8. Guyana. Oil Curse. How to prevent.

Guyana Black Gold Rush - MCAL

8. Guyana. Oil Curse. How to prevent. V.090808

Contents (17)

0. Note by Marcel Chin-A-Lien

1. Oil production may see change in country’s security landscape – July 8, 2017

2. An evil that will sink the country – July 21, 2017

3. A culture of corruption – Nov. 9, 2016

4. Can we overcome our ethnic insecurities and heal our historic wounds of race hate and oppression? – May 5, 2009

5. Judiciary embarks on capacity building for Oil and Gas Sector – Rehanna Ramsay – July 23, 2017

6. Guyana could end up worse off with oil – Jagdeo – June 05, 2017

7. Take away financial incentive of corruption to deter future activities – Jul 31, 2017 News – www. kaieteurnewsonline.com

8. Law enforcement and the judiciary blamed for corruption in Guyana and Caribbean Blame law enforcement, judiciary for corruption       says expert – Jul 28, 2017 Kaieteur News – guyaneseonline.wordpress.com – featuring Dr. Perry Stanislas

9. No conflict of interest in relations between GOG, ExxonMobil and Mangal brothers ??  – Aug 07, 2017 ExxonMobil, News 0 Comments

10) A Greater Measure of Transparency for Guyana – by Francis Quamina Farrier

11) Corruption in Latin America: Taking Stock -By David Lipton, Alejandro Werner, Carlos Gonçalves. September 21, 2017 – IMF BLog –

12) Stemming corruption in Guyana – Kaieteurnews April 4, 2018

13) Curse of the Black Gold: 50 Years of Oil in the Niger Delta – The Guardian

14) The Oil Curse – University Bergen – Law Research

15) https://guyaneseonline.wordpress.com/2018/06/21/guyana-the-country-that-wasnt-ready-to-win-the-lottery/

16)https://www.stabroeknews.com/2018/news/guyana/02/07/securities-council-seeking-info-on-key-shareholder-in-cgx-subsidiary/

17) Twelve Red Flags: Corruption Risks in the Award of Extractive Sector Licenses and Contracts Aaron Sayne, Alexandra Gillies and Andrew Watkins, April 2017:

https://resourcegovernance.org/sites/default/files/documents/corruption-risks-in-the-award-of-extractive-sector-licenses-and-contracts.pdf

0)  Note by M.Chin-A-Lien

” Good geology has led to bad politics, according to M.L. Ross “.

Since the beginning of my career in oil industry 4 decades ago, I was struck and at the same time intrigued by the paradox and co-existance of extreme wealth and poverty, in oil rich Venezuela. And later also in different other oil-rich countries where I have worked.

Since then I have been very interested in reading and analysing the causes of this phenomenon, that is more so a rule than an exception.

The paradoxical wealth of Nations:

The Oil Curse. How Petroleum Wealth Shapes the Development of Nations,

by Michael L. Ross

It is the devil’s excrement.

We are drowning in the devil’s excrement, Juan Pablo Pérez Alfonso, former Venezuelan oil minister, founder of OPEC.

I wish your people had discovered water,

King Idris of Libya, on being told that a US consortium had found oil.

Since 1980, the developing world has become wealthier, more democratic, and more peaceful. Yet this is only true for countries without oil. The oil states, scattered across the Middle east, Africa, Latin america, and Asia, are no wealthier, or more democratic or peaceful, than they were three decades ago. Some are worse off. From 1980 to 2006, per capita incomes fell 6 percent in Venezuela, 45 percent in Gabon, and 85 percent in Iraq. Many oil producers, like Algeria, Angola, Colombia, Nigeria, Sudan, and again, Iraq, have been scarred by decades of civil war.

These political and economic ailments constitute what is called the resource curse. It is more accurately a mineral curse, since these maladies are not caused by other kinds of natural resources, like forests, fresh water, or fertile cropland. Among minerals, petroleum, which accounts for more than 90 percent of the world’s minerals trade, produces the largest problems for the greatest number of countries.

The resource curse is overwhelmingly an oil curse.

Before 1980 there was little evidence of a resource curse. In the developing world, the oil states were just as likely as the non-oil states to have authoritarian governments and suffer from civil wars. Today, the oil states are 50 percent more likely to be ruled by autocrats and more than twice as likely to have civil wars as the non-oil states. They are also more secretive, more financially volatile, and provide women with fewer economic and political oportunities.

Since 1980, good geology has led to bad politics.

The most troubling effects of this scourge are found in the Middle East. The region holds more than half of the world’s proven oil re- serves. It also lags far behind the rest of the world in progress toward democracy, gender equality, and economic reforms. Much of its petroleum wealth lies beneath countries plagued by decades of civil war, like Iraq, Iran, and Algeria. Many observers blame the region’s maladies on its Islamic traditions or colonial heritage. In fact, petroleum wealth is at the root of many of the Middle East’s economic, social, and political ailments and presents formidable challenges for the region’s democratic reformers.

Not all states with oil are susceptible to the curse.

Countries like Norway, Canada, the Netherlands and Great Britain, which have high incomes, diversified economies, and strong democratic institutions, have extracted lots of oil and had few ill effects. The United States, which for much of its history has been both the world’s leading oil producer and the world’s leading oil consumer, has also been an exception in most ways.

Petroleum wealth is overwhelmingly a problem for low- and middle-income countries, not rich, industrialized ones. This creates, unfortunately, what might be called “the irony of oil wealth”:

those countries with the most urgent needs are also the least likely to benefit from their own geologic endowment.

The resource curse was not supposed to happen etc. etc.etc.” <<<

Reference from:  www.sscnet.ucla.edu/polisci/faculty/ross/oilcurse/oil_curse_chapter_1.pdf  <<<

Guyana’s history in 2040, in retrospect.

” The resource curse was not supposed to happen…..”???

Having joined the prosperous league of exceptions ?

Such as The Netherlands, Norway, Canada, Great Britain, USA ?

Hopefully !!!

But anno 2018 ?

Still a very, very, very long way to go. This given the present day Country SWOT characteristics: Social, socio-political, legal-judiciary etc. etc.

To become Oil-Curse-Proof and Dutch-Disease-Proof ?

Observations of how to become a country without the oil curse ?

From analysing oil countries that I have visited myself, with few ill effects?

