The 20014 Corruptions Perceptions Index (Part II)

Last week, we discussed the 2014 Corruption Perceptions Index which rated Guyana at 124 out of 175 countries surveyed with a score of 30 out of 100, the lowest in the Caribbean, except for Haiti. The countries in the Region that outperformed Guyana include: Barbados (74); The Bahamas (71); St Vincent and the Grenadines (67); Dominica (58); Jamaica (38); Trinidad and Tobago (38). Worldwide, the top performers are: Denmark (92); New Zealand (91); Finland (89); Sweden (87); Norway (86); and Switzerland (86).

We stated that during the last ten years, there has been no noticeable improvement in our standing, despite several reform initiatives that took place over the years. We ventured to suggest that we have very good laws on governance and accountability. However, we give lukewarm attention to their implementation, and in many cases we fail to uphold them, especially when they do not serve our purpose.

In my listing of the various reform initiatives that took place since 1997, it was an oversight on my part not to have included the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act that was passed in 2009. This is a key pillar in any fight against corruption since money laundering fuels corrupt behaviour. However, the Act was found to be weak and needed to be overhauled to bring it in line with international standards, especially as regards the seizure and forfeiture of assets for those convicted of drug trafficking and money laundering. The Government wanted minimal amendments based on recommendations from the Caribbean Financial Action Task Force whereas the combined Opposition insisted on a comprehensive overhaul of the legislation, given the extent of drug trafficking in Guyana, and hence money laundering. Because of the failure of both sides to reach a compromise, a stalemate currently exists, exacerbated by the prorogation of Parliament.

 

The Transparency Institute’s role

in fighting corruption

20131223watchThe Transparency Institute of Guyana Inc. (TIGI) was formed in late 2010 by a group of prominent individuals concerned about the perceived levels of corruption in Guyana. It is a chapter-in-formation of Transparency International, headquartered in Berlin, Germany with presence in over 100 countries. In the next year or so, TIGI is likely to be granted full chapter status once it continues to demonstrate that it is a vibrant force in fighting corruption.

TIGI has so far made a significant impact as the leading civil society organization in speaking out against corruption and in seeking to promote good governance, transparency and accountability. Through its outreach programmes, it has so far been able to take its message to citizens in Georgetown, Linden and Berbice in an effort to sensitise them about the ill-effects of corruption and what they can do about it. However, because of the Government’s lack of support for the work of TIGI, despite Guyana being a signatory to both the Inter American Convention against Corruption (IACAC) and the United Nations Convention against Corruption (IACAC), citizens are afraid to be associated with TIGI for fear of being discriminated against. This is the greatest dilemma facing the Institute and is a serious threat to TIGI’s survival. There are simply not enough persons, regardless how they feel about the levels of corruption, who are willing to come forward and identify themselves with TIGI. Fortunately, we still have some committed and dedicated citizens that keep the organization going. Both the Canadian and British governments have contributed in no small measure during the start-up phase of TIGI.

TIGI has stated on several occasions that it is willing to work in partnership with the Government to fight corruption but so far the latter has refused to take up the offer. Instead, the Administration has chosen, through its State-owned media outlets, to unleash a barrage of attacks on persons associated with the work of TIGI, using the techniques of character assassination and personal vilification. Pro-government outlets and individuals with close ties with the Administration have also followed suit.

The Government cannot address the issue of corruption alone, and an organization such as TIGI is well placed to assist in any effort. However, the Administration needs to divest itself of the mindset and notion that any reference to corruption in the public sector is an indictment on it. It needs to stop circling the wagons and must display a serious commitment to deal with the issue. The first step, however, is an acknowledgement of the extent to which corruption is perceived to exist in Guyana. After all, corruption destroys the moral fabric of society. It benefits the rich at the expense of the poor, the vulnerable, the disadvantaged and the unemployed.

In previous years when the CPI results were announced, the Government went on the offensive, accusing the local transparency body and its leadership of conspiring with its parent body in giving Guyana a low rating. It even attacked the CPI as mere perception which does not concur with reality. “Where is the evidence?” was the cry. The evidence of corrupt behaviour is now more overwhelming than ever before.

 

Corruption and the GRA

The Commissioner General of the GRA recently had cause to bemoan the fact that many businesses are still not including Value-Added Tax (VAT) as part of their sales. He stated that “tax officers are easily bribed by businesses looking to evade the payment of the 16% VAT” and suggested that there is the correlation between corruption within the public sector and the inducements by the private sector.

The Commissioner General made the following statement on the difficulties GRA faces in the assessment and collection of tax revenues:

 

It is no secret that, increasingly, there is a high frequency of private sector businesses offering bribes to tax officers not to unveil their fraudulent reporting; and more alarmingly, that billions are granted in concessions to businesses in the area of machinery and equipment and raw materials that are either diverted for other purposes or sold to persons who are not entitled to such benefits…This does not include the billions that are being evaded annually from fraudulent claims for VAT refunds even as many businesses continue to engage in the very insidious practice by the private sector of offering not to charge VAT on condition not to provide receipts of such sales.

 

The Commissioner General’s statement is a resounding call for action. When taxes legitimately due to the State are not paid, the State is denied the much-needed revenue to finance the cost of government programmes and activities. In all of this, the poor and the vulnerable, the disadvantaged and the unemployed are made to bear the brunt of hardships arising out of the inability of the State to provide adequately for them through various social programmes. The situation is exacerbated by what the frank admission of the Commissioner General that tax officers are paid to turn a blind eye on those who are bent on defrauding the State.

Regardless of how we feel about the 16 per cent VAT chargeable on goods and services, we are all obliged to collect this tax and pay it over to the GRA, and anyone who is a party to denying the State of this vital source of revenue is condoning an act of corruption.

 

Corruption and the Private Sector Commission

At a meeting with GRA, the Private Sector Commission (PSC) has raised the concern that businesses that are non-compliant with VAT are severely affecting the competitiveness of compliant businesses. The PSC expressed continued frustration over businesses that evade the 16 percent tax and stated that since GRA has the responsibility of ensuring that businesses registered as VAT members pay their tax, it should initiate prosecution against those in default as a means of curbing the trend.

On the occasion of the International Anti-Corruption Day, the Chairman of PSC suggested that the CPI is not a perfect measure of actual levels of corruption, but is rather an indicator that can be useful in addressing a problem. He stated that it is known that corruption is present in all societies, but some societies take more actions than others by putting in place the necessary laws and institutional framework to minimise and eliminate the scourge of corruption.

The Chairman contended that corruption in the public sector cannot exist without the support of members in the business community or the general public.

He then called on business community to cease engaging in this immoral practice and hold themselves to a higher standard.

The PSC Chairman stressed that ineffective governance mechanisms to adequately fight corruption in Guyana have contributed to the perceptions of high levels of corruption. He indicated the PSC’s support for TIGI’s detailed call for eleven specific actions to be taken by the Government, including the enforcing existing anti-corruption laws by investigating and prosecuting the corrupt; strengthening existing anti-corruption institutions such as the Guyana Police Force; ensuring that all public moneys are placed to the credit of the Consolidated Fund and no public expenditure must be incurred without Parliamentary approval; and ensuring all public officials in positions of trust are held accountable and display integrity in public life.

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