Integrity threat from the Appeal Court

ictt-vs-tsttOn 27th June 2013 the Appeal Court ruled that –

  • TSTT is not a State Enterprise. The members of its Board are not subject to the Integrity Provisions.
  • It is only the members of the Boards of those Statutory Bodies which exercise public functions that are subject to the jurisdiction of the (Integrity) Commission.

Telecommunications Company of Trinidad & Tobago (TSTT) is a company established between the T&T State and the British-based multinational, Cable & Wireless. C&W holds 49% of the shares in TSTT, while the State holds about 42% of the shares together with the right to nominate 5 of its 9 Directors.

That unanimous ruling has serious consequences for the viability of our nation’s integrity framework.

The intended purpose of that framework is to ensure a satisfactory level of transparency and accountability in the way Public Money is transacted and Public Functions are discharged.  There is still a strong case for this Integrity Framework as a necessary ingredient in the Good Governance of our nation. The Integrity Framework includes the Auditor General; the Integrity Commission; the Investments Division of the Ministry of Finance and the two Parliamentary Accounts Enterprises Committees.  Ours is the most vibrant Caribbean economy and the State is clearly the largest player, so the proper management of that sector is critical. Given the continuing rise in the waste and theft of Public Money, there will always be a need for an improved, more effective Integrity Framework to oversee these huge, controversial operations.

The Appeal arose from the 2005 case, in which TSTT sought an interpretation from the Court as to the meaning of the phrase in the Schedule to the Integrity in Public Life Act (IPLA), defining persons in public life –

(9) Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest…

TSTT was seeking a decision as to whether that definition applied to its Directors and the High Court ruled in October 2007 that those Directors were included in the provisions of the IPLA. TSTT’s Directors were trying to escape the obligations of the Integrity Act, but the High Court ruled that the clear intention of the IPLA was to include those Directors.  This lawsuit was from a Company which is controlled and majority-owned by the State.  It is indicative of a deep; one might almost say native, hostility to the very notion of transparency, but more on that later. TSTT and the Integrity Commission appealed that ruling in 2008 and the hearings were completed in mid-2010.

The BG View of 4 July 2013 by Anthony Wilson makes a pointed critique of that judgment along the line of demarcating just what constitutes ‘State Control’. Also, Andre Bagoo’s article in Newsday on Sunday 7th July 2013 notes the Court’s weak reasoning on the issue of Direct vs. Indirect control. In my view, the most perturbing aspect of the judgment was its overall tone, which seemed hostile to the notion that the obligations of Public Officials should properly include these elementary transparency provisions.  At no point does the Court express an appreciation for the important and necessary role of the Integrity Commission.  Instead, there are several pointed statements that the Court views the obligations of Public Officials to the Integrity Commission as burdensome.

TSTT

The first limb of the judgment, finding TSTT not to be a State Enterprise, is a remarkable exercise which should be required reading for students of public administration, political science and law.

To begin with, Para 13 “…One example of the lack of a free hand of the Government was the fact that under the Shareholders’ Agreement, the Board of Directors of TSTT was to be comprised of nine Directors, five appointed by the Government…” this completely fails to acknowledge that this provision places control in Gov’t hands.  A binding agreement which allows one party to appoint the majority of the Directors in a Company is one which gives effective control to that party, in the absence of other limiting provisions.  None such were mentioned.  It is literally incredible that our Appeal Court could cite this provision to support the contention that the State did not control TSTT.

Also in that para – “…none of the four C&W Directors was resident in Trinidad & Tobago…”  Also, para 16 refers to this as being “…an odd and probably unintended consequence of the Integrity Act…”  Is the Court of Appeal signalling that Directors of State Enterprises who may be resident overseas ought to be exempted from the IPLA?  If so, this obiter dicta tells me that our Appeal Court is resistant to the proper and full transparency which the IPLA was undoubtedly aiming for.

The Court identifies two tests as to the control of a company – de jure, which examines legal control and de facto, which examines the factual control.  At Para 30 the Court states that the de facto test will only be applied in cases of naked attempts to avoid the Integrity Provisions, then goes on to state – at para 31 – “…Further, given the uncontested evidence, there are no exceptional circumstances here which call for the application of the de facto or factual test of control to be applied…”.  TSTT’s application, from what one can read in this judgment, was not being challenged by the Integrity Commission, since they were themselves trying to limit their remit.  That this submission survived the case ‘uncontested’ is only evidence of the extent to which the interests of the parties to this litigation were aligned, it says nothing of the actual quality of the submission.  But the TSTT litigation must have been intended to achieve just what it did, to legally escape the provisions of the IPLA by obtaining a Court ruling, without the de facto test being applied.  In my view, the TSTT litigation was therefore exactly, as the Court stated – ‘…a naked attempt to avoid the Integrity Provisions…‘.

So we have an Independent Commission appealing to limit its own remit and the very same Court displaying its scepticism towards the very purpose of that Commission.

The two, taken together, taste toxic.

Statutory Bodies

The second limb of this judgment was on the Commission’s challenge to the part of the ruling of the High Court judge which would have placed Directors of all organisations established by statute under the purview of the Integrity provisions.  That makes sense, since the literal interpretation applied by the Judge in the 2005 case would have included Directors of all organisations or bodies established by statute.  That would have included Private Bodies and the legislature could not have intended that.  The Commission applied to the Appeal Court for an interpretation of this phrase which limits its application to members of the board of statutory bodies which are public in nature and/or which exercise public functions and/or functions on behalf of the State.  Statutory Bodies are created by statute – i.e. HDC, WASA, TTEC, Port Authority, Airport Authority and so on – so State Enterprises are not Statutory Bodies. That proposal to remove State Enterprises from Integrity Commission oversight is incredible, all the more so since it emanated from the very Integrity Commission.

To make a bad situation worse, the Appeal Court went beyond the limits of that application and imposed further limitations on the remit of the Integrity Commission.

Public Function

There is a great deal of debate on just where is the boundary between public and private functions.  This debate is still largely unsettled, since in certain countries even traditionally public sector services like health, defence or education have now been outsourced.  What was once strictly-defined as ‘public function’ is now greatly reduced over what it was a few decades ago.  Hence the introduction of this phrase “Statutory Bodies which exercise public functions …” into this judgment imposes further limits on the jurisdiction of the Commission.

In my view, a function which is routinely performed by the private sector cannot be called a public one.  For instance, neither Caribbean Airlines nor FCB perform public functions.  That is the peril with which this judgment confronts us.

Both parties effectively received favourable rulings, so there was no appeal filed within the 6-week deadline.  This peculiar and unsatisfactory situation calls for an exceptional intervention to preserve the Public Interest.

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4 thoughts on “Integrity threat from the Appeal Court

  1. Afra,

    I am glad you took this up. The judgment could not be appealed. However, your inference is valid in that the IC, the Government, business are all happy with this. It is for the Government to bring legislation to Parliament to amend the IPLA to define and include state enterprises. That is necessary. It is a simple matter. The Opposition has not said a word. Neither has any of the usually vocal groups. So it seems there is a consensus of silence here.

    Gerry

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