THE Natural Resource Fund Act 2019 is an important piece of legislation, albeit for reasons of constitutional legitimacy, transparency, accountability, and governance of the fund, the 2019 Act is set to be amended, inter alia, the Natural Resource Fund Bill 2021. This position was made clear by the current administration when in opposition. Hence, the premise of this bill is a commitment being honoured by the government of the day.

Criticisms of the Bill
Prior to the tabling of the bill in the National Assembly, a certain media house took completely out of context a comment made by the Vice-President on the bill at a private sector function. The Vice- President in his remarks said that the current bill seeks to simplify the withdrawal formula and to bring the Act in line with international best practices on the transparency and accountability front.

The Vice- President had also mentioned that in the current Act, the Public Accountability and Oversight Committee comprised stakeholder members from 22 different organisations–which he argued is impossible to get anything done with such a large stakeholder group on an oversight committee. The Vice-President is on record as saying, that “this has to change” and at no time did he say that it (the oversight committee) will be removed. This can simply be confirmed by re-examining the recording which is on the Georgetown Chamber of Commerce’s Facebook page.

Interestingly and unfortunately, the following day a certain media house and its publisher completely misrepresented the Vice-President’s statement by saying that the government under the stewardship of the Vice-President is seeking to remove the oversight committee. Other commentators, media operatives and even a so-called retired professor picked up on this and subscribed to this view – without even waiting for the opportunity to examine the bill in its entirety and to confirm the facts. This is even more disappointing because by training, academicians ought to be much more thorough and careful in their commentaries–ensuring that whatever arguments put forward are from an informed, evidenced, and fact-based standpoint, and are scholarly.

More disturbingly, following the tabling of the bill in the National Assembly (when the bill becomes a public document), another media house in its front-page commentary (reflecting, obviously the position of the media house), described the bill as a “wholly unacceptable bill” and called for its withdrawal and recomposition. The media house further went on to describe the bill as:

“…a coruscating example of the mountain having laboured to produce a dud; its toxicity is insidious. In part seeks to replace oversight of the Fund by a “Board of Directors which clearly will be handpicked by the PPP/C from among its followers and handmaidens in the private sector and elsewhere. The configuration proposed will ensconce the country’s earnings from oil and gas in the laps of a select few of the PPP/C’s adherents…”

Discussion and Analysis
In the commentary cited above, given that the bill is now a public document, the foregoing position propagated by a certain section of the media is arguably indicative of the vast incomprehension and lack of appreciation of the contents of the bill by these proponents; and /or an egregious, disingenuous modus operandi to deliberately mislead the entire nation, ignoring altogether the rules of ethical conduct, integrity, honesty, and good journalism to report on facts. And more so, an indication of the lack of in-depth research in the editorial department. This reality leaves much to be desired.

These are the only logical inferences that one can derive, having read and observed the highly misinformed positions being fiercely and profusely propagated and foisted upon the people of Guyana by commentators alike, so-called experts and academicians, and a certain section of the media.
Comparison of the Natural Resource Fund Act 2019 and the Proposed Amendments in the 2021 Bill: Key Components

Natural Resource Fund Act 2019Natural Resource Fund Bill 2021
Public Oversight of the Fund
* Public Accountability and Oversight Committee
Management of the Fund
I. Minister Responsible for the Overall Management of the Fund
II. Bank responsible for Operational Management of the Fund
III. Investment Committee
IV. Senior Investment Adviser and Analyst
V. Private Managers
VI. Custodians
VII. Macroeconomic Committee Governance and Management of the Fund
I. Board of Directors
II. Public Accountability and Oversight Committee
III. Bank Responsible for Operational Management of the Fund
IV. Investment Committee
V. Senior Investment Adviser & Analyst
VI. Investment Advisory Services Company
VII. Private Managers
VIII. Custodians The notion that the Public Accountability and Oversight Committee is being removed in the proposed amendments is grossly inaccurate. The amended bill in fact seeks to recalibrate the committee in such a manner that the committee can function effectively and efficiently for all practical reasons. In so doing, the 22-member committee has been reduced to nine as follows:
a) One nominee of the National Assembly;
b) Three representatives of the religious community;
c) Two representatives of the private sector;
d) Two representatives of the organised labour; and
e) One representative of the professions
Comparing this amended provision with that of the 2019 Act, this Committee is to comprise representatives from the following organisations:
a) One representative nominated by a consortium of civil-society organisations and community-based organisations.
b) One nominee to represent women, nominated by a consortium of civil-society organisations and community-based organisations which represent women;
c) One nominee to represent youth nominated by a consortium of civil-society organisations and community-based organisations which represent youth;
d) One nominee from the Bar Association of Guyana;
e) One nominee of the Guyana Consumers Association;
f) One nominee of the Guyana Extractive Industries Transparency Initiative;
g) One nominee of the Transparency Institute of Guyana;
h) One nominee of the Guyana Press Association;
i) One nominee of the most representative associations of trade unions;
j) One nominee of the Institute of Chartered Accountants of Guyana;
k) One nominee of the Private Sector Commission;
l) One Nominee from each of the 10 Regional Democratic Councils; and
m) One nominee from academia nominated by the University of Guyana

Comparing the recalibrated form of the Public Accountability and Oversight Committee, while the committee has been reduced from 22 members to nine (with good rationale and reason), it has in no way diminished the wide cross-section of representation which the Act currently embodies.
Effectively, the government has shifted the envisaged problem with the current structure comprising a 22-member committee from a wide cross-section of civil society groups, to the civil society groups themselves at the very outset (which is clever).

Firstly, that is to say, the envisaged problematic scenario with this current 22-member structure is such, that how easy or difficult would it be for the harmonisation of the interests of 22 different organisations, and to effectively carry out the function, unhindered, and objectively of the committee.

