Monday, September 28, 2009

Transparency International launches Global Corruption Report 2009: Corruption and the Private Sector

Transparency International (TI), a leading anti-corruption organisation, has launched a wide-ranging review of corrupt practices in the private sector, including bribery and undue influence, corporate fraud and cartels. New challenges for carbon trading markets, sovereign wealth funds and emerging economic powers in Asia and Latin America are also covered.

TI’s Global Corruption Report 2009: Corruption and the Private Sector features more than 75 experts examining the scale, scope and devastating consequences of corporate corruption, ranging from small entrepreneurs in Sub-Saharan Africa to multinationals in Europe and North America. These are complemented by 45 in-depth country reports (Trinidad and Tobago country report included). Best practices and practical recommendations for businesses and governments are also identified.

The Report is available for download here.

Sunday, September 27, 2009

Oh Khaleda! Women and Corruption...

Earlier this month, Khaleda Zia, the former Prime Minister of Bangladesh was committed to stand trial with her son and other top ranking officials for embezzling approximately 300 000 dollars which was originally intended to build a state orphanage. Zia, who became the first female Prime Minister of Bangladesh in 1991 and who was ranked number 33 in the Forbes list of the world's 100 most powerful women has certainly dropped from glory.

The Charges

The circumstances giving rise to the charges were that the plaintiff alleged that the accused in collaboration with each other misappropriated Tk 2,1071,643 belonging to Zia Orphanage Trust. The accused withdrew the money through cheques from November 11 to March 28 in 2007 from Prime Bank, New Eskaton Branch in Ramna, where Tk 2 crore was deposited in the account of Zia Orphanage Trust. Tk 1071,643 comes as interest against Tk 2 crore.        

A foreign firm in 1991 donated $ 12,55,000 (then equivalent to Tk 4,44,81,216) for the welfare of orphans. The then BNP government deposited the money with a bank and kept it till 1994, according to the case details. The amount increased to Tk 5.3 crore with interest in four years.
The prime minister's office later distributed the money in two separate projects in Bogra and Khulna districts under the name of Zia Orphanage Trust, the case statement said. Of the Tk 5.3 crore, the accused embezzled around Tk 2.11 crore from the trust, according to the statement. 

The plaintiff in the case statement alleged that though there were hundreds of orphanages in Bangladesh, the then BNP government did not distribute the money among them. With a view to misappropriating the money, the then prime minister Khaleda Zia formed Zia Orphanage Trust, which was registered at the sub-registry office in Gulshan in the city on September 5 in 1993, according to the case details. The address of the trust was mentioned as House No-6, Shaheed Mainul Road at Dhaka Cantonment, which is the residence Khaleda Zia and her family members.      

About Khaleda

Born in 1945 to Iskandar Majumder, a businessman, and Taiyaba Majumder at Dinajpur district in north-western Bangladesh, Zia's eventual rise to political power could hardly have been predicted.

According to records she got married in 1960 to Ziaur Rahman, a prominent war hero who himself later became the President of the Republic and formed the Bangladesh Nationalist Party (BNP)in 1978. However, unlike Hilary Clinton, until the assassination of her husband in an abortive military coup in Chittagong on 30 May 1981, Zia had taken little to no interest in either politics or public life.

From all reports, even when her husband was propelled to power after the political changes in 1975, "she remained a shy and withdrawn housewife who devoted most of her time grooming up her two sons".

After the assassination of her husband, Vice President Sattar took over the reigns of the BNP party and acted as President. This however was short-lived after a successful military coup of sorts headed by Chief of Army Staff General H.M. Ershad who proclaimed martial law on 24th October 1982. In 1983 Sattar appointed Zia as Vice Chairman of the BNP party and when he retired in February 1984 Zia took over the leadership. So that it would appear that her ascendancy to the leadership of the BNP party came less through the dint of hard work but more by a quirk of fate!

However, how this woman handled this new power initially was impressive, even if one shuns her as a role model given these allegations. Zia was seen to work hard as leader of the opposition to regain political power for the BNP party. Records of the early days of her rise demonstrate effective leadership and resolve on Zia's part.

"She stood resolutely, took the reins of BNP and with like minded pro-democratic parties and elements, formed the 7-party Alliance and started uncompromising resistance against the usurper of people's rights.

