Maya Angelou, American literary giant and civil rights activist once said, “When people show you who they are, believe them the first time”. Unfortunately, when Esso showed us who they were from the first decade of this century, we not only did not believe them, but successive governments spinelessly conspired with them to deprive current and future generations of Guyanese of their patrimony.
A couple months after being awarded the petroleum deal of the 20th. century by the PPP/C in 1999, Esso claimed “force majeure” of the entire contract area of 26,808 sq. km because of an issue involving Suriname at one extreme of the contract area, claiming that they were prevented from carrying out their contractual obligations, presumably within any part of the contract area. What a brazen lie.
Yet, the PPP/C Government meekly acquiesced.
When in October 2008 after force majeure was lifted, Esso sought and the PPP/C entered into an Addendum to the 1999 Agreement, modifying the description of the contract area, the relinquishment obligation, and the initial period of the exploration programme.
Esso never accounted in its local books for huge and undisclosed sums received from Shell under an assignment and Farm out Agreement in 2009 for a 25% participating interest in the Stabroek Block. That was dodgy accounting at best.
Having gotten away with that dodgy accounting, Esso repeated it when in 2011, Shell forked out more money to double its participating interest. Those moneys never found their way into the books of Esso. Shell later withdrew and in 2014, Esso sold participating interests to Hess (30%) and CNOOC (25%) in the Block. Effectively, Exxon sold the same rights twice, but never accounting for it once.
Those revenues should have been accounted for as credits, thus reducing the amount of contract cost recoverable by Exxon. Who knows, Exxon may have recovered as much from Shell, Hess and CNOOC as they themselves may have invested. Exxon has made profits without even having to invest their own money.
In 2015, when a team from the Petroleum Unit of the GGMC headed by Commissioner Newell Dennison visited the Exxon’s Head Office in Texas to discuss then current issues, the bullies from Texas inhospitably told them that the only thing to be discussed was a new Agreement.
When Dennison complained to Petroleum Minister Raphael Trotman in a written Memo of being “confronted” on a new Contract, Trotman did nothing. In fact, his Ministry started working towards the infamous 2016 Petroleum Agreement – shockingly, with the help of Exxon’s top lawyers.
To give legitimacy to the new Agreement, a Bridging Deed was concocted to make the 1999 Agree-ment part of the 2016 Agreement. By Trotman’s own admission in his recent book, the so-called signing bonus was not a signing bonus at all, but a sum to pay legal fees partly to protect Exxon’s interest.
Trotman of course had denied any such signing bonus until the veracity and his duplicity were exposed in the media. To this day, he has been unrepentant.
In the new Agreement, at paragraph (k) of Section 3 of Annex C, Esso and its accomplices claimed from the Government US$460.2 Mn. as the combined pre-contract costs incurred by Exxon, CNOOC and Hess up to December 2015. Embarrassingly, their own audited financials for that year showed they had only expended at a maximum US$368 Mn. If that is not fraud, I would like someone to tell what is a fraud!
Trotman commissioned an independent investigation by a UK law firm Clyde & Co “into the circumstances leading to the execution of the 2016 Petroleum Agreement”. Their report is a damning indictment of Exxon which actually wrote for Trotman the Cabinet Paper seeking approval of the 2016 Agreement. Neither Trotman nor his successor Vickram Bharrat made the report public.
Additionally, despite the incriminating information of Trotman’s and the APNU+AFC’s conduct in the execution of the Agreement, the PPP/C has refused to hold an inquiry, presumably to protect Exxon from public scrutiny and the discovery and exposure of their accounting shenanigans.
Trotman has suffered the lion’s share of blame and ignominy for the giveaway of the country’s patrimony. But the PPP/C is no less culpable. It was the PPP/C under Janet Jagan that started the whole monkey business. And the PPP/C that allowed the generous force majeure in 2008 when the current VP was President. It is the PPP/C, too, that has refused to take up the damning Clyde & Co report. And it is the PPP/C that has played around with the IHS Audit report issued nearly three years ago.
We are paying the price for not believing the character which Exxon showed us close to 25 years ago.
Yours faithfully,
Christopher Ram
Article Originally Published At: https://www.stabroeknews.com/2023/09/27/opinion/letters/exxon-has-engaged-in-dodgy-accounting-going-all-the-way-back-to-shell-transaction/
