turks and caicos islands commission of inquiry 2008‐2009 · 2013-12-19 · turks and caicos...

TurksandCaicosIslandsCommissionofInquiry2008‐2009

intopossiblecorruptionorotherseriousdishonestyinrelationtopastandpresentelectedmembersoftheLegislatureinrecentyears

ReportoftheCommissionerTheRightHonourableSirRobinAuld

PresentedtoHisExcellency,GordonWetherell,GovernoroftheTurksandCaicosIslands

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TURKSandCAICOSISLANDS

COMMISSIONOFINQUIRYINTOGOVERNMENTALCORRUPTION

REPORT

CONTENTS

PageNo

AppointmentofCommission 5

SubmissionofReporttotheGovernor 7

Acknowledgements 9

SummaryoftheReport 11

1‐INTRODUCTION

TheNatureoftheInquiry 14

BriefDescriptionoftheTurksandCaicosIslands 17

ShortHistoryoftheIslands 19

MattersgivingrisetotheCommission’sappointment 27

ScopeandconductoftheCommission’sInquiry 31

2‐CORRUPTION

Introduction 48

Conflictsofinterest 52

Disclosureofinterests 55

Politicsandpoliticaldonations 62

Belongership 67

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ConstitutionalWatchDogs 69

3‐CONTEXTOFCORRUPTION

Abuseofofficeandofthepoliticalandelectoralprocess 77

CrownLand 81

Publiccontracts 100

Immigrationandpermissiontowork 104

RevenuesandExemptions 108

4‐INFORMATIONOFPOSSIBLECORRUPTIONAND/OROTHERSERIOUSDISHONESTYAND

RECOMMENDATIONS

Introduction 113

TheHonMichaelMisick

Background 114DeclarationsofInterests 119DisclosureofIntereststotheCommission 119PoliticalDonationsor‘Loans’ 120OtherPayments 125Tourism 132UseofGovernmentandleasedaircraft 138CasablancaCasinoandtheWindsorInvestmentGroupLtd 141JoeGrantCay 146SaltCay 151

TheHonFloydHall

Background 158DeclarationsofInterests 158DisclosuretotheCommission 160PoliticalPartyFinances 161LinkswithRichardPadgett 164‘Flipping’ofCrownLand 168MinisterialinterventionintheallocationofCrownLand 171Scholarships 172HealthCare 173CabinetResponsibility 178

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TheHonMcAllisterHanchell

Background 178DeclarationsandDisclosureofInterests 179Loans 182Caicos OilLtd 183MinisterialAllocationofCrownLand 184JoeGrantCay 188SaltCayDock 193

TheHonJeffreyHall

Background 195

DeclarationandDisclosureofinterests 195

MelbourneWilsonandthefirstNorthWestPointtransaction 197

MelbourneWilsonandthesecondNorthWestPointtransaction 203

TheHonLillianBoyce

Background 204DeclarationstotheRegistrarofInterests 204DisclosuretotheCommission 205AllocationandFlippingofCrownLand 205Awardofscholarships 207Profitmakingfromgovernmentcontracts 208SouthernHealthNetwork 208

TheHonGalmoWilliams

Background 209DeclarationstotheRegistrarofInterests 209DisclosuretotheCommission 211ConflictsofInterest 211FirstCaribbeanTrustCompany 212Immigration 212

5‐SYSTEMICLEGISLATIVEANDGOVERNMENTALWEAKENSSES

GeneralFaultLines 214

PartialSuspensionoftheConstitutionandInterimDirectRulefromWestminsterthroughtheGovernor

218

CriminalSanctionsandCivilRecovery 224

IntegrityinPublicLife 230

4

CrownLandAllocation,SaleandManagement 238

ANewConstitution 240

6‐SUMMARYOFFINDINGSANDRECOMMENDATIONS

FromChapter4–InformationofPossibleCorruptionAnd/OrOtherSeriousDishonesty

TheHonMichaelMisick 244

TheHonFloydHall 249

TheHonMcAllisterHanchell 253

TheHonJeffreyHall 255

TheHonLillianBoyce 256

FromChapter5‐SystemicWeaknesses

PartialSuspensionoftheConstitutionandDirectRule 257

CriminalSanctionsandCivilRecovery 259

IntegrityinPublicLife 260

CrownLand 262

ANewConstitution

264

APPENDICES

1. Maps:i) Caribbeanii) TurksandCaicosIslandsiii) Providencialesiv) SaltCay

2. Commissioner’s Opening Statement, Providenciales Proceedings 13th January2009

3. CommissionInterimReportof28thFebruary2009

4.

Significantlegislativeandotherinstruments:i) ConstitutionOrder2006ii) Constitution(InterimAmendmentOrder)2009iii) CommissionsofInquiryOrdinanceiv) RegistrationofInterestsOrdinancev) MinisterialCodeofConductvi) PublicServiceCodeofEthicsandConduct

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SUBMISSIONOFREPORTTOTHEGOVERNOR

YourExcellency,

Your predecessor in the office of Governor of the Turks & Caicos Islands, His

ExcellencyRichardTauwhareMVO,appointedmeassoleCommissionerunderawarrant

signed and issued by him on 10th July 2008, pursuant to the Commissions of Inquiry

Ordinance.Thewarrant,whichisreproducedattheheadofthisReport,requiredmeto

conduct an inquiry into thepossibility of corruption and/orother seriousdishonesty in

relationtopastandpresentMembersoftheLegislatureoftheTurks&CaicosIslandsand

to reportmy findingsand recommendationsby theendofOctober2008. On14th July

2008IattendedbeforeHisExcellencyinGrandTurkandtooktheoath.Onthefollowing

day he and I attended and spoke at a press conference in Providenciales, at which I

openedtheInquiry.

For reasons with which you became familiar following your succession to His

ExcellencyasGovernoron5thAugust2008,andwhichhavebeenwellpublicisedinPress

ReportsissuedbyYourExcellencyandbytheCommission,itbecamenecessaryforyouto

enlargethetimefortheconductoftheInquiryandsubmissionoftheReport.TheReport

isnowtobesubmittedby31stMay2009.

Followingmy appointment in July 2008, I spent the best part of sixmonths until

early January 2009, making written enquiries, mainly from the Commission’s Office in

London.Indoingso,IhadtheableanddedicatedassistanceofMrAlexMilneandMiss

SarahClark,CounseltotheCommission,MrsJacquelineDuff,SolicitortotheCommission,

andMrLauranceO’DeaandMissBaharehAla‐eddini,respectivelySecretaryandAssistant

SecretarytotheCommission.

Asyouknow,inearlyJanuary2009theCommissionmovedtoProvidencialesinthe

Turks & Caicos Islands to conduct oral proceedings, in the main for the purpose of

examiningMinistersandotherMembersof theHouseofAssemblyas to their interests

declarable under the Registration of Interests Ordinance 1993 and/or sought by the

Commission under the Commissions of Inquiry Ordinance. Despite requests from the

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Commission,manyofthoseinterestshadstillnotbeendisclosed.Theoralproceedings,

which included, towards theend,evidence fromanumberofotherwitnessescalledby

theCommission, took justover fourweeks,endingon11thFebruary2009. For reasons

that I gave on that day when closing the proceedings, I considered that there was a

nationalemergencyintheTerritorynecessitatinganInterimReportby28thFebruary2009

at the latest. TheCommissionTeamreturnedquickly to theUnitedKingdomtoenable

me,withtheirhelp, toprepareandsubmit it toYourExcellencyon28thFebruary2009.

With the continued and dedicated help of the Commission Team, involving also the

conductofanextendedSalmonexercise,1 IhavecompletedtheFinalReporttoday,31st

May2009,andpresentitherewithforYourExcellency’sconsideration.

TheRightHonSirRobinAuld

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1LettersofthiskindwererecommendedintheReportoftheRoyalCommissiononTribunalsofInquiry,whichwaschairedbyLordJusticeSalmonin1966.TheReportlaiddownasetofgeneralprinciples,designedtosafeguardtheinterestsofwitnessesandpartiestoatribunalofinquiry–RoyalCommissiononTribunalsofInquiry(1966)Cmnd3121,London,HMSO

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ACKNOWLEDGMENTS

IcannotsubmitthisFinalReportwithoutrecordingmanyandwarmacknowledgements

due to somany for their help in the Commission’s inquiry in and from the Turks and

Caicos Islands, the United Kingdom and elsewhere. Throughout, I have been greatly

aidedandreassuredbythewelcomeaccordedtotheCommissionbythepeopleof the

TurksandCaicos Islandsandvaluableassistance that thevastmajorityhavevoluntarily

givenbywayof contributions inwritingand/or inoralevidence,andby someof those

whogaveoralevidenceonsummons.

I include inmy thanks theGovernor,HisExcellencyGordonWetherell,hispredecessor,

His Excellency, Richard Tauwhare MVO, and their hard‐pressed staff, the Attorney

General and the many senior Departmental Officials and their staffs who responded

promptlyandhelpfullytoourmanyrequestsforinformationandassistance.

The Commission was also extremely fortunate in the arrangements made for its

accommodation and oral proceedings in January and February of this year in

Providenciales. The Regent Palms Hotel, under the well‐judged and hospitable

arrangements made by Monica Neumann and her proficient and welcoming staff,

provideduswithcomfortablelivingandalocationfortheoralproceedingsthatwasjust

right.

In such a setting, and despite all the customary travails of any such exercise, the

CommissionTeam,MrAlexMilneandMissSarahClark,ofCounsel,MrsJacquelineDuff,

Solicitor,andMrLauranceO’DeaandMissBaharehAla‐eddini,respectivelySecretaryand

AssistantSecretary,allgavemorethantheirbest,notjusttotheCommission,butalso,I

believe,toallwhoattendedthehearingsorhadoccasiontocontactit.Iincludeinthat

tribute the vastmajority of the parties’ attorneyswho, consistently with their duty to

their clients, showed high professionalism, good nature and a prompt and helpful

responsetothemanydemandsthattheCommissionmadeonthem.

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Inaddition, IshouldrecordmygratitudetotheCommission’sReal‐TimeStenographers,

Christina Yianni and Catherine Eden, without whose dogged and talented work in

producingdailytranscriptsofthehearings,muchofinterestandimportanceformanyat

thetimeandforthefuture,wouldhavebeenlost.Asimilarandequallyfulsometributeis

due toDavidWoods, theCommission’sweb‐siteConsultant, for his regular postingsof

thetranscriptandotherinformationabouttheInquiry’swork.

Finally, a thank you to the Royal Turks and Caicos Police, who, under the direction of

Superintendent David Ryder, ensured – with great efficiency and unobtrusively – the

orderlyandsecuremannerinwhichtheCommissionwasabletogoaboutitstask.

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SUMMARY

1. There is ahighprobabilityof systemic corruption ingovernmentand the legislature

andamongpublicofficersintheTurks&CaicosIslandsinrecentyears.Itappears,inthe

main, to have consisted of bribery by overseas developers and other investors of

Ministersand/orpublicofficers,soastosecureCrownLandonfavourableterms,coupled

withgovernmentapproval for itscommercialdevelopment. Breachand/orbyabuseof

the Government’s Belongers’ Empowerment and Crown Land Policies appear to be

frequentmechanismsof,andaidsto,suchtransactions.2

2.Overthesameperiodtherehasbeenseriousdeterioration‐fromanalreadylowlevel‐

intheTerritory’ssystemsofgovernanceandpublicfinancialmanagementandcontrol.3

3.Thisdeteriorationhasbeenaccompaniedbyextravagantandill‐judgedcommitments

by those in public office, primarilyMinisters, in public expenditure and in their private

expenditure at public expense. There has also been deterioration in the Territory’s

financialconditionand,morerecently,accumulatingbudgetdeficitsandanearcollapse

ofitsfinancialreserves,givingitdifficultyonoccasioninpayingitsbillsastheyhavefallen

due.4

4.Amongthecontributorstothismoral,governmentalandfinancialdeclinehavebeen:

1) the potential and encouragement in the system of governance for abuse of public

office, concealment of conflicts of interest at all levels of public life, and consequent

venality; 2) the power of politics in themix of public decision‐making and commercial

activity,andwillingnessofoverseasdevelopersandotherinvestorstoexploitthatpower

for their own purposes; 3) vulnerability of the majority of the Territory’s long‐term

residents,owingtotheprecariousnessoftheirpermissiontoliveandworkhere,andto

whom Belongership and, with it, the right to vote are denied; and 4) lack of effective

constitutional checks and balances in the system of governance to protect the public

2SeeChapter1,paras1.41–1.44,Chapter2,paras2.44–2.49,Chapter3,paras3.9–3.52,andChapter4generally,andtheCommissionInterimReportof28thFebruary2009atAppendix3tothisReport3SeeChapter1,paras1.38–1.43–1.49,Chapter2,paras2.50–2.644SeeChapter4generallyandtheCommissionInterimReportof28thFebruary2009atAppendix3tothisReport

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purse,theinefficientfromscrutiny,thedishonestfromdiscoveryandthevulnerablefrom

abuse.5

5. There isalsomuchscope in thewidediscretionarypowersaccordedtoMinistersby

the2006Constitution,and/orarrogatedbythem,forabusebythemoftheirpublicoffice,

inefficientgovernanceandpoorpublicfinancialmanagementandcontrol,particularlyin

the grant or withholding of Crown Land and permission to develop it and other

investmentopportunities,and intheexactionorwaiverofgovernmenttaxesandother

dues.6

6.PursuanttotheCommission’sfirstTermofReference,Ifindthatthereisinformation

of possible corruption and/or other serious dishonesty, includingmisfeasance in public

office,inrelationtofivepresentelectedMembersoftheHouseofAssembly,allofwhom

until recently wereMembers of the Cabinet, namely, the HonsMichaelMisick,7 Floyd

Hall,8 McAllister Hanchell,9 Jeffrey Hall10 and Lillian Boyce.11 I have recommended

criminalinvestigationbythepoliceorotherswithaviewtoprosecutions,ifsoadvised,in

relation to such possible offences in respect of matters identified and described in

Chapter4,andsummarisedinChapter6,ofthisReport.12

7.PursuanttotheCommission’ssecondTermofReference,Ifindthattherearesystemic

weaknessesInlegislation,regulationandpublicadministrationintheTerritory,inrespect

ofwhich Ihavemaderecommendations,13 largelyconfirmingthosemade inmy Interim

Reportof28thFebruary2009.14

8. Those recommendations include:1)partial suspensionof the2006Constitutionand

Interim Direct Rule fromWestminster acting through the Governor;15 2) provision for

special criminalprocessandcivil recoveryof assetsarisingoutof any criminalorother

investigationspromptedbythisReport,includingtrialbyjudgealoneandpartialreversal

5SeeChapter2generally6SeeChapter3,paras3.9–3.867Seeparas4.6–4.109andRecommendations1to138Seeparas4.110–4.151andRecommendations14to269Seeparas4.152–4.189andRecommendations27to3310Seeparas4.190–4.211andRecommendations34to3611Seeparas4.212–4.22andRecommendations37to3912SeeChapter4generallyandChapter6,Recommendations1‐3913SeeChapter5andalsoChapter6,Recommendations40‐6514SeeAppendix3tothisReport15Chapter5,paras5.11–5.22andRecommendations40to47

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of the burden of proof;16 3) improvement of standards of integrity in public life;17 4)

statutoryreformofthesystemforadministrationanddisposalofCrownLandintheform

ofaCrownLandOrdinance(alreadypartly indraft),soastoremoveorseverelyreduce

the scope for corruption and loss without appropriate return of the Territory’s most

valuableasset;185)onreturnoftheTerritorytoministerialgovernment,amendmentof

the2006Constitutionor,withaviewtoanewConstitution,reformoftheFranchiseand

removalor reductionof constitutional imbalancesandweaknesses;19and6) review, in

consultationwiththeTCIBarAssociation,ofTheLegalProfessionOrdinance.20

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16Chapter5,paras5.23–5.32andRecommendations48to5317Chapter5,paras5.33–5.43andRecommendations54to5918Chapter5.44andRecommendation6119Chapter5,paras5.45–5.48andRecommendations62to6420Chapter5,para5.49andRecommendation65

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1‐INTRODUCTION

TheNatureoftheInquiry

1.1On10thJuly2008IwasappointedsoleCommissionerofInquiryunderthetermsofthe

Turks and Caicos Islands Commissions of Inquiry Ordinance21 by His Excellency Richard

Tauwhare MVO, the then Governor of the Islands. The Terms of Reference of the

Commission(takingintoaccountsubsequentamendment)wereasfollows:

To inquire into ...[w]hetherthere is informationthatcorruptionorotherseriousdishonesty in relation to past and present elected members of the House ofAssembly(previouslyknownastheLegislativeCouncil)mayhavetakenplace inrecentyears...[and]tosubmit... itspreliminaryfindingsandrecommendations...concerning:

(a)instigatingcriminalinvestigationsbythepoliceorotherwise,[and]...torefersuchinformationitmayobtaintotheTCIprosecutingauthorities];

(b) any indications of systemic weaknesses in legislation, regulation andadministration;and

(c)anyothermattersrelatingthereto.

1.2AsIobservedinmyInterimReportsubmittedtotheGovernoron28thFebruary2009,

thetaskssetformebytheTermsofReferencecouldnotsensiblyhavebeenexpressedwith

lowerthresholds.

1.3 Under the firstTermofReference, Iamtoconsiderwhether there is information ‐ in

whatever form and giving it the weight I consider it deserves – of possible corruption in

relationto,thatis,involving,electedMembers,pastandpresentoftheLegislature.Ifso,I

amtoconsiderwhethertorecommendcriminalinvestigationbythepoliceorotherbodies.

The potential targets of the Commission’s Inquiry and any such criminal investigation are

thosewhomayhavebeenbribed,thosewhomayhavebribedthemand/orthosewhomay

havebeenpartiestoanysuchcorruptand/orotherwiseseriouslydishonestbehaviour.

1.4 Under thesecondTermofReference Iamtoconsider, in the lightof the information

before me, making findings as to any systemic weaknesses in legislation, regulation or

21Ch21;SeeAppendix4(iii)tothisReport

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administrationrelevant topossiblecorruptionand/orotherseriousdishonesty,and, if I so

find,tomakerecommendationsforchangeinordertopreventandtodetersuchconduct.

1.5 Under the third Term of Reference, I am to consider, in the light of the information

before me, whether to make findings and/or report on any other related matters, for

example, those thatbearon,ormaybeaffected in a fundamentalwayby, any statutory,

regulatory and/or administrative changes that I recommend. These I have interpreted as

including the Constitution, the extent andmanner of grant of the Franchise, the over‐all

structure of the Territory’s system of governance and financial and other control, the

fundingofpoliticalpartiesandanyrelevantcodesofpublicorprofessionalconduct.

1.6OversixmonthsofextensivewritteninvestigationsbytheCommissionbeforeitbegan

oralproceedingsinProvidencialesinJanuary2009,Ireceivedmuchinformationpointingto

possiblesystemiccorruptionand/orofotherseriousdishonesty involvingpastandpresent

electedMembers of the Legislature in recent years. I also found indications of systemic

weaknesses in legislation, regulationandadministrationand relatedmatterscalling, inmy

view, for attention. As will appear in the ensuing chapters of this Report, the oral

proceedings, were necessitated in the main to secure full disclosure of interests from

MinistersandotherMemberof theHouseofAssembly. Thoseproceedingsproducedan

abundanceoffurtherinformation–informationthatpointed,notjusttoapossibility,butto

a high probability of such systemic venality. Coupled also with clear signs of political

amoralityand immaturityandofgeneraladministrative incompetence, theydemonstrated

an urgent need for suspension, in whole or in part, of the Constitution and for other

legislative and administrative reforms. There were also strong indications, from the

informationbeforeme,oftheneedforchangesinotherrelatedmatters.

1.7 Iaccordinglydetermined,bythecloseoftheoralproceedingson11thFebruary2009,

that I should submit an Interim Report to the new Governor, His Excellency Gordon

Wetherell(whohadsucceededGovernorTauwhareasGovernoron5thAugust2008),thatis,

wellbeforetheexpiryoftheCommission’speriodforcompletingtheInquiryandreporting

to theGovernor (by then extended to 30th April 2009). In closing the oral proceedings, I

explainedwhyIconsidereditnecessarytotakethatcourse:

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...thegovernmentofthiscountryisatanearstandstill,theCabinetisdividedorunstable, theHouseofAssemblyhasbeenprorogued, its financesare inabadwayandpoorly controlled, governmental andother audit recommendations lieunattended, and disposals of Crown Land to fund recurrent public expendituredeficits continue for want of governmental revenue from other more fiscallyconventionalsources.Itisevidentthattherearewide‐spreadfearsonthepartofthepeopleoftheTerritorythattheyareleaderlessandtheirheritageisatriskofcontinuingfasttodrainaway.

... thetrainofevents leadingtothesehearingsandtheTerritory’sparlousandvolatilestatehasnecessitatedafurtherextensionoftheCommission’speriodofInquiryto30thApril.Butthatdoesnot–orshouldnot–allowtheCommissiontoassumetheluxuryofreturninghomeforsomemonthstopolishitsparsesbeforereporting.IntheTerritory’spresentstate,goodnessknowswhatmayhappeninthemeantime....

1.8IdulypresentedtheGovernorwithanInterimReporton28thFebruary2009,conveying

myfindingsthattheInquiryhadproducedinformation,attheveryleast,ofpossiblesystemic

corruptionand/orofotherseriousdishonestyinvolvingpastandpresentelectedMembers

of the Legislature, coupled with indications of systemic weaknesses in the Territory’s

legislation, regulationandadministrationand in relatedmatters. I included in theReport

some24interimrecommendations,someofwhichIregardedandexpressedtobeofgreat

urgency tomeetwhat I considered to be chronic ills collectively amounting to a national

emergency,othersforthemiddleandlonger‐term.

1.9InthisReport,IsetoutwhatwasabsentfromtheInterimReport,thefactualbasesfor

the findings of systemic governmental weaknesses and more fully developed

recommendations flowing from those findings. I also setout for the first time findingsof

information of possible corruption and/or other serious dishonesty involving individual

Members of the House of Assembly ‐ all Ministers at the material time and some third

parties,withrecommendationsforcriminal investigations. Inaddition,Irefertoanumber

ofother transactionsand relationships,which, forwantof resourcesand time, I havenot

beenabletoinvestigateasfullyasIwouldliketohavedone,butwhichmaybeofinterestto

any criminal investigators whomay be appointed as a result of this Report. Absence of

specific mention or criticism of transactions or relationships should not be taken by

individualsconcernedinthemasnecessarilyexculpatory.

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BriefDescriptionoftheTurksandCaicosIslands

1.10 The Territory of the Turks and Caicos Islands (“TCI”) is one of 14 United Kingdom

OverseasTerritories.Itconsistsofanarchipelagoofislands‐someverysmallandknownas

cays–at theeasternedgeof theCaribbean. They lie tothesouthof theBahamasChain,

some600milessouth‐eastofMiamiand90milesnorthofHaitiandtheDominicanRepublic

–seeMapatAppendix1(i).

1.11 TheTerritoryconsistsofsome40 islandsandcaysdividedbyadeep‐waterchannel

into two groups – see Map at Appendix 1(ii). To the north‐west of the channel and

extending in an arc to the south‐east are the Caicos chain of islands, starting withWest

CaicosandProvidenciales, the latterbeing themain tourismandcommercial centre– see

MapatAppendix1(iii),andcontinuingsouth‐eastwardswithNorth,MiddleandSouthCaicos

To theeast and south, andon theother sideof thedeep‐water channel, areGrandTurk,

where the Territory’s capital, Cockburn Town, and the seat of Government are situated.

Extending in a south‐westerly direction from Grand Turk is a chain of mainly small cays,

whichmakeuptherestoftheTurksIslands.Theyinclude,attheirsouthernextremity,Salt

Cay,which,asitsnamesuggests,hashadalongconnectionwiththeproductionofsalt–see

MapatAppendix1(iv).Thewholelandareaisabout190squaremiles.Ithasapermanent

orlong‐termpopulationestimatedin2008tobeabout36,000,22plusatransientandvarying

numberofoverseasworkersand illegal immigrants, the lattermostly fromHaitiandother

partsoftheCaribbean.AbouttwothirdsofthepopulationliveandworkinProvidenciales.

1.12OnmanyoftheIslandsandsmallcaystherearehighqualitytouristdevelopmentsand

expensive private homes. The main attractions to residents and visitors alike are the

dazzling white beaches, fringed with spectacular reefs, internationally renowned diving

areas, and, of course, good fishing. In recent years these attractions have become an

increasinglypopularlurefortourists,andforoverseasdevelopersseekingtoaccommodate

and profit from them. This has led to a boom in development on many of the Islands,

particularly in Providenciales, which the TCI Government has encouraged and enabled by

releasingandsellinglargeareasofCrownLandfortouristresortsandassociatedprojects.

22TCIGDepartmentofEconomicPlanningandStatistics,2008Estimate.

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1.13 There are also environmentally protected land areas, but the poor soil – mostly

limestone–anddryclimatedonotencourageagriculture.TheTerritoryhastoimportmost

of its food,save for fish. TheTerritory is subject toperiodic– that is, in theSummerand

Autumn – tropical storms and hurricanes. Most recently, in early September 2008 and

duringthecurrencyofthisInquiry,thereweretwoinshortsuccession,TropicalStormHanna

and Hurricane Ike. They causedmuch damage, including very serious devastation in the

south‐eastofthearchipelago,onGrandTurk,SouthCaicosandSaltCay.

1.14 Of the total permanent or long‐term population there are an estimated 11,750

Belongers–mainlylocallybornordescended,butincludingotherstowhom,exceptionally,

thestatushasbeengranted.OnlyadultBelongershavetherighttovote,andtheyenjoya

number of other benefits, including the opportunity to acquire Crown Land at a very

substantialdiscountforprivatehousingandcommercialdevelopment.

1.15TheIslands,asaBritishOverseasTerritory,arenotconstitutionallypartoftheUnited

Kingdom (UK). They have enjoyed varying degrees of self‐government over the years,

subject to oversight from the UK exercised through an Administrator or Governor. The

fundamental relationship between the UK and the TCI, as with all other of its Overseas

Territories,istoassistandguidethemtofullindependencewhentheyarereadyforit.That

aim isat theheartof theUK’sobligationsunder theUnitedNationsCharter,Article73of

which imposes on it, as the administering power, a solemn and heavy responsibility to

recognisethattheinterestsoftheTerritory’speopleareparamount.Thatincludesadutyto

promote their well‐being, including their political, economic, social and educational

advancement,justtreatment,protectionfromabuseandamovetoself‐government.

1.16 In 1999 theUnitedKingdomGovernmentunderlined its commitment to the goal of

eventualgrantoffullindependencetoallitsOverseasTerritoriesinaWhitePaper,23setting

out a new partnership with them based on four principles: 1) eventual grant of

independencewherethedevelopmentofaterritoryissuchthatitisconsideredanoption;

2) in the meantime, the grant of the greatest possible autonomy; 3) defence,

encouragement of sustainable development and care for their interests internationally, in

returnfortheirexerciseofhighstandardsofprobity, lawandorder,goodgovernanceand

23FCO(1999)PartnershipforProgressandProsperity;BritainandtheOverseasTerritories,Cm4264,p4

19

observanceoftheUK’s internationalcommitments;and4)continuingfinancialhelpwhere

needed.

1.17Astothelastofthoseprinciples,theTCI,incommonwithmostotherBritishOverseas

Territories,alsohasanindirectrelationship,throughtheUK,withtheEuropeanUnion(the

EU), pursuant to an EU Council Decision, known as the Overseas Association Decision,

renderingtheTerritoryeligibleforconsiderationforEuropeanDevelopmentfunding,24and

alsoaccesstootherregionalfundingschemes.

1.18TheTCIhasitsownConstitutionbyvirtueofanOrdermadebytheQueeninCouncilin

2006,25underwhichitisgovernedbytheQueenactingthroughaGovernor.TheGovernor

actsinconsultationwithaCabinetappointedbyhim,exceptsometimesinrelationtocertain

matters for which he has special responsibility, or when so instructed by Her Majesty

through a Secretary of State, or when acting in his discretion or judgement on the

recommendationofapersonorauthorityotherthantheCabinet.Mattersreservedtothe

Governor include responsibility for defence, external affairs, regulation of international

financial services and internal security, including the police, the public service and

administrationofthecourts.TheConstitutionalsoreservestotheUKanumberofpowers.

TheyincludethepoweroftheQueentolegislatefortheTCIbyOrderinCouncil,toinstruct

theGovernorintheexerciseofhisfunctionstoactwithoutconsultationwith,orcontraryto,

theadviceof theCabinet,and,acting throughaSecretaryofState, todisallowany lawto

whichtheGovernorhasassented.

