SOLOMON Islands Finance Minister, Gordon Darcy Lilo, has moved to cancel all previous MOUs relating to the tax exempt status of companies working in a number of natural resource sectors.
The measure will come into force immediately, and affects forestry, fisheries and mining.
Allegations of corruption and mismanagement have constantly dogged primary industries in the Solomon Islands. Perhaps the most widely known scandal was the Renell Bauxite scandal.
The aftermath left the Solomon Islands Government and people being owed in the vicinity of $SBD100 million in royalties, taxes and rehabilitation payments.
The core issue at the time was that only 67 of 100 shipments made by Asia Pacific Investment Development company and its subsidiary, Bintan Mining Solomon Islands included royalty payments.
Those tainted by the scandal included officials, operators and even the former Land Acquisitions Officer. Further aggravating the situation at the time was a decision by then Prime Minister Manasseh Sogavare to introduce a zero per cent tax duty for bauxite exports.
Forestry and Fisheries have also had their fair share of controversy and corruption. Bodo Dettke was asked to step aside as Minister of Forests in 2015, due to his extensive logging interests, creating a potential conflict of interest. With logging being one of the highest foreign exchange earners for the country, and as such involving big sums of money, the conditions for underhand dealings are virtually baked in.
Earlier this year, angry landowners protested at Korona over a logging company being permitted to enter their customary land without their consent. The company, Sunrise Investments Limited exported five thousand cubic meters of tubi logs to a buyer in China, Receiving $USD4.9 million FOB value for the logs. The Attorney General and senior Ministry of Environment and Forestry officials were implicated in allowing Sunrise Investments to export the seized logs.
In another case, the caretaker Fisheries Minister quietly rolled back a ban on the export of live dolphins, just before leaving office. The damage was not too extensive however, as incoming Prime Minister, Mathew Wale immediately reinstated the restrictions citing the real threat to the country’s $USD300 million dollar Tuna industry.
In the light of these episodes of corruption and controversy across primary industries, the cancellation of all previous tax exemption MOUs can be seen as the start in a process of tightening up areas that could be exploited by unscrupulous actors looking to make a quick buck at the expense of the wealth and treasure of a resource rich people.
Source: in-depth Solomons
