Minister Laing Sets the Record Straight On Scandal for a Second Time

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Minister of State for Finance Zhivargo Laing (BIS Photo/Peter Ramsay)

Minister of State for Finance Zhivargo Laing (Photo/Peter Ramsay)

FULL STATEMENT ON MONAVIE ISSUE:

Mr. Speaker, I previously spoke on this issue in the House, in response to the suggestion on the part of the Member for St. Thomas Moore that I was running from the issue. This is untrue.

My comments at the time were not the full statement I promised but they did represent the extent of my involvement in the matter he raised.

I now make the promised full statement.

Mr. Speaker, I first wish to speak to the events that reflect my involvement in this matter.

Some time in September 2007, I received a telephone call from my brother, Tyrone Laing, who advised me that the Customs Department had increased the rate of duty on a juice product known as Monavie from 10% to 45%. He said that he believed that the same was done because someone who had a contact in Customs was able to have this rate change effected.

He claimed that the sudden change in rate was affecting all persons who imported this juice as it had raised their cost substantially.

My immediate response to him was that as it was a matter that involved family I preferred not to get involved.

I detected his disappointment with my response. After hanging up the phone, I thought to myself that it was not right that someone could use a contact in Customs to have a rate change effected and that I would not at least look into the matter simply because the person complaining about the same happened to be my relative.

I therefore contacted the Secretary of Revenue, as I would normally do when matters involving revenue arose and asked that he look into the matter. In the interest of full disclosure, I advised him that I had gotten the complaint from my brother whose wife imported the product.

A short time later, the Secretary of Revenue reverted to me and advised that he contacted the Customs Department in Freeport about the issue and that he was advised that the rate was changed from 10% to 45%.

He told me that on the basis of what he was told he advised the Customs Department that it was not normal practice to change a rate of duty in mid-year thereby affecting the cost of doing business without notice.

He told the Customs Department that it should allow the lower rate to obtain until the budget process when any adjustment could be considered as was the usual practice. On hearing from the Secretary of Revenue, I regarded the position as a reasonable one and left the matter there.

Some weeks later, Mr. Speaker, I arrived at my home in Freeport and parked outside my gate. There I was met by a number of persons (none of whom was a relative of mine) who told me that they were importers of the Monavie product and complained that they had been led to believe that the rate of duty on the Monavie would be 10% but were now being told by Customs that the rate would be 45%.

This surprised me as I thought that matter had been resolved. I told them that I would look into the matter further.

At some point after, I returned to the office in Nassau, I asked the Secretary of Revenue about the status of the matter regarding the Monavie product was. His response was that he thought it had been resolved but would inquire further.

Soon thereafter, the Secretary of Revenue showed me a copy of a letter issued by the Comptroller of Customs informing Mrs. Monique Laing that due to a World Customs Organization advisement, the Mona Vie product should be differently classified and that the new classification would attract the rate of duty of 45%.

He also showed me the letter from the World Customs Organization. I was surprised to learn that the Comptroller of Customs would take such action without reference to the Ministry of Finance, particularly given prior instructions from the Secretary of Revenue on the matter.

I discussed the matter with the Financial Secretary and also with the Secretary of Revenue and it was both their views that it was not the usual practice for rates of customs duty to be changed in the middle of the year. It was noted that small business operators who had been importing and distributing the product having been charged the 10% rate would suffer serious hardship if the rate was suddenly increased to 45% in the middle of the financial year.

It was further agreed that it was reasonable enough to allow the 10% rate to prevail until a review during the upcoming budget process. This would permit the importers to be advised of a proposed rate change at the beginning of a budget period as is the norm. This view was consistent with the directive originally given by the Secretary of Revenue in September 2007 when the matter first arose. I penned instructions reflecting the consensus and the matter was left there.

Over the ensuing weeks, on a number of occasions when I would have seen the now (Acting) Comptroller of Customs or the head of Customs in Freeport on different occasions I inquired about the matter and to my best recollection they suggested that it was being resolved.

Mr. Speaker, some time in January or February 2008, my youngest brother called me, quite upset about some web posting that was circulating accusing me of all manner of things involving this matter.

I eventually got a copy of the same. The posting was filled with lies and vulgar language. It greatly disturbed me. I believed it to be as another of the cheap maliciousness that I had come to expect from some elements of supporters of the side opposite.

