The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has failed to meet the Auditor General’s demand to provide ownership details on all the companies awarded COVID-related contracts despite this being deemed “pivotal” to good governance.

The revelation, contained in the Office of the Auditor General’s report on how the Government used the proceeds from last June’s emergency $250m International Monetary Fund (IMF) loan that kept the country and government afloat during the pandemic’s peak, reveals its request for information on who beneficially owns these entities remains “pending”.

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 “that received payments for the delivery of goods and services related to COVID-19”.

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. “Request was made for the beneficial ownership of these business entities. However, the same is pending,” the Office of the Auditor General said.

However, it immediately 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, the Office of the Auditor General said: “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.”

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.

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 ‘shell’ company or special purpose vehicle (SPV) to compete for government contracts without anyone being aware as the beneficial ownership details remain concealed.

Although annual company returns filed at the Registrar General’s 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.

The Office of the Auditor General’s 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 “expenditures, suppliers for the goods and services procured, and the reasons those suppliers were chosen”.

The disclosure requirement is in Section 11.2 of the regulations. Philip Davis, PLP leader, said at the time: “Twice the proclamation of emergency has expired – at the end of June and in November - and neither time did you comply with that requirement,” he said. “Neither 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?

“Which expenditures and which suppliers are so controversial that he cannot disclose them to the public, as he is so required? Perhaps we shouldn’t be surprised. Every promise ever made to the Bahamian people about accountability is sitting in the dustbin.”

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’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”.

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.

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: “We 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’s website.”

The IMF, in response, noted the same legal difficulties involved in accomplishing this.”Although 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,” it added.

“The 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.”

Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, yesterday told Tribune Business it was “critical” that Bahamians know who was awarded contracts to provide goods and services to the Government during a “disaster” such as COVID or Hurricane Dorian.

Suggesting that it would be “a huge statement” for accountability and transparency in The Bahamas, he added that the Office of the Auditor General’s report again indicated that this nation was “not aligned with modern expectations” on the issue.

Noting that Bahamian companies and non-profits “have had to jump through hoops” to comply with the Register of Beneficial Ownership Act, Mr Aubry said: “The fact locals want to know who has been given these contracts, and who the recipients are, particularly during a disaster such as Dorian and COVID-19 is critical.

“Citizens not only have a right but an expectation of that. Government monies are being utilised in a more significant way to prop up the country and being as transparent as we can possibly be is where we should aspire to. It makes a huge statement that allows for the kind of transparency that underpins public procurement laws, which is something the Integrity Commission Bill speaks to in terms of more modern openness and accountability.”