Bahamas<\/p>\n
The Government has failed to meet the Auditor General\u2019s demand to provide ownership details on all the companies awarded COVID-related contracts despite this being deemed \u201cpivotal\u201d to good governance.<\/p>\n
The revelation, contained in the Office of the Auditor General\u2019s report on how the Government used the proceeds from last June\u2019s emergency $250m International Monetary Fund (IMF) loan that kept the country and government afloat during the pandemic\u2019s peak, reveals its request for information on who beneficially owns these entities remains \u201cpending\u201d.<\/p>\n
The June 25, 2021, report tabled by speaker Halson Moultrie in the House of Assembly yesterday, confirmed that the Auditor General and his staff were provided by the Minnis administration with a list of companies \u201cthat received payments for the delivery of goods and services related to COVID-19\u201d.<\/p>\n
That list was not disclosed in the report, which suggested that the information made available by the Government fell some way short of the full transparency its internal financial watchdog was seeking. \u201cRequest was made for the beneficial ownership of these business entities. However, the same is pending,\u201d the Office of the Auditor General said.<\/p>\n
However, it immediately referenced an IMF quote that stated: \u201cKnowing 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.\u201d<\/p>\n
Drawing on this, the Office of the Auditor General said: \u201cWe 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.\u201d<\/p>\n
The implication of all this is that The Bahamas still does not have complete transparency over the awarding of contracts to supply goods and services to the Government despite the enactment of the Public Procurement Act, set to take effect on September 1, and accompanying reforms such as the Public Financial Management Act.<\/p>\n
While the names of winning bidders, and the reasons why they were selected, will be made public, it is still possible for politically-connected persons, family members\/relatives and others to set up a \u2018shell\u2019 company or special purpose vehicle (SPV) to compete for government contracts without anyone being aware as the beneficial ownership details remain concealed.<\/p>\n
Although annual company returns filed at the Registrar General\u2019s Office can disclose the names of shareholders and\/or directors, they are frequently concealed by the use of nominee entities or persons such as attorneys.<\/p>\n
The Office of the Auditor General\u2019s report is likely to trigger fresh scrutiny and political controversy. The Opposition Progressive Liberal Party (PLP) has claimed that the Government is in breach of the Emergency Powers (COVID-19 Pandemic) Regulations because it has failed to submit a report to Parliament on the \u201cexpenditures, suppliers for the goods and services procured, and the reasons those suppliers were chosen\u201d.<\/p>\n
The disclosure requirement is in Section 11.2 of the regulations. Philip Davis, PLP leader, said at the time: \u201cTwice the proclamation of emergency has expired \u2013 at the end of June and in November \u2013 and neither time did you comply with that requirement,\u201d he said. \u201cNeither time. You are in breach of the law, sir. Why? What do you not want the Bahamian people to know about how you are operating behind closed doors?<\/p>\n
\u201cWhich expenditures and which suppliers are so controversial that he cannot disclose them to the public, as he is so required? Perhaps we shouldn\u2019t be surprised. Every promise ever made to the Bahamian people about accountability is sitting in the dustbin.\u201d<\/p>\n
Meanwhile, the Office of the Auditor General said Bahamian law also restricts the disclosure of beneficial ownership information based on an opinion it received from the Ministry of Finance\u2019s legal unit. This opinion, which was attached to the report, said it was \u201csuitable\u201d to publish the name of a company awarded a government contract and details such as its shareholder register \u2013 but only if the latter is \u201cpublicly available\u201d.<\/p>\n
The Register of Beneficial Ownership Act gives the Government no authority to disclose \u201cbeneficial ownership information in relation to the tendering process\u201d, while the Data Protection Act is another barrier to its release. \u201cThere is no law which imposes mandatory disclosure of beneficial ownership information on the Government,\u201d the Office of the Auditor General added.<\/p>\n
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.<\/p>\n
Nevertheless, the Office of the Auditor General recommended \u201caddressing the beneficial ownership disclosure in terms of advancing and strengthening good governance\u201d. It also called for \u201charnessing accountability in public procurement and financial affairs\u201d, and \u201cfurther strengthening good corporate governance of all legal entities doing business in the country\u201d.<\/p>\n
Research by Tribune Business reveals the beneficial ownership non-disclosure potentially places The Bahamas in non-compliance with one of the promises\/commitments it made to the IMF in return for receiving the $250m low-cost loan based on the special drawing rights (SDRs) it had available with the Washington D.C. based organisation.<\/p>\n
The letter submitted by The Bahamas to the IMF, which was co-signed by then-finance minister, K Peter Turnquest, and Central Bank governor, John Rolle, pledged: \u201cWe will publish procurement contracts of crisis mitigation spending, including beneficial ownership information of companies awarded procurement contracts, report quarterly on COVID-19 mitigation spending, and such spending will be audited by the Auditor General in accordance with international best practice within nine months of the end of the fiscal year, and auditing results will be published on the Government\u2019s website.\u201d<\/p>\n
The IMF, in response, noted the same legal difficulties involved in accomplishing this.\u201dAlthough The Bahamas has a beneficial ownership definition and mandates registered entities to provide such information, it is not clear that such information is required in the bidding process. As such, beneficial ownership information of companies awarded COVID-related contracts is not published,\u201d it added.<\/p>\n
\u201cThe authorities are collecting the relevant information and developing the website for publishing crisis-related procurement contracts. The authorities want to publish all fiscal year 2019-2020 contracts at once and thus are waiting until all information is collected. They are also working on the web design.\u201d<\/p>\n