Author: Christopher Ram

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Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 134 – August 23, 2024

Sanctity of Contract vs Sovereignty over Natural Resources – Part 2

Introduction

This column is a continuation from last week which featured an adaptation of a presentation I made at an OGGN sponsored activity in New York last July 27. Recall that last week’s column described the meaning of sanctity of contract and the several exceptions which would negate the principle. The column showed facts and examples which stripped the principle of its relevance and application, a pointed response to President Ali and Vice President Jagdeo who embrace “sanctity of contract”, as an excuse for their refusal to honour their election campaign commitment to renegotiate. Today’s column looks at the principle of sovereignty, approaching it from two angles – the issue of sovereignty over natural resources, and second, sovereignty as a constitutional right and power of states.  

Sovereignty over natural resources

The Petroleum Production Act (now repealed and set out in the Petroleum Activities Act) addressed the question of sovereignty in the context of ownership by providing as follows: “The property in petroleum existing in its natural condition in strata in Guyana is hereby vested in the State, and the State shall have the exclusive right of searching for and getting such petroleum.” Put another way, the State has an inalienable right to the natural resources within its territory. That statutory provision goes back some eighty-five years, long before the 1962 UN General Assembly adopted Resolution 1803 which elevated the right to one recognised as part of the international legal framework, one that even trumps nationalisation, meaning that the only remedy available to any person would be monetary compensation, but not specific performance. I submit that no court or arbitral body would compel any state to return a concession.

A close look at the first three paragraphs of Resolution 1803 is most instructive. Summarised, they affirm a nation’s right to control its natural wealth while providing a framework for responsible development and attracting foreign investment, mandating that resource utilisation must foster national development and enhance citizens’ well-being. They also allow the state to set its own terms for resource management, to establish rules governing the exploration, development, and disposition of natural resources, including the regulation of foreign capital inflows and seeks a balance between foreign investment and national sovereignty.

The disagreers

Not everyone was happy with “allowing” sovereignty, let alone permanent sovereignty  to non-western countries. For example, in hardly disguised racist language, Henry Kissinger, the doyen of American diplomacy stated, “Oil is too important a commodity to be left in the hands of the Arabs”. To his hypocritical credit, Kissinger also said that “The contemporary world can no longer be encompassed in traditional stereotypes. The notion of the northern rich and the southern poor has been shattered. Mary Pillsbury Lord, the flour heiress, criticised the 1952 Resolution as “Unfortunate history”, while others went further, demanding equal terms to the trade and the raw materials of the world.

Sovereignty is no academic construct, but a foundational principle of international law recognised by a UN International Law Commission. Importantly, permanent sovereignty is intended to further national and collective interest. The very concept is designed to overcome economic injustice, the direct legacy of colonialism. Importantly too, is that economic sovereignty is the basis of political sovereignty. One does not exist without the other. Or as one of the original thinkers on the sovereignty question said: Sovereignty is or is not. There is no concept as partial sovereignty.

No silver bullet

It would be incorrect to identify the UN Resolution as transforming the international arrangements for the control of petroleum resources. The lock into which the West had gripped the Middle Eastern countries – colonial control, political structures and oil agreements – were shackles from which it was not easy to free themselves. Indeed, the 2016-type of Agreement signed by Guyana was certainly not atypical in the colonial era. We must remember too, that the West had installed leaders like the Shah of Iran who were favourably disposed to the American and British oil companies.

In fact, things really changed after the upheavals in the Middle East which eventually led to the OPEC countries flexing their muscles, taking control of the market via embargo and production and price fixing, all with grave consequences for the world economy. One undeniable consequence was that the countries exerted full sovereignty and control over their petroleum resources.

On the other hand, Guyana moved backwards, ceding sovereignty over its petroleum resources to two American and one Chinese companies. The shameful difference between Guyana and the OPEC countries is that our political leaders willingly sold us out (to use Jagdeo’s words), rendering irrelevant the UN Resolution on permanent sovereignty over natural resources. 

The final instalment on the subject will examine how we have ceded constitutional sovereignty to the oil giants.

