TT Making Progress Against Money Launderers

As you may have noticed on Monday, my friends, the Trinidad Guardian erroneously reported Trinidad and Tobago as somehow part of a "blacklist" of terror-financing states. But did you happen to read this dire news in any of the other dailies? Or an internationally respected publication like the New York Times or London Times?
Of course not, because it isn’t true. A review of the facts reveals that Trinidad and Tobago is continuing to improve in our efforts to comply with global financing standards.
This one slipped through the editorial process, and the Guardian owes an explanation for the error. The misleading story ran with no by-line – an inconvenience for truth-seekers, but a hedge for hasty journalists and authors. In the story, the anonymous author builds the report around a recent report by the international Financial Action Task Force.
The Financial Action Task Force is a well-regarded body which reliably sets the global standard for identifying and stopping money launderers and terror financiers. As I’ve said all along, we must look to bodies such as this to measure our progress in TT.

Imagine my surprise when the Guardian turned this valuable report of the respected FATF upside-down.
Ignore the poor Guardian and read the report yourself.

The report only mentions Trinidad and Tobago with praise for recent progress and commitments to improve in the areas of Anti-Money Laundering and Combating the Financing of Terrorism:

"Trinidad and Tobago Trinidad and Tobago has demonstrated progress in improving its AML/CFT regime; however, the FATF has determined that certain strategic AML/CFT deficiencies remain. Trinidad and Tobago has made a high-level political commitment to work with the FATF and the CFATF to address these deficiencies, including by: (1) implementing adequate procedures to identify and freeze terrorist assets without delay (Special Recommendation III); (2) implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); (3) ensuring a fully operational and effectively functioning FIU, including supervisory powers (Recommendation 26)."

It is an unfortunate fact that small nations such as Trinidad and Tobago can easily be dragged into the dirty business of money laundering and terror financing. Thankfully in our case, the bad actors appear to be outside the government and we can marshal our forces against them. Whatever the faults of the Manning regime they at least appear to want to put a stop to dubious and dangerous financial behaviors. Trinidad has always been on the right side of history’s major conflicts and we should continue to remain on the right side of the global war on terrorism.

I’ve been saying for years that we must get serious about the issue of money laundering. This is not simply a problem of the rich trying to avoid taxes or otherwise shelter honest money. We must remain vigilant over our financial comings and goings as devious characters lurk amongst us, attempting to take advantage of our open, accepting and forgiving society.

In two earlier posts (Friday, 4th December and Friday 18th December, 2010) I wrote about the dangers of “State capture” and money laundering. There is no need to repeat here what I said then … just scroll down and you can read it. But the point is that this is another aspect of the dangers that a small society like ours faces. And we must also be wary of journalists and newspapers who do not report accurately. As to why the Guardian would want to turn a report on its head I cannot say. It is either sheer incompetence or somebody there has an agenda of some sort. Give me another reason?

In this space we will give credit where credit is due, and in this case Prime Minister Patrick Manning’s Government at least appears to be doing the right thing. Of course, a serious question remains as to whether or not there are persons lower down the “totem pole” who have an interest in making certain that no matter what the Government does (any Government whether Manning’s or somebody else’s) is frustrated. The society in general, and this matter in particular, is not helped by inaccurate reporting from a newspaper that boasts of its accuracy in reporting on serious matters.

IS THE COUNTRY IN “1986 MODE?”

Most Trinis will understand the question. For those readers of this blog who are not Trinidadians (and, yes, there are quite a few) what happened in 1986 was that the then PNM Government which had won every single election was severely routed in that year’s general election, losing 33 of the 36 seats in Parliament. (Indeed, there are some who say that they lost Patrick Manning’s seat as well making it a loss of 34 seats, but that it was then Prime Minister A.N.R Robinson who prevented a recount thus saving Manning’s bacon.)

It was pretty clear to most observers for at least two years before the 1986 elections that the mighty PNM was losing support at a hitherto unprecedented rate. By March 1986 it was clear that then Prime Minister George Chambers had run out of steam and that the PNM was going down whenever he decided to call an election. The unions were marching. People were complaining bitterly about everything under the sun. The newspapers were highly critical of the Government. For example, one of the issues then was the amount of vagrants that were on the streets; the Daily Express newspaper ran a “vagrant of the day” picture every day in a prominent position in the newspaper … and many of the Ministers were perceived either as arrogant or corrupt or both! During the election campaign in December of that year one of the less competent Ministers, Desmond Cartey, stood up on an election platform and proclaimed to the world that “all ah we t’ief!” What he meant was that the allegations of corruption were unfair as during the oil boom of the late seventies and the early eighties that there many, many citizens who had cheated in one way or the other, e.g. non-payment of taxes, evading customs duties, overcharging for goods and services, etc. But his most unfortunate turn of phrase was seized upon by opponents of the Government as an admission of guilt (which in a very real way, it was) and is still remembered today some twenty-four years later!

