The business of concessions and money laundering
Peter R. Ramsaroop, MBA
Kaieteur News feature. 6 July 2008
According to Wikipedia, the definition of money laundering is the metaphorical “cleaning of money” with regard to appearances in law, is the practice of engaging in specific financial transactions in order to conceal the identity, source, and/or destination of money, and is a main operation of underground economy.
Major concessions without the approval of the citizens of a nation through its Parliament in my opinion is a form of money laundering, because this is taking money away from us the citizens by selling or leasing state owned properties for less than they are worth while taxing us the citizens at a ridiculous rate of 16% plus 33% income tax + NIS + property tax + Duty Tax + Fitness + others.
The remaining money we have left to take care of our families is not adequate given the high cost of living and rising food prices.
Yet the politicians wonder why we the citizens continue to criticize their lack of accountability and the lack of economic vision for our nation.
The US Government has repeatedly said that Guyana’s anti-money laundering policies are ineffective and the regulations accompanying the Money Laundering Prevention Act are inadequate.
They urged the current government to introduce new legislation on money laundering into Parliament early in the legislative session and also called on the administration to provide greater autonomy for the Financial Intelligence Unit (FIU) by making it an independent unit with its own budget and office space.
Finally, we see this issue again has been raised in Parliament. Additionally, the US Government noted that in January this year the National Assembly passed the Gambling Prevention (Amendment) Bill, which legalizes casino gambling.
The Bill establishes a Gaming Authority authorized to issue casino licences to new luxury hotel or resort complexes with a minimum of 150 rooms.
MONEY LAUNDERING ACTIVITIES
The illegal activity of money laundering is now recognized as potentially practiced by individuals, small and large businesses, corrupt officials, members of organized crime (such as drug dealers), religious organizations, cults, and even corrupt states, through a complex network of shell companies and other investments in legitimate assets such as housing schemes, businesses, hotels and other major industries.
For example, if a person is making thousands of dollars in small change a week from a business (not unusual for a store owner) and wishes to deposit that money in a bank, it cannot be done without possibly drawing suspicion.
In many countries, for example, cash transactions and deposits of more than $10,000(US) are required to be reported as “significant cash transactions”.
One method of keeping this small change private would be for an individual to give money to an intermediary who is already legitimately taking in large amounts of cash.
The intermediary would then deposit that money into an account, take a premium, and write a check to the individual. Thus, the individual draws no attention, and can deposit his check into a bank account without drawing suspicion.
Another example, if you own a store and take drug money and buy supplies, but sell it at a reduced price, less than a legitimate dealer can buy the product for that cleans the money; even though one looses 20-30% of the investment it is still worth it.
Another method involves establishing a business whose cash inflow cannot be monitored, and funneling the small change into this business and paying taxes on it.
Such shell companies should deal directly with the public, perform some service-related activity as opposed to providing physical goods, and reasonably accept cash as a matter of business such as cambios. Dealing directly with the public ensures plausible anonymity of source.
An example of a legitimate business displaying plausible anonymity of source would be a business activity such as a product company or a hotel.
Since it would be unreasonable for them to keep track of the goods required to maintain daily activities, a record of their transaction amounts must be ostensibly accepted as prima facie evidence of actual financial activity. Service-related businesses have the advantage of anonymity of resources.
Corrupt politicians and lobbyists also launder money by setting up linkages with subcontractors to move money between the prime contractors and the sub contractor, so that money from inappropriate sources may be illegally used for personal gain or another example of taking payback in first class upgrades for their families, hotels, and other luxurious items.
Recently, the government granted without any transparency, concessions to a new newspaper that does not fall in the category of a new industry that Guyana needs to further its development, yet they received concessions that were unfair to the other papers in the country.
After a major businessman who has the highest respect both in his profession as business leader and financial expert criticized the government, they were quick to chastise him publicly.
Today, they still refuse to let the people of our nation know why they provided so many concessions to the new entity. They provided state property at a price that robs us the citizens of our earnings as it is our taxpayer’s money that is being wasted.
We still do not know what concessions were given to the oil companies. We need to lobby hard for any royalties to be distributed to us the citizens versus to the government. I have written policy papers on this that was published in these papers.
There are many other deals that have not been transparent such as loans and repayments that involved our taxpayers’ money.
We know the corruption index in Guyana is very high at all levels of government as is published by reputable international agencies.
I wonder if GRA ever takes the time out to look at where the money comes from to build housing schemes and other businesses and question whether or not it is documented on any tax returns.
Yet we have seen polygraph tests given to CANU employees and then they are fired. I wonder how many of us would pass a polygraph test if we are asked questions such as “did we steal anything in our lifetime”.
I know I have jumped the fence and stolen mangoes, I even sneaked into Bourda cricket ground without paying while the gate was opened during the Australia/WI match in the 70s and then got tear-gassed after the riots started. I would fail my polygraph test too given the type of questions that were asked of the CANU staff.
We must continue to be the watchdogs of these inappropriate acts by our government officials who think they are beyond the law, or do not need to answer our questions whether from us or the media.
They should be focused on improving the investment climate of our country, reduce taxes to stimulate the economy, and most of all allow us the freedoms that America celebrated this week on July 4th. We the citizens must stand up and be counted for OUR FREEDOM and DEMOCRACY.