  1. Strong, modern democratic and political institutions
  2. Government fiscal discipline
  3. No political and no economic corruption
  4. Efficient, transparent governmental and highly professionalised petroleum management related organizations
  5. Civil society with anti-corruption, straight, honest mentality and attitude
  6. Transparency across the whole value and decision chain
  7. Diversified economy
  8. High income

A few interesting references on the Curse of Oil:

  1. The curse of oil: The paradox of plenty. The Economist, www.economist.com/node/5323394
  2. The Oil Curse: How petroleum Wealth Shapes the Development of Nations. Michael L. Ross, ebook ISBN: 9781400841929
  3. Hundiendonos en el excremento del diablo. Juan Pablo Perez Alfonso, Editorial Lisbona 1976, Caracas.

1) ” Oil production may see change in country’s security landscape

From: www.kaieteurnewsonline.com/2017/07/08, Jul 08, 2017

The security landscape in Guyana may very well change within the coming three years before, and immediately after, oil starts coming out of the ground.

Adjusted security landscape in a country is saidto be a common spin-off of the presence of big oil companies in developing countries around the world.

Dr. Kennedy Mkutu, an associate professor of the United States International University Africa, spoke about this phenomenon yesterday. Dr. Mkutu was one of the facilitators at the just concluded “Oil Curse and its Prevention” symposium that was hosted by the Caribbean Institute of Forensic Accounting (CIFA) and the Guyana Oil and Gas Association (GOGA).

At that forum, Dr. Mkutu delivered a presentation that focused on security governance and the extractive industry in Turkana – the second largest and northwesternmost County in Kenya – looking at how the presence of oil raises new challenges in terms of policing and private security industry, gun control and community security.

That presentation was extensive. Dr. Mkutu spoke about resource abundance being a strong predictor of incidence of civil war. The resource curse at the local level, governance problems and the need for proper legal landscape were also topics that Dr. Mkutu touched on during his presentation, and so were security governance and the dwelling of security firms in resource- rich countries.

During an interview after his presentation, Dr. Mkutu explained why the security landscape of a country often changes with the coming of oil. He said that many oil companies usually import their own security to guard the commodity. “How do countries monitor this (private security, guns, etc., that are in the country)?” he asked.

Dr. Mkutu said that oil companies often say that the police forces and private security firms in certain countries may not be enough, or may not have the level of expertise that they require. “They usually say that they want security companies that they trust and that they think are competent,” said Dr. Mkutu. “So what do they do? They bring their own guys.” He said that the importation of security personnel can have several spin-off effects, one being an outcry from local security firms. “They (local security firms) might say, what about us?

We have been sidelined, we have been bypassed. How does a country deal with these issues?

Strategy needs to begin now,” said Dr. Mkutu. The associate professor said that this is not a matter to be taken lightly by government and citizens of nations, as the monitoring of security firms as well as the amount of weaponry in a country, has been proven to be of utmost importance.”

2)  An evil that will sink the country

Most Guyanese by now have been convinced, by some revelation or other, that they are living in a corrupt society where most of the major institutions are woefully corrupt. There are some institutions that fare better than others in terms of corruption, but in the view of the man-in-the-street, the overwhelming consensus is that many individuals responsible for large financial undertakings are choking with the gains of corruption, which has become a norm in society.

Corruption is all around us; it is endemic and it is a major concern. Many of us have concluded that it near impossible to totally eradicate it. Corruption seems to be the fuel of the nation. A corrupt mindset is embedded in almost every level of society, from those who offer bribes for favors that they would not have obtained under normal circumstances to those public officials who will accept the bribes to fast-track or give consent to a decision on behalf of those who pay the bribes.

The familiar mantra from vote-seeking politicians is that if elected to office, they would stamp out corruption which they stress, continues to stifle the nation’s economic growth and prosperity. As purportedly the major beneficiary of corruption in the country, the last political directorate did not put in place the necessary measures to curb this scourge.

Two years ago, the APNU+AFC coalition came to office with the promise to put in place laws to stamp out corruption and although such laws have been passed, corruption continues unabated because some still find ways to beat the system and there is not much the government can do.

While many have accused the last administration of corruption, they also believe that the beneficiaries of the largesse that flows from corruption are still at the senior levels. The people have had enough platitudes from various administrations in the past regarding their attempts to reduce corruption; now they want to see results.

The government cannot end or fully reduce corruption by itself. It needs help from the public and all stakeholders to substantially reduce corruption and severely punish those found culpable of corrupt practices. While it is in the interest of the government to robustly fight corruption, it is the opinion of many that the administration is just giving lip service to it. We are living in a country that is perennially compromised by rampant dishonesty.

For over a decade, corruption became entrenched in our culture and society, it was actually instituted in the country as a way of governance during the tenure prior to the last election. The current government seems to be setting its own time table and is moving slowly to get there. However, there are few complaints about corruption in this administration, because it seems that no one is listening or are turning a blind eye to it.

When in opposition, the APNU+AFC coalition’s parties complained bitterly about corruption and were very passionate about wiping it out. But now in office, they seem to have lost their fearless zeal to even speak out against corruption because they have realized that it is even more widespread than they could have imagined.

Further, there appears to be a weakening of the safeguards to prevent the political interference and manipulation of prosecutorial authority which is vested with the power to act against offenders of corruption.

The government will stand tall if it ensures that these officials are following the laws and duly prosecute those who are found culpable. Allowing them to do their jobs independently and without political interference is not enough. The last administration did nothing about corruption. It maybe was too rewarding.

Corruption is an evil that will sink the country.

3) A culture of corruption 

Nov 09, 2016 Editorial, Features / Columnists 0 Comments

In Guyana, corruption has become a culture, despite the talk and all the promises to weed it out. Almost every day, there are stories in the news about corruption and so far, only a few have been prosecuted. Corruption is the abuse of public office for private gain. It should not be taken lightly, but it was under the last administration.
Its implications are profound and wide-ranging in that it has spread to all spheres in society. It continues to destroy the psyche of the people andis jeopardizing the prospects for economic growth and human development.
It has undermined confidence and trust in the country. There is a sense of resignation on the part of the people as this cancerous disease continues unabated.