Fast forward to today: What do we have happening? The unions are acting up. The Public Service Association (PSA) has booted out its old executive which was blatantly pro-PNM and replaced it with an executive which (for the time being at least) is fiercely independent of all political parties and which is simply refusing to go along with the Government’s plan to revise the Board of Inland Revenue and Customs and Excise by merging them into one authority. The PSA is promising some “serious heat” after Carnival. The powerful Oilfield and Workers Trade Union (OWTU) is also most unhappy with what is going on in the State owned oil company, Petrotrin, where layoffs are being contemplated.

Mr. Manning’s present team of Ministers, with a few notable exceptions, have left a bit to be desired. In a recent debate in the House of Representatives concerning the most contentious property tax, one junior Minister offended just about everybody by declaring that people had been “living off the fat of the land” and it was high time that they started to pay their way. He later attempted to explain this foolish statement away and tried to put a spin on it by saying that he was misquoted. Of course, nobody bought it. This followed a most embarrassing gaffe by the Sports Minister Gary Hunt concerning the erection of a $2 million flag at the national stadium. Mr. Hunt at first attempted to say that the flag only cost about $18 thousand. When the total cost of the flag installation came out ($2 million), the country erupted in anger. Then, four months later, Mr. Hunt, in a prime time television appearance, inexplicably raised the whole issue again by proffering a rather half hearted apology for the mistake and promising that it would never happen again. What?

The Opposition led by the formidable Jack Warner, immediately demanded his resignation. In a First World or developed country, this would have happened a long time ago. But Prime Minister Manning has defended his Minister and suggested that the nation should now “move on”.
Then there are water woes. The Water and Sewage Authority (WASA) has declared that because of a drier than usual rainy season our dams are at critical levels and all the signs are that we will experience a drier than usual dry season. Accordingly, WASA has ordered that there be severe restrictions on the use of water (no washing cars, watering lawns, etc.). On Wednesday (10th February) the Daily Express published a full front page picture of the very green Prime Minister’s residence lawn being cheerfully watered with sprinklers. The gardeners were promptly blamed and fired! But then we are regaled with a story (again in the Express) that President Max Richards’ gardeners having been doing the same thing! Most Trinis are finding it difficult to accept that ultimate blame in these stories do not lie elsewhere.

But the point here is not about water or the lack of it or Ministerial incompetence (real or imagined) or about perceived corruption. What I am trying to say is that there is a lot of grumbling on the ground. On top of that, Kamla Persad-Bissessar is presenting herself quite successfully as a credible alternative to the Manning regime. This factor, more than anything else, is making people think very carefully about where they will put their “X” next time in the coming election which is a little more than two years away. Put another way, the coming election, for the moment at least, is Kamla’s to lose. There are too many similarities between what is happening now and what happened before the 1986 elections for any PNM supporter to feel sanguine about his Party’s chances of success at the coming polls. Not only to me, but to many people who I have been talking to, the country appears to be in “1986 mode”. Can this change? Oh yes! Will it? I don’t know. Based on present performance, the PNM has a lot of work to do.

BWIA AND THOSE ANNOYING HEATHROW SLOTS

There has been a lot of ‘toing and froing’ over the sale of BWIA’s Heathrow slots with critics saying that the slots were seriously undersold and BWIA management saying that the slots were sold at a fair price. The lead proponent of the ‘fair price’ argument is former BWIA Board member William Lucie Smith.

For those who came in late, a ‘slot’ can be defined as a particular landing and departure right at a particular time on a particular day at a particular airport. Put another way, one slot (or pair) can be defined as the right to land and depart at certain times on a particular day. BWIA had seven such slots at Heathrow Airport … one of the busiest airports in the world. Indeed, Heathrow has more flights that wish to land and take off than it can handle. In other words there is a scarcity of slots. To make it worse, prices are controlled so that raising the costs simply to use the airport won’t work … it’s not allowed. The fact that there is an excess demand for slots makes these a valuable asset for any airline that has one or more of them, especially if these slots are at prime times. And BWIA had seven such slots at prime take off and landing times!

These slots have not only a high strategic value for airlines but a high cash sale value as well. Early morning landing and take off slots are particularly valuable for the long haul flights … and again, that’s what BWIA had. Now, admittedly there is a grey area when it comes to determining the value of a slot. But take a look at the following tables and you will get some idea of how much a slot is worth:

Table 1 Airlines Shares of Slots Heathrow (Summer 2004 and change from 2001)

Airline and rank	Heathrow Slots – movements per week	Share	Change from 2001 (%)
BA (1)	3742	40.1	+11.0
British Midland (2)	1096	11.7	-12.7
Lufthansa (3)	416	4.5	+19.6
Aer Lingus (4)	290[1]	3.1	-9.4
Virgin Atlantic (5)	284	3.0	+31.5
SAS (6)	280	3.0	-6.7
AA (7)	222	2.4	-
Total	9332 (9308 in 2001)	100

