Author: ChrisRam

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Adjustment time in Trinidad and Tobago

Introduction
It has been a challenging week for Trinidad and Tobago where crime seems to dominate the headlines in the dailies. In fact, crime had to share space with news on the economy and more dramatically with natural events in which persistent and unusual rainfall caused severe flooding in several regions of the country, including its capital, leading to the death of two persons. The central bank announced that food price inflation in October increased on a year-on-year basis to 33.4 per cent, slightly below the 34.6 per cent recorded in September. Core inflation, which factors out the cost of food, increased for the first time in three months to 7.4 per cent from 6.2 per cent as consumers paid more for water, electricity, gasoline and transportation. That was not all. The IMF reported on its visit to the country and then Prime Minister Patrick Manning addressed the nation on how the government proposed responding to the revenue shortfall. Let us look at the address first.

Oil and gas run out of steam
The thrust of his address when shorn of politics and rhetoric was that in the face of an international financial crisis that shows no sign of abating, the Government of Trinidad and Tobago has moved to cut discretionary expenditure to match the fall in revenues from key sectors. These of course, form the backbone of the economy of the twin-island economy. Revenue losses are being felt in the prices of the country’s major exports − oil and petroleum products, ammonia, methanol, urea and steel. Because of the significance of those sectors to the economy, the budget makes certain assumptions about the international price − and therefore the revenue the country will receive – of those products.

In the budget presented at the end of September, the Minister of Finance used a price for oil and gas of $70 per barrel and $4/mmbtu (Million British Thermal Units) respectively based on international estimates at the time. If anyone had a clue of the falls that were likely to take place following the budget, they certainly did not mention it. Yet, by the end of October, crude oil fell significantly to US$67.81 per barrel at the end of October, losing more than 50 per cent of its value since peaking in July 2008 at US$148 per barrel. Natural gas at the US benchmark trading hub was priced at US$6.58/mm but at the end of October 2008, it was down 11 per cent since the beginning of the month and trending downwards. Between September and October this year, the price of ammonia fell from US$887.60 to $772.90 per tonne (13%); urea from US$798.75 to $573.40 per tonne (28%) and methanol, also softening, from US$411.00 per tonne to $399.00 (3%). Because the markets for these products are different, prices do not move in tandem.

Compounding a bad situation that may yet get worse, are a number of temporary plant closures and reduced output at the Point Lisas Industrial Estate, the 860 hectares, world-class facility that is the heart of the country’s petrochemical sector.

Taken together, revenue is projected to fall short by six billion dollars or US$1B for the financial year. Describing the situation as “very serious” and warranting immediate action, Prime Minister Manning in a national address earlier this week reported that his government had done a reassessment of its planned expenditure and cabinet had considered recommendations from the Minister of Finance. Out of those, according to the Prime Minister, the government was reordering its developmental priorities and deferring some projects considered essential to the realisation of developed country status. Trinidad and Tobago has targeted the year 2020 for the achievement of that status and has in place a multi-sectoral group of twenty-eight subcommittees working with a National Development Strategy Plan.

All ministries, departments and statutory authorities have been targeted for reduction of budgetary allocations including discretionary expenditure like promotion, publicity and printing; materials and supplies. Not without significance is the decision to put on hold any further consideration to buy a jet for the country’s increasingly mobile Prime Minister. But the real brunt of cutbacks are in relation to the country’s development programmes with “downward adjustments” for new projects other than those of an urgent or critical nature; for those projects for which there were no firm contractual obligations; for ongoing projects for which the pace of implementation could be reduced without legal penalties; and for ongoing projects for which some components could be deferred.

CARICOM
Trinidad and Tobago has the largest economy in CARICOM. Since 2001, the economy has grown at Asian rates of 8.3 per cent per annum, tripling in size from 55 billion dollars in 2001 to 160 billion dollars in 2008. Comparatively in CARICOM, the T&T economy is a giant among ordinary mortals. The Prime Minister recognised in his statement, however, the interdependence of the CARICOM economies which represent T&T’s second largest market for its goods and services. Amid all the cuts and belt-tightening Manning emphasized the need for the continuing availability of the CARICOM Petroleum Fund for the assistance of its partners.