ShortHistoryoftheIslands

1.19 I should say something about the history of the TCI before moving to the

circumstances giving rise to the appointment of this Commission. In doing so, I have

borrowedfromothermuchfulleraccountsthanarenecessaryhere.Oneaccount,towhichI

amparticularly indebted is thatof Sir (ashenow is) LouisBlom‐CooperQC in1986of an

24 FCA (2008), Overseas Territories: Seventh Report of Session 2007‐2008,Volume 1 (Report, togetherwith formalminutes), HC147‐1,LondonTSO,p47,para11225TheTurksandCaicosIslandsConstitutionOrder2006,SI2006/1913

20

Inquiry he conducted into allegations of arson, corruption and related matters in the

Territory(theBlom‐CooperInquiry).26

1.20 The first permanent settlement in the Islands was in the late 17th century when

Bermudansalt rakersestablishedsalt‐pans inGrandTurkand later innearbySaltCayand

SouthCaicos,establishingwhatwastobecomeoneoftheprincipalworld‐sourcesofsaltfor

useasapreservative.AftertheFrenchdrovetheBermudansoutinthe1760stherewasa

periodofthirtyyearsduringwhichtheBritish,actingthroughtheGovernoroftheBahamas

Islands, claimed territorial jurisdiction. Notwithstanding their claim, theBritishwerehard

puttokeepatbay,first,theFrenchand,bythen,thewell‐establishedsaltworkers.Toadd

to the mix, in the late 1780s American loyalists arrived in the Bahamas and began to

establishcottonplantationsintheCaicosIslands.

1.21 At the turn of the 18th and 19th centuries the TCI became a restless part of the

Bahamas–restlessinlargepartbecauseoftheIslands’saltproprietors’deepresentmentof

thesaltdutiesimposedonthembytheBahamians.Theoutcomewasseparationfromthe

Bahamas in the mid 19th century and the introduction of a form of self‐rule called a

Presidency,underthesuperintendenceoftheBritishGovernorofJamaica–some400miles

tothewest.Overthesucceedingyearsthedeclineofthesaltindustryandoftheeconomy‐

andadevastatinghurricane,bythesoundofitworsethanHurricaneIke–ledin1874tothe

Islandsbecoming,attheirinhabitants’request,adependencyofJamaica.Theysoremained

forthebestpartofacenturyuntil1962whenJamaicaitselfgainedindependence.

1.22 By this time refrigeration had largely replaced salt as a preservative, and the salt

industry in the Islands had all but come to an end. By this time too, the Territory had,

acquired a constitution,27 but now with the Governor of Jamaica as its Governor (acting

through an Administrator appointed by him) and an Executive Council and a Legislative

Assembly.Thiswasashort‐livedarrangement,comingtoanendin1965withtheTerritory’s

second Constitution and a period of rule by the Governor of the Bahamas (also acting

throughanAdministrator), anda further (slightly) amendedConstitution in 1969. Finally,

followingthegrantofindependencetotheBahamasin1973,theTerritoryacquiredin1976

26ReportoftheCommissionerMrLouisBlom‐CooperQC, intoAllegationsofArsonofaPublicBuilding,CorruptionandRelatedMatters,December1986,London:HMSO,SeeinparticularPartsA,E,FandG,General,Related,andUnrelated,Matters,andPoliticalPatronage27TheTurksandCaicosIslands(Constitution)OrderinCouncil1959

21

its first very own fully‐detached Constitution28 (the 1976 Constitution) and resident

Governor.

1.23 Turningback foramoment fromtheconstitutionalstatusof the Islandsachievedby

1976, itmaybehelpful to lookbackbrieflyat theirphysical, cultural, socialandeconomic

developmentsincethebeginningofthe20thcentury.Forthispurpose,Icannotdobetterby

wayof scene‐setting for today thandrawon the followingpassages from the1986Blom‐

CooperReport:29

... At the beginning of this century Grand Turk, Salt Cay, South Caicos, EastCaicos,MiddleCaicos,NorthCaicosandWestCaicoswereallpopulated.TodayEast and West Caicos are uninhabited. This small group of islands, sparselypopulated,havelimitednaturalresources.Therearevastdiseconomiesofscales,bothinpublicandprivatesectors,resultinginthehighcostofgoodsandserviceswhichmustbeduplicatedoneachisland.ThisisexacerbatedbythegeographicalspreadoftheIslandsrangingover166squaremilesandsurroundedbyreefandshallow waters. Communication between the Islands has been a perennialproblem. On the Caicos Islands there were no proper roads and the journeybetween the non‐coastal settlements was often made on foot or by donkey.GrandTurkwasacablestationandhadcontactwiththeoutsideworld,buttheCaicosIslandswerenotsofortunate.

TherehasbeenhistoricallyamarkeddividebetweenpeoplefromtheSaltIslands(Grand Turk, Salt Cay and South Caicos) and those fromMiddle Caicos, NorthCaicosandProvidenciales...IntheSaltIslands,saltwasacashcropandcreatedawageeconomy,whereas in theother islands subsistence farmingand fishingprovidedthesolemeansoflivelihood.DuringtheSecondWorldWaranairstripwasbuiltbytheUSforcesonSouthCaicosandanotherwasestablishedonGrandTurk.TheUSestablishedaCoastGuardbaseatthenorthernendofSouthCaicos.OnGrand Turk, at the polarities of the sixmile‐long andmile and a halfwideisland,theUSmaintainedaNavalBaseandanAirForceBase.Theconstructionand operation of these two bases brought a significant addition to the wageeconomy. While they provided much‐needed employment, they masked theunderlying weakness of a ‘one‐crop’ economy. The weakness was unmaskedwhen the bases were discontinued in the early 1980s, leaving unoccupiedbuildings,areminderofindirectaidfromtheUS,notsincereplaced.

1.24Aid,notsincereplaced,thatis,untilthestartintheearly1970sofUStourismtothe

Islands,developingeventuallyintoanotherone‐cropeconomy,30withitsmainfocusonone

of the most attractive, though hitherto least economically favoured Caicos Islands,

28TheTurksandCaicosIslands(Constitution)Order1976,1976/115629Report,pp5‐630It istruethatsincethe late1970stheTerritoryhasalsosoughttoestablish itselfasoffshorefinancialcentre,butwithonlymoderatesuccess.

22

Providenciales.Thenext30yearssawagatheringmomentum,indeedanexplosion,onthat

Islandoflarge‐scaletouristdevelopments,radiatingouttosomeoftheotherCaicosIslands

and associated cays, but not to any great extent in Grand Turk or the other former Salt

Islands. Despite,orbecauseof, thisdramaticeconomicturnabout, thecultural,socialand

economicdividebetweenthetwosetsof Islandshaspersistedin largeparttothisday,Sir

LouisBlom‐Cooper,commentingin1987,againaptlysetthescene:31

... Between thepopulationofGrandTurkand thatof theCaicos Islands, therewasaninitialdifference.TheformerconsistedofBermudansandtheirslavesinsearch of salt. The latterwere Loyalists from theUSwho emigrated after theWarofIndependence.WhilethesaltindustrybroughtameasureofprosperitytoGrand Turk, agriculture was always a struggle: Grand Turk, the seat ofgovernmenthasbeenconcentratedinasingletownandhasbeenpoliticallymoreadvanced. Inthe largerCaicos Islandssettlementhasbeenmorescatteredandless cohesivebutwitha sturdyparochialismencouragedby sectarianvariety inreligiousmatters.Fortheseandotherreasonstherehasbeenadivisionoflongstandingbetweenthetwogroups,dividedbya22miledeep‐waterchannel,anddifficultcommunications....

But a new dimension to the traditional rivalry and parochialism was alreadydevelopingbytheearly1970s.Tourismwasmushroomingonthemostattractiveof the Caicos Islands, Providenciales. Today there is a reversal of the unequalfortunesofthetwogroups,withthoseanxiousfordevelopmentonProvidencialesbelievingittobethwartedbythepoliticaldominanceofGrandTurk.Itisanewingredientintherivalry...32

1.25 All of this, as I have indicated, formed the back‐drop to the 1976 Constitution, a

change toaWestminster styleadministration. Thishad the familiar trappingsof aBritish

dependentterritoryoftheday,aGovernor,actinginthemaininconsultationwithandon

the advice of an Executive Council, save in certain matters reserved to him or when

instructed from London.33 It had a Legislative Council composed partly of members

appointed by the Governor and partly ex officio, all subject ultimately to the control of

Londoninmattersofpolicyandadministration.34

1.26The1976Constitutiongaverisetotwomainpoliticalparties,theProgressiveNational

Organisation, the forerunner of the Progressive National Party (PNP) and the People’s

DemocraticMovement(PDM).Withthesupportofindependentmembers,thePDM,ledby

31opcit26,p832ibid,p833s734ibid,s23

23

James(Jags)McCartneyasChiefMinister,wasabletocommandamajorityintheLegislative

Council for four years until the 1980 General Election. Thereafter the PNP secured a

substantialmajorityintwofurtherelectionsunderthesuccessiveleadershipofMrNorman

SaundersSnrandMrNathanielFrancisasChiefMinister,andwasthepartyinpoweratthe

timeoftheBlom‐CooperInquiryinApril1986.35

1.27 The main subject matters of the Blom‐Cooper Inquiry were, on the face of it,

comparativelynarrow,namelyallegedarsonofabuildingonGrandTurkonNewYear’sDay

1986andallegedcorruption inthePublicWorksDepartment in1985/1986. However, the

termsofSirLouis’appointmentalsoauthorisedhimtoinquireinto,andreporton,Related

Matters, which he did. His general conclusions on thosematters, suggest that little has

changedoverthelast20orsoyearsleadingtothisInquiry,exceptastothepossiblerange

and scale of venality in public life. The following passages from his Report, under the

headingofConclusions,givea flavourofwhathe foundorbelievedhewouldhave found

haditallbeenwithinhistermsofreference:36

Nineteen eighty six ought to witness a point of departure in the political andgovernmental life of the Turks and Caicos Islands. ... I am driven to theconclusion that the time has come to disperse the cloud that hangs like abrooding omnipresence in a Grand Turkan sky. Persistent unconstitutionalbehaviour(throughtheapplicationofpoliticalpatronage)andcontraventionsofthefundamentalfreedomoftheindividualfromdiscriminationonthegroundsofpoliticalopinions,maladministrationbybothMinistersandcivilservantsateverylevelofgovernment(mostlyatmiddlemanagementlevel),andintolerable(nottosayseditious)conductby leadingoppositionmembersof theLegislativeCouncilare constant blights upon a constitutionally ordered society which is alreadydisplayingsignsofpoliticalinstability.

...

... Ihavenot foundcorruption. But I cannotsimulatedeafness to thevoicesofresponsiblepeopleintheIslandswhocomplainthatthereispervasivecorruptioningovernment,ifonlyitcouldbeuncoveredbydiligentandsustainedinquiryoveranumberofareasofgovernmentaladministration,allofthemoutwithmytermsofreference....

35AppointedundertheCommissionsofInquiryOrdinance1986(ofwhichthecurrentCommissionsofInquiryOrdinanceisarevision);thefirstoftwoInquiriesconductedbySirLouisin1986,thesecondintoanarrowerissue,SeeReportofCommissionofInquiryintotheNorthCreekDevelopmentProject1986‐1987(1987),Cm195,London:HMSO36ibid,PartH:ConclusionsandRecommendations,ChapterXIX,pp98‐99

24

Ifnothingisdoneaboutthisdepressingstateofpublicaffairs,thediseaseinthebodypoliticthatIhaveidentifiedmayalltooreadilybecome–ifitisnotalready–endemicandineradicableforthepresentgenerationofIslanders....

....Thetwindevelopmentoftourismand,since1979,theoffshorefinancialcentrehasoffered...theseIslandstheirfirstmodernopportunityofeconomicprosperity.Butbothelements in theeconomyareatpresentprecariouslypoised. It is theresponsibility of the people not to forego this opportunity through inertia andunwillingness to adapt. It is the duty of the politicians,with the assistance ofadministrators,topromoteandstimulatethatprosperity,notjustforthemselvesortheirsupporter{s]butforthebenefitofallthepeoplesoftheseIslands.

1.28 In the result, Sir Louis found that threeMinisters, including the ChiefMinister,Mr

Nathaniel Francis, had been guilty of unconstitutional behaviour and of ministerial

malpractices rendering themunfit to exerciseministerial responsibilities.37 He alsomade

findingsagainsttwoleadingMembersofthe(PDM)OppositionintheLegislativeCounciland

a Public Works Department employee, expressing the view that they were unfit to hold

publicoffice.However,herecommendedthattheyshouldnotbeprosecutedfortwomain

reasons. First, theadversepublicitygiventothembeforeand inthecourseofthe Inquiry

woulddeprivethemofa“fairhearing”towhichtheywereentitledundertheConstitution.

Secondly,itwouldbeimpossibletoempanelanimpartialjury:38

... Almost everyone in the Islands identifies himself with one or other of thepoliticalparties.Withsuchamanifestcommitmenttopartypolitics,itwouldbeimpossibletoachieveimpartialityinajuryempanelledfromamongthequalifiedjurorsintheTurksandCaicosIslands.

1.29Onawiderplane,andfollowinginlargepartfromthosefindings–andalso,nodoubt

becauseofhisviewastothegeneralconstitutional,administrativeandpoliticalmalaise in

the Islands, he recommended three further options for consideration.39 They were: 1)

suspension of the 1976 Constitution and introduction of an interim system of direct rule

through the Governor; 2) not to amend the Constitution, but to operate the Executive

Council throughMinisterswithoutportfolios;or3)–hisdiffidentlyexpressedpreference–

partial suspension of the Constitution to retain administration of the Territory by the

Governor actingon, but notboundby, the adviceof anAdvisory ExecutiveCouncil,while

retainingtheLegislativeCouncil.

37Report,p9738ibid,pp58and9739ibid,pp99‐101

25

1.30 In July 1986, shortly after the submission by Sir Louis of his Report, the 1976

Constitutionwas amended by anOrder in Council, temporarily suspending theministerial

system of government, his preferred option. A Constitutional Commission under the

Chairmanship of Sir Roy Marshall (the Marshall Commission)was appointed to consider

possible future constitutional arrangements.40 The Marshall Commission’s Report,

submitted inDecember 1986, gave rise to anOrder in Council in 1988 introducing a new

constitution (the1988Constitution),41 restoringministerial government in the formof the

GovernorandExecutiveCouncil, includingaChiefMinisterandfourotherMinisters,anda

LegislativeCouncil, consistingof12electedmembersand threeappointedmembers. The

1988Constitutionlastedfor18yearsuntilitsreplacementbyanOrderinCouncilin2006.

1.31Thatperiod,inpoliticalterms,continuedtobedominatedbyrivalrybetweenthePNP

and PDM, and ‐ particularly since the turn of the century ‐ accelerating economic

developmentandgrowthinpublicwealthandprivateprosperityengenderedinlargepartby

tourismandoverseasdevelopers catering for it. In theyears from2000up to the recent

world‐wide economic crisis, the Territory had, according to the UK National Audit Office,

experienced economic growth among the highest in the world.42 This influx of overseas

investment,muchof ithungry forCrownLandat thedisposalof theGovernor inCabinet,

alsobroughtwithitcontinuedgovernmentalmaladministrationandamixofincompetence

andperceivedcorruptioninpublicaffairs‐whicheverofthetwopartieswasinpower.

1.32So,thereisnothingnewaboutallegationsofgovernmentalincompetenceandabuse

of power in the TCI. As indicated in the next Chapter of this Report, many who gave

evidence to the UK Foreign Affairs Committee in 2007‐200843 and to this Inquiry have

stigmatised the conductofbothpolitical parties and theirmemberswhen in government,

accusing them of abuse of office or political power for personal or political advantage.

However,ofthetwo,thePNPhaveinrecentyearsattractedthemainandmostvociferous

criticism.

40TCIConstitutionalCommission(1986),ReportoftheConstitutionalCommission,Cm111,London:HMSO41TheTurksandCaicosIslandsConstitutionOrder1988,SI1988/24742UKNationalAuditOffice(2007),ReportbytheComptrollerandAuditorGeneral,ForeignandCommonwealthOffice:ManagingriskintheOverseasTerritories,HC42007‐08,p5843ibidp56,para149

26

1.33Whatisnewaboutthesecriticisms,oftenclearlytheproductofstronglyfeltgrievance,

istheincreaseintheirprevalenceandseriousness.Thatisparticularlysoinrespectofthose

voicedagainsttheHonMichaelMisick,hispoliticalcolleaguesandsupportersandfamilies,

since the PNP gained control and he became Chief Minister in the 2003 elections. The

dramatic surge inpowerandwealth thatheand theyenjoyedover the succeeding years,

which they openly displayed, appeared tomany to be egregious and tell‐tale signs of, at

best,abuseofpowerandfavouritism,atworst,corruptionorotherseriousdishonesty.

1.34 It was in such a political and economic climate that, at the suit of a now highly

confidentPNPadministration,seekingmoredevolutionofpowersfromWestminsteranda

furthermovetowardstotalindependence,thatthe2006Constitutioncameintobeing.44The

principal changes wrought by it were the introduction of a modernised chapter on

fundamental rights and freedomsof the individual and the replacementof the Legislative

Council with a House of Assembly composed of a Speaker, 15 electedMembers (one for

each of 15 electoral districts), four appointed Members and the Attorney General. The

former Executive Council was replaced with a Cabinet consisting of the Governor, a

Premier45andsixotherMinistersappointedbytheGovernorontheadviceof thePremier

fromtheelectedorappointedMembersoftheHouse,andtheAttorneyGeneral.

1.35TheConstitutionrequirestheGovernortoconsulttheCabinetonmattersofpolicyand

in the exercise of all functions conferred on him, savewhen otherwise instructed by the

Secretary of State or in functions expressly exercisable by him in his discretion. It also

reserves to theGovernor certain special responsibilities,namely:defence,external affairs,

internal security, including the police force and appointment to any public office; and it

providesforthejudiciaryandthepublicservice.

1.36TheCabinetanditsMembersindividuallyweregranted,orwereenabledtoexercise,

significantly more discretionary power than they or their predecessors had enjoyed as

MembersoftheExecutiveCouncilunderthepreviousConstitution.

1.37Whenthe2006Constitutioncameintoforceon9thAugust2006,theGovernorinpost

wasHisExcellency,RichardTauwhare,MVO.ThePNP,withtheHonMichaelMisick,asChief

44Schedule1totheCaribbeanandNorthAtlanticTerritories–TheTurksandCaicosIslandsConstitutionOrder2006,2006/191345sostyledbysection27(1)(b)

27

Minister,hadbeeninofficeforthreeyears,havinginAugust2003,followinganelectionand

twoby‐elections,defeatedwithamodestmajority46thepreviousPDMAdministrationunder

theHonDerek Taylor as ChiefMinister. The2006 Constitution called for fresh elections,

whichwerescheduledforFebruary2007.ThePremier,astheHonMichaelMisickhadthen

become, and his fellow PNP colleagues and supporters resolved to secure amuch larger

majoritythanthemajorityithadbeenabletosecurein2003.Ishallhavemoretosayabout

theFebruary2007electioncampaign later inthisReport. Forthemoment it isenoughto

record that this time they secured a resoundingmajority in the new House of Assembly

composed, inadditiontotheappointedmembersandtheAttorneyGeneral,of15elected

members, with 12 seats to the two of the PDM. This result, no doubt coupledwith the

continuingrisingwaveoftourismandassociatedprosperitytotheIslands,gavetotheHon

MichaelMisick and his political colleagues and friends optimism and zest for evenmore

ambitiousprojects.

MattersgivingrisetotheCommission’sAppointment

1.38DespitetheseeminglyboomingeconomyatthetimeofthePNP’ssweepingelection

victory in February 2007, all was far from well with its public finances and their

management,astheReportsofTCIChiefAuditor,CynthiaTravis,for2005and2006show.47

Despite unprecedented growth in governmental revenue and expenditure in those years,

there were growing budget deficits for want of proper control and monitoring of

expenditure. InherReports,48 theChiefAuditor identifiedmanyserious issues,andmade

manyrecommendationsrequiringurgentattention.Mostofthemwerelargelydismissedor

ignored by the Misick Administration, the Hon Michael Misick and the Hon Floyd Hall

treatingherwithhostility.AuditReportsofindividualgovernmentboards,forexample,the

Tourist Board and the National Insurance Board49 revealed similar serious deficiencies in

their financialmanagementand control,mostly routinely ignoredby those in government

responsibleforthem.Untilabout2007,incomefromstampdutyonlandsalesandimport

dutieshadbeenthelargestcontributorstomeetingcurrentexpenditure,some50%ofwhich

went to meet the costs of government and public healthcare. But with the weakening

46Byamajorityof8to5seatsintheLegislativeCouncil.47Themostrecentauditedaccounts.48AnnualReportstotheHouseofAssembly,GrandTurkAuditOffice49AuditReportsoftheTouristandNationalInsuranceBoardfortheyearended31stMarch2005.

28

economy,as2007gavewayto2008,thosesourcesofrevenuediminished,adiminutionnot

matched by reduction in extravagant spending by Ministers on various projects and

themselves. The result was that the Government had to borrow heavily to meet its

recurrent revenue expenditure as well as significant capital expenditure obligations. The

accumulatedpublicdeficitwastorisebytheendofthefinancialyearinMarch2008tosome

$38million,with an overdraft on its bank accounts of over $6million, shortly before the

Commissionstartedwork.

1.39 That worrying trend was confirmed in a Report by the UK National Audit Office in

November2007onManagingRisk in theOverseasTerritories (theUK2007NationalAudit

Report).50 The UK National Audit Office considered proper management of TCI public

finances to be a key risk, noting: 1) expenditure consistently over budget, without prior

statutory authorisation and with financial controls routinely overridden and projects

informallyadded;2) relianceonunplannedsurplusesoverbudgetedrevenue, inparticular

theproceedsof salesofCrown land tomeet current sales receipts; 3) risingpublic sector

debt;4)widespreaddeparturesfromcompetitivetendering;5)publicfundingofMinisters’

extravagantlife‐style;and6)electoralabuse,particularlyintheformofbribes.51

1.40InJuly2007theUKForeignAffairsCommitteeopenedaninquiryintothesecurityand

goodgovernanceofthe14UnitedKingdomOverseasTerritories.Itsoonhadreasontopay

particularattentiontotheTCI.AstheCommitteehasrecordedinitsReport,52thenumber

andweightofsubmissionsthatitreceivedfromtheTCIledittosingleouttheTerritoryasa

particularcauseforconcern.Byfarthemostevidencereceivedfromanyofthe14Overseas

Territories was from the TCI, as also were the majority of all witnesses requesting

confidentialitybecauseoffearofintimidationorreprisalsiftheirevidencebecameknown.53

1.41Theevidence,insummary,consistedofallegations,muchofithearsay,ofwidespread

governmental corruption, in particular in relation to sales of Crown Land, allocation of

contractsanddevelopmentagreements,grantsofBelongershipunder statutorypower for

discretionarygrant inexceptional cases,misuseofpublic funds,mismanagementofpublic

50opcit42p5851ibid,pp60‐61,paras166‐16952ibid,p51,para127,andp55,para14753ibid,p 51, paras 127 – 131, leading it to recommend, in para 131, extension to evidence given to the FAC of the protection of theWitnesses(PublicInquiries)ProtectionAct1982.

29

finances,lackoffreedomofspeechandaclimateoffear.ThePDMsubmittedanextensive

memorandum detailing the same and other serious concerns, which concluded with a

request, echoing that of individual witnesses, for the appointment of a Commission of

Inquiry.54 Many of these concerns were, as the UK Foreign Affairs Committee put it,

highlighted in private meetings that a delegation of some of its members had with

individualsduringavisittotheTCI.

1.42 TheUK Foreign Affairs Committee also received, byway of response from the TCI

Government,55oralevidencefromtheHonMichaelMisick56andawrittensubmissionfrom

theHonFloydHall,thenMinisterofFinanceandDeputyPremier,withparticularreference

tocriticismsoftheTerritory’sgovernanceandpublicfinancialmanagementinthe2005and

2006 TCINationalAudit Reports and the2007UKNationalAudit Report.57 In the visit of

someoftheCommitteememberstotheTerritorytheyalsospokewithGovernorTauwhare,

thePremierandfellowMinisters.

1.43 The HonMichaelMisick, in his oral evidence to the Committee, hotly denied the

allegations ofwidespread corruption and abuseof public office, publicmaladministration,

mismanagementofpublic finances,andof intimidation.TheHonFloydHall, inhiswritten

evidence to the Committee, sought to discredit the TCI Chief Auditor and to dismiss the

concerns inthe2007UKNationalAuditReportasaresultofbias inherAuditReportsand

hercontributiontotheUKReport.58Hisevidencemakesinterestingreading.Itistoolong

forinclusionhere,butIshallreturntoitindifferentcontextsinlaterpartsoftheReport.

1.44TheCommitteeexploredwiththeGovernorTauwharesuggestionsbysomethathe,in

his role asGovernor and as President of the Cabinet, had not been sufficiently vigilant in

puttingastoptopossiblycorrupttransactionsorproposalsapprovedinCabinet,particularly

in relation to grants of Crown land. His response to the Committee was that it was

constitutionally very difficult to intervene when all legal requirements appeared to have

beenmet.59FrommyexaminationoftheCabinetpapersandtheGovernor’sownfiles,his

54FAC(2008),OverseasTerritories:SeventhReportofSession2007‐2008,VolII(OralandWrittenEvidence),HC147‐II,London:TSO,Ev339,MemorandumsubmittedbyHMLoyalOpposition,TurksandCaicosIslands55opcit24,pp63–65,Ev35156ibid,p63,para176,Ev1157opcit42,p4358opcit24,p63,para17759ibid,pp65‐66,paras183‐187

30

response as recorded by the Committee does not do him justice. He clearly scrutinised

matters closely, took issue in Cabinet, and, in reporting to the Foreign& Commonwealth

Office,expressedconcernonsomeworryingproposals,notablyforthedevelopmentofSalt

Cay.

1.45 The UK Foreign Affairs Committee also examined the role of the UK Government,

characterisedbymany themaseffete in the faceofobvious corruption. The responseof

Meg Munn, the then Parliamentary Under Secretary of State at the Foreign &

CommonwealthOfficeresponsibleforOverseasTerritories,wasthat,despitetheallegations,

therewasnosubstantiveorcompellingevidenceofcorruptiontojustifyeitherprosecution

or intervention, saybyaCommissionof Inquiry.60 Sheadded that theConstitutionof the

Territoryempowered theSecretaryof State to interveneandoverrule theCabinetonany

matter should it prove necessary, and that she was reassured by new TCI provisions

designedtopromoteintegrityandopennessinpubliclife,includinganIntegrityBill,aCrown

LandBillandaMinisterialCodeofConductbasedontheUKCodeabouttobeintroduced.

1.46TheCommittee’sconclusionandrecommendationonallthisevidencewasclearlyand

trenchantlyexpressedinfavouroftheappointmentofaCommissionofInquiry:61

... We are very concerned by the serious allegations of corruption we havereceivedfromthe....TCI.TheyarealreadydamagingTCI’sreputation,andtherearesignsthattheymaysoonbegintoaffecttheIslands’tourismindustry.ThereisalsoagreatriskthattheywilldamagetheUK’sownreputationforpromotinggoodgovernance. .... theonushasbeenplacedon localpeopletosubstantiateallegations in TCI. This approach is entirely inappropriate given the palpableclimateoffearonTCI. Insuchanenvironment,peoplewillbeafraidtopubliclycomeforwardwithevidence.WeconcludethattheUKGovernmentmustfindaway to assure people that a formal process with safeguards is underway andtherefore recommend that it announces a Commission of Inquiry, with fullprotectionforwitnesses....

As to the stance of the Foreign& CommonwealthOfficewith regard to intervention, the

Committeecommented:62

437....in...caseswhichshould...causegraveconcern,inparticular,allegationsofcorruptionon theTurksandCaicos Islands, itsapproachhasbeen toohandsoff. The Government must take its oversight responsibility for the Overseas

60ibid,pp67‐69,paras188‐197;andopcit24,Ev5661ibid,para19662ibid,para437

31

Territorymoreseriously‐ ... demonstratingagreaterwillingnesstostepinandusereservepowerswhennecessaryontheother.

1.47ThepublicationoftheUKForeignAffairsCommitteeReportinmidJune2008wasthus

ofapiece,initsexpressionsofseriousconcernaboutgovernanceoftheTCI,withthe2007

UKNationalAuditReport.

1.48 TheUKForeignAffairsCommittee’s concernalso reflectedagrowingoutcryamong

the people of the TCI against perceived governmental corruption,misuse of public funds,

seriousmismanagementofpublic financeandtheescalatingpublicdeficit.Theseconcerns

wereaccompaniedbyaperceptionofincreasingcontrolbytheHonMichaelMisickandhis

PNPAdministrationofpeople’slivesandlivelihoods,inhibitionoffreedomofspeechandof

non‐Belongers’righttoremain,extensiveexerciseofpowertograntorwithholdpatronage,

increasingcontrolofthepublicmediaand,over‐all,ageneralatmosphereofintimidation,as

reportedbytheUKForeignAffairsCommittee.63Toallofthiswasnowaddedsomecriticism

ofGovernorTauwhareforseeminglynotstandinguptothePremierandhisfellowMinisters

andtheUKForeignAffairsCommittee’sapparentendorsementofthegrowingperceptionof

neglectbytheForeign&CommonwealthOffice.

1.49 Itwas in such circumstances that theGovernor, nowwith the encouragement and

support of the Foreign & Commonwealth Office, took urgent steps to establish this

Commission,pursuant to theCommissionsof InquiryOrdinance,whichhedidon10th July

2008–withinamonthafterthepublicationoftheUKForeignAffairsCommitteeReport.