Corruption is no longer a perception as the PPP had claimed; it is real. It exists in all levels of society among people and institutions. The bribers are usually the people who offer kick-backs to politicians, law enforcement and public servants in order to avoid being prosecuted, obtain contracts, or receive benefits. Corruption has thrived in Guyana because many have become wealthy andgovernments have turned a blind eye to it.

Corruption is not only a political problem, it is a social disease, and while accusations are made from both sides of the political divide, the cancer is spreading.

But there was a time just a few years ago when the average citizen in Guyana did not believe that corruption was a major problem in the country. The public had confidence in the integrity of public servants and persons in positions of public trust. Many believed that corruption or the misappropriated of public funds for personal gain was an issue for other Caribbean countries and not Guyana.
It was only during elections that one would hear politicians accuse their opponents of being corrupt, but they hardly even provided evidence to substantiate their claims. While such allegations may have influenced some voters, no high profile person was ever charged and prosecuted.

However, there has been corruption in Guyana for years. During the last fifteen years of PPP rule, corruption was so rampant that it was brought to the forefront of discussion by the public. In the last year, several audit reports have shown that there was massive corruption under the last administration in both the private and the public sectors.

The bribers are usually the people from the private sector and the recipients are those in the public sector. There are many types of corruption, but the most common involves kickbacks from the granting of government contracts to contractors. Another is the offer of bribes to ease the difficulty in doing business.

There have been several documented cases of corrupt practices by senior public officials in the last government, but because of political patronage, they were not fired. In fact, they did not even raise an eyebrow because everyone was doing it, and also the misguided notion that corruption does not kill.

The truth is corruption does kill, and it is a death that lingers on the economy and affects the people, especially the poor.
The government, when in opposition had promised to weed out corruption if elected to office. Now after eighteen months at the helm of the government, it has not delivered on its promise, and even though there is a firm commitment to do so, it has not happened despite the audit reports.

Being transparent and accountable could go a long way towards reducing corruption. Interestingly, the tables have been reversed as the government is now being accused of corruption by the opposition in much the same way it had accused the opposition prior to the May 2015 election.

It is about time the government delivers on its promise to end corruption.It would be in the country’s best interest and would bolster its own credibility It will be unfortunate if it does not.

4) Can we overcome our ethnic insecurities and heal our historic wounds of race hate and oppression?

Dear Editor,
Today (Tuesday 5 May 2009) marks the 171st Anniversary of Indians arriving in Guyana in the year 1838. May all Guyanese celebrate this important milestone in our rich racial heritage.
May all Guyanese use this day to reflect on who we are, what we are as a Nation state in 2009 and where have we arrived in our history?

To our Indian brothers and sisters, you have indeed made mighty contributions to the making of our Nation. With icons such as Doctor Yesu Persaud, entrepreneur par excellence, social activist, humanitarian and cultural leader, who only this weekend gave the welcome remarks for the 26th consecutive year for the show Nrityageet 30 at the National Cultural Centre, there is much to be proud of.

Some Guyanese will become involved in the spurious debate that Tuesday is Arrival Day and not Indian Arrival Day. Yes indeed. Chinese, Portuguese and others were brought to Guyana and history bears a distinct date for their arrival, although these two groups have decided not to commemorate their arrival dates.

As Guyanese, we need to move beyond the politics of the day and use Arrival Day to understand we are a nation of many cultures and races. Our Motto of “One People, One Nation, One destiny” is a dream deferred for all of us and a nightmare for many Guyanese citizens. Perhaps, we should have had a motto that stated “Out of Many, One Nation”.

Many African Guyanese do not pay much attention to the significance of Arrival day. Perhaps it is because captured Africans were savagely brought to Guyana 180 years before Indians. African Guyanese tend to more celebrate August 1 as Emancipation Day and October 12 as African Arrival Day or African Holocaust Day because slavery was a nuclear bomb that destroyed Africa and its advanced civilizations.

African Holocaust Day is commemorated on 12 October because it was on this day in 1492; Columbus arrived in the region, signaling the unbridled decimation of indigenous cultures and peoples throughout the world. So where have we as Guyanese ‘arrived” on this 171st Anniversary?

Today, as over the last decades, we are a divided Nation.
The most telling paragraph in the United Nations Expert Gay McDougall’s Report has been completely ignored by all. This paragraph in her report tells us all we need to know about the state of the Nation in 2009.

“Ethnically based divisions and politics have created two separate and conflicting narratives and perceptions of reality in Guyana.

On the part of the Afro-Guyanese, there is a widely held belief that they are discriminated against by an Indian-dominated and supported government that puts Indian interests to the fore, particularly in resource allocation, government contracts and employment.

On the part of the Indian-Guyanese, there is a belief that an Afro-Centric political opposition, if in power, would settle political scores and work solely in the interests of Afro-Guyanese.”

As recorded, Indian Guyanese believe that the PNC, if in power, would settle political scores and work solely in the interests of Afro-Guyanese.
This observation indicates Indo Guyanese believe the current government is still settling political scores and is working primarily in the interests of Indians in Guyana.
Can we as Guyanese overcome our ethnic insecurities and heal our historic wounds of race hate and oppression.

This is the fundamental question Guyanese should use Arrival Day to reflect on. Today, we are a divided Nation, both internally and externally as we are also a Nation of nomads with half its population outside of our borders. Many Guyanese live in economic or self imposed political exile in many foreign countries
It is becoming clearer by the day that Executive lawlessness and monopoly power are elements of our political decay. It is clearer by the day that Constitutional Reform is critical to the survival of our Nation.
Without Constitutional Reform, nothing else is viable. We need to employ our best minds to neutrally change the constitution. I say neutrally because politicians will not do what is in the best interest of the Nation.
We need to aggressively pursue good governance practices not only by strengthening the capacity of the State but by renewing the spirit of civil engagement in all aspects of public affairs.

Without good governance, without strict adherence to the rule of law, without a morally driven administration, without the legitimate use of power and without responsible regulation; we are heading to become a failed state. No amount of investment will place Guyana on the path of prosperity.
On the 171st anniversary we need to ask ourselves whether it is possible for Guyana to become a peaceful multi-racial, multi-party, multi-cultural, multi-religious plural democracy.

