The audit report on Exxon’s post-contract costs
Before proceeding with today’s article, we refer the response by Guyana’s Minister of Parliamentary Affairs and Governance to a question posed by the United Nations Human Rights Committee. The question relates to allegations of corruption against a very senior member of the current Administration and the failure of the Government to initiate an investigation into the matter. In response, the Minister stated that no formal police report had been filed and that without such a report, law enforcement authorities were unable to launch an investigation.
One recalls when allegations of corruption were made against a Minister under the Hoyte Administration, the President appointed a Commission of Inquiry to examine the matter, and the said Minister had to resign to facilitate the investigation. President Ali should therefore do the same if his government is serious about fighting corruption and bringing about the much-needed improvements in Guyana’s standing on Transparency International’s Corruptions Perceptions Index. If the report of the Commission indicates criminal behaviour or breaches in Guyana’s laws, it should be forwarded to the law enforcement agencies for further action. The first task, therefore, is for the President to appoint a Commission of Inquiry as a matter of urgency.
In three previous articles, we reviewed the contents of the report on the audit of the pre-contract costs incurred by Exxon’s subsidiaries during the period 1999 to 2017. The results of the audit, which was conducted by IHS Markit, identified US$214.4 million in disputed costs. The figure has been reportedly reduced to US$3 million through what the Authorities claimed to be an unauthorized negotiation between an officer of the Ministry of
Natural Resources and ExxonMobil’s subsidiaries. It seems, however, unreasonable to consider that the said officer would have acted on his out accord, that is, without the full knowledge and consent of the Authorities. After three years since the issuance of the final report on the matter, the status of the disputed expenditure remains unclear.
In today’s article, we discuss the contents of a second audit report: the audit of post-contract costs covering the period 2018 to 2020. As in the case of the IHS Markit report, this report is yet to be made public.
Some background information
The absence of ring-fencing provisions is a key weakness in the 2016 Petroleum Sharing Agreement (PSA), according to the International Monetary Fund (IMF). A ring-fencing arrangement ensures that only costs attributable to a particular field are considered in the computation of profit oil for that field. Although the