ScopeandConductoftheCommission’sInquiry

1.50AsIhavesaid,thetaskssetbytheTermsofReferencecouldnotsensiblyhavebeen

expressed with lower thresholds. As I have interpreted them, they required me to

investigateandreportwithinfourmonths:

1)whether there is information ‐ inwhatever form and giving it theweight it

deserves ‐ofpossible corruptionand/orother seriouslydishonestbehaviour in

recentyearsinrelationto,thatis,involving,electedMembers,pastandpresent,

63ibid,para173

32

of the Legislature and/or those who may have been parties to any such

behaviour,and,ifthereis,whethertorecommendcriminalinvestigation;

2)whetherthereareindicationsofsystemicweaknessesinlegislation,regulation

or administration, and, if there are, to make recommendations for change in

ordertopreventandtodetercorruptionand/orotherseriousdishonesty;and

3) whether they give rise to findings and/or recommendations on any other

relatedmatters, for example,matters relevantor complementary to the cause

and/orremedyoffindingsand/orefficacyofrecommendationsunder1)and/or

2),includingtheextentandmannerofimmigrationcontrolthroughthegrantof

Belongership and permission to work, any relevant codes of public and/or

professionalconduct,governanceofandbypoliticalparties,electoralreformand

theoverallstructureoftheTerritory’ssystemofgovernanceandpublicfinancial

control.

1.51On15thJuly2008GovernorTauwhareandIpubliclyopenedtheInquirywithapress

conference inProvidenciales. TheGovernor, inhis introductoryobservations indicated,as

he had in announcing the Inquiry, that he had appointed the Commission only after the

Foreign&CommonwealthOfficehadinstructedhimtoconsiderdoingso.Heindicatedthat

anumberofpersonshadwrittentohiminconfidencepromptinghimtorefertheirconcerns

to the relevant TCI authorities for inquiry and that he had directed the Commission to

respect confidentiality by conductingparts of it in cameraas considered appropriate. He

alsoreferredtoanumberofrecentlegislativeandotherinitiativesintheTerritorytoreduce

thescopeforcorruptionandtopromoteintegrity,openness,fairnessandaccountabilityin

theconductofgovernmentbusiness.64

1.52 Inmy opening statement,65 I stressed, as I have donemany times since, that this

Inquiryisintopossiblecorruptionorotherseriousdishonestymeritingcriminalinvestigation

andintoindicationsofneedforsystemicgovernmentalandadministrativereform.Itisnot

64includingtheestablishmentofanIntegrityCommission,aHumanRightsCommission,aMinisterialCode,aPublicServiceCodeofEthicsandIntegrity,appointmentofaChiefAuditor(thepostthenbeingvacant),adoptionofaProceedsofCrimeOrdinance,advancedworkonaCrownLandBillandarevisedImmigrationBill.65SeetheCommissionweb‐siteforthepressstatementcontainingthisopeningstatementinProvidencialesof15thJuly2008.

33

formetomakefindingsofcorruptionorothercriminality,simplytorecommendareasand

people or bodies for further investigation, while at the same time indicating areas of

systemicweaknesssuggestinganeedforconsiderationbyothersofreform.Ialsosaidthat,

with liberal use of a Commissionweb‐site and press statements, Iwouldmake a start by

seekinginformationinwriting‐undertermsofconfidentialityifrequested‐andwhenready,

wouldfollowitwithoralhearingsintheTCI.TowardstheendofmystatementImadethe

following appeal for cooperation from Ministers and other Members of the House of

Assembly:

In all of this, I hope to have the full cooperation of those asked to assist theInquiry.ThoseMinistersandMembersoftheHouseofAssembly,orMembersoftheformerLegislativeCouncilwhohavenothingtofearfromthetruthshouldhavenoneed towithhold the true source of their capital and incomeonanyissue relevant to the Inquiry. As I am concerned withMinisters and electedMembers of the Legislature, whose remit is the honest stewardship of theirpublicresponsibilitiestothepeopleoftheseislands,thereshouldbenoneedforme tohave recourse to thewidepowersgiven tomeby the [CommissionsofInquiry]Ordinancetocompeldisclosure.

1.53 Howwrongthehopeprovedtobe. Onthepreviousday,14th July, twoback‐bench

PNPmembersoftheHouseofAssembly,theHonRoyalRobinsonandtheHonSamuelBeen,

had already taken steps to apply to the Supreme Court of the TCI seeking, among other

things,adeclarationtorestrainmefromproceedingwiththeInquiry.Theyclaimedthatmy

Terms of Referencewere invalid andmy appointment, therefore, was of no effect. This

application,which induecoursewas rejectedby theChief Justice, theHonGordonWard,

andtheCourtofAppealof theTCI,66wasaccompanied in theearlydaysof the Inquiryby

regularly repeated television broadcasts of the Premier urging opposition to it. He

stigmatised itasnothingmorethanafishingexpedition, todisguisethetrueplot, tomake

criminals out of our politicians, on both sides of the political divide, and destabilise our

country, and suggested an early move by way of elections or a referendum towards

independence.

1.54 Notwithstanding that inauspicious start, I returned immediately to the UK and

establishedaSecretariatinLondonandbegantoconsidertheinformationalreadyavailable.

Mystartingpointwasapreliminarydiscussion Ihadhadwith,andbriefingnote from,the

66On1stOctober2008thetwoapplicantswithdrewaproposedapplicationtotheCourtofAppealforleavetoappealtothePrivyCouncil.

34

out‐going Governor Tauwhare on my short visit to the TCI, supplemented by further

informationprovidedshortlyafterwardsbyhissuccessorasGovernor,HisExcellencyGordon

Wetherell,followinghisappointmenton5thAugust2008.

1.55Shortlyafterwards,theUKForeignAffairsCommittee–forwhosereadyandhelpful

assistance throughout I am grateful ‐ made available to the Commission the recently

publishedtwovolumesofitsReport,thefirstcontainingtheReportitselfandtheseconda

record of the oral and written evidence given to it by those who had not requested

confidentiality. As Ihaveindicated,manyofthosefromtheTCIwhogaveevidencetothe

Committeedidsoonlyonthebasisthatitwouldbetreatedasconfidential.TheCommittee

hadsoughtandobtainedtheirconsentandthatofallotherpersonswhohadgivenevidence

to it, for itsprovision to theCommissionon the same terms. Ihave treated thatbodyof

materialasinformationandevidenceintheInquiry.Over‐all,itisconsistentwiththevast

bodyofwrittenandoral informationsinceprovidedtotheCommission,otherthanthatof

theHonMichaelMisickandhisministerialcolleaguesandotherpoliticalsupporters.

1.56ThetimeallowedtotheCommissionwasshort,anditsTermsofReferencewerewide.

Abroadlybased,butalso selective inquirywasclearlynecessary.Theaimwas todiscover

whethertherewerecertainmajorcategoriesand/orseriousinstancesofpossiblecorruption

involving electedmembers of the TCI Legislature and/or others thatmightmerit criminal

investigationand/oras leads for such investigation. I couldnothope to investigateevery

allegedlycorruptordishonestrelationshiportransaction,howeverbigorsmall.Itdoesnot

follow that, because I have notmentioned as possibly corrupt a particular relationship or

transaction,itshouldbeexcludedfromanyensuingcriminalinvestigations.

1.57IalsodecidedthatIshouldhavetoconcentrateonrelativelyrecentmatters,sincethe

priorityistoidentifythepresentmalaise,saidtobeoneofendemiccorruptioninpubliclife

in the Territory. Therewas also the important practical consideration that the older the

alleged crime, the colder the trail for the purpose of investigation and prosecution.

Accordingly,Itookaperiodofuptotenyears,thuscovering,notonlythePNP’sfiveyearsof

office frommid 2003 tomid 2008, but also the previous three to four years of the PDM

administration under the leadership of the Hon Derek Taylor from 1999 to 2003. If my

widely directed requests for assistance were to be heeded, there would be every

35

opportunityforevidenceofanysignificantvenalityintheHonDerekTaylor’stimetobeput

beforeme. AsIhavealreadyobserved, likeSirLouisBlom‐Cooper, Iwasawarethatthere

hadlongbeenapublicperceptionofcorruptioninthisTerritorybymorethanonepolitical

partywheninpower.

1.58Idecidedtodevotethefirstpartofthefourmonthsthenavailabletogivingthewidest

possible publicity to the Inquiry. I did so through the Commission’s web‐site and in

correspondence,seekingassistancefromTCIpublicingeneralandfrommanyindividualsin

theprivateandpublicsectorsoftheTerritory,includingallpresentandpastmembersover

thelasttenyearsoftheLegislature.

1.59 InearlyAugustandearly September2008, through theCommission’sweb‐site, the

Commission made general requests to the public for information that might assist the

Inquiry, indicating as it did throughout that such information could be provided

confidentially.Asaresult,theCommissionhasreceived,bywayofwrittensubmissionsand

oral approaches, much assistance from persons within and outside the Territory. These

includealmost500submissions,26underpseudonyms,81confidential,299frommembers

ofthepublic,39fromTCIGovernmentofficialsand27fromformerMinistersandMembers

of the House of Assembly. There were almost none from current Ministers or other

Members of the House of Assembly or others in positions of responsibility or from

developerswhomighthavebeenexpectedtocomeforward.Muchoftheinformationwas

ofadirectnature;manysubmissions,whetherofageneraloranecdotalnature,wereinthe

formofhearsay.Overwhelmingly,theinformationpresentedapictureconsistentwiththat

given to the UK Foreign Affairs Committee. It was of widespread abuse of public office,

corruption and other forms of dishonest or unethical behaviour by Ministers and other

Membersof theLegislature,presentandpast,andsomepublicofficials. TheCommission

also sought and obtained copies of a wide range of the Territory’s CabinetMinutes and

Papers,publicrecordsandreports,includingauditreports.Responsesfrommembersofthe

publicincludedmuchinformationallegingorsuggestingcorruptioninrecentyearsbythose

inthePNPAdministrationor their familyandfriends. Buttherewasrelatively littleabout

earlierdayswhenthePDMheldgovernmentalsway.

36

1.60Inaddition,inearlySeptember2008IwrotepersonallytothemajorityofMembersof

theLegislatureoverthepreviousdecade,invitingtheirassistancewithwhateverinformation

orsubmissiontheyconsideredmightbearonmyTermsofReference.I laterextendedthat

invitationtotheCabinetSecretaryandmostGovernmentPermanentSecretariesandUnder

Secretaries. Even allowing for the disruption and devastation to the Islands caused by

TropicalStormHannaandHurricaneIkeinlateAugustandearlySeptember,theresultwas

deeplydisappointing. Therewasno response from the HonMichaelMisickorhis fellow

PNPMinisters, and little from otherMembers of the Legislature, present or past, or the

seniorpublicservantstowhomtheCommissionhadwritten.

1.61So,despitetheCommission’sattempttobepoliticallyandhistoricallyeven‐handedin

itssearchforinformationofpossiblecorruptionorotherseriousdishonesty,theresponses

toitsrequestspointedmostlyoneway.Theypointedtoarapidriseintherangeandscale

of corruption, abuse of political office, personal aggrandizement and extravagance by the

PremierandhisfellowPNPMinistersandintimates.Theypaintedapicturewhich,inmore

guardedtermsistobeseenintwomissives,separatedbyaboutayear,fromwithinthePNP

anddirectedtothePremier.

1.62 Thefirstwasa letterof18thOctober2007,purportedly fromExecutiveMembersof

thePNP, including itsChairman,LloydStubbs, itsDeputyChairmanandSecretaryGeneral,

theHonDon‐HueGardiner,67headedLeadershipConcerns. The letter listed11complaints

about the Hon Michael Misick’s and his fellow Ministers’ conduct, including his

absenteeism, failure to attend to governmentorparliamentarybusiness, failure to inform

the public of governmentalmatters andministerial private extravagance accompanied by

failureofpublicfinancialmanagement.Itconcludedwiththefollowingexhortationtodeal

withcorruption:68

11.HouseofAssembly–ThereneedstobemorefrequentmeetingoftheHouseofAssembly to dealwith the several bills that are outstanding andneed to beaddressed as amatter of urgency. Wemake reference to the Anti‐CorruptionLegislation in particular, which the PNP promised to deal with since the 2003generalelections. ThisbillshouldbepresentedinParliament ifonlytogivetheperceptionthattheGovernmentisseriousaboutit.

67TheHonDonHueGardinertoldtheCommissionthathedidnotsignandwasnotpartytothedraftingorsendingof this letter;Transcript,4February200968PNPParty(2007)LeadershipConcerns,availablefromTCINetNews,publishedon16thAugust2007

37

... We expect that you will immediately address these issues and change themannerinwhichyouandyourCabinetaregoverningtheCountry.

1.63ThesecondmissivewasalettertotheGovernoron15thDecember2008,passedtothe

press,revealingseriousdissentamongPNPMembersoftheHouseofAssemblypurportedly

from several PNP elected Members, including the Hon Floyd Hall69 and the Hon Lillian

Boyce,70 inprotestatabroadcastaddress to thenationby thePremier. Itwasofapiece

withmuchoftheevidencegiventotheUKForeignAffairsCommitteeandwiththatprovided

totheCommissionbeforeitbeganitsoralhearingsinProvidenciales:

...ManyofuswithintheGovernment,withintheProgressiveNationalPartyandindeedwithinthecountryat largehave longbeenfrustratedwiththePremier’stabloid,DListHollywoodstyleofleadership.Wehavewatchedindisbeliefastheresources of our country have been squandered on an unsustainablematerialisticallyorientedlifestyle.Wehavesatinstunnedsilenceasourcautiousand[sic]warningshavebeenrudelyrebuffed.AndwehavelivedeachdayinfearofbeingthenextvictimofthePremier’smuchtoutedappetiteforvengeancehadwebeenmoreoutspoken.

ThenetresultofourfailuretobringthePremiertoheel,andforwhichweoweour countryanapology,hasbeen thatGovernment’s financesare in such totaldisarray that we have been unable to assist the victims of last September’sstormsfromourownresourcesandhavehadtorelyinsteadoninternationalandcharitableaid.Thatnotwithstanding,thePremiersawfitrecentlytocharterajettoParis forashoppingspree forhimselfandhismistressat theexpenseof theGovernmentandthepeopleofTurksandCaicosIslands.

ThePremierhasalsobroughtusanotorietyabroadthat isusuallyassociatedwiththemostdespoticandparasiticofregimesworldwide....

1.64 Given the many allegations to the UK Foreign Affairs Committee and to the

CommissionofthestrikingincreaseinaffluenceandextravaganceoftheHonMichaelMisick

and of his ministerial colleagues and other Members of the House of Assembly in the

relativelyshorttimesinceachievingpublicoffice,Idecidedtogiveprioritytotheirfinancial

affairs. IdidsobyrecoursetotheirdutyundertheTCIRegistrationofInterestsOrdinance

199371 to make annual declarations of them. The Ordinance provided for a Registrar of

Interests, whose duty it was to ensure the fullness and accuracy of each declaration by

examination and, if necessary, by questioning the declarant about it, and to compile an

70TheothersweretheHonsKarenDelancy,AmandaMissick,WayneGarland,GregoryLightbourne,NormanSaunders,RoyalRobinsonandSamuelBeen.

71TheHonFloydHalldeniedbeforetheCommissionhavingbeenapartytotherelease.71enactedpursuanttos87ofthe1988Constitution;nows98ofthe2006Constitution.

38

Annual Register of interests declared byMembers. Hewas also required to produce his

Register to the Legislature for inspection bymembers of the public at any of its sittings.

Failurebyanymembertomakeatimely,fullandaccuratedeclarationalsorequiredhimto

reportthefailuretotheLegislature,aSelectCommitteeofwhichcouldimposeasanctionof

afineofupto$5,000orsuspendthedefaulterfromsittingorvoting.

1.65 Frommid‐August2008 theCommissionwrote toeachMemberof theGovernment

andotherpresentandpastelectedMembersoftheLegislatureinvitingthemvoluntarilyto

providebytheendofthefirstweekinSeptember:1)copiesoftheirannualdeclarationsof

their financial interests, benefits and obligations for each of year of office; and 2)

information they would give if making such a declaration at the time of receipt of the

request. The response over the following three weeks was scant, evasive and in some

respects clearly obstructive. So also was the response of certain public officials on the

IslandstotheCommission’sattempttoidentifyandlocatesomeoftheirnumberandcertain

public records, including the Register of Interests itself. Those delays, to which Tropical

StormHanna andHurricane Ike contributed, led the Commission to extend the period of

timeforreplytoitsrequesttothethirdweekinSeptember.

1.66ForthoseandotherreasonstheCommissionwascompelledtodelaytheplannedvisit

of twomembersof itsTeamto the Islands to contactofficialsandothersand toexamine

public records. I also sought from the Governor an enlargement of the four months

originally allowed for completion of the Inquiry, contemplating by then: 1) a visit by

membersoftheCommissionTeamtotheIslandsinOctobertointerviewpotentialwitnesses

andexaminepublic records;2)oralexamination intheTerritory inNovemberofMinisters

and other Members of the House of Assembly on their declarations of interest; and 3)

furtheroralhearingsthereinDecembertoexaminespecificallegationsofcorruptionand/or

other dishonesty. The Governor granted an enlargement of the Commission’s time for

submissionofitsReportuntil16thFebruary2009.

1.67Meanwhile,asSeptembergavewaytoOctober,responsesfromMinistersandothers

to the Commission’s invitations voluntarily to provide details of their financial interests

continued,inthemain,tobeslowandinadequate,andinsomeinstanceswerenotprovided

at all. As a result, the Commission by letters and in its press statements of 3rd and 10th

39

October,indicatedthat,failingfullandaccurateresponses,itwouldissuesummonsesunder

the Commissions of Inquiry Ordinance requiring attendance of those concerned to give

evidence and/or to produce the relevant documentary information in public oral

proceedingsintheTerritory.

1.68 Throughout October and into November the Commission continued, in a series of

exchangesofcorrespondence,topressforfullandadequatedisclosurefromMinistersand

otherMembersoftheHouseofAssembly,butlargelywithoutsuccess.Accordingly,inearly

November theCommissionTeambeganpreparing listsof informationanddocumentation

outstanding from Ministers and Members for inclusion in summonses requiring them to

attendforexaminationintheTerritory.DuringthatperiodtwomembersoftheCommission

TeamspentsometimeintheTerritoryinterviewingpotentialwitnessesandtryingtolocate

andexaminevariouspublicrecords.However,theydidnotalwayssucceedingainingaccess

to what they needed to see. As a result of those two set‐backs, Senior Counsel to the

CommissionandIhadtomakeashortimpromptuvisittotheTerritoryinearlyNovemberto

take up the search for outstanding public files which, with the helpful assistance of the

CabinetSecretaryandDepartmentalPermanentSecretaries,wasmorefruitful.

1.69TheCommission’sindicationsthatitwould,ifnecessary,resorttoitspowersunderthe

CommissionsofInquiryOrdinancetoexamineMinistersandotherMembersoftheHouseof

Assemblypromptedmostof them inNovember toprovideagooddealmore information.

However, the information was still, in the main, inadequate and in some respects

questionable. It was also submitted in a piecemeal fashion, without regard to the time‐

tables andwell‐publicised programme set by the Commission for two sets of hearings in

earlyDecember.Thosedelayswereaccompaniedbyasurgeinsubmissionsfromthepublic,

someofferingtogiveoralevidence.

1.70BecauseoftheshortnessoftimeleftfortheCommissiontoanalyseanddocumentthe

newlyarrivedandstillincompleteinformationastointerests,andalsothevolumeofrecent

submissions,theCommissionhadagaintopostponethetwosetsofhearingsithadplanned.

Initspressstatementof25thNovember2008,itstated:

The Commission, in its Press Statement of 17th November 2008, indicated itsintention to hold hearings in Providenciales in December, depending on the

40

information providedand yet to be providedbyMinisters andMembers of theHouse of Assembly as to their interests. Only recently ...some Ministers andMembershavebegun toprovide theCommissionwithvoluminousquantitiesofdocuments purportedly in full and accurate disclosure of their interests.However, in themain, suchdocumentation– in the short time theCommissionhashadtoexamineit–stillappearstobeinadequateandinsignificantrespectsotherwisequestionable.Theprocessofpiecemealdisclosurecontinues–mostlywithout regard to time‐tables set by theCommission. Someof the promiseddocumentation has beenmade available only in hard copy in Providenciales or has still to arrive at theCommissionSecretariatinLondon.MuchthathasbeensenttoLondon,eitherinhardcopyorelectronicform,hasarrivedonlyinthelastfewdays.AllofthisnewmaterialhasnowtobeanalysedandconsideredalongsidepreviousreturnsanddisclosurestotheCommissiontoenableittodeterminetheneedforandformofanyoralexamination.This late provision, principally by Ministers, of documentation has beenaccompaniedbya recent surgeofapproaches fromothers seeking,notonly toprovideinformation,butalsotogiveevidence.Thistoohasledtotheproductionof much fresh documentation for analysis and comparison with ministerialdisclosuresofinterest.Fairness requires that all this new material, whatever its source and whererelevant, should be considered for inclusion in reconstituted or new bundles ofCommission copy documents for service onMinisters and others in advance ofanyhearings.Inthecircumstances,theCommissionhasbeendriventoabandonitsintentiontoholdhearingsinDecember...

1.71 In the event, the Commission, having reviewed the state of disclosure throughout

December, still found it seriously wanting, and re‐cast and served its summonses on

Ministersandotherstoattendforexamination.TheCommissionTeamleftfortheIslands

in early January ‐ still not having had an opportunity to examine all the last‐minute

disclosure, andwithno time to complete its taskbefore the start of thehearings on13th

January2009.

1.72 BythetimetheCommissionfinallyopenedtheproceedings inProvidenciales, ithad

beendriven to try tocombine inonesetofhearingsoralexaminationas todisclosedand

undisclosed interestsandalso furtherevidence that theCommissionwished to call. Here

again,theprogrammewastoslip–andforthesamereason–continuingfailure,inthemain

41

byMinisters, but also others – in some instances by conduct in and out of the hearings

bordering on obstruction – to make complete disclosure and/or to produce necessary

supportingdocuments.

1.73 It was now obvious that the Commission would not be able to complete its work

within the enlarged period allowed by the Governor, namely by 16th February 2009, and

wouldrequirestillmoretime. TheGovernorwasshortly tograntanenlargementof time

until30thApril2009.

1.74BeforeIcontinue,Ishouldpausetosayafewwordsaboutthepoliticalandeconomic

sceneintheTerritorybythistime.Itsgovernmentwasatanearstand‐still.Notwithstanding

aheavylegislativeprogramme,proceedingsintheHouseofAssemblyhadbeensuspended

and had stood prorogued since 15th December 2008 at the instance of the HonMichael

Misick.Hehadtakenthatcoursetoavoidadebateonapotentiallysuccessfulmotionofno

confidenceinhisAdministrationbythePDMminority,whichadiscontentedmajorityofPNP

Members,includingatleasttwoCabinetMembers,showedsignsofsupporting.TheCabinet

wasthus,atbest,highlyunstable,atworst,bitterlydivided, thePremierdevotingagreat

deal of his timebefore andduring theCommission’s hearings to abortive attempts to re‐

constructanewCabinetandasupportivemajorityintheHouseofAssembly.

1.75 TheTerritory’s financeswere, as theyhadbeen for some time, in a verydangerous

state,withadeficit,saidtobeofabout$6millionandrising,outstandingdebtsthatitcould

notpayandcurrentobligations,suchasthegovernmentmonthlypay‐roll,thatitcouldnot

meetastheyfelldue.Itsmanagementofpublicfinancescontinuedtobeofgreatconcern,

forwantoflong‐termdisregardofnationalandotherauditrecommendationsandno,orno

effective, scrutiny by the House of Assembly’s Public Accounts, Expenditure and

Administration Committees. Meanwhile it was still attempting to fund recurrent public

expenditurepartlyoutof theproceedsofdisposalofCrownLand, forwantofothermore

fiscallyconventionalsources.

1.76 Such was the scene when the Commission opened its oral proceedings in

Providencialeson13thJanuary2009.MyopeningstatementisAppendix2tothisReport.In

it I stressed that Iwas concernedwith the possibility, not proof, of corruption. I had no

powertodetermineissuesoffactortodirectanyparticularoutcome.Itwasnotmyjobto

42

makefindingsofguiltortoexoneratethoseagainstwhomallegationshadbeenmade.The

most Icoulddo– if Ihad informationofpossiblecorruptionorotherseriousdishonesty–

was to recommend further andmore searching investigationby thepolice or someother

body, with a view to criminal prosecution, recovery of the proceeds of crime and

considerationofothersanctions.

1.77Ialsoreferredinmyopeningstatementtothestateoftheinformationandmaterialby

thenaccumulatedbytheCommission:72

Anyone with any familiarity of the public affairs and commercial life of theTerritory knows that the escalating volume of allegations – true or false – hasreachedacrescendo.ThepressingconcernisforthehealthoftheTerritoryanditspeopletodayandfor the future–notwhatmayhavehappenedsomeyearsago. Thevastbulkof the informationputbefore theFACand this Inquiry isofallegedcorruptionunderthisAdministration,relativelylittleabouttheirpoliticalpredecessors. That may be in large part a symptom of the passing of time,dimming as it does keenly felt grievances and memories and leading todisappearance of evidence. I should also mention that a likely source forcanvassing such earlier transgression, namely present Ministers and otherMembersoftheHouseofAssembly,producedvery little. Personal lettersthat Iwrotetoallofthemandothersinvitingwhateverassistancetheycouldgivemeinmytask,wereinthemaingreetedwithsilence.Inshort–incontrasttothemanycomplaintsabout them– therewas very little from themorothersabout theirpredecessors....SohereIam,withmuchoftheCommission’senquiriesmadeandtheinformationin,butstillshortoffullandaccuratedisclosurefromanumberofpersons,inthemain Ministers in the present Administration alleged to have profited frombribery. Ihavemaderepeatedcomplaint intheCommission’spressstatementsabout theabsenceof hardand statutorily disclosable information from them–not so much about how they spent their money, but where they got it from.Hence the summonses that I have been obliged to serve on them to producedocumentsandgiveevidenceoftheirinterestsandhowtheyacquiredthem....

1.78IntheoralexaminationsoftheMinistersandMembers,startingwiththeHonMichael

Misick,astotheirinterests,itsoonbecameobviousthat,despitethepreviousbesteffortsof

mostoftheirlegalrepresentatives,therewerestilllargeandsignificantgaps.Moreover,the

piecemealand incompleteprocessofdisclosure, coupledwith continuingattemptson the

partofsomenottogiveit,continuedthroughoutthehearings. Aswillappearlaterinthis

72SeeAppendix2tothisReport.

43

Report,thehighlyunsatisfactorywayinwhichmostoftheMinistersrespondedtoquestions

abouttheirinterestssodominatedthefourweekssetasideforthehearings,thatverylittle

timewaslefttotheCommissiontocallotherwitnessesforexamination.

1.79 The oral proceedings came to an end onWednesday, 11th February 2009. It was

urgent in the interests of the Territory and its people that the Commission should, if

possible,completeitsworkbytheendofApril. SuchwastheurgencythatIconsideredit

necessarytoattempttoprovideanInterimReportby28thFebruary.Igavemyreasonsfor

thatinastatementclosingtheproceedings:73

...insteadofspendingtwoweeks,ashoped,tofinishthejobastodisclosureandmove to other evidence, the Commission has spent the best part of the fouravailableweeksstillseekingdisclosureand/orexplanationofdisclosuremadeonthespot–disclosureas thosegiving itmusthaveknowntheCommissioncouldnotpossiblymasteronthespot.

While all this has been going on, the government of this country is at a nearstand‐still, the Cabinet is divided or unstable, theHouse of Assembly has beenprorogued,itsfinancesareinabadwayandpoorlycontrolled,governmentalandotherauditrecommendationslieunattendedanddisposalsofCrownlandtofundrecurrent expendituredeficits continue forwantof governmental revenue fromothermorefiscallyconventionalsources.Itisevidentthattherearewide‐spreadfearsonthepartofpeopleintheTerritorythattheyareleaderlessandthattheirheritageisatriskofcontinuingtodrainaway.

... the trainof events leading to thesehearingsand theTerritory’sparlousandvolatile state ...[have] necessitated a further extension of the Commission’speriod of Inquiry to 30th April. But that does not – or should not – allow theCommissiontoassumetheluxuryorreturninghomeforsomemonthstopolishitsparsesbefore reporting. In theTerritory’spresent state,goodnessknowswhatmayhappeninthemeantime.

Inthecircumstances,speedcoupledwithfairnesstoallthosethesubjectoftheInquiryisvital. TheCommissionhastobalancethestrongpublicinterestofthepeople of the Turks and Caicos Islands for early resolution of their problemsagainsttheprivateinterestsofthosethesubjectofbeingtreatedfairly.FairnesstothemhereincludesareasonableopportunitytorespondtocriticismsthattheCommissionmaybemindedtomakeofthembeforefinallyreporting....

73SeeTranscript,Day22,pp171–177.

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1.80 On its return to London, the Commission allowed legal representatives of those

examined as to their interests ten days, i.e. until 21st February to make further written

submissionsinrespectofmattersconcerningthemthathadarisenduringtheproceedings.

