Senior Petroleum Coordinator in the Ministry of Natural Resources, Gopnauth ‘Bobby’ Gossai has been blamed for the audit fiasco where US$214m in disputed oil expenses was slashed to US$3m and he is to be disciplined, a statement last night from Minister Vickram Bharrat said.
While assigning blame, Bharrat’s statement will raise more questions. The government had promised an investigation of the illegal engagement between the Ministry and ExxonMobil to whittle down the disputed costs. No independent investigation was done and it appears that Bharrat – who himself should have been a subject of the inquiry – presided over the probe.
Second, Bharrat’s statement does not address what further investigation should now be conducted since Gossai has been accused of the illegal engagement with ExxonMobil. Ordinarily the matter could be referred to the police for investigation and/or to the Integrity Commission. The statement was however silent on this.
Third, the role that ExxonMobil might have played in inviting the reduction of the disputed figure is still to be determined and it appears from last night’s statement from the ministry that there is no interest in this.
Observers say that the shenanigans over the disputed costs will cast a dim light over the government’s handling of the oil and gas sector and how it accounts for profit flowing from it.
In the statement which he also broadcast on social media, Bharrat said: “… after examining all the facts it is clear that Mr. Gossai acted without the requisite authorization to engage EEPGL (ExxonMobil’s subsidiary) and provided inadequate advice and as such, I have asked the Permanent Secretary to take the necessary disciplinary measures,” the minister said. He did not say what form such action would take.
Gossai is currently in Scotland pursuing post-graduate studies.
The Minister made known the government’s position after hours earlier submitting to Cabinet a report on his ministry entering into direct negotiations with ExxonMobil to reduce US$214 million in questionable cost oil claims flagged by UK audit firm IHS Markit to US$3 million.
On September 21st, Vice President Bharrat Jagdeo reported that President Irfaan Ali had ordered that an investigation be swiftly conducted into the matter and that Bharrat “would still have to give Cabinet a full report, on his ministry’s part.
Saying that he wanted to bring full clarity on the issue surrounding EEPGL Stabroek Block Cost Recovery Audit for 1999 – 2017 period, Bharrat last night maintained that from the inception the Government of Guyana’s position has always been that the Guyana Revenue Authority (GRA) is the sole and final authority to determine the final outcome in relation to the audit.
The Ministry of Natural Resources’ role, he said, was to oversee the process of conducting the audit as per the PSA, as well as, to facilitate the exchange of information and documentation among the relevant parties, including the GRA.
Bharrat said, however, based on advice from Gossai that the initial claim of USD$214,911,994 was reduced to USD$3,414,853.68, he wrote the Guyana Revenue Authority on 28th November, 2022 to confirm this figure by seeking a “No Objection”.
The Minister said that as recent as July, 2023 Gossai in a meeting with the Vice President and himself, reported that the initial sum was reduced to USD$11,497,140 then further down to USD$3,414,853.68.
”Given that I had written the GRA since November, 2022 and it was established that the GRA’s involvement is necessary to finalize the audit, I was under the impression that the (reduced) figure was done in collaboration with the GRA,” the minister added.
The Minister said he subsequently learnt that the GRA did not agree with the position and the initial claim of USD$214,911,994 remains the same.
“I wish to restate that the position of the Government of Guyana today remains consistent with its original position that the only authority to make a final determination is the Guyana Revenue Authority”, he stated.
He added that systems will be established to ensure no repetition of this lapse in the future. Also, staff members will be advised to make full disclosure with all contact and sharing of information with stakeholders in the sector.
IHS Markit had been hired to do the first ever audit of expenses of ExxonMobil and its partners for the period 1999 to 2017, and up to April 2nd this year the report was kept hidden until Stabroek News published the details. In the six months that followed there were attempts by the government and ExxonMobil to cut the figure but that apparently ended when the GRA wrote a letter to the Natural Resources Minis-try saying that it wouldn’t challenge the US$214 million figure and recommending that the audit be closed. That letter was also revealed to the public by Stabroek News and appeared to have forced the various players to close deliberations.
Shadow Minister of Natural Resources, David Patterson, had told Stabroek News that ExxonMobil Country Manager, Alistair Routledge, informed the Opposition that the government had accepted that the US$214 million sum found by the IHS Markit audit would be reduced to US$3 million, statements contradictory to government’s position, the week before, that it had accepted that the company overstated their expenses by the US$214m audit sum.
“They said they had completed it and they had resolved the audit issue. I went in thinking it was reduced to US$11 million but Routledge said it has been reduced to US$3 million. I was shocked. I asked him if he was sure and to confirm it. He said yes,” Patterson told Stabroek News in an interview.
“He also said they could have been reduced further because they have all their record boxes. Boxes and boxes of records, but it was time consuming so they and the government said, it was a waste of energy and manpower trying to do that [sort the boxes of documents] and they agreed to the US$3 million sum”, Patterson added.
ExxonMobil has steered clear of addressing how it entered into the discussions with persons not authorised by the Government of Guyana concerning the US$214 million in questionable expenses cited in an IHS Markit audit report but has stated that it acted in “good faith” and cooperated with consultants.
“We have supplied responses and documents to the issues raised in the draft audit report prepared for the Government by their consultant (IHS Markit). We now await a formal response from the Government, after which we will enter into further dialogue as necessary,” the company had said in a statement after this newspaper had asked about the issue.
While the company issued a statement to the public, it did not address key concerns such as how it engaged in unauthorised deliberations with the Ministry of Natural Resources.
“Auditing an oil and gas joint venture operator’s expenses is a standard process by co-venturers and governments to ensure only appropriate costs are charged. It’s normal for auditors to highlight focus areas by sharing a draft report that is later addressed with additional documentation. Our experience is that typically, very few, if any, costs are ultimately rejected, reflecting the integrity and quality of our accounting activities,” the statement said.
“The Government has audit rights under Article 23 and Annex ‘C’ of the Stabroek Petroleum Agreement. We have acted in good faith and co-operated with the Government and their consultants appointed for the cost recovery audit of the 1999-2017 years,” it added.
