Courcy’s Intelligence Brief

On 11 December of Mckeeva Bush, the premier of the Cayman Islands, a British Overseas territory, was arrested on suspicion of theft, breach of trust, abuse of office, and conflict of interest.  He has been under investigation since at least June 2011 over a 2004 land deal.  The strong suspicion must be that Britain is running fast to clean up its Overseas Territories under US pressure.

That Britain has had the government of the Cayman Islands in its sights was clear from the row over bringing into law last month of the Framework for Fiscal Responsibility (FFR).

Bush had sought to introduce a watered-down version, but the UK insisted on the original version agreed by Bush in November 2011, suggesting that direct rule could be imposed if he didn’t comply.  A letter from the UK government to Bush dated 1 October was released in which the British Overseas Territories Minister Mark Simmonds warned that if there was a “continued breach” of commitments to good governance, the UK would be left with “no alternative but to give detailed consideration to alternatives” – in other words to impose direct rule.

The neighbouring Turks and Caicos Islands (TCI) have just returned to home rule, following a period of direct rule from the UK imposed as a consequence of corruption and misgovernment.  A number of former TCI ministers have been charged with bribery, fraud, and money-laundering.  Former premier Michael Misick was arrested on 7 December in Brazil after months on the run.

After the spectacularly undiplomatic public spat between Simmonds and Bush, which left no doubt about the UK’s determination, the Cayman premier backed down.  One casualty of the new provisions relating to the conduct of public tenders was a bid by the China Harbour Engineering Company (CHEC) to develop a new cruise-ship terminal in Grand Cayman.

According to Transparency International (TI), the Cayman Islands host 18,000 ’business companies’ many of them Foreign Sales Corporations – a category that TI describes as “a major corporate tax dodging vehicle for US companies”.

Ministers from British Overseas Territories came to London last week for a Joint Ministerial Council from 4-5 December.  A White Paper on the Overseas Territories was published in June and stressed the importance of good stewardship.

The imposition in the US this week of a US$1.9bn fine for money-laundering offences on HSBC, Britain’s largest bank, may have had an additional salutary effect on Britain’s view of its responsibilities.

Nine of the world’s 50 identifiable tax havens come under British jurisdiction, and the Bank of International Settlements reported in 2009 that total funds in all the UK connected jurisdictions accounted for 55% of the global total – at that time estimated by the Bank at $6.5 trillion.