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Jagdeo shows no interest in arming future projects with penalties if audits of Exxon’s expenses continue to expose patterns of skullduggery
Kaieteur News – To date, Guyanese authorities have completed two audits of ExxonMobil Guyana’s expenses, covering 1999-2017 and 2018-2020. These audits have exposed several financial anomalies with the usage of Guyana’s profits.
Vice President, Bharrat Jagdeo
According to the 2016 Stabroek Block Production Sharing Agreement (PSA), once an oil block is ring-fenced, there should be no spending of revenues from that block to offset expenses in another block such as Canje or Kaieteur.
However, when auditors reviewed a sample of ExxonMobil’s expenses incurred in the 2018 to 2020 period totalling US$7.3B, they found that the Stabroek Block revenues paid for services related to the Kaieteur and Canje blocks. To compound this alarming state of affairs, auditors also uncovered that Guyana’s oil profits were also used to cover expenses that had nothing to do with the effective running of Exxon’s operations offshore.
Auditors attached to Ramdihal & Haynes Inc., Eclisar Financial, and Vitality Accounting and Consultancy Inc with backing from Martindale Consultants, said Exxon used a portion of Guyana’s profits to cover social media ads to promote the company, puppet shows, staff parties, school fees for the expats’ children and private drivers amongst other things which are not cost recoverable.
Another equally important point is that audits are still to be done on the third, fourth and fifth oil projects in the Stabroek Block worth approximately US$30B.
With these audits still outstanding, Kaieteur News recently asked Vice President, Bharrat Jagdeo if future projects would be armed with stiff penalties if auditors continue to find a pattern of abuse or skullduggery.
The Guyanese official said that the government can only rely on its right to audit Exxon’s expenses which is enshrined in the 2016 Stabroek Block PSA. He noted that this right is also afforded to local authorities via all agreements.
He further explained that, “The right to audit gives you a chance to see whether the expenditures were done illegally or they were inflated and therefore you have a mechanism to address it.” The Vice President said the mechanism the government has at its disposal is to instruct the oil company to return all disputed expenses to the cost bank.
Jagdeo noted that, “This is how the world of economics (and) accounting works. So there is a mechanism for that, for the government to have oversight over this and it’s been in all the contracts. That’s the mechanism that we are pursuing.”
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- Bharrat Jagdeo, expenses, Stabroek Block, Stabroek Block Production Sharing Agreement, Vice President
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