Corporate reporting focuses mainly on financial information that does not give a full picture of an organsation’s true value for the benefit of investors and other stakeholders. There is therefore an accountability gap. This is according to an article by Alexis See Tho appearing in ‘CFO Innovation’.
(https://www.cfoinnovation.com/accounting-compliance/integrated-reporting-gathers-steam-asia). Tho went on to state that across Asia, an increasing number of organisations are implementing integrating reporting which recognizes the six capitals or resources that create value for an organization and its stakeholders. These are financial capital, manufactured capital, intellectual capital, human capital, natural capital, and social and relationship capital. In Japan, for example, 341 listed companies in Japan are publishing integrated reports as of 2017, while in Malaysia, some 60 companies have started to do so, according a survey by KPMG. This new approach to corporate reporting is in line with the King IV Report on Corporate Governance published in November 2016, as discussed in our articles of 26 March and 2 April 2018.
The Integrity Commission has been in the news over the last few weeks. Since the appointment of Commissioners in February 2018, it has been publicizing the names of persons who have failed to submit their financial declarations with the Commission. Such declarations include income, assets and liabilities of the persons involved as well as those of their spouses and children. However, this is a basic task that requires comparing the list of persons required to make submissions to the Commission and compiling the list of defaulters. The Commission therefore needs to do more than this if it is to play any meaning role in preventing and fighting corruption in government.
In today’s article, we discuss the key provisions of the Integrity Commission Act for the benefit of readers who may not be aware of them.
Historical background
Guyana is one of the signatories to the Inter-American Convention Against Corruption (IACAC) which was adopted in March 1996 with the following objectives:
(a) To promote and strengthen the development by each of the State Parties of the mechanisms needed to prevent, detect, punish and eradicate corruption; and
(b) To promote, facilitate and regulate cooperation among the States Parties to ensure the effectiveness of the measures and actions to prevent, detect, punish and eradicate corruption in the performance of public functions and acts of corruption specifically related to such performance.
IACAC emphasizes, among others, that: (i) corruption undermines the legitimacy of public institutions and strikes at society, moral order and justice, as well as at the comprehensive development of peoples; (ii) fighting corruption strengthens democratic institutions and prevents distortions in the economy, improprieties in public administration and damage to a society’s moral fiber; and (iii) preventing and fighting corruption involves taking appropriate action against persons who commit acts of corruption in the performance of public functions, or acts specifically related to such performance; and (iv) there is a need to strengthen participation by civil society in the fight against corruption.
In terms of preventive measures, parties to the Convention agreed to consider implementing measures to create, implement and strengthen standards of conduct for ‘the correct, honorable, and proper fulfillment of public functions’. These standards are aimed at preventing conflicts of interest and ensuring the proper conservation and use of resources entrusted to public officials in the performance of their functions. They also require these officials to report to appropriate authorities acts of corruption in the performance of public functions. In this way, public confidence in the integrity of public officials and government processes is preserved. A key requirement is the declaration of income, assets and liabilities of persons who perform public functions in certain posts.
Guyana’s Integrity Commission
The Integrity Commission Act was passed in March 1997 and became operational two years later with the appointment of three commissioners exclusively from the religious community. Arguably, they would have lacked the relevant skills to properly evaluate the declarations made to the Commission and therefore it would have been necessary for the Commission to engage the services of professional persons. However, this was not done. That apart, dispute subsequently arose in the re-appointment of the Chairman and other members of the Commission without consultation with the Leader of the Opposition, as required by Section 3 (1) of the Act. This had resulted in the filing of a judicial review on the matter. In 2006, the late Bishop George resigned from the position. Without a quorum and the pending court matter, the Commission could not have proceeded with its work. To compound matters, the then Opposition announced that its Members of Parliament would not be filing returns with the Commission until the judicial review is concluded.
Successive U.S. Department of State country reports on human rights practices continued to highlight the lack of effectiveness of the Integrity Commission as a key anti-corruption mechanism. The 2015 report stated that although there was general implementation of the law relating to criminal penalties for corruption by officials and that the then Administration had responded to isolated reports of government corruption, there remained a widespread public perception of corruption involving officials at all levels, including the police and the judiciary. The report further stated that the then Prime Minister in 2012 had given the assurance that members of the Commission would soon be appointed.
It is evident that the previous Administration had no strong desire or interest in having a fully functioning and effective Integrity Commission, and by extension in preventing, detecting and punishing public officials for corrupt behaviour. It was therefore not surprising that several public officials amassed enormous amounts of unexplained wealth, enriching themselves at the expense of the State and leaving the ordinary folk struggling financially to make ends meet for themselves and their families.
In the APNU+AFC manifesto for the 2015 elections, the activation of the Commission was one of the key promises made. However, it took nearly three years for the commissioners to be appointed. In addition, among the 21 actions items listed to be accomplished within the first 100 days of assumption to office, if elected, were: (i) the establishment of an Investigative Commission on Corruption; and (ii) having in place a Code of Conduct for Ministers of the Government, Members of Parliament and other senior public officials, including mechanisms for demitting office for violating the Code. However, to date, there is no such Investigative Commission, while the Code of Conduct took more than two years to be finalised and brought into effect.
