It’s interesting to see that Iain Dale has finally picked up on a story that’s been bubbling under the media’s radar for at least the last twelve months…

I wonder if THIS threatens to become a big story during August. Apparently Britain is imposing direct rule on the Turks & Caicos islands and suspending its constitution. Last week, the former PM of the Turks & Caicos, Michael Misick launched a legal challenge to the government’s decision. It has all arisen after a corruption investigation revealed “a high probability of systemic corruption and/or serious dishonesty”.

As a quick synopsis of the situation that’s a pretty fair reflection of the events that have taken place over the last couple of years. Serious concerns about the possibility of systematic corruption in the Turks and Caicos Islands first emerged in 2007 during the course of a parliamentary review of the UK’s remaining overseas territories, which was undertaken by the House of Commons Foreign Affairs Committee, prompting the committee to issue a call for a formal inquiry into the stream of allegations it received from concerned islanders.

196. We are very concerned by the serious allegations of corruption we have received from the Turks and Caicos Islands (TCI). They are already damaging TCI’s reputation, and there are signs that they may soon begin to affect the Islands’ tourism industry. There is also a great risk that they will damage the UK’s own reputation for promoting good governance. Unlike the Cayman Islands, where the Governor has taken the initiative in investigations, the onus has been placed on local people to substantiate allegations in TCI. This approach is entirely inappropriate given the palpable climate of fear on TCI. In such an environment, people will be afraid to publicly come forward with evidence. We conclude that the UK Government must find a way to assure people that a formal process with safeguards is underway and therefore recommend that it announces a Commission of Inquiry, with full protection for witnesses. The change in Governor occurring in August presents an opportunity to restore trust and we recommend that the Commission of Inquiry should be announced before the new Governor takes up his post.

As this paragraph from the FAC’s final report indicates, uppermost in the committees thinking at the time was its finding of a pervasive ‘climate of fear’ on the islands in relation to free speech and public criticism of the-then government, one based on all the usual totalitarian ‘favourites’, i.e. direct government interference in the media, intimidation of opposition politicians and putative whistleblowers, etc.

174. We witnessed this climate of fear for ourselves when we visited the Turks and Caicos Islands. Alarmingly for a British Overseas Territory, many individuals expressed great concern about being seen to be talking to British parliamentarians and some individuals declined to meet us altogether for this reason.

The committee even reported that a pro-government newspaper on the islands ‘radically misreported comments made during one of our [the committee’s] evidence sessions’ before going on to note that the same newspaper had, after their visit, published an advertisement that threatened opposition members who had written the committee in the course of their inquiry. The upshot of all this is that the government accepted the committee’s recommendation and, last year, initiated a formal inquiry ‘into possible corruption or serious dishonesty in recent years of past and present elected members of the legislature’, the final report of which can be accessed from the Commission of Inquiry’s website, albeit that some of its content has been redacted as a result of legal action.

However, as you might well expect, an unredacted copy of the report can be accessed via Wikileaks despite an attempt to suppress the full report with what it, perhaps, one of the most bizarrely Orwellian injunctions even granted, one that actually sought to prohibit any mention of the words ‘corruption report’ and ‘Wikileaks’ in the same sentence.

[Note: This ruling has since been overturned by the Island’s Supreme Court]

As a consequence of the inquiry’s findings, specifically those contained in an interim report published in March 2009, the UK government has taken the Turks and Caicos Islands back under direct rule and has suspended parts of its existing constitution until this whole sorry mess is cleared up. The suspension order lasts for an initial two year period and, at the time of writing, its expected that fresh elections will be held in 2011 leading to a restoration of autonomous government in the islands. It is this decision that TCI’s former Prime Minister, Michael Misick, proposes to appeal.

An undisclosed interest?

So far, so good, but what I find a tad puzzling about Iain’s coverage is that its not entirely clear as to exactly what angle he’s coming at it from – both the title of the article ‘The Empire Strikes Back in Turks and Caicos’ and his closing remarks…

Politicians on the islands are furious as they said they warned former Foreign Office Minister Meg Munn what was happening some time ago, but they were ignored. Something tells me this is going to make the headlines soon.

