"Caesar's wife must not only be above suspicion, but must be seen to be above suspicion." In The Bahamas, we seem to live in a virtual "fish bowl" where everything we do is exposed for all to see. We are also so closely connected to one another that hardly a day goes by that we do not discover a new relative or distant "cousin" who was previously unknown to us. We are often confronted by situations that raise the specter of conflicts of interest.
One of the recent examples of this phenomenon has arisen with respect to the Utilities Regulation and Competition Authority (URCA), a statutory independent regulator responsible for licensing and overseeing all electronic communications in The Bahamas, which includes fixed and mobile telephone services, Internet and broadcasting, including cable television. URCA seems to be a magnet for attracting charges of conflicts of interest.
Therefore this week, we would like to Consider This... why, in its relatively short existence, has URCA been so fraught with charges of conflicts of interest? A conflict of interest can be defined as any situation in which an individual or corporation, either private or governmental, is positioned to exploit a professional or official capacity in some way for their personal or corporate benefit. The most common forms of conflicts of interest include self-dealing transactions - those in which an official who heads or controls an organization causes or influences that organization to enter into a transaction with the official, or with another organization, that benefits the official.
In such cases, the official sits on and benefits from both sides of the "deal". To date, there have been three instances where claims of a conflict of interest have arisen with respect to URCA. Usman Saadat The first case involves two individuals. It began with Usman Saadat who was hired by URCA in April, 2009 as its director of policy and regulation. He was subsequently appointed CEO in October 2010. Prior to working at URCA, Saadat was the CEO of Cable and Wireless Communications (CWC) in St. Lucia.
After assuming the position of URCA's CEO, without any local advertisement, he hired Marsha Lewis, a former vice president for human resources at CWC Barbados. At the time, her husband was CWC's vice president for business development. Apart from circumventing Bahamian immigration laws, the conflict of interest arose in the case of both these persons because they had previously worked for the same company, CWC, which was seeking to purchase Bahamas Telecommunications Co. Ltd.
(BTC) from the Bahamas government, a deal which needed URCA's approval to complete the transactions. The proximity of both parties to the deal that was being negotiated could have impaired, or at least given the appearance of impairing, the execution of their duties as employees of the independent regulator. After heeding a public outcry surrounding these conflicts of interest, then Prime Minister Hubert Ingraham acknowledged that URCA did in fact break the rules when it hired a foreign human resources consultant without advertising that position locally and the appropriate action was taken regarding her employment with URCA.
Also, again because of the public outcry surrounding a possible conflict of interest with respect to Saadat, he appropriately submitted his resignation on May 2, 2011. There was absolutely no question that Saadat, in his capacity as the CEO of URCA, was conflicted because he was a recent former employee of the company that was attempting to purchase BTC which in turn was regulated by URCA.
Wayne Aranha The second conflict of interest claim arose with respect to Wayne Aranha after he became the chairman of URCA. The conflict claims surrounded the fact that it was shortly after his retirement from his former accounting firm, in which he was a partner, that his former firm was appointed the independent auditor of URCA. We covered the details of that matter extensively in a Consider This column entitled "A Perception of Bias" on October 15, 2010 and do not intend to recount the details of that submission.
Suffice it to say that this matter raised the specter that it was not so much a case of a blatant conflict of interest as it was the appearance of a conflict. So, while this might not have been an actual conflict of interest, it bears repeating, as we did at the time, that it represents a classic case of Caesar's wife "being seen to be above suspicion". Randol Dorsett The third conflict of interest claim recently arose with Randol Dorsett, Aranha's successor as chairman of URCA. The claim was made by Rodney Moncur at the URCA town meeting two weeks ago to hear public views on the proposed 27 percent basic rate price increase by Cable Bahamas.
In a press release on URCA's website, it was stated that "Mr. Dorsett, who is a partner in the law practice of Graham, Thompson & Co., has represented Cable Bahamas in legal matters prior to his appointment as chairman on August 1, 2012. Upon his appointment as URCA's chairman, representation of CBL by his law firm was assigned to other attorneys in the firm." The release continued: "Mr. Dorsett no longer has any such dealings with Cable Bahamas Limited or any other licensee of URCA.
These facts were disclosed to URCA by Mr. Dorsett upon his appointment as chairman. Mr. Dorsett also took a decision not to sit on any matters which are brought to the board in which his firm represents any licensee. Upon Mr. Dorsett's disclosure of these matters the board accepted that appropriate and satisfactory measures had been put in place to deal with any claims of a conflict of interest. At its August 2012 meeting the board also decided to publish these facts on its website in its quarterly report of board activities, which report becomes due in October." While this press release is informative, it does not adequately address the issue of a conflict of interest.
The fact is that as long as his law firm represents Cable Bahamas, however insignificant that representation might be, a conflict of interest persists because Dorsett is a partner of that firm, and personally benefits from fees earned from that client, whether he acts for Cable Bahamas in a legal capacity or not. In a strict sense, there is only one of three ways to cure the conflict: either the law firm resigns as legal counsel to Cable Bahamas, or Dorsett resigns as the chairman of URCA, or Dorsett resigns from his law firm.
Such is the nature of conflicts of interest, their consequences and their cures. Conclusion As The Bahamas matures, it is vitally important that persons in public and private life must avoid situations that place them into conflicts of interest, real or perceived. In the absence of progressive consumer protection laws and regulations, if we are to have confidence in those who are entrusted to act in our best interest, it is imperative that persons and institutions regulating our lives must not only avoid conflicts of interest but always "be seen to be above suspicion".
• Philip C. Galanis is the managing partner of HLB Galanis & Co., Chartered Accountants, Forensic & Litigation Support Services. He served 15 years in Parliament. Please send your comments to pgalanis@gmail.com.
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