Former Auditor General Anand Goolsarran yesterday called on the PPP/C government to release the IHS Markit audit report on US$460m in ExxonMobil’s pre-contract costs.
The PPP/C government has sat on the audit report for months without releasing any part of it. The IHS Markit audit, which had been commissioned under the former APNU+AFC government, would provide the first real insight into whether ExxonMobil has been making undue expense claims.
Baseless expense claims could reduce the quantum of profit oil available to Guyana. The non-release of the audit report has been compounded by the PPP/C government’s casual approach to the auditing of the whopping US$9.5b in post-contract costs. The statutory period for the auditing of this amount elapsed without the government appointing auditors. After public pressure was brought to bear on the government, it backtracked and said that it will be having the audits done. It is still to finalise these arrangements and ExxonMobil would have to agree to waive the statutory deadline for this to be done.
In his Accountability Column in the Stabroek News, Goolsarran said “In December 2019, the Government awarded a contract to the United Kingdom-based firm IHS Markit for the auditing of the pre-contract costs. The audit was expected to be completed over a four-month period but this period was extended by a month because of the COVID-19 situation. However, the results of the audit are yet to be made public. In the circumstances, it is unclear how much of the pre-contact costs claimed by Exxon is considered recoverable costs. We call on the Government, in the interest of transparency and proper accountability, to release the audit report for the benefit of the nation. After all, Guyana’s natural resources belong to its citizens and should be exploited so that they obtain the maximum benefit.”
Goolsarran’s column also addressed the delinquency in relation to US$9.5b auditing. He pointed out that Section 1.5 of Annex C of the 2016 Agreement provides for the audit and inspection rights of the Government. The Minister is required to serve 90 days’ notice of the Government’s intention to audit the accounts of Exxon for each calendar year. The audit is to be done within two years of the close of the year.
“As of now, Exxon would have finalized its accounts up to the end of 2020. Since no audits have been undertaken so far, the Government would have forfeited its right of audit in respect of 2016, 2017 and 2018. According to various media reports, the expenditure involved amounted to US$9.5 billion. In a few days’ time, the deadline for the audit of the 2019 accounts will expire”, Goolsarran said.
He noted however that Exxon has given the assurance that it will not enforce the requirement for the audit to be undertaken within the specified timeframe.
“The Government’s explanation was that it had advertised for a foreign firm to undertake the audit but was unable to select a `strong’ local group of auditors to partner with that firm. This was despite its acknowledgement that ‘our people have enormous skills, forensic skills [and] auditing skills’. It is nevertheless heartening to note that the Government has had a change of heart and is now engaging the Institute of Chartered Accountants of Guyana with a view to assembling a group of auditors to undertake the audit. It is, however, not clear whether this group will be teaming up with a foreign firm”, Goolsarran added.
