Kickback as 'business' or corruption

Mark Wignall

Thursday, July 28, 2011    

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Some years ago in the last PNP administration when the impressive highway roadwork was being laid out, a noted JLP Opposition spokesman made a public comment in which he stated that it had been established that at least one transnational corporation had, in the past, paid out 2 1/2 per cent kickback money to politicians in developing countries as part of its package to secure the contracts.

Then I had written that the JLP spokesperson sounded jealous, as if he wished that it had been his government in power to collect the "normal 2 1/2 per cent kickback".

The political fight for power in this country has, as one of its motivating factors, the ability of key politicians in power to be in the front line of the kickback train. Transnational corporations exist in a competitive environment and they have to answer to their shareholders for the continued profitability of the companies. If the key element in corporation X securing an overseas contract for, say, US$500 million is paying a kickback of US$10 million or US$12 million to key people in the ruling administration when it knows that the overestimate of the contract will easily take care of that "bother", it will even up the kickback money to 3 per cent or US$15 million.

We should also not fool ourselves that the same doesn't happen when key government assets are sold, or are in the process of being sold to large private entities. "He demanded and collected US$1 million over the sale," said a CEO of a semi-large multinational. This was told to me over seven years ago. The person named the government minister involved, and of course, the name of the company is well known. As he was not prepared to go any further with the matter (It would have incriminated him too), I dropped it. I left it alone not only because I did not have the resources to investigate the story, but as he told me, "It is quite normal." In other words, it was a part of the business model not taught in Harvard Business School.

The few stories that come to light are - well - few. The giver has no need to tell, and those on the receiving end, enriched as they have been, have no need to cut off their noses to spite their faces.

In late 2006 when it was revealed by then JLP Opposition leader, Bruce Golding that Trafigura Beheer, an Amsterdam-based company that had been long contracted with the government of Jamaica to lift (and dispose of) Nigerian oil on our behalf, had given the then ruling PNP administration what was said to be a "gift" of $31 million, the very obvious word which came to many was "kickback".

Why else would Trafigura part with $31 million if not to ensure the continuation of the renewable contract? some said. Although Trafigura has maintained that the payment was made as a "commercial transaction" and the PNP kept saying "gift" and "donation", it has never been established what else, apart from oil which was traded, could have constituted that "commercial transaction".

Close to four years in the life of this JLP administration, one senses that the JLP is not too interested in chasing down the Trafigura duppy for fear that it may expose some "kickback" and "commercial transaction" ghosts created since September 2007 when that party took power from the PNP.

A Jamaican political party in power always has a head-start on the party in Opposition in terms of these "midnight deals" to fund constituency and national elections. The PNP knows it, and the JLP is well aware of them.

Both parties know which are the key ministries through which the slush can be channelled and although at times jealousies can arise, the ministers in charge are seen as more than "quiet champions" because that is the reality of politics here at home.

It has even been thought that really big overseas investments, that is, those over, say, US$1 billion, are not that favoured by Jamaican politicians. Months ago a businessman/ex-politician explained it to me: "Once the project gets the description "mega" it invites more than the usual level of scrutiny, national and international. For one key minister, or if you may "purchasing officer" to strike a deal there, it could eventually blow up in his face because he doesn't really know where the traps are being set. If you have something under, say, US$500 million, the risks are less because the transaction is less unwieldy. Whether it is a collection of US$1 million or over, the smaller deals allow the politicians to cut their deals without too much fuss."

The implications in what he said were staggering. Small overseas investments have an easier chance of getting through in this country than the really big ones because the politicians have less control the bigger the investment is. The other implication is that private development in this country is dictated by the ability of the local politician to commandeer funds to himself and his party. Shocking!

Prime Minister Bruce Golding spoke quite strongly on corruption at the beginning of his administration. One didn't quite know if he meant penny-ante corruption or those which involved the "midnight" collection of millions of US dollars. Considering that his party is behind in the polls and the Opposition PNP has a damn good chance of retaking power next year, purely on JLP voter attrition, would he now be prepared to turn a blind eye to corruption if he should discover that one or two ministries have collected enough "midnight" money to assist in the funding of the next elections? I don't think the PM can afford to separate the corruption into "business deals" and just "tiefing".

One cannot change the face of big business, and were I the head of a large transnational seeking to secure a multimillion-dollar contract in a developing country when I know that there are four or five other competitors, I would issue a communiqué to my operational officers: "Secure the contract at all costs." They would know what I mean.

We are not suddenly going to awake one morning and find the world corruption-free. If prostitution is the world's oldest profession, politics has been the world's oldest in its refinement of corruption. It has nowhere going away in a rush.

Matters beckon to the prime minister to make his voice heard, even if it is purely for public consumption. At the very least, we can use his words to "jook" him when the next scandal breaks.

Unfortunately, when it comes to allegations of JLP corruption, the only appropriate stance for the Opposition PNP to take is hiding its face. That is the reality, given the PNP's wallowing in the corruption mud sometime between the years 1989 and 2007.





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