(Top, Denis O’Brien with Philip Paulwell, Jamaica’s former Minister of Telecommunications and Professor Trevor Munroe).
This might seem a little familiar.
Jamaica’s leading anti corruption campaigner has attacked Denis O’Brien’s mobile phone firm Digicel over its lack of transparency in its dealings with the island’s politicians.
Professor Trevor Munroe (COR), executive director of the US-funded National Integrity Limited (NIA), is also demanding to know why the public is not being abreast of the discussions between Digicel and the tax authorities since an armed police raid on the former’s old headquarters last May.
Partly due to its sponsorship of Usain Bolt, and principally due to rolling out of mobile phone ownership to the island’s poorest (handsets and line rental were previously limited to professionals in the larger towns) Mr O’Brien has enjoyed the status of something of a cult hero on the Caribbean island.
But a series of well-publicised court spats with the regulatory authorities over the company’s refusal to lower charges for calling other networks, not to mention last summer’s raid over alleged tax avoidance on a gargantuan scale, is beginning to take some of that gloss off.
Digicel is also understood to have made donations to both main political parties campaign expenses prior to the last General Election, but was not among the firms which willing to disclose what, how, when, in public.
Politicians and leading journalists were photographed enjoying Mr O’Brien’s company and hospitality at the firm’s 10th anniversary party in 2011 when selected guests left with Digicel’s latest generation of mobile Blackberry phone. There are also claims that Jamaican politicians may have visited Mr O’Brien at his home in Portugal.
It is the apparent secrecy surrounding Digicel’s generosity which concerns Mr Munroe, who is the son of Jamaica’s former Director of Public Prosecutions.
Following representations by the NIA in December 2011, Jamaica’s electoral commissioner put draft proposals before Parliament for a new mandatory register of donations above a certain amount.
Although both the ruling and main opposition party broadly agreed with it, they asked for more time so that they could tell the commissioner of any specific concerns. They were due to be put on the statute book by March 2013, but this has been delayed because neither party has passed its concerns to the commissioner yet.
In an interview, Professor Munroe said change was coming, whether some parties liked it or not.
‘It is going to happen, there is no question at all,’ he said. ‘’What we say here is “He who pays the piper, likes to call the tune. Currently in Jamaica there is no law, criminal and commercial money can enter the political financial stream of parties. There is no requirement of any kind for disclosure.
‘One of the recommendations from the electoral commission, which Parliament has approved, is that donations above a certain amount should be publicly disclosed. As of now there is no way of knowing whether Digicel is making contributions to either political party.
‘It is against this background, responding to our representations in November of 2011, just before the General Election in December 2011, six major corporations in Jamaica, including two banks and several other financial institutions, disclosed how much they had given to each of the two Parliamentary parties. Digicel was not amongst them.’
Tax Administration Jamaica officials, accompanied by armed police officers, raided Digicel’s offices on the island last May. In a statement at the time it said the company had failed to provide records it had been requesting since the previous December.
The company for its part accused the authorities of heavy-handedness, and insisted it was meeting its tax obligations. The dispute centres on Digicel’s collection of GCT (General Consumption Tax) from customers and the amount it was passing on to the taxman.
The firm said tax officials had accused it of a US£1.25 billion dollar discrepancy in the numbers TAJ had counted and the amount of GCT that was being passed on by Digicel. TAJ later insisted no figures had been put to the company, as the investigation was ongoing.
Last week Meris Haughton, TAJ’s director of communications refused to discuss the case, saying negotiations between it and Digicel were “still ongoing” and that it had the same rights to discretion as any taxpayer.
Mr Munroe, however, believes that after more than a year the Jamaican
public has a right to know what was going on.
‘There was a raid on the Digicel headquarters here in 2012 by the Jamaican tax authorities. Since then the public has been told that discussions have been taking place concerning the extent of Digicel’s liability.
‘We have no indication of the conclusion of those discussions; and National Integrity Action requires to see transparency to keep the public of Jamaica in this matter, particular the concept where credible allegations have been made concerning tax evasion.’
Digicel has hardly helped its own cause by launching a lawsuit against TAJ at Jamaica’s Supreme Court. It is one of dozens the firm has launched since setting up its headquarters in the Caribbean in 2001.
Previous disputes have included multiple suits against Jamaica’s Office of Regulation Utilities (OUR) over attempts by the authorities to regulate prices in the industry. Indeed in 2010 one such dispute ended up before the Privy Counci in England. It ruled that Philip Paulwell, Jamaica’s onetime Minister of Telecommunications, had
acted unlawfully and outside of his powers when intervening on Digicel’s behalf in a dispute with OUR.
A year later it was revealed that the United States, British, and Canadian governments had all expressed reservations about Mr Paulwell’s inclusion in the cabinet, following corruption allegations which he vehemently denied.
Digicel’s latest problems in Jamaica have overshadow its move into its new multi million Euros offices in Kingston. It comes with its own pharmacy, gymnasium, and first aid station, and is seen a key part of the Government’s previously unsuccessful attempts to regenerate the rundown downtown district.
Pic: Jamaica Gleaner/NIA
Digicel and Jamaica History:
In March 2000 Digicel, 100 per cent owned by Denis O’Brien, obtained
by competitive auction a domestic mobile carrier and other licences
from the Government of Jamaica for US$47.5 million dollars. This
entitled the company to offer mobile phone networks and services for a
minimum of 15 years.
Previously Cable and Wireless, trading as Lime Communications, had
enjoyed a 50 year monopoly which had been due to expire in 2012. The
Jamaican government, however, negotiated an end to this in 1999,
enabling other firms to enter the market.
Digicel then officially launched its mobile service in 2001. When calls were made from C&W’s fixed lines to mobile phones on the Digicel these were paid and charged according to the principle of “the caller pays”.
The company is incorporated in Bermuda but its declared HQ is Kingston, Jamaica, from where it runs mobile services for 6 million users in 26 countries across the Caribbean and Central America.
Digicel put on an astonishing 100,000 subscribers in its first 100
days, largely thanks to extending the use of mobiles across the length
and breadth of Jamaica, in particular to the working classes.
In the ten years since it has boosted this to more than two million, 80 per cent of the island’s estimated 2.9 million population (in Jamaica the use of mobiles is above 100 per cent of the population, as many are on more than one network).
Unsurprisingly this has not gone down well with its competitors, who argue that Digicel is a monopoly in all but name.
OUR has attempted to level the playing field, so to speak, including proposing a flat rate for telephone calls last year. Digicel is, unsurprisingly given its record for litigation in Jamaica, fighting the move tooth and nail.
Some had been expecting the company to fall into line in exchange for the Government approving Digicel’s purchase of smaller rival Claro last March. But, as competitors such as Lime point out, this has not happened.
Lime’s chairman Chris Denring claimed recently that it costs more than double, on average, for a LIME customer to call a phone on the Digicel network, making it cheaper, Dehring reasoned, to call China than a neighbour in Jamaica.
He want’s Jamaica’s Parliament should introduce a new telecoms act which would impose a flat rate for all networks.