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Don’t ‘hide behind letter of law’ over beneficial owners

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Gowon Bowe

• Legal reforms allow some disclosure

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent banker yesterday criticised the government for “hiding behind the letter of the law” in not providing beneficial ownership details on COVID contract winners to the Auditor General.

Gowon Bowe, pictured, Fidelity Bank (Bahamas) chief executive and a member of the Fiscal Responsibility Council, told Tribune Business that if legal restrictions were a problem then the government should “embed” in the public procurement process a requirement that the winning bidder disclose who its beneficial owners are.

His comments came as Kwasi Thompson, minister of state for finance, informed this newspaper that provisions in the new Public Procurement Act, which takes effect on September 1, address at least some of the concerns raised by the Office of the Auditor General as well as Mr Bowe.

He added that it “provides for the government’s ability to publish the names of beneficial owners for recipients of government contracts where funding was sourced from an international agreement or funding agency. The government will comply with the law”.

While this would appear to clear the way for beneficial ownership disclosure on contracts awarded using the proceeds from last year’s “emergency” $250m International Monetary Fund (IMF) loan, which was the subject of the Office of the Auditor General’s report, it seemingly does not cover many other procurements done without either of the conditions referred to being present.

Separately, another source, speaking on condition of anonymity because they were not authorised to talk, said the Government’s failure to provide the beneficial ownership details sought by the Office of the Auditor General for the COVID contracts was not willful or deliberate.

They reiterated that existing laws, particularly the Date Protection Act and Register of Beneficial Ownership Act, prevented the Government from doing what was requested on the grounds that this would be a breach of privacy or confidentiality.

However, Mr Bowe argued that such a stance was not good enough amid 21st century demands for greater transparency and accountability over the use of taxpayer monies. “I think it’s extremely disappointing that the Ministry of Finance would take the position about what the legislation provides,” he told Tribune Business.

“In the bidding process, there’s nothing to prevent the Ministry of Finance saying to all companies lining up to bid that they must consent to disclosure of who their beneficial owners are. If you feel the law as written prevents disclosure, you should embed disclosure in the process of contract award.”

Arguing that it “does not bode well for the country”, Mr Bowe said The Bahamas has already amended its confidentiality laws under pressure from the likes of the G-7/OECD such that beneficial ownership information can now be shared with foreign countries.

Suggesting that disclosure should only not occur if there was a proven threat to “national security”, he reiterated: “It’s one where we have to mature as a country and we are not hiding behind the letter of the law but providing full transparency and disclosure. 

“I would hope the Ministry of Finance, acting financial secretary and all those seeking to embed the new public procurement legislation not only embrace the law but the spirit of the law, and say that all parties seeking to do business with the Government consent to full disclosure of their ultimate beneficial owners.

“This is not a contractual relationship between two private entities; this is the Government. The Government is the ultimate public interest entity..... This is an element of moving into the 21st century. We are a maturing nation, but it is disappointing to see that we got into that state and it’s disappointing to see that we are using the legal reasons for not doing so.”

Gaynell Rolle, the Ministry of Finance’s under-secretary, declined to comment on the Office of the Auditor General’s report and the beneficial ownership non-disclosure when questioned yesterday, instead referring the media to Mr Thompson.

However, Arinthia Komolafe, the Democratic National Alliance’s (DNA) leader, yesterday echoed Mr Bowe in arguing that the public interest, and need for accountability and transparency on the COVID contracts, should override the legal obstacles.

“While there might be legal obstacles to the public disclosure of ownership details of companies that benefited from these COVID contracts, the public interest and the need for transparency and accountability supersedes such impediments,” she argued. “The consent of the entities involved should have been obtained and, at a minimum, the details ought to have been provided to the Office of the Auditor General.

“In recent weeks, the Government and companies that were awarded contracts during the pandemic have come under pressure and scrutiny based on allegations of cronyism, nepotism, favouritism and political patronage. This recent revelation further places a dark cloud over the Minnis administration and exposes a flawed public procurement system.

“The Democratic National Alliance (DNA) calls on the Government to prove that the COVID pandemic has not been used to unjustly enrich its political supporters, cronies, family, friends and lovers. Respond to the request and reveal the names of those who received millions in COVID contracts.”

While the Auditor General and his staff were provided by the Minnis administration with a list of companies “that received payments for the delivery of goods and services related to COVID-19”, that list was not disclosed in the report. “Request was made for the beneficial ownership of these business entities. However, the same is pending,” the Office of the Auditor General added.

The Office of the Auditor General admitted Bahamian law restricts the disclosure of beneficial ownership information based on an opinion it received from the Ministry of Finance’s legal unit. This opinion, which was attached to the report, said it was “suitable” to publish the name of a company awarded a government contract and details such as its shareholder register - but only if the latter is “publicly available”.

The Register of Beneficial Ownership Act gives the Government no authority to disclose “beneficial ownership information in relation to the tendering process”, while the Data Protection Act is another barrier to its release. “There is no law which imposes mandatory disclosure of beneficial ownership information on the Government,” the Office of the Auditor General added.

The Act restricts access to beneficial ownership details to law enforcement agencies and financial services regulators for purposes of responding to overseas legal requests, and any unauthorised disclosure is treated as a breach of privacy/confidentiality.

Nevertheless, the Office of the Auditor General recommended “addressing the beneficial ownership disclosure in terms of advancing and strengthening good governance”. It also called for “harnessing accountability in public procurement and financial affairs”, and “further strengthening good corporate governance of all legal entities doing business in the country”.

The Office of the Auditor General also referenced an IMF quote that stated: “Knowing who ultimately owns companies (their beneficial owners) is a key piece of data that allows governments and citizens to check that money is going where intended.”

Drawing on this, it added: “We note that beneficial ownership full disclosure plays a pivotal role in the good governance in governmental financial affairs with respect to transparency and accountability; integrity and law enforcement; and mitigating the risks associated with abuse of public funds, corruption and financial fraud.”

Comments

tribanon 1 year, 1 month ago

Hear, hear Mr Bowe! Well said indeed.

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