In November 2019, former U.S. President Donald Trump was fined US$2 million after admitting to using charitable funds to boost his 2016 political campaign. A New York state judge ruled that the tax-exempt status of the Donald J. Trump Foundation was abused to further the former President’s political efforts.
Unlike the U.S., non-profits linked to politicians in Jamaica seem to escape similar scrutiny. This is despite a 2021 report outlining an example of a local charity that may have been misused.
The report, the National Risk Assessment, meant to identify vulnerabilities and threats to the country’s Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regime, stated that “Jamaican investigators have alleged that over J$50 million [US$326,472] of public funds were diverted to the personal use of a Politically Exposed Person and associates through a number of schemes, including a Non-Profit Organisation.”
Though not explicitly named in the report, the example matches the case of former Education Minister Ruel Reid, whose wife, Sharen, and daughter, Sharelle, had set up a charity called the Education and Help Foundation. All three have been criminally-charged with corruption-related offences, along with two others. Attorney Carolyn Chuck declined to comment claiming the case is sub judice.
The foundation had been set up in 2017 but had never made any filings - not at the Companies Office of Jamaica, the Tax Administration or at the regulator for charities known as the Department of Cooperatives and Friendly Societies (DCFS), according to checks made by 18º North. The NRA states that the investigation and ongoing prosecution of this case, “highlights the requirement for effective due diligence, tracking, recording and analysis of annual filings” of non-profits.
In response, the Jamaican Parliament passed new legislation in December to strengthen the oversight of charities by the DCFS, which could see the authority auditing a non-profit. However, of the more than 6,000 companies limited by guarantee without share capital registered at the Companies Office, the first step to becoming a non-profit, only about a quarter of them are registered at DCFS, potentially allowing most of them to escape this heightened level of scrutiny.
At Companies Office, the non-profits are merely required to file annual returns and financial statements each year. But even with this more basic filing requirement, an analysis from the Companies Office, prepared at the request of 18º North, shows that the majority of non-profits aren’t filing.
Some of those delinquent on their filings are linked to elected members of parliament and senators, leaving them vulnerable to abuse. There is always the possibility that campaign financing and other activities could be going unchecked.
As a result, 18º North has mined a database of thousands of these non-profit structures provided by the Companies Office and identified which ones are linked to politicians. We then assessed which ones have been filing their returns and which ones have not.
Over the next few days and weeks, we’ll be breaking down the filing status of each of the foundations linked to each politician. Other than delinquencies in their filings, there have not been any adverse traces found nor are any insinuation regarding any organisation made. This exercise is said to highlight issues related to compliance.
Here are some overall findings as of July 15, 2022 from the database sent to us on June 13, 2022:
· 59 foundations have an elected MP or senator serving as a director.
· 31 of 63 elected MPs serve as a director of at least one foundation.
· 12 of 21 senators serve as a director of at least one foundation.
· Some foundations are specifically named after the MP’s constituency.