Saturday, December 1st, 2012
The sources in the audit office said they had tried to check the accuracy of shown costs of IOCs following an allegation that foreign oil companies showed wasteful expenditures in the name of cost recovery. “If we could find any inconstancy in the IOC documents by checking files at Petrobangla office, we would report it to the parliamentary committee on public accounts for taking necessary steps,” said one source. It is widely believed that cashing in on weak measures of the government to verify the documents, IOCs were involved in various financial irregularities. When contacted, Petrobangla Chairman Dr Hossain Monsur said, “I cannot recall whether the audit department was allowed to check IOC documents or not.” Petrobangla has to go by the rules and regulations governing the IOCs as they are foreign companies, he told daily sun Wednesday.
It was learnt that the Comptroller and Auditor-General’s office on August 24, 2009 formed an audit team to examine the files of IOCs for the fiscal years from 2007 to 2009, but Petrobangla refused to provide the panel with necessary documents. Later, Petrobangla on February 7, 2010 wrote a letter to Kamal Hossain and Associates, the law firm of noted lawyer Dr Kamal Hossain, seeking opinion on the scope of audit by the CAG office. On April 7, Kamal Hossain and Associates gave its opinion that the CAG office could be allowed to audit accounts of the IOCs. In line with the constitution and laws of the land, and provisions of the contracts, the Commercial Audit Team from the CAG office could be allowed to audit the accounts of IOCs, according to the law firm Kamal Hossain and Associates. Though the opinions of legal experts went in favour of audit, Petrobangla and Power and Energy Ministry had not yet allowed the audit department to examine the files, sources said, adding that even they stand in the way of audit.
A letter sent to the audit authorities on November 2 last year made it clear that Power, Energy and Mineral Resources Ministry backs Petrobangla in this matter. “The issue of examining accounts of IOCs is controlled as per the contract signed between the government and IOCs. So, the ministry is of the opinion that there is no scope for the audit department to examine the accounts of IOCs who are carrying out activities under the PSC. But, the audit department can examine the accounts of Petrobangla under the rules of government.” Showing an excuse for not providing IOC documents, the Petrobangla chairman in another letter to the audit authorities on November 3 said, “As per the Production Sharing Contract (PSC) with IOCs, there is no scope for the audit department to examine the files of IOCs.” He aired the fear that Petrobangla may be accused of violating the contract. It could also face legal complexities and the country’s image could be tarnished abroad if Petrobangla provided IOC documents to the audit team.
The commercial audit directorate in a letter to the CAG on August 27 this year called for CAG’s direction and steps to audit files of IOCs to examine their cost recovery, duties and PSC-related taxes. “The Auditor-General has access to files of any government employee. Considering the whole aspects, it is essential to audit the wasteful expenditures of IOCs in the name of cost recovery,” the letter reads. It was also mentioned that the Auditor-General’s office in India performs compliance audit and performance audit of hydrocarbon production-sharing contracts on the activities of those operating under the PSC. When contacted, energy expert Prof Nurul Islam echoed the opinion expressed by the Kamal Hossain and Associates law firm. Islam said, “Dr Kamal is a renowned petroleum lawyer in the world. As he opined that Petrobangla should allow the audit department to check the IOC files, I also think so.” Prof Anu Muhammad, a main leader of the protesters against alleged wrongs in this sector, said, “International Oil Companies are facing charges like financial irregularities, paying less taxes and less compensation in a number of countries, including Bangladesh.” Citing an example, he said, “Recently, an IOC was fined $ 19 billion in Ecuador. The interest of a country depends on how a government sets controlling measures on the activities of IOCs.” The economics professor went on: “In Bangladesh, IOCs enjoy tax rebate, and on their behalf, Petrobangla pays tax. They also face charges of irregularities in transferring money from here against their investment. As our controlling measures are weak and the audit department cannot examine IOC documents, they are involved in financial irregularities.” He opined that the audit department should be allowed for checking the files of IOCs for the sake of national interest.