In the Parliament elections that followed on 27 February 1991 under a Non-Party Caretaker Government, Begum Khaleda Zia led her party to a thumping victory, herself emerging as the most popular political leader of the country. On 20 March 1991 she was sworn in as the country's first woman Prime Minister in a Presidential form of Government. Respecting the wishes of the people, Begum Khaleda Zia and her party took the lead in switching over from the Presidential to the Parliamentary system of Government in order to give the hard-won democracy a permanent institutional shape. She formally took over as the Head of Government on 19 September 1991 under the Parliamentary system.

Begum Zia's Dall-Bhaat (lentil and rice) approach received both regional and international acceptance as a tangible programme for poverty alleviation in SAARC countries as well as in other developing nations.

She became Prime Minister for the second consecutive term after the February 1996 general election.

Her party BNP restored the parliamentary system through the 12th amendment to the Constitution in 1991 and introduced the Caretaker Government for holding neutral and free election through 13th amendment to the Constitution in 1996.

The government of Khaleda Zia made tangible progress in empowering huge rural womenfolk in the countryside. Her government brought about major reforms in the education sector that included introduction of compulsory free primary education, free education for girl students, stipends for the girl students and food for education programme. Side by side, she initiated bold reforms to revitalize national economy, accelerate production in all sectors and to alleviate poverty. Agriculture, the mainstay of Bangladesh's economy, was given the main thrust to achieve autarky in food production in the shortest possible time.

Promoting good neighbourly relations, strengthening regional cooperation within the ambit of SAARC, strict adherence to the UN Charter and furthering world peace and amity were the cornerstones of her government's foreign policy.

In the 1996 polls, the BNP emerged as the largest opposition party in the country's parliamentary history with 116 seats. The party under the leadership of Begum Zia formed a four-party opposition alliance on 6 January 1999".[Life Sketch BEGUM KHALEDA ZIA Hon'ble PRIME MINISTER PEOPLE'S REPUBLIC OF BANGLADESH]

So there we have a stellar record of a woman exercising political power as commendably as any other of her male counterparts. Studies, though challenged by many, have suggested that women are lest prone to corrupt acts than men. According to the World Bank in 2001 in an important policy statement on gender equality,
‘Engendering Development’, there is a strong relationship between relatively high levels of female involvement in public life and low levels of government corruption. The report concludes that this finding lends ‘additional support for having more women in politics and in the labor force – since they could be an effective force for good government and business trust’ (World Bank, Engendering Development, 2001:96).

Women & Leadership

In the Western world, with the evolution of the feminist movement and the growing empowerment of women, there has been increasing involvement of women in politics. If one were to look at the Scandinavian countries we see 40% representation by women on the legislature and in fact this is the highest political representation of women in the world. Followed by, interestingly enough, leaders in the Asian continent. So I wonder, is it that women in Asia are further along in terms of equality and non-discrimination in the political sphere or is it as Stanley Wolpert describes it an “accident of gender” or as Shakespeare would say having "leadership thrust upon them"? One study singled out a commonality in these Asian women leaders as being the manner in which they came into office in the first place. In most cases, like Zia, these women are victims of the violent death of a close male relative – a husband or father. And it has been said that even in the case of exceptions where they were groomed for the highest office it was not by their ability alone but more by reason of their proximity to male rule.

Indira Gandhi, for example, was the daughter of the illustrious Jawaharlal Nehru who died a natural death. Benazir Bhutto assumed the mantle of the Pakistan People’s Party after the hanging of her father Zulfikar Ali Bhutto by the military leadership. While Indira and Benazir had some amount of political experience the others like Chandrika Kumaratunga of Sri Lanka, and Zia lost their husbands, both politically significant members, to assassination.

Accident or not, it would seem that Zia, if the allegations are proved to be true, despite her commendable strength, vision and determination exhibited throughout her leadership, may put the lie to this myth that women are less corrupt than men.

[ LMG World TV digression. Interestingly, although, as we have seen above, it is unremarkable that the former housewife of a political war hero becomes a leading political figure, it would seem far less likely that such a person develops an innovative economic aid programme, especially in a country like Bangladesh.  Bangladesh in this regard is a particularly interesting study of how one country has responded to the challenges of poverty. We should not forget that Bangladesh is also the home country of Mohammed Yunus, Noble Prize Winner and Founder of the Grameen Network which spearheaded the creation of the, now so-popular, micro-finance model]

Tuesday, September 8, 2009

On the Collapse of a Commission ..