If this is what we want, then many changes need to be made, starting today. First, we must change our attitudes of indifference to each other’s pain. The crimes against Guyanese: extra-judicial killings, corruption, racism and defiance of the rule of law…must be opposed by all races. History has shown us that these types of evil do not last forever.
Second, we must insist all political parties contesting the next elections sign a legally binding pre-election pact that will ensure constitutional reform, the pursuit of good governance, economic revitalization and racial harmony as national priorities.

Third we need a Cabinet based on meritocracy and one that reflects the fundamental cultural dimensions of our society. Cabinet members should reflect the will of the people as recognised by their votes. The Cabinet should reflect competence. Gender and race must be balanced to ensure equity.

Fourth, Parliamentarians should represent specific geographical areas in which they are resident. Any person born in Guyana should be eligible for any political office. Fifth, local government should be constructed on a basis that encourages local decision-making as this is fundamental to any well functioning democracy.
An inclusive society based on merit is a necessary perquisite for racial and political peace.
On the 171th anniversary of Indian Arrival and African Emancipation, all races in Guyana need to feel equal and be equal.

Racial insecurity is a cancer in our society. Each racial group in Guyana must receive equal access and equal treatment, constitutionally, legally, politically, morally, religiously, culturally and economically.
Guyana is a country forged out of a mixture of many races, cultures, religions and ideas.
For our country to flourish, we need the talents of all our people. We have already lost most of our skilled people to foreign lands and this must be reversed before it is too late. All segments of Guyanese society need to participate in the country’s development.

All citizens, including politicians, need to be committed to the fundamental principle of a democratic, multi-racial, multi-ethnic, free enterprise society in which every Guyanese regardless of age, race, religion or creed has an equal opportunity to realize his or her potential Finally, a critical need for all Guyanese is economic prosperity and not the debilitating poverty that consumes us. In Guyana, there is “water, water everywhere and not a drop to drink”.

Poverty is an overwhelming reality in Guyana. As the UNICEF web sites describes:
“Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see a doctor. Poverty is not being able to go to school and not knowing how to read. Poverty is not having a job, is fear for the future, living one day at a time. Poverty is losing a child to illness brought about by unclean water. Poverty is powerlessness, lack of representation and freedom. Poverty has many faces, changing from place to place and across time, and has been described in many ways. More often, poverty is a situation people want to escape”.

Guyana needs new and better leadership. We need to move from “serve the leadership” to “servant leadership”. The former is about racism, corruption, constitutional illegalities and human rights abuses such as torture, extra-judicial killings, drugs. The latter is about visionary, courageous, healing, knowledgeable and compassionate leadership.

On the 171st anniversary of Arrival Day we need to commit to forging a spirit of spiritual and emotional nationalism. If not, we will continue to disintegrate politically, morally, socially and culturally.
This year’s theme for Nrityageet is “unity in diversity through dance”. This year’s theme for Arrival Day should be “unity in diversity through justice for all”.  Eric Phillips

5) Judiciary embarks on capacity building for Oil and Gas sector

In anticipation of new matters which will arise from the emerging Oil and Gas sector, members of the local judiciary have embarked on a capacity building workshop that focused on the regulatory framework of the industry in the Caribbean.

Chancellor of Judiciary (Ag), Justice Yonette Cummings Edwards

Acting Chancellor of the Judiciary, Justice Yonette Cummings-Edwards, who spearheaded the initiative, disclosed that the workshop is intended to build Guyana’s judicial preparedness to deal with matters related to the Oil and Gas sector.

Last week, Minister of State, Joseph Harmon, was among those who acknowledged that local judges will require capacity-building exercises so that they can be able to effectively handle the legal issues that may arise from a complex oil and gas industry which Guyana is currently preparing to be a part of.

Harmon had asserted that “our judges are trained in the law, but there are some specific issues which would arise from this area of development and clearly our judges, I am sure, would adjust to it.”
Harmon added, “The judicial officers are also benefitting from training locally and abroad. And more of this is taking place.”

Responding to comments on the country’s legal capacity to deal with the issue, the Acting Chancellor explained that Oil and Gas was among the main topics at the recently concluded Annual Judges Conference.
Justice Cummings-Edwards disclosed that under this year’s theme “the Role of Guyanese Judiciary in the Evolving Juridical Landscape,” Judges were enlightened on the fundamental legal concepts in the Oil and Gas industry.

The presentations conducted by University of the West Indies (UWI) Oil and Gas Law Lecturer, Alicia Elias-Roberts focused on key legal issues and legal challenges in the sector. According to Justice Cummings-Edwards, the presentation was part of training aimed at preparing the Guyanese Judiciary to meet the demands which the new industry will place on the justice system.

The Conference also encompassed presentations on the evolution of petroleum laws in the Region, and issues to be dealt with such as review of concessions agreement, and the increasing equity and revenue of governments; new tax regulations under the Oil and Gas Sector; the sovereignty independence, socialism and nationalism of the Oil Industry as well as expropriation and Organization of Petroleum Exporting Companies (OPEC).

The Chancellor noted that systems are already in place to handle expeditiously matters of the emerging sector.
“It is worthy to note that emergence of the Oil and Gas Sector in Guyana will be taking place after the introduction in February of new Civil Procedures Rules 2017. These rules are designed to help expedite the pace of civil litigation through adequate case management, a process in which cases are assigned to a single judge from the filing of defence and managed by the same judge to final disposition.

“Alternatively if a fixed date application is filed, a hearing will be fixed before a judge within at the most, 28 days of filing, depending on the nature and urgency of the matter. Litigation arising within the new sector will therefore benefit from the new regime of procedures and should be disposed of without lengthy delays.

Since matters are filed under the Civil Procedure Rules 2017 are now judge-driven, members of the local bar have had to adjust in order to keep abreast with the new practices and procedures.
Justice Cummings Edwards asserted that the judiciary will continue to take the steps necessary to prepare and equip its members to deliver effective and efficient service to all entities and individuals who approach the Courts.

“It is also known that contracts in the Oil and Gas Industry may often contain arbitration clauses by which the contracting parties agree to refer some disputes to international arbitration, thereby reducing the matters taken to Court.”
Recently, Opposition Leader, Bharrat Jagdeo in response to queries on the Oil and Gas Sector asserted that somehow, Guyana has to build capacity when it comes to the judiciary. He expressed the hope that sooner rather than later, specialized courts would be established to deal with such issues. He said that a commercial court, for example, could be put in place to deal specifically with oil and gas cases in a swift matter.

