Integrity in the Public Service

Today, Wednesday, 1 February 2023, I heard a senior government administrator on Radio Anguilla explaining how loyal, efficient, and hard-working all the members of the Anguilla public service are.  They are all, apparently, undervalued and misunderstood by members of the public.  In relation to some of them, nothing can be further from the truth, as any Anguillian who regularly interacts with the public service can attest.  Members of the health and education services are notable exceptions.

The level of corruption in some other sectors of the public service over the years has been staggering.  There are several professionals in the service illegally moonlighting in the private sector.  Some have the requisite permission of the Public Service Integrity Board (PSIB) to do so.  The rest are doing it contrary to the Code of Ethics in the Public Service.

The Governor has delegated to the PSIB the task of investigating conflicts of interest when public servants apply for permission to engage in private enterprise on the side.  The PSIB in suitable cases recommends permission which is then granted by the Governor in writing.  This is a prerequisite before civil servants can apply to private establishments for after-hours work.

Some private sector employers do not employ moonlighting public servants on a permanent basis.  They are considered casual employees.  Once the second job is kept quiet and off the record, the employer does not pay either Social Security or the Interim Stabilization Levy on their wages or tips.  They don’t have to pay medical benefits or holidays with pay.  This illegal labour is a cheap substitute for full-time employees.  Social Security and the Inland Revenue are defrauded.

Some of the computer specialists in the IT Department in years past quietly offered their services for a fee to offices, supermarkets, and businesses in the private sector.  I have heard it said by senior administrators that there is nothing wrong with that.  After all, this expertise was in rare supply.  These services were said to be desperately required in the private sector.  That is nonsense.

That justification is on a par with the tongue-in-cheek excuse we heard in the 1980s when conflicts of interest first began to envelop the public service.  It was said then that civil servants who illegally provide technical and professional services in the private sector were not engaged in conflicts of interest, but in a “convergence of interests”.  There was said to be an insufficient number of qualified persons in the private sector to take on the specialist tasks that, if the island was to become modernized and efficient, trained government employees would have to contribute their expertise to ensure the objective was achieved.  So, the interests of the public and the interests of government were said to converge.

The Registered Land Act and the Land Surveyors Act provide for government surveyors to perform certain surveying jobs as part of their duties.  It is a function of the Surveying Department to ensure that missing boundary stones are replaced.  One of the government surveyors’ jobs is to do any survey necessary for the Registrar of Lands and the Director of Surveys to sort out disputed boundaries.  It is a government service for which government is expected to be paid.  There is a scale of fees set out in the Regulations.  So, if you ring the Department and request a surveyor to replace your missing boundary mark, a surveyor will turn up.  But you may then be informed that he is performing the survey on a private basis.  You pay him, not government.

A government surveyor working privately deprives the Inland Revenue Department of the prescribed fee.  This amounts to a fraud on the revenue.  Not to mention that it is contrary to the terms of his employment.  His head of department has no authority to give him permission.  Nor will he have the permission of the Public Service Integrity Board to engage in this clear conflict of interest.  And private sector surveyors are cheated out of a job.

If you dine at one of our fine restaurants, you are likely to notice that some of the waiters and waitresses are permanent civil servants moonlighting on a second job.  Sure, their enterprise in finding a way to earn enough to supplement their meagre salaries is commendable.  But it is illegal if they do not have the permission of the Governor through the PSIB.

For decades there have been accountants in the public service who offered private accounting services to local businesses.  The Governor’s permission was not sought.  This amounted to unfair competition with accountants in the private sector.  Some were known to work with private accountants who accepted their work as their own and signed off on the accounts.  This was part of the well-known Anguillian profession of “fronting”.

Some police officers moonlight, working at nights as security for restaurants, “sports bars”, illegal casinos, and other businesses on the island.  The employers love it as their businesses are protected on the cheap.  There are several private security firms that are deprived of the opportunity to provide these services.  But they are more expensive than illegally moonlighting public servants, as they have greater overheads.

One customs broker tells me there were until recently officers in the Customs Department that provided informal customs brokerage services.  Even if there were only one or two of them, think of the conflicts of interest this presented!  It was some years ago, but one day I was passing outside Radio Anguilla and saw a person in uniform hustling out of the old Customs office building.  He furtively accepted a bundle of documents from an apparent representative of a foreign developer and disappeared back into the office.

