It now seems clear that the APNU+AFC government has no intention of placing the US$18m signing bonus in the Consolidated Fund as required by Article 216 of the constitution. As with the appointing of the chairman of GECOM, the President and the government have either misread key provisions of the highest law of the land or are dismissive of them.
Finance Minister Winston Jordan at his press conference on Friday to report on the performance of the economy announced that the signing bonus at the Bank of Guyana had been invested in foreign paper and had earned the sum of US$36,169. It was as if the argument was being made that the bonus had been put to work and was earning money completely oblivious to the consideration of whether the returns were adequate and, of course, the major concern that the government had already surrendered a mammoth sum to ExxonMobil by virtue of a shoddy Production Sharing Agreement with its subsidiary in 2016.
There are two major concerns about Friday’s announcement which strike at the heart of governance and whether the government is prepared to abide by the highest standards of probity. The first is that the signing bonus remains illegally outside of the Consolidated Fund. Despite the Minister of State Joseph Harmon saying that the sum will be placed in the Fund it seems from what Minister Jordan said that the intention is to keep the sum where it is and to only pass it through the Fund when a payment has to be made to lawyers for the border controversy case at the International Court of Justice or for training purposes.
This is wholly unacceptable as the Consolidated Fund is being bypassed and, by extension, Parliament has no way of exercising any control over the fund or its expenditure. By what process and on whose authority was the signing bonus invested in US and Canadian instruments? Was this a Cabinet decision? Is the BoG within its right to take such steps particularly since the furore over the secreting of the bonus there in the first place? As has been argued by several knowledgeable commentators, the signing bonus should be placed forthwith in the Consolidated Fund.
The other troubling aspect of the signing bonus saga is the continued absence of any fiscal framework for treating with the proceeds of the oil and gas sector and other natural resources. The Ministry of Finance is inching towards presenting legislation for a Sovereign Wealth Fund (SWF) even though this government has been aware for nearly three years that such a fund is imperative. Furthermore, the government has benefited from the advice of a multitude of experts and institutions on the composing of a SWF. Its sloth in this matter is typical of its lacklustre performance in key sectors of the economy.
It may now take six months or more for the government to put its draft together and secure consensus on it and eventual passage in the National Assembly. All the while, funds are being received from the oil and gas industry and other natural resource sectors and the absolute necessity to sequester these monies has been ignored. The government’s firmly stated support for the SWF should have made it reflect carefully on its decision to place the US$18m signing bonus in investment instruments. The US$18m – even though it has been described as paltry ranged against what had been expected for similar agreements – is the single biggest inflow from the oil and gas industry and it should have been immediately brought under the ambit of parliament and subject to scrutiny by civil society groups.
The government would be well aware of the risk of investing in treasuries and other such instruments. The underpinning of any SWF is the apportioning of inflows among short, medium and long-term needs and then making a judicious decision on how these sums are to be invested for maximum gains and at low risk. Ignoring all of those preliminaries, it appears as if the government has thrown caution to the wind and is investing the amount without any framework approved by Parliament and without the public being told who has been entrusted with this task and the terms surrounding this arrangement. Is someone being paid to invest this sum, what types of investments have been made and on what rationale? Is the sum at risk of losses? Who will be held liable if this were to happen? Is the US$36,199 the net return on the investment and have there been losses as a result of any part of the investments made? Short of getting advice from Warren Buffett why didn’t the government approach the very helpful government of Norway for assistance from the managers of its US$1 trillion SWF?
The government’s handling of the Production Sharing Agreement in 2016 and its signing bonus has irretrievably damaged its standing as it relates to transparency. It has now compounded this by proceeding to invest the bonus with dubious authority and with many questions left unanswered as to who is investing and the level of risk involved. It must urgently place the bonus in the Consolidated Fund.