Author: Christopher Ram

Introduction

With appreciation to the editor-in-chief of Stabroek News, this column which last appeared on April 17, 2020, is returning for a short series. It will feature the 2020 financial performance of the three companies which signed a petroleum agreement with the Government of Guyana for the Stabroek Block. The three companies are Esso, Hess and CNOOC which hold 45%, 30% and 25% respectively of the Block which has so far been hugely successful with a twentieth discovery – Longtail 3 – announced earlier this week. Each of the columns over the next three weeks will feature one of the companies, followed by a wrap-up synthesis of the three.

The Petroleum Agreement is largely silent on accounting rules except in relation to the documentation to be submitted to the Government in relation to the petroleum operations. Expanding only slightly, the Agreement requires the companies to keep accounts, operating records, reports and statements relating to the operations in accordance with the Agreement and the Accounting Procedure set out in Annex C to the Agreement. The substantial part of the Annex deals with the various categories of costs and whether certain specified costs are recoverable without any approval by the Minister, recoverable with the consent of the Minister, not recoverable, and finally, costs not otherwise specified. These would require the approval of the Minister.

In the absence of and prescribed rules, it is left to the Institute of Chartered Accountants of Guyana to set the accounting rules for petroleum operations. This the Institute has done by way of the adoption of International Financial Reporting Standards, generally referred to by the abbreviation IFRS. Given the nature of the operations involved, the rules are extremely complex and their application open to interpretation. This is just another area in which the country suffers as a result of the failure by the Government to have a Petroleum Commission by whatever name to regulate the sector. This Column will address some of these issues after a review of the financial statements of the individual companies. 

CNOOC

This company has changed its name from CNOOC/Nexen which was originally a Canadian/Chinese jointly held company but the Canadians are no longer involved. Note 2 to the financial statements states that certain of the Branch’s activities are conducted through joint arrangements, raising the question whether it has other activities which is carries on independently.

The Company appears to be a shell within a shell. CNOOC operates as an offshore company in Barbados which up to now has provided a haven for sheltering taxes. So instead of the Board having directors from the parent company, three of the four directors of the company are Bajans! It is therefore not ironic that the note to the financial statements carry a long statement on the regulatory changes in Barbados but nothing about the regulatory petroleum environment in Guyana which is the only country in which CNOOC Petroleum Guyana carries out its only operation. 

In its first full year of production, the Company has reported a profit of $9,298 million on income of $41,419 million, a net margin of 22.4%. The financial statements also fail to disclose how it accounts for pre-contract costs recovered in the current year and what is left to be recovered.

Of the expenditure of $32,121 million, Depreciation, depletion and amortization accounts for $14,782 million and refers the reader to Note 3 but that number is not evident in the Note. Operating costs amount to $16,875 million, but that number does not even carry a note or any other information to support the figure.  

Taxation

The most interesting bit on the income statement is the element of taxation. Nowhere in the financial statements or in the extensive, copious notes is there any indication that the branch pays no taxes in Guyana. Indeed, it is surely guilty of a half truth when in Note 8 it states that the Branch is subject to the Guyana Income Tax Act and the terms and conditions of the 2016 Petroleum Agreement. At first glance, this appears to suggest a cumulative impact when the reality is the direct opposite.

The fmancial statements make good use of what is called deferred tax and so the financial statements have a charge of $2,324 million for deferred tax, one that is paid to no one but rather to recover losses claimed to have been made in past years. 

The Company sells all its share of oil production to an affiliate in Singapore which on sells on a cargo-by-cargo basis. Despite this arrangement the Company owes its related parties more than $400,000 million, the terms and conditions of which, including interest, are not stated.   

Note 5 states that the company has a $2.5 billion credit facility provided by CNOOC International Limited and one wonders whether this is a USD facility, or unlikely, a G$ facility. The note also states that the Company has received a letter of support from BVI (sic) to sustain the business at its current level of activity. The financial statements show that the company is already making commitment for Liza Phase 2 and the Payara Projects to the tune of $297,000 million.  A final matter of note is the Decommissioning and restoration provisions at $39,365 million as funds to reclaim and abandon wells and facilities.

This was Published on July 20,2020

The High Court will today deliver its ruling in APNU’s latest case, this time instituted by its Agent Misenga Jones. Let us face reality: this is part of the plan to delay the declaration of the results of the March 2 elections – now a full 140 days since and an incredible 577 days since the December 21, 2018 no- confidence motion (NCM). Once considered scaremongering, the fear that the APNU would not give up power seems to be validated. It is not a series of unconnected events that there were three court cases on the NCM involving the High Court, the Court of Appeal and the Caribbean Court of Justice. And so far, there have been eight cases, including appeals, arising out of the elections: one before the CCJ, two before the Court of Appeal, one before the Full Court and four before the High Court. If the decision today goes against the APNU, it is almost certain that the Court of Appeal and the CCJ will have further work.