Italsoallowedanyotherstomakesubmissionsortoprovidefurtherinformationinwriting

over thesameperiod. Within sevendays thereafter,on28thFebruary, I submitted to the

GovernoranInterimReport,towhichalltheCommissionTeamcontributed,summarisingin

thebarestoutlineandingeneraltermssomeofmyprovisionalconclusionsandmaking24

Interim Recommendations, in the main in relation to my second Term of Reference

concerning indications of systemic weaknesses in legislation, regulation and

administration.74

1.81 Myprovisional conclusions in summarywere that,onall thematerial andevidence

beforeme, therewas information inabundancepointing toahighprobabilityof systemic

corruption and/or other serious dishonesty. This, coupled with clear signs of political

amoralityandimmaturityandofgeneraladministrativeincompetence,demonstratedtome

an urgent need for suspension, inwhole or in part, of the TCI Constitution and for other

legislativeandotherreformsandchange,allsetoutinmyInterimRecommendations.

1.82On16thMarch2009,GillianMerron,whohadsucceededMegMunnasParliamentary

UnderSecretaryofStateattheForeign&CommonwealthOffice,madepublicadraftOrder,

tobemadebytheQueeninCouncil,pursuanttoherpowersundertheWestIndiesAct1962

andherotherpowers,suspending,initiallyfortwoyears,partsoftheConstitution,including

those relating to Ministerial Government and the House of Assembly. As the Under

SecretaryofStateandtheGovernorexplained incorrespondingpublicannouncementson

thesameday,shetookthatcourse:

...InthelightoftheaccumulationofevidenceinrelationtoTCIinthelastyearorso, and fortifiedby theCommissioner’s interim report, theUKGovernmenthasformedtheviewthatpartsoftheConstitutionwillneedtobesuspendedandhasdecidedtotakestepstoenableittodoso.

1.83TheUnderSecretaryofStateaddedthat,unlessthefinalReportsignificantlychanged

theForeign&CommonwealthOffice’scurrentassessmentofthesituation,theOrderwould

bebrought intoforceafterreceiptofthatReport,orsoonerifcircumstancesarisinginthe

74SeeAppendix3tothisReport.

45

Territory prior to that date justified suspending relevant parts of the Constitution. She

explained:

Asdrafted,theOrderwouldleaveinplaceimportantelementsoftheConstitutionsuchasthefundamentalrightschapterandprovisionsrelatingtotheGovernor,thecourtsandthepublicservice,whileremovingtheCabinet,HouseofAssemblyandreferencestoministerialandrelatedpowers.Powersandfunctionscurrentlyexercised by Ministers would be exercised by the Governor acting in hisdiscretion, including in relation to public finances, legislation necessary andregulatoryreform.

This would be an act of constitutional significance in order to restore theprinciplesofgoodgovernance.

1.84 On 18th March 2009 HerMajesty in Council made the Order, the Turks & Caicos

IslandsConstitution(InterimAmendment)Order2009(the2009ConstitutionOrder),75laying

itbeforeParliamenton25thMarch,withaviewtoimplementationfollowingreceiptofthe

Commission’s final Report. In addition to the partial suspension of the2006 Constitution

provisions for the Cabinet, House of Assembly and references to ministerial and related

powers, theOrder inCouncilprovides for theGovernor toexercise,athisowndiscretion,

powers currently exercised by Ministers, including those relating to public finances,

legislationandnecessaryregulatoryreforms. TheOrderalsoprovidesfortheGovernorto

be assisted in the exercise of those powers by an Advisory Council composed of persons

nominatedbyhim,themajorityofwhomaretobeBelongers,andalsoaConsultativeForum

drawn from persons representative of the TCI community to make recommendations in

relationtolegislationandpolicyissues.

1.85WithinamonthafterthemakingofthatOrder,theHouseofAssemblywasrecalled,in

midApril2009withtheHonGalmoWilliamsasPremierandaCabinet,apartfromhimself,of

new Ministers. The House initially sat for two days, but with little productivity, early

adjournmentsandleavingthebusinessofeachdayunfinished.Followingnearlyamonth’s

adjournment, it sat for a third time on 15thMay 2009 for half a day, again leavingmore

businessunfinished,beforeadjourninguntil29thMay2009.

1.86 In themeantime and sincemid February 2009, I have, with the assistance of the

CommissionTeam,preparedthis,myReportandRecommendations,confirmingand,where

75SeeAppendix4(ii)tothisReport.

46

Iconsider ithelpful,elaboratingonoraddingtomyInterimReport. IneverycasewhereI

was minded to make an adverse finding leading to a recommendation of criminal

investigationinrespectofanypersonwhoseconductisthesubject,orwhoisimplicatedor

concernedinthesubjectmatter,oftheInquiry,theCommissionAssistantSecretarywrotea

Salmon letter76 inviting any representationswithin aweek to ten days. Thiswas shorter

than I wished, and most of those who made representations in response are to be

commended for doing so in the time. Others took longer, seeking to challenge the

Commissioninconsiderabledetailonitsprovisionaladversefindings,and/orseekparticulars

asiftheywerecountsinanindictment.SomeeventhreatenedtheCommissionand/orthe

Foreign&CommonwealthOfficewithlegalproceedingswithaviewtopreventingmefrom

submittingmyReporttotheGovernor,orsoughtaccesstoitscontentbeforeIdidso.Inall,

19 persons made written representations in response to Salmon letters, many of them

repeatingorsupplementingwrittenandoralsubmissionsontheirbehalfintheproceedings

inProvidencialesandinfurtherwrittensubmissionsinFebruary2009.Inmakingmyfindings

and recommendations set out in this Report, I have taken all those representations into

account.

1.87TheInquiryendedasitbegan,withlegalchallengesintendedtothwartitswork.This

time the challenges were made by the HonMichael Misick personally and two overseas

developers in the TCI, Mr Mario Hoffmann and Dr Cem Kinay. The former Premier’s

challengewasmadeintheAdministrativeCourtinLondon,bywayofapplicationforleaveto

claim against the Secretary of State at the Foreign & Commonwealth Office for judicial

reviewof the2009Order.Hesought tohave itquashedasultravires theWest IndiesAct

1962, in removing him and other electedMembers of the House of Assembly from their

postswithoutcompellinggrounds. On1stMay2009, theAdministrativeCourt refusedhis

applicationonthegroundthatithadnorealisticprospectofsuccess,andon20thMay2009,

theCourtofAppealdismissedhisapplicationforpermissiontoappealagainstthatrefusal.

Mr Hoffmann’s claim is for judicial review in the TCI Supreme Court against me and the

Governortorestrainmefrom,amongstotheractions,submittingaReporttotheGovernor

unlessIcomplywithMrHoffmann’sdemandstoexcludeanyreferencesinittohim,andto

theGovernortorestrainhimfrompublishingtheReportwithoutadvancereferencetohim.

76opcit1

47

DrKinay’s challenge is in similar form,namely to requireme to removeany references to

him from the Report, to requireme to recommend the Governor not to publish it, or to

require him not to publish it or any press release accompanying it referring to Dr Kinay.

HearingdatesforbothmattershavebeensetforearlyJune.

___________

48

2‐CORRUPTION

...theverynatureofcorruptiondefiesprecisedefinition.Likearotwhichcan,unseen,destroythefabricofahousebeforecomingtothe surface, corruption grows and spreads out of sight, onlyoccasionally revealing itself. When it does, it reveals only itspresence, not its extent or when it started. Treatment of thevisiblepartalone isnotsufficient. The trueextentof the troublewillonlyberevealedbyfurtherexamination....77

Introduction

2.1 Corruptionisasimpleenoughnotion;thereisnothingtechnicalabout it. At itsmost

basic,itistorotwhatwaspure.Inthecontextofhumanrelationshipsitistorendermorally

unsoundwhatwas – or should have been ‐morally sound. At its heart is the notion of

dishonesty,whichisorshouldbecleartoall intheseIslands,especiallythoseholdinghigh

publicoffice,andwhatevertheCaribbeanculturetowhichsomeoftheMinistershadresort

fromtimetotimeintheirevidence.

2.2Inlawyers’language,itisanofferand/orthepaymentofabribeorgrantofafavourto

anotherasaninducementorrewardforimpropermisuseofposition,ortherequestand/or

acceptanceof abribeorother favour fromanotheras an inducementor reward for such

behaviour.Improprietyinacaseofallegedbriberyoforbyapublicservantisaquestionof

fact fordetermination in the circumstancesofeach case,but ismost readily identifiedby

asking the question whether there was a sought or actual misuse of position. The Law

CommissionofEngland&Wales,initsrecentreport,ReformingBribery,78tookasitsstarting

pointforbriberyatcommonlaw,thefollowingvenerablepropositionfromthe12thedition

ofRussellonCrime:79

Bribery is the receiving or offering [of] any undue reward by or to any personwhatsoever, inapublicoffice, inorder to influencehisbehaviour inoffice, andinclinehimtoactcontrarytotheknownrulesofhonestyandintegrity.

77perGordonWardCJ inRoyalRobinsonandSamuelBeenvTheRtHonSirRobinAuldandTheHonAttorneyGeneraloftheTurksandCaicosIslands26thSeptember2008,CA17/2008,para25.78LawCommission(2008),ReformingBribery,LawComNo313,HC928,London:TSO79(1964)p381

49

I am not surewhat thewordundue adds to the test, other than to indicate that it is an

evidential feature of a transaction from which a corrupt intent on the part of the giver

and/or the recipientmaybe inferred. As theLawCommission’sdiscussion inPart3of its

Reportmakeplain,improprietyisthetestandthat,inmostcircumstances,meansmisuseof

position.

2.3Whenappliedtoapublicofficer,MrArielMisickQC,inhissubmissionsonbehalfofthe

HonMcAllisterHanchell,helpfullytookthecommonlawashisstartingpointinthefollowing

proposition,derivedfromthewordsofLawrenceJ,givingthejudgmentoftheCourtinRv

Whittaker:80

Itisacommonlawoffenceforapublicofficerwhohasadutytodosomethinginwhichthepublicare interestedtoreceiveabribeeither toactcontrarytohisdutyortoshowfavourinthedischargeofhisfunctions.

2.4 The criminal law of bribery in the TCI ismuch the same as in England&Wales, its

relative simplicity ineachcasemaskedbyanunsatisfactorymixof commonandstatutory

law. MrMisick and other counsel helpfully directedme to section 18 of the Legislative

Council (Powers and Privileges) Ordinance 1998, which makes it an offence to bribe

Members of the House of Assembly in relation to proceedings before the House, and to

sections 68 and 69 of the Elections Ordinance 1998,81whichmake it an offence to bribe

voters, both sets of provisions overlapping with or replacing the general common law

offenceofbriberyintheirrespectivecontexts.

2.5 However, while corruption, in particular, of those in public office,may be a simple

enoughnotion,itisbyitsverynatureoftenhardtoprove.Therearetworeasonsforthis.

First,asChiefJusticeWardobservedinthepassagefromhisjudgmentsetoutattheheadof

this Chapter, its invisibility or secrecy, usually between two consenting persons, readily

defies discovery or proof. Secondly, even when the material relationships and facts are

established, it can still be adifficult value judgmentwhether, in the circumstancesof any

particularcase,atransactioniscorruptoraccordswithwidelyacceptedsocialandbusiness

normsof itscontext. It isaninternationallyacknowledgedphenomenonthatthedifficulty

80[1914]3KB1283,at1296;Seealso10CrAppR,245CCA81Cap5,Revised15thMay1998

50

ofprovingcorruption inanysociety isalmostalways in inverseproportion toweaknessof

thatsociety’sdemocraticcontrols.82

2.6Variouslegalsystemshaveemployeddifferentformulaefordealingwiththeproblem,

mostly through thenotionof illicit enrichment coupledwith some formof reversalof the

burdenofproof,suchas inexplicablewealth calling forsatisfactoryexplanationas inHong

KongandArgentina. Therearesimilar legaldevices inthefieldofcontrolofdrugs,where

the knowledge as to possession of drugs or of their proceeds is peculiarly within the

knowledgeof thesuspect. Perhaps thebestknownandwell‐triedprovisionof this sort is

section 10 of theHong Kong Prevention of BriberyOrdinance (Cap 201),which enables a

courttoconvictanofficialwherethereisevidencethatheislivingabovehispresentorpast

officialmeansandforwhichhehasnotgivenasatisfactoryexplanation.Convictionsunder

section 10 carry a heavy financial penalty and imprisonment for up to 10 years. The

provisionhas survived the scrutinyof thePrivyCouncil andmore recently theHongKong

CourtofAppeal,83evenafterpayingdueregardtothepresumptionofinnocenceenshrined

intheInternationalCovenantonCivilandPoliticalRights.84Itisforadefendanttoestablish,

on a balance of probabilities, a satisfactory explanation for disproportionate wealth; the

smallerthedisproportion,theeasieritwouldbetogiveanexplanation.85Theintroduction

ofsomesuchprovisionasaruleofevidenceincorruptioncasesandthelike,ratherthanthe

creationofanewsubstantiveoffence,maybeworthconsideringfortheTCI.Thiscouldbe

an interim measure to meet the present insufficiency or rustiness of the Territory’s

democratic controls. Or it could be a longer term and common‐place international

protection against insidious corrupt practices whatever other constitutional, investigative

andforensictoolsaredeployedagainstthem.

2.7TherehavebeenanumberofconditionsintheTCIoverrecentyearswhich,together,

havemadeitaveryfertilegroundforcorruption,namely:

1) a Constitution and other statutory provisions and policies that allowed

individual Ministers, acting individually and in Cabinet, considerable

82SeeUnitedNationsConventionAgainstCorruption(UNCAC)DocA/58/422,NewYork,31October2003;andLegislativeGuideof theUnitedNationsConventionagainstCorruption,Vienna2006

83AttorneyGeneralvHuiKin‐hong[1995]1HKCLR22784UnitedNationsGeneralAssemblyResolution2200A(XXI)of16thDecember1966(inforce23rdMarch1976)85 Fung, Daniel R, Anti‐Corruption and Human Rights Protection: Hong Kong’s Jurisprudential Experience, paper presented at the 8thInternationalAnti‐CorruptionConference

51

discretionarypowerinvariousrespects,notablyin:(a)allocationofCrownLand

and as to price, development and terms of development, planning permission

and conditionsand concessionsas toBelongers’discountand stampduty; (b)

theawardofpublicworksandothergovernmentalcontracts;and(c)inrelation

toimmigrationmatters,inparticularinthegrantofBelongershiponexceptional

grounds,therighttoremainandthegrantorwithdrawalofpermissiontowork;

2) a booming tourist economy, attracting a surfeit of overseas interest and

investmentintouristdevelopments;

3)limitedsupplyoflandfordevelopmentunlessbyreleaseofCrownLandunder

thepolicyoftheday,86andatasubstantialdiscounttoBelongersorcompanies

inwhichtheyheldatleasta50%equity;

4)becauseofthesmallTCIcommunity,considerableexposureofMinistersand

other Members of the Legislature to conflicts between their public duty and

privateinterests;

5) lack of basic and available mechanisms of governance to deter or combat

possiblecorruptionbyMinistersandotherMembersoftheLegislature,and/orof

guidance in the form of a promulgated and enforced Ministerial Code of

Conduct;

6)widespreaddisregardbyMinistersandotherMembersoftheLegislatureof

their constitutional obligation regularly and publicly to declare their financial

interests;

7)thepowerofpoliticsormoreparticularlyinrecentyearsthepowerofthePNP

to dominate the TCI Legislature and Executive, and to channel unaccountably

largesumsofmoneytoandfromMinistersandtheirassociates;

8)empowermentofBelongers;and

86i.e.theCrownLandPolicy;Seeparas3.9–3.52below

52

9)lackof,oroftheconstitutionalmachineryfor,effectivepublicwatchdogsover

the TCI Government’s governance and financial management and control, in

particularthroughitsparliamentarycommittees.

IdiscussallthosemattersinsomedetaillaterintheReport,butitmaybehelpfultosetthe

scenebysayingalittlemorehereaboutthelastsix.

ConflictsofInterest

2.8Iflocalsignpostswereneededtopointtopossiblecorruptioninpublicofficetheywere

andaretobe found inplenty. Asastartingpoint, therehasbeenaseeminglyembedded

disregardbyMinistersandotherMembersoftheLegislatureofthe imperativetoavoid, if

possible,anyconflictofinterestorperceivedconflictthatmayimpairtheirdutyandability

toact in the interestof thepublic. It isan imperativeenshrinedsince1995 in theUnited

KingdomintheNolanPrinciples87–TheSevenPrinciplesofPublicLife,AnnexAtotheBritish

Code of Ministerial Conduct. The Hon Michael Misick introduced an almost identical

documenttotheCabinetaslongagoas7thMarch2007,withaviewtosuchadaptationfor

useintheTCIasmightbenecessary.88IttooknearlyafurtheryearbeforetheCabinet,on

6th February 2008, accepted it in principle, subject only to a few small amendments

substitutingreferencestotheTCIforreferencestotheUK.89

2.9 TheCode,90 including theNolanPrinciples,makesdetailedprovision foravoidanceof

conflicts of interest and for declaration of potentially conflicting private interests,

acceptanceofgiftsandhospitalityandinconnectionwithoverseastravel.Itsetsoutbasic

aspectsofhonestythatareorshouldbefamiliarenoughtoallcivilisedpeopleengaged in

public life, whatever their local culture. Such norms are as ‐ or more ‐ critical in small

countries like the TCI with closely‐knit relationships and associations, than in larger and

possiblymorepoliticallyandeconomicallysophisticatednations.Thetwomostrelevantand

obviousaspectsofhonesty in this contextare summarised in thesixthandseventhNolan

Principles:

87socalledbecausetheyweredrawnupundertheChairmanshipofLordNolan.88Minute07/141/2007ofCabinetMeeting7thMarch200789Minute08/107ofCabinetMeeting6thFebruary200890Seeinparticularsections7and9.

53

Honesty

Holders of public office haveaduty to declareanyprivate interests relating totheirpublicdutiesandtotakestepstoresolveanyconflictsarisinginawaythatprotectsthepublicinterest.

Leadership

Holders of public office should promote and support these principles byleadershipandexample.

2.10 On 10th July 2008, Governor Tauwhare, in his press statement announcing the

appointmentoftheCommission,includedtheMinisterialCodeinalistofimportantsteps...

recentlytakenorunderwaytoreducethescopeforcorruption. A fewdays later,on14th

July, the Hon Michael Misick, in a widely reported speech challenging the need for the

Commission,spokeofhavingintroducedandpassedsuchaCode.

2.11 AsCounseltotheCommissionobservedinhisclosingsubmission,despitethosetwo

publicreferencestotheCode,anditsacceptanceinprinciplebytheCabinetinearly2007,it

does not appear to have been formally adopted, published or promoted. When the

Commissionfinallyobtainedacopy,itwasintheformofareproductionoftheBritishCode,

saveforthetitleandcrestoftheTCIandwithsmall,butincomplete,adaptationsforusein

theTerritory.

2.12TheattitudeoftheHonMichaelMisickandsomeotherMinisterstotheprinciplesset

out in that Code is well illustrated by his denial in evidence in the Commission’s oral

proceedings that the Code existed.91 When pressed by Counsel to the Commission, he

stated:

...IhadaskedtheclerktotheHouseofAssemblytogetacopyofthecodefromtheUK.Thecabinethad–theplenarywentthroughit....itwasneveradopted.Shewassupposedtohavetidieditup–makeitrelevanttooursituationhereintheTurks&Caicosforfurtherconsideration. Thatneverhappened. AndsothefactisthatthereisnoministerialcodeofconductthatpresentlyexistshereintheTurks&Caicos....

When asked whether he had regarded it as a good starting point for seeking to enforce

standardsofprobitywithintheCabinet,hecontinuedinthesamevein:

91Transcript,Day2,pp6‐15

54

Thisdraft codeof conductwasneveradoptedand thereforeneverenforced ....Therefore,thereisnoministerialcodeofconduct. ...That’smyanswer.... Iamsayingthatthisministerialcodeisnotenforced.....thisisaworkinprogress.

Later,whentheCabinetMinuteof6thFebruary2008wasput tohim,92heabandonedthe

stancethatithadneverbeenadopted,andsoughtthistimetoblametheCabinetSecretary

fornothavingtidiedupthedocumentandpresentedittohimforsignatureanddistribution.

The Minister for Natural Resources, the Hon McAllister Hanchell, like the Hon Michael

Misick,repeatedlystressedthattheCodehadnotbeenintroduced.

2.13 TheHonFloydHallhadadifferentapproach.Whenquestioned,hesaidthathehad

known that the Cabinet had approved the Code and that, although it had not come into

force, he had regarded it as a guide to proper behaviour and its principles as binding on

him.93However,hedoesnotappeartohaveappliedthoseprinciplestohisownconductso

astoavoidconflictinginterests.

2.14 Thelethargyandlackof interestwithwhichtheCabinetasawholeapproachedthe

simple but important task of incorporating the essentials of theUKCode into its law and

practiceareunfortunate.Theirdisregardofitinpromotingtheirprivateinterestsandthose

oftheirintimatesdeservesmoreseriouscensure,asdoesthehypocrisyoftheHonMichael

Misickon14thJuly2008inhispublicrelianceonhisclaimedintroductionofittotheTCIasan

argumentagainsttheneedfortheCommission.

2.15TheattitudeoftheHonMichaelMisickandhisfellowMinistersinthisrespecthasnot,

asIhavesaid,beenpeculiartothePNPAdministrationforwhichtheywereresponsible.It

has been a constant theme of many complaints made against them and their PDM

predecessorsovertheyears. WiththesweepingelectoralmajorityofthePNPinFebruary

2007,givingitseeminglyimpregnablecontrolofthecountry,theneedforclearrecognition

andobservanceofsuchaCodebecameevenmorenecessary.

2.16 As Cabinet papers, Minutes and other public and private documents in evidence

before the Commission show, there have been frequent actual or potential conflicts of

interestinthepubliclifeoftheTerritoryinvariouscontexts.Manyindividualandcollective

examples are discussed in Chapter 4 of this Report. They include failures by Cabinet

92Transcript,Day3,pp5‐1493Transcript,Day5,p7

55

MinisterstodeclareinterestsonparticularmatterscomingbeforeCabinetfordecision,for

example as to grant or development of Crown Land, making of commercial concessions,

grantoffranchisesofwhatinpracticeamounttopubliclyprotectedmonopolies,theaward

of public contracts, or with regard to parties who in other ways would benefit from

governmentspendingunderconsideration.TherearealsoanumberofexamplesofCabinet

Ministers, purportedly exercising their own discretionary powers in favour of themselves,

membersoftheirfamilies,closefriends,thePNP,politicalsupportersorbusinesscolleagues.

2.17Inallofthoserespects,thepoliticaldominationbytheHonMichaelMisickofthePNP,

andthroughitanditsfinancialdealings,overtheengineofStateanditspeoples,hasgiven

specialpotencytotheevilofabuseofconflictofinterestinpubliclife.Thatdominationwas

and is aidedby the small size of the electorate, confined as it is to Belongers – less than

7,000ofthembeingregisteredtovotein2007–outofatotalofsome36,000permanent

residents of the Islands. This political dimension is not limited to cash payments and

improperfavourstopotentialelectorsatelectiontime–mostegregiouslyinthelastelection

inFebruary2007. It includeslongertermlurestoBelongersthatwerelikelytopredispose

themtothePNP.TheseBelongerswereencouragedandsometimesprompted,purportedly

aspartoftheirempowerment,toprofitfromthatstatus,notjusttoacquireasmallareaof

Crown Land at substantial discounts for themselves, but also to acquire it, sometimes in

largetracts,foronwardsaletooverseasdevelopers(flipping),ortofront,inwholeorinpart

andsometimes just temporarily, forsuchdevelopers. Theywerealsoprovidedwithnon‐

existentgovernmentjobs‐popularlyknownasgovernmentghostworkers‐forwhichthey

receivedregularwages.

DisclosureofInterests

2.18ThepotentialforexploitationbyMinistersandtheirfellowMembersoftheLegislature

of conflicts of interest in their public lives was complemented and encouraged by their

indifference to their constitutional duty to make full and accurate disclosure of their

financialaffairs.Suchindifferencehasbeenevidencedinabundanceby:1)theirfailure,year

on year, to make full and accurate returns to the Registrar of Interests, pursuant to the

Registrationof InterestsOrdinance1993;2) theTerritory’sChiefAuditor’s identificationof

56

such failure in her TCI Audit Reports for 2005 and 2006,94 in each of which she called

attentiontothefactthatthemajorityoftheLegislativeCouncilhadfailedadequatelyorat

alltodisclosetheir intereststotheRegistrar;3)theirdelays,disregardand,inmanycases,

obstruction of the Commission in the opportunity it gave them to make good those

deficiencies, even when, late in the day, it brought into play its powers under the

Commissions of Inquiry Ordinance; and 4) such openly expressed disregard, bordering on

disdain, in their evidence to the Commission as to their constitutional obligations of

disclosuretowhichtheRegistrationofInterestsOrdinancegaveeffect.

2.19 The result is that the Commission has had to extract – albeit with difficulty and

incompletely ‐ information of hitherto hidden interests and involvement in suspect

transactionsandrelationships.Therevelationofmanyoftheseinterestswastheproductin

largepartoftheCommission’swritteninvestigationsoverthefirstfivemonthsofitsworkin

andfromLondon.Manymoreweretoemergeintheglareofpublicityinitsexaminationof

MinistersandothersintheoralproceedingsinProvidenciales.

2.20 In all of this, the Hon Michael Misick set the tone in his late, inadequate and

misleadingwrittenresponsestotheCommission’srequestsfordetailsofhisinterests,andin

hisevasiveandsometimestruculentandobstructiveoralevidenceonthepoint.Effectively,

hisstancewastodismissthosestatutoryobligationsasofnopracticalapplicationtoelected

MembersoftheHouseofAssemblybecause,asheputit,ofacross‐partyculturetoignore

them.Theremaybesometruthinthesuggestionthattherewasacross‐partyattitudeto

thateffect.Buttocallitacultureand‐givenhisposition‐todonothingaboutitamidstthe

increasingdinofpublicconcernoverperceivedexcessesofhisAdministration,wouldhave

causedraisedeyebrowsinthefoc’sleofapiratesloop,asPGWodehousemighthavesaid.95

Thedisclosureobligationshave longbeenafeatureofTCI law,startingat leastasearlyas

the 1988 Constitution,96 and re‐enacted in the 2006 Constitution.97 They are necessary,

familiarandobviousaidstoencourageandenforcehonestyandopennessbythoseinpublic

office, at which ordinary canons of public behaviour and the shelvedMinisterial Code of

Conductweredirected.

94Seepara1.38above95Wodehouse,PG(1926),KeepingInWithVosper,London,p9996s87(1);Seealsoss25(1)(f)and26(3)(d)97s98;Seealsoss47(1)(f)and(g)and48(2)(d)

57

2.21 The2006Constitution,98 like its1988predecessor,requiresprovisiontobemadefor

the appointment of a Registrar of Interests, and imposes a duty on all Members of the

Legislature,includingMinisters,todeclareannuallytotheRegistrartheirfinancialinterests,

includingassets, incomeand liabilitiesand thoseof suchpersons connectedwith themas

mightbeprescribed.TheRegistrationofInterestsOrdinance1993spansbothConstitutions

inprescribingbywayofaScheduletheformoftheannualdeclarationandtheintereststo

be declared to the Registrar. The form of the annual declaration could not have been

plainer.Itrequiresthedeclaranttodiscloseinrespectofhimself,hisspouseoranychild:

1) Directorships ‐ the names of companies in which any of them held a

remunerateddirectorship;

2)Employmentoroffice–thedetailsofanyremuneratedemploymentoroffice;

3) Trades or professions etc. ‐details of any remunerated trade, profession or

vocationpractised;

4)Financialsponsorships,giftsetc‐includinganymaterial[i.e.$10,000ormore]

benefitsreceivedasacandidateormemberoftheLegislature;

5)Overseasvisits‐includingdetailsofeveryvisitrelatingto...membershipofthe

LegislativeCouncil[/Cabinet]undertaken...thecostofwhichhasnotbeenwholly

bornebythedeclarant,hisspouseorchildorbypublicfunds;

6) Land and Property ‐ including the location or description of any land or

propertyfromwhichthedeclarantorhisspouseoranychildderiveanincomein

excessof$10,000,orwhichconstitutesanassetworth$10,000ormorewhether

bywayofrentalorotherwise;

7) Declarable shareholdings ... in companies or bodies – of the declarant, his

spouseoranychild(i.e.abeneficialinterestinshareholdingofavalueexceeding

$10,000);

8) Liabilities – including the names of any creditor towhom the declarant, his

spouseoranychildisindebtedtoanamountexceeding$10,000.

98s98

58

2.22ItwasandistheRegistrar’sdutytoensurecompletenessandaccuracyoftheRegister

byexaminationofeachdeclaration,andifnecessarybyquestioningthedeclarant.Heisalso

boundtomaketheRegisteravailableforinspectionbymembersofthepublicatanysitting

oftheLegislature.FailurebyaMemberoftheLegislaturetomakeatimely,fullandaccurate

declarationrequirestheRegistrartoreportthefailuretotheLegislature,aSelectCommittee

ofwhichmayfinetheMemberupto$5,000orsuspendhimorherfromsittingorvoting.

2.23IdecidedtorequestallMembersoftheLegislatureoverthelasttenyears,whowere

still alive and could be traced, voluntarily to providemewith copies of their declarations

overtheperiod,andfromthosestill intheLegislature,a freshdeclarationuponreceiptof

the request. In making those requests, I had in mind the power of the Commission to

require such information, pursuant to the provisions of the Commissions of Inquiry

Ordinance.99 However, it proved extremely difficult to obtain from any public source the

identity or address of the Registrar and the addresses or telephone numbers ofmany of

those to whom the Commission wished to write, especially previous Members of the

Legislaturewhohadheldofficebefore2003.