He too shared the opinion that training would be needed for some of Guyana’s judges.
Several legal experts have also opined that Guyana’s judicial system is currently not prepared for the complex legal issues that may arise from the looming multibillion-dollar oil and gas sector.

Attorney-at-Law, Sanjeev Datadin, who has worked with several international oil and gas companies, holds the view that Guyana’s judicial system is simply too slow, understaffed, and lacks individuals with the necessary knowledge and skills.
Were legal issues to arise from the oil and gas sector, Datadin predicts that most companies will opt for arbitration. He opined that there will be arbitration centres just as there are in Trinidad.
The attorney believes that major companies which come into Guyana are going to be distrustful of the judicial system, given the perception of how long cases take to be heard, how easily records get lost, personalities involved, among other discouraging observations.

Datadin said that the arbitration process would have to go up parallel to the court system, since this is how it is usually done.
“It usually would come through the business sector; the chamber of commerce and similar things would establish arbitration tribunals and panels, and then you would need a list of arbitrators.”

6) Guyana could end up worse off with oil – Jagdeo – Jun 05, 2017 News 0 Comment

The Government is giving Guyanese the wrong impression that the coming of oil is an automatic saving grace. There is a real possibility that Guyanese can wake up worse off in 2020 than they are now.

That is the contention of Opposition Leader Bharrat Jagdeo.
At a recent press conference, Jagdeo spoke about the absence of “realism” in the minds of many government officials and said that they are passing the dream onto Guyanese.
The Opposition Leader said that because government expects that Guyana will become rich overnight due to oil, it is forsaking the traditional sectors. “This is dangerous,” he said. Further, Jagdeo said that the money that is projected to be derived from oil is not, by itself, enough to save Guyana.

The Opposition Leader referred to the current deal struck between the Government of Guyana and ExxonMobil where the profit from oil production will be shared equally and government will benefit from a two percent royalty. He said that that deal does not guarantee much for Guyana and that the only assurance is the royalty. This, he said, is because the profit that is to be divided is gross, meaning, profit after cost would have been deducted.

Jagdeo said that there is a real possibility that for many years, there will be no profit when the cost is deducted.
“The one thing that is sure is the royalty; you may not get profit for many years. So we are looking at two percent royalty.”

Oil is currently being sold at around US$50 dollar per barrel. Jagdeo estimated Guyanas royalty come 2020 using that figure.
He said that two percent of US$50 works out to US$1 per barrel. This is to be multiplied by the amount of barrels that Exxon plans to produce a day100,000. That works out to US$100,000 per day which when multiplied by 365 (one year) works out to about US$36M which exchanges to about GY$8B a year.

Opposition Leader, Bharrat Jagdeo

Jagdeo said that the government has signed an agreement with DDL “that will cost the treasury $80B dollars and they are only getting $8B in royalties per year. They have already given up 10 years of future royalty of the oil that we produce by this one agreement. In the meantime the rest of the economy is sinking.”

Jagdeo said that government officials are busy walking around spreading hope of a better life and “the good life” but with no action in place to see the realization of those “dreams”.
He said that many are being offered jobs, money and gas “but there is no realistic basis for these things.”

“So the reason I use those assumptions, it is not a massive sum coming from the royalty, it a fairly decent sum but when compared to a single action that this government did it amounts to nothing at all…they have given up more,” said Jagdeo.
The Opposition leader urged, “People must not sit and wait and think that the oil can save us.”

He said that even if the price of oil per barrel raises and more is derived “we need to use it wisely, not to kill the rest of the sectors. Jobs have to be created elsewhere. The oil industry is not labour intensive and therefore I am arguing that we cannot neglect the traditional sectors.”

Jagdeo questioned, “What if in 2020 the price of oil is US$20…it was 14 dollars at one time…one year, who would have thought that in six months the price of oil could have dropped from over US$120 to US$28 dollars. This is the realism that I am trying to get people to understand.”

Jagdeo said that oil can be blessing or it can be a curse. “It is a curse if you misspend the money and change relative prices and kill off the other sectors of your economy that generate jobs and wealth for people. It has been a curse in many countries because of misuse of the money.”
While Jagdeo is urging the government not to forsake traditional sectors, he too, has in the past, been accused of doing the same.

7)  Take away financial incentive of corruption to deter future activities
Jul 31, 2017 News 0 Comments – www.kaieteurnewsonline.com

– Expert advises

Christopher Camponovo of Halcyon Law Group thinks that if the financial incentive of corrupt practices is taken away from past offenders and they are then made to serve time, a clear message would be sent that corruption will not be tolerated in Guyana.
Camponovo spoke at a recent symposium that focused on the relationship between oil and corruption.

The prevalence of corruption in Guyana was highlighted at that symposium and so were the dangers of the crime.
Highlighting the effects of corruption, one of the facilitators quoted former UN Secretary General, Ban Ki Moon. “When desperately needed development funds are stolen by corrupt individuals and institutions, poor and vulnerable people are robbed of the education, health care and other essential services.”

Camponovo said that it is important that the money be recovered and returned to the state. He described that as a key part of the justice the people of a country should receive.
“Find the money, the money can be found; at least a large part of it. If you remove the financial incentive, people will think twice about it in the future. That will help in the changing of the culture of corruption.”

The lawyer said that when the culture changes, Guyana will be better off.
“Guyanese must develop anti-corruption attitudes to progress,” Camponovo said.
“Where there is a culture of corruption, where it is accepted, any anti-corruption strategy will fail, but in some ways I am an optimist because I do think cultures can be changed.”

Camponovo is one who thinks that to a large extent, law enforcement and the judiciaries are to be blamed for the high levels of corruption in Guyana and the wider Caribbean. This is so because it will only take a few good examples to be made out of corrupt officials to send a message that the crime would not be tolerated.

That is the view also held by United Kingdom’s Dr. Perry Stanislas.
At the same anti-corruption forum, Dr. Stanislas noted that corrupt behaviour is determined by the relative strengths or weaknesses of institutions. It deprives a nation of much needed revenue, he added.

The security expert and University lecturer made that point before referring to an article published in this newspaper in 2012. In that article, Transparency International labelled Guyana as the most corrupt country in the English-speaking Caribbean.