…appear to suggest that he thinks that this may all prove to be a bit of banana skin for the Foreign Office, although quite why is not altogether clear. Which is a little intriguing given Iain’s undisclosed but somewhat indirect interest in the particular story – Lord Ashcroft. Lord Ashcroft is, of course, a key investor in Iain’s ‘Total Politics’ magazine and, one would presume, in his new publishing venture. Ashcroft is also a ‘belonger’ of the Turks and Caicos Islands, where he has fairly extensive business interests via an offshoot of his Belize Bank, although not quite the full range of interests he was seeking as The Guardian noted in this 1999 report:

Mr Ashcroft, having made millions by helping set up a bank in Belize and an offshore tax system, had been trying to expand into the Turks and Caicos, a British dependency. This was a cause for concern among British diplomats in the region. Leaked foreign office papers in recent weeks revealed that Charles Drace-Francis, a diplomat, writing two years later, suggested Mr Ashcroft was becoming increasingly frustrated over British restrictions on his plans for the Turks and Caicos. ‘He threatened to get the politicians in the TCI to stir up trouble for us,’ Mr Drace-Francis said. The British government gave him permission to open an offshoot of his Bank of Belize on the islands but refused to let him set up a new bank.

Now, as we’re dealing with the notoriously litigious Lord Ashcroft here I should make it absolutely clear that there is nothing in the TCI Inquiry report, whatsoever, which would suggest any involvement in any of the corruption uncovered by the inquiry on the part of Lord Ashcroft, the Belize Bank or any other direct business interests he might have in the Turks and Caicos Islands. Nevertheless, there are one or two aspects to this story that could generate a bit of mildly embarrassing media attention. During the course of the inquiry, for example, it emerged that, despite having a recorded annual income of only around $200,000 a year between 2002 and 2008, the now former Premier, Michael Misick, was able to secure more than £20 million in personal loans to finance property and other business deals, $5,860,000 of which came from Ashcroft’s Belize Bank. And, in what seems to be one of the more damning sections of the inquiry report, for Misnick and other senior members of the then-ruling Progressive National Party, it appears that bank accounts at Ashcroft’s Belize Bank were used to circumvent TCI’s parliamentary regulations on the declaration of political donations and the registration of interests, conceal sizeable donations from other members of the PNP and, it seems, financial the rather lavish lifestyles of a small number of senior party members:

4.118 The second and third accounts of the Party were with the Belize Bank, a current account and a supporting loan account with an overdraft of $1.5 million. From these accounts, the Hon Michael Misick and the Hon Floyd Hall spent Party funds at will and without accounting for their use of the funds to anyone, even to other senior Party members. The Hon Floyd Hall described the current account at the Belize Bank as a clearing account for its main account there, by which he presumably meant the supporting Party Loan Account. He maintained that the Party Executive had known of the Belize Bank accounts, but that their existence had been kept from party members because full disclosure of the Party’s financial affairs was a sensitive issue and not all of its membership had the Party’s best interests at heart. He added that the Party’s Secretary General, the Hon Don Hue Gardiner, knew of the accounts. However, Mr Gardiner gave two differing accounts about this. The first, in his oral evidence to the Commission, was that he had not known of them until the Hon Royal Robinson told him about them in November or December 2008, that is, very shortly before the Commission’s oral proceedings.324 The second, in a written statement sent to the Commission on 18th February 2009, he maintained that he had subsequently remembered having signed a resolution authorising the opening of a Belize Bank account for the Party, and produced an unsigned document purporting to be a resolution of the Party of 5 June 2002 mandating the opening of the current account.

4.119 The Hon Floyd Hall acknowledged to the Commission his failure to maintain and present to the ruling Party proper accounts of its financial affairs. Such failure, of which he, the Hon Michael Misick and possibly a few others in the Party leadership were potential beneficiaries, smacks of dishonesty in keeping to themselves the existence and use of the second and third Party bank accounts with the Belize Bank.