If, for example, this 22-member group cannot agree on a matter for the simple reason that each member has the predicament of advancing the cause of their individual organisation’s agenda, then the work of the committee would naturally be stymied. Such a situation would no doubt be unavoidable, and therefore, must be mitigated at all cost to allow for the uninhibited work of the Oversight Committee to be executed.
Secondly, it is noteworthy to point out that in the recalibrated structure of the said committee, the approach employed seeks to do just that – that is, mitigation of the above perceived risk in the functioning of the committee.

This deduction is inherent in the manner in which the now nine-member committee is designed where for example:
(1) instead of having the one nominee each from the 10 administrative regions, the 10 administrative regions can be represented by one nominee from the National Assembly and that nominee, perhaps may require at least a two-thirds majority support in the National Assembly;

(2) instead of having one member each from the various professional associations such as the accounting profession, the legal profession, the journalistic profession, etc., in the new structure all the professional associations would have to come together through a consultative approach to nominate one representative to represent all of the professional associations;

(3) where in the current Act there is one nominee from a number of different civil-society groups – these groups need to now come together through a consultative approach and nominate three representatives to represent all of those organisations. In a similar manner, the two representatives from the private sector will have to be nominated to represent all of the private-sector associations across the country and the same goes for the labour representative.

Thus, the burden for all these named stakeholder groups, organisations and associations now rests on their shoulders to agree on a single nominee, in one case two and in another three, to represent all of their interests on the committee. Thus effectively, the government will not be faced with this dilemma in the functioning of this committee.

Notably, the above illustration has demonstrated that the Public Accountability and Oversight Committee has not been removed as has been falsely propagated by some sections of the media, and the wide cross-section of representation from the private sector, civil society groups, labour unions and the professional associations has not been diminished in the recalibrated structure of the committee.

Third, the 2019 Act confers full management responsibility upon the Minister of Finance, which by all standards, is a deviation from the Santiago Principles and constitute a great degree of political domination which can effectively compromise transparency, accountability, and good governance of the fund. This element has been replaced by a Board of Directors comprising a minimum of three members and maximum of five members appointed by the President. The Bill speaks to the qualifications and experience of the directors and that one of whom shall be nominated by the National Assembly, and one from the private sector.

Though the bill did not elaborate on the procedure on how all of the directors are to be nominated and appointed, the bill did empower the Minister of Finance to make regulations wherein “…generally for the better carrying out of the purposes of this Act, taking into account the generally accepted principles and practices on sovereign wealth funds as contained in the Santiago Principles.”

Fourth, the bill replaced the Macroeconomic Committee which in the 2019 Act is the Committee that is appointed by the Minister of Finance that advises the minister on the management of the fund (this also could be problematic in its current form as previously illustrated), with an Investment Advisory Services Company. An Investment Advisory Services Company would be much more prudent and bring greater value in terms of the management of the fund, rather than a committee made up of members that may have different personal agendas. In other words, the 2021 bill has brought the bill in line with a more prudent structure from a transparency and accountability perspective, as well as a governance standpoint from a heavily politicised architecture (the powers vested in the minister) to a more highly professionalised architecture (removal of the ministerial powers, to the Board of Directors, and an Investment Advisory Company).

The Santiago Principles
Finally, the Santiago Principles is a voluntary set of 24 guidelines designed to promote good governance, accountability, transparency, and prudent investment practices, as well as maintain a stable and open investment climate. The Santiago Principles are now observed by more than 20 countries’ Sovereign Wealth Funds (SWFs).

The implementation of these principles can be grouped into three key areas:
A) Legal framework, objectives, and coordination with macroeconomic policies: in the case of Guyana, the legal framework is the legislation, namely, the Natural Resource Fund Act. The objectives of the fund are set out in the Act and those objectives are aligned with the economic policy and development agenda of the government of the day.

B) Institutional framework and governance structure: the institutional framework in the case of Guyana is the operationalisation of the fund, which is being held in the Federal Reserve Bank of the United States. The Bank of Guyana, which has responsibility for operational management of the fund, the Board of Directors, the Public Accountability and Oversight Committee, the Ministry of Finance, and then ultimately, the National Assembly.

C) Investment and risk-management framework: in the case of Guyana, this is the investment committee, the investment adviser (s), the private manager (s), and the investment advisory company.

Conclusion/Summary
Altogether, the Natural Resource Fund Bill 2021 has not removed any component from the 2019 Act per se; rather, the bill seeks to replace certain components in the current act with those that align with international best practices – following the Santiago Principles. Ultimately, the aim is to ensure greater accountability, transparency, and prudent governance of the fund in the interest of the people of Guyana.

It is disturbingly unfortunate that a certain group of commentators and media operatives are either deliberately or mischievously disseminating the most egregious form of misinformation to the general public with respect to the Natural Resource Fund Bill 2021.

The ultimate oversight body of the fund is the National Assembly, the Public Accounts Committee, the Bank, presumably the Central Bank/Bank of Guyana, the Board of Directors, the Public Accountability and Oversight Committee, which by design will exercise non-governmental oversight, and the Ministry of Finance.

With respect to transparency and accountability, the bill mandates monthly, quarterly, and annual reporting. The annual report has to be tabled in the National Assembly, and the fund is subject to both internal and external audit.

Further, management of the fund is not to be determined by the board per se, rather, the board has management responsibility for the fund, and the board has to be guided by the legislation on how the fund ought to be managed. The board, therefore, cannot (legally) deviate from the investment mandate of the fund, as stipulated by the Act.

With regard to the appointment of the board, it is normal practice in other countries that the board be appointed by the President. While the legislation did not speak to the procedure on how the board will be appointed, the bill did empower the minister to make regulations to aid the implementation of that which will be enshrined in the Act.