Reaction to the address has been varied and while the announcements have largely been welcomed by the various private sector organizations the political opposition has been less generous calling on Manning to begin by cutting governmental excesses. But it seems that most Trinidadians are prepared to wait on the details of the cuts following a review by ministers of their respective budgets and cuts in specific programmes and projects decided by the cabinet to ensure that expenditure is kept in line with revenue.

The IMF
At the end of a mission to discuss economic and financial developments, policies, and prospects, as part of its routine annual consultation with Trinidad and Tobago, the IMF issued what may be considered a cautiously optimistic assessment of the economy with its usual caveats and warnings. The team acknowledged the impressive growth of the economy and achievements in key macro indicators including the low unemployment rate, the halving of the public debt and moving from a net debtor country to a net external creditor, and having one of the strongest credit ratings in the region.

The report notes, however, that while its large international reserves and low debt ratios make Trinidad a better place than many countries to weather the international financial crisis, it is not immune from contagion. The report notes that the country’s banking sector has entered the period of global turmoil from a position of strength, being well capitalized, liquid, and profitable, and funded mainly through domestic deposits and equity, as opposed to external borrowing. Spillovers and disruptions are not likely to be significant even with the risk of liquidity shocks transmitted through foreign parent banks. Ironically RBTT one of the country’s largest banks has only just been taken over by Royal Bank of Canada although there is no suggestion or indication that RBC is anything but strong.

Threats
The problem will come if the global slowdown becomes more acute. If that is accompanied by a more dramatic decline in energy and asset prices things could change with risks arising from exposures of large and complex financial conglomerates operating across the region. No one wants to bet on the unlikelihood of that happening but the odds must still be in the country’s favour.

If the external environment continues to deteriorate and recession bites deeply in the advanced economies there will certainly be spillovers to the tourism-dependent economies of the region, and sharply lower prices for energy products. The IMF sees the effect in sharp declines in growth of the economy to 3½ per cent in 2008 and 2 per cent in 2009. While this will dampen demand and ease price pressures, it will also see the external current account surplus declining by 13 percentage points to about 15 per cent of GDP and transform the central government balance into a deficit of about 2 per cent of GDP under current budget plans.

The mission noted the urgency to the enactment of improved financial sector legislation and the strengthening of supervisory practices and welcomed the recent passage of a new Financial Institutions Act (FIA). Trinidad and Jamaica have perhaps the most sophisticated but complex financial sectors in the region and the mission called for changes in conglomerates’ holding structures, with a clear separation of financial and non-financial activities; risk-management practices; and enforcement of prudential standards and for coordination with regional and international supervisors.

Conclusion
The Manning government is by nature very populist in its ways and the developments will no doubt come at an inopportune time for the PNM government that was busy trying to cement some form of union with the OECS countries. Manning did not indicate whether that initiative is still on the front burner, but there must now be serious doubts about the gestation of that wish.

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Half year economic performance

The Guyana economy has performed reasonably well during the first half of the year according to Dr. Ashni Singh, Minister of Finance, and there is cautious optimism about the domestic economy for the rest of the year. This is according to the mid-year report presented to the National Assembly by the Minister on October 27, 2008. However, anyone with a serious interest in the economy and concerned about the several important omissions contained in the mid-year report should read the report in conjunction with the half-year report done by the Bank of Guyana and published on the bank’s website.

Driven by improved performances in agriculture, mining, engineering and construction, and services, the economy recorded a 3.8 per cent GDP growth during the first half of 2008, but still a sharp decline from the 5.8 per cent growth in the corresponding period of 2007. The Bank of Guyana – using that well-known oxymoron – reports that the manufacturing sector recorded negative growth, due partly to the high cost of inputs − fuel and imported raw materials, challenges to which the sector is no stranger.

2008.11.16_Chart1
Source: Bank of Guyana Half-year report 2008

Revenue and expenditure
On central government revenue and expenditure, the mid-year report presents some interesting information. Value-added and excise taxes were budgeted to increase by 12.8% from the $36.7 billion collected in 2007 to $41.4 billion in 2008. For the half-year actual collections amounted to $17.8 billion (43% of full year) compared with the $17.1 billion collected last year. On a period by period comparison these collections represented a marginal increase in value-added tax to $11 billion from $10.2 billion, although excise tax collections declined to $6.7 billion from $7 billion.

