The Extractive Industries Transparency Initiative (Part II)

This column has been hesitant to comment on the recent visit to the Houston headquarters of ExxonMobil by five Ministers of the Government, the Petroleum Advisor to the President and two staff members of the Ministry of Natural Resources, until the fact are known as to the purpose for the trip and the source of funding. We now know that the purpose was to obtain an update on progress being made by the U.S. oil giant in relation to the extraction of crude oil in Guyana’s waters and that the trip was funded by ExxonMobil.

Several concerns arise from the above disclosures. First, both the Government and ExxonMobil should have been aware that it is highly inappropriate from an ethical and moral standpoint for latter to fund the trip. The agreement with ExxonMobil is in the nature of a procurement contract, and our Procurement Act prohibits the acceptance of gifts and other favours from suppliers/contractors. Such acceptance has the potential of influencing decisions in favour of suppliers/contractors, hence a potential conflict of interest. Additionally, the Integrity Commission Act has a schedule of Code of Conduct that prohibits the acceptance of gifts and other favours. The Code has since been revised and gazetted but the related amendments to the Act are yet to be tabled in the National Assembly.

Second, in an apparent attempt at damage control, Government officials have indicated that the cost of the trip will be included in Exxon’s investment to be recovered against revenue when production begins in 2020. This explanation should be rejected since the U.S. oil giant’s investment cannot include expenditure incurred on behalf of the Government of Guyana. A competent and independent auditor is more than likely to reject such an expenditure as a charge to Exxon in its books. This practice can also open the floodgates for all sorts of government expenditure to be incurred and included in Exxon’s investment.

Third, there is no provision in our Fiscal Management and Accountability (FMA) Act or our Constitution that allows expenditure to be incurred and charged against future revenues; nor can there be netting off of expenditure against revenue. In fact, Section 38(1) of the FMA Act specifically states that “All public moneys raised or received by the Government shall be credited fully and promptly to the Consolidated Fund …” (Emphasis mine). The cost of the trip should therefore have been funded by the Government through the budget process.

Fourth, one needs to reflect on whether such a costly visit to obtain an update on progress made by ExxonMobil, was indeed necessary, considering that in an age of rapid advances in information technology, virtual meetings can be conveniently held via Skype, conference calls and other technology-related means. Is it not a case of waste and extravagance in the use of public funds?

In the circumstances, ExxonMobil should be requested to present to the Government an invoice for the expenditure incurred and reimbursement made at the approved travelling rates for Ministers and other officials. As it stands, the expenditure will not be reflected in the public accounts. One hopes that there will not be a repeat of this practice.

On a related matter, this Column is not impressed with the explanation provided for failure to make the agreement with ExxonMobil available to the public. Everything that our neighbour to the west needs to know about the agreement is already in the public domain. If there are some clauses that border on territorial integrity or national security, a redacted version of the agreement can be released to the public.

Finally, the Stabroek News should be applauded for taking the high ethical and moral ground by declining the offer by Exxon Mobil to fund a trip to a California oil and gas seminar. One wonders if any other media house was provided with a similar offer and whether such an offer was accepted.

Last week, we began a discussion of the Extractive Industries Transparency Initiative (EITI) by providing some background information about its establishment as