And so there we have it, the apparent collapse of the Commission of Enquiry into UDeCOTT and the construction sector in Trinidad and Tobago. The news came yesterday when Chairman of the Commission Professor John Uff held a press conference instead of opening the fourth and last hearing of the enquiry. Uff read a prepared statement which stated

"It seems to be generally accepted that the Commission, when issued by His Excellency the President on 9 September 2008 and extended on 10 December 2008 was not, as it should have been, published in the Gazette. That is a formality which can be cured at any time. However, it seems to be the opinion of most of the lawyers involved in the Enquiry that, unless and until it is cured, the Commission cannot take effect under the Commissions of Enquiry Act and the powers provided by the Act are therefore not available. If and when action is taken to regularise the Enquiry, it is suggested that publication in the Gazette at that stage will not have retrospective effect and that a validating statute would be necessary. I should say that a contrary opinion has been provided to the effect that gazetting at this stage would validate the Enquiry retrospectively. This matter is still under review."

Cynicism abounds throughout the small twin island state of Trinidad and Tobago as the Commission of Enquiry saga which had begun amidst much public furor [after the firing of then Minister of Trade and Industry, Dr. Keith Rowley who had demanded greater oversight of the state-owned enterprise UDeCOTT] now ends amid questions, much like those surrounding the bombing of the World Trade Center of how, when and why?.

A Consideration of the Reason Advanced : Failure to Gazette the Commission of Enquiry

Coming as the latest chapter after a tirade of challenges, from UDeCOTT, Mr. Calder Hart and their counsel, which have plagued the enquiry's continued work from inception and under circumstances where Government officials were seen on numerous public platforms continuing to support and praise the beleaguered state enterprise, many view with grave suspicion what they see as just the last and ultimately most successful attempt to derail the Commission.

The reason advanced for the cancellation of the fourth session is the failure on the part of officials unknown to gazette the Commission of Enquiry. So what does this mean?

According to section 15 of the Commission of Enquiry Act Chapter 19.01 "All commissions under this Act and all revocations of any such commission, shall be published in the Gazette, and shall take effect from the date of publication". The Gazette is the official publication of the Government which is in many cases the statutorily mandated form of official notice to the public. Ordinarily failure to gazette would not invalidate the act done, however in the case of a Commission of Enquiry under the law of Trinidad and Tobago it is expressly stated that it shall only take effect from the date of publication.

According to the Privy Council in the 2007 St Vincent and the Grenadines case of Joachim v Attorney General, the proceedings of the inquiry are ineffective without the gazetting. In that case it was ruled that section 16 of the St Vincent and the Grenadines Commission of Inquiry Act — which is on all fours with our section 15 — made the proceedings ineffective until gazetted.

It was stated in that decision that “Parliament must indeed be taken to have intended the consequence of non-publication of the commission to be total ineffectiveness. That intention is as plain as can be from the last ten words of section 16: ‘and shall take effect from the date of such publication’,”

But has the Commission really collapsed?

The question now is - can this defect be repaired? and if so, by what means? There have been two main arguments advanced for the repairing of the defect and I consider each of them briefly below.

1. Publish in the Gazette now and rely on the retrospective operation of section 42 of the Interpretation Act Chap. 3.01

Section 42 reads as follows:

"An appointment (however described or designated) under a written law may be made to have effect retrospectively from the date upon which the person appointed in fact first performed any of the functions of his appointment."

Lawyers are going back and forth on whether this section is applicable. My view is that it is not applicable. That section relates to the appointment of public officials and not expressly with a Commission of Enquiry. To go this route will be to rely on the hope that it would apply and merely leave the door open for not so ingenious legal challenge at a later stage.

2. Pass an act of Parliament validating the Commission of Enquiry retrospectively.

This in my view is the safest route. It can be done very quickly, since there is no need for compendious legislation. There may only be the need for 2-3 clauses. Parliament can change the law at anytime. If there are those who are of the view that this retrospective application of the validating act would operate to breach some individuals fundamental rights and freedoms under the Constitution - then the precaution should be taken to have the Act passed by the requisite special majority.

Common Law Enquiry?

Professor Uff, quite interestingly, threw another spoke in the wheel of the argument that the Commission of Enquiry was illegal or invalid. He stated that he was of the view that in a common law territory - if there is no statutory law it does not mean that there is no law that would operate to cover a particular scenario - the common law (judge made law - doctrine of precedent) would apply. Accordingly, since there is precedent and provision in the British common law for common law enquiries the instant Commission will be covered thereby. I have not researched this issue as yet - so I prefer not to express a legal opinion on it. It does at first blush though appear to make very good sense.