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An Eventful Life by Dr. Maurice Odle

A book review by Christopher Ram – Part 1

An Eventful Life, the autobiography of Dr. Maurice Odle, is among those occasional books that cast new light on facts and events with which a declining number of Guyanese are familiar, rekindling old prejudices and arousing nostalgia. This publication which will soon be available to Guyanese, does more than recount the work experiences of one of the Region’s leading economic academics and practitioners, a contemporary and intellectual soulmates of some of the Region’s top economists and leaders. It is a good read – an honest narrative of an individual who overcame personal challenges to earn his PhD in Economics from the London School of Economics (LSE) in 1973 and spent a long life characterised by political activism and professional excellence in Guyana, the Caribbean and on the international stage.

Dr. Odle was born in 1937 in colonial British Guiana and his early education gave no hint of the contribution he would later make as a respected economist and influential figure in Caribbean and what was then referred to as the Third World. The fifth of eight children to parents of contrasting dispositions in which a strict disciplinarian mother and a father who was less visible and influential, Odle entered Queen’s College where he continued what might be considered a solid but not exceptional student career after which he worked in various Ministries as a public servant. This phase witnessed the blackouts and rationing against the backdrop of World War 11, shaping his early life, social development and political awareness influenced by the growing social and political developments which led to universal adult suffrage and the suspension of Guyana’s constitution in 1953.  

Reluctantly Odle took up his six months’ long leave in the Mother Country, determined to return home. Later, persuaded to change his mind by siblings and friends, Odle elected not to return home but to pursue higher education in London which had seen a large influx of Caribbean and Commonwealth citizens exercising their rights as British nationals.

Following a stint at the Board of Trade and aided by some additional studies, Odle gained admission to LSE in 1961, a move which changed his life forever. At LSE, Odle immersed himself in a rigorous economics curriculum, broadening his understanding of political economy and international relations. He became an active participant in campus life, particularly as an office holder in the West Indian Society a feature of which was the hosting of international politicians and academics, as well as organising cultural events. Odle narrates an incident in London in which he had a tense exchange with Mr. Forbes Burnham which Odle described as disturbing and warranting inclusion in the book. This period also saw Odle engaging in political activism, participating in protests against apartheid and the Rhodesian Unilateral Declaration of Independence (UDI), all influencing his left-wing inclination.

His experiences at LSE and in London broadened his worldview, deepened his understanding of global issues, strengthened his commitment to addressing development challenges in the Caribbean and most importantly caused him to rub shoulders with some of the Region’s intellectual giants in the pre-UWI era, such as Clive Thomas, Norman Girvan, Alistair McIntyre and the world-famous Walter Rodney. 

For those who endured life as an immigrant in the UK, the expression  Life in London seems to be a cruel joke and throughout his studies, Odle faced significant financial challenges, balancing his academic pursuits with various jobs to support himself and his growing family. Having myself done weekend work at Lyons at Piccadilly Circus, I think I understand his comment about washing dishes at Lyons in Regent Road, London.

After completing his MSc at the London School of Economics, Odle secured a lectureship at Enfield College of Technology (later Middlesex University) in England. However, the call of home proved irresistible, and in 1967, Odle returned to the newly independent Guyana to take up a position at the University of Guyana (UG).

Odle’s time at UG was marked by both academic pursuits and political activism. He quickly rose through the ranks, becoming Head of the Department of Economics and later Dean of the Faculty of Social Sciences. His research during this period focused on various aspects of economics, including monetary policy, public expenditure and technology transfer.

The political climate in Guyana during the late 1960s and 1970s was tense, with growing authoritarianism under Forbes Burnham’s government. Conditioned by his early life and the growing political consciousness of the era, Odle became involved in political activities, serving as President of the UG Staff Association and participating in the publication of ‘Ratoon’, a critical pamphlet addressing social and political issues.

Throughout this tumultuous period, Odle managed to maintain his academic focus, producing significant research and publications. He completed his PhD from London University in 1973, becoming a full Professor and Director of UG’s Institute of Development Studies in 1974.

A pivotal moment in this period was the denial of a professorship to Walter Rodney, a prominent historian and activist. Odle was part of the committee that reviewed this decision, which was ultimately politically motivated. The subsequent political tension culminated in Rodney’s assassination in 1980, an event that deeply affected Odle and the course of politics in Guyana.

To be continued

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NIS Press Brief Re: Shariff Zainul and Julia Clarke

By Christopher Ram & Associates – August 16, 2024

Following concerns expressed about the reliability of the records of the NIS and the mounting number of complaints against the body, the Government announced several initiatives to clear the backlog while Budget Speech 2024 claimed that the Government will offer eligible persons with between 700 and 749 contributions a one-off grant.