4.120 Of major concern also, must be the scope that such secrecy may have given to the passage of funds from wealthy individuals with business relationships with the Government, and who stood to gain from its decisions, to fund on a lavish scale extravagant lifestyles of the Party’s representatives in the Cabinet. Information received by the Commission from various sources indicates that PNP Party fundraising consisted in large part of demands by the Hon Michael Misick and the Hon Floyd Hall on overseas developers to provide large cash donations to the Party. The message implicit in those demands true to the fears voiced by Mr f Jnr when trying, by way of submission on behalf of the PNP, to keep its bank accounts from the Commission and the TCI public was that failure to pay up would or could have had an adverse effect on the Government’s view of the acceptability of their projects.

I guess you could consider this to be one of the main ‘occupational hazards’ of offshore banking in the sense that the same culture of secrecy and opacity that legitimate businesses use to create their complex array of tax shelters can also readily be exploited to facilitate criminal corruption and money laundering if a particular individual, company or organisation has a mind to use the system in that way. It’s certainly a problem that Ashcroft has run into on a number of occasions during the 1990’s, as the Guardian discovered in 2001 using documents obtained under the US Freedom of Information Act.

US documents obtained by the Guardian reveal for the first time why the drug enforcement agency and other US authorities were so concerned about millionaire Tory treasurer Michael Ashcroft’s offshore world in the 1990s… The original discovery that references to the Florida-based Tory donor existed in DEA files led to controversy two years ago. Mr Ashcroft issued a libel writ against the Times, which published a correction, and he declared there was nothing to support “allegations that I am a drug runner and money launderer.” Mr Ashcroft was correct. No evidence exists to implicate him in committing crimes. Nor was he investigated on suspicion of doing so. What worried the Americans was that the Ashcroft-inspired tax haven in Belize in central America was, as a side-effect, encouraging fraud, money laundering, drugs and bribery in a small, poverty-stricken jungle state with corruptible officials.

To be scrupulously fair to Ashcroft, while both Belize and the Turks and Caicos Islands were amongst the 35 countries cited by the OECD as having ‘harmful tax practices’ in 2000, both countries have cooperated fully with the OECD in committing to and implementing its international standards for banking transparency and the exchange of information.

The TCI Journal takedown

As occupational hazards go, this is one that still seems to rub Lord Ashcroft’s rhubarb up the wrong as the independent TCI journal discovered on the 3oth March this year. Two weeks after the House of Commons was informed of the government’s decision to institute direct rule in the islands, a legal team from Harbottle and Lewis, acting for Lord Ashcroft, marched into the data centre/offices of TCI Journal’s UK-based webhost, Cyber Host Pro, and demanded the removal of four articles from the Journal’s website on the basis that these articles [allegedly] contained defamatory material which suggested that Ashcroft was somehow corrupt and/or personally involved in the corruption uncovered by TCI Inquiry’s interim report. As so often happens in such cases, the webhost panicked, took down the TCI Journal’s entire website and then, a day later, notified the Journal that it could no longer host its website. The use of strong-arm legal tactics to silence dissent and criticism of high-profile public figures is, sadly, becoming increasingly common but what makes this particular case all the more interesting is the fact that one of the four articles about which Ashcroft’s lawyer specifically complained was a reprint of an article that I had written and published over at the Ministry, in July 2008.

Article 2: Published July 20, 2008

This article was a reprint from a UK political blog. It contained no comment by the Editors of the Journal.

It can still be found at: http://www.ministryoftruth.me.uk/2008/07/16/trouble-in-paradise

The article’s first paragraph begins with:

It’s hardly the stuff of a lead story on the BBC Evening News, but there is rather more of interest to be found in the concerns recently raised by the Commons Foreign Affairs Committee in regards to allegations of government corruption in the Turks and Caicos Islands, one of Britain’s few remaining overseas territories.