Later, a gentleman called me to alert me to the web posting and told me that he knew the authors of the posting. I shall not name anyone at this time. The gentlemen said he had approached one of the authors and told him that I was going to sue them for their libelous statements, at which point that author confirmed that they had pulled the web posting.

Interestingly enough, in that same web posting, it said that “even as we speak, the Member of Parliament for St. Thomas Moore was “putting hell on Laing in the House of Assembly.”

Following the pulling of the web posting, I totally dismissed the matter until it was raised in this place by the Member of St. Thomas Moore. He appears to have missed his orchestrated date on which he was to raise the matter in this place.

Those are the facts, Mr. Speaker, as to my involvement in this matter; the full facts.

FURTHER INQUIRY

Mr. Speaker, since the Member for St. Thomas Moore raised the issue, I made further enquiries into this matter to understand why this has come to this point. Here is what I can confirm.

Mr. Speaker, the Customs Department has two categories that classified drinks versus juices. In simple terms, one classification is for what is regarded as 100% juice which attracts a duty of 10% and the other classification is for drinks which attract a duty of 45%.

Monavie, like many other products, has on its label the description 100% juice and had therefore been classified as such and attracted the 10% duty.

Some time prior to September 14, 2007, a determination was made in the Customs Department in Freeport that the imported Brazilian juice known as Monavie should attract a rate of duty of 45% as opposed to 10%.

This became known only after a brokerage firm known as “E Z Imports” sought to clear some of the product from the dock in September 2007 at the 10% and was advised by a Customs officer that the higher rate would apply. That brokerage firm notified its customers, one of whom was Mrs. Monique Laing, my sister-in-law.

Monique Laing wrote to the Comptroller of Customs, unbeknownst to me, complaining about the rate change. Her letter was dated September 14, 2007. I table her letter in this Honourable House. (Annex I)

In a letter dated October 2, 2007, unbeknownst to me, the Comptroller of Customs wrote to the Secretary of the World Customs Organization requesting a “Classification Decision” on the product Movavie. I table that letter in this Honourable House. (Annex II)

In a letter dated October 4, 2007, the Customs Department, unbeknownst to me, wrote Mrs. Laing back responding to her September 14th, 2007 letter advising that a review of the product Monavie was being conducted to determine the classification and rate of duty and that in the meantime the 10% rate would continue to be applied and that any change would be communicated to her in writing. That letter I table in this Honourable House of Assembly. (Annex III)

In a letter dated November 13, 2007, the Secretary of the World Customs Organization wrote the Comptroller of Customs, unbeknownst to me, advising that the classification for the Movavie product had ruled should not be heading 20.09 but rather heading 22.02. That letter I again table (Annex IV).

By letter dated November 20, 2007, the Comptroller of Customs wrote to Mrs. Laing, unbeknownst to me, that the product re-classification would take effect due to the World Customs Organization ruling and that the product would therefore attract a rate of 45%. I table that letter for the benefit in this Honourable House of Assembly. (Annex V)

By memorandum dated December 7, 2007, the Secretary of Revenue wrote the Comptroller advising that it was not the practice to amend rates outside the budget period and that the original heading should be allowed until a review at budget time. I table that memorandum for the benefit of this Honourable House of Assembly. (Annex VI)

FURTHER OBSERVATIONS

Mr. Speaker, I do wish to make some further comments regarding this matter, having had to delve into it in some detail.

First, Mr. Speaker, it should be noted that the Customs Department in Freeport charged the 10% rate of duty for more than a year prior to September 2007. Some time in September 2007, it gave some indication that led importers to conclude that the rate of duty on Monavie had been increased to 45%. This was not known to the Minister of State for Finance or the Ministry of Finance.

Second, the determination to apply a rate applicable of 45% occurred in September 2007 notwithstanding that persons had been importing the Monavie product and being charged customs duty of 10% by the Customs Department for more than a full year!

Thirdly, notwithstanding the Customs Department’s undoubted legal authority to determine whether or not there has been a “short levy” under the Customs Management Act, the Rules of Natural Justice would impose a duty to treat an innocent party according to a standard of fairness.

These facts beg a number of questions:

  1. What prompted the unforeshadowed increase in the rate of Customs duty applied to the Monavie product in September 2007;
  2. What promoted the actions that led importers of the Monavie product in Freeport to be informed that there would be such an increase prior to any advice from the World Customs Organization (WCO)?
  3. Why was 10% charged up to that time and what triggered the need for a sudden change even before any inquiry to or receipt of advice from the WCO?

