FREE: Did Jamaica's Finance Minister Dr. Nigel Clarke Use a Tax-Exempt Charity for Political Purposes? Can He?
FREE: Did Jamaica's Finance Minister Dr. Nigel Clarke Use a Tax-Exempt Charity for Political Purposes? Can He?
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Last month, Jamaica’s Finance Minister Dr. Nigel Clark won praise for the country’s removal from the international grey list of the global watchdog Financial Action Task Force.
For the past four years, he’d been the ministerial point person on enhancing the country’s counter-terrorism financing and anti-money laundering regime, including getting parliament to pass legislation to strengthen monitoring of the nation’s non-profit sector.
But an 18º North probe has found that Dr. Clarke’s own tax-exempt charity deserves scrutiny.
His Growth and Opportunity Trust Ltd., set up to serve his North West St. Andrew constituency by providing “relief of poverty” and to “promote the advancement of good citizenship and community development,” has raised more than $91 million (US$631,644) in donations from unexplained sources between its inception in 2018 and 2023. It’s also spent about $84 million (US$581,460) over that same time period with little indication as to how that money was spent.
Of note is that the foundation’s two most lucrative hauls occurred during election years, according to the foundation’s financials filed at the Companies Office beginning in January 2023.
In 2018, the year Dr. Clarke was first elected to parliament in a special election, the foundation took in roughly $28 million (US$192,196), which sank to just above $8 million (US$56,854) in 2019. In 2020, the year of the general election, donations shot up again, surpassing $35 million (US$244,349). They plunged again in 2021 to $1.6 million (US$11,060) and around $3 million (US$21,082) in 2022. They then rose again in 2023 to just over $15 million (US$106,104).
The foundation’s spending tracked a similar pattern — some $15.5 million (US$107,353) in special election year 2018, then down to just under $10.3 million (US$71,139) the following year. In general election year 2020, expenses skyrocketed, this time to about $30.5 million (US$210,712). They then plummeted again to around $5.8 million (US$40,009) in 2021 and $9.7 million (US$67,055) in 2022 before rising again in 2023 to just over $12 million (US$85,191).
Identity of Donors Not Known
Despite this heightened level of fundraising and spending around election periods, there's no evidence that funds from Growth and Opportunity Trust were in fact used for political purposes. *Engaging in politics is not on the First Schedule outlining the list of charitable purposes allowed under the Charities Act, which, instead, includes initiatives like the relief of poverty, the advancement of education, religion, good citizenship, community development, among other causes.
Still, anti-corruption activist Trevor Munroe, who’s been advocating for more transparency around political campaign donations for decades, told 18º North that if funds from politician-linked foundations are being used for campaigning, the source of these donations should be known. He said the public can then determine if there is “subversion of the people’s will by virtue of the [person paying the] piper calling the tune.”
But the financials of Growth and Opportunity Trust don’t give any information on who the donors are and lay out only the broad categories of “Administration”, “Operations” and “Special Operations” in terms of spending. In areas of the financials, there is a reference to “notes” but there were no notes attached to the financials filed at the Companies Office beginning in January 2023.
When asked about the donors and how the money was spent, Dr. Clarke responded via WhatsApp, “You only have aggregate donations over the six-year period 2018-2023 because this information has been made available to the Companies Office, as required.”
He added, “With respect to providing you with further information, the organization is under no obligation to you to go further than the applicable laws require.”
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No Longer A Director, But…
Dr. Clarke also pointed out that he’s no longer a director of Growth and Opportunity Trust, and indeed, on company documents, he stopped serving as a director in February 2020. But the only remaining director is a Stephanie Abrahams, who, based on a LinkedIn search, seems to work directly with the minister in his office at the Ministry of Finance and the Public Service as a senior analyst. Ms. Abrahams didn’t respond to a request for information, including the notes to the financials.
Additionally, even after Dr. Clarke ceased being a director on company papers, two months later in April 2020 on national television with Prime Minister Andrew Holness, he referred to the non-profit as “our” then “my foundation” as he pledged the Jamaican equivalent of US$2,000 to a government-sponsored Covid-19 telethon — the only gift that 18º North could find as ever having been made by Growth and Opportunity Trust. (Dr. Clarke later clarified to 18º North that the use of the word “our” was a mistake and that PM Holness has nothing to do with Growth and Opportunity Trust.)
Video: Finance Minister Dr. Nigel Clarke announces a donation from his Growth and Opportunity Trust to the Covid-19 Telethon in April 2020 for the Jamaican equivalent of US$2,000. Prime Minister Andrew Holness’ Positive Jamaica Foundation donates as well.
No Evidence of The Foundation Spending In Dr. Clarke’s Constituency
After looking at the financials, which aren't too dissimilar from those of some of the other non-profits filed at the Companies Office in terms of the lack of details, Robert Stephens with civil society group Advocates Network still wanted more disclosure: “What evidence has been presented to indicate they’re dealing with community issues? What justifies them getting tax exemption?”