2.24 From about mid‐August 2008 the Commission Secretary sent to present and past

MembersoftheLegislativeCounciland/ortheHouseofAssemblya letter inthefollowing

terms:

... [the Commissioner] has instructedme towrite requesting you voluntarily toinformandprovidehimwithcopiesofthefollowinginformation:

1)thedateandcontentofeachDeclarationofInterestsmadebyyouatanytimeduringyourtenureasaMemberoftheLegislatureoftheTurksandCaicosIslandsto the Registrar of Interests, pursuant to your obligation to make suchDeclarationsundersection98oftheConstitutionOrder2006and/oritsstatutorypredecessorand/oranylawmadeundereitherinstrument;

2) whether or not you havemade any such Declarations, the information anddocumentsthatyouwouldnowprovideinsuchaDeclarationofInterestsifmadepursuanttosection98(3)and/orofanylawmadeunderit;

3) if, in any 12month period during your period of appointment as an electedMemberoftheLegislature,youhavenotcompliedwithyourobligationtomakesuchDeclarationpursuanttothatprovision,or itsstatutorypredecessorand/orofanylawmadeundereitherinstrument:

99ss4(1)(d),(f),(k)and(2);SeeAppendix4(iii)tothisReport.

59

a)whyyoudidnotdoso;andb)what,ifany,sanction,admonitionordirectionresulted....

2.25 At the same time theCommissionattempted to findand seek theassistanceof the

Registrar,with a view to examining the declarationsmade to himover the years and the

Registerinwhichhehadrecordedtheirdetails.Itprovedverydifficulttoidentifyhim,never

mind locate him. Nobody in the TCI seemed to knowwho hewas or where he lived or

worked,orotherwisehowhecouldbecontacted.RuthBlackman,theClerktotheHouseof

Assembly and other public officialswere seemingly unable to help – even theGovernor’s

Office could not immediately assist. Eventually, the Commission learned that theDeputy

Governor, theHonMahalaWynns, knewhisname ‐AlfredBeen,a retired schoolmaster ‐

and his telephone number, but not his address. Following a telephone call, contact was

establishedandarrangementsmade for amemberof theGovernor’s staff to collect from

thelivingroominhishomeaheap,asheputit,ofdeclarationsandtheRegisterinvarious

forms.

2.26ThesedocumentscouldnotbeexaminedbytheCommissionuntillateOctober,when

itsSolicitor,accompaniedbytheCommissionSecretarymadeavisittotheTerritoryforthe

purpose. Someof thedeclarationsof interest, including thoseof theHonMichaelMisick,

wentbacktotheearlyandmid1990s.Thereturnsfrom2000to2007,whichwerenotall

complete,werefiledyearbyyearinseparateenvelopes.Foreachoftheyears2004to2006

there was a bound Register containing typed entries taken from the declarations. The

entriesfor2007wererecordedinmanuscriptinanexercisebook.

2.27 I have referred to delays, evasion and obstruction byMinisters and others in their

responses or lack of response to the Commission’s requests and then to summonses for

informationastotheirfinancialinterests.Ishallrefertothatconductagaininmoredetail

when dealing with individualMinisters and otherMembers of the House of Assembly.100

Counsel to the Commission – echoing the Territory’s Chief Auditor in her 2005 and 2006

Reports,rightlysummariseditallasapictureofwholesaleandwidespreaddisregardforthe

requirements of the law. He referred, in particular, to the requirement of disclosure of

FinancialSponsorships,Giftsetc. Noneof theMinistersorotherelectedMembersof the

HouseofAssembly everproperly completed that sectionof thedeclaration form. Eachof 100Ch4

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themwho gave oral evidence to the Commission admitted that and other deficiencies in

their returns. Some, in particular theHonMichaelMisick and theHon FloydHall, did so

becausetheyregardedtheirstatutoryobligationsundertheOrdinanceasofnoimportance

atall. Others,suchastheHonMcAllisterHanchellandtheHonJeffreyHall,attributedthe

omissionstosimpleerror.

2.28 The Hon Michael Misick, in answer to a general question from Counsel to the

Commissionabouttheinadequacyofhisreturns,explained:

... this has to be put in its right perspective. ... in relation to the Register ofInterests,andthere isnoexcusefor it, thereweremembersasamatterof factthatneverevendeclaredaninterestatall.....ithasbeenacross‐partyculturetoreport in themanner inwhich I did. Particularly in relation to gifts and partypoliticaldonations,therehasbeennoonewhohaseverdeclared,probablywiththe exceptionof onenewmemberwhoprobablydeclareda small amountandthis is primarily because, particularly the small nature of our Territory, personsgivingpoliticalcontributionwouldhavepreferredtobenotnamed.101

... there has been a cross‐party culture not to – to enter these as correct aspossiblebasedonyourrecollectionandinmanycasesthereweremembersandmembers of the oppositionwhowere then in government from 1995 to 2003,whoneverdeclaredtheirinterestsatall....Sonotwithstandingthefactthatitisa legal obligation, ministers as a whole were quite prepared to adopt a laxapproach to it. ... I have always declared interest based onmy knowledge intermsofthecross‐partyculture.Itiswhatitis.102

2.29 TheHonFloydHall,whohadmadefuller,butstill farfromcomplete,declarationsof

interest,saidthathetoohadnotdeclaredfinancialsponsorshipsorgifts,adding:103

...Noonefilledoutthatsection.Iguessitwasacaseofgroupthinking,inmyrespect and that section was not filled out. ... it was not filled out becausenobodyelse seemed tohavebeendoing itand therewerenopenaltiesbeingenforcedasaresultofit.SoitwasagroupthinksituationIthinkamongstallofusandresultedinmynotfillingoutthatsection.InhindsightIdobelievethatitwasinappropriatetodothat.

That evidence of the Hon Floyd Hall, when confronted with the inadequacy of his

declarations, is to be compared with his written evidence to the UK Foreign Affairs

Committeeayearorsobefore,inwhichhehadasserted,withoutqualification,Ministersdo

regularlyandroutinelydeclaretheir interests. Inafurtherpassage inthatevidencetothe

101Transcript,Day1,pp47‐48102ibid,pp51‐52103Transcript,Day5,p7

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Committee,hehadshownthathewaswellawareofwhathadbeenrequiredofhimandof

hisministerialcolleagues:104

Thegovernmentfullysubscribedtogoodgovernmentprinciples. .... Weare...committed to proper functioning of committees of theHouse of Assembly. Aspartofour legitimateagendasince the [2007UKNationalAuditOffice]Reportwas published, we have taken steps to ensure disclosure of interest by publicofficials,includingmembersoftheHouseofAssembly.Inthisregardyouwouldbe pleased to note thatwe are in the process of piloting an Integrity in PublicOfficeOrdinancethroughtheHouseofAssembly....

2.30TheHonMcAllisterHanchell,whosedisclosurewas,andremainsdeficient,maintained

inhisoralevidencethathehadcompletedhisdeclarationsovertheyearstothebestofhis

abilitybasedonhisinterpretationatthetimeofwhatwasrequired.Heacknowledgedthat,

intheglareofthespotlightthrownonthematterbytheCommission’sInquiry,hehaderred,

inparticularinhisroutinefailuretoaccountforanyfinancialgiftsorsponsorship.105

2.31 TheHon JeffreyHall,Minister of Communications andWorks,whose returnswere

amongtheworstexaminedbytheCommission,adoptedasimilarstance.Hedidnotprayin

aid any cross‐party culture or group thinking excuses; he simply said in relation to each

deficiencyputtohimthatitwasanerrororcarelessnessonhispart.

2.32 It may assist, before I leave the generality of this topic, to set out what the

CommissionwasaskingforbywayofdisclosurefromtheMinisters.Following,andinreply

to,thedisappointingresponsesfromMinisterstotheCommission’sinitialletter,towhichI

have referred,106 sent to all Members of the House of Assembly in mid August, the

Commissionwrotesecondletters,explainingwhatitsoughtbywayofdisclosure.Hereisa

specimenof the information sought in those letters,provisionofwhich shouldhavebeen

withintheunderstandingandcapacityofanyreasonablydiligentpublicservant:

Anyandallpayments,emoluments,salaries,wages,commissions,honorariaandbenefits inmoneyor inkind,orentitlements tosuch, fromall sources, receivedsincecomingtoofficeasaMember,whetherornotassociatedwithyourroleasaMemberorMinister,andthosereceivedbyyourspouseandanychild.

Any sponsorship, presents, gifts, services, commissions or payments, includingtravel, accommodation, food, drink, clothing, holidays, entertainment and

104opcit54,Ev351105Transcript,Day7,p79andpp86‐94106Seeparas1.53–1.71above

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hospitalityprovidedtoyou,yourspouse,familyorfriendsduringyourofficeasaMember ofmore than nominal value (i.e. over $100)whether or not explicitlyrelatedtoyourpositionasaMemberorMinister.

Alllandandpropertyownedbyorheldonyourbehalf,yourspouseoranychild,whetherfreehold,orleasehold,oranyentitlementtothesame,anywhereintheworld.Thistoincludedetailsofthelocation,valuationonpurchaseandnow,itsstate of development, stamp duty paid, any planning permission sought orgrantedandtheidentityofanyagentactingonyourbehalfinrelationtoit.

AllbankaccountsheldintheTCIorelsewhere,byyou,yourspouseandanychild,orheldonyourortheirbehalfintrust.

All personal and corporate credit cards held by you, whether in sole or jointnames.

All shareholdings, debentures or commercial interests in any company,partnershiporfirm,andanycontractsenteredintowhetherinyourownnameorthat of an intermediary, including options to purchase, franchises, licences, orcontractswithanybodiescorporate.

Any directorships or positions of authority, whether remunerated or not, inrelationtoanycommercialenterprise.

All liabilities in excess of $10,000 in money or money’s worth includingmortgages,loans,debts,guarantees,indemnitiesorwarrantiesgiven.

2.33 Theclearandundisputedpicture isthusofacknowledgedwidespreadfailureonthe

part ofMinisters and otherMembers of the Legislature overmany years to complywith

their constitutional obligation to provide full and accurate declarations of their financial

interests. Whatevertheir individualreasonsorsubsequentrationalisationfortheirfailure,

there isnodoubtthatthey ignored‐certainlysince2005‐thestricturesoftheTerritory’s

ChiefAuditorinherAuditReportsaboutit.

PoliticsandPoliticalDonations

2.34Theallpervadingimpactofpoliticsonpeople’slivesandlivelihoodsintheTCIandthe

seeminglyimperceptiblelinebetweenpoliticalpaymentsordonationsontheonehandand

bribesontheotherhasbecomeacankerintheeconomicandsociallifeoftheTCI.Ittakesa

number of forms. First there are payments made by potential or well‐established

developers and other businessmen to PNP funds or to PNP Ministers individually,

purportedly as political donations. These are sometimesmade direct, but are also often

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made through and held by a third party, such as an attorney or close business or family

associate. Wealthy developers and other businessmen usually made their donations on

termsofstrictanonymityandwithnorestrictionsastouse,politicalorotherwise.Whythe

secrecy?Whynostringsattachedtoitsuse?

2.35 Mr Norman Saunders Jr, when seeking on the PNP’s behalf to persuade the

Commissionnottohearevidenceaboutsuchdonors‐ornottodosoinpublic‐couldnot

have answered the first of those questions more plainly. They were afraid that it would

become common knowledge that they had been donating large sums to one party or to

individual members of that party while in power, lest it damage their access to and

possibilityofinfluencingtheirpoliticalopponentsifandwhentheycametooffice:107

....donorstoapartyare...highlysensitiveaboutthedisclosureofinformation.ThefactthatthedetailsofdonationsaregoingtobemadepublictothisInquiryisgoingtosendashiveringeffectdownthespinesof thedonors ...There isanenvironment that – there is a feeling that if you donate and you are a strongsupporterofaparticularparty,whetherornotthatisactuallyrealorimaginary,if you are a strong supporter of a particular party and you are engaged inbusiness thatwith the flows and ebbs of political fortune,when the party youstrongly support is in opposition, that very few of your callswill be answered,veryfewofyourapplicationswillbeconsidered.....thereisthatperceptionanddonorsdonotliketheirinformationtobemadepublic....

and108

... Theproblemandconcern is thatpublicdiscussionaboutthe identityof thedonorsorevenoneortwodonorsandevenifthosedonorsaresomehowinvolvedwith criminality or conduct that is inappropriate, that even in those instancespublic discussion about those donorswill irreparably damage the ability of thepartyinthefuture–theabilityforpartyinthefuturetoraisemoney,tocollectmoney,which isabsolutelyessential for its function. That is themajorconcernthatthepartyhas:thatfuturedonorstobepetrifiedaboutdonatingtotheparty.

Q Why should they be petrified if their intentions are good and in the publicinterest?Whathavetheygottobefrightenedof?

ATheyareafraidoftheirdetailsbeingmadepublic...whenthereisachangeinpolitical parties, they fear that their applications, their telephone calls, theirproposalsmaygounheard....

107Transcript,Day5,pp116‐117108Transcript,Day7,pp3‐4

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2.36 As to my second question ‐ Why no strings attached? – it applied, not only to

paymentsmadebydevelopersandthelike,butalsotopaymentsmadebythePNPtoeach

ofitscandidates,knownas“Candidate’sStipend”.Suchpaymentswereforthemtospend

as theywishedandwithout any requirement to account for its use forpolitical purposes.

Theanswersarefound,first,byexamining,astheCommissionhasdone,alargenumberof

relationshipsbetween,on theonehand,PNPMinistersand,on theother,developersand

others,andtransactions‐in‐the‐makingaboutthetimethedonationsweremade.Chapter4

of this Report contains a number of clearly evidenced instances of very large payments,

direct or indirect, to, in particular, the HonMichael Misick, the Hon Floyd Hall, the Hon

McAllister Hanchell and the Hon Jeffrey Hall, whose Ministerial portfolio included

responsibilityfortheawardofpublicworksandothergovernmentcontracts.

2.37ItlooksfromtheevidencebeforetheCommissionthatdonorsdidnotcarehowtheir

politicalrecipientsspentthemoney,aslongastheystayedinpowerorhadtheprospectof

it and remainedamenable to their commercialproposals. ThePartyhadno system– the

HonFloydHall,itsTreasurerandacertifiedpublicaccountant,seemedoblivioustotheneed

for‐requiringindividualrecipients,whetherofsumsdirectfromdonorsorfromthePartyto

account for theiruseofsuchmonies. Mostof thedonationsorpaymentsappear tohave

been at the disposal of individual Ministers to spend on what they liked, free from any

requirementtoaccountfortheirexpenditure.Thefollowingextractsfromoralevidenceof

theHonMichaelMisick,theHonFloydHallandtheHonMcAllisterHanchell,inexamination

bySeniorCounsel to theCommissiongivea flavourofwhatwasgoingon. First, theHon

MichaelMisick:109

Q...On3rdNovember2006...[y]ougotadonation,soyoutellus,of$100,000from Caicos Construction Management and Development Limited. What wasthatfor?

AItwasapoliticaldonationforme....

Q...whatisthepurposeofapoliticaldonation?

A Thepurposeofapoliticaldonation in theTurks&Caicosmightbedifferentfromthepurposeofapoliticaldonation in theUK, soyouhave toput in thosetwo different perspectives. The purpose of a political donation in the Turks&Caicos is toassist theperson receiving itwithhisorherpoliticalambitionsbut


65

also in most cases when donations are given to individuals, it is to use yourdiscretion, because you use your personal money to advance your politicalambition,andsodonationsissortofhelptosupplementthat.

QWhatispoliticalaboutthat,MrMisick?Whatisintheleastbitpoliticalaboutthat?Hereissomemoneytouseforyourself.Thatisnotapoliticaldonation.Itisagiftpossibly.

AYouareobviouslynotaCaribbeanpolitician.

Q...IamstillwaitingtohearfromaCaribbeanpolitician,withrespectsir,whatitis about $100,000 froma construction company that hasapolitical angle to itwhenitisputintohiswife’scompanysoshecangoandspenditintheUSA.....Explainittomeagainplease.

A Ihaveexplained it toyou, tothebestofmyknowledge. And Istandbymyexplanation.....

Q[Commissioner]...Whydidthiscompanypaythismoneytoyou?Why?

AThecompany,asIexplained,paidthismoneytomeasapoliticalcontributiontomeforthepoliticaldonation/gift.

Q[Commissioner]Butwhyshouldtheydothat?

AThiswasmonthsbefore theFebruary2007election. Certainly in theTurks&Caicos a number of political contributions are given sometimes to a party,political contributions/gifts topartiesand to individuals. There isno campaignfinance laws that regulate strictly how that is spent. So when you get acampaigncontribution,justlikehowyouspendthecontributionthatyougetonyourself.Itisallintertwined....

2.38TheHonFloydHall,whenasked,byreferencetohiscreditcardexpenditure,whether

hecouldaccountforhisuseofpoliticalpaymentsmadetohimpersonally,said:110

To some degree but not any degree of specificity ... this is the areawhere itcouldgetabitmuddyinthesensethat...inmycase,Ihavebeenusingpersonalfunds for political endeavours as well, including loan proceeds to enforce mypolitical endeavours throughout the Turks & Caicos Islands. So it is quiteconceivablethatsomeofthosepolitical[sic]wouldendupbeingcon‐mingledattheendofthedaywhenitreachedmybankaccountormycreditcard....

Q ... Did you not regard it as being slightly messy that there would be con‐mingling of personal funds and political funds when it would be a relativelysimple exercise to separate and account for those to avoid the possibility ofinterpretationlateron?


66

A...youhavetoappreciate...thathereintheTurks&CaicosIslands,wedon’thave any campaign finance laws. So I didn’t feel it an obligation to treat theprocedureorthedisbursementsandtheincomeofthosefundsinthefashion...youhavejustdescribed....

2.39 TheHonMcAllisterHanchell had the samedifficultywhenaskedbyCounsel to the

Commissiontoaccountforhisexpenditureofalargesumofmoneygiventohim,whichhe

claimedtohavespentonaseriesofelectionpartiesataboutthetimeoftheFebruary2007

election.

2.40Therewasalsomovementofpoliticaldonationstheotherway,fromPNPpoliticiansat

oraboutelectiontimetotheirvoters,insomecases,giventhesmallconstituenciesandthe

limitation of the franchise to Belongers, to relatively few of them. As Counsel to the

Commission observed in his closing submission,111 the remarkable aspect of such funding

was the sheer volume of money washing through the system, with an electorate of just

under7,000spreadacross15constituencies.FromthePNPpapersbeforetheCommission

alone, it canbe seen that in the sixmonths spanning the February2007electiona figure

approaching$4millionwentinandoutofthePNPParty’smainbankaccount.

2.41 Therewasmuchotherevidencebefore theCommissionofwide‐spread largesseby

MinistersandthePNPpartymachineamongsttheirconstituentsbeforetheFebruary2007

elections.MsMcCoy‐Misickgaveafirst‐handaccount112ofhisapparentpersonalgenerosity

intheformofsubstantialcashhandoutstothosewhomhesawaspotentialsupporterson

hiselectionvisits.TheHonFloydHallspokeofalargenumberofround‐sumpaymentsspent

byhim,including$5,000atRoyalJewelsinAugust2007,whichhesaidhehadusedforthe

purchaseofpresentsformothersinhisconstituencyincelebrationofMothers’Day.113He

addedthathehadspentabout$15,000eachyearonMothers’Daypresentsforabout200

mothersinhisconstituency.

2.42 It istrue,astheHonMichaelMisickandotherMinistersremindedtheCommission,

thattheTCIhasnostatutoryprovisionsspecificallyrestrictingtheamountoruseofelection

campaign finance expenditure. However, sections 68 and 69 of the Elections Ordinance,

reproducingorreplacingthecommonlaw,makeitanoffencetoengageincorruptelection

111Transcript,Day22,p44112Transcript,Day14,p106113Transcript,Day15,p194

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practicesofbriberyandtreating,whetherbefore,duringorafteranelection,byseekingto

influenceorpersuadeapersontovoteortorefrainfromvotingbytheofferorgivingofa

rewardofanysort.

2.43 Insummary, thePNPpoliticalpresenceandmachineryappear tohavebeenawell‐

usedchannelforthepassingofconsiderablesumsofmoneyonewayortheother,andwith

noaccountabilityatallonthepartofthePartyoritsMinisterialMembersandothersasto

whattheydidwith it–anall tooeasymechanismforcorruptionbythosemindedtotake

advantageofit.

Belongership

2.44Putatitsbroadest,BelongershipintheTCIstemsfrombirththereand/orbydescent

fromaBelongeroraspouseofaBelongeroffiveyearsstanding,orexceptionallywherethe

Governor, acting on the advice of the Cabinet, considers that a person has made an

outstanding contribution to the economic and social development of the Islands.114

Belongers,byrightofthatstatus,havetwomainprivilegesintheTCIthatarenotenjoyedby

thosewitharightofpermanentresidenceorother lesspermanententitlementtoremain.

Theyaretheonlyoneswitharighttovote,andtheyareonlyonestowhom,asamatterof

policy,CrownLandmaybedisposed,eitherintheirownrightorasthemajorityshareholder

inacorporatepurchaser,andatasubstantialdiscount. Theyalsobenefit fromapolicyof

empowermentespousedbybothmainpoliticalparties.Oneofitsavowedaimsistoenable

everyTCIBelongertobuyasmallplotoflandforhimselfandhisfamily.

2.45 There is no legal restriction, however, on the number of plots each Belongermay

acquire,andthesameprivilegesareaccordedtoprominentandwealthypersons,including

developersandotherswhohavebeenaccordedBelongershiponexceptionalgrounds.Nor

isthereanyrestrictioninpracticeonaBelongerimmediatelyflipping,thatis,quicklyselling

ontoadeveloperaparcelofCrownLandgrantedtohim,orfromfrontingforadeveloperin

thetransaction,soas,ineithertransaction,toenablethedevelopertoacquirethelandata

substantiallydiscountedprice.Sometimes,BelongersflipinunisonwithotherBelongersto

114ImmigrationOrdinance,s3

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the same developer, thereby enabling him to acquire a large acreage of land on

advantageous terms. Sometimes, it appears, the flipping Belongers are only informed by

governmentauthoritiesshortlybeforeorafterwards. Inthateventtheyaretobeorhave

beenusedas intermediaries in thisway ‐possiblyorpossiblynot ‐witha smallprofit for

themselves.

2.46 Suchtransactionscanbe initiatedatMinisterial levelandtheirproductapproved in

Cabinetintheformofgrantsof largeareasof landtodeveloperscoupledwithconditional

development approval. The Commission’s examination of Executive Council and Cabinet

minutesoverthelastdecaderevealedanincreasingpatternofsuchproposalsputbyoneor

otherMinisterbeforetheGovernorinCouncilorCabinetforurgentdecision,oftenwithno

Cabinetpaperandwithminimalinformation.IftheCouncilorCabinet,withtheagreement

of theGovernor,approvedsuchaproposal, itwasoften,as theMinutes record, for rapid

communicationtothedeveloperconcerned.

2.47Inmanysuchcases,theclaimedjustificationforsuchurgencywastheneed,inahighly

competitive international market for tourists and tourist development, to secure the

investment in the interest of the people of the Islands. That was certainly how such

proposals were often put to the Governor in Cabinet – speedwas of the essence or the

developerwouldgoelsewhere.ThatwasalsothejustificationgiventotheCommissionbya

numberofPNPMinistersandothersforsuchhighlevelproposalsandthedevelopmentsto

whichtheyled.

2.48Ontheotherhand,thereareindications,increasinginfrequencyandscaleduringthe

PNP Administration, of other possible motives as well. There is information before the

Commissionof transactions inwhichtheMinisterconcernedhas,withtheapprovalof the

Cabinet,securedforadevelopera lowerpricethanthatadvisedbytheGovernmentChief

Valuation Officer or other exceptionally favourable terms, including relaxation of

developmentconditionsand/orinterventioninhisfavourintheplanningpermissionprocess

and/or a substantial reduction in duties to be paid. As Chapter 4 of this Report

demonstrates, such favourable treatment might have been part of an agreement or

understandingfortheMinisterand/orothersclosetohim‐perhapsarelativeoracomplicit

Belonger‐intermediary, perhaps a lawyer acting for both sides ‐ to be rewarded with a

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substantialcashpaymentorotherfavour.Ifapayment,itmighthavebeenrepresentedasa

loanwithnoformalagreementorprovisionforrepaymentorforpaymentofinterest.Orit

mighthave taken the formofa finder facilitation fee,or realtor’scommission,or shareof

the equity in the development when built, or a condominium. Or it could have been a

favour,saybywayofarrangementofawell‐paidemploymentorallotmentofashareina

corporateinterestorotherbenefittoamemberoftheMinister’sfamily.

2.49Thus,thelaudableandmuchvauntedPolicyofEmpowermentofBelongersmayhave

had uglier manifestations in its application. It may, in some instances, represent an un‐

earnedbenefitorprivilege–evenaninformalprospectiveinterestinCrownLand,byvirtue

only of that status and regardless of any personal need for land. Itmay include already

affluent newly minted developer/Belongers as one media commentator has recently put

it.115AnysuchmisuseofthePolicysuggeststhepossibilityofabusebyMinistersandothers

oftheirpublicofficeforthepurposeofcorruptreward.

ConstitutionalWatchDogs

ChiefAuditors’Reports

2.50Ofthetwospeciesofconstitutionalwatchdogs,theGovernmentChiefAuditorsand

ParliamentaryOversightCommittees, the formerbarked, loudly and repeatedly, the latter

barelyshowedanysignsoflife.IhavereferredbrieflyinChapter1ofthisReport116tothe

comprehensiveandpenetratingreportsofCynthiaTravis,theChiefAuditorfrom2005and

2006, inwhich she identifiedmany recurring issues of serious concern, including growing

budgetdeficits forwantofpropercontrolofexpenditure. Thedifferencebetweenactual

andbudgeted figures for receipts fromCrown Land saleswas amajormismatchbetween

estimatedandactualfiguresinthe2005‐06Budget,butitwasnottheonlyone.Themany

othersnodoubtcontributedtotheChiefAuditor’sconclusionthatthebudgetprocesswas

ineffectiveandthattherewasalackoffiscalopenness.117Asshereportedelsewhere,there

has been throughout successive governments an excess of expenditure over that

115EquitableEmpowerment,TCIJournal26thFebruary2009;UnearnedPrivilege6March2009TCIJournal116Seepara1.40.117AuditReportontheFinancialStatementsoftheGovernmentoftheTurksandCaicosIslandsfortheyearended31March2006,p22

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appropriated.InthefinancialyearendinginMarch2006,theactualexpenditureexceeded

thebudgeted,orapproved,expenditureby15.9%.118

2.51 This isnotanewproblem inTCI. Nor is itunimportant. As theUKNationalAudit

Officerecognised,intheir1995Report,ContingentLiabilitiesintheDependentTerritories,119

realistic estimates of revenue, expenditure and borrowing requirements or increases in

reservesareakeyelementofanygovernment’sfinancialplanning. TheUKNationalAudit

Office found that lack of commitment from the TCI Government to firm budgetary

managementandpublic sector reformhad resulted in continuingbudgetarydifficulties.120

More recently, in their 2007Report, they recorded that expenditurewas consistently and

repeatedly being incurred in excess of annual budgets, across most government

departmentsandwithoutpriorstatutoryauthorisation,andthatfinancialcontrolsdesigned

to prevent this were routinely overridden.121 Astonishingly, as one Acting Permanent

SecretarytoldtheTCIPublicExpenditureCommittee:122

YoumustrealisethattheMinistrycanbudgetbutitisstilllefttotheMinistryofFinancetogiveuswhatwebudgetedfor.InmanycasesourbudgetsareslashedandweoperateknowingthatwearegoingtogooverbudgetandtheMinistryofFinanceknowsthisalso.That’sthepositionweareputinaswehavenocontroloverthefinalfigures.

ParliamentaryOversightCommittees

2.52 The2006 Constitution provides in a largely permissiveway for the appointment of

StandingCommitteesof theHouseofAssembly tomonitor theway inwhich government

conducts its business. For some years there have been three such bodies, the Public

Accounts,ExpenditureandAdministrationCommittees. However, theConstitution leaves

muchtotheinitiativeoftheHouseitselftodeterminebyStandingOrdershowtheyshould

be composed, andhow they should conduct their business. A political partywith a clear

majorityintheHouseisthusable,throughthemediumofStandingOrders,toneutralisethe

workofsuchCommitteesinmonitoringtheconductoftheGovernment.Thishascertainly

been the case since at least 2003, while the PNP has been in control. There is thus no

118ibidpage38119UKNationalAuditOffice(1997),ContingentLiabilitiestheDependantTerritories,HC131997‐1998,page29120ibid,page47121opcit42122PublicExpenditureCommitteeMinutes,10February2004

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effectiveconstitutionalunderpinningofthepublicsafeguardsthatsuchCommitteesshould

provide – a serious weakness given the chaotic state of the Government’s long‐standing

financialmanagement and control of public finances repeatedly identified in national and

otheraudit accounts towhich Ihave referred. In short, therehasbeennoparliamentary

oversightofanysignificance;andthepowerofthePNPhasbeenlargelyunchecked,givenits

overwhelmingand,untilrecentlyloyal,parliamentarymajority.

