Dear Editor,
There has been much discussion over the last week of the work to be undertaken by the Special Orgainised Crime Unit (SOCU) and the mechanism via which its investigations can be triggered.
Many of the issues discussed such as the routing of funds through the NICIL or the overpayment for contracts or even fraudulent payments, raised in the debate, are properly part of mainstream police work. In the case of fraud in Guyana, most of the work is actually undertaken by the affected firms themselves and the office of the DPP rather than the police. It is not surprising therefore that prosecution for fiduciary violations including insider dealing are practically unknown in Guyana.
As a general rule these areas are not as complicated as money laundering and often do not have the same motives. In Canada, the USA and the UK, when it was realized that extensive commercial and business or financial fraud were becoming a feature of life and could not be sufficiently well handled by the police force, special financial investigative units were established, sometimes independent of the police. In the UK alone there are five bodies including a financial ombudsman and a Financial Conduct Authority.
In the UK, the Serious Fraud Office (SFO) identified the following indicators as being among the most important when looking for signs of corruption:
- abnormal cash payments
- pressure exerted for payments to be made urgently or ahead of schedule
- payments being made through a third party country – for example, goods or services supplied to country ‘A’ but payment is being made, usually to a shell company in country ‘B’
- an abnormally high commission percentage being paid to a particular agency. This may be split into two accounts for the same agent, often in different jurisdictions
- private meetings with public contractors or companies hoping to tender for contracts
- lavish gifts being received
- an individual who never takes time off even if ill, or for holidays, or insists on dealing with specific contractors himself or herself
- making unexpected or illogical decisions accepting projects or contracts
- the unusually smooth process of cases where an individual does not have the expected level of knowledge or expertise
- abuse of the decision process or delegated powers in specific cases
- agreeing contracts not favourable to the organisation either because of the terms or the time period
- unexplained preference for certain contractors during tendering period
- avoidance of independent checks on the tendering or contracting processes
- raising barriers around specific roles or departments which are key in the tendering or contracting processes
- bypassing normal tendering or contracting procedures
- invoices being agreed in excess of the contract without reasonable cause
- missing documents or records regarding meetings or decisions
- company procedures or guidelines not being followed
- the payment of, or making funds available for, high value expenses or school fees (or similar) on behalf of others.
These indicators may be signs that either fraud or money laundering is afoot. In Canada the Toronto unit dealing with such matters recently held a conference listing the following as the main areas of their work: corporate fraud, multi-jurisdictional fraud, securities related fraud, telemarketing schemes, asset forfeiture, proceeds of crime, counterfeit money, forgery, organized crime involving the manufacture and distribution of payment cards.
There is no equivalent specialist unit in Guyana.
It is significant that known drug dealers and money launderers who have conducted their operations and scams in part from Guyana have to date only been charged outside of Guyana. Not a single charge has been laid against any of those persons in Guyana. Obviously, some part of the failure has been due to a lack of will on the part of the government as has been evident from instructions to release vessels seized for fuel smuggling, for example. The remaining reason relates to lack of capacity. Who in their right mind would suggest that Guyana has an officer let alone a team of officers capable of tackling two or more of the foregoing areas?
Money laundering requires special investigative skills and approaches because it involves trying to hide money that originates outside of the financial system (eg, drugs, straight theft, illegal exports, tax evasion, etc) in the banking system or finding a means of parking it somewhere such as property acquisition, or passing it through an apparently legitimate business such as vehicle imports, spare-parts imports, (which often require the same infrastructure as people and drug smuggling) or general trading operations where expenses are involved but little actual sales actually take place. The latter include hotels, for example, which will have a lot of expenses but show little income or actual services in kind from a sister organization.
Unearthing such transactions usually requires importing a range of ‘new skills‘ in the Police Force and innovative approaches. Countries in addition have institutional arrangements linking Customs, Inland Revenue and commercial banks. Coordination is not new in Guyana but it has not always been effective. As regards skills, as far as I am aware, the only time that any of the ‘disciplined services’ ever tried to build relevant specialist capacity outside of their professional areas by systematically recruiting graduates with financial and economic skills was the Customs and Excise Department under Comptroller Burnett in the 1980s. The SOCU would need to have specialists with a reasonable capacity in the disciplines mentioned above by the Toronto unit. The unit’s need for such skills will be more acute in the absence of specialist financial investigative units elsewhere in the country and capacity, including special software within the commercial financial entities themselves.
A careful look at the types of crimes associated with money laundering may help us to understand the change in approach required of the police and the persons responsible for investigating AML and related financial crimes. Over the last two years the categories of persons prosecuted under AML legislation in the USA and the activities in which they were involved or which provided cover included:
People prosecuted & sample of charges: husband and wife; lawyers; former fire chief; teacher; businessmen; car dealers; school district employee on wire and mail fraud; tobacco broker; car dealership; former owner of LA toy company; Pecan Farm owners.