Source: Competition Issues associated with the trading of airport slots. A paper prepared for DG TREN by the UK Office of Fair Trading and the Civil Aviation Authority, TSO, Norwich, 2005, p. 34. http://www.caa.co.uk/docs/589/oft832.pdf

Table 2. Some Transactions and Implicit Values in the Heathrow Slot Market

Purchase and year	Quantity	Price or Value	Comment
Quantas from Flybe (2004)	2 pairs	£20 million (€30 million)	Primetime take off and landing
Virgin Atlantic from Flybe (2004)	4 pairs	£20 million (€30 million)
British Airways from SN Brussels Airlines (2002)	7 pairs	£25-30 million (€37.5-45.0 million)	Only slots acquired by cash appear on balance sheet (my emphasis)
British Airways from Swiss International Airlines (2004)	8 pairs	£22.4 million (€33.6 million)
British Midland asset valuation (2005)	90 pairs	£425 million (€637.5 million)	The Observer claims a series of writedowns mean that bmi is now worth ‘£225m at most’, i.e. less than its slot portfolio.

Sources: Issues of Travel and Hospitality Industry Digest: 23 March, 2007, 11 June 2004, 06 August 2007, 11 June 2007, 31 January 2005. See: www.e-tid.com.

Now, it is generally agreed by all in the airline industry that the slots will only increase in value. Remember that BWIA sold its seven slots for a grand total of Pounds Sterling 5 million, which seems on the face of it and without any really good explanations to date, to be a sale at a serious undervalue. What happened?

Put another way, I certainly cannot say that there is or was “bobol” in the sale and purchase of the BWIA slots. I have absolutely no evidence to make that suggestion. What I can say (and am saying) is that on the face of it and without any proper explanations having been given to date, it is not unreasonable to believe that the sale was at a serious undervalue. The big question is WHY?

If you can really show that it was not at an undervalue, then do so in a clear and cogent manner. Don’t brush us off with platitudes and obfuscations. Failure to do so will result in very nasty and most unfortunate suspicions that cannot be good for the national psyche. I am not the only one who does not understand why this sale was made at this seemingly low price.

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^[1] This works out at 145 return (‘pair’) services per week, an average of approximately 20 per day.

IS TRINIDAD & TOBAGO APPROACHING ‘FAILED STATE’ STATUS?

Sometimes it gets difficult to see the forest for the trees. If I ask this question of anybody who supports the present Government I will get a resounding ‘no’ for an answer. But if I ask the same question of those who oppose the PNM I will not only get a shouted ‘yes’ but I will get an added “we are already a failed State!”

So what is the truth? Perhaps we could start with a number of questions? Has the Government made T&T a safer place to live in? Has the economy been well managed or have the various economic decisions made by the Government over the years led us into trouble? Are we doing something now which, given the state of the world’s economy we ought not to be doing? If so, what? Are we doing something now which, given the state of the world’s economy we ought not to be doing? If so, what? Was the bringing in of the infamous Property Tax justified? If so, why? Are the country’s health care facilities in the best order that they could be in given all that has gone before or not? What about our education system? Is it being improved in a way that we can see, or are our children slipping further and further behind an increasingly competitive world?

All too often we argue from our own personal perspective with emotion and without regard to the facts. And our arguments are often tinged with our own political perspectives and prejudices. So, here are a few facts to consider:

There is a most interesting World Bank report which you can access here.

Basically, the report says that we are not doing too badly at all but that there are areas that need improvement and reform. If you go to page 51 of the report you will find a handy chart showing where reforms have been enacted around the world. You will see there that T&T is not doing too badly at all. And then there is another interesting chart put out by The Heritage Foundation for their 2010 Index of Economic Freedoms. You can access it here.

In this study T&T has been ranked at 55 out of 179 countries. Incidentally, neighbouring Venezuela was ranked at 174!

Well, if truth be told, that ranking isn’t bad. We beat Jamaica (57). But little Barbados (40) beat us, as did the Bahamas (47). But we beat Italy (74). Take a look. The chart is most interesting.

What I guess that I am trying to say is that there are “positives” in our situation and things are certainly not necessarily as bad as some would have us believe. On the other hand, I personally believe that we could be doing a lot better than we are and there are many things that are wrong with the way that we are being ruled and need fixing and/or improving.

Put another way, I believe that most (if not all) of us genuinely want to see our little country go forward and really don’t care who are the actual persons in charge (whether they are PNM or UNC or COP or any other acronym that you can think of) so long as things are done properly and that corruption is dealt with firmly. We can and will put up with the posturing of politicians on all sides provided always that they ‘deliver the goods.’ What we don’t want is the endless bickering, name calling and incompetence that we are so often met with.

I know that I haven’t answered any of the questions that I asked earlier. That has been deliberate on my part. I am trying very hard to be as balanced as possible and it is so easy to criticise without offering solutions. And I am not here trying to change your mind or opinion on any thing. I am simply trying to make you think and to realise that life is not one or two dimensional, but we live in a 3D world. If I have done that then I have succeeded. But those questions do need answering!

What do you think?