Properly understood, the one-off grant is nothing more than the current legal framework provides. It has not addressed an outdated, harsh and unfair arrangement. In the Speech, the Minister also referred to the 14,000 claims outstanding at August 2020 which had been resolved. Our experience tells a less positive story. Here are a few examples.

You will recall that we met in November 2023, after the Court had ruled that the National Insurance Scheme pay an NIS pension to a 73-year-old former employee of Toolsie Persaud Limited. Apparently, under pressure from the Government, the NIS appealed the decision and on 26 January of this year, the Full Court of the High Court referred the matter back to the Trial Judge. The matter is still pending while Mr. Zainul is deprived of a modest pension for which he contributed for over decades. Mr. Zainul is with us again today.

The other person here with us today is Ms. Julia Clarke, aged sixty-eight who, according to the records of the NIS, has 739 contributions – eleven short of the 750 to qualify for an NIS pension. Ms. Clarke disputes the poorly kept records of the NIS, providing evidence that her employment with one employer alone, qualifies her for a pension and not a one-off grant. Like Mr. Zainul, Ms. Clarke submitted to the NIS copies of her pay slips.

Sadly, these are not isolated cases. We have been trying to help another person who worked with the Special Constabulary in the late seventies, but the Special Constabulary cannot locate records which they had once admitted to having. And of course, the poor man cannot find one person, let alone two, who can give a sworn statement that they worked together at the Constabulary some forty years ago. Like so many employers from the state interventionist era, the employers no longer exist.

As a final example, a case was also brought to our attention where persons willing to sign affidavits were scared out of doing so after being cautioned about their failing memories.

Notwithstanding the promises by the Administration, the letters in the press indicate a continuing high level of public dissatisfaction with the NIS, largely due to past inefficiencies and failures by both the NIS and employers, as its former General Manager Patrick R. Martinborough admitted in his book The NIS in Guyana – Its Conception, Development and Future.

Those associated with the NIS and its administration must recognise that the payment of a pension is less about insurance and more about social security while the receipt of a pension is often the difference between poverty and extreme poverty. The ‘floodgate’ argument used in the Zainul matter is unsupported by facts and completely ignores the real human cost to workers who have contributed for decades.

It is incumbent on the Administration to restore public confidence in the NIS by making it more transparent, accountable and responsive to members of the public generally and to contributors and claimants in particular. The conditions for long term benefits under the Scheme have not changed since the Scheme was established in 1969.

Insistence on strict, inflexible and outdated rules which seek to transfer the responsibility for the maintenance of records from the NIS to workers is unlawful, unreasonable, unjust and inhumane. After 55 years, it is more than time for the Government to commission a comprehensive review with a view to modernising the Scheme, providing adequate security and fairer outcomes.

The advent of oil has provided the Scheme with both a financial and actuarial windfall that allows for more generous benefits, and to address inequities. We call on the Administration to immediately publish its Annual Reports and Financial Statements for the years 2022 and 2023 and the long overdue Actuarial Report. It is ironic that the NIS, which holds contributors to strict standards and legal compliance, does not think that such standards apply to itself.

We implore the Government to Immediately withdraw its appeal against the court’s decision in the Zainul matter and to review cases like Julia Clarke’s in an enlightened, humane manner. We also call for the immediate implementation of a sliding scale or partial pension system for persons who have made more than 500 contributions, the equivalent of ten years.

The NIS is one issue that can be objectively and impartially addressed outside of political affiliations or legal technicalities. It is about our values as a society and our commitment to those who have worked hard for their entire productive lives. We cannot stand idly by while our fellow citizens, who have contributed so much, are left without support in their golden years.

I want to show my personal commitment to the cause by making a small token of goodwill to Ms. Clarke and Mr. Zainul by donating to each of them on an ongoing basis, the equivalent of an NIS Old Age Pension out of my NIS and Old Age Pension.

I will be happy to answer your questions.