Think of the conflict of interest this involved.  The temptation must have been to under value some of these dutiable transactions on the understanding that the officer would collect a fee for the “service” he was providing.  It was not only a conflict of interest which corrupted the public servant in question, it also encouraged defrauding the revenue.

I am upset that these public servants undermined the income of the public who were in unfair competition with them for these jobs.  Private sector employees did not have the advantage of a permanent job with a regular salary to go back to every morning.

Statutory boards are not strictly part of the public service.  But they are very much public sector.  Some years ago, government announced that all statutory Board members must successfully complete a management course that government had arranged with the Community College.  There, they would be lectured in good governance, avoiding conflicts of interest, and the need for integrity in the conduct of their duties.  Gradually, this exercise petered out.

The announcement that you must be qualified before your appointment to a Board was not backed up by any law or statutory regulation.  It was therefore not enforceable.  Ministers who advise the Governor on appointments found it frustrating to deal with Boards which refused to be intimidated and which instead insisted on doing things the right way.  So, many qualified Board members were fired and replaced with the usual unqualified girlfriends and cronies who were easier to influence.

The low standard of governance that prevail in the past and probably continues is truly shocking.  Some years ago, in a well-meaning gesture that was typically ineffective, futile, and misleading, Anguilla’s Executive Council “declared” that all single use plastics were illegal, and their importation banned.  Now, as every Anguillian schoolchild knows, there is a law under which Executive Council can genuinely prohibit the importation of any commodity deemed contrary to the public good.  But instead of using the prescribed mechanism, they engaged in this useless exercise of making an announcement.

We all knew this “banning” was unenforceable from the moment it was published in the newspaper and billboards.  Printed at the foot of each announcement was the attribution, “Barbados Public Service.”  Barbadian prohibitions have no legal effect in Anguilla.  For a few months, supermarkets and groceries tried to comply.  Some still do by using biodegradable green plastic bags.  But some continue to supply non-degradable plastic bags.

It was like the “banning” of Pitbulls and Rottweilers after the baby-mauling in The Forest.  Or the prohibiting of amplified music late at night to the disturbance of the public.  Or the band of young louts we see at all hours of the day loitering around the gates of the Comprehensive School, preying on pre-pubescent schoolgirls.  Or the open running of illegal brothels and casinos.  Or the illegal sand mining from the dunes and beaches.  Or the dumping of truckloads of domestic and commercial garbage on the sides of minor roads.  Or the unauthorised emptying of the contents of septic tanks on back roads.

So, I am done with it now.  I am considering ceasing all efforts to encourage a rise in standards in the public service.  The rant may be good for reducing my blood pressure, but it is pointless.  This will, hopefully therefore, be my last essay on the topic of the lack of public service integrity in Anguilla.

Suicide by GST

When the autopsy comes to be performed on the body of the current APM administration, the ultimate cause of death will be disputed.  The favoured view among local forensic experts will be that it was the betrayal of the party’s promise to the people that, if they were elected, they would reject the previous administration’s commitment in principle to enacting a Goods and Services Tax (GST).  There is much merit there.

A minority view will be that it was the Premier’s failure to choose the alternative, to reduce the cost of government, that led to its decease.  There is a lot of merit in that view.  It reflects widespread demand for cost cutting.

But what it misses is that any administration attempting to slim down government would incur the wrath of a plump and entitled public service to such an extent that they would be blocked at every turn.  A slimmed-down, enraged public service could and would bring down any Anguillian government.

In practical terms, the proximate cause of death is likely to be that government could not make the quorum requirement of nine members to be present in the Assembly (two-thirds of thirteen).  One minister has resigned and gone over to the opposition benches in the Assembly.  Government now has eight seats in the Assembly (six elected plus two ex officio) compared with the opposition’s five seats.  When time on the 2022 budget runs out early in 2023, if the opposition boycotts the Assembly, and if the ruling party cannot muster nine members present, the governor will be obliged to dismiss the government and call general elections.  That is instant death.

The fiscal issue behind the introduction of GST was the need to fill a gap of some EC$22 million between tax receipts and recurrent expenditure.  Our government’s borrowing to pay salaries grows greater year after year.  We have been lucky to have benefitted from gifts from the British taxpayer to the extent of hundreds of millions of dollars.  To solve the budgetary dilemma, the choice the Foreign Commonwealth and Development Office (FCDO) gave us was stark.  Either you raise that sum in additional taxes or cut that amount of fat from the cost of government.