While things are a little better now as regards Guyana’s standing, the country still has a long way to go. Dr. Stanislas said that the desired change will not be achieved unless the crime is no longer tolerated.
“(Guyana) needs to develop an attitude that if you steal from the country we (the law) will be coming after you,” said Dr. Stanislas.
Dr. Stanislas singled out Jeffery Archer, a former British Minister, famous author and wealthy businessman; Martha Stewart, successful business woman and entrepreneur; Conrad Black, former owner of British Daily Telegraph, and several famous hotels/businessman and asked what was the common thread.

“These are rich powerful people but they all spent time in jail; that tells us something about the country they come from.”
Camponovo, noted that very often in Nigeria corrupt politicians are arrested, placed before the court and sent to jail. He said, however, that the problem is that there are so many of them.

He said that this is one area where Guyana’s small population comes in handy. “It will be easier for Guyana with a smaller population, smaller business community, government, etc. you only have to set a few examples,” said Camponovo.

He said that no strategy to tackle corruption can ever be complete without prosecution. “You have to bust some of the bad guys to send a very clear message to people that corruption would not be tolerated. That’s a combination of civil actions and criminal actions.”

He continued, “Where there is a culture where it is accepted any anti-corruption strategy will fail. But in some ways I am an optimist; I do think cultures can be changed and I think the people of Guyana have it much better than the people of Nigeria in the sense that it is a smaller country, population is smaller, institutions are smaller and in some ways more manageable, in Nigeria everyday someone is prosecuted but nothing seems to be changing.”

Camponovo said that if wrongdoers are made to face the fire and are held responsible for theft in a way that respects the rule of law, respects judicial and prosecutorial processes it will effect real change.

8) Law enforcement and the judiciary blamed for corruption in Guyana and Caribbean

Blame law enforcement, judiciary for corruption – says expert

Jul 28, 2017 Kaieteur News – guyaneseonline.wordpress.com – featuring Dr. Perry Stanislas

To a large extent, law enforcement and the judiciary are to be blamed for the high levels of corruption in Guyana and the wider Caribbean. This is so because it will only take a few good examples to be made out of corrupt officials to send a message that the crime would not be tolerated.

That is the view held by a few international experts, particularly United Kingdom’s Dr. Perry Stanislas and Christopher Camponovo of Halcyon Law Group. This view was aired during the recent symposium that examined the relationship between corruption and oil.

At that forum, Dr. Stanislas noted that corrupt behaviour is determined by the relative strengths or weaknesses of institutions. It deprives a nation of much needed revenue, he added.

The security expert and University lecturer made that point before referring to an article published in this newspaper in 2012. The article is one in which Transparency International labeled Guyana as the most corrupt country in the English-speaking Caribbean.
While things are a little better now as regards Guyana’s standing, the country still has a long way to go. Dr. Stanislas said that the desired change will not be achieved unless the crime is no longer tolerated.

“(Guyana) needs to develop an attitude that if you steal from the country we (the law) will be coming after you,” said Dr. Stanislas.
Dr. Stanislas singled out Jeffery Archer, a former British Minister, famous author and wealthy businessman; Martha Stewart, successful business woman and entrepreneur; Conrad Black, former owner of British Daily Telegraph, and several famous hotels/businessman and asked what was the common thread.

Answer, “These are rich powerful people but they all spent time in jail; that tells us something about the country they come from.”
Dr. Stanislas said that Jeffery Archer was a personal and very close friend of Margret Archer but their friendship ended when Archer went down a not so clean path.

“These parts of the world are unlike the Caribbean where politicians associate themselves with criminals. When you go wrong, they will no longer send you a Christmas card, they will not go to your child’s christening and that is how it is supposed to be.”
He said that the politicians just do not associate themselves with criminals “so it is worse if the criminal is a politician.”
Dr. Stanislas then asked the symposium to name a few rich or powerful people who have been jailed in the Caribbean. There was silence, and then one man shouted, ‘Stanford!’

Robert Allen Stanford is an American former financier and sponsor of professional sports who is serving a 110-year federal prison sentence, having been convicted of charges that his investment company was a massive Ponzi scheme and fraud.

Though he is American he lived in Antigua before being jailed. That is where the mix up came. It was soon clarified that Stanford does not count as coming from the Caribbean and in any case it was America that brought him to justice.

Dr. Stanislas then asked the question again, “Can you name a powerful wealthy person in the Caribbean that served a sentence for fraud or corruption.” The silence returned until another man pointed to a case in Granada. It turns out that Granada is the only Caribbean jurisdiction that has jailed a rich white collar criminal.

Dr. Stanislas said that that speaks volume of the Caribbean system. “What is wrong with the Caribbean justice system and law enforcement? Dr. Stanislas said that it is the weakness in these institutions that is attracting the crime.

Christopher Camponovo, of Halcyon Law Group, noted that very often in Nigeria corrupt politicians are arrested, placed before the court and sent to jail. He said, however, that the problem is that there are so many of them.

He said that this is one area where Guyana’s small population comes in handy. “It will be easier for Guyana with a smaller population, smaller business community, government, etc. you only have to set a few examples,” said Camponovo.

He said that no strategy to tackle corruption can ever be complete without prosecution. “You have to bust some of the bad guys to send a very clear message to people that corruption would not be tolerated. That’s a combination of civil actions and criminal actions.”

He continued, “Where there is a culture where it is accepted any anti-corruption strategy will fail. But in some ways I am an optimist; I do think cultures can be changed and I think the people of Guyana have it much better than the people of Nigeria in the sense that it is a smaller country, population is smaller, institutions are smaller and in some ways more manageable, in Nigeria everyday someone is prosecuted but nothing seems to be changing.”

Camponovo said that if wrongdoers are made to face the fire and are held responsible for theft in a way that respects the rule of law, respects judicial and prosecutorial processes it will effect real change.”

9)  No conflict of interest in relations between GOG, ExxonMobil and Mangal brothers
Aug 07, 2017 ExxonMobil, News 0 Comments

– Harmon

Minister of State Joseph Harmon is adamant that no conflict of interest exists in the relationship between itself, the Mangal brothers and ExxonMobil.

Dr. Jan Mangal is as an advisor on oil and gas while his brother, Lars Mangal, has partnered with ExxonMobil.