Internal revenue collections amounted to $19 billion in the first half of 2008 compared with $17.4 billion collected last year. The bulk of such revenue comes from a handful of companies, including the commercial banks, telecommunications companies and Banks DIH, DDL and DEMTOCO. Despite the many unincorporated businesses, the self-employed category pays less than one billion dollars in taxes, or just about 15% of the taxes paid by the employed persons.

While both reports indicate significant growth in key sectors, tax revenues have not risen correspondingly and one is left to wonder whether this is a case of generous tax concessions or continued tax evasion within key sectors.

But it is in relation to expenditure that the picture is particularly interesting. And while the Minister in his report did not discuss the table which contains several errors, it must now be a matter of speculation why only 38% of the full year budget has been expended in what the table itself describes as key sectors. Particular attention is drawn to the Health,

Infrastructure and Agriculture sectors where only 41%, 27% and 33% respectively, have been spent in the first half of the year. Are we going to see a mad and irresponsible rush to spend during the second half of the year, simply because the money has been allocated?

2008.11.16_Table1

Debt
The mid-year report deals very inadequately with external debt and omits completely any information on domestic debt which has been rising alarmingly over the past several years. The Bank of Guyana Report shows the stock of government’s domestic bonded debt increasing by 7.6 per cent, while its external public and publicly guaranteed debt rose by a whopping 16.8 per cent from end-June 2007.

The outstanding stock of government domestic bonded debt, which consisted of treasury bills, debentures, bonds and the CARICOM loan, amounted to G$74,223 million, an increase of 7.6 per cent from end-June 2007 and 7 per cent from end-December 2007 balance. The increase from one year earlier reflected the expansion in the stock of outstanding government treasury bills at end-June 2007.

Over the year July 1 2007 to June 30, 2008, the stock of outstanding public and publicly guaranteed external debt rose by 18.2 per cent to US$774 million. This increase reflected disbursements of US$45 million by the Inter-American Development Bank and the delivery of US$44 million credit by the Venezuela Petrocaribe agreement.

Employment
This very critical economic and social indicator once again fails to attract the attention of the Minister and again recourse has to be had to the Bank of Guyana Report which by its own admission is not based entirely on hard data. One has to wonder why the government continues to refer to labour surveys but yet the Ministry of Finance seems unable or unwilling to deal with the issue. While indicating that preliminary data indicated that public sector employment remained relatively stable, the Bank of Guyana reports some decline due primarily to factors such as resignation and retirement of employees.

The Bank of Guyana reported that while “data on private sector employment are sparse, there are indications that the growth sectors recorded higher levels of employment.” It went on to state that the mining, distribution as well as the engineering and construction sectors seem (emphasis mine) to be associated with increased employment.

It is interesting how the Bank of Guyana and the Ministry of Finance are so sure of the performance of the various sectors of the economy but cannot establish similarly reliable numbers on employment.

Inflation
Inflation has been one of the most disputed and massaged variables in the Guyana economy. Both reports indicate a 5.8% rate of inflation but again the Bank of Guyana is more informative even if no less controversial. The Minister of Finance attributes the increase mainly to food items, identifying cereals and cereal products as the principal contributors which are unlikely to be the main concerns of the average consumer. In fact in a typical food basket done monthly by Ram & McRae, Chartered Accountants, the price increase in food items over the six month period was 10.2%, compared with the Bank of Guyana figure for the food group of approximately 9%.

Conclusion
While the date on the Minister’s report is shown as September 12, in fact it was presented to the National Assembly on October 27, repeating a pattern of wrong dating by this Minister. Despite the additional time he took in presenting his report, the Minister chose not to address the serious global economic issues that surfaced in the third quarter, nor did he treat in any serious way his duty under the law to include in the report a list of major fiscal risks for the remainder of the fiscal year, together with likely policy responses that the government proposes to take to meet the expected circumstances.

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David – a Goliath of a man

David de Caires was very clear on what Business Page was about – the dissemination of financial and economic information and discussion of ideas and issues aimed at enhancing the business culture and environment. He was quick but polite in recognising my sometimes not too subtle attempts to inject extraneous matters into Business Page. His use of the editorial pen was surgical and sharp, always accompanied by the reassurance that if I “put it in a letter” I would have a better chance at publication. On this occasion, as we mark his passing, I take the opportunity to break his rule, hoping that he would understand how extraordinary are the circumstances and implications of his departure.