The crucial moment came the day after winning the general elections on 29 June 2020.  It seems the Governor must have explained to the new Premier that salaries were due to be paid the following day for the month, and there was no money in the Treasury.  The Premier must have been in a quandary.  However, the Governor would have explained, there was a solution.  Endorse the previous administration’s promise repeatedly made to the FCDO and all your worries are over:  Agree to pass the AUF’s GST without delay and implement it, and the FCDO would make a gift of another EC$100 million to pay public service salaries for nearly a year.  By the end of the first year after GST you should be able to raise enough revenue to continue paying your bloated public service salaries.  At $22 million a year, that injection of money would be two-thirds of the monthly public service salary bill of $5 million for ten months.  It was tempting.

For the unaware onlooker, it is important to explain that the new administration had won over the voters and succeeded in the 2020 general elections mainly by promising that, if they were elected to office, they would get rid of the AUF’s GST on day one.  To accept the governor’s suggestion would therefore be to betray the main plank of the legislative platform on which the successful party had campaigned.  On the other hand, to refuse the governor’s suggestion would be to leave the public service unpaid at the end of the month, that is in one day’s time.

The public service, consisting of over 2,000 persons, if you include contract and non-establishment workers, constitute the largest group of the approximately 6,000-person work force in Anguilla.  They are a powerful body, with which no government wants to tangle.  The public service is completely insulated from the political class.  It is illegal for any politician to discipline any member of the public service.

Among Anguillians, the public service is almost universally despised.  This dislike does not extend to those few public servants who provide a real public service: nurses, doctors, teachers, social workers, police and fire service, prison officers, etc.  Many of the others provide little or no real service.  They sit smugly in their airconditioned offices, enjoying their perks.

The public administration department justifies its existence by recruiting every week more and more useless secretaries and clerks.  There are on average, I estimate, five of them doing the job of one.  Ministers, Permanent Secretaries, and other important officials vie among themselves as to who can get their most unemployable cousin appointed to a plush public service job.

During the period 2020-2021, the ports were closed.  Tourists were barred.  The entire island was in Covid-19 lockdown.  People were forbidden under penalty of imprisonment to leave their homes.  Passenger traffic was closed for some eighteen months.  Even after we reopened, permission to enter the island was required for another year. 

As businesses collapsed island-wide, many hundreds of private sector employees were let go without pay or even the promise of reemployment once the lockdown was over.  The Social Service Fund was raided to pay unemployment benefits.  Meanwhile, the public service continued to receive their full salaries and allowances.  There was no need to provide most public services since the public could not access government offices.  Public anger was exploding.

It was at this critical moment that the new administration came to office.  When the Governor gave the new Premier the choice, either accept the AUF-agreed GST deal or cut expenses, the Premier might have remembered and acted on his promise to the people who elected him.

He could have refused to sign the offered MOU and gone back to consult the public.  He could have told the governor to send home some or all the public service while he put the two options to the public.  That was the type of change from the way the previous administration handled decision-making that the public were expecting.

He could have explained to the people that after the double whammy of Hurricane Irma, which destroyed the island’s infrastructure in 2017, and the Covid-19 eighteen-month lockdown of the island’s economy during 2020-2021, the previous administration had no choice but to accept imposing the demanded increased taxation in exchange for UK aid to rebuild the island.

He could have better explained that the previous administration agreed to impose GST only after every expert they consulted recommended it as the best option for the island’s sustainability.  He could have explained that the best option was to accept the cards he had been dealt so that he could pay the public service.  We desperately needed the offered $100 million.

Or, he could have put the other option, which was to slash the widely believed to be bloated public service.  If it seemed the majority view was that he should not accept the offered money, he would have been free to demand a savage cost-cutting exercise.  This option was and is popular, and if the Premier accepted it, he would have basked in the popular gaze.  He would have been praised for listening to the people.

Anguilla’s public service would not tamely accept mass lay-offs, cancellation of travel and allowances, garaging of the fleet of vehicles, switching off government offices’ lights at night, and disconnection of all office air conditioners.  They would retaliate.

In the general elections that would have followed the inevitable public service-led fall of the government, his party would likely have been re-elected with an increased majority.  The opposition would have had no platform to stand on.  He would have shown himself to be true to his principles, and to have performed the one act that his followers wanted most of all:  to be rid of the burden of a perceived bloated public service which was causing them to pay, and pay, and pay.