2.53 Such machinery as the 2006 Constitution123 requires is the establishment by the

Legislatureofat least twoStandingCommitteesof theHouse,eachwith responsibility for

monitoring the conduct of the business or a ministerial department or departments. In

addition, it empowers the House, with the approval of the Governor, to make Standing

Orders,whichmayprovidefortheestablishmentofadditionalStandingCommitteesofthe

House.124EachStandingCommitteeistoconsistofMemberswhoarenotMinistersandto

correspond proportionately, so far as possible, to numerical strengths of political

representationintheHouse.AtleastoneoftheCommitteesmustbepresidedoverbyan

oppositionMember.UndertheConstitution,theCommitteesmay,butarenotrequired,to

summonMinistersoranypublicofficerforexaminationandprovideinformationabouttheir

departmentalresponsibilities.Theymay,butagainarenotrequiredto,reportontheirwork

totheHouseofAssembly.IfaCommitteedoesreport,theHouseisrequiredtopublishtheir

reports,butnotwithinanyspecifiedtime‐scale.

2.54AsinthecaseofotherinstitutionsofpublicgovernanceandadministrationintheTCI,

the Commission has had great difficulty in extracting from those who should be most

familiarwith the system,what, if any, effectivemachinery these constitutional provisions

haveprovidedforpublicoversightofgovernmentconduct.StandingOrdersoftheHouse,125

whichhavebeenamended from time to time,provide for StandingCommittees tobe re‐

appointed at the commencement of each Parliamentary Session. Under the Orders, the

ExpenditureandAdministrationCommitteesarerequiredtomeetatleastoncepermonthin

123asinthe1998Constitution124ss60and61125SeeLegislativeCouncil(PowersandPrivileges)Ordinance,RevEd1998,consolidatingStandingOrdersoftheLegislativeCouncil1990asamendedbylegalnoticesSeptember2003andDecember2004.

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every Session, and all threeCommittees are required to report to the Legislature at least

onceineverysession.126

2.55 From informationobtainedbytheCommission,albeitwithconsiderabledifficulty, it

looksasifallthreeStandingCommitteesmetinfrequently.Sometimestheycouldnotmeet

becausetheywereinquorateduetonon‐attendanceofPNPMembers.Forexample,four–

possiblyfive‐meetingsofthePublicAccountsCommitteescheduledinthefirstquarterof

2008werecancelledforwantofaquorum;Ibelievethatitonlymettwiceinthewholeof

2008.AlthoughallthreeCommitteesarerequiredbyStandingOrderstoreportupontheir

activitiestotheHouseofAssembly,andtheHousewasrequiredtopublishtheirReports,127

compliance with both requirements has been distinctly patchy. Unless reports are

presented to the Legislature and tabled, the exercise is pointless. EvenwhenCommittee

ReportsweretabledbeforetheHouse,Ministersoftendidnotmakethemselvesavailableto

answerquestionsarisingfromthem,and,onoccasion,haverefusedtoanswerquestions.128

2.56 Even in lesstroubledtimesforthegovernanceoftheTCI, theseCommitteesdonot

appeartohavemetregularlyorreportedtotheHousepromptly,oratall. Sincetheearly

nineties, and throughout, there has been concern about their ineffectiveness. In 1993 a

consultantengagedbytheForeign&CommonwealthOfficeidentifiedanumberofareasof

concern, such as widespread laxity in adopting financial procedures and a failure to

administergovernmentfinanceswithduerespectforthelawandlegislature.129Thereafter

eight technical officers were appointed to senior financial posts in the TCI to encourage

improvementsinfinancialcontrolandreporting,andseparatearrangementsweremadefor

trainingfinanceandauditstaff.

2.57 But therewas little change for the better. TheUKNational AuditOffice expressed

concern in 2005.130 These concerns include Committee hearings being held in private,

failuretoachievequora,especiallyinsensitiveareaswhereback‐bencherswishedtoavoid

anappearanceofdisloyalty,perceivedpoliticisationbecausetheChairmaninthecaseoftwo

oftheCommitteesistheleaderoramemberoftheOpposition,andalackofexperienceand

1262006Constitution,s37andStandingOrders57.3.1and57.3.2127s61(5)(c)and(6)128opcit54Ev336,para5.4129TCINationalAuditOffice(1997),TCINationalAuditReport,p30130ibid,p32

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expertise in scrutinisingaccounts. Allof thosedeficiencies,as Ihavesaid, continueduntil

anypossibilityofStandingCommitteescrutinyoftheGovernmentwascompletelydeniedto

thepeopleoftheTCIwhen,attheendof2008,attheHonMichaelMisick’sinstigation,the

HouseofAssemblywasproroguedforoverthreemonths.NoneoftheCommitteeshadin

factsatorreportedsincetheHouseofAssemblyhadbeenpreviouslyproroguedattheend

of July 2008. They had been briefly re‐established in mid December 2008 in the dying

momentsoftheMisickAdministration, justbeforetheHousewasagainprorogued. When

Parliamentre‐openedon14April2009underthestewardshipoftheHonGalmoWilliamsas

thePremier,heexpressedhimselfunreadytoconsidertheestablishmentandcomposition

fortheSessionofanyoftheStandingCommittees.Afurthermonthpassedbefore,on15th

May2009,heannouncedintheHouseofAssemblythattheyhadthenbeenestablished.

2.58 The Public Accounts Committee ‐ This Committee’s statutory role is to examine

accountsshowingtheappropriationofthesumsgrantedbytheLegislaturetomeetpublic

expenditureandsuchotheraccountslaidbeforetheLegislatureastheCommitteemaythink

fit.131ItmustconsistoftheLeaderoftheOppositionasChairmanandfiveothermembersof

theLegislatureandbeestablishedatthecommencementofeachparliamentarysession.For

anumberofyearstheHonFloydSeymour,asleaderofthePDM,hasbeentheChairman.Its

rolewastwo‐fold.First,itwastoexaminethefinancialperformanceoftheGovernment,in

themainbyexaminationofitsannualfinancialstatementslaidbeforetheLegislatureandby

questioning those responsible for them. Secondly, it was to report on its work to the

Legislature,makingrecommendationswherenecessaryforimprovement. Itthusformeda

vital part of the financial accountabilitymechanismof theGovernment, as Cynthia Travis,

whenChiefAuditor,observedinherannualAuditReportstotheLegislaturefor2004‐2006.

Yet, as she reported in the second of those Reports, submitted to the Legislature in

November 2007, therewas a huge back‐log, going back to 2003‐2004, of annual financial

statements and audit reports that the Committee had not examined, and it had not

submittedanyreportstothelegislatureforanumberofyears.

2.59TheCommitteeappearstohavemettwiceinDecember2007.Perhapsstungbythe

ChiefAuditor’scriticisms,oneofthemeetingswastoconsidertheGovernment’sFinancial

131StandingOrder4

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Statementsfor2005‐2006.132 However, itdidnotproduceareporttotheHouseonthose

accounts‐thistimeseeminglyforwantofaChiefAuditorinpostwithwhomitcouldconfer,

and ithasnotdoneso since. Secondly, itmet todiscuss theTouristBoard’saccounts for

2005‐2006, amatter that Imentiononlybywayof examplebecause theCommissionhas

seen a transcript of the proceedings, chaired by the Hon Floyd Seymour. The transcript

indicatesanappropriatelyvigorousandthoroughexaminationoftheDirectoroftheTourist

Board, Mr Lindsey Musgrove and its accountant, Mrs Pauline Saunders, revealing a very

unsatisfactory picture of the Board’s system, or lack of it, of financial management and

control.YettheCommitteedoesnotappeartohavereportedtotheHouseonthematter;

nor, from theCommission’s examinationof theHonWayneGarland, theChairmanof the

Board,MrMusgroveandMrRalphHiggs,DirectorofTourism(Marketing),133doestheBoard

appeartohavetakenanyconcertedstepstoputmattersright.AswillappearinChapter4

inrelationtotheHonMichaelMisick’sdealingswiththeTouristBoard,whichwaswithinhis

portfolioofministerial responsibilities,whathadpassed for theBoard’smanagement and

controlofitsfinancialaffairshasdeterioratedfrombadtochaotic.

2.60In2008thePublicAccountsCommitteeappearstohavemetonlytwice,onceinlate

June and once in mid July 2008, but at neither did they consider the Government’s

Accounts,134whetherthosefortheyears2004–2006,orfor2007(which,seemingly,have

yet to be completed and presented to the House). The last scheduled meeting of the

Committee,whichwasfortheendofJuly2008,likeothersearlierintheyear,wascancelled.

2.61 The Expenditure Committee ‐ This Committee’s statutory function is to examine

expenditureofsumsgrantedbytheLegislatureorotherwiseallocatedtoMinistriestomeet

public expenditure. It consists of six Members of the Legislature, all appointed at the

commencement of each Parliamentary Session, and its Chairman is elected by the

Committee.135 It is requiredbyStandingOrders tomeetat leastoncepermonth inevery

Session.TheroleoftheCommitteewasdescribedbyitsChairman,theHonWendalSwann,

in the course of a meeting on 13th November 2007, as being to review the accounts of

Ministries,includingtheMinistryofFinance.Headdedthatitsmandatewastoinvestigate

132Seepara1.38above133Transcripts,Day1913426thJune2008:CARIFTAGamesandFire&RescueServices;17thJuly2008:DisasterManagement135StandingOrder57.1

75

and report to the House of Assembly areas for improvement of the management of

governmentexpenditurewithaviewtosecuringvalueformoney.136Itdoesnotappearto

havemetveryoftenoverthelastfiveyears.NotwithstandingrequestsbytheCommission

toMrsRuthBlackman,theClerktotheHouseofAssemblyandtoMrDudleyBeen,nowthe

ActingClerk,forinformationontheroleandactivitiesoftheCommittee,andforsightofany

ofitsreportstotheHouseofAssembly,verylittlehasbeenproduced‐onlytheminutesof

sixmeetingsoverathreeyearperiod,threein2004,twoin2006andonein2007.137There

is, therefore, no information before the Commission that the Committee has turned its

attention,forexample,totheescalatingcostofthetwonewhospitalsunderconstructionby

JohnstonInternational,ortothedisastrouslyexpensivecontractenteredintowithSouthern

HealthNetwork(SHN)forreferralofTCIslanderstooverseashealthcareatfavourablerates.

2.62TheAdministrationCommittee‐ThisCommittee’sstatutoryfunctionistomonitorthe

conduct of the business of the Government and to report on the implementation,

administrationanddevelopmentofpoliciesoftheGovernmentineveryMinistry,exceptfor

mattersreferredtotheExpenditureCommittee.138 It isappointed inthesamewayasthe

otherCommitteesatthestartofeachparliamentarysession,andconsistsofeightMembers

of the Legislature, with a Chairman who must be the Leader of the Opposition or his

nominee.TheHonFloydSeymourwasalsotheChairmanofthisCommittee.Inthecourseof

ameetingoftheCommitteeon27thMarch2008,hedescribedtheCommittee’smandateas

to investigate andmonitor the conduct of theGovernment’s business, to review areas of

concernandtoreportonbothtotheHouseofAssembly.TheresponseofMrDudleyBeen,

torequestsfromtheCommissionabouttheroleandworkofthisCommitteewassimplyto

producefourmeetingagendasandonesetofminutes.Threeoftheagendaswerefor2005,

andonewasfor2006;thesinglesetofminuteswasforameetinginMarch2008.Nothing

wasproducedtotheCommissiontoshowanyothermeetingoractivityofthisCommittee,in

particularpresentationofreportstotheHouseofAssembly.

2.63Thus,suchprotectionastheStandingCommitteesweredesignedbytheConstitution

togivetheTCIslandershasnotbeenprovidedformanyyears.Itisanadditionalaffrontthat

136Minutesofmeetingon13thNovember2007137MrBeenisnewtohispostandisnottobeblamedforwhathasgonebefore,138StandingOrder57.2

76

such records as there are, are unavailablewhen a public body appointed in their interest

comesknockingonthedooraskingtoseethem.

2.64InconclusiononthisandtheotherissuesconsideredinthisChapter,theinformation

beforemeindicatesthatthosewhohadresponsibilityandwerebestplacedtoestablishand

maintainsystemstosecuregoodandhonestgovernancefortheTCIIslanders,theleadersof

theGovernmentandtheirfellowMembersoftheLegislature,havefallenfarshortoftheir

responsibility. Theywerealsobestplacedtosetanexampleandtopreventorreducethe

scopeforcorruptioninpubliclife,simplyby:1)followingbasictenetsofhonesty;2)avoiding

conflicts of interest; 3) observing the law as to declarations of financial interests, and 4)

effectively using the constitutional tools provided to secure good governance. The clear

signsarethattheychosenottodoso.

__________________

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3‐CONTEXTFORPOSSIBLECORRUPTION

Abuseofofficeandpoliticalandelectoralprocess

3.1 Elections in theTCI are governedby theElectionsOrdinance1998, a revision largely

reproducing earlier legislation. As emphasised by a number of legal representatives for

Ministers at the Commission’s oral proceedings, it does not deal with election campaign

financing.Thatistosay,itdoesnotlimitorcontrolthesourcesoffundingfororamountof

lawful expenseson elections,which it defines in predictable forms,139 as long as they are

incurredingoodfaithatorconcerninganelection.140Itdoes,however,insections68and69

oftheOrdinance,makeitanoffencetobribeortreatvoters.Section68(1),initsdefinitions

ofvariousformsofelectionbribery,couldnotbeinbroaderterms.Bywayofexample,Iset

outthefirstandmostgeneralofthesevenformsspecified:

(a)everypersonwho,directlyorindirectlybyhimselforbyanyotherpersononhis behalf, gives, lends, or agrees to give or lend, or offers, promises, orpromises to procure, or to endeavour to procure any money or valuableconsiderationtoorforanyvoter,ortoorforanypersononbehalfofanyvoter,ortoorforanyotherpersoninordertoinduceanyvotertovoteorrefrainfromvoting,orcorruptlydoesanysuchact...onaccountofanyvoterhavingvotedorrefrainedfromvotingatanyelection;

Treatingisequallybroadlydefinedinsection69:

Thefollowingpersonsshallbedeemedguiltyoftreating...–

(a) every personwho corruptly, by himself or by any other person, either before,duringorafteranelection,directlyorindirectly,givesorprovidesorpays,whollyorin part, the expenses of giving or providing any food, drink, entertainment, orprovisiontoorforanypersonforthepurposeofcorruptlyinfluencingthatpersonoranyotherperson,tovoteortorefrainfromvotingatsuchelection,oronaccountofsuch person or any other person having voted or refrained from voting at suchelection;

(b)everyvoterwhocorruptlyacceptsortakesanysuchfood,drink,entertainmentorprovision.

3.2 Thetrouble is that thereappears tohavebeena long‐standingtraditionofwideand

opendisregardofthoseprovisions,mostblatantlyintheFebruary2007electionwhenvast

139s68(1)140s68(2)

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amountsofmoneywerespentbyoronbehalfofPNPcandidates, incash,procurementof

ghostjobsontheGovernmentpayrollandentertainment.Thereappeartohavebeenlittle

or no official system or resources to monitor or police corrupt conduct on such a scale.

Even if there had been, and it had led to prosecution, themaximumpenaltywould have

beenmodestinfinancialorcustodialterms,$5,000oroneyear’simprisonmentorboth.

3.3 IhavealreadyreferredtoevidencebeforetheCommission, includingthatoftheHon

MichaelMisick,theHonFloydHallandtheHonMcAllisterHanchell141–alsotothefirst‐hand

evidenceoftheHonMichaelMisick’swife,MsMcCoy‐Misick.142Shesaidthatshehadbeen

onthecampaigntrailwithhimjustbeforetheelectionandthathehadbeenverygenerous

onthecampaign. Shespokeofhimgivingahundreddollarbillhereandtherewhenthey

werecampaigninginhishomeisland,NorthCaicos.Shealsospokeoforganisingacarnival

for children over Christmas just before the announcement of the election, for which the

Government paid, but thatwhen she sought to repeat it the followingChristmas, he said

thathehadonlydoneitbeforebecauseoftheelection,andwouldnotdoitagain.143

3.4EarlierinthisReport,IhavealsotouchedontherelativesmallnessoftheTCIelectorate

and of individual electoral constituencies, ranging from 190 to 882.144 There is a single

nationalelectoralregisterdividedinto15partscorrespondingwiththe15electoraldistricts.

Aperson is entitled tobe registeredand to voteonly in thedistrict inwhichhenormally

resides,145 a test frequently the subject of uncertainty and dispute in the TCI with many

instancesofpeoplelivingonmorethanoneisland,andconstantmovementbetweenislands

for temporary employment purposes or otherwise. In addition to the widespread

allegations of election abuse in the form of largesse to electors, there are also strong

indications of rigging of individual electoral district rolls, not just in the February 2007

elections,butalsomoregenerally.

3.5AllofthesemattershavebeenrecentlyauthoritativelyandcarefullyconsideredbyaUK

organisation, Electoral Reform International Service (ERIS) in a Report commissioned by

Governor Tauwhare, entitled Turks & Caicos General Elections 9 February 2007 Election

141Seepara2.40above142Seepara2.41above143Transcript,Day14,pp106‐110144GeneralElectionReturns,February2007–190MiddleCaicos,882BlueHills145ElectionsOrdinance,s11.2

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ObservationReport(theERISReport).TheauthorsoftheReport,were,asitstitleindicatesa

team of persons who observed the election. Their assessment and recommendations,

including early review of the Elections Ordinance, are of a piece with many submissions

madetotheCommission.AnExecutiveSummaryoftheReportbeginsasfollows:

... the elections were technically sound, and run in accordance with theapplicable lawofthe islands. However,anumberofsignificantshortcomingwerefoundintheelectoralprocessandinitslegalframework,whereitdidnotmeetinternationalstandards,someofwhichwereexacerbatedbytheactualElectionLawandthenewconstitution.

3.6AmongtheshortcomingsidentifiedbyERISwere:

1)suffragelimitedtolessthanhalfoftheadultpopulationoftheTCIandthe

needtoconsideranenlargementorpossiblereplacementofBelongershipwith

a more inclusive form of citizenship as the basis for entitlement to vote, a

suggestionalreadymadebyanotherreviewbodyin2004.146

2)animbalanceinthenumberofregisteredvotersbetweendifferentelectoral

districtsthatmayaffectthequalityofthevotescast;147

3)potentialforriggingofelectoralconstituencyrolls,orasERISput it,[v]oter

registrationproceduresthatunderminethecredibility,finalityandaccuracyof

voter registers,148 including: i) the short deadlines providedby theOrdinance

forthepreparationofelectors’listsandproceduresforclaimsandobjectionto

andpublicationoftheRegisterofElectors;149andii)uncertaintyastotheexact

criteria for residency in an electoral district qualifying for inclusion on the

districtvoterregisterandastoprovisionofavoter’squalifyingaddress;150

4) theneed toprohibitpoliticalparties fromplacing tents at theentrance to

pollingstationsfortheissuetosupportersofrefreshment(presentlylefttoan

instructionbytheGovernor);

1462004ImmigrationReview,Seebelowparas3.70–3.75147ExecutiveSummary,pi148ibid,pi,providedforins49(1)oftheElectionsOrdinance149ibid,piii150ibid,piii

80

5) the need to dispense with [s]erially numbered ballots rendering them

potentiallytraceable,compromisingsecrecyandconfidenceofthevote;and

6) [t]he legal exclusion of domestic and international observers from polling

stations.151

3.7 ThemainconcernofERISwas lackof legislativeprovisionforcampaignfinancingand

thepotentialforbriberyandotherelectoralmalpracticesinthepresentsystem.

The biggest concern during the process of campaigning was the insufficientlegislationdealingwithcampaignfinancing.Currentlythereisnorequirementtopublishcampaignaccounts,noristhereanylimitonspendingimposed.Thiscanbeconsideredaseriousbreachofgoodpractice,andisnotinlinewithUKor internationalstandards,whichimposestrictrulingsoncampaignfinancetoguard against bribery and corruption. Furthermore, no safe‐guards exist toprevent use ofGovernment resources as part of an election campaign,whichgivestheincumbentpartyanunfairadvantageoverOppositionparties.

Whilst it is accepted that political parties and candidates cannot conductcampaignswithoutfunds,anditisinternationallyacceptedthatdonationsarealegitimatesourceofcampaignfunding,thereisariskthatsuchfinancemaycomewithstringsattachedtothecandidateorthedonor.Inordertopreventlegitimate campaign funding transgressing the line and becoming a non‐legitimatemethodof influence, legalsafeguardsmustexist. AlthoughtheTCIElections Ordinance has specific rulings and definitions on what constitutescorruptionandbribery,thereseemstobenowaytoenforceorauditcampaignexpenditure,specificallytoprotectagainstbriberyortreating.Thehighlevelsofcampaign spending, and the advantage that a more wealthy party has overtheir opposition are apparent and of concern. It is questionable whether thecurrent legislation in the TCI meets the requirements as set out in the UNHumanRightsConvention,generalcommentnumber25whichstates:

‘Reasonablelimitationsofcampaignexpendituremaybejustifiedwhenthisisnecessarytoensurefreechoiceofvotersisnotunderminedorthedemocraticprocess distorted by the disproportionate expenditure on behalf of anycandidateorparty.’152

3.8ERISaccordinglyrecommendedlegislationtoregulatepartycampaignfinance,eitherby

prohibitingtheuseofpublicfundsandresourcesforelectioncampaigningortomakethem

equallyavailabletoallcandidates.153Theyalsorecommendedlegislationtorequirepolitical

151ibid,pi;providedforins49(1)oftheElectionsOrdinance152ibid,pp10‐11153ibid,pv

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partiestopublishtheir incomeandexpenditureonelectioncampaigns.154 Itseemstome,

particularlyinthelightofallthatIheardaboutPNPfundingduringtheoralproceedings,155

as to its substantial amounts, its diverse and secret sources, and how it was spent, that

reformofthelawisnownecessary.AsERISreported:156

There is great scope for change in the Ordinance governing elections. Both toreducetheunnecessaryamountofadministrationandbureaucracy,andalsotointroducedemocraticsafeguards,includingpersonalandfinancialaccountability,which will bring the election legislation in line with UK and internationalstandards.

Thisis,asinotherareasofTCIpubliclife,notthefirsttimethatsuchrecommendationshave

beenmade.On7thAugust2003,ateamofUKElectionObserverswereinvitedtoassessthat

year’s two by‐elections. Their report, submitted in October 2003, contained 26

recommendations for electoral law reform, only two of which were acted upon. In this

instance,Iunderstandthatthedelaywasattributabletoashortageofdraftsmen.However,

bythetimeoftheERISreport,thedraftingwasreportedtobecomplete.SofarasIknow,

the changes first recommended in 2003, and re‐affirmed in 2007 by ERIS, still await

implementation.

CrownLand

3.9ToanewcomertolandtenureintheTCI,itisstartlingtolearnthat,whileCrownLandis

themostvaluableresourceofitspeople,thereisnoconstitutionalor,sofarasisrelevantto

issuesthrownupbythisInquiry,otherstatutoryprovisiondefiningtheincidentsofitsstatus

or providing any requirements or safeguards as to itsmanagement or disposal. The only

constitutionalprovision is in section94of the2006Constitution,which states thatCrown

Landmay be disposed of by the Governoror any person authorisedby him inwriting.157

Thatprovisionhasproved tobe readily susceptible toministerial abuse, andhas failed to

provideaneffectivemeansofensuringeffectivestewardshipoftheTerritory’smostvaluable

resource.CrownLand,asIanFuller,theTCIChiefAuditorandauthorofaSpecialReportfor

154ibid,pv155Seepara2.37above156ibid,p17157See,intermsofsimilargenerality,clauses16to19oftheBillpresentlyindraftfortheproposedCrownLandsOrdinance,discussedinparas3.51‐3.52below.

82

theTCIGovernment,entitledTheAdministrationofCrownLand,in2004(theFullerReport),

putit,is:158

... an extremely valuablebut finitepublic asset. It is also, a crown resource, aresourcethatproperlybelongstothepublic,andoverwhichgovernmentshouldbe exercising a stewardship role. Stewardship implies an appropriate level oftransparencyofactionandaccountabilitytothepublic....

3.10SuchprovisionasthereisfordisposalofCrownLandistobefoundintheCrownLand

Policy.ThisPolicywasoriginallydevisedinthe1980swiththeaimofempoweringBelongers

to play an active role in the economic and social development of the Islands. More

particularly,itsaimwastoensurethatallBelongerswouldhaveaffordableaccesstoCrown

Land for their needs, by permitting them topurchase it at a substantial discount from its

marketvaluation. Thereappear tohavebeenanumberofchanges in thePolicyover the

years,somewritten,somenot,somepublishedsomenot.159Ithasneverhadanystatutory

basis,anditslegalstatusisnotclear.

3.11 Disposals of Crown Land for residential use were initially in the grant only of the

ExecutiveCouncilbymeansofaconditionalpurchase leaseforthreeyears. Thecondition

requiredcompletionoftheproposedhomewithinthatperiodor,ifextendedbytheCouncil,

afurthertwoyears,whentheleasecouldbeconvertedintoafreehold.Theinitialrentwas

tobe10%ofthediscountedfreeholdpurchaseprice,andthefreeholdpurchasepricewas

setatonly25%ofthemarketvaluationatthetimeofsigningofthelease–thus,anover‐all

discountofpotentiallywellover75%.However,afurtherconditionoftheleasewasthatthe

Belongercouldnotdisposeofthelandtoanon‐Belongerwithin10yearswithoutrepayment

totheGovernmentofthediscountedsum.

3.12 Following thePNP’selectionvictory in2003, thenewAdministration,with theHon

MichaelMisick,asChiefMinister,andtheHonMcAllisterHanchell,asMinister forNatural

Resources, reaffirmed the Policy. But, as to allocation of Crown Land for residential use,

theymade changes to givemorepower to individualMinisters in theprocess.Allocations

and extensions of conditional purchase leases henceforth required approval only by an

individual Minister, not the Executive Council, or the Cabinet as it was to become. The

158Fuller,Ian(2004),TCICrownLand–ReviewofAdministration–InterimReport,ExecutiveSummary,p1159Foradiscussionofthepoliciesandtheirvariousmanifestations,Seeibid,pp11–16.

83

enormousscopeforcorruptionentailedintheassumptionbyMinistersofsuchpowerwas

immediatelyrecognisedandrobustlyaddressedintheFullerReport.160

3.13AstodisposalofCrownLandforcommercialuse,thePolicyhadbeenlessconsistent,

savethatittoohadbeenintendedtoempowerBelongerswhomightotherwisebedeterred

or disabled by the costs of development. The Policy took different and sometimes

overlapping forms according to whether the land for disposal was small or large‐scale

commercialdevelopment.ThenewPNPAdministrationintroducedchangestothePolicyin

March2004, shortlyafterassumingpower. In future:1)grantswere tobe subject to the

approval of the Executive Council; 2) no grant could be made unless a Belonger had a

minimumof51%inthegranteeentity;and3)aBelongerwastopaynomorethan50%of

theopenmarketvalueofthelandinProvidencialesandnomorethan25%ofthevaluein

theotherIslands.Conditions2)and3)weretogiverisetoanewspeciesofempowerment

of,orofthepossibilityofabuseby,Belongersintheformofsubstantialunearnedrewards

fromflippingand/orfrontingandotherwisebyvirtueonlyoftheirstatus.

3.14 ThePolicydidnot limitthenumberof leaseholdgrantsofCrownLandper individual

Belonger, whether for residential or commercial use. Nor did it identify any social or

economic criteria for the grant, for example, equality of opportunity, or any over‐all

objectivesas towhatproportionof thepopulationshouldbeaffordedsuchopportunities.

Whatevertheoriginalwell‐intendedpurposesofthePolicy,ithadnotby2004,andmaynot

yethave–asagenerality‐resultedingrantsoflandtoTCIBelongerfamiliestomeettheir

ownneeds. On the contrary, asFullernoted,161 thePolicymadeno specific provision for

equitabledistributionofCrownLand.ManyBelongersacquiredseveralplots,someofwhich

they quickly disposed of for profit to others, including foreign developers. And, as he

added,162 whatever the wording of and intentions for the Policy, it was, in any event,

overreachedbyleavingtoasingleMinistertheallocationofresidentialplotsforthegrantof

conditionalpurchaseleasesandtotheExecutiveCounciltheallocationofcommercialleases.

3.15TheevidencebeforetheCommissionindicatesthatsuchoverreachingofthePolicyhas

continueduptoandsinceitsappointment.Thereismuchanecdotalinformationaboutitin

160ibid,pp17‐20161ibid,p4162ibid

84

the written submissions I have received of personal interference by the Hon McAllister

Hanchell, theMinisterofNaturalResourcesandotherMinisters intheallocationofCrown

Landandastorelatedmatters,includingvaluationandplanningpermission.Itwasalsoput

beyonddoubtbyrecordsproducedbythePermanentSecretaryof theMinistryofNatural

Resources in response to awritten enquiry from the Commission following oral evidence

fromtheMinister.Inhisevidence,163hegaveanaccountofthesystem,which,accordingto

him, was operated by his Department for allocation. He said that there was a review

process, operated by a group of staff workers, who considered on a daily basis

representations of applicants for the grant of Crown Land. He said that that the group

consisted of the Permanent Secretary, the Commissioner of Lands, the Deputy

CommissionerofLands,theAssistantCommissionerofLandsand,sometimes,alsohimself.