Even though over approximately twenty-five years or so I had the privilege of knowing him as client, editor-in-chief and friend, my initial impression of him of awe and admiration remained undiminished to the very end. Much has been written and said of David – the enduring nature of his contribution to the country that he loved, including the reconstruction of the Camp Street Avenue as a Y2K project, the rehabilitation of the Theatre Guild, the launch of the Stabroek News in 1986, his contribution to the ideas for an independent Guyana with the publication New World, his success as a solicitor and his role as guide, mentor and friend to so many in the field of journalism.

But there was another side, a personal side, to David that was equally extraordinary. He was human to the bone. My first experience was shortly after I had returned from Grenada with a young family and was told by state officials in a state-dominated economy that as I had worked for the Grenada government, I was blacklisted and could not be employed in any state entity in Guyana. I had met David through his law partner, Miles Fitzpatrick, who had also served the Bishop regime in Grenada. David would certainly never had heard of me, but his words on being told by Mr. Fitzpatrick of my situation were that they would “give me a brace” with an offer to me to provide professional accounting services to their law practice.

It is no disrespect to anyone to state that that was the beginning of one of the most satisfying and stimulating professional relationships Ram & McRae has had with clients throughout its more than two decades of existence.

His incisive questions on audit matters and instant grasp of issues raised by us were a testament to the breadth and depth of his intellect. The relationship was characterised by mutual respect for each other’s profession, during which never was Ram & McRae asked to do anything remotely unlawful or unethical. There was no question in Mr de Caires’s mind that simple decency, patriotism and calls for good government and governance carried with them an obligation to act within all laws, that if you make profits you should pay your taxes, that the flip side of the coin of privilege is responsibility. He felt that accounting and accountability were not a responsibility reserved for companies, but also wherever public funds or interest were involved, including the Camp Street and the Theatre Guild projects which he insisted must be audited.

My partner Robert McRae recalls the occasion when David and he both got stopped by traffic cops. In David’s case, the fitness for his vehicle had expired and while admitting that his driver was careless, David took full responsibility for the lapse and recognised that the police were totally in order. According to McRae, even as they were being held, David saw as a positive that the police were doing their job without caring who he was!

His respect for professionalism, for ethical conduct, for accountability and good governance was no doubt his motivation for the launch of Business Page.

He wanted the page to be an unvarnished record of business and related issues that was informed, fair and balanced. Crusader as he was, the only goal, weapon and vessel was the truth.

His unfortunate but honourable battle with the government over its withdrawal of ads from the Stabroek News has been widely acknowledged, but he was also disappointed at the behaviour of some of the captains of industry and leaders of the private sector who also used ads to express their displeasure over the content of critical news articles and Business Page. He recognized, however, the difference between the strict duty of a government and that of the private sector, and while he would often say that Business Page cost him friends and the newspaper, advertising revenue, he never entertained any thought of discontinuing the page or replacing me as contributor.

We had our own skirmishes over editorial deadlines − which the Sunday Editor would attest that I mostly missed − and the sometimes unnecessarily strong language I used to express myself.

He would constantly remind me that the English language is so wide and flexible that the same idea could be expressed in much more palatable words, and of course be free from libel!
But David was also a friend with whom the closest secret can be shared and advice sought. In that regard there are only two other persons in whom I had such confidence – former President Desmond Hoyte and Elder Eusi Kwayana. David was ever willing to lend that ear, to share an anecdote or to offer advice that was measured, sound and uncannily right. It did not require of him any special effort to demonstrate extraordinary humility and while I have known him on a first-name basis for years, never was I not aware of the uniqueness of the man or has my awe and respect of him been dimmed.

I suppose, however, that even with that close and long association I admired, but never truly appreciated his greatness. If I had to put a label on him it was that he was a capitalist, even if a liberal one. Yet many of his friends were socialists, if not Marxists.

He saw the strong criticisms of businesses in Business Page and the views of market economics as contributing to their refinement and enhancement. He was an intellectual giant, a workaholic with the patience for even the most modest among us.