Christopher Ram
16 August 2024

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Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 133 – August 16, 2024

Sanctity of Contract vs Sovereignty over Natural Resources

Introduction

This column is an adaptation of a presentation I made at an OGGN sponsored activity in New York last July 27. OGGN is a US registered NGO with its membership drawn from the Guyanese Diaspora in North America, Europe and the Caribbean. Dr. Vincent Adams and I were the two presenters. Adams spoke on the environmental implications of intensive fossil fuel production in a concentrated area of 26,000 km2 and of his tenure as head of the (Guyana) Environmental Production Agency from which the PPP/C Administration removed him following the 2020 elections in Guyana. Adams was able to embellish his presentation with anecdotes, incidents and several confrontations he had in the EPA’s oversight of the much discussed and criticised 2016 Petroleum Agreement. That agreement was signed by the APNU+AFC Coalition Government and a consortium of oil companies headed by the American giant ExxonMobil Guyana Inc. a far-removed subsidiary of ExxonMobil Corporation of the USA.

The theme of the activity was Sanctity of Contract  versus Sovereignty. Let me begin this presentation by showing two clips that are widely available on social media, one by President Irfaan Ali and the second by Vice President Bharrat Jagdeo.

Having come into Government, both Ali and Jagdeo have left those commitments behind, now repeating the mantra “Sanctity of Contract” . So, for today’s talk, I will look at sanctity and argue that this is not an absolute rule of law but rather is one that is subject to a number of exceptions, anyone of which could cause a contract to be set aside. As I hope to show, the 2016 Petroleum Agreement can be set aside under several of these exceptions.

In this first part of the adaptation, I invite you to look first at the excuse being used by the PPP/C.

Sanctity of Contract

The sanctity of contract is a legal principle which states that agreements, once freely made, should be honored and enforced. It means:

  1. Contracts are binding.
  2. Parties must fulfill their promises.
  3. Courts generally uphold valid contracts.

This principle is important, promoting trust and stability in business relationships. However, when called upon, the courts not only consider the exceptions such as fraud, duress, illegality and unconstitutionality, but may also balance “sanctity” with fairness and the public interest.

First and foremost, my view is that having exhausted an earlier 1999 Agreement between Esso and the Government, Exxon was NOT ENTITLED to a second Agreement. Section 10 of the Petroleum Exploration and Production Act of 1986 conceived of a single Agreement that is phased out after ten years, barring any production licences issued under the Agreement. In essence, section 10 grants the Minister the power to enter into an agreement not inconsistent with the Act with respect to any or all of four specified matters, namely, the granting of a licence, the conditions attaching thereto, the procedure to be followed in exercising any discretion granted to him under the Act and any matter incidental thereto.

Illegality

But this provision was turned on its head under a so-called Bridging Deed conceived by Houston Texas in which one of the recitals states as follows:

“Pursuant to section 10 of the Act, the Minister has entered into this Deed together with the Contractor Parties to set out the process whereby 1999 Licence and the 1999 Petroleum Agreement will be replaced by a new petroleum prospecting licence and petroleum agreement in respect of the Contract Area.”

It is ironic that the Exxon who is now hiding behind “Sanctity of Contract” described at the April 2016 meeting that “the current (1999) agreement with Esso was in several ways out-of-date with what prevails administratively in Guyana and that an approach to Esso in 2010/11 to deal with that was politely declined.” Exxon’s team added that their company was prepared to move to a new “current specimen format for their agreement,” prepared and ready for GGMC to review. Here for all to see is Exxon admitting that it wrote the 2012 Model Petroleum Agreement which was subsequently handed to then Natural Resources Minister and blessed by President Ramotar.

Of particular relevance too, is a report by Clyde & Co., an international law firm based in London, which discloses that Brooke Harris of Exxon was actively engaged in the drafting of the Cabinet Paper on the 2016 Agreement. To be clear, the illegality lies not in the Cabinet Paper but in the granting of a second Agreement and the infamous Bridging Deed. Drafting of the cabinet paper was a sovereignty issue.

Duress

In April 2016, a technical team from the Guyana Geology and Mines Commission visited Exxon in Houston to discuss technical matters relating to a first discovery of oil announced in May 2015. Exxon threatened the Guyana Team with withholding investment until they were granted a new contract. This is how the Head of the GGMC Team reported the threat.

“Esso then confronted with GGMC the matter of their Contract and Licence… For Esso to start spending, the replacement petroleum licence and agreement is needed, along with the undertaking that the Development Plan and permitting would be done in good time.”

