PLP Report on Minister Laing Scandal Released

Nassau, The Bahamas – At a mid morning press conference concerning the ongoing scandal involving FNM junior Minister of Finance Zhivargo Laing and the importation of the Mona Vie product, the Progressive Liberal Party laid out the facts surrounding the incident and demanded Mr. Laing’s resignation.

In a four page statement accompanied by a detailed 6-page report, the PLP’s Parliamentary leader the Hon. Dr. Bernard Nottage also called on Prime Minister Hubert Ingraham to end his silence on the matter and fire Laing.

FULL TEXT OF THE REPORT

COMPREHENSIVE REVIEW BY THE PROGRESSIVE LIBERAL PARTY ON ZHIVARGO LAING, THE MINISTER OF STATE FOR FINANCE’S IMPROPER INVOLVEMENT IN LOWERING THE CUSTOMS DUTY ON THE IMPORTED PRODUCT MONA VIE

19th March 2008

The PLP has reviewed fully the statements made by Zhivargo Laing, the Minister of State in the Ministry of Finance with regard to his role in the lowering of the duty on the drink Mona Vie. This matter first came to the attention of the public by way of a series of questions asked by Frank Smith MP (PLP) for St. Thomas More on 13th February in the House of Assembly.

MR. LAING SHOULD RESIGN Mr. Laing has spoken on three occasions in the House of Assembly on this matter. He spoke first at oral question time in the House of Assembly on 13th February 2008. Then he spoke again extemporaneously on Wednesday 28th February 2008 in the House. His third statement was a written statement made on the 10th March 2008 in the House.

Having reviewed all the statements, we are moved to say that Mr. Laing’s response has been less than forthright and evasive. Having reviewed all the facts, we find him in an inescapable conflict between his private interest and his public duty. In the circumstances, Mr. Laing must take the honourable course. He must resign.

CONTRADICTION We wish to draw the public’s attention to the following statement by Mr. Laing on the 28th February: “I want only to say Mr. Speaker; I want to assure this House that I did not at anytime, in any way, seek to give any advantage to any family member or anyone in relation to any product.”

The public ought to compare and contrast this to his first statement on the matter, which he gave on 13th February: “The written complaint was made by my sister-in-law (Monique Laing).”

The latter statement clearly contradicts the first.

MR. LAING’S OWN ACCOUNT By Mr. Laing’s own account, the facts are that at some time in September 2007 he received a complaint from his brother by telephone complaining about the rise in duty on the drink Mona Vie. Mr. Laing did not give the date of the telephone call. We point this out because, the date of the phone complaint is crucial to the issue of the state of Mr. Laing’s knowledge when he intervened in the matter. Mr. Laing claimed in his 3rd March statement that at the time he first intervened, he was ignorant of an official complaint by his sister-in-law.

According to him, his first knowledge of any complaint came to his attention by way of the phone call from his brother Tyrone Laing. Mr. Laing said the following: “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 Mona Vie from 10 per cent to 45 per cent.” Mr. Laing said that at first he told his brother that since it was a matter involving his family “I preferred not to get involved.”

That was in fact the proper thing to have done. The matter should have been left there. The brother ought to have been told that he ought to write a formal complaint to the Comptroller of Customs so that the matter could be investigated.

Mr. Laing did not do that. Again, by his own account, he intervened with the Secretary of the Revenue and asked him to investigate the matter. He disclosed to the Secretary that his brother was the author of the complaint. What Mr. Laing does not now admit and seeks to fudge is that his brother and sister-in-law benefited from his direct intervention in the matter.

As a result of the intervention of Mr. Laing, who is the Minister responsible for the Customs Department, the Secretary of the Revenue intervened to the benefit of his brother and sister-in-law. By Mr. Laing’s own account, the Secretary of the Revenue “advised the Customs Department that it was not the normal practice to change the rate of duty in mid-year thereby affecting the cost of doing business without notice.”

This point is also important since Mr. Laing seeks to excuse his behaviour by suggesting that the instruction by the Secretary of the Revenue was not unusual and that in fact the Customs Department’s behaviour was unusual.

