The Guyana Government continues to defend its handling of the negotiation and receipt of a US$18M ‘signing bonus’ from US Oil Major, ExxonMobil, this time placing its position on record in the National Assembly, saying too the ‘clandestine’ deposit is permissible under the country’s Laws.
The position was adumbrated by the country’s Vice President and Minister of Foreign Affairs, Carl Greenidge on Thursday, as the House commenced another tense day of scrutinizing the 2018 National Expenditures ahead of its approval.
Mr. Greenidge told the members of the House that it was the Ministry of Foreign Affairs (MoFA) which advised the Executive with regard to the deposit of the funds into a special account at the Bank of Guyana.
“Faced by the existential importance of the ICJ case, and given that the case had not been yet referred by the Secretary General of the United Nations to the International Court of Justice (ICJ),” Greenidge said it was his Ministry which advised that money be held “separately and securely until such time as we were clear as to when it would be needed.”
He said it was ”out of concern that adequate funds may not be available from the general budget (the Consolidated Fund) when it was time to pay for these critical services, the Minister of Foreign Affairs, advised the President that arrangements be made to set aside sufficient funds to make the payment when needed.”
Defending the legality of the deposit into a Bank of Guyana account, Vice President Greenidge informed the legislators that it was catered for under the country’s Fiscal Management and Accountability (FMAA).
Commentators have labelled the placement of the US$18M signing bonus as illegal since it was not in keeping with Article 216 of the Guyana Constitution.
Under that provision of the Constitution, government is obligated to deposit all State revenue into the Consolidated Fund (Treasury), except where provided for under a subsidiary Act of Law.
Vice President Greenidge in speaking to the lawfulness of the deposit – in face of allegations of government holding the money ‘off-books,’ – relied on Section 37 (2) of the FMAA. That in its treatment of public funds dictates that all public monies shall be classified as either received monies, monies in the contingencies and consolidated funds as well as Extra Budgetary funds, “dram moneys; or moneys in a deposit fund.”
According to the provision cited by Vice President Greenidge, “all public moneys shall be deemed to be received moneys from the time that they become public moneys until the time that they are credited to the Consolidated Fund and the Extra-budgetary Fund or a Deposit Fund.”
Conceding a depletion of available monies in the reserves of the treasury, the Vice President informed the House the “the Guyana Government (since taking office in May 2015) has found itself in a very tight fiscal situation in that its needs for funding far exceeds the total cost of the goods and services for which it has to pay.”
He lamented being unable to make timely payments to the government’s current team of legal advisors in its preparation for likely litigation at the ICJ over Venezuela’s claim to close to 2/3 of its south American neighbour’s territory, in addition to the unresolved maritime delimitation.
“There have been times in 2016 and 2017 when we were unable to make timely payments to the legal team advising the Government…his is an undesirable situation,” Mr. Greenidge said.
He indicated it is the Ministry of Foreign Affairs’ responsibility to ensure payment for services it contracts, hence the advice to have the monies placed in a separate account at the Bank of Guyana.
According to Mr. Greenidge, the Ministry was fully cognizant of the likely litigation at the ICJ due in 2018 and, “in particular, the need for funds to pay the enlarged team of lawyers that would be required should the United Nations Secretary General honour his commitment to refer the Guyana case to the ICJ without further procrastination after December 2017.”
Seeking to provide clarity on the chronology of transactions surrounding the ‘signing bonus’ and its deposit, he told legislators it was Minister of Natural Resources, Raphael Trotman, during 2015 and 2016, after discussions with ExxonMobil, who proposed to the Cabinet Counsel of Ministers that the payment of a bonus on the extension of an agreement by the company be undertaken.
He said Cabinet agreed and in June 2016 the Minister duly reported that the negotiation had been completed and that it approved the terms negotiated and the arrangements to receive the funds.
GGMC & GFC
“Nothing about the levy was either particularly secret or illegal…Many agreements are approved during the course of any year without being announced,” Mr. Greenidge said in defence of the secrecy surrounding the actual deposit into a separate account.
He reminded that the earmarking of funds is not unusual in Westminster-type systems and used as example, “the monies collected by GGMC (Guyana Geology and Mines Commission) and GFC (Guyana Forestry Commission, for example are earmarked, meaning that they do not go to the Consolidated Fund in the first instance, if at all.”
The retention of revenues by the state owned GGMC and GFC are as a result of Legislative Instruments bringing into being the two state agencies and makes provisions for its treatment of revenues outside of the Consolidated Fund.
This deposit, he said, is also in keeping with that processes and practices used for other monies received from external sources, such as the Inter-American Development Bank (IDB), “especially where overseas contractors may have to be reimbursed.”
Greenidge disclosed that it was in pursuit of the decision of Cabinet, that the Secretary to the Treasury gave instructions about the placement of the funds.
“The Central Bank, the Government’s banker, was directed not to utilize the funds to meet any Government expenses without written instructions from a named set of persons, the most senior public financial officers in the country,” he said.
On the matter of accepting the signing bonus from ExxonMobil, Vice President Greenidge said, “whilst such payments are not unusual there is no standard arrangement or formula concerning either the quantum or procedures for signing bonuses.”