He emphasised that normally he only came into the process very late in the day when

decisions as to allocation had been made and letters to successful applicants had been

preparedforhimtosign.Hesignedthem,hesaid,mechanically.Hisevidencewasthatno

minutes weremade of suchmeetings and that the only record of them consisted of the

actualrecommendations.

3.16TheCommission’swrittenenquirytothePermanentSecretaryaboutmembershipof

thereviewgroupanditsmeetingsasdescribedbytheMinisterelicitedthefollowingwritten

replyfromheron31stJanuary2009,makingplainthattherewasnosuchreviewgroupand

nosuchprocess,andattachingdocumentaryexamples fromtheMinistry’s recordsofhow

allocationswereinfactmade:

... In regard toSirRobin’s inquiry re the ‘reviewgroup’,no sucharrangementexistsintheMinistryofNaturalResources.

Since 2006, once Cabinet approves a subdivision, the procedure forallocatinglandhasbeenhandledinoneofthreeways:

i. On instructions from theMinister of Natural Resources, HonMcAllisterHanchell, primarily to me, but also to the Commissioner and DeputyCommissionerofLands,[t]hiswouldeitherbeverballyorintheformofane‐mail–...

ii. Instructions and requests from other Ministers of Government andElectedmembers.Thiswouldbeeitherverballyorinwriting.Thisexercise


85

is more prevalent when a subdivision is created in their respectiveconstituencies‐...

iii. Finally, the LandCommissionersor Iwould compilenamesofpersonswho have continuously called and lodged applications with theMinistry.ThesenameswouldbegiventotheMinisterforhisapproval...

Pursuanttoeitheroneoftheabovemethods,LandCommissionerswoulddraftaprovisional letter of offer of a Conditional Purchase Lease for the Minister’ssignature. It isat this stage that thepersonpreparing the letterwouldensurethat the applicant is in compliance with the Crown Land Policy or a ‘reviewprocess’occurs(i.e.age,Belongership,numberofparcelscurrentlyinpossession).This letterprimarily commitsaparticular survey lot to theapplicant, butomitsspecificdetailsoftheparcel.

Followingthesurvey,registrationandvaluationofthesubdivision,afinal letterofoffer...isissuedtotherecipient.

Regrettablymuch of the instructions are informal and not systematically filed.Therefore[sic], requirestimetosearchemailsandforstaff tosearchtheir files.In this regard, theattached instructionsbynomeans representall subdivisionsover the past two years. However, I believe it demonstrates the methodsoutlinedabove.

...

3.17AttachedtothePermanentSecretary’sletterwere,first,severale‐mailsfromtheHon

McAllisterHanchell, inhis capacityasMinister forNaturalResources, including,bywayof

example:1)instructionstohertoallocatealargenumberoflotsinWestCaicos,ineachcase

identifying the lot number and the person towhom itwas to be allotted, including, as it

happens,abrotheroftheHonMichaelMisick,MarvinMisick;2)advicetoherofthegrant

by Cabinet of 16 lots in another part ofWest Caicos in an effort early revenue (sic), and

askingforthelettersforhissignaturetobereadythefollowingmorning.Thelistincluded

Chal Misick, another brother of the Hon Michael Misick, and Olincia Missick, the Hon

MichaelMisick’spersonalassistant.

3.18AlsoattachedtothePermanentSecretary’sletterwere:1)ane‐mailin2007fromthe

Hon Floyd Hall, instructing her to issue 22 plots of land on West Caicos to five named

companies and one individual. The instruction readsBelow is the list of Companieswith

attachedshareholdersthatIwouldliketohavethefollowingparcelsonWestCaicosissued

to; 2) letters in late 2007 and early 2008 from the Hon Lillian Boyce putting forward a

numberofnamesofpersons forgrantof land inFiveCays;3) letters fromtheHonLillian

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Boyce listing persons who need relocation from the low land in Five Cays, including her

brother, Earlson Robinson; and 4) an e‐mail from the Hon Royal Robinson, Member for

NorthCaicosWestandnowDeputyPremier,listinganumberofpeoplewhoshouldbenefit

from...12threeacrecommerciallotsinKew,NorthCaicos.

3.19 The final attachment to the Permanent Secretary’s letter contained, by way of

example,alonglistofnamessubmittedbyhertotheHonMcAllisterHanchellofpeoplewho

hadcontinuallycalledand lodgedapplications,accompaniedbye‐mails fromhimselecting

thosetowhomlandshouldbegranted.

3.20 In short, the information provided by the Hon McAllister Hanchell’s Department

showednosignof thedepartmental reviewprocess followedbyhismechanisticsigningof

lettersthathehaddescribedinhisevidencetotheCommission.

3.21 Hands‐on ministerial involvement with Crown Land extended to its valuation for

disposal,ofwhichthereareexamples inChapter4ofthisReport. Thesameistrue inthe

contextofplanningpermission,examplesofwhicharealsotobefoundinChapter4.

3.22Perhapsthenatureanddangersofministerialinvolvement,asithasbeenpractisedin

theTCIforthelastfewyears, isbestsummedupinthefollowingthoughtfulandobjective

observationsofMrArielMisickQCinhisclosingsubmissionsonbehalfoftheHonMcAllister

Hanchell:164

...theallocationofCrownland.ThisofcourseisanareainwhichMrHanchellhas to accept responsibility becausehewas theminister of land. Muchof themovement inCrown landtookplaceunderhiswatch. I thinkhe ...doesacceptthat ... thewholesystemforCrownlandallocationanddisposition is inneedofreform. He has also conceded that himself and otherministers have played adirectroleintheprocessofdistribution.Itisclearlynotappropriateforministerstobeinvolvedatthatlevelandtheyreallyoughttoconfinethemselvestomakingpolicy. ... The lastwordsaremysubmission,but certainlyhis stance is thatheaccepts that the ... system is inneedof reformandheaccepts that inan idealworld,ministersoughtnottobeinvolvedintheallocationanddistribution.

...

Heseekstoexplainitbythefactthatthereisatremendousdemandonhimself,hisCabinetcolleaguesandotherelectedmemberstogetinvolvedintheprocessinthatMembersareeffectivelyusedasmessengersbetweenapplicantsandthe


87

PermanentSecretaryandotherswhoareinvolvedintheadministrationofCrownland....[Hesays]...thathehasneverreceivedoraskedforanykindoffinancialrewardforhisinvolvementinthisprocess,andhisinvolvementhasnotbeenoutof anydesire tobe corrupt or dishonest. ... he ... said ... that the systemas itoperatesleadsormayleadtofavouritism..intheallocation.

3.23Thus,therewereandarestillanumberofwell‐evidencedandacknowledgedflawsin

thisill‐definedPolicyanditsapplication.Alsoforconsiderationarethecomplexitygivento

theprocessbytheinvolvementofamultiplicityofGovernmentdepartments,andthescope

forabuseandprofiteeringat theexpenseof thepublic indissipationof itsmostpriceless

assetforinadequatereturn.Therewasandstillislittleeffectiveco‐ordinationbetweenthe

variousdepartmentsresponsibleforadministrationofthesystemandensuringcompliance

withthetermsof individualgrantsofCrownLand. This includes, inparticular,compliance

witheligibilitycriteria,withconditionsofdevelopmentandofrepaymenttoGovernmentof

undeserveddiscountswherelandwasnotretainedand/ornotdevelopedbytheBelonger.

3.24 It was plain by the time of the Fuller Report in 2004, if not well before, that the

administrationandallocationofCrownLandshouldbegovernedbystatute,notpolicy,and

that it shouldbe administeredby an independentCrown LandCommission, notMinisters

inside or outside of Cabinet.165 Mr Fuller, in his Report, made many and detailed

recommendations to that end, including the removal of Ministers from the process of

granting of land for residential use and marginalising their role in the case of grants for

commercialpurposes.Hisconcernaboutpossibleministerialcorruption,bothinrelationto

pastpossibleabusesbyMinistersintheTaylorAdministration166andthefuturepotentialfor

it,wasexplicit.Amonghismanyrecommendationswerethefollowing:167

3.2Crownlandisanimmenselyvaluablepublicasset;itsstrategicimportancetotheeconomyandstabilityofthecountry,andtheopportunitiesforimproperadvancement that poor or corrupt management offer, mean that itsmanagementshouldbegovernedbyspecificlegislation(andnotofteninformalpolicyandregulatorystatements).

...

3.12 ... *Specific legislation (as opposed to various statements of uncertainlegal standing) is needed concerning land allocation and usage; *Specificregulationsshouldbeinplacetopreventthosewithdecision‐makingauthority

165Forapowerfulcritiqueofthesystem,Seeopcit158,ExecutiveSummary,pp1‐10166ibid,Seepp9,17and18167ibid,pp17‐19

88

beingabletobenefitdirectlyfromtheirdecisions; ....*Clearaccountability isneeded through the publication of details of all beneficiaries, and moreimportantly,ofalldiscountsgiven,tothoseallocatedsuchland;*Detailsmustbe made available of all transactions involvingMinisters, or companies withwhich Ministers have an involvement, in a publicly available document, andreviewofsuchtransactionsshouldbeundertakenbyanindependentbodysuchasasub‐committeeoftheLegislativeCouncil;...

3.25Unfortunately,theFullerReportgaverisetolittleofpracticalbenefittothepeopleof

the TCI over the next four years. I say that, in the main, because of the continuing

vulnerabilityofthesystemtoMinisterialcorruptionandotherabuses.Hisrecommendation

fora formal inquiry into transactionsofCrownLand involvingMinistersand/or their close

family members was ignored by the Hon Michael Misick, then Chief Minister, and his

Ministerial colleagues. Indeed, a letter emanating from his Office expressed strong

disagreementwithmanyof theChiefAuditor’s recommendations, themainburdenofhis

argumentbeingthatmattersofpolicyanddecision‐makingshouldremainwiththeelected

Governmentratherthanbedevolvedtoindependentbodies.

3.26TherewerealsobroadconcernsexpressedintheFullerReportaboutthefailureofthe

Crown Land Policy to enable, as originally intended,all Belongers to advance themselves,

and of the Government to introduce a properly conceived land use and planning policy,

manyofwhichgaverisetosimilargovernmentalresponse.

3.27 However,theFullerReportwasfollowedbyanumberofotherauthoritativeStudies

andReports,allinmuchthesameconcernedandcriticalvein,andallmeetingwithasimilar

lack of response or disregard from the Misick Administration. The first was an interim

comprehensivestudyonCrownLandManagementbyKevinBarthelinassociationwithTerra

InstituteLtd,astudysponsoredbytheTCIGovernmentin2004‐2005,andfundedbytheUK

Department for International Development (DFID). This led in the first instance to an

Interim Report published in May 2005 (the 2005 Barthel Report), making a number of

recommendations,manyofapiecewiththosecontainedintheFullerReport.168

3.28ThefirstandprincipalrecommendationoftheBarthelReportwasforthepreparation

of a new and modernised Crown Land Policy. Other recommendations of particular

relevance to the Commission’s Report were for: preventing Belongers illicitly transferring

168TerraInstitute(2005),CrownLandPolicyandManagementfortheTurks&CaicosIslands,pp6–15,parasA1.7–1.32

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their conditional purchase lease discounts to non‐Belongers;169 limiting empowerment of

BelongersbytheacquisitionofCrownLandtoonetransactiononly;170requiringpublication

of information on Crown Land allocations to make the Policy and process open and

accountable;171replacingthesystemofregulationbynon‐statutorypolicybyenactingCrown

LandLegislationandRegulations;172preparationofaCrownLandApplication,Allocationand

Management ProceduresManual;173 establishment of an effective and responsible Crown

Land Department as a statutory body for land administration;174 rationalisation of Crown

LandLeaseapplicationandapprovalprocesses;175establishmentofaCrownLandAdvisory

PaneltoreviewandadviseonallocationapprovalsandaCrownLandsAppealsTribunal;176

and creation of readily accessible land information systems.177 The first of those

recommendations,preventionofillicittransferofdiscountstonon‐Belongers,isparticularly

relevant to the Commission’s work. It lies at the heart of most of the possibly corrupt

transactionsmentionedinChapter4ofthisReport.Barthelstated:

1.11 ... One of the major concerns of the current Crown Land policy is thatdiscounts given to Belongers on Conditional Purchase Leases for large‐scalecommercialdevelopmentareeventuallytransferredtoNon‐Belongers.Itisclearthatunderthecurrentpolicy,nodiscountsshouldbegiventoforeignersasthey... are not eligible to receiveCrown Land. The issue is thepassingonof thesediscounts to foreignowners,apracticewhich is simplyprohibited in the formerCrownLandPolicyandnowrequires that theBelongerpay thediscountback iftransfer is made to a non‐Belonger. This process can only be prevented withspecificlegislation,enforcementofthelegislationandestablishmentofasystemtomonitorthecompliancewiththelegislation.

1.12CrownLandpolicyshouldberevisedsothatnodiscountsaregivenforlargescale development on commercial land. All allocations for large‐scalecommercial development on Crown Land should be done through long‐termleases. Previousallocations ...anddiscountsgiven ... shouldbemonitoredandauditedovertheyearsbytheCrownLandUnitsoastoavoidthetransferofthediscounttonon‐Belongers(“fronting”)...

3.29Inpartasaresultofthe2005BarthelReport’srecommendations,andpossiblyalsothe

earlierFullerReport,theTCIGovernment,on2ndNovember2005, approvedanewCrown

169ibid,pp7–8,paraA1.11170ibid,p8,paraA1.13171ibid,p9,paraA1.16172ibid,p10,paras1.21–1.22173ibid,p11.para1.23174ibid,p11,paras1.24and1.25175ibid,p13,para1.28–1.29176ibid,pp12–13,paras1.26–1.27177ibid,pp14–15,para1.32

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Land Policy, setting out 21 key principles and proposals.178 The avowed purpose of the

Policyinthefirstofthosestatementswasthat:

TCIGwillnotactivelyseektosellofflargeareasofCrownLand,butitreservestherighttodoso,ifdeemednecessary.TheproceedsofsuchsaleswillbepaidintotheGovernmentReservesFundoruseddirectlyforamajorspecificdevelopmentproject.

Infact,ashasbeenwelldocumentedandpubliclyacknowledged,theTCIGovernmenthas

sincebecome increasinglydependentontheproceedsof largedisposalsofCrownLandto

fundrecurrentexpenditure, including,mostrecently,tomeet itsmonthlypayrollbillwhen

shortoffunds.

3.30Inthebriefestandsomewhatselectiveoutline,thenewPolicyStatementprovidedfor

transferofCrownLandtoBelongersforresidentialorcommercialpurposesatmarketprice,

subject to non‐transferable discounts. Thiswas to apply, initially, to Conditional Purchase

Leases for specified periods appropriate to the size and nature of each proposed

development.Themaximumdiscountforpurchaseofresidentiallandwastobe50%ofthe

fullopenmarketprice,andavailableonly in respectofonepropertyper islandandnot in

respectofanyotherpropertyonanotherislandatthesametime.Themaximumdiscounton

CrownLandrequiredforcommercialuse,whichwastobelimitedtoafirstpurchaseonlyof

upto10acres,wasagain50%,exceptonProvidencialeswhereitwaslimitedto25%.And,

forlargedevelopments,forexample,amajortourismproject,twoormoreBelongerswere

tobepermitted tocombine their10acreentitlements toenableBelongerparticipation in

theproject. In theeventof the landbeing soldwithin fiveyears, thediscountwouldbe

repayableinfull;asalemorethanfiveyearsafteracquisition,butbeforeten,wouldrequire

repaymentofhalfthediscount.InformationonCrownLandallocationwastobepublished

in theGazette. CrownLand LegislationandRegulationswere tobe introduced. ACrown

LandDepartmentwas tobeestablishedwithin theMinistryofNaturalResources,and the

systemofapplicationforandapprovalofgrantsofCrownLandwastoberationalisedand

basedonuniform,rationalandobjectivecriteria.

3.31 Inmid2007,theTCIGovernmentrequestedTerra Institute,comprisingateamagain

led by Kevin Barthel, to assist the Ministry of Natural Resources to implement the new

178TerraInstitute(2008),FinalReport‐ConsultancyfortheImplementationoftheTurksandCaicosCrownLandPolicy,pp90–98,para1.5

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Policy. The ensuing work involved the establishment of a Crown LandManagement Unit

withintheMinistry,thepreparationofaCrownLandProceduresManualandofmaterialfor

adraftCrownLandOrdinance.TheTCIGovernmentalsoembarkedonworkonthedesign,

development and installation of an integratedmanagement information system, butwith

anotherbody.

3.32ByFebruary2008TerraInstituteLtdproducedaFinalReportinwhichithadfashioned

itsproposalstogiveeffecttotheNovember2005CrownLandPolicy,TheReport,whichwas

describedasthatoftheConsultancyfortheImplementationoftheTurksandCaicosCrown

LandPolicy(the2008TerraInstituteReport),comprised:1)proposalsforestablishmentofa

CrownLandsDepartment;1792)aManualofCrownLandAdministrationandManagement

Procedure;1803) adiscussionof Legal IssuesArising from theCrownLandPolicy;181 and4)

DraftingInstructionsfortheProposedCrownLandOrdinance.182

3.33 The proposedManual andDrafting Instructions for theOrdinance are of particular

importancetotheCommission’sReport.TheManualsetsoutthelaw,policyandprocedures

foradministrationandmanagementofCrownLandintheTCI,and isdesignedtoguide, in

accordancewiththelawandtheNovember2005Policy,theday‐to‐dayworkofthestaffof

theCrownLandsDepartment(alreadyestablishedin2006asaseparatedepartmentofthe

Ministry ofNatural Resources). It should be noted that the proposedOrdinancewas not

intended to replace the Policy, but to give effect to it, proposal 14 providing what the

ConsultancydescribedinitsReportas:183

acentralguidingprinciplefortheproposedlegislation,namely‘[t]oensurethatthe current policy of equitable allocation and sustainable use of Crown Land iseffectiveinthelong‐term,andnoteasilymodifiedbyfutureCabinetdecisionsorfuturepoliticalmandates.

3.34Thatproposal,inmyview,isquestionable,merelyframingtheOrdinance’sprovisions

aroundtheCrownLandPolicyoftheday,ratherthanincorporatingintotheproposednew

Ordinance the essential criteria for administration, management and allocation of Crown

Landfordisposal,variableonlybylegislativeamendment.Anotherproposaldescribedas

179ibid,Cap2180ibid,Cap3181ibid,Cap4182ibid183ibid,Cap5,pp94and206

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key,isfineasfarasitgoes,namelythattheCrownLandDepartment,wouldberesponsible

fortheadministrationandmanagementofCrownLand,inparticularitsallocationforlease

or sale, with the Governor retaining responsibility for legal grant at the request of the

Government. As will appear later in this discussion, it is important that the Bill, in the

drafting,excludesanyMinisterialinterferenceintheworkoftheCrownLandDepartmentin

allocating land to persons for lease or sale. The Bill, as presently drawn does not, inmy

view,dothat.184AfurtherandentirelyproperassumptionwasthatdevelopmentofCrown

Land, like that of any other land, requires development permission from the Physical

PlanningBoardpursuanttothePhysicalPlanningOrdinance,185arequirementthatMinisters

sometimes simply ignore or, on occasion, exert pressure to influence, under the present

statutoryregime.186

3.35 The meat of the proposed Manual concerning prevention of corruption and other

abuse in the allocation of Crown Land is in sections 3 and 4.187 As to disposition and

eligibilityfordisposition,section3.3preservesbroadlytheexistingscheme,restrictinggrants

of Crown Land, whether for residential or commercial purposes, to Belongers, usually by

leases for three years. The lease conditions relate mainly to completion of approved

developmentwithinthatperiod,whichwouldqualifythe lesseetoapplyforfreeholdtitle.

PrioritywouldbegivenonanyoneislandtoBelongerswhoownnolandonthatislandand

havenotpreviouslybenefitedfromanyCrownLanddispositionthere.

3.36 As to allocation, section 4 of the Manual introduces an entirely new and closely

controlledschemetobeoperatedbytheCrownLandsDepartmentandinwhichMinisters

would have no involvement. It provides, in order of preference, for four methods of

allocation, in themain to Belongers only, namely: 1) public invitation for applications for

developedland,withselectiontobemade,wheretherearemoreapplicantsthanavailable

parcelsofland,byballotweightedinfavourofthosewhohaveneverbeforereceivedCrown

Land;2)publicoffer for saleby tender,available forboth residentialandcommercialuse,

principally applicable to large residential or commercial developments; 3) public auction,

thoughnotexpected tobemuchused;and4)private treaty, followingpublicnotification,

184Seeparas3.51–3.52below185Seeparas4.183–45.189below186SeesubmissionsofMrArielMisickQConbehalfoftheHonMcAllisterHanchell,TranscriptDay22.187pp46‐77

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whereCrownLandhasnotbeensoldbyuseofanyoftheotherthreemethods,orinother

exceptionalcases.

3.37 Section5of theproposedManualdealswithdiscountsas setout in theNovember

2005Policy.Itbeginsbyidentifyingtheirpurpose:188

... toassistBelongerstopurchasefreehold land,recognisingthatthe lawofTCIdoes not prevent foreign ownership of landand thatmanynon‐Belongersmayhave an advantage over Belongers with respect to access to capital for landpurchases. In theabsenceof statute, thepolicy levels theplaying field, ... andmakesaccesstolandmorerealisticallyachievableforBelongers.Moreover,thepolicy seeks to empower Belongers through their ownership of land and thecapitalthatisinherentintheownershipofatangibleasset.

Section5alsoclarifieshowthediscountistobecalculatedwherethegranteeisaBelonger‐

owned TCI company, namely it must be 100% owned by Belongers or Belonger‐owned

companiesororganisationsandat least51%of its incomemustbeearned fromactivities

undertaken in theTCI. Thesectionalsoprovidesthatwhereacompanyororganisation is

less than 100%Belonger owned, the discount shall apply to the portion that is Belonger‐

owned,and,ifacompany,islessthan51%Belongerowned,nodiscountwillbegiven.

3.38 Importantly, the proposed Manual also provides in Section 7 for monitoring and

enforcement of Crown Land leases and grants,189 and in Section 9 for appeals to the

CommissionerofCrownLands,andthencetoanAppealsTribunaltobeconstitutedbythe

proposedCrownLandsOrdinance.190

3.39InMarch2008,shortlyafterpresentationofthe2008TerraInstituteReport,MrMartin

Robinson, who had, as the Acting Chief Auditor, temporarily succeeded Cynthia Travis,

presentedaSpecialReporttotheHouseofAssembly(the2008RobinsonSpecialReport),191

whichGovernorTauwharehadspecificallyrequested. MrRobinsonconcludedthattheTCI

Government’s implementationof its 2005Crown LandPolicy over theprevious two years

hadbeenunsatisfactoryand,oncurrentarrangements,couldnotproperlybeimplemented.

Whilst he acknowledged the value of the recommendations of the Terra Institute, he

consideredthatimprovementsinanyaspectofCrownLandmanagementintheintervening

188p161189pp170‐171190p173191Robinson,Martin(2008),SpecialReportontheManagementandDisposalofCrownLand,ReportNoS/08/052/07R

94

periodwerebarelydiscernibleandthatarrangementsmightworsen,particularlyintheshort

term. His criticisms and concerns aremuch the same as, and as forcefully expressed as,

thoseofhispredecessoroverthreeyearsbefore. Heset themoutundertenheadings,192

makingasanearlypointthefailureoftheTCIGovernmenttokeeptoitsfirststatedaimof

the Policy, namely to confine the proceeds of Crown Lands sales to bolstering the

Government Reserves Fund or for major specific development projects. Instead, as Mr

Robinsonrecorded:

Government finances are now heavily dependent on income from Crown Landsales,whichamountedtoover$55million in2006/07and2007/08. There isadanger that this will become the key determinant of future policy on landdisposal.193

3.40Isummarisehistenheadingsofconcern:1)weaktonon‐existentcompliancewiththe

Policy;2)blatantspeculationinCrownLand,particularlyonSaltCaywarrantingindependent

review;194 3) misuse of Belongers’ entitlements to discounts on dispositions of land for

commercialpurposesandan inequality inallocationofcommercial land,with40%ofsuch

salesintheprevioustwoyearsbeingtocompaniesinwhichpresentorpastMembersofthe

House of Assembly and/or their immediate families had a direct interest; 4) failure of

compliance in the system of allocation, which was determined in large part by personal

contacts, pressure and influence; 5) inadequate and deteriorating systems of Crown Land

dataanddatamanagement;6)generallackofopennessandaccountabilityinallocationsof

CrownLand;7)reliancebydecision‐makersonout‐of‐datevaluationsandthepotentialfor

improperpressuresontheTCIValuationOffice;8) lackofanup‐to‐datedevelopmentplan

for the Islands and of any adequate inventory of Crown Land; 9) insufficient provision of

affordable housing on Crown Land; and 10) mounting arrears of rentals because of

inadequatecollectionarrangements.

3.41TheRobinson2008SpecialReport,whichGovernorTauwharesawindraft,causedhim

greatconcern,particularlyastorecentdisposalsoflandinSaltCay.Heexpressedthoseand

widerconcernsinthefollowingpassageinalettertotheForeign&CommonwealthOfficeof

22ndFebruary2008:

192ibid,ExecutiveSummary,pp3‐6193ibid,ExecutiveSummary,p3194See, inparticularastotheSaltCaytransactions,pp3–4and19–20,SectionB2(a)and(b),expressingparticularconcern aboutanumberofrecenttransactions.

95

Thereappeartohavebeenupto12grantsinashortspaceoftime,shortlybeforea significanthoteldevelopment therewasannounced. Mostof those receivinglandarerelatedtooneanother;oneisaformerPS/NaturalResources,anotheristheDirectorofMedicalServicesandbrotherinlawofHonGalmoWilliams.Mostsubsequently sold the land to thedeveloperatanaverageprofitof750%,withindividualsmakingbetween$300–950kprofiteach.Thetotalprofittothem(andthereforelosstoTCIGwasover$4m).Thevaluationusedwhenthelandwassoldtothemdatedfrom2001andhadnotbeensubsequentlyupdated.Fewifanyofthemappeartohavefulfilledthenormaltermsforbeinggrantedfreehold. Thelandsoldtothedeveloperhimselfwasalsovaluedonthebasisof2001valuation.The draft report strongly recommends that there should be a thorough andindependentreviewofthebackgroundandhistoryofthesegrants.ForthefirsttimeIhavebeenhere,weatlasthaveaproperly‐researchedaccountofexactlythe sortofabusewhich is traditionally complainedof, inwhatappears tobeaparticularly blatant example. Whether anyone has actually broken the law isunclear. ... But questions should certainly be asked of why the Minister forNaturalResourcesproposedtheselandgrantstothesepeopleatthistimeandifsowhy.QuestionsshouldalsobeaskedabouthowthesedecisionsgotthroughCabinetwithanoldvaluation.... ItmustbehighlylikelythatanyseriousreviewwillconfirmwhattheActingChiefAuditorhasfound,recommendrapidreformstotheprocedures(albeitthesearemostlyin‐handintheCrownLandBill,buttotheextentthattheyarenot,theyshouldbeadded)andrecommendthatawiderreviewisrequiredtocheckwhethertheproblemsfoundinSaltCayarereplicatedelsewhere(astheyalmostcertainlyare).Thiscouldprovidethebasisforawide‐rangingCommissionofEnquiryintoCrownLanddeals....

3.42 It is clear from those remarks that, at Governor level at least, there had been

mountingconcernforsometimeaboutabusesinrelationtoCrownLandmanagementand

disposals,andthattheUKForeignAffairsCommittee,whichhadyettopublishitsReportin

June2008,wasnotthefirstinthefieldtoconsidertheneedforaCommissionofInquiry.

3.43 The 2008 Robinson Special Report, which had also been submitted as a matter of

routine in draft to the Hon McAllister Hanchell, did not seemingly cause him the same

concern.FollowingdiscussionofthedraftwithMrRobinson,hecommentedonitbyletter

tohim9thMarch.195Intheletter,theMinisteracceptedthatcertainpartsoftheNovember

2005 Crown Land Policy had not been implemented and that certain parts of it needed

revision,which,hestated,theMinistrywouldputinhandfollowingCabinet’sacceptanceof

the 2008 Terra Institute Report. He also acknowledged the need to ensure that the

beneficiariesofCrownLandtransactionswouldbemajorityBelongerownedandcontrolled

entities, especially where discounts were given. However, he challenged that there had

195setoutbyMrRobinsonwithhisresponsesinalettertotheMinisterof14thMarch2008.

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beenabuseofthePolicyinrespectofsalesoflandonSaltCayforcommercialpurposes,and

urgedMrRobinsontoreconsiderhisrecommendationforafurtherindependentreview.He

also urgedhim to reconsider his initial implication that present andpastMembers of the

House of Assembly had improperly benefited from Crown Land sales. And he strongly

refutedMrRobinson’scriticismsontheissueofvaluation. TheMinistermademanyother

detailed comments, which I do not attempt to summarise, or the response from Mr

Robinsoninwhich,forthemostpart,herobustlystucktomostofhiscriticisms.However,

the following extended comment from the Minister is interesting in the light of the TCI

Government’s delay in implementing the recommendations of the 2008 Terra Institute

ReportandoftheinformationthathasemergedinthisInquiry:

...Iagreethatthepresentsystemforallocationofresidentiallandisnotperfect,anysystemwillhavethesameexperience(personalcontacts,influenceanddirectpre‐applicationand‘applicationchasingpressure’)Thisisattributedinlargepartto the culture of people of the TCI, ‘peoplewant to see the person/persons incharge’ and the access that persons have to elected officials. In this regard Ireiteratethat it is importanttotake intoaccountthecultureandhistoryof thepeopleofTCIwhenassessingissuessurroundingCrownLand.