Instead of taking his dilemma to the people, he concealed it.  He took the resolute view that he had been elected to govern.  He made finding the solution to the crisis his burden alone.  In hindsight, this was counterproductive.  This was his mistake.  For months he said not a word.  When the realisation sunk in that he had, without any explanation to the people, without any attempt to sell his decision to his many followers, silently betrayed his election promise to them, all his political capital instantly drained away.  He should have realised it would be political suicide for him to quietly drop his election promise and agree to go along with the AUF-agreed GST.  His self-confidence would be wilfully misconstrued by his enemies as a lack of interest in the views of the public.  He would be described by some of the more malicious of them as having no care for the welfare of the people.  No later amount of fiddling with the AUF’s GST details (for example, increasing the number of exceptions) would succeed in protecting him from the charge of betraying his supporters.

I forecast that imposing GST on uninformed and uncooperative Anguillian consumers of goods and services will not result in any great increase in revenue.  Given the history, culture, and character of Anguillians, the GST will be widely evaded.  So many of us will avoid collecting or paying the new tax that its effect on revenue will be minimal.  Bills that were previously paid in cheques that can be easily traced will now be paid in cash.  Bills that were previously paid in cash will now be paid in barter of goods and services.  Other than in the bigger supermarkets, few cash sales will be receipted or recorded.  It will be normal for businesses to keep two sets of accounts.  Few will declare their true income to the Statistics Office or to the Inland Revenue Department.

But these are criminal offences, you will say.  You should know that never in the history of Anguilla has a single tax dodger been prosecuted.  There is no member of the Inland Revenue Department experienced in enforcing tax offences.  There is not a single police officer or other investigator who has ever entered a business-place to check on its accounts.  There is not one government lawyer who has prosecuted a tax offender.  Everyone in Anguilla is related.  Enforcement will be a joke.

Government has not been able to collect the millions of dollars of Accommodation Tax owed.  Property Tax is several decades old.  The Chief Auditor tells us that no more than 40% of it is collected.  If we do not collect the present taxes, why should anyone expect that we are going to enforce collection of a new one now?

 

The AUF GST

 

I occasionally tune in to Klass FM for entertainment when I am driving my car from North Hill into town.  I don’t get to hear much during the short drive.  But it seems these days I mostly hear some agitator or the other spouting propaganda and drumming up anti-government sentiment, usually over the impending arrival of GST.

These radio commentators assure us that Hurricane GST will hit Anguilla on 1 July because Premier Dr Lorenzo Webster betrayed Anguillians and agreed to implement GST when during the election campaign he promised if elected to do away with the AUF’s proposed GST (the Anguilla United Front was Anguilla’s previous administration).

It was not high sea-surface temperature that caused Hurricane GST to develop.  It was the AUF administration’s signature back in 2018 to the agreement to impose GST that set off the disaster.  The present Anguilla Progressive Movement administration, appointed on 30 June 2020, is taking the blame for it.  Do they deserve the abuse they are getting on social media and the talk show programmes?

I had a word with Mr Ivan Connor, the government’s press officer.  He explained to me that it was pure propaganda.

According to the draft AUF White Paper of May 2020, GST was going to be the best thing that ever happened to Anguilla.  It would help to restore growth and achieve fiscal sustainability and poverty alleviation.  It would enable our economy to respond to and recover from the global and economic recession, the pandemic, and natural disasters.  The AUF administration committed Anguilla to the full implementation of GST effective 1 January 2023.  (The White Paper was later revised by the APM administration and the FCDO and published in March 2021.)

The propaganda was that GST would not be an additional tax.  It would replace the tourist-paid Accommodation Tax, the miniscule Environmental Levy, and the almost non-existent Communication Levy.  The claim was that this would allow GST to be introduced at a relatively low rate.

The more outrageous claim was that GST would facilitate investment, provide incentives to exporters, and make Anguilla internationally competitive.  What spin-doctor dreamed this stuff up?  Mind you, a lot of this puffery is repeated in the subsequent APM revised White Paper.  Meanwhile, we know that the sole purpose of GST is to allow the Anguilla administration to get money to continue pampering the Anguillian unemployed and unemployable.

