The audit of ExxonMobil’s over US$9 billion in claimed expenses has begun and will see local auditors working alongside the Martindale Group of Oklahoma, in the United States as part of their training, according to Floyd Haynes, head of the consortium undertaking the review.
“There is a training component that sees knowledge transfer. So what that is, is the training of local accountants. We, the consortium, will have staff working along with Martindale. What has been suggested and agreed to is that we will send some people up to Oklahoma to work alongside the Martindale folks,” Haynes told Sunday Stabroek when asked for an update.
It was in May of this year, and nearly 22 months after the PPP/C took office, that the Government signed a deal to audit the US$9 billion claimed by ExxonMobil and its partners as post-contract expenses.
The agreement was signed with the RHVE consortium of local accounting firms to the tune of US$700,000 ($150.5 million) to audit Guyana’s 2018-2020 cost oil. The RHVE contract, which has a life of four months, is made up of Ramdihal and Haynes, Vitality Consulting, and Eclisar Financial & Professional Services (EFP), and was subcontracted to the US firms of Martindale Consultants Inc., and Squire Paton Boggs for technical support and expert assistance.
Haynes said that the commencement date of the contract took effect on June 29, 2022. Since then, he said, the contracted consortium has been “working assiduously” in the information gathering process.
“We have had a series of meetings with ExxonMobil and we have requested documentation. The way the process works is we request documentation for the years under audit, [we] review and analyze and verify, and then once [we] have everything in our hand, we prepare a report,” he explained. “We are currently in the [documentation] requesting and reviewing phase,” he added. ExxonMobil has to date complied with all requests from the consortium and has not objected to the approach of how the audit will be conducted. “They have been complying. We discussed our approach and they didn’t have any problem. We will review the data for the years under review, collect information, review those, analyse and assess, based on the agreement they have with government. If during the course of looking at the info we see something that warrants a discussion, we will discuss with the Government of Guyana and then ExxonMobil. We will exhaust all efforts to ensure everyone is fully briefed,” Haynes noted.
Mindful of what he had disclosed to this newspaper when the contract was signed, Haynes reiterated that the audit does not set to deliberately harass any of the companies under the financial oversight process. “I continue to stress it is not a witch hunt. It is really to determine the validity of costs claimed or claimed costs. The purpose is to allow the costs of the period under review be looked at and ascertain its accuracy,” he said. “People are looking for the “Got ya!” moment. But our job is to look at the costs and allow its allowability or validity as per what has been agreed on,” he added. In May, he had shared this view, “The purpose of this audit is to verify the validity and the allowability of claimed costs. We look at what Exxon submitted and ask the questions: ‘Is it valid and is it allowable under the production sharing agreement?’ There is an expectation that we will find that Exxon has been cheating and we would like to temper the expectations of the Guyanese public.”
“The idea that Exxon has been overbilling and overcharging, is grossly misleading and it is not fair to mislead the public. We don’t know what we will find, but we will ensure that the costs are legitimate and allowable,” he added while underscoring that the firms will do their work with professionalism and in the best interest of the country.”
Given that the report covers at least three years, Haynes said that the method used for auditing will show clearly the evaluation period. “Whatever we issue will reflect our observation for each individual year. Whether it will be delineated in such a way that the information is identified for each individual year, it will be clear,” he said. There is no central office for the conducting of the audit as each of the companies involved work from their respective locations but are united virtually for periodic online meetings.
“A lot of the documents are being exchanged electronically, so we are working from various locations and don’t have one base of operation per reworking alongside Martindale Consultants Inc. and Squire Paton Boggs,” Haynes explained. But he said that local accountants will have to travel to the Oklahoma Offices of Martindale Consultants for on-the-job training. The accountants who will travel overseas have already been identified, and while he is confident that they will gain a wealth of knowledge on their attachment, Haynes said that he also wants to limit expectations that they will be able to conduct another on their own, after their one stint. “This is not a one-time thing and this is not something that could happen in one audit. You don’t build capacity in one year,” he contended.
Some of the auditors from Oklahoma will also come to Guyana at some point during the audit. When the contract was signed, Minister of Natural Resources, Vickram Bharrat, had pointed to locals being afforded the opportunity to learn about a sector that is new here. “Our local auditors might be very familiar with auditing basic expenses – fuel, meals, transportation – but when we are talking about jumpers and risers and FPSOs and these technical terms, obviously they will need that kind of technical knowledge and expertise on board to assist them to have a thorough exercise being done.”
Bharrat predicted that the audit will put to rest any doubts about the government’s willingness to conduct the audits. For now, Haynes assured that, “Everybody has been briefed and it’s on track and its going well; a lot smoother than everyone thought,” he said.
The audit comes against a background of Vice-President, Bharrat Jagdeo previously saying that, “ExxonMobil’s post 2017 expenditures for Liza-1 and Liza-2 would not be audited as government was not able to select a strong local group to undertake it.” This disclosure by Jagdeo had set off a wave of public criticism. Stabroek News had previously reported too that the statutory two-year period for the 2017-2019 auditing had expired and there was a concern that the company might object to its books being audited after the contracted time had elapsed.
