Latest update April 25th, 2024 12:59 AM
Apr 17, 2020 News
– a violation of the bank’s procurement and public disclosure rules
– directors’ immediate intervention required
By Kiana Wilburg
Urgewald, a German pro-environment organization, is calling for the immediate intervention of the World Bank’s Directors, as it relates to contracts the international institution is funding in Guyana.
According to the non-governmental organization, some officials at the World Bank seem to be giving their blessings for certain ExxonMobil-linked contractors to grab up contracts that will determine what laws and policies would be used to regulate Guyana’s oil industry. Urgewald said that this is a clear conflict of interest, and therefore represents a violation of the Bank’s procurement and public disclosure rules.
In its letter to the World Bank’s directors, Urgewald said that at least two contractors cleared by the World Bank should have been disqualified due to conflict of interest.
Expounding further, the non-governmental organization reminded that the World Bank would have provided Guyana with US$20M to fund a Petroleum Resource and Management Project (P166730). Part of the Bank’s financial assistance targeted the drafting of new policies and laws, including the Local Content Policy and Petroleum Taxation and Fiscal Regulations. However, in a clear breach of legal and ethical standards, the NGO said that multiple contractors hired under the World Bank Project to draft these laws are linked to ExxonMobil, the developer of Guyana’s giant Stabroek offshore oil block.
In February 2019, the NGO reminded that the coalition administration had announced that an oil consultant, Mr. Michael Warner, was hired to finish the drafting of the new Local Content Policy which would apply to new oil projects’ requirements surrounding the participation of Guyanese labour, services and goods. The organization noted that there was public criticism of the hiring of Mr. Warner, as he is the same contractor who was hired and paid by ExxonMobil to run the oil giant’s Local Content Centre for Development in Guyana.
Using reports that would have been produced by Kaieteur News, the Human Rights Organization told the World Bank that the hiring of Warner was further criticised because he has no track record of independently producing a local content policy for any country.
With further reference to Kaieteur News’ articles, Urgewald reported in its letter to the World Bank Directors that the revised Local Content Policy developed by Mr. Warner ignored key recommendations which were intended to improve transparency and give locals the upper hand in the industry.
Urgewald also told the directors that Warner injected into the final policy, a provision which allows for Local Content reports submitted to the government by foreign oil companies to remain confidential, while only a “summary” of those reports would be made public.
Urgewald in its letter said, “Stakeholders have criticized that such confidentiality would hinder the public’s ability to hold the companies, regulators and government to account and would prevent them from being able to analyze either compliance with the law or the degree of local economic contributions.”
The NGO added, “The independent national newspaper, Kaieteur News, reports that the confidentiality provisions were not included in the first two drafts of the policy that were done by Trinidadian Local Content Expert, Anthony Paul. The confidentiality provisions were only added after the ExxonMobil-linked oil consultant, Mr. Warner, was hired to revise the new policy.”
When questioned about the procurement process surrounding the hiring of Mr. Warner, the NGO told Directors that the government responded that it used a limited competitive selection process to expedite the award of the contract consistent with the World Bank’s Procurement Regulations. In addition, an evaluation report was completed and sent to the World Bank for its no-objection.
Urgewald further informed the World Bank Directors that Kaieteur News had since confirmed with the former Business Minister, Dominic Gaskin, that this contract was never advertised. In addition to the clear conflict of interest and resulting policy changes that undermine governance in favour of oil companies, Urgewald said that this contract that was awarded to Warner also raises the important question of why, if Guyana already had a local content expert drafting the new policy, did the World Bank Project fund another contractor under a limited, non-transparent process.
Turning its attention to another questionable contract, Urgewald noted that the law firm Hunton Andrews Kurth was hired for US$1.2 million to draft new petroleum laws for Guyana, covering, inter alia, tax regime, production sharing contracts, and environmental regulations. Urgewald was keen to note, however, that this very law firm has been representing ExxonMobil for some 40 years.
On this premise, the NGO said the hiring of Hunton Andrews Kurth and Mr. Warner for the drafting of new laws involving oil development, clearly violates the Bank’s Procurement Regulations.
It said that Section 3.17 of the regulations regarding Conflict of Interest for consulting services, states: “Consultants shall not be hired for any assignment that would be in conflict with their prior or current obligations to other clients, or that may place them in a position of being unable to carry out the assignment in the best interests of the Borrower.”
In light of this, the pro-environment agency believes it is high time that the World Bank Directors intervene to remedy the violation of Procurement Regulations, as it believes the current state of affairs would undermine efforts at good governance of Guyana’s oil sector.
Urgewald is a non-profit environmental and human rights organization that is based in Sassenberg, a small town in western Germany. It also runs an office in Berlin. For 25 years, Urgewald has been fighting against environmental destruction and for the rights of people harmed by corporate profit interests. During these 25 years, Urgewald has evolved from a small group of people to a powerful organization.
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