The AUF administration’s concession to the British Government in introducing GST arose from the devastation caused by Hurricane Irma in September 2017.  The AUF administration was in a dilemma.  It was faced with a choice.  Either enforce existing tax legislation (for example, the Chief Auditor’s Report consistently over the years shows that only 40% of Anguillians pay their property tax), or introduce a new tax, preferably GST.  The AUF administration chose the second option.  In agreeing to the Medium Term Economic and Fiscal Plan (MTEFP) in June 2018, the AUF promised the FCDO they would introduce GST in Anguilla.  They preferred to impose a new tax.  If we collected the outstanding unpaid taxes, we would probably have enough money to run the government for five years without GST.  We won’t enforce this one either.  Remember the rule:  we cannot turn “innocent” Anguillians into convicted criminals.  To this day, we still have not prosecuted, so far as I know, a single Property Tax evader.

Let us not forget how GST came upon us.  To recap, after Hurricane Irma in September 2017, we fell back on British taxpayers’ generosity to meet the over-indulgencies of our excessively expensive public service (I estimate we currently employ two to do the job of one).  When the hurricane passed, the British made a gift to the AUF administration of £60 million (EC$240 million at a four to one exchange rate) for rebuilding.

We had no reserves to pay for our structural repairs ourselves.  This grant was earmarked for capital infrastructure.  In return, the AUF administration promised that we would cease to rely on the British taxpayer.  In future we would raise our own revenue to pay our own costs.  We promised we would enact the GST Act.  As the months and years of the AUF administration passed, we did not do so.

In the middle of the 2020 pandemic, and the close down of Anguilla’s economy, the AUF administration begged for and got a further EC$100 million in grant in aid.  This was intended specifically to pay civil servants for the following ten months.  It was also, we realised, intended to throw money around to help win the coming general elections.  In exchange, the AUF administration promised again on 11 June 2020 that it would either enact the GST or cut the cost of the public service.  We took the money.  We did not cut the cost of the public service.  The AUF’s tactic did not work.  It lost the elections.  But not before it had negotiated yet another EC$100 million gift from the British taxpayers to pay civil servants.  This windfall was due to be paid within days after the general elections.

The day after coming to office on 30 June 2020, Dr Webster was faced with a dilemma.  There were no funds in the Treasury.  He must either default in paying civil servants’ salaries for June or accept the AUF-negotiated EC$100 million from the FCDO.  He chose to pay the civil servants.  You may think, as I do, that he missed the golden opportunity to send all of them home while he worked out how to permanently let half of them go as being an unproductive and unnecessary burden on Anguilla’s taxpayers.

Let us be clear.  We got the second EC$100 million by repeating the promise of the previous administration, that we would introduce GST.  Since we would not reduce our expenses of government, we would increase taxes to pay for it.  That was the promise.  On 29 July 2021, our House of Assembly passed the GST Act into force.

The new APM Administration was immediately in political trouble.  They promised the people during the 2021 election campaign that they would not agree to accept the British EC$100 million gift if it meant passing the GST Act.  But, once in office, they faltered.  They reconsidered.  They took the seemingly easy option of taking the money and agreeing in exchange to pass the GST Act into law.

The CDB had also agreed with the previous administration to make a $30 million loan conditional on passage of the GST Act.  The new administration needed this additional money to pay more salaries.  It could not turn it down. On taking the loan, it was now obligated also to the CDB to pass the GST Act into law

The FCDO did not force us to pass the GST Act.  We took their money, and the money of the CDB, on a solemn undertaking to start paying for our expensive government ourselves by imposing GST.  If we do not live up to our promises made in exchange for hard cash, then would we be anything but a bandit state?

We have no one to blame for our dire circumstances but ourselves.  The British don’t owe us anything.  We don’t pay a penny in British taxes.  Blaming the “British” for our present problems is pure xenophobia if not an appeal to racism.  Let us face it, we Anguillians always delight in blaming others for our misfortunes.  We are never to blame.  It has always been so.

What really gets to me is the pure hypocrisy of the government critics who blame Dr Webster’s administration for agreeing to the GST Act after he came to office.  Are they willing to step forward and say that he should have chosen the alternative?  Would they have supported him sending the civil servants home without pay in June 2020?  Of course not.  What he did instead was masterful.  He negotiated down the most onerous terms and conditions of the GST as agreed by the AUF administration.  He got them to agree to making the GST terms as light as he possibly could.

I hope to look at these in a later article.  I also hope to expose the mistaken, if not malicious, motives of some of his most vociferous critics.