In an effort to have a pool of local auditors to assist in auditing post-contract costs and the continuous auditing of oil & gas expenses, government has met with the Institute of Chartered Accountants to work out a mechanism to acquire the requisite skillsets needed.
Discussions continue even as government says that ExxonMobil has given its assurance that it would not hold firm to a rigid two-year time frame for completion as stipulated in the Production Sharing Agreement it has with this country, Minister of Natural Resources Vickram Bharrat says.
“[With regard to] this current audit [post contract], we want to bring it to a stage where we can do auditing all the time; quarterly, yearly, and not wait necessarily on a big audit. The only way we can do that is by building local capacity, we have to get our local companies involved,” Bharrat told the Stabroek News when asked for an update.
“We are in discussions with local auditors. We met this group – the Institute of Chartered Accountants – they are working with us at this time and the possibilities of getting them involved [in the auditing process],” he added.
Last month, more than two weeks after it had been revealed that the statutory period for the auditing of US$9.5 billion in ExxonMobil’s expenses had expired without an audit firm being hired, President Irfaan Ali has assured that the forensic scrutiny of the massive figure will be carried out.
“The President reiterated what the Vice-President has said and he said that VP has made the government’s position very clear; that unlike the APNU+AFC government that had no interest in conducting the audit, this government is committed to getting it done and it will be so,” Ali’s Press and Communications Officer, Suelle Findlay-Williams had told the Stabroek News on behalf of the President when this newspaper sought a response.
“The Vice President had also said that the government is looking at the composition of local experts and technical persons in keeping with his commitment to local content policy and he [the President] said that process is ongoing. The idea that the government is not pursuing the audit is a fairy tale and the President is committed. The audits will take place and that the process is ongoing,” she asserted, while explaining that Ali’s response to the questions had come between meetings of his hectic schedule that day.
The announcement of the lapse had been made by Vice President Bharrat Jagdeo on November 1 at a press conference. He had said that ExxonMobil’s post-2017 expenditure for the Liza-1 and Liza-2 wells would not be audited as government was not able to select a strong local group to undertake it. This statement was at odds with the fact that the government had advertised this year for foreign firms.
“We have been very disappointed that we have not been able to select a group to do the audit of the post-2017 expenditure on Exxon. The reason is we did not have a strong local content. We had two local groups that came in but they were not strong enough. We want to build a capacity in Guyana to do this audit,” the VP explained.
“We think our people have enormous skills, forensic skills, auditing skills, and we are looking to see if we can’t have an arrangement where we have a consortium of local people partnering with a foreign company so we can build capacity right here in Guyana. We are disappointed that from the individual bids we have not been able to do this. When I get back from Scotland [from the COP26 conference] I have asked the minister to see if we can’t get all the groups that expressed interest to see how we can partner, they can partner with a foreign company to do this audit. We also have to build this capacity in GRA [Guyana Revenue Authority]. GRA has been mandated to build a capacity to do this. But it is a disappointment because it has been quite a while,” he added.
‘Commitment’
While both the President and Vice-President later sought to assure that auditing will still be done, neither had said whether ExxonMobil and its partners had been approached to extend the period to allow for the auditing to be done.
The Minister of Natural Resources put clarity to the issue of a possible objection from the company. “We have a commitment from Exxon. There is no such [objection], they are not against us doing it [later].”
ExxonMobil has told this newspaper that it is confident of its bookkeeping matters and transparency of the company. It added that it has never shied away from audit requests and that it submits periodic reports on its spending to a number of government agencies here.
“ExxonMobil Guyana considers audits a normal part of our operations and cooperates with the government so it can fulfill its obligations. We are fully transparent with the Government on our budgets and cost banks for each block and have implemented extensive cost controls across our business in line with our contracts and the laws of the country,” ExxonMobil spokesperson Janelle Persaud had said in response to questions from the Stabroek News.
“Audits are just one part of a comprehensive framework of controls established by the government. These include setting annual budgets for each block we operate which are reviewed by the Ministry of Natural Resources, and reporting actual spend against these on a monthly basis to the Ministry. We also steward and report costs for each project that is approved and each well that we drill,” she added.
The company boasts that its procurement strategies and processes leverage the latest international methods, capturing significant market value for Guyana. “We employ modern information technology systems and a professional workforce, many of whom are Guyanese, that ensure we operate with robust processes and controls,” the company declared.
“We publish the statutory financial statements and the independent auditor’s report, made by a Guyanese audit company. ExxonMobil Guyana is also audited by internal auditors, its co-venture partners and multiple government agencies, including the Ministry of Natural Resources, Guyana Revenue Authority and Guyana National Bureau of Standards, as a final step in verifying our compliance with relevant contractual commitments and laws,” it added.
‘Still in talks’
The Opposition APNU+AFC has taken to Parliament seeking answers and has requested a copy of the US$460 million pre-contract audit report it had initiated and which was completed by research, analytics, and technology firm, HIS Markit.
In the name of Shadow Minister for the petroleum sector, David Patterson, government is being asked a number of questions on why it abandoned the procurement process to find an auditor along with who made the decision to allow the audit to fall into default.
The Minister of Natural Resources was asked about the report and he responded that verification of expenses in the report was still being discussed between this country and ExxonMobil. “Our teams are still in talks with Exxon to verify some of the expenses. As soon as we are finished that we will make it public.”
He added that his President and Vice-President gave their word that the audit will be done with locals included in the process and citizens should hold them at their word.
According to Bharrat, it would be counterproductive to have a local content law that ensures Guyanese are part of the entire oil & gas processes and not have them in an integral part such as auditing.
“As the Vice President has said, the auditing will be done, but we want to include locals because if we want to do continuous audits we have to get locals. We can’t be contracting [foreign companies] all the time. You can’t have a local content policy and only have foreign companies [auditing],” the minister averred.