He was at once a David, the nimble tactician, and a Goliath, a force of power. He came from a privileged class but not only did he not seek to benefit from that class, but actually cultivated relationships outside of it. While others would talk about multiracial values and conduct, David actually lived them and offered us what is, I believe, an outstanding example of those values.

It may be idealistic but certainly not idle to ponder what Guyana would have been if his vision and values had been shared by politicians over the last fifty years or so. To those in his later profession, he has left a legacy of commitment to excellence, quality and values that should be the goal of all journalists. For him the progression from New World to Stabroek News was a mere step, inevitable and logical. For those who now bear the responsibility of carrying on his work, or hoping to walk in his footsteps, that will require giant leaps.

Guyana is a better place for having benefited from his presence, his contribution, his insights and his ideas. All Guyanese at home and abroad are better informed because of the brave new world of Stabroek News. Those who use the Camp Street Avenue are safer and more comfortable for his tireless efforts to rebuild the avenue. The arts community is richer because of his faith that the Theatre Guild could be and was restored.

With the passing of Mr David de Caires, founder and Editor-in-Chief of the Stabroek News, Business Page has lost its creator, guide and friend. David’s commanding personality, considerable intellect, unusual humility and an unshakeable commitment to truth in all its forms, made him a truly remarkable man, a legend in his lifetime and the quintessential gentleman.

To his wife Doreen, children Isabelle and Brendan and their families, Business Page extends its condolences.

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Curbing corruption: The Corruption Perception Index – conclusion

Introduction
Today we conclude this three-part article arising out of the publication of the 2008 Corruption Perception Index of Transparency International which ranked Guyana at a lowly 126 out of a total of 180 countries surveyed, with a score of 2.6 out of 10. No one can say whether the ranking is correct in the strict sense. That would require knowledge of the other countries surveyed or assume an unerring degree of consistency in the process across all of them. What we can say, however, is that the methodology and sources meet the reliability and credibility test, and any government serious about the image of the country ought to take the perception very seriously.

No one needs to be convinced that corruption and its sidekick, bad governance, have developed in Guyana into a culture of impunity fuelled by an unacceptable level of public tolerance. Inconsistent with its boasts of achievements in rooting out corruption, the government fiercely resists any demand for public scrutiny and readily attacks anyone who questions its decisions and actions. Corruption finds shelter in opacity and over- centralisation of power, non-transparency in major financial dealings and contracts, absence of accountability, and excessive red tape in government departments − conditions that exist here.

Many-headed hydra
There is no longer any question whether there is corruption, but only the extent and cost. One columnist described the situation as a “kleptocracy,” a term applied to “a government that extends the personal wealth and political power of government officials and the ruling class at the expense of the population.” Corruption takes many forms and the cases are legion. It can be the straight bribing of politicians and officials to the extension of concessions, contracts and benefits to those in power. It can take the form of scholarships and plum jobs for relatives of those in power, advisory positions for party officials and all kinds of personal benefits for the politicians. All of these have a real cost to the economy and explain why despite all the tax write-offs and excessive taxation on the backs of the poor our per capita GDP is a mere US$1,000.

Compare Guyana with the African island of Mauritius, which at its independence in 1968 was more dependent on sugar than Guyana was. Its per capita GDP was a mere US$200 and its future gloomy at best. Forty years later, despite the absence of oil or mineral resources and having to import most of its food and energy, the country has a diversified economy and enjoys a per capita GDP of US$7,000. It was rated at 41 on the TI Index and is considered the top African country in the Doing Business Series of the World Bank.

Cost and cancer-effect
Corruption costs the treasury, but also the ordinary person and as one friend wrote to me in an e-mail, “Corruption is not just a morality abstraction. It can and does indiscriminately hurt persons, groups, organisations, communities and nations in concrete and practical terms. For example, the untutored motorist who has corruptly paid for their driver’s licence ‘under the table’ is really a lethal weapon that may be heading your way. And every time you pay for a public service which is nominally available without cost, you obviously and unnecessarily diminish your disposable income and your child may have to do, at least temporarily, without a school book.”

Parts one and two of this article showed that instead of the government taking action to curb corruption, it has dismantled, emasculated and politicised key institutions with the result that corruption goes undetected and unpunished. The question is why is there an absence of outrage at the failure of the government to deal with corruption, and whether it has now gone out of control?