Persons, who spoke on the grounds of anonymity, expressed concern over the relationship that seemingly has the potential to put Guyana in a bad spot. But those concerns are not shared by Minister of State Joseph Harmon.

Harmon told the media, “Dr. Mangal has written a letter to this effect and it is in the public domain where he states there is no conflict of interest with the work that he is doing as an advisor to the government on oil and gas and at this point in time we do not share that view that there is, in fact, a conflict of interest.”

In the letter to which Harmon referred, Dr. Mangal noted that his term as Petroleum Adviser to President Granger began in March 2017 whereas the re-negotiation of the contract for the Stabroek Block was performed about a year earlier.
That statement contradicts what Harmon, Minister of Natural Resources, Raphael Trotman and Prime Minister Moses Nagamootoo said before which is that negotiations were continuing up to about three months ago. It was only on June, 1 this year that government announced a two percent royalty has been negotiated.

In his letter, Dr. Mangal said that he has not negotiated contracts between any oil company and Guyana.
He said, “President Granger has been clear that his priority is for the oil and gas resource to benefit the Guyanese people without corruption. The Petroleum Adviser supports this objective wholeheartedly.”

As he referred to the article, Mangal said, “It is encouraging to see Guyanese journalists paying attention to potential conflicts of interest.”
“Many in Guyana, including some of our most prominent officials and attorneys, seem not to recognize these conflicts. Hence journalists need to become more adept at investigating possible conflicts of interest by directly querying allegedly involved parties, and highlighting likely abuses. In the recent article in Kaieteur News about the Mangal brothers, it seems the relevant journalists failed to ask about or acknowledge the mitigation measures which are in place.

“They also do not appear to have asked any of the oil companies operating in Guyana if they have perceived or experienced any resulting conflict.”
Mangal said that the risk of corruption is likely to increase with the advent of the oil and gas sector due to the vast sums of money involved, and with the complex transnational business structures. “Objective, specialized and investigative journalism will therefore play a critical role in attaining the President’s vision.”

Dr. Mangal occupies an Office at the Ministry of the Presidency.

His brother, Lars Mangal, is working with ExxonMobil. He recently won a bid to construct an onshore facility for ExxonMobil.
Lars Mangal, has established a company, Totaltec Oilfield Services. The company was established in 2016.
Guyana Shore Base Incorporated (GYSBI) is currently constructing an onshore base facility to service ExxonMobil’s offshore operations. The site is located at the Muneshwers wharf in Houston, East Bank, Demerara. The wharf is being converted from a container port into the onshore base facility.

GYSBI is a partnership between Muneshwers Limited, Pacific Rim Constructors, Totaltec Oilfield Services and LED Offshore.
The 28-acre warehousing and logistics base will see services that were previously accessed in Trinidad and Tobago by Exxon, being brought to Guyana. Those services include port facilities, accommodations on site, fuel bunkering, bulk cementing and mud plants.
The offshore facility will employ an estimated 100 persons directly, and 200-300 persons indirectly when it is fully operational.

10)  A Greater Measure of Transparency for Guyana – by Francis Quamina Farrier – Reblogged from guyaneseonlinewordpress.com – August 16, 2017

GYEITI – at Region 10. Guyana
The Guyana Extraction Industries Transparency Initiative (GYEITI) which was established earlier this year, 2017, will soon be accepted as another member of the Global EITI Family of Nations, if all continues to go as planned.

This longed-for mechanism for better governance in Guyana, is now much closer to realisation. That was announced by the recently appointed National Coordinator of the GYEITI, Dr Rudy R. Jadoopat. The Guyanese-born economist and former Youth Trade Unionist, brings to the job, over three decades of international experience.

So what is the Guyana Extraction Industries Transparency Initiative (GYEITI) all about? The short answer is that it is a coalition of governments, companies, investors, civil society and partner organisations, working together to ensure a much greater degree of transparency, and with it, a Citizenry capable of accessing information regards business transactions which done by their governments, investors and non-government organisations; in a nutshell, EITI empowers citizens in member countries to be able to access the kind of information, which in the past, was held as top secret, and to have such information, citizens can hold their political representatives and others, accountable for business which will impact the lives of the ordinary folks and others.

During the past two weeks – July 8 to 20, 2017 – GYEITI has held five out-reach workshops; at Corriverton, Bartica, Linden, Charity and Georgetown, where the public was addressed by representatives from EITI, government, civil society and Investors, including Exxon Mobile. During those workshops, a wide variety of questions were entertained from the Floor and responses given, generally to the satisfaction of the gathering.

At Corriverton, the principal questions from the Floor were about the Exxon Mobile Oil and Gas exploration. At Bartica the principal questions were linked to the Gold Mining Industry, and at Linden, to the Bauxite Industry. Questions from the floor at the Out-Reach Workshop at Charity, were also about the Oil and Gas exploration and the Gold Mining Industry.

The published Policy Forum of GYEITI states the following;

(a) Ensuring Corporate Social Responsibility.

(b) Encouraging the sharing of Information.

(c) Revealing Beneficial Ownership, and

(d) Promoting Revenue Transparency.

EITI being in Guyana is not unique, since it has already been established in over fifty countries around the world, and the number is growing. With Guyana’s application soon to be official accepted, our country will be elevated to a country in which corruption will dwindle, as is the case in other EITI Member countries. Some of the EITI member countries are Nigeria, Norway, Sierra Leone, Suriname, Liberia, The United Kingdom, Peru, Colombia, Togo, The Dominion Republic, Ghana, Honduras, Senegal, Zambia, Germany, the United States and Trinidad and Tobago.

The fifth and final of this first series of Out-Reach Workshops, was held at the Marian Academy in Georgetown. The principal speaker was Minister of Natural Resources, Hon. Raphael Trotman, MP, who referred to himself as “the first among equals” in the partnership of Government, Civil Society and Industry, in bringing more Transparency to governance in Guyana, as is unfolding in over fifty other Democratic countries around the world.

As was the case at the other four GYEITI out-reach workshops, there was a wide range of questions from the floor at this fifth workshop in Georgetown, one being whether there will be similar out-reach workshops in some of the far-flung communities, such as Mabaruma, Mahdia and Lethem. That was answered in the affirmative.

