Nandlall did no research in relation to Transparency International before making his comments

Attorney General Anil Nandlall has joined the attack on Transparency International (TI) on the publication of its 2012 Corruption Perceptions Index. Because Mr Nandlall is a member of a profession which calls itself learned, and which is known for its members researching before speaking, and speaking with a certain sense of responsibility and decorum, I thought it might be useful to examine how Mr Nandalall’s statement stacks up against those standards.

Mr Nandlall accused TI of:

1. Failing to disclose “the empirical data or sources that they examined to arrive at those conclusions.”
2. Not stating the methodology as to how the organisation ended up at its findings [sic].
3. Not disclosing whom they spoke to and which institutions and organisations, or which documents they consulted.
4. “Gross dereliction” by arriving at baseless disclosures.
5. Failure to say where corruption exists, be it in the government, public or private sector.
6. Failure to examine the institutional mechanisms which are in place constitutionally, legislatively or departmentally.
7. Being insulting and disrespectful to Guyana and Guyanese.

Points 1, 2, 3 and 4 are all on the same issue: that Transparency International did not disclose vital information and sources.

If Mr Nandlall had taken the elementary research step of going on TI’s website he would have learnt that the basis for inclusion of a country/territory in the CPI is a minimum of three of the CPI’s data sources. The website also identifies CPI’s 2012 data sources as: i) African Development Bank (ADB); ii) Bertelsmann Foundation (German non-profit foundation); iii) International Institute for Management Development (IMD); iv) World Competitiveness Yearbook; v) International Country Risk Guide (ICRG); vi) World Bank; vii) World Economic Forum (WEF); viii) World Justice Project; ix) Economist Intelligence Unit; x) Global Insight; xi) Political Economic Risk Consultancy (Asian); xii) Transparency International Bribe Payers Survey; and Freedom House (no, not that one).

If he had acted more responsibly, he would have learnt that in the case of Guyana, there were four sources: ICRG, WB, WEF and Global Insight, and that a country’s score on the index is a simple average of its data sources.

Point 5 is even worse in terms of Mr Nandlall’s research efforts. I find it embarrassing that the Attorney General of this country does not by now know that the definition of corruption in the TI lexicon is “misuse of public office for private gain.” Perhaps he is more familiar with relevant examples such as Pradoville 1 and 2; the misuse of duty-free concessions; and paying out of the Treasury so-called advisors to the President and the Local Government Minister to work at Nandlall’s party in Freedom House.

Mr Nandlall should and could have served his and the country’s interest by challenging the local Institute to start speaking out on private sector corruption, including tax evasion and money laundering. He must be personally aware that members of his and other professions as well as aggressive law firms not only engage in these practices for their own direct benefit, but also in aiding and abetting others to do so.

Once Mr Nandlall understands my comments on points 1 to 5 above, he will realise that point 6 is not relevant to his argument. I cannot believe that the holder of such a distinguished public office does not recognise that in his attempt to discredit others, he ought not to be relying on laws that are on the statute books but not in operation. Any person would know that rather than prevent and punish, it actually perpetuates corruption if the Procurement Commission is not established ten years after it became a mandatory constitutional requirement; if there is an Integrity Commission without commissioners; an Access to Information Act not brought into force sixteen months after passage; and a Judicial Review Act not brought into force two years after passage.

On disrespect and insult, readers might wish to consider whether Mr Nandlall’s failures do not amount to an insult to his own intelligence, that of the legal profession and to the expectation of Guyanese to have an Attorney General who is informed, responsible, temperate and accurate.

Finally Editor, I researched the recent publications of leading newspapers in Zimbabwe and Pakistan which had much worse ratings than Guyana in the 2012 Index. In fact, in the case of Pakistan, the 2012 CPI was sensationally misreported by stating that Pakistan was the 33rd most corrupt country in the world. That report wrongly assumed that all the countries of the world were covered in the survey. Some twenty countries were not.

Yet I could not see any article or statement in which the governments of Pakistan and Zimbabwe engaged in any attack on Transparency International or their national chapters, let alone in the crass, vulgar, shameless and disgraceful manner in which Mr Nandlall, Ms Gail Teixeira, the PPP/C and the PYO did in the case of Guyana.

Teixeira was very wrong

In his presentation at the awards dinner of the Georgetown Chamber of Commerce and Industry last Thursday Mr Clinton Urling, the Chamber’s President included in his wish list for Guyana a stronger civil society. In the course of his presentation Mr Urling not only referred to the work of the Transparency Institute of Guyana Inc but also echoed a recent call by that young organisation – made on the day Transparency International released its 2012 world Corruption Perceptions Index – for measures to enhance accountability, combat corruption and strengthen governance.

