Caroni Central MP Dr Bhoe Tewarie yesterday publicly called for the Board of Inland Revenue (BIR) to carry out a tax audit on an oil firm accused of earning millions of dollars by billing the State for oil it had never supplied, termed “fake oil.” He made his call as a member of the Public Accounts Committee (PAC) at Tower D Port-of-Spain which yesterday probed top staff of the Ministry of Energy, under the observation of staff from the Auditor General’s Office.
Saying the company has under supplied yet was over paid, Tewarie said the saga was disturbing. In a likely barb at some present, he added, “I find the casual nature of the conversation is even more disturbing.”
Earlier, Tewarie asked if the Ministry and Energy Minister Franklin Khan had known of the “fake oil” scandal before it had become a public matter (as revealed by Opposition Leader Kamla Persad-Bissessar last Sunday at a UNC meeting)?
Ministry of Energy permanent secretary Selwyn Lashley replied, “The preliminary report had no details. There’s a report circulating right now in the public space. Those details are part of a final report that is still to come to the ministry.” Tewarie asked if he had no knowledge of that final report? Lashley replied affirmatively, “Apart from what is circulating in the public space.
“The preliminary report would have just indicated that there is an investigation ongoing. It would have indicated that the genesis of it would have been oil received at the refinery and oil sent out or shipped out by production. Drilling into that would have been what the internal audit report would have been doing and that is what would have come, would come to the ministry eventually.”
He declined to speculate on why the ministry would not yet possess a report that is already public, but said, “If something is sent for investigation by internal audit, there is a process coming through the company before it goes outside the company.”
Tewarie pressed, “So prior to the public exposure of this report, you did not have knowledge?” Lashley replied, “Not at all.”
He said he could not speak for Energy Minister Franklin Khan, adding,“It wasn’t submitted to the ministry officially.”
Lashley said he saw no conflict of interest in him being on Petrotrin’s board and being PS.
Tewarie later told reporters he found it hard to believe that the Ministry has had no report on the “fake oil”, despite possible collusion and subversion of the country’s resources and over-expenditure of taxpayers money.
He was also scathing of revelations to the PAC that revenues for oil and aggregate (from 80 quarries) are paid to the ministry on the basis of trust - an “honour system” - without the ministry ever able to confirm the amounts of each material extracted. Tewarie said the current “fake oil” scandal shows that the honour system cannot work, quipping, “There’s no honour here.”
“I was rather surprised to hear that a report as detailed as the one that is out there being circulated as an internal audit report as made public by the Leader of the Opposition, never reached the permanent secretary.
“The permanent secretary did say he cannot speak to the minister, so I don’t know if by some unofficial means it may have reached the minister, but I find it very, very surprising that such as detailed report did not reach the Ministry or Minister or Permanent Secretary.” He urged the matter be brought to a quick conclusion. He said urged the use of inspectors and technology to replace the honour system .
In the sitting Brian Caesar of the Auditor General’s Office said the honour system is not acceptable. “You cannot manage what you cannot measure. You must strengthen controls.”
While Lashley said that periodic geological surveys can determine the volumes extracted from a quarry and so help reconcile this with the stated figures, Caesar remarked, “But that is long after the gravel is gone. You need to be there.” He suggested some sort of turnstile or weigh bridge system to enforce control and measurement of the gravel loads extracted.