Among those who addressed one or more of the five Workshops, were National Coordinator, GYEITI Secretariat, Dr. Rudy R. Jadoopat, Deputy Coordinator GYEITI Secretariat, Diane Barker, Guyana Country Representative The Carter Center, Jason Calder, Deputy Director Office of the Budget, Ministry of Finance, Gillian Pollard, MSG Member, Extractive Industry, Patrick Harding, MSG Member, Civil Society, Najuma Nelson, MSG Member, Civil Society, Gomin Comacho and Exxon Mobil Country Manager, Rod Henson.

11) Corruption in Latin America: Taking stock – IMF Blog sept. 2017 –

https://blogs.imf.org/2017/09/21/corruption-in-latin-america-taking-stock/#more-21310

Corruption continues to make headlines in Latin America. From a scheme to shelter assets leaked by documents in Panama, to the Petrobras and Odebrecht scandals that have spread beyond Brazil, to eight former Mexican state governors facing charges or being convicted, the region has seen its share of economic and political fallout from corruption. Latin Americans are showing increasing signs of discontent and demanding that their governments tackle corruption more aggressively.

In this first part of two blogs, we look at how corruption in Latin America compares to other regions and explain why it is so difficult to combat. Part of the answer lies in the fact that systemic corruption is so endemic to the fabric of society, that changes in behavior require a major shift in expectations. As corruption drains public resources and drags down economic growth in multiple ways, the IMF has committed to work together with our members to confront the problem.

Corruption exists in many forms

Corruption—the abuse of public office for private gain—involves illicit payments or favors and how they are distributed. However, it can take different forms. It can occur at a “grand” or political level and/or at the “petty” or bureaucratic level. When corrupt behavior is so pervasive and entrenched, it can become the norm. In these systemic cases, corruption can even affect the design and implementation of policies, and skew regulatory or state decisions such as the case of Ukraine.

Corruption could also involve individual projects and how they are awarded or renegotiated. A prominent recent example is the construction firm Odebrecht, which spent considerable resources buying the support of key public officials in exchange for contracts in several Latin American economies. Other forms of corruption occur at lower tiers, including how licenses and zoning rights are granted. While corrupt activities can be initiated either on the supply (offering a bribe) or demand side (asking for a bribe), in practice it is often hard to separate the two.

The corruption trap

Given its high social costs, why is it so hard to successfully fight corruption? As in any type of social interaction, individual beliefs and expectations are crucial. When systemic corruption is the norm, people believe that other people are accepting or offering bribes. Given these beliefs, deviating from foul play is costly from the point of view of the individual. Like in the Odebrecht example, construction companies offering bribes are more likely to get projects than ones that do not—even if the latter are more efficient. Moreover, this inefficient equilibrium is self-perpetuating because companies and politicians can collude and use proceeds from past corrupt actions to secure future benefits at the expense of society.

Countries need forceful policies that lead to changes in social perceptions so corruption is seen as the exception rather than the rule. And as corruption falls, governments will more easily detect those who remain corrupt because they will stand out.

But achieving this realignment in incentives and behavior is not easy. Fighting corruption is a collective action problem with political dimensions. Isolated efforts are not likely to work. A multifaceted and resolute push is needed to initiate positive dynamics out of the bad equilibrium. For that, strong leadership and society’s support are key.

Corruption is still a problem in Latin America

Corruption is difficult to measure, but different measures of corruption perceptions correlate quite strongly. Across these different measures, Latin America and the Caribbean appear on par with other emerging market economies, but fare substantially worse than advanced economies.

At the same time, regional averages mask a great deal of variation across countries. Corruption perceptions in some countries, such as Chile and Uruguay, are similar to levels seen in advanced economies. Interestingly, Chile and Uruguay also score well in other institutional and governance indicators, and have relatively higher income per capita levels. The rest of the region does not score as well. To varying degrees, this reflects poor law enforcement, lack of fiscal transparency, bureaucratic red tape, loopholes and weak contractual frameworks in public procurement and investment, and weak governance in state-owned enterprises.

Limited progress

It is not easy to track concrete improvements in Latin America because some measures are not fully comparable across time. Moreover, perceptions of corruption may in fact rise even when corruption falls because more is being investigated and uncovered.

While there are some cases of significant improvement over the past 20 years in emerging markets, there are fewer success stories in Latin America. For example, control of corruption in Honduras has noticeably improved (though remains high), reflecting recent actions regarding the police force, the social security administration, and the tax administration. Overall, however, most changes in Latin America are relatively small. Corruption is hard to get rid of once it’s there.

The cost of corruption

Previous studies show that corruption can hinder sustainable and inclusive growth. With systemic corruption, the state’s capacity to perform its core functions is weakened, making costs macro-critical. In addition, higher corruption tends to be accompanied by higher inequality. Some commonly recognized costs evident in parts of Latin America include: lower provision of public goods (which hurts the poor disproportionately), misallocation of talent and capital through distorted incentives, higher levels of distrust in society and lower legitimacy of government, higher economic uncertainty, and lower private and foreign investment.

Nevertheless, it is hard to statistically pin down the precise impact of corruption on development since causation runs both ways. Our illustrative estimates suggest that an improvement in corruption from the lowest quartile to the median could raise per capita income by about $3,000 in Latin America over the medium term, although part of this gain reflects coinciding factors like overall institutional improvements.

Window of opportunity

Corruption in Latin America remains too high. The latest surveys tell us that the public is losing patience, which creates a window of opportunity for national leaders. Developing and enforcing a coherent strategy to fight corruption is difficult, entails learning by doing, depends on country circumstances, and is one part of a broader development strategy. But drawing from international and regional experience can provide insights and guidance to combat corruption. Our next blog will offer some concrete suggestions for Latin America.

By IMFBlog| September 21st, 2017|capital markets, commodities, Corporate Risk, corruption, developing countries, Economic outlook, Economic research, Emerging Markets, Global Governance, Government, inclusive growth, International Monetary Fund, Investment, Latin America, Politics

12) Stemming corruption in Guyana

Opinion: Stemming corruption in Guyana

13) Curse of the Black Gold: 50 Years of Oil in the Niger Delta

https://www.theguardian.com/environment/gallery/2010/mar/05/curse-black-gold-nigeria

14)  The Oil Curse – University Bergen – Law Research

http://www.uib.no/en/news/43420/oil-curse

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