UNEASY LIES THE HEAD

In a matter of days, all eyes will be on Tax Administration Jamaica (TAJ) and the Financial Investigations Division (FID) amid the referral of an investigative report into the statutory declarations of Prime Minister Andrew Holness. The report has revealed almost half a billion dollars in transactions for three companies that filed nil tax returns.

Anti-corruption watchdog, the Integrity Commission (IC), in the 171-page report conducted by its Director of Investigation Kevon Stephenson, raised tax compliance concerns about the three companies – Imperium, Positive Media and Estatebridge – which have been linked to Holness.

The prime minister is the sole owner of Imperium.

The report was tabled in the House of Representatives yesterday. It is the practice of the commission to dispatch referrals to the respective institutions shortly after tabling in Parliament.

Yesterday, TAJ Commissioner General Ainsley Powell said he could not comment on whether the state agency would be looking into the report’s findings.

“I operate under the Income Tax Act, the GCT Act and the Revenue Administration Act. So, what I do with a taxpayer I can’t divulge that. Even if I got it or the team got it, I couldn’t comment that we’re doing an audit,” Powell told The Gleaner.

The nil tax returns for the companies were filed for 2021 and 2022.

NIL TAX INCOME

A nil income tax return indicates that a company falls below the taxable income and therefore did not pay taxes during the year.

Holness said the company with which he is “directly associated is compliant and up to date with its tax filings”.

The report said the prime minister is connected with or had financial interests in the three companies.

It said a forensic examination of bank accounts attributable to Holness and the referenced companies for the period January 1, 2020, to June 13, 2023, revealed intercompany deposits and withdrawals of $473,161,545.37 and $427,174,913.86, respectively.

The report said the financial statements provided by Holness indicate that, in 2021, Imperium earned at least $5,121,105 in dividends, exchange gains and interest.

Still, Imperium filed a nil tax return for 2021 and 2022.

Positive Media’s management accounts and statement of comprehensive income for 2021, submitted by Holness, indicate a total income of $20,069,697, the report said.

Notwithstanding, Positive Media filed a nil tax return for 2021 and 2022, indicating that the business had not engaged in any revenue-generating activity over the two years of its existence.

For Estatebridge’s management accounts, the report said the statement of profit and loss account, the year ended December 31, 2021, shows an ‘interest income’ of $1,040,625.

The report said, despite this, Estatebridge filed a nil tax return for 2021, which means that the business had not engaged in any revenue-generating activity in that year.

Further, the report stated that, over the period March 2021 to May 2022, a fourth company, Greenemerald, provided loans to Positive Media to the tune of $20,625,000 and appeared to be in operation during the referenced period.

Greenemerald filed a nil tax return for 2021 and tax returns declaring income of $355,100 in 2022.

However, in commenting on the report in the Lower House on Tuesday, Holness said as far as he knows the company he is directly associated with is compliant and filings are up to date.

But Stephenson, in the report, said there is sufficient basis on which to make a referral to TAJ’s commissioner general and the FID for a determination to be made as to the appropriateness of the filing of nil tax returns, and whether there is any financial impropriety on the part of the mentioned companies.

“On a preliminary assessment, the tax returns filed by Greenemerald do not demonstrate that this company has the income-generating capacity/has generated sufficient income to be in a position to provide loans to Positive Media of over $20,000,000.00 within the time frame it did,” Stephenson said.

Stephenson concluded that the filing of nil income tax returns for the years 2021 and 2022, on the part of Imperium, Estatebridge and Positive Media, in circumstances where those companies reported income and other business activities in their audited financial statements, poses significant tax compliance concerns.

Similarly, he said the filing of nil income tax returns and an income tax return with income of $355,100, by Greenemerald in 2021 and 2022, respectively, in circumstances where this company had, over the referenced period, provided short-term loans to Positive Media of over $20,000,000, and more importantly, appeared to be in operation, also raises serious tax compliance concerns.

“It is accepted and understood, that a company, though operating at a loss, may well be in a position to offer loans. The live issue here, however, is whether the named companies had any income and expenses over the relevant period which were not disclosed in their returns to TAJ,” Stephenson said.

He recommended that the report be referred to the TAJ commissioner general for the necessary assessment to be made and, where required, for the appropriate penalties to be imposed.

A copy of the report has also been referred to the FID.

The report stated that the investigation raises significant questions about the income-generating capacity of the companies, relative to the funds which have been identified in their accounts.

It said Stephenson’s power and limited resources, and exigencies relative to remit and time, do not allow him to sufficiently ventilate this issue.

But the governing Jamaica Labour Party (JLP) has denounced the recommendation for referral to the FID for further probe.

The JLP said after an extensive probe, which involved the hiring of an international forensic investigator, the IC conceded that it was unable to conclude that the prime minister illicitly enriched himself.

It criticised “attempts by the Integrity Commission to act outside of its legal remit by seeking to, without credible basis, refer for investigation by the Financial Investigations Division, a transaction where a financial institution admitted making an error”.

“The Jamaica Labour Party urges the Parliament to conclude its review of the Integrity Commission Act to ensure the commission conducts its business with greater fairness, equity and regard for the rule of law,” the party, in defence of its leader, Holness, said.

It is customary for investigative bodies, including the IC and the Auditor General’s Department to refer their reports to law enforcement and other oversight bodies.

The IC urged Parliament to support Stephenson’s referral, noting that there can be no finality on the matter until the FID has completed its work.

“The commission reminds Parliament that, in keeping with the provisions of the Integrity Commission Act, there can be no certification of a statutory declaration until the commission’s director of information and complaints is satisfied that the statutory declaration has been duly completed. Once he is so satisfied, he will inform the commission,” the body said.

The IC also urged Parliament to develop a policy, and legislation, if thought necessary, to deal with the commercial and corporate activities of ministers of government and the likelihood of conflicts of interest arising.

kimone.francis@gleanerjm.com