Auditor General Deodat Sharma has started investigating the failure by government to transfer the US$18 million signing bonus paid by ExxonMobil last year to the Consolidated Fund, in keeping with the Constitution.
“The minister should have mentioned, if he isn’t putting it in, what is the reason and he didn’t do that,” Sharma told Stabroek News yesterday.
“I am currently working on what happened. You see it is only Sunday that Exxon said definitely that the money was paid. I had been following the story before but it is just that I was waiting to get the information and confirmation. It [the money] is receipts for the Consolidated Fund and according to the Constitution, [Article] 216, all the monies collected should be stated. If it was not, then it means that the assets and liabilities statement of the government is understated or the cash book is understated by that amount. It should have been paid into the Consolidated Fund,” he added.
After months of silence on if a bonus was paid to it, the government admitted only on Friday last following a report published by Stabroek News confirming a request for the setting up of an account at the Bank of Guyana (BoG) for the funds from the signing bonus.
On the same day of the publication, Natural Resources Minister Raphael Trotman admitted to the National Assembly that government received the signing bonus, which he had for months refused to confirm.
Trotman, who did not disclose the value of the signing bonus, also claimed that the publication of the letter appeared to be organised to cause embarrassment to the government. He said the bonus was intended to be used for legal fees pertaining to the preservation of Guyana’s territorial integrity in the potential court case stemming from its border controversy with Venezuela.
He also echoed Minister of State Joseph Harmon, who had two weeks ago announced, when asked by this newspaper for an update, that the contract and its antecedents would be made public by the end of this month.
Stabroek News was reliably informed that it would be made public this week
On Sunday, ExxonMobil confirmed that a signing bonus of US$18 million was paid over.
“Let me say that signing bonuses are customary and normal in many petroleum agreements, not all but many around the world, as part of the total financial agreement,” ExxonMobil Country Manager Rod Henson said, when asked by Stabroek News at a lecture at Queen’s College .
“In this case, when this agreement was finalised, thorough negotiations were done and executed. We did pay a US$18 million signing bonus to the Bank of Guyana, to an account that is owned by the Government of Guyana and designated by the Ministry of Finance, not to any individual but to a government bank account designated by the Ministry of Finance,” he added.
It was the first time that the amount was made known publicly.
But Sharma said that while he believes the reports that the company admitted to the amounts, for the official purposes of his investigation as Auditor General, he has to get “in black and white” from the company that this is indeed the case.
He said that his correspondence with Exxon will also seek to determine if any other monies was paid by the company to the government.
“I want to follow this up with Exxon because I will have to write them a letter to confirm officially what they are saying, because so far it is just everybody just saying whatever. So, very soon I am determined to write Exxon because I want to be sure that it is not only this amount that was paid. I want to know if any other amount was paid for any other purpose,” Sharma explained.
“It is like a third party confirmation when you are doing a bank reconciliation and you need a third party confirmation,” he added, while informing that he will also be probing the BoG.
Sharma could not say if the monies should be reflected in the bank’s Annual
Audit because it was something he was still “following that up with the Accounts Department at Bank of Guyana to see if it was or was not. I am reexamining that part of it.
Meanwhile, a source knowledgeable about the BoG said that the Governor of the BoG and Finance Secretary Hector Butts, who requested the opening of the account, and Sharma, who audited the 2016 accounts of the bank, should all provide clarifications.
The source explained that the BoG is independent of the Government of Guyana but that the latter is a customer of the bank, with several foreign currency accounts held by the bank in the name of various government projects, especially foreign-funded ones. These accounts are normally used to pay overseas contractors and suppliers, and operate on a revolving fund basis.
“I do not believe that there is a lack of accountability for the US$18 million in the books of the Bank of Guyana. The year-end accounts of the Bank, in all probability, would have reflected this figure as part of the bank’s foreign currency assets in its balance sheet, and a corresponding liability to the Government of Guyana under the heading ‘Deposits’. This is standard accounting practice for banking institutions,” the source explained.
“The only problem is that the money should have been placed in the Consolidated Fund bank account, which is also held at the Bank of Guyana, instead of a special account. The question is whose fault it is: the Bank of Guyana or the Ministry of Finance? My own view is that the Ministry of Finance should bear the primary responsibility for the violation. One might be tempted to attribute blame on the Governor if he was aware that a constitutional breach has occurred and he did not bring the matter to the attention of the Ministry of Finance,” the source added.
But believes that the initiator of the request, the Finance Secretary, ought to have been
aware that his request, if honoured, would breach Article 216 of the Constitution and Section 38 of the Fiscal Management and Accountability (FMA) Act.
“The big question, however, is: Having received a request from the government to open a special account, is it within the authority of the governor to question whether the money should be placed into the Consolidated Fund or a special account? Was he aware of Article 216 of the Constitution and Section 38 of the FMA Act?” he added.
Section 38 (1) of the FMA Act states, “All public moneys raised or received by the Government shall be credited fully and promptly to the Consolidated Fund, except –
(a) moneys credited to an Extra-budgetary Fund as stipulated in the enabling legislation establishing that fund;
(b) moneys credited to a Deposit Fund; and
(c) as stipulated in the Constitution.”
Asked if the Governor of the BoG should have brought the matter to the attention to the board that government collected the US$18 million signing bonus and wanted it placed in a special account, the source said it was debatable. “It is debatable whether the Governor should have brought the matter to the attention of the Board, especially if he considered that the request from the Finance Secretary to be a regular or routine one involving day-to-day banking operations. Only the Governor can explain why he did not see it fit to inform the Board,” the source added.