Despite the foundation being set up to serve Dr. Clarke’s North West St. Andrew constituency, two of the three elected councillors there told 18º North that they’d never heard of Growth and Opportunity Trust. One of the two, Andrew Harris, who’s been in the role for 7.5 years, says he knew Dr. Clarke had a foundation and would have used funds from it to help with projects, but he couldn’t name a specific project. Mr. Harris said Dr. Clarke has helped him with items like “cement,” “a bag of rice” or “refreshments” for past activities that would have been valued at a “few thousands.” However, he wasn’t sure if the assistance came from the foundation or from the Constituency Development Fund, which allocates $20 million (US$138,246) annually to each member of parliament to be used for constituency projects. The third councillor declined to comment.
Can Tax-Exempt Foundations Spend on Politics?
Dr. Clarke isn’t the only politician that has a foundation.
In summer 2022, when 18º North started to look at the non-profits of politicians, there were close to 60 organizations where a parliamentarian was a director, though only about a quarter of those were specifically for the benefit of a constituency. Most of the 60 were registered solely at the Companies Office, making them public companies with charitable purposes. Only about three of them were like Dr. Clarke’s Growth and Opportunity Trust that had gone a step further and registered at the Charities Authority, which operates out of the Department of Co-operatives and Friendly Societies (DCFS), making them tax-exempt. (One of the three no longer appears on the list of charities as of 2023.)
Not much is known about these organizations, but at least one Jamaica Labour Party MP told 18º North that hers was a vehicle for persons or entities to make donations to projects within communities she represents.
Raymond Pryce, a former People’s National Party MP, who had put forward a stalled motion years ago to have foundations more closely tracked, said, “It creates a degree of separation between making a donation for electioneering versus making a donation for a civic good. But the outcome is the same. You enhance the agenda of the individual politician.”
The Tax Administration of Jamaica (TAJ) wrote to 18º North that where political activities form the core of an organization’s charitable purposes, its Commissioner General, by virtue of his power vested under section 16 of the Charities Act, 2013, “would object to the registration of such an entity on the grounds that those activities, being political, would not fall within the ambit of the provisions of the First Schedule of the Charities Act, 2013 as being a purpose which the common law regards as charitable.” However, it didn’t respond when asked whether a back-to-school treat for residents of a politician's constituency right before an election, for example, would be deemed to be political.
The TAJ did make clear that “both the political party and the political candidate are required to pay taxes on any income deemed exigible,” meaning taxable, unless the donations received are purely gifts from the donor with no “material benefit” in return since gifts aren’t considered income. The TAJ says “material benefit” is not defined in the Income Tax Act though the ordinary definition refers to a “benefit, direct or indirect, which may not be financial, but has a monetary value and is considered more than de minimis.”
In the United States, former President Donald Trump was fined US$2 million in 2019 after admitting to misusing charitable funds. 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. The charity was ordered to be shut down.
By examining the foundation’s tax filings with the Internal Revenue Service – a document that is public in the U.S. - The Washington Post reporter who broke the story was able to find out that the foundation had admitted to the illegal act of self-dealing. Self-dealing is when funds from a non-profit are used to enrich its leaders or their businesses or families.
Like in the U.S., Jamaican tax-exempt charities are also required to file a tax return. But, unlike in the U.S., those returns aren’t made public, according to the TAJ.
Even at the DCFS, which collects information from charities on the identity of their major donors, an initial request for the financial filings of Growth and Opportunity Trust in February 2023 was turned down because of “confidentiality.”
Section 11(1) of the Charities Act, 2013, speaks to DCFS’ employees keeping “secret and confidential” all information, books, records or documents “relating to the functions of the Authority,” and the Charities Regulations, 2022 refer to “respecting donor confidentiality,” but it’s not known if these are the sections that the DCFS is relying upon to withhold the release of the financials of Growth and Opportunity Trust.
When 18º North pushed back asking why financials of charities -- which are supposed to be for the public good -- can’t be made public, the Ministry of Industry, Investment and Commerce, under whose portfolio DCFS falls, wrote back in June 2023 saying 18º North could make the request for the financials and the Department “will process same as soon as possible.” But a request submitted once again for the financials of Growth and Opportunity Trust at the DCFS in February 2024 is still pending. In the end, we had to rely on the financials filed with the Companies Office to do this report. (The aim of 18º North to get the financials filed at DCFS was to see if there were more details in them.)
Fundraising During General Election Year 2020
It is from these financials filed at the Companies Office that 18⁰ North learned that in election year 2020, Growth and Opportunity Trust raised $35 million and spent $30.5 million. Meanwhile, Dr. Clarke reported to the Electoral Commission of Jamaica (ECJ), as required, that during the campaign period between August 11 and September 2 of that year he raised around $15 million (US$103,615). It’s not known if any of that $15 million came from the charity, and Dr. Clarke didn’t clarify when asked via WhatsApp.