COMPTROLLER CONTRADICTS MR. LAING’S ACCOUNT Public comments from the Comptroller of Customs John Rolle clearly contradict that statement by Mr. Laing. In an interview published in the Bahama Journal on Thursday 20th March, the Comptroller has described the directive to keep the Mona Vie at the lower rate of duty as “illegal”. In fact, Mr. Laing himself had to admit in his statement on the 3rd March that the Comptroller of Customs has the right in law to assign imported goods into the correct categories. He said: “The Comptroller of Customs effected a reclassification which resulted in the rate change based upon a ruling by the World Customs Organization.”

Mr. Laing is not specific about when the letter from the World Customs Organization was shown to him, or when the first conversation took place with the Secretary for Revenue.

There was a second intervention with the Secretary for Revenue to which we will refer later. It was on this second occasion that he claims that he became aware for the first time of the formal complaint by his sister-in-law and that an answer was given by John Rolle, the Comptroller of Customs, informing her that the rate of duty would then be 45 per cent as a result of the reclassification of the drink to its correct category.

Mr. Laing tabled the letter from the World Customs Organization in the House of Assembly. That letter is dated 13th November 2007 and the letter informing Mrs. Laing of the findings of the Comptroller to change the classification of the product is dated 20th November. On 4th October 2007, the Comptroller wrote to Mr. Laing’s sister-in-law to say the matter was being investigated and that the rate of duty at 10 percent was to continue until such time as his investigation was completed.

On October 4th, there was no reference by the Comptroller to an intervention by the Secretary of Revenue. Remember Mr. Laing claims that he had intervened for the first time with the Secretary of the Revenue in September. We know that up to at least the 13th November, the rate of duty was still ten percent.

Mr. Laing in his statement to the House on 3rd March 2008 seeks to persuade the House that with his brother having called him to complain sometime in September 2007, with a letter of complaint on file from his sister-in-law on the 14th September complaining about the matter, he did not know that a formal complaint had been lodged.

We have pointed to Mr. Laing’s unwillingness to be specific about the dates on which he first intervened. One logical inference to be drawn from the fuzziness with regard to the dates, is that Mr. Laing is seeking deliberately to avoid what would ordinarily be the inescapable conclusion that his brother, Tyrone, called him to complain because the Comptroller of Customs was not responding favourably to their written complaint, and in the dissatisfaction of his brother and sister-in-law, the brother deliberately called Mr. Laing to intervene for their benefit, which Mr. Laing did and of which Mr. Laing was fully aware.

Try as he might, Mr. Laing cannot escape the obvious appearance of a conflict of interest.

MR. LAING’S SECOND INTERVENTION Mr. Laing intervened a second time. This time, he intervened after the Comptroller of Customs had determined that the classification should change on the 13th November or thereabouts. The Comptroller communicated this to Mrs. Laing on 20th November. By 7th December in a letter from the Secretary of the Revenue, this was reversed. That reversal was by the account of the Minister directly as a result of his intervening in the matter for a second time.

We quote from Mr. Laing’s own account to the House on 3rd March 2008: “I supported the instruction that it should be kept where it was and be reviewed at budget time…

“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 further agreed that it was reasonable enough to allow the 10 percent rate to prevail until a review during the upcoming budget process… I penned instructions reflecting the consensus and the matter was left there.

“In summary I say that I determined that since the product had been imported for months at 10 per cent, the fair and reasonable thing to do was to have the rate remain unchanged until it could be reviewed at budget time…”

The fact is that by penning the instructions and by himself determining that the rate should remain at 10%, Mr. Laing as a public official was acting and inviting the Comptroller of Customs to act in an illegal manner and to break the Law. The Comptroller’s public comments in the Bahama Journal state: “…the instructions received by the Department of Customs late last year to place the Mona Vie nutrition drink back under the ‘wrong’ classification was both improper and illegal”.

Mr. Rolle went on to say to the reporter “There is a procedure where [importers] for years sometimes do not pay the correct rate and when we (the Department of Customs) become aware of it then we by law have the authority to go back two years and assess the correct amount. The procedure is that based on the law we are supposed to collect the exact amount – not more; not less. In the event where we collect an excess amount, the same law forbids us from keeping that. And so [customs] in the meantime would refund the monies to the individual.

