Combatting Secret Company Ownership in T&T- a Keynote Address by Attorney General Faris Al-Rawi

Sex trafficking, murders and fatal road accidents seem to dominate the nation’s airwaves, social media posts and steal the front pages of newspapers. Yet another glaring national danger that seldom features in public conversations is that of secret company ownership. Before you think that this seemingly nebulous issue does not affect citizens in the same way as murders and road accidents, consider the following.

Corporate scandals such as the 2016 Panama Papers disclosures shine light on how the ultimate owners of companies (i.e. beneficial owners) illegally make millions by deliberately hiding their identities behind complex ownership structures. They do this by holding assets and sending payments offshore through shell companies, using aliases and abusing prominent political/public positions (i.e. politically exposed persons) to award contracts to oneself to family members, etc. These corrupt practices facilitate tax evasion, money laundering and terrorist financing which results in:

  •   Wanton corruption and mistrust
  •   Lower levels of government tax revenue and consequently less government spending on education, health, security, community projects on creating jobs
  •   Foreign countries stigmatizing T&T as a “supporter” of terrorism
  •   International countries blacklisting T&T as a tax haven and potentially less foreign investment.

 

A TTEITI- TTTI Public Sensitization Campaign to Promote Beneficial Ownership Disclosure

Through a yearlong campaign funded by the European Union Delegation in T&T, the Trinidad and Tobago Extractive Industries Transparency Initiative (TTEITI) and the T&T Transparency Institute have teamed up to tackle secret company ownership in the local extractive and non-extractive sectors. At the launch of this campaign, held at the Energy Conference on February 6 2019, representatives of Government, civil society groups and extractive companies met for a conversation on national beneficial ownership disclosure.

 

Keynote address by Attorney General Faris Al- Rawi

Attorney General Faris Al- Rawi provided much-needed local context to the issue of secret company ownership and he challenged the audience to think about its practical effects on a national level. He said, “…we talk about the ease of doing business indicators, FATCA threatens us, we talk about the Corruption Perception Index. What does this mean for citizens? Very little unless we get blacklisted.”  He then presented data from the Financial Intelligence Unit’s (FIU) publicly accessible Annual Reports to impress on the audience how activities associated with corporate opacity shaves the country’s potential revenues. Although illicit financing is a pervasive problem in T&T, he shared that there was a 95% decrease in the value of suspected criminal transactions, from TT$ 22 billion in 2017 to TT$ 1 billion in 2018. Money laundering, fraud, financing terrorism, tax evasion and corruption (including misbehavior in public office), etc., all make up these suspected criminal transactions.  The AG attributed this to better enforcement of laws that require a person to disclose his/her source of funds. In an attempt to hammer the costs associated with secret ownership, he referred to the Piarco International Airport Inquiry, in which millions of taxpayers’ dollars are still being spent chasing the matter in court.

As it relates to beneficial ownership legislation, the AG told of the Companies Act (Amendment) 2018, that was laid in Parliament on December 6 2018. This will serve as the country’s National Beneficial Ownership Bill and it intends to reduce revenue leakages, improve transparency, improve customer due diligence, as well as, to comply with best practices. “In this Bill the company has to verify its information, it provides for offences, (it) puts obligations on the Directors and allows for the identification of secret ownership through trusts,” he said. Once it is made law, all companies will be required to disclose their beneficial owners in a National Beneficial Ownership register.

“This (beneficial ownership) law is going to impact on the multibillion dollar claims that we have. Al Capone did not go down for murder. He went down for tax evasion.”

-AG Faris Al-Rawi

Notwithstanding the importance of beneficial ownership legislation in combatting corruption, the AG saw the need for a more holistic approach that regulates other related activities. He said “ …(we) need to add Civil Asset Exposure Laws to explain your wealth, add a Registration of Deed Bill since we also use land transactions to sequester wealth by abusing the equitable trust principle. (Add) a Real Estate Agents Bill since agents get commissions unregulated for land transactions and a Non- Profit Organization Bill. We uncovered 7709 unregulated non-profit entities. They need to be regulated.” He said that these laws are being drafted and will be laid in the near future.

While legislative change is key, the AG emphasized the need to marry laws with strong systems to ensure that the laws are enforced or operationalized. He said, “…it is well and good to talk about law, but is it working? What is the result of the application of our laws and why are they not working?” He made reference to several gaps that hinder our progress towards beneficial ownership disclosure and that hamper the fight against illicit financing. For example, he alluded to the inability to pay online to submit beneficial ownership information or to register a company. He also highlighted that land transactions remain paper based and are therefore subject to poor record keeping and fraud.

Some of the mitigating measures he identified include the implementation of an online electronic payment system in March 2019 and the roll out of a Property Business System in the next 10-11 months. The latter will allow information on property and land owned (e.g. deeds, property registration information in a centralized repository —deed, company, aerial photography, ID details, etc.) to be captured in a central repository.

Importantly, beneficial ownership disclosure is essential to the AG but he said that capturing more tax revenue from the country’s oil and gas resources is of greater priority. He explained “…taxpayers obtained from one of the producers of gas in T&T, 0.53% of what is sold.  In a market right next to Trinidad, that same producer gives that government roughly 55% of the revenue on their sales. How much is ours is the golden question?” He stressed the importance of transparency in extractive sector contracts and for citizens to focus on the data that is made available.

For more information on this public sensitization campaign call 225-4334 or email tteitiproject@gmail.com.