Editorial | Why is the AG failing to hold recalcitrant boards to account?

Six years ago, this newspaper’s financial analyst, A.C. Count, who was in the habit of reviewing the financial reports of state-owned companies and other government bodies, was often frustrated that the information with which he had to work was out of date and that public officials didn’t seem to care.

Count took to naming the CEOs and the boards, including the chairmen, of the offending companies, who tended to respond with hubris for their own failures in public accountability and for the operational and management weaknesses he highlighted in the analyses. Among Count’s proposals for fixing the problem was that public agencies be made to follow the rules of listed companies in publishing their reports, including having to post quarterly unaudited statements on their websites.

While Jamaica’s economic support agreement with the International Monetary Fund was an important catalyst in the Government’s effort to improve accountability, we suspect that Count’s campaign, and the support it received in these columns, was not without influence on the 2014 amendment to the Public Bodies Management Accountability Act, which, among other things, set out a clear timetable for QUANGOs to produce their annual reports.

Indeed, as the anti-corruption group, National Integrity Action (NIA), reminded last week that public bodies are obligated, by law, to produce their reports and accounts “as soon as possible after the end of each financial year but not more than four months thereafter”. Given that the financial year of most public bodies, like the Government’s, ends in March, these reports should be ready by the end of July.

Their boards, after the statements are ready, must submit them to the minister to whom their agencies report, “who shall cause the report and statements to be laid on the table of the House of Representatives and of the Senate”. The legislation, unfortunately, doesn’t say how long after the end of the financial year ministers must comply with the law’s requirement for tabling the reports. There is no sanction for failing to do so.

However, Section 25 of the act provides that the accountable person in a public body who does not produce annual reports and statements, or fails to fulfil a raft of other obligations, may be required by the court “to pay the Crown” up to J$1 million if found guilty of the offence. Penalty is dependent on the attorney general taking the matter to court. Insofar as we know, it has never happened. The result is that few government bodies bother to take the matter seriously. The vast majority produce their reports if and when they please.

SINGLE AGENCY

In last week’s statement, NIA noted the Cabinet Office’s tabulation, as posted on its website in January 2019, of compliance of QUANGOs with their reporting requirement. It showed that only a single agency, of 163, was up to date with its report. A later tabulation, for the period up to March 31 of this year, and compiled in June, revealed a 900 per cent improvement – all of 10 public bodies were current with their reports. Put another way, six per cent of 163 public bodies were up to date.

Among the more egregious of the laggards were the Sugar Company of Jamaica (SCJ) and its parent firm, SCJ Holdings. Both are at the centre of the Holland Estate land deal, in which approximately 1,400 acres of the estate was handed over, in opaque circumstances, to a company in which the live-in, life partner of J.C. Hutchinson, former minister without portfolio in the Ministry of Industry, Commerce, Agriculture and Fisheries (MICAF), was a shareholder and director, while another director was a senior officer in a government agency that reported to Mr Hutchinson. Mr Hutchinson, on the political side of the ministry, was the top man in agriculture.

At the time of NIA’s review, the SCJ was seven years behind with its reports. The Cabinet Office’s latest tabulation says that it is now eight years. SCJ Holdings is nine years behind. Only a single entity, the National Export-Import Bank, of the 29 bodies that report to MICAF, based on the recent Cabinet Office report, is current in its filings.

While we make no claim about the legality of the Holland arrangement, the matter raises legitimate questions about conflict of interest on the part of Minister Hutchinson and whether he, and other public officers, operated ethically. That is why we support NIA’s call for the Integrity Commission to investigate the deal.

But there are the broader issues relating to the lack of transparency in the finances of the public bodies. The murky environment that results when the finance and other affairs of government companies are not open to scrutiny from the public in a timely fashion creates conditions in which mismanagement and inefficiency can easily be hidden and corruption facilitated.

Ministers, in this regard, have to take seriously their obligation to hold boards accountable when they fail to meet their obligations. The public bodies law should be amended to require ministers, at a specified period, to report on the status of the financial and other statements of agencies in their ministries and why they may have not been produced.

But the process of accountability must start with a commitment to good governance and transparent government, which requires a leader who is firmly against corruption, which Prime Minister Andrew Holness has declared himself to be. Mr Holness must be willing to expend political capital on this venture, including being absolutely intolerant of colleagues whose behaviour falls below the benchmark for ethical conduct and threatens the best interest of the country.