“For someone to try to say that that process changes the rate in the middle of the year, I find that quite disappointing.”

The Bahama Journal story continues ‘In following this procedure, Mr. Rolle said the Department of Customs is merely following the law and not seeking to provide an advantage or disadvantage to anyone.’
(Emphases added)

MR. LAING’S WRONG DOING Mr. Laing does not appreciate his wrongdoing. He by his own statements has built a trap for himself and fallen into that trap. By each statement, he has further dug himself into a hole, which goes to the integrity and lawfulness of his actions as Minister. A Minister must not act for his private good. He must be seen not to do so. Further, he must at all times act in the interest of the public and do so in accordance with his mandate and be seen to so do. A Minister must act in strict conformity to the Law. The Ministerial acts in this matter directly benefited his sister-in-law and brother. That violates the code of conduct for Ministers, which governs the behaviour of Ministers. Moreover, the Minister was seeking and inviting the Department of Customs to alter its procedure for the benefit of his brother and sister-in-law. He was asking the Department to act outside the Law.

This bold admission by Mr. Laing of ministerial abuse seeks to confuse the changing of the rate of customs duty under the Tariff Act with the technical process of classifying a product under the Tariff Act. It is the Comptroller of Customs alone, aided by the World Customs Organization, who determines into which category a product is to be put. The criteria that guide the comptroller are objective, such as the ingredients contained in the product, for example, and not whether one is related to or has access to a particular Minister of Government. Minister Laing used his office to confer a benefit on his sister-in-law, in violation of the law and to the detriment of all other importers who do not enjoy her advantage. All of those importers whose products were reclassified over the many years also have a natural justice right not to have been treated less favourably than Mrs. Monique Laing.

An administration such as the FNM that says that a minister should not have his hand in the cookie jar has much to answer for this action where the Minister’s actions have resulted in a direct financial benefit for his brother and sister-in-law.

Mr. Laing does not deny it. Instead, he seeks to escape the inevitable consequences of his bad and improper behaviour by saying that there was a general good as well. That does not excuse the behaviour. It confirms that he was seeking instead to provide a cover for his wrong ministerial actions.

We take issue with the following statement of Mr. Laing as self serving and another example of his failure to recognize his wrong doing: “I wish to note that the family members of 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.”

Mr. Laing is wrong. While family members have the same rights in law that other citizens of the country have, when a Minister who is a family member takes a public office, there are certain rules that apply to how family members can access government services directly under the purview of the minister. These rules of conduct say that the Minister must not be involved in the decision with regard to those family members. He ought to have recused himself from the matter based on the premise that he had a conflict and that there would be a perception that he might benefit from his actions as a minister. In this case, Mr. Laing violated those cardinal principles. He violated the trust that the Bahamian people placed in him.

THE PRIME MINISTER’S SILENCE

What is astonishing to us is the unusual silence of Prime Minister Hubert Ingraham in the face of this behaviour. We took note of the fact that during the statement of Mr. Laing to the House, Mr. Ingraham absented himself from the chamber. His seat directly in front of Mr. Laing’s place on the government side was empty when Mr. Laing spoke on the 3rd March. Mr. Ingraham is in fact the Minister of Finance and has the supervising authority over Mr. Laing. In the case of a conflict of interest, the Prime Minister must say whether he formally excused or waived the conflict. The Bahamian people deserve and demand to know. If Mr. Ingraham has excused the conflict, he shows a double standard since he in similar circumstances forced his now Deputy Prime Minister Brent Symonette to resign as Chairman of the Airport Authority in similar circumstances during his first term in office.

The PLP will not allow this matter to die. Our obligation is to represent the Bahamian people. We will not be silenced on this matter. We certainly expect Mr. Laing to take the honourable course, to resign his position, now that he has by his own account exposed his behaviour of benefiting his family member by direct ministerial action, a clear case of nepotism. We are also watching to see whether the Government intends to whitewash the entire matter by actually lowering the duty on the drink Mona Vie at budget time in an attempt to make the issue disappear. We will not let this issue die.