The blog continues and quotes heavily from an article, published before 2001, written in a major UK newspaper. 2001 is around the time when Lord Ashcroft sued another UK paper, an event that seems to coincide with a marked change in how UK newspapers started to deal with Lord Aschroft.

All-in-all, that’s a pretty fair description of the article in question, about which I’ve never personally received any complaints (least of all from lawyers acting for Lord Ashcroft) nor indeed would I expect to receive any such complaints given that the article is, primarily, a bit of a round-up of past stories relating to Ashcroft’s sometimes controversial business activities in Central America and the Caribbean, all of which was sourced from what I consider to be pretty reputable media outlets; including The Guardian and the The Economist, whose article on a controversial issue in Belize which involved Ashcroft’s Belize Bank and the apparent seizure of £10 million of funding given to the Belizean government by Hugo Chavez was also, as a TCI Journal reprint, fingered as allegedly libellous.

[As for the other two articles that drew Ashcroft’s ire, a letter to the Journal and a locally generated article about an apparent conversation between a local residents and member of the crew of Ashcroft’s private yacht, both have been successfully driven down the memory hole by Ashcroft’s lawyers and, as such, I have no way of knowing whether either contained anything that could be construed as libellous.]

To say the least I’m rather nonplussed as to why my own article was included in the list that Ashcroft’s lawyers wanted to remove from the TCI Journal’s website, not least as I can find nothing to indicate that any of the source articles I used in putting that piece together attracted any adverse attention of that kind at the time that they were published by the MSM. Ashcroft did sue The Times over their original coverage of the DEA issue, a case that ended in what could best be described as a no-score draw but, to the best of my knowledge, he didn’t then go after the Guardian when it disclosed, in full, the reason why Ashcroft’s Belize Bank had attracted the DEA’s attention…

…and, as I’ve already mentioned, I’ve not received any complaints myself, although whether that’s just down to the fact that I host the Ministry in the US where the scope for strong-arming webhosts with takedown notices is severely curtailed by section 230 of the Communications Decency Act, a law we could desperately do with in the UK, is anyone’s guess.

Making the headlines?

Having noted that Iain has a bit of an undisclosed interest in this story by virtue of his own association with Lord Ashcroft, one has to wonder quite whether and to what extent he’s aware of this connection. Its not at all clear, to me, that Lord Ashcroft would actually welcome Iain drawing attention to the situation in the Turks and Caicos Island let alone this particular story finding its way to prominence pages of the MSM, given that the Belize Bank and it business dealings in the islands are, at least, indirectly linked to this particular story, raising the possibility that Ashcroft’s name may be ‘mentioned in dispatches’ by the MSM when reporting on any further developments.

If anything, it seems to me that, far from proving to be a bit of banana skin for the government, there may well be more in this story for the Tories to be worried about, not just in terms of Lord Ashcroft’s connection to the story and his business interests in the islands but also because, in the same year that the Foreign Affairs Committee launched it review of Britain’s Overseas Territories (2007), both William Hague and Andrew Mitchell made official visits to the Turks and Caicos Islands in the respective roles as Shadow Foreign Secretary and Shadow Minister for International Development – with flights (by private executive jet)provided by Ashcroft’s Flying Lion Ltd on both occasions – and yet neither appear to have noticed the ‘climate of fear’ that was evident to members of the Foreign Affairs Committee during their visit only a year or so later, and if they did, it doesn’t appear to anything they’ve chosen to comment on publicly, not even within Parliament.

However, given Ashcroft’s documented history of difficulties with the Foreign Office over, specifically, his involvement in the Turks and Caicos Islands, perhaps the question that he, and David Cameron, may be most keen to avoid is that of whether and to what extent the FCO’s past opposition of Ashcroft’s plans to expand his business operations into the Turks and Caicos Islands may soon evaporate given that one of Ashcroft’s closest allies, William Hague, seems likely to become Foreign Secretary should the Tories win the next election. It’s long been joked that Ashcroft liked the Tories so much, towards the end of 1990’s, that he bought the party but rarely, in the years since, has anyone seriously questioned what he might be expecting to get in return for his investment.