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Ram accuses Exxon of ‘scampish accounting practices’ as company under-reports profits
Kaieteur News – Chartered Accountant and prominent Attorney-at-Law, Christopher Ram has accused oil major, ExxonMobil of ‘scampish accounting practices’ in Guyana as the company has been underreporting its earnings from the lucrative Stabroek Block operations.
Chartered Accountant and Attorney-at-Law, Christopher Ram
Ram while appearing as a guest on the Oil and Gas Governance Network’s (OGGN’s) weekly radio programme ‘Oil Talk’ recently pointed out that while the company lists tax as expense on its financial statement, it does not make such payments to the government of Guyana.
Exxon’s 2023 Annual Report reflected an ‘operating profit before taxation of $752,782,373,026 or US$3.6B and an income tax expense of $138,182,695,517 or US$658M. As such, the company reported $614,599,677,509 or US$2.9B as its ‘total comprehensive income for the year.
However, Ram’s contention is that Exxon does not pay taxes to the government of Guyana, in accordance with the 2016 Production Sharing Agreement (PSA).
He told viewers and listeners of the radio programme, aired on Kaieteur Radio 99.1/ 99.5 FM that the company’s tax reporting is fraudulent.
“That is a complete fraud. They do not pay taxes in Guyana; that’s a fraud and let me tell you why. The agreement says (at) Article 15.4 of the Petroleum Agreement says that at the end of the year, the oil company will make up its tax returns (and) hand the returns to the Minister.”
A receipt is subsequently issued to the operator, indicating that the respective annual income tax was paid. The Chartered Accountant pointed out that the company then presents this certificate to the United States of America and claims that figure as a tax deduction on its total tax liability.
To this end, Ram argued, “So there is no tax charge as represented by these financial statements. It’s fraudulent…it is all skullduggery and accounting scampishness.”
It should be noted that not only is Exxon exempted from paying taxes in Guyana, but its subcontractors as well.
The PSA states at Article 15.1 that the Contractor (ExxonMobil Guyana Limited) as well as its affiliates shall not be subjected to tax, value-added tax, excise tax, duty, fee, charge or impost in respect of income derived from petroleum operations, property held or transactions except as specified under the agreement.
It goes on to state at Article 15.4 that the sum equivalent to the taxes owed by the company will be paid by the Minister responsible for Petroleum to the Commissioner General of the GRA.
As a result of the deal signed by the former administration and now accepted by the incumbent regime, Guyana to date has lost over US$3B in tax payments from petroleum companies operating here.
Kaieteur News reported that tax exemptions granted between 2019 and 2021, according to previous Reports from the Auditor General (AG), amount to a whopping US$2.3 billion. In 2019, Guyana lost US$600 million in taxes and in 2020 another US$685 million; this was followed by US$1 B in tax exemptions in 2021 and US$541 million in 2022. The AG report for 2023 has not yet been issued but information from Exxon’s Annual Report indicates that Guyana lost US$658M in taxes from that company alone. Taxes were also waived for the other Stabroek Block partners, Hess and CNOOC as well as the subcontractors hired by the Co-Venturers.
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