Although the government is adamant that it will not budge from the US$214.4 million figure of the 2017 HIS Markit cost oil audit, ExxonMobil yesterday said that it had asked for an extension on discussions and those are still ongoing simultaneously with the second audit conducted by Vitality Accounting, Haynes and Ramdihal and Eclisar Financial (VHE) consortium.
“The first two audits, there is really nothing new to report. We are working to respond to the GRA because they gave us a bit of extension… they asked us for some substantial amount of additional information. We are working to gather that. All of that is in the spirit that we want to be transparent, we want to answer the questions,” Country Manager Alistair Routledge said yesterday when asked by the Stabroek News for an update.
“Should we, as we reach conclusion, [find] there is something that [does] not align, then we would accept that, but at this point we are still in the information gathering and answering the questions and providing answers. When the first set of queries came in they were not particularly specific so it was hard to give a detailed response. With specific queries now raised we are able to provide additional documentation,” he added.
Routledge maintained that the company is, “responding in the time that has been requested or we ask for an extension. Currently we are complying with all the deadlines and will continue to do so.”
He said that this is to, “Ensure there is transparency and we are spending money wisely.”
Since 2023 the government had said that it stood by GRA’s no-objection to the US$214 million in disputed costs flagged by IHS Markit in its audit of ExxonMobil’s US$1.7 billion in expenses incurred for the period 1999 to 2017.
The second audit report of ExxonMobil’s US$7.4 billion in costs, which the VHE consortium had undertaken in 2022 was handed to Exxon last November for review. It was due to be completed by the end of last month.
The US oil major, which said it racked up US$7.4 billion in costs between 2018 to 2020 now has 60 days to respond, Minister of Natural Resources, Vickram Bharrat explained. He said that the report “will be placed online like the other, next week”.
Lead of the VHE consortium Floyd Haynes had on Friday told this newspaper, “A final report was delivered to the MNR [Ministry of Natural Resources] and GRA [Guyana Revenue Authority]. The audit report was done on behalf of the GOG. It is now the property of the government.”
Both the government and the GRA had remained mum on the status of the second cost oil audit which had been in the process of auditing for over two years with criticisms over the quality of its work.
Criticisms were also raised when VHE was awarded the contract to conduct the third audit even though the second one was still to be completed, with APNU+AFC parliamentarian and former government minister, David Patterson adding his voice to the issue.
Patterson questioned the rationale of awarding a third audit to the consortium which had not yet completed the initial contract and which he believes went beyond the time allotted.
“Why if GRA has said that it is not completed and has not officially stated that they are in agreement with the contents of the second audit, appoint this consortium again?” he asked, adding, “And if the agency that accepts these reports appears not to be satisfied, then what? If GRA is in disagreement then there would be something lacking in the third audit. And if VHE haven’t yet fulfilled their contractual obligations, which should have been a criteria applied when awarding the third audit that their work be satisfactory, how can they get another contract?”
The opposition parliamentarian observed that when the draft VHE audit is juxtaposed against the first audit by IHS Markit, “It is very substandard.
“We thought that they would have at least used the IHS audit as a template and add to it. IHS examined the clauses of the PSA and how Exxon spent against that. This looks like a basic financial audit,” by VHE.
He contended that it was still not clear, given that the audit will only be delivered now and is clearly past the contractual delivery date, whether there were any penalties for the delay.
He noted that the first audit had stated that some money had been promised by Exxon to be remitted and shown in the second audit, and wanted to know if this was done and if not, what happens to it in the third audit. Further, there has been no public announcement from the US oil major on whether it has agreed with the results of the second audit.
Patterson also lamented,“This third contract has been awarded for the sum of $312 million, while the contract for that second audit was $157 million, with no apparent explanation for this increase.”
And with no public signing of the contract for the third audit, Patterson opined that the government and the company seemed to want to dodge scrutiny. “We do see this as an attempt by the government to dodge questions on the performance of the company, as well as the contents of their report,” he said.
Former auditor general Anand Goolsarran also criticised the award of a second audit of oil costs to VHE considering the questions raised about its performance on the yet unfinished examination of a whopping US$7.3 billion in ExxonMobil expenses.
According to Goolsarran, at a time when stringent oversight is needed to ensure comprehensive audits of the post-contract recoverable costs, contractors undertaking the audits require the knowledge, skills, and competence and experience in the field.
Goolsarran pointed out that the audits are necessary to provide reasonable assurance to citizens that expenditures incurred are legitimate recoverable costs in the context of the agreement, and the amounts involved are reasonable and represent good value for money. This, he added, is especially important, considering the higher the recoverable costs, the less will be the amount of Guyana’s share of profit that will accrue to it.
As such, he noted that questions have been raised about the quality of the original report by VHE, and listed some of its shortcomings. VHE has declined to speak about its ongoing audit, the issues that have been raised about it and why it is still to be concluded. It was awarded the contract in May of 2022.
As regards the second audit, VHE identified amounts totalling US$7.435 billion as recoverable costs of which the auditors had reservations in relation to amounts totalling US$54.471 million, representing less than one per cent of the recoverable costs claimed by Exxon.
Last September, Bharrat had stated that VHE was supposed to issue a final report before any action could be taken in relation to the findings.
