Editorial | Blind trusts and more

The Integrity Commission’s (IC) report into Prime Minister Andrew Holness’ finances raises important questions about how persons who assume high public office should manage their private assets, including whether these should be placed in blind trusts.

While The Gleaner is inclined towards the idea, we appreciate that it cannot be the whole response to the society’s concern for conflicts of interest, and other forms of corruption. There must be, too, institutional arrangements that prioritise transparency, accountability, and the rule of law.

To be clear, this newspaper has arrived at no conclusion about the veracity of Mr Holness’ assets and liabilities filings with the Integrity Commission. Neither have we settled on an inference from the peek provided by the IC into the financial operations of the prime minister’s private firms.

What, however, cannot be ignored is the Commission’s determination, after a long probe, that it could not discount that Mr Holness may have engaged in illicit enrichment, as well as its calls for the tax authorities and financial crimes investigators to continue the inquiry. The IC also urged the securities industry regulator to scrutinise the basis on which a brokerage/investment house loaned one of Mr Holness’ companies J$50 million.

Mr Holness is not the only politician, or member of parliament, who owns private business operating in sectors of the economy for which they pass laws, or, in the case of members of the executive, have regulatory oversight. Some of these cross-owned businesses may, like Mr Holness, engage in significant, and seemingly complex, inter-company financial flows, whose explanations are not immediately appreciated.

Such matters, even if nothing untoward lies behind them, raise legitimate questions about conflicts of interest, public integrity and good governance.

NOT A PANACEA

So, when, in the face of these uncertainties or unease, should a politician who ascends to membership of the Cabinet be allowed to continue to run his or her business as though he or she were a private citizen?

Maintaining the status quo is clearly fraught.

Blind trusts, in which that official’s assets are placed under the control of an independent trustee who manages them without input from the official, are one potential way around the conundrum. This mechanism can help prevent conflicts of interest by ensuring that public officials are not influenced by their financial holdings when making decisions on behalf of the State.

In other words, by separating officials from their financial interests, blind trusts reduce the temptation for politicians to manipulate policy decisions in ways that benefit their personal wealth.

This can be particularly important in small and emerging markets, where political elites often have significant control over economic levers as well as state resources.

But blind trusts are not a panacea.

They work best when certain conditions are met, such as a clear legal framework governing their establishment and operation. Without this legal clarity, the trust arrangement could be abused or ignored.

Second, there must be independent oversight to ensure that trustees are acting in good faith and that public officials are complying with the requirements of the trust deed.

Third, civil society organisations and the media must play an active role in monitoring the use of blind trusts and exposing any potential and apparent violations.

SCRUTINISE FOR GAPS

With respect to the first two conditions, Jamaica’s Trusts Act of 2019 appears, on its face, to meet the requirements. However, in the context of the current developments, that legislation should be scrutinised for gaps, which, should any exist, Parliament should close to make it fit for purpose.

Altering the constitutional provisions (Sections 69 and 70) to require that a prime minister, or his ministers who own businesses, place them in blind trusts appears to be a relatively easy fix, given that these clauses are not deeply entrenched. In any event, this could become a convention or informal requirement of a prime minister until the constitutional changes are made.

Blind trusts are, however, as we have noted, just one piece of a larger puzzle.

Emerging markets like Jamaica must also focus on strengthening institutional frameworks to mitigate the risk of corruption.

Which makes agencies like the Integrity Commission, the Financial Investigations Division, civil society oversight bodies, an honest police force, and an incorruptible judiciary especially critical.

Hopefully, too, they will be joined by an awakened moral force in political parties.