29764: (Lucas)TELECO PRIVATIZATION: QUI BONO? (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Stanley Lucas <maloukwi@yahoo.com>

TELECO PRIVATIZATION: QUI BONO?
By Stanley Lucas centurionlucas@gmail.com

In a recent interview with the Miami Herald, Haitian President Rene Preval 
announced the privatization of the country’s largest state-owned enterprise 
TELECO.  Haitian citizens fully understand the benefits of privatization as 
increased competition and therefore lower prices.  However, experience with 
privatization under the Lavalas regime has left many Haitians – at home and 
abroad – skeptical.

  Haiti’s history with privatization
  In 1996, the Lavalas regime privatized the state-owned flour (Minoterie 
d’Haiti) and cement (Ciment d’Haiti) factories.  The deal was much touted as a 
step towards progress and marketization in the Haitian economy.  But the 
average citizen never felt the benefits of this restructuring, and it became 
clear that the factories were essentially given away to Lavalas cronies 
resulting in a de facto monopoly for government allies. 1  Prices for these 
commodities actually climbed.  The lack of transparency during that process has 
led many to speculate that these transactions were political payoffs to 
businessmen close to Lavalas.  Further, many citizens believed that the 
legality of these transactions must be challenged as the required parliamentary 
approval was never obtained.  This, for many, remains an open issue for current 
officials to address.
  It is especially important that the process of privatization of TELECO, the 
main communications provider and a major revenue generator, follow global 
guidelines of privatization.  Many Haitians already have a strong perception 
that telecom business is riddled with corrupt domestic and international 
dealings.  As reported by Lucy Komisar, the case of IDT was one clear example 
where Jean Bertrand Aristide received payoffs and kickbacks.  Aristide and 
several of his former Lavalas ministers, who are working for the current 
Administration, have assets invested in the current telephone companies in 
Haiti.  In fact, Aristide and his allies control the lion’s share of the 
sector.  These companies will be involved in the bidding process.  Therefore, 
there is already the expectation that TELECO will essentially become a 
political gift.

  Will Haitians actually benefit?
  There is little accountability in the use of TELECO funds, and revenues have 
been used for political purpose.  The U.S. Justice Department Foreign 
Registration Act (FARA)2 of the past ten years provides detailed documents on 
how Aristide has made many lobbyists quite wealthy supporting his telecom 
investments.  One Aristide lawyer, according to recent public statement of 
former Prime Minister Latortue, made US$10 million in four years.  TELECO 
revenues are still used by Aristide to pay “experts” to fabricate human rights 
report, and sponsor an international political network involved in character 
assassination and political propaganda under the pretense of supporting 
democracy.  Essentially, revenues are used to purchase international support 
and credibility.

  In addition to lavish lobbying contracts, the Lavalas government has always 
offered up “political gifts” in the form of favorable business deals to 
international business concerns as another way to buy international support and 
credibility.  When elections are rigged or the government is under pressure for 
human rights violations, these international business ties are trotted out to 
counteract any unpleasant allegations.  In addition there are recent 
allegations that Aristide is using telecommunications revenues to sponsor 
political violence in Haiti, including kidnappings, rape and assassination. 
What it comes down to is that Aristide – out of office but not out of power – 
and his network are still raping the Haitian people and the country of very 
limited resources.  President Preval echoed his desperation during his 
Independence Day celebration speech several days ago: “Today the supporters of 
chaos do not want democracy.  They are taking advantage of the current
 political instability to rip off the country’s public funds, to “fix” State 
contracts and continue with their black market businesses and drug trafficking”

  How to get it right
  First, Aristide needs to be held accountable.  While this may be a 
complicated issue, it is not impossible to have the privatization of TELECO 
actually benefit the Haitian economy – rather than just benefiting a few 
people.  In order to ensure transparency and avoid conflicts of interests 
during the privatization of TELECO, the Preval government should pass detailed 
regulations covering privatization of state owned enterprises.  The 
International Monetary Funds (IMF) outlines the following recommendations:

  1. Clearly define what privatization means
Privatization should entail the removal of existing privileges to create a 
level playing field, private ownership, independent management and market based 
competition.
  2. Set clear objectives
Set objectives at the outset, before special interests can interfere and 
disrupt the process.
  3. Maintain strong political commitment and effective communication
The privatization process should have strong support at the highest levels, the 
set objectives and the proposed privatization methods should be shared with the 
stakeholders early on.
  4. Ensure transparency in the privatization process
A transparent decision making process is critical to securing a successful and 
politically tenable privatization.
5. Establish a regulatory framework that includes a level playing field
 Privatization should be preceded by:
- Placing the state-owned enterprise on a level playing field with private 
sector competitors
- Only the most limited commercial restructuring of the state-owned enterprise
- Promote competition by protecting against the state-owned enterprise’s 
dominant market power and cross-subsidization
- Taking measures to ensure that related regulatory reforms comply with 
international trade rules and result in a system of compliance that can carry 
forward
  6. Limit post-privatization government oversight to a legitimate regulatory 
role
 Government involvement in corporate governance and unrelated public policy 
mandates should be avoided where possible.  Privatization should avoid giving a 
quid pro quo for universal service mandate.  In addition, corporate governance 
should be independent from direct government input in management, avoiding 
placements of government officials as officers and directors.  Government 
shareholding and other forms of influence should be avoided and should not be 
used as a basis for implementing measures that effectively create co-dependency 
that hampers the state-owned enterprise transition and harms its competitors 
and customers

1 Haiti under the Lavalas regime was recently ranked the most corrupt country 
in the world according to Transparency International.
  2 As a legal matter, lobbyists are required to register with the Justice 
Department and disclose their clients and matters they are handling on behalf 
of their client.



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