Those legal games are not about law, it is about lawlessness. It is not about the fairness of elections, it is about the rigging of elections. It is not about conceding to who or conceding to what. It is a power grab, an electoral coup, the attempted entrenchment of a dictatorship where one group considers itself superior and another inferior.   

For APNU, it is their assertion of perpetual power, the control of state resources and denial of the vote of one out of every two electors in Guyana. Apparently for them only some votes matter. And yet, Guyanese remain remarkably patient, simply wondering if when and how it will end. Fortunately or unfortunately, the same is not true of the international community. They are neither taken in by the ruses and tactics of the APNU, nor possessed of the unlimited patience of Guyanese.

The US State Department has already announced visa restrictions on those engaged in denying democracy in Guyana with the warning that punitive action will be escalated and targets widened. With signals of similar action by regional, hemispheric and international nations and groups, Guyana will find itself not only more isolated than it has ever been but more isolated than any other country in the world – Iran, Syria, Venezuela and Zimbabwe included. 

Five years ago, Granger was touting his decency, honesty and integrity. He came to power the model of an upright individual, intolerant of improprieties, committed to values. Yet, in five relatively short years the path of his Government is littered with constitutional violations, corruption, cynicism, ethnic preferences, waste and extravagance, arrogance and delusion. Those of us who promoted and supported him find it impossible to recognise the David Granger of five years ago. The veneer of virtues has been shattered. With a determination that borders on the irrational, Granger seems willing to take Guyana into that black hole. And yet, not a single institutional member of the Coalition, not even the JFAP, is decent or brave enough to say, to borrow Andaiye’s famous words, “Not in our name”.

They are all it seems, under the spell of Joe Harmon, the master of bravado, the untouchable and above and beyond the law. A lawyer himself, he seems willing to court international notoriety by mocking the threat of sanctions. He clearly is unmindful and uncaring of the consequences of his further acts of recklessness to the country and its people. Time will tell whether he is indeed as invincible and untouchable as he thinks he is. 

For more reasons than one, I do not celebrate sanctions and do believe that problems concerning Guyana should be solved in Guyana. But I do not accept that the theft of an election is a purely domestic matter since it infects and infests all with whom it comes into contact. It is for that reason and that reason alone that I support sanctions. Bullies, cheats and thieves must realise that evil does not pay.

Yours faithfully,

Christopher Ram  

This was Published on October 26, 2020

The Guyana Elections Commission (GECOM) has not replied to an October 12, 2020 letter from commentator Christopher Ram requesting copies of the declaration of expenses by political parties which contested the March 2nd general elections.

Ram had written GECOM Chair Claudette Singh pointing out that according to Section 108 of the Representation of the People Act, the election agent of each group of candidates has to forward to the Chief Election Officer a return in Form 26 of the Act.

He pointed out that this return was due no later than 35 days following the declaration of the result which would have been September 7th.  Ram also pointed out that in the absence of an authorised excuse the failure to comply “constitutes an illegal practice”.

Ram further noted that Section 109 requires the publication in the Official Gazette of a summary of the returns and a notice of the time and place at which the return and declaration can be inspected or copies of these purchased. Ram said he was desirous of obtaining copies of the returns for analysis and public dissemination.

The letter was sent to Singh and copied to the six commissioners.

In a statement on Saturday, Ram expressed regret that he had not even been given the courtesy of a reply by Singh. He said that the provision is not unrelated to campaign financing, “a matter about which I have advocated for decades, and which is intended to bring accountability (to) the political parties which at the moment is close to zero. This is not good for democracy ..for our country”.

This was Published on July 3, 2020

Dear Editor,

The lull in election letters as we move towards the election defeat staring the APNU+AFC+WPA, allows me the opportunity to react to the responses to my letter of June 13, 2020 edition of SN, `A movement once famous for its values and Rodneyite principles is now deeply involved in attempts to rig the 2020 elections’. Readers will probably recall that a response came first from Tacuma Ogunseye, then Desmond Trotman and latterly Eusi Kwayana.  I will ignore the innuendoes and attempted attacks by Ogunseye and Trotman as unworthy of both the WPA we all knew, or a reply and merely seek to correct Kwayana who seemed to mix-up, unwittingly I hope, my reference to our conversation when he was leaving Guyana in the heat of the Buxton troubles with when he returned for the Walter Rodney Commission of Inquiry. I would like to maintain my respect for Kwayana and the privacy of our conversations even as he chooses to highlight a narrative reflective of an obviously evolved view of events and key actors.

I was both surprised and amused at the lengths to which Ogunseye would go to fabricate facts. He accused me of being a major shareholder in a company of which Ram & McRae is the independent auditor a statement which an Editor’s note forced him to retract. That was not his only fabrication. His letter also stated that “What Ram has failed to tell readers is that it was under the PNC/Burnham regime, aided by his buddy, Elvin McDavid, who at the time was a powerful politician in the ruling party and government that “opened” the door for Ram to emerge as a successful businessman and now an economic power in the country. The genesis of his economic empire lies in the support he received from Mc David’s organised “state patronage”.

