Dear Editor,
Guyana’s oil discoveries have set insider trading alarm bells ringing at all the major stock exchanges in the past week. On September 8, a report by online magazine Petroleum Economist attributed new discoveries to Government of Guyana official, Owen Verwey. “There have been some big discoveries and by next Friday, we will be announcing another one… We are one of the hottest destinations for the oil and gas industry right now and that is set to continue,” this statement was made during an address at the Society of Petroleum Engineers (SPE) Offshore Europe Conference and Exhibition in Aberdeen, Scotland.
The price of Tullow Oil and ExxonMobil stock rose significantly after the statement. On September 14, Verwey hosted a press conference where he tried to distance himself from his words by saying, “when comments are made, only the Department of Energy information is relevant when it comes to the oil and gas industry”. Thirty-six hours later ExxonMobil and Tullow announced major new discoveries.
It is clear Mr Verwey had inside information, not in itself illegal; however, Verwey is not an ‘insider’— who is defined as someone with either access to valuable non-public information about a corporation or ownership of stock equalling more than 10% of a firm’s equity. The questions that will be asked by the Securities and Exchange Commission are: Who told Verwey? When was he told? Why was he informed? Who else is in this information loop? Which Government officials hold stock in the oil companies? When did they buy?
The information of new oil discoveries must come from the oil companies, in this case, ExxonMobil and/or Tullow; the big question is the amount of lead time between informing Government of Guyana officials and making of public announcements. A week is an eternity on a stock market, where fortunes are made and lost in hours. Insider information can be used to enrich a person via insider trading very easily; in fact, it can easily be a way to ensure the pliancy of officials instead of actual bribes. Have we unearthed a new type of kickback scheme?
Earlier this year I posited that “Dr Jan Mangal ascribes knowledge of oil reserves to former President Donald Ramotar and Minister of Natural Resources at a time (April 2015) that would land ExxonMobil in hot water with the Securities and Exchange Commission (SEC) for failure to report an event that would have major impact on the price of the company’s publicly traded stock (XOM) on the New York Stock Exchange”. The same applies in this instance, and we do have Mr Verwey’s statement at an oil conference as evidence of pre-announcement knowledge.
Editor, Officials of the Government of Guyana continue to act as if they are running a ‘cake shop’ and Guyanese are suffering from gross incompetence or deliberate mismanagement. The Local Content Policy deficiencies are costing Guyanese the opportunity to compete on a levelled playing field in their own country.
Mr Carl Greenidge recently suggested that our country should make sovereign wealth investments in ExxonMobil stock; it would be a travesty if officials of the Granger administration, their friends and/or family were already so invested and are now working inimical to Guyana’s interest in favour of their own. Nothing less than a full investigation into the ‘Verwey’ pronouncement is acceptable.
Respectfully,
Robin Singh