It may be that we have been so accustomed to corruption that it is now part of one’s existence, part of doing business in Guyana. It is also cancerous as businesses find it necessary to adopt corrupt practices to compete. It may also be that corruption takes so many forms that it may not be immediately seen for what it is. The country failed to see the creation of Pradoville, the Cabinet Outreach to get Amerindian votes for the 2006 elections and the virtual abolition of the Office of the Ombudsman and the Integrity Commission either as themselves corrupt practices or the facilitators of corruption. Not even the emasculation of the Audit Office, the abuse of the Lotto and NICIL funds and the misuse of state funds for personal benefits arouse any attention these days.

Tackling the problem
For there to be any real war on corruption requires political will and personal and institutional commitment, all of which seem in very short supply. Threats by the President to deal with corruption and to bring the perpetrators to justice are almost a monthly joke. The PPP/C came to power with a pledge to deal with corruption and its own manifestos may offer some solutions. Here are some of its pledges:

1.  Its 1997 Manifesto pledged to have a Freedom of Information Bill approved in the 1997 Parliament.

2.  In 2006 it promised, among other things, to:

i)  introduce fiduciary oversight reforms that will give greater oversight responsibilities to parliament to monitor executive programmes;

ii)  to reform and strengthen the Integrity Commission to carry out its functions of holding public officers to account;

iii)   strengthen the Audit Office; and

iv)  work with Parliament to establish the Procurement Commission.

As Business Page has shown over the past weeks, the government has not only failed to deliver but has gone into reverse, even as its political control has increased.

The parliamentary opposition chairs the Public Accounts Committee but the PNCR which holds the chairmanship seems to have run out of ideas, energy and capacity to make a real impact. The AFC failed to win government support for a Freedom of Information Bill in Parliament and it and the PNCR have not been effective enough in asking searching questions in the National Assembly that would help to expose and reduce the level of corruption.

That leaves us with ‘civil society,’ which however defined, has shown little or no interest in stemming corruption. For all its feigned complaints about corruption, the private sector is willing to ask for and accept concessions which it knows smack of corruption and which compromise their independence. Beneficiaries themselves of goodies from the government, they are recycled into various forms and on successive days they are members of this or that commission or body, then the next they are in religion and the next, part of the EPA coalition. As a result civil society is so weak that even when it extracts a commitment from the government as in the aftermath of the Lusignan Massacre, it could and did nothing when the President broke his promise to have the outstanding constitutional commissions set up by May, 2008.

In the course of this article I have called on key members of civil society to play their part in cleaning up corruption in their own areas. Significantly this included the Integrity Commission that has been disgraced as much by the politicians as by the Commissioners. A similar call was made to the Gecom commissioners but that too has been ignored. Hopes then are receding and the fear is that things will get even worse.

Conclusion
This may be a last chance for the so-called ‘silent majority’ to find its voice and get involved in the fight against this cancer. Entering the public debate, pushing for resuscitation of the powers of the Office of the Ombudsman, mobilising public support against corruption, demanding accountability for public funds and lodging complaints when approached for bribes are all actions that the lowliest among us can take, so the excuses that we cannot change the situation are just that: a copout. Advocacy in the form of sustained pressure from civic groups and private sector organisations for fundamental reform of how government runs its business can be effective and save the country billions. For starters I would support the recommendation of the friend from whose e-mail I quoted above that we have a country chapter of Transparency International appropriately structured and populated. Any interest anyone?

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Curbing Corruption – The Corruption Perception Index – part 2

Introduction
In introducing this subject last week Business Page sought to explain how Transparency International, the international non-governmental organization, compiles its annual Corruption Perception Index. For the benefit of readers who may have missed it, the 2008 Index ranks Guyana at a lowly 126 out of a total of 180 countries surveyed, with a score of 2.6 out of 10. As we indicated last week, in this second part, we turn our attention to why and how the attitude of the Government reflected by the cavalier statement of Dr. Luncheon that the Government would work in the same mode not only contributes to the perception of corruption but quite likely to actual corruption in Guyana.