Activities: drug distribution & money laundering (ml); racketeering and ml; structuring financial transactions; failing to report; evading taxes; health care fraud & ml; real estate investment scheme; drug conspiracy and ml; conspiring to structure funds from cigarette sales; failing to file IRS; fmr US Corps of Engineers manager on bribery and kickback scheme; operating black market peso exchange scheme; telemarketing fraud; data securities broker for money laundering;
trucking company owners for fraud and money laundering; Grand Prix promoter – wire fraud, etc.
Readers will see from this list that the range of persons involved is very wide and the types of devices and entities used to launder is even wider and more importantly, even more unpredictable. Obviously, in the end a policemen is needed to effect the arrest and to the extent that the person may resist, soldiering type of activities may be need to conduct assaults on premises, but the bulk of the work is simply boring, tedious (if you are not an auditor or accounting-type) forensic work designing software, studying and buying software, checking on the actual transactions carried out by a business, etc.
Precious little such experience is to be found in the GPF either by way of recruited skills or training. This is even more the case for the GDF.
The SOCU has not been established to deal with financial crimes per se, but those involving the hiding of money which is the distinctive feature of money laundering. For that reason and the absence of complementary financial units and capacity in the police and Bank of Guyana, for example, the SOCU we should be seeking to build an SFO or SFU-plus.
The financial institutions with which the SOCU will be working will need to conduct their own investigative and due diligence work. That information will need to go the FIU which will then pass it on to the relevant body outside of the police per se. Elsewhere their work is aided by computers and special computer programmes which can track money movements and look at transactions and identify those that are inconsistent with the declared business of the entity making transfers.
However, contrary to the impression given recently, the SOCU should not have to await reports emanating from the FIU or the commercial banks to conduct its work. It should independently be looking at business activities that harbour money laundering and mapping the characteristics of those businesses. It should be looking at the types of behaviour identified by the SFO, the CFATF and FATF guidelines and related bodies to get information on movements of cash, drugs and tax dodging. That information may be gleaned directly. Without exercising its own initiative the national pursuit of money laundering crimes will be severely and unnecessarily hamstrung.
I make these points to plead for a more nuanced understanding of the AML exercise and to urge the government to recruit and train persons with the aptitudes, relevant education, formal qualifications and basic skills that are relevant to the job of AML. This has not always been the approach of the PPP. At the same time, it needs to be stressed that the establishment of SOCU does not remove the need for the GPF to recruit skilled persons, competent in the key financial and accounting areas identified globally. There would also remain the need for the GPF to be properly equipped and supported. It should be obvious that attention would have to be paid to looking at the pay structure and level of the GPF and those to be granted to the SOCU.
SOCU is being set up with a former military officer as the head and with the promise of a newly constructed $63.1M HQ as well as staff with law enforcement and financial working backgrounds (SN, Sept 7 – HPS and AG). After three or more years of existence the FIU which stands at the centre of the AML fight has no significant achievement to its credit, not even a credible report, a single prosecution nor evidence of intensive special training in the area of forensic financial audits. If the SOCU is led and funded in the same manner it will equally become another white elephant.
As has been the case with the FIU head, there has been no attempt on the part of the government to explain what relevant skills the appointee to head the SOCU brings to the fight. It appears that the PPP believes that the public would recognize that intelligence work in the army post-2000 is relevant background for a SOCU head. It may be, but it is certainly not sufficient. In recent times the two biggest challenges to GDF intelligence capacity have been the loss of AK47s and the failure to anticipate and to be in a position to alert the government to the Surinamese action against the CGX oil exploration activities in our waters. The AK47s have yet to be unearthed and that fact along with the torture allegations of various victims such as Corporal Mtakatifu Mbukwa Rodney, Akeem Charles, Private Dane Wilson, Corporal Wilson and Private Dunn have implicated the GDF leadership and members of its apparently restructured Military Intelligence Department in deploying inappropriate, ineffective and illegal intelligence-gathering tools. The scandal is still freshly etched in the public psyche and are not a good recommendation.
Fmr Lt Col Sydney James whose recent claim to fame is to have unearthed a variety of weapons of interest to the President, the PPP and the Commissioners of the Rodney COI, in the course of an investigation into a death which most of us believed was the result of a bomb blast, would have done nothing to quell the fears of the blatant use of the SOCU for political ends.
The PPP always seems to be seeking a shortcut to solving problems rather than doing the required groundwork. The SOCU is a case in point. The work assigned to this unit is neither normal police work nor soldiering. The fight against money laundering is simple as a concept. It involves people who make money in a variety of ways including the drug trade getting their money into the banking system as normal deposits so that they may spend it when and where they like without hindrance from the authorities, police, regulatory agencies or banks. Apprehending them requires policing which includes preventing the illegal activities which generate the money in the first instance.
My concern is not about the individual who has been appointed to head the unit so much as the attitude it suggests. The unit has specific and unconventional tasks to perform, tasks which require skills in which we are short. The belief that they can be short circuited is ill-conceived.
This is not about finding a tough guy who will follow instructions. Worse yet the sloth in providing for supporting staff and office facilities is to be deplored.
This is a serious matter and if not done properly we will find ourselves going through the same nonsense every year in relation to blacklisting – for lack of legislation, lack of regulations and non-prosecution.
Yours faithfully,
Carl B Greenidge
