Dear Editor,
It is my painful duty to retrace the steps in the audit of US$7.3 billion of Exxon’s expenses for the period 2018-2020, relative to the Liza-1 and Liza-2 oil projects. There is no choice but to walk back some of the guarded praise extended to the audit team of Ramdihal & Haynes Inc., Eclisar Financial, Vitality Accounting and Consultancy Inc., with advisory services provided by Martindale Consulting., in collaboration with SGS (Ramdihal & Haynes). A letter from the Oil and Gas Network (OGGN) in SN and KN dated Nov 25th set me back on my heels. I admit to the error of premature generosity to the Ramdihal & Haynes audit team, some of which was not due.
The volume involved in the Exxon audit exercise speaks for itself – a staggering 260,000 transactions. While many could have been routine invoices, there were sure to be other attachments to quite a few of that over quarter of a million transactions. As an aside, I am tabling whether Exxon pulled that ancient IBM trick that earned a sharp reprimand from a US federal judge. IBM was canny and reckless enough to try to overwhelm the court with a large container of documents to obscure the kind of deep scrutiny of its activities. Exxon’s 260,000 transactions have a close resemblance. Whatever the sampling methodology (random, stratified, some reasonable percentage, or some combination of those, [or something alien to those conventions]), it still had to be a veritable mountain of paper standing before the audit team. It had to be dug into, sifted through, reviewed and interpreted, consulted over and sometimes corrected, with possible additional digging and following-up necessary. Also, I had expressed misgivings from day one of the utility of an audit period of four months for something of this magnitude (US$7.3 billion).
Now the realization dawns, thanks to the people at OGGN, a couple of whom are known and respected, that four months represented nothing but a chime in the full audit clock that was needed. No wonder some foreign people who knew about the demands embedded in audits of this kind and bulk had openly ridiculed the four-month audit timeframe. Scope limitations held in suspension, it boggles the mind about what could get done, assuming that a meaningful sample was taken, when there were 260,000 transactions hanging overhead. That US$100 million in findings suddenly look like small potatoes; the flashing fairy lights that they ended up being. What quality of the guidance was given by consultants? Another admission is fair. There was fascination with expenses for the equivalents of bungee jumping, rope dancing, and stress busting (exercise classes). There was a good laugh at the findings bared about improper expenses for brandy sniffing and cigar smoking and caviar gorging (T & E), and all on Guyana’s scarce oil dollar. At 75% skimmed from off the top of revenues, self-help is tempting. Exxon did not hesitate, as findings revealed.
But, as OGGN noted, this is still allowing oneself to be carried away by glossy miniatures. The big damage likely lurked in the big-ticket items. How many of those were targeted, isolated, examined? It would be interesting to learn the sampling method selected for those items and what was the floor used for such expenses to qualify for scrutiny. With so many of what I would term ‘small fry’ items having received so much attention (and applause), how much time in the four months audit frame was earmarked for hidden expenses that were smoking guns? Though the audit exceeded the initial allotted time, to check, doublecheck, and crosscheck, the probable expense machinations of Exxon still had to be gargantuan. In the US$100 million in findings, did Guyanese get a pig in a Santa Claus suit? As a decoy, US$100 million does have its gaudy attractiveness. Considering the sensational items unveiled, relative to Stabroek Block operations, with Exxon fiercely guarding their propriety, Guyanese definitely got some Christmas trees, which led to their losing sight of the forests. I did.
Last, this US$7.3 billion audit exercise was supposed to be the first ‘deep dive’ into Exxon’s unrestrained and unmonitored spending. I regret that I am compelled to reach this unhappy conclusion: That deep dive led to the audit team hitting its head on some jagged rocks that lurked beneath Exxon’s expense murk. I can only anticipate the worst for upcoming audits, and I noticed that Ramdihal & Haynes has subtly announced its availability. I believe that Exxon bled Guyana through the ears and eyes, and the audit findings are now the source of some nosebleeds. I could use some Kleenex. Thanks, but I will get my own; I will do without any from Exxon, for it could be included in Stabroek Block expenses, and categorized as a local rescue operation.
Sincerely,
GHK Lall
