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…Natural Resource Fund Bill 2021

By Kaieteur News

GEORGETOWN
Petroleumworld 12 20 2021

In the Natural Resource Fund (NRF) Bill 2021, the People’s Progressive Party / Civic (PPP/C) administration has proposed several penalties for an official who discloses confidential information or provides misleading data about the nation’s oil money. Noticeably absent however, is a fine or jail time for anyone found guilty of abusing or misappropriating the oil revenues.

Under Part VIII of the Bill which deals with penalties and offences, a person who gives information that is materially false or misleading or knowingly includes or permits to be included, in any report or document, information that is materially false or misleading, commits an offence and is liable on conviction on indictment to a fine of $10M and to imprisonment for five years.

A person who fails to comply with any obligation to publish information provided for in this Act, or leads someone else to fail to comply with or hinders or leads someone else to hinder the compliance with, the obligation commits an offence and is liable to be fined $5M and 10 years in jail.

The Bill goes onto state that a person who, directly or indirectly, hinders or leads someone else to hinder the exercise of powers by an external auditor commits an office and can be fined $5M and be made to serve three years behind bars. Furthermore, a person who discloses official information in contravention of the provisions of the Act commits an office and can be fined $5M and sent to jail for three years.

There is also a section for liability of legal entities. The Bill states that legal persons, corporations or any other legal entities are liable for contraventions provided for in this part when committed by its organs or representatives in its name and in the collective interest. The proposed legislation states that liability is excluded where the agent has acted against expressed orders or instructions properly issued. It further notes that the liability of the entities mentioned does not exclude the individual liability of their respective agents. It adds, “The entities mentioned in Subsection 1 are jointly and severally liable for the payment of any fine or compensation or for the fulfillment of any obligations derived from the facts or with incidence on matters covered by the scope of this Act. The provisions included in this part are without prejudice to criminal and civil liability under applicable law.”

It is significant to note that the current NRF legislation which the NRF Bill will replace, does not have any punishment for the abuse of the oil fund. When Guyana had pursued the creation of its first NRF legislation back in 2018, it was warned to have clear penalties in place for the abuse of the oil fund. This advice was provided by the Natural Resource Governance Institute (NRGI) which also cited numerous examples from around the world on how often Natural Resource Funds become easily mismanaged, and the perpetrators go unpunished.

The 1Malaysia Development Berhad (1MDB) fund, established in 2009, has proven to be a major source of alleged corruption and mismanagement. Designed to attract investment into Malaysia by forming joint ventures with foreign firms, 1MDB ended up being in over US$11 billion of debt by 2014. Among its more suspect transactions are a US$1 billion investment in a Saudi oil company in 2009 which has gone missing; funds that were diverted in 2012 from an Abu Dhabi state fund to a firm in the British Virgin Islands (a secrecy jurisdiction); and US$4 billion that has been misappropriated from Malaysian state firms. Malaysia, the U.S., Switzerland, Singapore and the U.K. are still trying to unravel the web of corruption and money laundering schemes that are related to the fund and robbed current and future generations of their wealth.

The Azerbaijani and Iranian funds are other examples of extra-budgetary funds which have been used to fund the legacy projects of political parties instead of being prudently saved for future generations. In Azerbaijan, for instance, government authorities have used the State Oil Fund (SOFAZ) to directly finance strategic government projects such as the railway between Azerbaijan, Georgia and Turkey. These expenditure items were not subject to the same reporting or public procurement requirements as those financed through the regular budget process, nor were they subject to as much parliamentary oversight.

In Iran, the country’s US$40 billion National Development Fund provided loans to private-sector companies, cooperatives and economic enterprises owned by non-governmental institutions through agent banks. While the fund managers did not provide information on the specific investments, news reports revealed where they actually went. Importantly, the executive directly controlled the fund and therefore some decisions bypassed normal budgetary and parliamentary procedures.

Taking the foregoing into account, among other cases of blatant mismanagement, Guyana was urged to have “clear consequences for malfeasance.”

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By Kaieteur News

kaieteurnewsonline.com 12 20 2021

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