So, in synopsis, there has been a defect, but I have not heard anyone credibly advance that it is fatal. It is curable and the safest cure would be the validating legislation. Ironically, in the present circumstances, the Government [which is perceived by many as not entirely supportive of the work of the Commission, given their vociferous defence of UDeCOTT despite the evidence adduced], will be forced to demonstrate to the public whether in fact they are desirous of remedying this defect.

In fact, it is far better that this defect has come to light now and not later during the course of judicial challenge brought by any of the parties before the Commission.

And the result is....

Though many may refuse to admit it, as the evidence burgeoned through our television sets, day after day, telling stories of the apparently unchecked exorbitant expenditure on projects being undertaken by the state agency and of alleged improprieties, irregularities and in some instances self-interested conduct on the part of the Chairman Mr. Calder Hart and other UDeCOTT consultants and employees, a growing though reluctant optimism was being felt throughout the country. Some, though not daring to mutter out loud, allowed themselves the luxury of the cautious and hopeful thought 'perhaps something would come of this Commission?'.

On the other hand the perennial cynics who are never wrong and love to craw "I told you so!" now seem not to be able to contain their mirth that they have been proven to have been right all along. The Commission was a sham, a farce - no hope of success!!

However, as one of the many persons involved in one way or another with the work of the Commission who gave of themselves tirelessly hour after hour, poring over thousands of pages of transcripts, cases, submissions and reports and sitting through hearing after hearing, making submissions, questioning witnesses and unearthing information to inform the Commission's eventual findings and recommendations, such assertions ring hollow. Those involved know the plethora of very specific material which has been advanced before the Commission demonstrating critical gaps in our legislative, regulatory and operational frameworks existing in our public sector which no doubt will influence the eventual findings and recommendations of the Commission. We also know of information which has been brought to the fore in respect of alleged improprieties on the part of public sector employees. We also know that some persons have been exonerated by the information adduced, some persons have had to resign and in the case of one state-enterprise we saw consultants, lawyers and board members unceremoniously replaced. And last but by no means least, we know about the vast sums of money and resources which have been devoted to this Commission both by the Government and private citizens who bore the brunt of their own legal costs.

Margaret Chow, Former MD HDC

So the question emerges, if there are no further hearings as had been planned - does this mean that the Commission was a sham or a farce? Is this really the collapse of a Commission?

For two reasons, I say No!

(i) The Commission's work was practically complete

Firstly, from a practical perspective, according to Uff, outside of the expanded Terms of Reference (TOR) relating to the Cleaver Heights Development Project, there was very little else left to do by way of public hearing. When one considers the stage of the Commission's work in respect of the original and first amended Terms of Reference (TOR) which were items (i) - (viii) on UDeCOTT and the procurement practices in the Construction Sector and (ix) dealing with the Cleaver Heights Development Project, all that was outstanding in respect of these items were the final partially completed submissions of UDeCOTT and Mr. Calder Hart.

Counsel for both these parties had indicated that they were not minded to cross-examine the explosive testimony of the last and unexpected witness Mr. Karl Khan, who gave evidence of a familial relationship between Mr. Calder Hart, Chairman of UDeCOTT and the directors of CH Development & Construction Company Ltd which was personally invited by Mr. Hart to tender, in breach of UDeCOTT's own published tender requirements. Significantly, this company was awarded a 368 million dollar contract over two other bidders whose prices were at least 60 million dollars lower.

In respect of the reason for the Cleaver Heights Development Project first amended TOR, the evidence had been produced and subjected to cross examination by all affected parties. Net result - not one shred of evidence was adduced that
(a) 10 million or any other sum was missing from the project as alleged
(b) Dr. Rowley was connected in anyway with any impropriety on the project.

According to Commissioner Khan during the course of the proceedings there was not a scintilla of evidence impugning the character of Dr. Rowley.

Notably, the Government had stated that they had hired Bob Lindquist (Forensic Accountant) to examine the accounts of the project forensically - no Lindquist report was produced to the enquiry.

HDC later in the day, after the removal of their previous lawyers, the entire board except its Chairman and the resignation of the Ag MD Margaret Chow - promised yet another expert's report on the issue - this too was never forthcoming, despite several and repeated requests from the Commission.

Uff's view is therefore that there is no need for further hearings on those items of the TOR.

