An uncanny letter appeared in yesterday’s edition of Kaieteur News. It was penned under the name of an official of the Ministry of Natural Resources, and accuses the publisher of this newspaper of misleading the readers of the newspaper News about the Production Sharing Agreement between ExxonMobil and the Government of Guyana.
The letter is an infantile attempt at responding to the criticisms of the contract. It would have been much better if the Ministry had said nothing.
Kaieteur News reported in its Valentine Day edition that the government had waived its right to access certain records which are usually held by the Contractor or its affiliated companies. The relevant provision of the agreement in Article 1.5 (E) of the contract reads as follows:
“Nothing herein shall entitle the Minister or his auditors to have access to data and records which: (i) are subject to statutory restrictions on disclosure or (ii) do not relate to petroleum operations; or (iii) are not customarily disclosed in auditing practice in the international petroleum industry; provided however, that where the Minister of his Auditors seek confirmation that charges subject to restricted access under (a), (b) and (c) above have been properly charged under the Agreement and Accounting Procedure, they shall be entitled to seek ( at their sole cost) from the statutory auditors of the Contractor or its affiliated companies, as the case may be, certification that such charges have been levied on a fair and reasonable basis.”
There is clearly a typographical mistake in this section because (a), (b) and (c) relate to the conditions under which an audit can take place, while (e) deals with restrictions on information which does not have to be provided in the audit. Such information includes data which are subject to statutory restrictions.
Some countries usually have legislation which limit what can be disclosed. This exists, for example, in the medical profession, a situation where the laws of some countries prohibit auditors from having access to the medical records of patients. Similarly, in certain sensitive industries, especially those relating to national security and high technology, there are usually restrictions on the auditors having access to certain designs and plans, for obvious reasons.
The petroleum industry is not that sensitive or a national security sector. There is therefore not many charges which ought to be subject to statutory restrictions on disclosures to the auditors, all the more so given the international outcry for greater transparency in oil contracts
According to the provisions of its contract with Exxon Mobil, Guyana cannot demand, during an audit, information that is statutorily restricted from disclosure. Guyana has effectively waived its right to do this under the contract. What is it that Guyana has to pay for under cost recovery but which Guyana’s auditors cannot have access to? The Ministry must tell this nation what charges are subject to restricted disclosure. Guyana should not be paying for anything which it cannot verify?
However, the contract goes on to state that for those categories of data and records which are subject to statutory restrictions on disclosure , the government’s auditors can see certification( not access) from the auditors ( not the Contractor) of the Contractor of its associated companies.
In other words, if government’s auditors want to verify something that is chargeable to Guyana but that information is subject to statutory restriction on disclosure, it can simply ask the auditors of ExxonMobil to verify that what ExxonMobil has charged is true and correct. But it cannot verify this for itself.
In light of this, which is contained in the terms of the contract between the government of Guyana and ExxonMobil, it is truly perplexing that the Ministry of Natural Resources can accuse Kaieteur News of being contradictory when it stated that“…the Government of Guyana agreed to relinquish all rights to go after documents in relation to operations here” while concluding that this proviso effectively limits the scope of any audit it may pursue.
The conclusion is fully justified. If Guyana’s auditors are not entitled to demand data or records which are subject to statutory restrictions on disclosure, and if in such cases all that can be done is to ask the auditors of the company which is being audited to certify the truthfulness of the costs, then does this not restrict the scope of any audit?
It does because Guyana’s auditors will not be able to verify certain costs which Exxon may claim are subject to restrictions (statutory or otherwise) on disclosure.
Exxon holds all the main cards under this agreement. Guyana holds the joker in the pack.
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