Even the Minister whose signature appears on the 2016 Agreement had grave doubts about the Agreement, writing in a book published after he demitted office that he and his Legal Officer “harboured some discomfort about signing”, which he claims, “did not go down well with Exxon top brass”.

Fairness

On the question of fairness, here is how the 2016 Agreement has worked in terms of distribution of the number of millions of barrels of oil produced. Yes, the oil companies have a right to recover their costs but as the numbers below show, Guyana received 12 % of the total oil produced in the first four years of oil production. Twelve percent must rank as one of the lowest host Government take anywhere in the world. It seems that the 2016 Agreement effectively transferred Guyana’s patrimony and good fortune to Exxon, at the expense of its people.

Compiled by: Ram and McRae

Source of Information: Budget Speech

Next week’s column will discuss unconstitutionality as an element of sovereignty and ask which one the Government thinks ought to prevail.

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Banks DIH decision on shares a clear case of illegality

Dear Editor,

Pension Funds, Institutional and even small shareholders  in Banks DIH Limited have been thrown into turmoil as a result of the arrogance and inexcusable insensivity of the directors of the company, the legacy of Guyana’s pioneering entrepreneur Peter D’Aguiar. For months, those shareholders and the public were confused by the decision of the directors to make the food and beverage giant into a private company, away from public scrutiny. To achieve this Machiavellian objective, shareholders of the company were expected to exchange their shares in the company for an equivalent number of shares in a newly established holding company, Banks DIH Holdings Inc.

Then followed a lawsuit brought by the two companies against the Guyana Securities Council – the Regulator  of public companies – for its failure or refusal to delist the old operating company and list the new company as the public company. The Court rejected the application and ordered the companies to provide the Council with the information it required within a specified timeline and a deadline for a decision by the Council to respond to the companies.

Earlier reports in the press indicated that the Court ruled that the Securities Council was in its right to demand information on the transaction to enable the Council to make a proper decision. The date set out in the Court’s decision was 8 September 2024. There is no public information that the Council has given the companies its approval.

Yet, in surprise announcements in the national newspapers on Thursday and Friday of this week, the companies published two advertisements: one to shareholders and the other to “To whom it may concern” respectively. While the notices are confusing in their details, what is clear is that the directors have deemed the shares held by every holder of shares in the beverage company to be invalid, i.e., until a shareholder exchanges her/his current shares for new ones, those shares have no value. In other words, shareholders are deprived of their property which they thought the Guyana Constitution protects.

It is true that the views of the minority cannot prevail over a decision by the majority, but Company Law has made gigantic strides in the protection of minority shareholders, including a buyout of dissident shareholders. But I do find it hard to believe that the directors of both companies are so simple-minded to think that an exchange of an equal quantity of shares between companies carries an equivalent value. Think of it: even countries which engage in barter use value as the medium of exchange.

To confirm that frightening situation, the Guyana Stock Exchange, in a publication in the press of August 3 has suspended trading in Banks DIH shares with grave implications for all shareholders. I think it most unfortunate that the Guyana Securities did not respond publicly to the initial advertisement by the company which not only sought to preempt the decision of the Council but also seems to be in contempt of the Court’s ruling in the Council’s favour.

The decision by the two companies is irrational, abhorrent, unlawful, contemptuous and unconstitutional. Our country is replete with instances where persons refuse to act even when their interest is threatened. This is evidently such a case, and shareholders cannot let this pass.

In the more general to whom it may concern notice, emphasis seems to be placed on. She held interest or shares held on lean by institutions, requiring such institutions to return the share certificates to facilitate the issuance of the new shares.

It might have escaped attention that that was effectively backdating a deprivation of property guaranteed by the constitution of Guyana.

To add to the confusion, this Saturday’s edition of the Stabroek news, in addition to the republication of the general notification by the Company concerning shares held in in trust and on lien the Guyana Stock exchange Announced that in the circumstances of Banks DIH holdings Inc. issuing a newspaper notices to the effect that banks GIS Limited shares will no longer be valid effective July 19, 2024, stock exchange has suspended trading in BIH shares. It probably comes as no surprise to everyone, but to the directors and officers of BANKS DIH Limited, that the confusion brought about by the irrational decision whereby the beverage and hospitality giant is converted into private company whose shareholdings are transferred to a new hauling company.