By Peter Espeut
I spent the early part of this week as a guest of the Ministry of Petroleum and Petroleum Affairs of the Government of Trinidad and Tobago at a conference about transparency surrounding extractive industries like mining, quarrying and drilling for oil and gas. There is concern, globally, about the secrecy that surrounds this sector.
Even now, there is no disclosure to the public of the amount of taxes the individual bauxite-mining and -refining companies pay into the coffers of the Government of Jamaica; it is a criminal offence for a government officer to tell the public what any mining company paid to the Government in taxes. Remember: the taxes and royalties they pay are in exchange for digging up the countryside, and either shipping our soil to foreign parts for processing, or processing it locally and disposing of the waste locally.
That is why even now we don't know how much the Jamaican people obtained when AusJam mined gold in the hills of Clarendon; or how much Jamalco or UC Rusal contributes to the public purse.
The same prohibition will prevent the Jamaican people from knowing how much we will earn as a country from each company if and when oil is commercially extracted on the Pedro Bank or Walton Bank, or wherever.
There was one bauxite company operating in Jamaica that paid no income tax year after year because it claimed its expenses exceeded their income; yet it continued to operate at a loss. The Government had no access to their books to verify this claim. Of course, it is an old multinational trick: the local subsidiary makes a loss, but the parent company gets rich.
Killing for a shilling
Why don't the mining companies want the Jamaican public to know how much they contribute to the public purse? Because, it is said, it is such a pitifully small amount. Before the bauxite levy was imposed on the mining companies in 1974, the Jamaican people earned a royalty of one shilling per ton of bauxite mined, an arrangement negotiated by the colonial authorities.
Even with the bauxite levy, the amount we earn compared to what the mining companies earn is quite small. And, of course, when things are not going well, as an incentive we waive the bauxite levy, reverting, I suppose, to one shilling per ton of bauxite mined.
The meeting in Trinidad, which was funded by the Inter-American Development Bank and the German International Development Agency, promoted the Extractive Industries Transparency Initiative (EITI), which calls for - in each jurisdiction - a triumvirate of partners to collaborate to increase transparency and accountability: the government, the extracting companies, and civil society.
EITI requires each mining, oil and gas company to publish what they pay over to the government, and for governments to publish what they receive, and for the two figures to be independently reconciled by an approved auditing firm.
Opportunity for corruption
The secrecy around these large sums of money provides a wonderful opportunity for corruption, which is often grasped. Companies report to their head offices that they pay a certain amount, but might actually pay less; or maybe they pay some to the government and some to persons in high places. And governments may receive one amount, but only some of it actually reaches the public purse. The secrecy surrounding taxes and royalties paid by these extractive industries provides a wonderful opportunity for corruption, which is often grasped.
Many countries rich in natural resources such as oil, gas and minerals tend to underperform economically, and suffer from poor governance, resulting in underdevelopment and poverty. Globally, civil-society organisations have campaigned for companies to publish what they pay to governments, so that the people can make governments account for how the money is spent. In 2002, then UK Prime Minister Tony Blair announced the EITI at the World Summit for Sustainable Development in Johannesburg, South Africa, and the EITI became a reality in 2003.
And EITI has turned up discrepancies; some have since declined. Transparency does reduce corruption, although it cannot eliminate it. For example, EITI cannot detect under-the-table payments by mining companies to government officials to obtain prospecting and mining licences.
Trinidad has signed on to EITI and hopes to be fully compliant by 2013. Their big hold-up is the same as ours: Trinidadian laws also make it a criminal offence to publish the taxes each company contributes to the coffers of the government. The law is being changed.
Jamaica has not signed on to EITI. Jamaica does not have transparency with respect to political donations. Could Trafigura have happened if Jamaica had signed on to EITI?
Peter Espeut is a sociologist and Roman Catholic deacon. Email feedback to email@example.com.