Senator Sagramsingh-Sooklal: Special economic zones help reduce white-collar crime

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Special economic zones will help to reduce white-collar crime, as companies must comply with international and local regulations, Government Senator Renuka Sagramsingh-Sooklal said on Tuesday.

Sagramsingh-Sooklal, during debate on the Trinidad and Tobago Special Economic Zones Bill, 2021, said government had introduced many incentives to outweigh for companies the fact that they would be monitored to prevent white-collar crime.

She said the courts would make an ultimate determination as to whether a CEO or employee commits gross negligence, with the board making the first determination, so as to not infringe on the separation of power between the board and the government.

Consultation on bill has been ongoing since 2017. She said some of the organisations consulted were the Organisation for Economic Co-operation and Development and the European Code of Conduct Group, as well as consultation to ensure the bill was consistent with the revised Treaty of Chaguaramas.

The bill is an act to provide for the designation, development, operation and management of Special Economic Zones, the establishment of the Special Economic Zones Authority, the repeal of the Free Zones Act, Chap. 81:07, the regulation of Special Economic Zones and matters related thereto.

Sagramsingh-Sooklal, responding to concerns raised by Opposition Senator Jerlean John, said compliance with international regulations such as the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) creates an avenue for integration in TT’s financial system, especially in the global financial system.

“Some of the advantages of being compliant with AML international standards are preventative measures, as we know, such as customer due diligence, identification of beneficial ownership of financial assets and suspicious transaction reporting, we know, can definitely impede tax fraud and tax evasion. We also have the protection of the integrity and stability of the international financial system, and the SEZs would then benefit at their aim of attracting new and foreign business and business of a different calibre. Strong AML/CFT controls increase public confidence in financial institutions and national systems and promote markets and investments through cross-border financial and direct foreign investment.”

Sagramsingh-Sooklal said the rationale behind the requirement that large businesses have more than 50 employees on-site was to prevent the setting up of shell companies by foreign organisations for money laundering purposes.

Responding to concerns by Independent Senator Paul Richards about SEZs becoming dumping grounds for contraband, fake products, illegal transshipments of contraband, and a lack of transparency and accounting mechanisms, she said Section 45 of the Customs Act had a comprehensive list of items that are prevented from being imported, and the Excise and General Provisions Act both applied to the SEZs. She said the government remained cognisant of the need to protect migrant workers and referred him to the International Labour Organisation.

Independent Senator Amrita Deonarine said SEZs around the world had a mixed record of success. She said while the Free Zone Act is lacking, if the constraints were fixed through countrywide reform, the SEZs might not be needed.

“The risk of the SEZ is borne by the private sector or those participants of the joint venture, but there are areas of the legislation that can make the SEZ framework vulnerable not only to knowledge problems but to rent-seeking behaviour, the economic term for corruption.”

She said while the role of the operator and developer seemed rolled into one, which is allowed under best practice, and leaves no gap for rent-seeking behaviour. However, she said the bill makes a provision that the operator’s licence can be granted to a public body, a private body, or a public-private partnership and details what the operator is responsible for.

“In the interpretation section, a public body can be a body corporate. The SEZ Authority is a body corporate. Does this mean that the authority can get involved in the operations of a zone? Further investigation shows that the authority can participate in the operation of a SEZ. This is a conflict of interest in my view. The authority should not have any role in the development and operation of any SEZs.”

Deonarine said entities applying for licences in the zones should compete for them through a fair and equitable procurement process if there was more than one of the same type.

She said the authority should create a strategic plan containing the long terms goals, with an operating plan, a clear policy direction and clear strategic planning. She said it must have access to private sector, experts, government ministries and other bodies. She said the board of the authority should have at least one representative each from InvesTT and ExporTT.

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