For the purpose of this article we will look at the performance of the relevant political structure, the propriety, accountability and transparency of public spending, procurement, executive behaviour, the capacity and independence of the oversight mechanisms established to identify, punish and prevent corruption such as the Audit Office, the Public Accounts Committee and the Integrity Commission as well as the role and contribution of civil society. What we see is a depressing tale of resigned powerlessness and apathy to corruption and impropriety from top to bottom – from the way key provisions of the Constitution continue to be ignored with impunity at the level of the presidency, the routine demands for bribes and kickbacks by police and customs officials whose boss in defeat and frustration appealed to the public not to give his staff any more bribes, to the minibus driver who must perforce give a $1,000 to the traffic cop.

Party accountability
Let us look first at our political arrangements. Governments come out of political parties but these must be the only members’ organisations where there is no financial accountability and where members are not given access to even basic financial information, let alone formal reports. There is a curious fascination about the sources of their income, the identity of the select few who control their cash and how the income and expenditure are accounted for. So embedded is this absence of controls and financial accountability and so normal is it that parties behave as though accountability does not exist and that there is no expectation among members for any form of reporting. This can allow the financing of political parties by drug dealers and tax cheats to go unnoticed and the buying of favours for the donors, to be returned in one form or another including “immunity” in their tax affairs. This danger is particularly evident at general elections time when huge funds seem to come from nowhere while our Elections Commissioners seem unconcerned that the relevant law is out-of-date and used as an excuse for totally ignoring it. It is unlikely that any of the commissioners would dare to suggest that the law be updated and enforced. The possibilities for financial lawlessness and what the PPP/Civic 1992 Manifesto referred to as “dishonest electoral practices” and corruption are therefore endless. To call for proper legislation would be an invaluable national service which a GECOM Commissioner can render this country.

It should not be a surprise therefore that the attitude evident in the administration of the party finances is often carried over into public office. But even if we were to consider political parties outside of the pale of accountability – which they ought not to be – what about the rest of the country including most importantly those with the power to raise taxes from the people and the duty to spend it in a fiscally responsible and financially transparent manner? That duty includes waging “war against corruption which has seeped into every corner of our national life and is destroying the morals and morale not only of the corrupt but of all our people” – to use the words of the PPP/Civic 1992 Manifesto. That war requires an adequate institutional framework with reasonably capable and honest persons operating a system that has sufficient checks and balances including strong oversight and regulatory bodies. Absent these, the door is wide open for abuse and corruption.

Promises and delivery
It seemed for a while that these minimum requirements were recognised and that serious steps would be taken to address the problems. The 1992 Manifesto provided an excellent framework and statement of commitment. These were followed by changes to the national Constitution and some new laws. The changes have turned out to be more cosmetic than real and many consider that the cost and impact of corruption now is higher than it was fifteen years ago. Year after year, the Constitutional requirement that all public moneys be paid into the Consolidated Fund has been ignored in respect of the Lotto Funds which seem to be available for utilization at the President’s pleasure, since he has no such authority in law. Instead of taking remedial action, the Government has found another avenue for similar non-accounting and questionable spending. And that is in respect of the substantial sums collected and spent by the Privatisation Unit from privatisation and rentals of public property.

Recognising that the Government over a sustained period has been the largest procurer of goods and services, and that any control of corruption requires a strict regime of oversight of the procedures to ensure that procurement is done in a “fair, equitable, transparent, competitive and cost effective manner”, the revised Constitution makes provision for an independent, impartial Public Procurement Commission to be appointed by the President. Not only has this not been done but the Parliament has passed not one but two Procurement Acts placing procurement under a political head and rendering the Commission effectively redundant.

Integrity
Like with procurement so with integrity. Two Acts have failed to do the trick (no pun intended) and from its outset the Integrity Commission has been a failure if not a farce. We recall the wife of a later discredited Minister being appointed a commissioner by the Government but even more ludicrous the information is that the Chairman or ex-Chairman Bishop Randolph George resigned but that his resignation was not accepted by the President. It seems that the Commission is non-functional or at best dysfunctional with a membership that inspires no confidence and that seems to have no accountability other than to the President who has supervisory authority over the Commission. Indeed the Act allows the President to step in and request information from declarants and to publish their names and to hold formal enquiries. Given the scope of this legislation, covering as it does members of the National Assembly, the judiciary, public officers, local government officers, presidential advisors etc., it is incredible that there is no report of the Commission or the President publishing the fact that a person has failed to file his declaration under the Act, or of the Commission having held, since its establishment a single inquiry into any person. And is it a “nancy story” that no one has ever been charged with the new offence created by the Act of failing to account for their assets?