I might note further, Mr. Speaker, that I received weeks before now a copy of an email that discussed this matter in the most colourful and defamatory manner, accusing me of all manner of things.

Mr. Speaker, I have spent most of life seeking to live a life not merely acceptable to people but to God whom I chose to serve many years ago. This might not be appreciated by those who seek to sully my name today but it is true. I believe that it is important for me to act right, not for political reasons alone but more importantly for personal spiritual reasons.

I simply wish to assure you and this Honourable House, Mr. Speaker, that I never sought one day since coming to office to give any tax advantage to anyone, not relative or friend.

I never sought to contravene any law of the Bahamas in this or any other matter.

I am not involved with any business belonging to any relative of mine, including the import of the Monavie product.
Action and decisions taken on my part regarding this matter were based on principle alone.

Quite frankly, while I would have been delighted not to have involved myself in any matter such as this that concerns a family member, when in fact there are hundreds of persons in The Bahamas who are involved in the distribution or import of Monavie, including some in this Honourable House and that other place.

This notwithstanding, I wish to note that the family members of we public officials are entitled to be treated as any other business person in our country and should not be prejudiced and limited in their remedies due to the fact that a family member serves the public. The Government nor its agencies ought to treat any member of the public arbitrarily and that includes the family and relatives of public officials.

Indeed, just as individuals must not be advantaged by the position of their relatives in public office , nor should they be disadvantaged for the same reason.

Mr. Speaker, in both by my previous statement in this House and in this statement I categorically deny any attempt on my part to contravene any rule or law of Customs on behalf of a relative.

At all times, it was not the interest of any relative that guided my actions but support for what I was advised was and believed to be the usual and normal practice of dealing with Customs duty in the country. Far from seeking to “cut the customs duty” as some sought to suggest, I supported the instruction that it should be kept where it was and be reviewed at budget time.

THE CONTROLLER OF CUSTOMS

I do wish, Mr. Speaker to make this point, it may appear to some that I suggested in my earlier statement that the Comptroller of Customs increased the rate of duty on this product. That is not so. I relayed information given to me by a layman who claimed that a reclassification in the rate on this beverage would result in an increase in duty.

The Comptroller of Customs effected a reclassification which resulted in the rate change based upon a ruling by the World Customs Organization.

MEMBERS QUESTIONS

Mr. Speaker, the Member for St. Thomas Moore has repeatedly accused me of not answering his questions? The fact of the matter is that in this place, I answered all of his questions up to the point where I advised that I would make a full statement. The questions unanswered were as follow:

Question

Would the Minister of State for Finance explain why other juice drinks such as bowl drinks, fruita drinks and jumex Mexican drinks, etc., were left unchanged?

Answer

No complaint was raised to me in respect of any drink other than Monavie and no decision was taken in September 2007 or subsequent to alter the classification and hence the rate of duty on any product other than Monavie.

Further, Mr. Speaker, Monavie is used as a health drink or as a supplement. It is taken in prescribed doses in the morning and in the evening. It is not a recreational or soft drink that is taken casually at any time. It is not a substitutable for ordinary fruit juice. Its taste, while reasonable enough would not lead children, for instance, to want to drink it other than if they are forced to do so.

It is a drink more comparable to the Aloevera health juice. Anyone seeking to compare Movavie to bowl drinks, fruita drinks or jumex Mexican drinks as a substitutable is mistaken.

The issue of advantage does not therefore arise because this drink does not, to my knowledge, compete with any of the drinks mentioned.

Question

Would the Minister of State for Finance inform the Honourable House under which law was the Comptroller of Customs authorized to alter or change the Tariff Act without the approval of Parliament?

Answer

The Comproller of Customs would have acted under the provisions of the Customs Management Act.

The Comptroller of Customs never altered or changed the Tariff Act. The Comptroller, acting on advice from the World’s Customs Organization reclassified the product Monavie which placed it in a heading that resulted in a rate of duty increase from 10% to 45%.

At all times in this matter the issues that guided me was the advice that it was not the usual practice to have any rate change done in the middle of the budget year and that doing so in the manner that it was done in September 2007 in particular was unusual. I can say that at no time was I guided by a desire to give any advantage to a relative of mine. That assertion is political mischief. It is absolutely untrue and will remain untrue no matter how many times it is repeated.

In summary I say that I determined that since the product had been imported for months at 10%, the fair and reasonable thing to do was to have the rate remain unchanged until it could be reviewed at budget time, which was and is the normal practice.