As the following shows, and he can confirm this with Kwayana, the facts are quite different.

I left Guyana as an employed person in 1978 for Grenada where I worked first with Coopers & Lybrand and then the People’s Revolutionary Government (PRG) led by Maurice Bishop. After the invasion, I returned to Guyana with my young family to set up home. Among those returning were Freddie Kissoon, Ms. Denise Cossou and economists Claremont Kirton and Eddie Dewar. The latter two and I set up the ambitiously named Management and Economic Consultancy Services Limited along partnership lines. After a few months of struggle and no work, they packed up and left. I was determined to stay on and set up an accounting practice which Ogun refers to as an economic power.

Miles Fitzpatrick who had also worked with the PRG rejoined the law firm de Caires and Fitzpatrick and persuaded David de Caires to give me “a brace”. I would visit their office every Friday afternoon to balance the partnership’s books. I supplemented my meagre income by doing some moonlighting accounting work with an old friend from South West London College who had an accounting practice in Central Trinidad. Because I had written in 1980 as Purpose of Visit on my immigration landing card “To attend Walter Rodney’s Funeral”, a complete search of person and luggage on arrival had become obligatory. I soon discovered however that an offer of a copy of Time magazine as good an explanation as any to ease the entry process!

In the meantime, I had reconnected with Paul Chan-a-Sue, my old boss from Bookers Stores Limited Guyana. Paul offered me a small engagement to set up an accounting system at National Printers Ltd. Shortly before the commencement date, Paul informed me that he had been “advised” by Mr. Elvin McDavid, Chief Political Advisor to President Burnham, to withdraw the offer on the instructions of Burnham. (Mr. Chan-a-Sue who is still around has consented to my use of his name in this letter). During that time when the State boasted of controlling the commanding heights of the economy, all State audit and accounting work was reserved entirely for Thomas, Stoll and Dias. Even crumbs were not available to the few private accounting and audit firms around and the period witnessed the exodus of some of our brightest accountants.  

Sometime after McDavid’s removal by Hoyte as Chief Political Adviser to the President following Burnham’s death, Mrs. Doreen de Caires called to tell me that McDavid, whose house in Queenstown had been rented by the Stabroek News, was concerned about his tax affairs and requested her to inquire of me whether I would assist him. I agreed and brought his affairs up to date, all at no cost.

Anyone who knows Elvin would tell you he was not a shy man and even while we were meeting to finalise his work, he requested similar work for Mrs. Viola Burnham on the same terms which he enjoyed! I agreed and I have to say that I have met few women with Mrs. Burnham’s charm, elegance and humility. Elvin and I did become friends in the late eighties, and he as the pioneer of the Burnham Foundation invited me to deliver the feature presentation at one of the early anniversary events for Burnham. But money or work from Burnham, McDavid and Viola? – definitely never.      

I do not need any further apology from Mr. Ogunseye. What is important to me is that the public must not be misled or deceived by those in support of our new riggers.

Yours faithfully,

Christopher Ram   

This was Published on June 22, 2020

Dear Editor,

There appears to be a mistaken view that any decision by the Court of Appeal in the case brought by Eslyn David seeking to stop the declaration of the results of the March 2 elections is unappealable. That view is simplistic and wrong. Put shortly, the view is that the term “exclusive jurisdiction” used in Article 177 to describe the powers of the Court of Appeal, makes any decision by it unappealable.

Holders of that view may even consider that section 4 (3) of the Caribbean Court of Justice Act supports their position. That sub-section contains another exclusion of jurisdiction with the following words: “Nothing in this Act shall confer jurisdiction on the Court to hear matters in relation to any decision of the Court of Appeal which at the time of entry into force of this Act was declared to be final by any law.” In other words, cases before the CCJ Act came into force constituted settled law and outside of the reach of the CCJ.

The situation changed radically after the Act came into force, opening the doors of appeal from a wide array of cases and matters. Exclusivity was no longer assured as Article 133 of the Constitution makes clear. That Article provides that “Parliament may make such provision as it deems fit authorising any court established or to be established, as the final court of appeal for the Caribbean to be the final court of appeal for Guyana.”

And Parliament did just that. Section 6 of the CCJ Act states that “an appeal shall lie to the [Caribbean] Court from decisions of the Court of Appeal as of right (emphasis added) in [among other things], any civil or criminal proceedings which involve a question as to the interpretation of the Constitution or in in any proceedings that are concerned with the exercise of the jurisdiction conferred upon the High Court relating to redress for the contravention of the provisions of the Constitution for the protection of fundamental rights.”

In my view therefore, there is no question that any decision by the Court of Appeal in the David case is appealable to the CCJ as of right. 

Yours faithfully,

Christopher Ram