting the declaration.

---

• Bharrat Jagdeo, Exxon, Guyana Revenue Authority (GRA), Ramps, Vice President (VP)

---