What remains is only the expanded TOR which was generated by the Government during the last week of the last scheduled session of the Commission. In fact, it is clear that the fourth hearing would not even have been set were it not for this expanded TOR. The expanded TOR related to the Cleaver Heights Project and mandated the Commission to look into the the design, delays on the project and other operational matters which had nothing whatsoever to do with the well publicised genesis of the issues surrounding Cleaver - (remember 10 or 20 million was supposed to have been missing!). In respect of this aspect Uff neatly states

"I next deal with what is to happen about the issues which would have been the subject of this week’s hearing. This refers to the issues in the second extension to the Terms of Reference dated 21 May 2009 which concern alleged defective and delayed work at Cleaver Heights. On those issues the evidence and submissions have yet to be heard. It follows that a fresh commission can be issued (and Gazetted) at any time. That has not happened and as a result we do not intend to take any action with regard to those issues unless invited to accept a fresh Commission. If a fresh Commission is to be issued decisions will have to be taken as to who should be appointed as Commissioners and those Commissioners will have to decide whether they will accept the appointment. There the matter rests."

(2) The true purpose of a Commission was accomplished

In order to assess the success or otherwise of a Commission of Enquiry one needs to appreciate the purpose of such a body. Under the Commission of Enquiry Act Chap.19.01 the President of Trinidad and Tobago has the power to appoint such a Commission to enquire into the conduct of any officer in the public service in Trinidad and Tobago, the conduct or management of any department of the public service or of any public or local institution, or into any matter in which an enquiry would, in the opinion of the President, be for the public welfare.

Contrary to widely held belief, a Commission of Enquiry is not a body established to determine who is guilty of either a criminal or civil wrong. It is not a necessary precursor to charging someone and it does not result in charges being laid. Very simply a Commission of Enquiry is one which is established as the ultimate citizen's accountability mechanism to satisfy their need to know the facts on an issue which is of serious public concern. After the publication of the report the executive may do with it what it sees fit. Neither the President nor the Prime Minister are statutorily bound to accept the findings or follow the recommendations. This factor seems to be consistently missed and this factor alone results in many of the uninformed expectations of a Commission of Enquiry.

A Commission of Enquiry must be distinguished from judicial proceedings or the criminal justice system and must never be viewed as a substitute therefor. Commissions are in fact largely viewed as inappropriate to investigate alleged criminal conduct.

In the Ontario Court of Appeal in Re The Children’s Aid Society of the County of York, Justice Mulock stated:
“…in answering the questions submitted it might be advisable to point out the nature of the inquiry in question. It is one to bring to light evidence or information touching matters referred to the Commissioner…where useful documents or other evidence could be obtained, it would seem reasonable that
he avail himself of such a source of information… It is for the Commissioner,
from all available sources, to bring to light such evidence as may have a bearing
on the matters referred to him. …”

And according to Justice Riddell:

“… A Royal Commission is not for the purpose of trying a case or a charge against any one, any person or any institution – but for the purpose of informing the people concerning the facts of the matter to be inquired into. Information should be sought in every quarter available."

Commissions can be particularly useful in uncovering the systems, methods and procedures used by corrupt officials which processes are usually not the focus of conventional criminal investigations which are more focused on obtaining proof of the illegal act itself. Commissioners are usually experts in the relevant fields and can give constructive recommendations to prevent the recurrence of the impugned activity. A Commission is expected to investigate and come to grips with what happened, why it happened and who is responsible for causing it to happen. It must do more than place facts on the table and consider the most appropriate remedy or solution to address the problem.

So, has this been achieved by this Commission? Does the instant Commission pass this litmus test?

Certainly, it would be difficult to argue that pertinent facts have not been unearthed relative to the TOR. Evidence of what was going on in UDeCOTT, the construction sector and surrounding the issue of alleged missing funds on Cleaver has been quite comprehensively adduced. Even now, without a report of the Commission, the relevant authorities can initiate appropriate investigations into the matters which have arisen.

With respect to the recommendations, Uff has unequivocally stated that come what may, he has every intention of producing the required report based on the evidence adduced before him. According to Uff, whether or not the Commission is published in the Gazette or validated by an Act of Parliament, he will be finalising his report and submitting it to the President.

Based on the professional manner in which Professor Uff has run the Commission and his wisdom in the face of mounting challenges, I for one, have every confidence in his ability to produce a report with appropriate recommendations for the benefit of the people of Trinidad and Tobago.

That being said, for the naysayers and the doubting members of the public, I urge a more temperate view on the events surrounding the close of the Commission. Much has been accomplished and much much more to be gained in the months and years ahead. What will come of this enquiry will depend in large part, not on what the officials do with the information that has been unearthed, but on what we as, right thinking citizens of Trinidad and Tobago, will do with the information we have gained as we exercise our democratic rights, if and when the time comes.