Finance Minister has a lot of questions to answer over investing of signing bonus

Dear Editor,

After considerable delay and with great reluctance, the Granger Administration conceded that a sum of US$18 million was paid by Exxon/Esso as a so-called “signing bonus” and this was reflected in Clause 33 of the secret 2016 Petroleum Agreement although this fact was resolutely denied when first articulated in the press. This business of the US$18 million payment has already sparked one lawsuit since the Government has repeatedly stated that the funds have not yet been placed in the Consolidated Fund as required by Article 216 of the Guyana Constitution but has announced belatedly that a special account was opened at the Bank of Guyana to accommodate these funds. These funds were received since mid-2016 as per Petroleum Agreement.

However, an examination of the list of accounts held at the Bank of Guyana failed to disclose the presence of any such funds at the Central Bank and I pointed this out in a letter to the media recently. The Ministers of Government who responded to the observation refused and failed to disclose exactly where the funds were held but added some convoluted nonsense that at the appropriate time the funds would be placed in the Consolidated Fund and approval would be sought for disbursements from it.

This turned out to be an unvarnished falsehood because some days later on April 14th , the Minister of Finance boasted that the Funds had earned US$36,169 having been invested in US and Canadian Securities by the Bank of America, once again belatedly admitting after media exposure that it had been invested overseas without Parliamentary approval as required under Article 217 of the Guyana Constitution thereby compounding the first violation of Article 216.

But the Minister of Finance created another problem for himself by disclosing that the investment in US T- Bills and Canadian Bonds had yielded the paltry sum of US$36,169 although the Canada Bonds were yielding 1.8%.

It is not stated precisely at what date the investments were made but since the Petroleum Agreement confirmed the payment of the US$18 Million (Article 33) since mid-2016 and the letter to the Bank of Guyana reconfirmed this secret placement, one could reasonably assume that the funds have been earning a return for at least 18 months and with an average US annualized rate of 1.2% and a Canadian rate of 1.8% as disclosed by the Minister and assuming that the funds were more or less equally invested in the two instruments, the annual return would be in the vicinity of US $270,000 per annum gross (including broker’s fees).

Eighteen months of interest would yield approximately US$405,000 (gross).

Therefore, based on these assumptions, it appears as if Guyana is receiving only about 10%  of what it should have earned.

This needs to be thoroughly investigated and audited by the Auditor General, putting aside for a while that the funds were received and invested overseas in utter violation of Articles 216 and 217 of the Constitution. The US$18 million has all the characteristics of a slush fund and so too are the funds from the overseas investments quietly stashed away in faraway places hidden from the Auditor General and Parliamentary oversight

There is clearly some fiscal recklessness and financial misconduct at work here. The Minister needs to provide full details on this matter, the earlier the better – date and maturity of investments, yields, gross and net earnings.

This at a time when he is boasting of GuySuCo having borrowed $30 Billion at 4.75%. Only a fool would put his own money to earn 1.5- 1.8% while paying 4.75% on borrowed money.

If this is what passes for financial management, could you imagine what is going to happen with the oil money?

This is all happening at a time when the Minister is interested in accessing US$900 million from the Islamic Development Bank, the GPL is looking for US$110 million and GuySuCo has already borrowed $30 Billion.

This all sounds crazy and irresponsible. Borrowing and spending and hoping that future revenues, if received as projected, will take care of all the debts accumulated recklessly in the intervening period.

We have been there before.

We appear not to have learnt anything and we appear determined to repeat the same mistakes of the past.

    Yours faithfully

    Ramon Gaskin

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