It would be an act of integrity if Bishop George, a respected man of the cloth and one who contributed to the return to democratic elections, would tell the nation what really is going on. Incredibly, calls to the Commission’s office are referred to the Office of the President!

Financial oversight
Then there is the Public Accounts Committee (PAC) of the National Assembly with the principal task of doing follow-up work on the report of the Audit Office. A leading member of that Committee has lamented the limited powers of the PAC but the public can legitimately ask whether that body does enough not only within its limited authority but whether it is sufficiently aggressive in pursuing its mandate. The combination of an Audit Office with the range of weaknesses identified above and a PAC without the expertise or the power to compensate for those weaknesses increases the risk of corruption succeeding without detection.

The two major executing entities for accounting for and overseeing public expenditure are the Audit Office and the Accountant General’s Department. The weaknesses in these outfits were long recognized but sixteen years after the Government pledged to the nation and the voters to strengthen the Audit Office and the Accountant General’s Department, these remain as starved of resources as they ever were while yet being called upon to manage and supervise vastly larger sums of money. After all these years, the Accountant General’s Department cannot control bank accounts of billions of dollars and the financial statements that it submits for audits are incomplete and in many cases incorrect.

Business Page of August 31 and September 7, 2008 highlighted some of the glaring weaknesses in the Audit Office including being understaffed by persons who are under-qualified, with serious problems of professional independence, glaring conflicts of interest and consistent failure to meet its constitutional mandate for reporting to the nation within a defined timeframe. Its 2006 report speaks as much about its own inadequacies as it does about the public finances of the country. Years after, it is still to publish its report on the money that was received and disbursed on the 2005 Flood and there are concerns that the same is happening with the 2006 Cricket World Cup accounting. If the Audit Office is so handicapped that it is several years in arrears in respect of several of its statutory obligations, when will it detect any occurrences of fraud and corruption? And if it has to spend its time on what in a normal situation would be regarded as basic such as bank reconciliations, it will not have time even if it had the other resources to deal with the serious control issues. The Office seems to lack the competence, independence or the confidence to scent corruption and there has been not a single case over the past several years of the Audit Office pursuing any incident of corruption of its own initiative.

Custom
There is such helplessness over corruption in the Customs and Trade Administration that its head is now appealing to the public to help in curbing corruption there. That statement is an indictment of the entire GRA and directly Colonel Ramsarup whose appointment was considered by many as usurpation of the role of the GRA Board by the President. The public waits with bated breath to see what action the Government will take to deal with the Department.

It would be unfair to hold public servants entirely responsible as the failures of their political bosses are in many cases worse. Why is the Minister of Finance not held accountable when he consistently fails to present to the National Assembly his half-year report within the sixty days deadline? The President is allowed to handle hundreds of millions of dollars without any authority whatsoever and creates for himself the supervisory responsibility over persons accountable only to him. The bloating of the number of ministries and departments, appointments and salaries outside the public service rules and an explosion of positions in the Office of the President create huge problems of adequate supervision and opportunities for corruption.

Large part of the problem
Add to all of these major institutional weaknesses, the Government’s willingness to pass legislation tailor-made for the President’s friend and to facilitate plea bargaining by its supporters, the belief that the Government is not at all serious about corruption gains credibility and sympathy. On the other hand the Government has strongly resisted calls for a Freedom of Information Act which it promised in its 1997 Manifesto and arrogates unto itself complete ownership and control of the state media and resources which it had promised to open. Not only has the Government shown a serious breach of faith but this complete control over activities and information on their conduct has dangerous implications for corruption since any government would be reluctant to embarrass itself over any corruption involving those near and dear to its political heart.

The problem is that by his style and obsession with micro-management, everything including allegations of corruption, the latest example being Fidelity/GRA and wastage (the Bridge) has to wait on the President. The trouble for us here is as the evidence shows the President is a large part of the problem.

Next week we will look for some solutions.