Annual declaration of income, and assets and liabilities
Section 13 of the Act requires all persons in public life to file annual declarations of income, and assets and liabilities with the Commission in relation to themselves, their spouses and children. Schedule I lists the persons who are required to do so, including the President, Ministers of the Government, Members of Parliament and other senior public officials. To this list must be added all procurements officials regardless of seniority, as provided for by Section 24 (3) of the Procurement Act.
It has been reported that the President did not file his financial returns with the Commission. We fully agree that he should set the example for others to follow. The President has indicated that he would do so as early as possible. This raises the all-important question whether, since the passing of the Act in 1997, former Presidents – the late Janet Jagan, Samuel Hinds, Bharrat Jagdeo and Donald Ramotar – have filed their returns with the Commission, bearing in mind that Section 13 (2) requires ‘every person in public life on the commencement of this Act shall, within thirty days from such commencement, file with the Commission a declaration containing the particulars referred to in subsection (4) with reference to the date of such commencement’. Such declarations have nothing to do with whether the Commissioners are in place or not, and therefore we do not agree with the decision of the Commission not to review compliance with the Act for the backlogged years.
Content of the declaration and its examination
Section 13 (4) refers to Form 2 which requires the following information to be submitted not later than 30 June in relation to financial declarations for the previous year:
(a) Income: Income received or receivable such as salary, fees as director or consultant, commission, bonus, dividends, professional fees and rent;
(b) Assets: Description and value of assets such as land, buildings, cash in bank, life insurance policies, shareholdings in companies and holdings in partnerships and joint ventures, directorships and partnerships, motor vehicles, boats, government bonds and gifts; and
(c)Liabilities: These include mortgages and judgement debts.
Having received a declaration, the Commission is required to make such enquiries as it considers necessary in order to verify and determine its accuracy. This includes requesting further particulars from the declarant within a specified time-frame. By Section 12, the Commission may retain the services of professionals to assist it in the performance of its functions. Over the years, however, its work has been stymied by the absence of the relevant technical and professional skills to examine the declarations. This requires the services of professionally qualified accountants with forensic auditing skills. Recently, the Commission has placed advertisements for the services of such persons. However, the qualification requirements have been pitched too low in that they do not require persons to be professionally qualified accountants.
Where a person fails to file a declaration, the Commission is required to publish the fact in the Gazette and a daily newspaper. In accordance with Section 22, a person who fails, without reasonable cause, to file a declaration with the Commission, or knowingly makes a false or incomplete declaration of a material nature, shall be liable, on summary conviction, to a fine of G$25,000 and to imprisonment for a period of between six months to one year.
Code of Conduct
Schedule 2 of the Act contains the Code of Conduct which all persons in public life are obliged to follow. The Code was amended by Order No. 10 of 2017 dated 12 June 2017 and contains ten principles in public life. In particular, a person in public life must not allow private interests to conflict with his or her public duties or improperly influence the public official’s conduct in the performance of his or her public duties. Where any such conflict is perceived to exist, the public official must seek the guidance of the Commission, and any resolution must be in favour of his or her official duties. This is separate and distinct from the annual declaration of income and assets and liabilities referred to at Section 13. In addition, a person in public life shall, among others, ‘refuse or relinquish any outside employment, shareholdings or directorships which create or are likely to create a conflict of interest’.
By Section 27(2), a person in public life who is in breach of any of the provisions of the Code shall be liable, on summary conviction, to a fine of G$25,000 and to imprisonment for a period of between six months to one year. Any person who believes that there has been a breach of the Code can file a complaint with the Commission providing specific information relating to the alleged breach. If the Commission is of the view that there is merit in the complaint, it shall hold a public hearing into the matter. At the conclusion of the hearing, the Commission shall transmit a report to the Director of Public Prosecution (DPP) if it considers it necessary. Where the DPP is satisfied that a breach of the Code has occurred, it shall initiate criminal proceedings against the person in public life.
Conclusion
Now that the Integrity Commission has been activated and has begun to monitor the declarations of those persons in public life, it should move to the next stages relating to its mandate. These include: (i) engaging the services of technically and professionally competent persons to examine these declarations for completeness and accuracy and for possible mismatch between observable lifestyles and the contents of the declarations; (ii) initiate steps to prosecute those who have failed to submit financial returns as well as those who have violated the Code of Conduct; and (iii) examine the backlogged years 1997 to 2017 to identify those persons who have failed to submit returns and take appropriate actions consistent with the requirements of the Act.
On a final note, there have been calls for the President and the Leader of Opposition to make their declarations to the Commission public. We agree with this and would add that all Ministers of the Government and all Members of Parliament, indeed all elected officials, should do the same.
