By Ryhaan Shah
Attorney and Accountant Christopher Ram has been providing a valuable national service through his analysis and critique of the contract signed between ExxonMobil and the Granger Government for the exploration and planned extraction of oil off our coast.
Concerns about the contract include the low two per cent royalty Guyana will earn, Government’s attempt to secret away the US$18 million signing bonus, and all the shortcomings uncovered about the Production Services Agreement.
By all accounts, Guyana’s chief negotiator, Minister Raphael Trotman was out of his depth and ill-prepared to deal with a seasoned US corporation like ExxonMobil, and Presidential Advisor on Petroleum, Dr Jan Mangal says the contract can be reviewed and amended.
Dr Mangal’s contract with the Granger Government ends next month and there is no certainty that it will be renewed. It is also likely that Government’s contract with ExxonMobil will stand notwithstanding all the suspicions that there could be more than meets the eye especially since the oil company has a poor track record in its business dealings with countries like ours.
In 2003, then Exxon was investigated for the US$500 million which were squirrelled away in a private American bank accounts held by the President of Equatorial Guinea.
Mobil Oil Corp, now partnered with Exxon, was questioned at the same time for its part in routing US$78 million to a Swiss bank account held by Kazakhstans’s President Nursultan Nazarbaev and other senior Government officials.
Then, in 2009, ExxonMobil was investigated for a controversial deal with the Nigerian Government over the renewal of three oil licences. The US$1.5 billion amount paid by ExxonMobil was lower than the valuation given by the Nigerian Government which had rejected an offer from a Chinese oil company willing to pay over six times the amount paid by ExxonMobil for the same licences.
It’s a way of doing business for many major corporations and it’s a fact that companies like ExxonMobil prefer to deal with countries like ours rather than with larger, more developed ones. In pioneer countries like Guyana, politicians and political stability can simply be bought.
This provides every reason for suspicion and scepticism over the deals being struck between the Granger Government and ExxonMobil especially when Government had to be forced to make the contract public.
By squirrelling away the signing bonus and being reluctant to own up to it, it did appear that Granger had his own reasons for wanting the deal to remain a secret. The questions are: why and, given ExxonMobil’s track record, was the US$18 million signing bonus the whole amount paid or were other payments made to other accounts as was done in Equatorial Guinea and Kazakhstan?
With all of our natural resources of gold, diamonds and timber, Guyana has remained poor. Everyone would agree that our own internal corruption whereby State funds are siphoned off into the pockets of Government officials and their friends and family helps to deepen our impoverishment.
The oil is still to flow but already the ground appears corrupted and what should be a new sector of the economy that should provide a huge windfall for future development is already tainted by suspect and controversial contractual arrangements.
Interestingly, a comprehensive study of global finances done in 2012 discovered that the flow of money from rich countries to poor countries pales in comparison to the flow that runs in the other direction.
The Global Financial Integrity Group and the Centre for Applied Research at the Norwegian School of Economics published figures of the financial resources that are transferred between rich and poor countries. The transfers included aid, foreign investments, trade flows and non-financial transfers like debt cancellations and capital flight.
They found that, in 2012, developing countries received US$1.3 trillion in aid, investment and remittances. But, in that same year, US$3.3 trillion flowed out of them to wealthy countries.
Between 1980 and 2012, the net outflows from the developing world added up to US$16.3 trillion and the study concluded that the accepted development narrative has it backwards: rich countries aren’t developing poor countries; poor countries are developing rich ones.
The statistics weaken the moral high ground taken by wealthy nations as they dispense “aid” to countries like Guyana, which continue to be exploited for their natural resources and with very little positive development to show for it.
But much of that is our fault. While the developed world and its corporate culture of greed are partly to blame for keeping us poor, we cannot discount from the equation our own culture of corruption that is spurred on by partisan politics which places racially aligned self-interest above the national good.