When asked if any political candidate had listed a foundation as a donor to their election campaigns, the ECJ, which, by law, collects donor information for each political candidate during the reporting period but doesn’t reveal it publicly, would only tell 18º North that, “None of the candidates or parties listed any foundations in their disclosure reports.” The ECJ further explained to 18º North that it’s not within its remit to monitor donations to charities registered to politicians.
The TAJ doesn’t seem to routinely monitor these organizations either unless there is an audit. The Companies Office wrote that as long as a filing is made by an entity, that’s enough, “We do not check for accuracy.”
The Integrity Commission tasked with monitoring the assets of parliamentarians for illicit enrichment by requiring annual filings listing the income, assets and liabilities of politicians, also indicated that “A declarant does not need to declare donations for organisations, including charities, for which they are associated.”
That leaves the DCFS as the only government entity that would likely monitor politician-connected tax-exempt charities.
DCFS, the only hope?
Since the Charities Regulations in 2022, shepherded through the Jamaican parliament in part by Dr. Clarke at the behest of international regulators, charities at an increased risk of being misused for financial crimes can be designated as “protected,” and one of the criteria in the law that will be used to make this determination is whether the charity is connected to a politically-exposed person. Dr. Clarke is one such person.
Once the charity is deemed protected, it would be subject to enhanced monitoring, which entails audits being carried out by the DCFS every year on those charities instead of every two years for other ones.
Since the enactment of those regulations, more than 40 charities have been deemed at-risk. However, it’s not clear if Growth and Opportunity Trust is one of those. On the 2023 list of charities, it’s deemed “medium” risk. The DCFS didn’t respond when asked what that actually means or what it has started to do differently as a result of that designation.
The Charities Act 2013 lays out that the DCFS is supposed to “have regard” to “the maintenance, protection and enhancement of public trust and confidence in charitable organizations” and “the need for transparency and accountability in the management” of them.
Additionally, it states that a charitable organization is one “established for a charitable purpose exclusively,” operates “for the public benefit” and has “no part of its net income or assets enuring to the personal benefit of any governing board member or settlor of the organization, or of any other private individual.”
But if a second media request for the financial filings of Growth and Opportunity Trust hasn’t been honored by the DCFS for five months, how is the public to trust that this tax-exempt charity is carrying out a charitable purpose and operating for the public benefit?
Without public access to the financials and to the donors’ names, how will taxpayers become convinced that the donors didn’t receive a “material benefit” in return for their donations, which could call into question whether the organization should really be tax-exempt.
Section 24 of the Charities Regulations makes clear that using a charity for a purpose “outside of its charitable purpose” is a criminal offense punishable by “a fine not exceeding one million dollars or to imprisonment for a term not exceeding twelve months.”
When asked via WhatsApp whether he was willing to rule out that he had personally benefited financially from Growth and Opportunity Trust or that none of its donors had ever influenced his decision-making in his public role, Dr. Clarke didn’t respond.
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Editor’s Notes:
This version of the story has been updated to insert the phrases “some of the” other non-profits and “in terms of the lack of details” just before Robert Stephens’ comment. Note that most of the non-profits reviewed by 18⁰ North provided still-broad categories of spending like “Staff Costs”, “Audit and Accounting”, “Welfare”, “Advertising”, “Grant Expenses”. Only a few gave detailed specifics of their charitable spending.
Exchange rate used is J$144.67:US$1, which is the average of the average yearly exchange sell rates found on the Bank of Jamaica’s website between 2018 and 2023, the years covering the financials lodged at the Companies Office for Growth and Opportunity Trust Ltd..
*Though engaging in politics is not on the list of charitable purposes in the First Schedule of the Charities Act, 2013, there is a section of the schedule that says that the Minister can specify a charitable purpose, “subject to negative resolution of the House of Representatives,” as being analogous to one of the listed charitable purposes. (The minister in charge of the DCFS is Senator Aubyn Hill.) Additionally, Section 3(2) says that if the purposes of an organization that seeks to be registered as a charitable organization includes a purpose that is not a charitable purpose, but is instead, “merely ancillary” to a charitable purpose of the organization, “the presence of that non-charitable purpose does not, without more, prevent the organization from being regarded as, or qualifying to be, so registered.”
A subsequent email to DCFS from 18º North in June 2024 requested filings, in general, and not just the financials. This email should have captured a request for the DCFS’ annual return Form 8, which we recently learned, requires charities to list their significant donors and the amounts they contributed. Since the information has still not been forthcoming, 18º North has now submitted an Access To Information request to see if we can get the information that way.
Why else would he need the Foundation. Are contributions in constituencies for all and sundry assistance founded by the Government? What is charity?