Mr Urling would most likely have been aware that only a few hours before he spoke the youth arm of the ruling party had attacked Transparency Institute, singling out its highly respected Vice-president Dr Anand Goolsarran for its vituperation, and severely chastising Transparency International for daring to include Guyana in its 2012 survey. Significantly, even if Mr Urling was aware of the attack, he offered no comment or defence of a civil society organisation in the presence of two Ministers of Government, Messrs Irfaan Ally and Robert Persaud.

One day later, PPP/C governance czarina Ms Gail Teixeira took the PYO vulgarity one notch down when she dismissed the 2012 CPI by stating that “only four persons were surveyed [by TI] as it related to Guyana.“ She even suggested that they must all be male! Surely anyone who knows anything about surveys would know that no sane person would regard a sample of four as reliable or representative of any population and that such a statement simply could not be right. Indeed, Ms Teixeira was wrong, very wrong.

The Transparency International website discloses that for its 2012 CPI with respect to Guyana, TI used four surveys, which in total, and even allowing for overlap, would have covered hundreds of individuals and organisations. The four surveys were Global Insight, World Bank’s Control of Corruption Index (WB), World Economic Forum and the International Country Risk Guide.

If this better information does not have any impact on Ms Teixeira and her “youths”, it is inevitable that any discourse in Guyana would continue to be backward-looking, uncivil and profoundly infected by manipulation and distortions. The leadership of the PPP/C must be in dreamland if it does not realise that for many Guyanese, the ‘C’ in PPP/C has long since ceased to represent any evaporated Civic and now, on empirical evidence as well as well-founded perception, unmistakably stands for Corruption.

In the final NCN debate on institutional corruption Ashni Singh committed the same error of which he accused Nagamootoo

In the final NCN debate on institutional corruption broadcast recently, Senior Minister of Finance Dr Ashni Singh accused Mr Moses Nagamootoo of the AFC of “pretence,” “misrepresentation,” “opportunism” and “making false charges of corruption” against the PPP/C.

In an attempt to show how far the government has gone to remove the opportunities and possibilities for corruption, the Minister said on the programme that in the case of the tax laws, his government has “removed opportunities for discretion, imposed rigid rules-based system over all aspects of the corporations, rules have been framed for the granting of incentives …” The facts show otherwise.

What makes the Minister’s accusations so contrived is that he could not have forgotten the infamous case of the Ramroop group in which he and Mr Jagdeo rushed to grant illegal tax concessions to the group. And when confronted with the embarrassment of the illegality – which Dr Singh missed not once but thrice – he spearheaded a change in the law to legalise the concessions to the government’s friend. That cannot constitute a rules-based system.

What was ironic about the accusation is that by his false boast of removal of discretions, the Minister committed the same error of which he seeks to accuse Mr Nagamootoo. A tax holiday under the Income Tax (In Aid of Industry) Act is easily the most valuable tax concession available, and its award is substantially discretionary. This is how the relevant section of the Act begins:

“Notwithstanding anything to the contrary contained in the Income Tax Act or the Corporation Tax Act, it is hereby provided that the Minister may grant an exemption from corporation tax…” (emphasis added).

Readers might be aware that by law once an entity is exempt from Corporation Tax, it is also exempt from Property Tax (section 6) and Capital Gains Tax (section 5). These combined concessions can run to ten years and cost the country billions of dollars in lost revenues. Spin it how much one wants, the language and the power are clearly discretionary.

A less known but certainly not inexpensive concession is contained in the Value-Added Tax Act. By regulations made by the same Minister, any supply of goods and services under an investment agreement entered into on behalf of the government is zero-rated. This means that while the entity does not have to charge VAT on its supply of goods and services, it can recover any VAT it pays on its inputs. The Minister responsible for that Act (Dr Singh) has not indicated the criteria, if any, which a company must meet to qualify for an investment agreement or, that it is he who has the final say on whether or not a person qualifies.

And to go back to the tax holidays, the Minister of Finance who confidently makes such statements that “it is a matter of public record” and that this or that person “ought to know,” must himself know that the Investment Act requires him to publish information regarding tax holidays incentives under the Income Tax (In Aid of Industry) Act. Would the Minister say how transparent and compliant the government has been?

To compound the institutional silence and dereliction, the Act also requires the Audit Office to carry out annually a process audit of the concessions and to make a report to the National Assembly “within six months of the end of each of the financial year.” June 2005, 2006, 2007, 2008, 2009, 2010, 2011 and 2012 have come and gone since the Investment Act became law. Would the Minister say for which year any such a report was made to the National Assembly?

Curbing corruption: The Corruption Perception Index – conclusion

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.

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?

Curbing Corruption – The Corruption Perception Index – part 2

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.

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.

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.