Proof of spending

Jun 08, 2024 Editorial

Kaieteur News – ExxonMobil is billing Guyana’s oil revenues in a cavalier manner, it seems. There have been billions of US dollars in expenses submitted, and millions have been questioned by the auditors. When the VHE Consulting audit team probed into the records of ExxonMobil, much has been found that raises alarms about the honesty of the oil partner that Guyana is stuck with, and seemingly doesn’t know how to put straight. Buying from affiliated companies is the latest that has come before the public and gives a glimpse into the manner that the oil giant does business with Guyana.

ExxonMobil can purchase items from its affiliated entities but must follow the procedures embedded in the 2016 Production Sharing Agreement (PSA). Section 3.1(e)(iii)(b) of Annex C of the PSA permits ExxonMobil to purchase items from its affiliates, but a supporting document trail is required. Invoices must be supplied, and values identified, so that comparisons can be made in the open market to determine the fairness of what the affiliate charged and what ExxonMobil Guyana Ltd booked. Also, the company has a duty to document how and where the materials billed were used. In essence, such materials must be for the Guyana Stabroek Block operations and nowhere else, along with details about their present disposition.

It is interesting what ExxonMobil has as part of its accounting records for its purchases from affiliates. Journal entries were what ExxonMobil had to share with the VHE Consulting auditing team. The equivalent of a company diary, it could be said, and with little else to support its entries. Some invoices with prices stated would have helped. The auditors could then proceed to verify by way of comparisons. If there are no invoices, then the reasonableness of the affiliate pricing and invoices cannot be readily checked. We do not know whether this apparent gap in ExxonMobil’s record was for just such a purpose, but it certainly raises a world of speculation, if not hard suspicion, about what the oil giant is up to. US$1M is a relatively significant sum for Guyana, and should this occur with frequency in ExxonMobil’s charges, then they add up in no time. US$7.3B in expenses to be audited at one shot represents a huge volume of records, complete with invoices, statements, supporting memoranda, and much more to go through. The auditors had at one time described the process as tedious and time consuming, and to which we would include that it had to be numbing. This means that costly items could either have not been given the keenness that was necessary, and the scope and sample standard selected limited the type of wide-ranging and deep dive scrutiny that was required to give Guyana the fullest value for its oil dollars.

Being the seasoned corporate power that it is, was ExxonMobil gambling on those factors coming into play and keeping its fingers crossed that detection of its accounting deficits would not follow? It should have been the simplest matter for ExxonMobil to obtain invoices for its purchases from affiliates, and almost as a reflexive action. It was Country Head, Mr. Alistair Routledge who spoke so authoritatively about his company’s accounting systems, going so far as to label them “world class”. When journal entries are all that the company has for over US$1M in affiliate purchases, then we will assert that that cannot be termed ‘world class’ by any stretch of the imagination. When the “validity and propriety” of the affiliate charges cannot be verified, then this goes beyond the actual materials themselves. Claims about world class accounting systems cannot be said to have validity. When US$1M in materials have no invoices, and nothing to back such up, then “propriety” takes on a new, and possibly scurrilous, meaning. We return to a point often made: if a full forensic audit was ordered and done, how many more big and pricey exposures could have come to light of the way that ExxonMobil conducts itself, sets as its standards, in this Guyana partnership?

If nothing else, charging US$1M for purchases without any invoice(s) gives an indication of how serious ExxonMobil takes Guyanese. Frankly, no invoices, and no credible explanation, speaks to the contempt and more of ExxonMobil for the Guyanese people.

auditors, Editorial, ExxonMobil, Guyana, VHE Consulting

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Proof of spending

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