“Look, I tired eating chicken. Let we eat steak. How you so surprised? All over the world this happening, man. Bribery is the first stage of economic development. Oh, Jesus, is no big thing that my company deliberately order the wrong size pipe to drag out the contract, and that in the process some bread change hands, the right hand supposed to feed the left…”
– ‘Mongroo’, In Derek Walcott’s “Beef, No Chicken, 1981
I have written much about official venality since 2016 and said little about private sector corruption, but the tentacles of corruption are everywhere. And we would be surprised at the wellspring of such corruption.
I read a short time ago, the story of a former Indian peanut vendor and travel agent, Abdul Karim Telgi who was twice arrested for corrupt misdeeds. Some 25 years ago, he was imprisoned without bail (he was neither tried nor convicted) for having bilked customers of his travel agency.
Released from prison after two years, Telgi then set up a sophisticated forgery operation in Mumbai, printing and selling government stamp papers (official documents bearing a tax stamp of denominations ranging from $1 to many hundreds of dollars on which most legal and commercial transactions in India must be written).
The Indian government earned at the time roughly $7 billion in tax revenues annually from the sale of stamp papers, so that Telgi’s potential market would have been enormous. Officials in India claimed that he was soon raking in tens of millions of dollars a month.
This particular scheme – a $5 billion nationwide forgery scam uncovered in 2003, apparently involved some of the country’s top police officers and politicians.
How was he caught? It took Anna Hazare, a 65-year-old social activist who filed a public-interest case against Telgi in Mumbai’s high court in the summer of 2003 and the court, in turn, appointed an honest, retired super-cop named S. S. Puri to lead an investigation into Telgi’s business dealings.
In a matter of weeks, 60 people had been arrested, including two state assembly members and six senior police officers.
That is why social activism, vigilance, commitment, lack of tolerance, and of course whistleblowing legislation, are critical to reducing the scale of corruption, whatever its source.
Back to corruption in the Caribbean. For a moment, I wish to turn my gaze to the tourism sector. Let us not all be sanctimonious about the benefits of the tourism industry to the Caribbean. Yes, the industry is important for several reasons, not least of which is the gross dependency on the industry for employment purposes and, of course, for the few backward and forward linkages that are created.
But the industry has for years benefitted from the unsustainable support by the Government in the form of incentives, especially to the hotel sector. This is regarded as critical to reduce cost, make the sector more attractive to visitors and assist in the continued buoyancy of the economy.
But we need to examine whether or not we have provided sufficient oversight of that sector. This is especially pertinent in the context that the economy has not grown and we are confronted with what appears to be the difficult but necessary job of asking Barbadians to dig deeper into their pockets, which has dire consequences especially for those of us who barely scrape by in the so-called middle class.
All hands must be on deck in this enterprise and not only should salaried individuals, especially those in the middle class, be asked to bear the brunt of the recovery, but the independent professionals like the doctors, the dentists, and the lawyers especially, whose affairs are not as ordered as those of salaried individuals, must be placed under a microscope.
From time to time, I have heard of the abuses of the Tourism Incentives Act by individual hoteliers who avail themselves of tax exemptions for the purposes of tourism-related properties, yet who find it fortuitous to instead arrange for exempted property to be redistributed to private residences.
This is not unique to the Caribbean, though no less than the Court of Appeal of the Eastern Caribbean condemned such behaviour by a former minister in Saint Lucia’s United Workers Party government for failing to pay taxes when goods earmarked under the Tourism Incentives Act were redirected to a private residence.
It occurs so routinely that many simply suck their teeth, roll their eyes, or shake their heads in disgust.
But a few are outspoken. Indeed, St Lucian Nobel Laureate Derek Walcott chastised regional governments in 2008, for “selling our land like whores to foreign investors”.
This time, however, a vigilant Opposition Leader Kenny Anthony took the matter to court. But the hotelier was a politician and so it was not difficult to understand why the Opposition scrutinized his behaviour. What about those who engage in this behaviour with a degree of frequency and impunity but who are not persons in public life and thus escape the gaze of the Opposition?
Rob Coates, writing in the New Internationalist nine years ago, reminded us that tuxedo-gate was “the latest in a string of allegations over nepotism which stretch back a decade – property and tax concessions that have left the population with little confidence in official structures. That most cases involve tourism development comes as no surprise; and the issue remains a matter of high controversy”.
Now, among the first group of people to be targeted for complicity in this criminal behaviour is the customs officer. It is easy to do so, for customs is really the front line for international business of this kind. However, this particular transgression has nothing to do with customs, and must be placed squarely at the doorsteps of some hoteliers.
It is simply not enough to allow hoteliers to access tax exemptions for their businesses and unwittingly be given the space to manipulate the system in a manner which is privately beneficial to them and their cronies. These are people who can afford to pay duties on the flat-screen televisions, for example, which are supposed to be used in the hotels but which find a place in private homes.
We talk about transparency, accountability and oversight in the public sector. The same degree of scrutiny, transparency and accountability must also be associated with the private sector.
Under Part 4 of the Tourism Incentives Act of St Lucia for example, a permit granted for tax emptions by customs is subject to the condition that the building materials, articles or equipment as specified shall be used exclusively for the construction and equipping of the tourism product for which the approval has been granted.
Article 19 of the Act, specifically prohibits the improper use of these permits.
Under the Act therefore, every operator or owner of a tourism project for which building materials, articles or equipment have been imported or purchased free of customs duty who, without authorisation, disposes of such goods other than as provided for in the permit, commits an offence and is liable on repayment of money refunded on such goods under sections 17 and 18; or imprisonment for a term not exceeding 12 months, in default of payment summary conviction to a penalty of three times the value of the building materials, articles or equipment disposed of fraudulently.
I would also broaden the Act to include punishment, a monetary fine as well as impoundment of the goods or materials to those who knowingly accept such goods or materials from hoteliers.
So how can we ensure that these abuses do not occur in the future as they have been done in the past and continue to occur? It requires follow-up by customs to ensure that these goods were not corruptly converted for private use. We simply cannot operate on blind faith. For misuse, and other forms of corruption occur in the absence of oversight.
Again the St Lucia Tourism Incentives Act is instructive. Under the Act, where the Minister is satisfied that any building materials, articles or equipment, for which a permit has been granted are no longer required for the purpose of the tourism project on which the permit was based, the Minister can formally authorise the holder of the permit to dispose of any such building materials or articles in such manner and upon such conditions as the Minister may think fit.
This cannot be done under three years unless the holder of the permit, in this case the hotelier, paid to the Comptroller of Customs; or given security to the satisfaction of the Comptroller of Customs that he or she will pay, all customs duties or refunds given under the Act to the goods to be disposed of, and of course, to me one of the best deterrents; the suspension or revocation of the permits.
Zero tolerance is required. So there must be full monitoring in order to avoid fraud and corruption, however minimal.
(Cynthia Barrow Giles is a senior lecturer in political science at the University of the West Indies, Cave Hill Campus)