Foremost, theMinistry takes the position that this reportmight be prematuresince the majority of criteria on which the assessment and the overalleffectivenessandconformationtotheCrownLandPolicywasbasedispremisedon its full implementation and by the full establishment of a Crown Landunit/department.

3.44ThereisonefurtherReporttowhichIshouldrefer,ifonlybriefly.Itisacuriousand

opaquedocument,seeminglypromptedbyMrRobinson’sexpressionofparticularconcern

inhisSpecial2008ReportaboutanumberofrecentdisposalsofCrownLandinSaltCayfor

commercial purposes. It is a report by Deloitte of June 2008 entitled Agreed Upon

Procedures Report on Salt Cay Development, prepared on the instruction of Governor

TauwhareinconsultationwiththePremier,onbehalfofTCIGovernment.

3.45ThetitleandopacityofthisReportreflecttherestrictednatureofDeloitte’stermsof

engagement.InsubmittingtheReporttotheGovernor,itexpresslydisclaimedthatitbore

the status of either an audit or a review in accordance with internationally recognised

standardsoranyassuranceontheTCICrownLandPolicyorthetransactionssurroundingthe

Salt Cay Development. Its declared sole purposewas to carry out certain procedures to

assist the Governor in evaluating the Crown Land transactions surrounding the Salt Cay

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Development,namelytodocumentanddetailcertaintransactionsinCrownLandonSaltCay

andotherrelatedmattersas listedinSchedule1totheReport. That,theauthorsdid ina

documentconsistingmainlyofafewbriefstatementsoffact,combinedwithseverallengthy

schedulesoftransactionsrespectivelydescribedasBackgroundandAnalysis.

3.46 Analysis is certainlywhatwas – and still is ‐ required, though not provided in any

meaningful or readily understood form fromDeloitte. But, on their understanding,what

theyhadprovidedwastoformthebasisforanevaluationbytheGovernorwith,presumably

the assistance of the TCI Government. As far as I have been able to discover, no such

evaluationhasbeenundertaken,muchlesscompleted,andtheCommissionhashadneither

thetimenortheresourcesofaforensicaccountantorauditortoattemptit. Insubmitting

itsReporttotheGovernor,Deloittetantalisinglyobservedthat,haditperformedadditional

procedures or had it performed an audit or review of the Crown Land Policy or the

transactions in question in accordance with recognised international standards, matters

mighthavecometotheirattentionthatwouldhavebeenreportedto...[theGovernor].

3.47 Iwas and remain puzzledwhyDeloittewas instructed to report onMr Robinson’s

concerns insorestrictedaway. IhaveaskedGovernorTauwhareandhavecorresponded

with and spoken to those responsible at the Foreign and CommonwealthOffice about it.

TheformerGovernortoldmethathehadcompiledthetermsofreferenceinajointexercise

with the HonMichael Misick, having taken advice from the Foreign and Commonwealth

OfficeinLondonand,notwithstandinghisunease,deferredtotheirjudgment.Icanonlysay

thatIsharetheuneaseofMrRobinsonandGovernorTauwhareaboutthesetransactions‐

an unease accentuated by an absence of information beforeme as to any or any expert

evaluationofthefactualinformationgatheredandtabulatedbyDeloitteinitsReport,save

that the current Chief Auditor has considered it. Such an evaluation, coupled with the

resultsofother investigations in relation to theSaltCayproject, is clearlyamatter thata

specialprosecutor,ifappointedasaresultofthisReport,maywishtoconsider.

3.48 In the meantime, there has been very slow progress on the part of the TCI

Governmentinimplementingtheproposalsinthe2008TerraInstituteReport,inparticular,

fortheManualandthedraftOrdinance.Inthemeantimetoo,theabusesoftheCrownLand

PolicychronicledbyFuller in2004,Barthel in2005,theTerra Institute in2008andlatterly

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Robinson have continued apace. If anything, Ministers have increased the number of

proposalsbroughttoCabinetforgrantsofCrownLandforsubstantialcommercialuseand

othermajorcommercialprojects,stillinmanycasesatshortnoticeandwithnoornotabled

supporting Cabinet papers. What is more, many recent transactions have involved the

disposal of Crown Land, not by way of Conditional Purchase Lease, but by absolute

dispositionofthefreehold.

3.49 On 3rd April 2008 the TCI Cabinet approved a number of the Terra Institute’s

recommendations, includingdrafting instructions for theproposedCrownLandOrdinance.

As the Hon McAllister Hanchell had surmised in his objections to Mr Robinson’s Special

Report, it did not, however, approve the Manual of Crown Land Administration and

Management, and deferred it for further consideration towards the end of April. The

Cabinetdidnot consider it again inApril, and it surfacednext inoneormorediscussions

between the Governor, the Hon Michael Misick, the Hon McAllister Hanchell and the

AttorneyGeneral. Those discussions gave rise to an undated paper proposing, inter alia,

thattheAttorneyGeneralshould:1)formallyadviseastowhomightmakeallocationsand

disposals of Crown Land; and 2) check what, if any, powers the Chief Auditor had to

investigate Crown Land transactions and review valuations, with a view, if necessary, to

makingprovisionforthosepowersintheproposedOrdinance.TheAttorneyGeneraldidnot

formallyadviseonthepowertoallocateanddisposeofCrownLand,takingtheviewthatit

wasadequatelydealtwithinsection94oftheConstitution,whichaccordsthepowertothe

Governororanypersonauthorisedbyhimtodoso.However,withrespecttotheAttorney

General, thatprovisiondoesnot resolve thevexedquestionwhether theGovernorshould

leavethepowerwiththeCabinetand/orMinistersortransferittoanindependentbodyas

hasbeenfirmlyrecommendedbyFuller,Barthel,theTerraInstituteandRobinson.Hedid,

however,advisethattheOrdinanceshouldprovideforreviewandinvestigationbytheAudit

Department. In my respectful view, that would be an inadequate remedy, coming as it

would, longaftertheoccurrenceofpossibleharmfulconductthat interveningactivitymay

haverenderedirremediable.

3.50TowardstheendofAugust2008thePermanentSecretaryattheMinistryofNatural

ResourceswrotetotheAttorneyGeneralaboutsomeunresolvedmattersintheCrownLand

PolicyandurgingprogressontheproposedOrdinance.InearlyOctobertherewasafurther

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letterfromthePermanentSecretarytotheAttorneyGeneralreferringtoherAugustletter,

attaching a copy of the Drafting Instructions for the Ordinance taken from the Terra

Institute’s2008Report,andagainurgingexpeditioninitspreparation.TheAttorneyGeneral

didnot reply to thatmemorandum. HisChamberswereabout to commencedrafting the

legislation.Butno‐onetoldthePermanentSecretarythat.AttheendofOctobershesenta

memorandum to the Hon McAllister Hanchell making various further proposals to hurry

matters along, including implementation of the Manual or of some comparable system,

statingthattheCabinet’sfailuretoapproveitinAprilhadleft...thesameflawedsystemfor

allocationofland.TheMinisterdoesnotappeartohaverespondedtohermemorandum.

3.51However,inearlyFebruary2009whentheCommissionwasapproachingtheendofits

oral proceedings in Providenciales, the Attorney General informed me that drafting

instructions for theOrdinancewere nearly complete and that they included provision for

issuing the Manual, thus giving it legislative authority. I trust this includes provision for

placing allocation of Crown Land under the independent control of a Crown Land Unit.

However,clauses16,18and19ofthe incompletefirstdraft,establishingsuchaUnit,and

setting out the duties of a proposed Commissioner of Lands responsible for its

administration,stillleavethatmatteropen‐itseemstome‐tothewhimoftheGovernoror

theMinisterofNaturalResourcesoftheday:

16.ForthepurposeofthisOrdinancethereshallbeestablishedaCrownLandUnitwithintheMinistryofNaturalResources.

...

18.ThereshallbeinthepublicserviceaCommissionerofLands,whoshallberesponsible for administering theCrown LandUnit andwho shall performhisfunctionsinaccordancewiththisOrdinance.

19.TheCommissionershallhavethemanagementofallCrownlandandshall....superintendtheallotmentofCrownlandsand layingoutresidential lotsastheGovernor/Ministerfromtimetotimedirects.

3.52 On 14th April 2009, shortly before submitting this Report to the Governor, a new

Cabinet under the Premiership of the Hon GalmoWilliams, tabled a number of Bills for

considerationbytherecentlyrecalledHouseofAssembly.TheCrownLandsOrdinanceBill

wasnotincludedinthelist.Itmaybethatconsiderationisbeinggiventomorefundamental

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reformofthelawastoCrownLandsoastogiveitdirectstatutoryimprintratherthanone,

asseeminglyproposedtodate,merelysupportiveofgovernmentalpolicyoftheday.

Publiccontracts

3.53Inthefieldofpublicworkscontracts,asinotherfieldsofcommercialactivity,thereisa

gradationfrompublicinefficiency,enablingabusebyoneorotherpartyofthepotentialor

established contractual relationship, to mutually accepted behaviour that lubricates the

wheels of business and is not generally stigmatised as dishonest, and on to mutual

dishonestyamountingtocorruption.Contractinginthepublicorprivatesectorsisproneto

abuseofonesortoranotherunlessstrongcontrolmeasuresareestablishedandenforced.

The potential for abuse is undoubtedly greater where an urgent and obvious need for

infrastructureiscoupledwithcontractualaccesstosubstantialpublicfinancesthatare,and

areknowntobe,largelyuncontrolled.

3.54IntheTCIoverrecentyearsthebudgetforspendingonpublicworkshasrisensteadily,

but,therehasbeenasignificantoverspendofatleast10%ineachofthefinancialyearsfor

which the TCI Government has produced audited accounts, 2003 – 2006. In the year

2005/2006,itwassome$400,000overthebudgetfigureof$3,380,000.196

3.55AllgovernmenttenderproceduresshouldconformtoFinancialInstructionsissuedby

the Ministry of Finance197 and to generally accepted tendering procedures. Those

Instructions, since2006, have required all contracts forwork valued at between$15,000

and $75,000 to be the subject of public tendering unless the Permanent Secretary, the

AttorneyGeneral, the Financial Secretary or the Commissioner of Police approved limited

tendering,thatis,fromanofficiallistofpreviouslyapprovedcontractors.198Allcontractsfor

workworthmore than$75,000 shouldbe the subjectofpublic tenderunless theCabinet

approved limited tendering.199 Responsibility for issuing invitations to tender lay with

PermanentSecretariesorHeadsofDepartments.TheCabinetcouldwaivepublictendering

requirementswherethenationalinterestrequiredthecontracttobeissuedearlierthanthe

196TCIAuditOffice(2006),AuditReportonContractTendering&ExpenditureSystems,Engineering&MaintenanceServices,p4197 WSP International Management Consulting (2005),Ministry of Communications, Works & Utilities, Department of Engineering &MaintenanceServices:ProjectManagementDivision–RoadDesignManual,Chapters17‐18198ibid,PartIV–AnnexI:FinancialInstructionsChapters17&18,FinancialInstructions1707applies199ibid,towhichFinancialInstruction1702applies

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normaltenderprocesswouldallow,orwheretheworksand/orservicesorthematerialsto

beprocuredwereofaspecialistnatureforwhichonlyalimitednumberofsourcesofsupply

couldreasonablybeidentified.CapitalprojectswerenormallygovernedbytheGovernment

Development Budget, but the Cabinet could additionally approve expenditure on new

projectsnotcontainedintheBudgetforemergenciesortomeetemergingandunforeseen

developmentsduringtheyear.

3.56 The twomain purposes of public tendering requirements formajor capital projects

were and are: 1) to promote open and competitive tenders to enable those considering

them on behalf of the TCI Government to determine, in the public interest, in terms of

qualityofworkandvalueformoney,thebiddertowhomthecontractshouldbeawarded;

and 2) to ensure honest dealings between those responsible for the award of public

contractsandthosebiddingforthem–inshorttominimisethescopeforcorruptionand/or

unnecessarycosttothepublic.However,theincreasingpatternintheTCIoverthelastfew

yearshasbeentodisregardtheserequirementsinanumberoflargeandsmallscalepublic

works and other contracts –many potentially questionable as to value formoney and/or

becauseofpossiblecorruptionofMinistersandpublicofficersinvolvedintheiraward.

3.57TheCommissionhasnotseentheAuditReportonContractTenderingSystemsinthe

TCIofNovember2004,butitraisedissuesthatwerestillpresentin2006,asshowninalike

Audit Report for that year.200 They included a number of recommendations designed to

improve the accountability, openness and independence of tender procedures, and drew

attentiontospecificcontracts,someinvolvingsignificantsums,wheresuchprocedureshad

notbeenfollowed,oratleastwerenotevidenced.

3.58 In late 2004 the TCI Government had engaged a consulting engineer, Simon

Bradfield,201 to undertake a Department for International Development (DFID) funded

projecttocreateaninventoryandconditionsurveyofallpublicinfrastructureontheIslands

and to reorganise the Public Works Department. He had made detailed and urgent

proposals for reorganisation,newmethodsofworkingandgreateraccountability. Hehad

presented these proposals to the Executive Council and to various Government

200(2006)ContractTenderingandExpenditureSystems,EngineeringandMaintenanceServicesDepartment,AppendixD201ofWSPInternationalManagementConsultants

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Departments,buttonoavail.In2008,inasubmissiontotheUKForeignAffairsCommittee,

hedescribedthelackofresponsetohiswork:

Throughout my work I received minimal cooperation from the variousDepartment Heads, and PWD [Public Works Department] staff were, largely,unwillingtodivulgeordiscussdetailed informationontheircurrentpracticesofimplementing Public Works projects. Project information and records werehaphazard,incompleteand/orlackingandIfounditimpossible[to]conductanyadequateauditofprojecthistoriesorexpenditure.Myoverallimpressionduringmy time there was that the reorganisation project had been imposed on theDepartmentandthattheyhadnointerestinourobjectives–consideringustobemerelyaninterferencewiththeirexistingmethodsofworking.

He added that, on a subsequent visit at the beginning of 2006 to check on progress of

implementationofhisproposals,hefoundthatnothingwhatsoeverhadbeenachieved.

3.59 The UK 2007 National Audit Report202 indicated widespread departures from

competitive tendering in the TCI, a report echoed inmany allegations to the UK Foreign

AffairsCommitteeandto theCommission. Theseallegations includedtheawardofmajor

contractsatanover‐priceand/orwithouttenderand/ororasaresultoffailureproperlyto

observe the tenderprocess. Commonfeaturesof suchallegationshavebeendisregardof

lowest or lower bidders, Ministers’ advancement of personal or family or associates’

interests,involvementinthesuccessfulbiddersand/orpotentialreceiptfromthemofbribes

as rewards for award of contracts, also awards of small contracts toMinisters’ relatives,

associatesorsupporters,ortheirengagementinprojectsforrewardinreturnforlittleorno

work.

3.60AsIhaveindicated,noneofthesecriticismswasnew.Theyhavebeenidentifiedtime

andagaininofficialandindependentreportsindifferentcontexts,oftencommissionedand

fundedbyDFIDorotheroutsidebodies,buttolittleresult.AsSimonBradfieldsaid,when

hecontactedtheUKForeignAffairsCommitteeinrelationtotheprojecttoreorganisethe

PublicWorksDepartment:203

ItseemsagreatpitythatthelargeexpendituremadebyDFIDontheprojecthasproducedpracticallynoresultsorimprovements.

202Seepara1.39above203Opcit

103

3.61 The material before the UK Foreign Affairs Committee, supplemented by similar

information in evidence to theCommission, has suggested a numberof areas of business

and transactions for concern. For want of time and resources, I have not been able to

investigate all, or even most of them, so as to equip myself to form a view of possible

criminalityandneedforfurtherinvestigation. WhereIhavebeenabletoexaminespecific

allegations,andtoformviewsastopotentialcriminality,IhavedonesoinChapter4ofthis

ReportinrelationtoindividualMinistersandothers.

3.62 Mymainareaofconcern in thiscontext is thegrantofuntenderedand/orpossibly

over‐pricedcontractstopersonsorcorporateentitieswithconnectionswithPNPMinisters

and/or financialsupportersof thePNP. I setout in thenextparagraphsomeexamplesof

typesof transaction thatgive rise to that concern. However, I shouldemphasise that the

Commissionhasnothadthetimeortheresourcestoinvestigateindividualinstancesinany

depth or other similar contracts or matters, for example, by questioning public officials

and/or representatives of persons or corporate entities concerned. It may well be that

further investigations would yield information that would point to the possibility of

corruptionand/orotherseriousdishonesty,orwouldallaywidespreadconcerns thathave

beenexpressedintheTCIaboutsuchmattersoverthelastyearormore.Mylackofspecific

mention of them among the following examples should not be taken as an indication or

recommendation not to investigate them. It is, of course, open to any investigators

instructedbytheTCIGovernmentfollowingmysubmissionofthisReporttoexaminesuch

transactionsandrelationshipsastheyseefit.

3.63Theexamplesare:

1) major contracts for services, such as that made in November 2006 with

Southern Healthcare Network (SHN) for referral of TCI Islanders for overseas

medicaltreatmentandairevacuationsatdiscountedrates,whichquicklyproved

tobeafinancialdisasterinitscost,service,financialmanagementandcontrol;204

2) major construction contracts, for example: a) PFI contracts awarded to

JohnstonInternationalfortwonewTCIhospitals,saidtohavebeenover‐priced

204opcit24,pp57–58,paras154–155

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and awarded without any or any appropriate tender process, with an initial

budgetof$40millionandcoststodateof$125million;

3) major road‐building and other public works contracts, for example: a) the

Lower Bight Road, Providenciales – said to have contracted to Johnston

Internationalatasignificantlyhigherpricethansomeotherbiddershadoffered,

andbuilt, it is said, toa low standard; andb) roadworks inNorthandMiddle

Caicos,contractedtoHerzog;

4) rental of property byMinisters, their relatives or supporters, including the

HonMichaelMisickandhiswifeandtheHonFloydHall,forGovernmentuseat

above‐marketrents;

5)salebyMinistersofpropertytoGovernmentatabovemarketvalue;

6)makingorapprovalof agreements forhotel/condominiumandother tourist

developmentsinwhichMinistershadorweregrantedinterests;

7)thegrantoffranchisesorlicences,someintheformofeffectivemonopolies;

and

8) purported employment and actual payment of ghost workers, that is, of

personsinvariouspublicpostsorofficesforwhomtherewaslittleornowork.

Immigrationandpermissiontowork

3.64 The Immigration Ordinance205 and subsidiary legislation provide a comprehensive

systemforregulationofimmigrationintheTCI.TheOrdinancehasestablishedthreelevels

of immigration status in a descending order of entitlement and security to remain in the

Territory.

1) The legislation provides206 a status of full citizenship, called Belongership,

acquired by descent from a Belonger or a spouse of a Belonger of five years

standing, or exceptionally where the Governor in Cabinet, considers that a

205RevisedEd1998,Cap51,asamended206ss3and4

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person has made an outstanding contribution to the economic and social

developmentoftheIslands. AsIhavealreadyindicated,onlythisstatuscarries

withittherighttovote.

2)ThelegislationprovidesforthegrantbytheGovernorinCabinetofPermanent

Residence Certificates,207 which as the name indicates are valid for life and

grantabletopersonsofgoodcharacterandhealth,whohaveestablishedalong‐

term living andworking connection in the Territory, andwith a demonstrated

ability to support themselves and their dependents there. Such long‐term

connection may take any one of several prescribed forms, including having a

home or principal home in the Islands coupled with a work permit as a self‐

employedoremployedperson,orinvestmentinandactiverunningofabusiness

there,orinvestmentofasubstantialsuminabusinessorahomethere.208The

status is also revocable by the Governor, but only for specified reprehensible

conductand/orfailuretocomplywiththestatutoryrequirementsofgrant.Any

decisionofhistorevokeitisappealabletotheSupremeCourt.209

3)Thelegislationprovidesforalesssecureformofpermissiontoremaininthe

form of a temporary and conditional Residence or Work Permit,210 made or

revocableforcausebytheImmigrationBoardestablishedbytheOrdinance,and

subjecttoanappealtotheMinisterresponsibleforImmigration.TheMinister’s

decision on appeal is not required by the Ordinance to be reasoned, and is

expressly declared by it to be final and unreviewable or enquired into by any

court.

3.65 It is apparent from Executive Council and Cabinet minutes that the initiative for

putting and supporting applications to the Governor for Belongership on exceptional

groundsor forPermanentResidenceCertificates is thatofaMinister,usually theMinister

responsible for Immigration. Although applications for Residence or Work Permits are

determinable by the Immigration Board, amajority of itsMembers are appointed by the

207ss14‐22208ImmigrationRegulations,ReviseEd1998,reg15andSchedule2,para3209ss20‐22210ImmigrationOrdinance,s23–35

106

Governor,actingontheadviceoftheMinister,211and,asIhavesaid,anyappealsfromthe

Board’s decision are made to and determined by the same Minister, whose decision is

final.212

3.66Evenfromthatshortsummaryofthestatutoryscheme,itisclearthatMinisterswield

very considerable discretionary powerover non‐Belongers, including thosenot entitled to

permanent residence,butwhohaveestablishedahomeandplaceofwork in the Islands.

There are two aspects to their vulnerability, one at the stage when grant of a higher

immigrationstatusissoughtandtheotherwhere,ifgranted,revocationisthreatened.

3.67TheapplicationforgrantstagewascanvassedinevidenceputbeforetheUKForeign

AffairsCommittee,213andhasbeenafrequentsubjectofinformationgiven–almostalways

in confidence – to the Commission. The complaints are of grant of Belongership or

PermanentResidentCertificates inbreachofthe legalrequirements inreturnforbribesto

Ministers or officials, and also of Belongerships to questionable individuals,with financial

clout orministerial connections, via the exceptional grounds route. TheCommission also

receivedmany complaints, including accounts of long delays in the regularisation of their

immigrationstatusandofseeminglyarbitraryandunexplaineddecisionsonapplicationsfor

grantorinrevocationofexistingstatus.

3.68ManyresidentswhohavenotattainedBelongershiporPermanentResidence,orwho

donotqualify for it, live ina stateof constant insecurity lest theyare compelledat short

noticeandatthewhimofaMinisteroroneofhispublicofficialstoleavetheirhomeand/or

employment.TheCommissionhasreceivedsubmissionsfromnumerouspersonsintheTCI,

given in confidence for fear of losing their homes and livelihoods as a result of arbitrary

revocation of their fragile permissions, and allegations of corruption on the part of

immigrationstaffatvariouslevelsabletoexercisesuchdominance.

3.69 Suchasystemand/orabuseofit isnotacceptableinwhatpurportstobeamodern

democracy.

211ibid,s48212ibid,s35213opcit24,paras161–165;andopcit54,Ev335,para5.3

107

3.70 However, in2003–2004,theimmigrationsystemhadthebenefitofawide‐ranging

and comprehensive review, by an Immigration ReviewCommissionappointed by theHon

JeffreyHall,whoseministerialportfolioincludedresponsibilityforimmigrationmatters.The

Commissionwas chaired by the HonDon‐HueGardiner, its Secretarywas Leo Selver, the

Under‐Secretary in theMinistryof Immigration,andtheothermembersweredrawnfrom

thepublicsector, theprofessionsandtheworldofbusiness.214 Its taskwastoreviewthe

statutory framework, policy and procedures, and to make recommendations for more

efficient and effectivemethods ofmanaging and controlling immigration. As part of that

task, itundertookareviewof thestatutorygrounds for thegrantofBelongershipandthe

grant,refusalandrevocationofPermanentResidenceCertificatesandResidenceandWork

Permits. It also considered possiblemechanisms for greater efficiency in the handling of

applicationsforeachofthosestatusesandforcomputerizationofimmigrationrecords.

3.71 The Commission consulted widely throughout the TCI and beyond, and reported

within fivemonths, in February 2004.215 In doing so it identified abuses of the statutory

system of the sort to which I have referred, including instances of Belonger status given

blatantly in return for political favours216 and of applications for Permanent Residence

Certificatesignoredordelayedformonthsandevenyears.217

3.72 In an early section of the Report inwhich the Commission set out its approach, it

spokeoftheneedtoattractandretainpeoplewithspecialisedskillsandexpertisetosecure

the success of the Islands as a tourist destination and financial centre. In the following

passageitdiagnosed,intermsthatareasapttodayasthen,whatwasrequired:218

Overtime,thepeoplewhohavecometoliveherefeelmoreandmoreattachedtothecountryandbegintolookformoresecurityofresidence.Firmswhohaveemployees who have become valuable to their business naturally want thoseemployeestoremain.ItisinevitablethenthattheproportionofindigenousTurks& Caicos Islanders in the country’s permanent population will continue todecrease.Inordertobeabletosetandadjustimmigrationpolicy,itisvitalthatwehavea system that facilitates the identificationanddifferentiationof thoseresidents who need or deserve to be integrated as long‐termmembers of the

214IncludingalsotheChairmanofthePublicServiceCommission,WendalSwann,andthethenPresidentoftheBarAssociation,RichardSavory215ImmigrationReviewCommission(2004)ReportoftheImmigrationReviewCommission216ibid,p8,para1.4217ibid,p17,para2.1218ibid,p2

108

community,thosewhoshouldnotqualifyaslong‐termresidents,andthosewhoforwhateverreasonhavenointentiontobecomelong‐termresidents.

Such a system, the Commission emphasised, required open, clear, fair and consistently

appliedmechanisms.219

3.73 To those ends, the Review Commission recommended the establishment of a new

statutory body to be known as the Citizenship Commission.220 It was to be appointed

annually and so constituted that, to the extent practically possible, it would not be

susceptible to thepressuresand influenceof interested individuals,andnot subject toany

overridingpowerof theGovernmentof thedayas tograntofBelongership. TheReview

Commissionalsomadeanumberofdetailedrecommendationsastocriteria forgrantand

revocation of immigration status at different levels, and for clear public expression and

consistentapplicationofthemandforotherreformsofthesystem.

3.74 Unfortunately, littleornothingcameoftheImmigrationReviewCommission’swork.

Theevidencebefore theUKForeignAffairsCommitteeand thisCommission suggests that

theabusesitidentifiedcontinue,andthattheremediesitrecommendedlieunattended.

3.75 As foreshadowed in my Interim Report, I consider that there is urgent need for

removal of ministerial involvement in the exercise of discretionary or other powers

concerningthegrantorrevocationofimmigrationstatus.AsrecommendedinChapter5of

thisReport,suchdecisions,whetherbyabodysuchastheCitizenshipCommissionsuggested

inthe2004Review,orbypublicservants intheImmigrationDepartment,shouldbemade

withregardtoclearlydefinedandwell‐publicisedstatutorycriteria. Suchdecisionsshould

beexplainedandexplicable,andbesusceptibletoameritsappealtotheSupremeCourtor

anindependenttribunalestablishedforthepurpose.

RevenuesandExemptions

3.76ThepowertolevytaxesintheIslandsisreservedspecificallytoMinisters,foritisthey

whocontroltheintroductionbeforetheHouseofAssemblyofBillsdesignedtoimposeorto

219ibid,p3220ibid,p10,para1.5

109

increase taxes.221 Likewise, it is only Ministers who can recommend to the House of

Assembly,thoseBillsthatprovideforimposingorincreasinganychargeontherevenuesor

otherfundsoftheIslands,orforcompoundingorremittinganydebtduetotheIslands.

3.77TheTCIisregardedbymanyasataxhaven.222Thisishardlysurprising.TCIimposesno

income, capital gains, corporation, or inheritance taxes. During the oral proceedings, the

Premier,hadrecoursetothisfactinresponsetorequestsforwrittendetailsofhisfinancial

means, saying that there was no need for anyone to keep records of their income or

expenditure. InresponsetoaquestionfromSeniorCounsel totheCommissionaboutthe

dramatic increase in his net worth between his appointment as Chief Minister and the

presentday,hestated:223

IhavebeenworkingfromthetimeIwas18,sellingrealestateonProvidencialessince1984,andbythetimeIbecameChiefMinister,hadalreadybeeninvolvedina lot of businesses andhad establishedmyself in our community not only as abusiness person but also as a politician. In this jurisdiction there is norequirementforaccountingpurposes.Wehavenotaxesorincometax.Sothereisabsolutelynowaythat–and...inrelationtothedeclaration,thedeclarationofintereststhereisnorequirementtoputadollaramountonanyone’snetworth.Whatyouarerequiredtodeclareisassetsandinsomecaseliabilitiesintermsofthe (inaudible) figure.Sothere’sabsolutelynowaythat Iwouldhaveknownorotherswouldhaveknownwhatmynetworthwouldhavebeenin2003.224

3.78 Buttaxhavenstatusbringswith it,especially inthecurrentglobal financialclimate,

certain responsibilities, even for a British Overseas Territory. The TCI is but one player,

amongstmany,havingtolooktoitslaurelsinthisregard.Pressuresarebeingapplied,not

leastfromtheUSA,nowarmedwiththeStopTaxHavenAbuseAct,passedbytheUSSenate

on2ndMarch2009.

3.79 The CompaniesOrdinanceprovides for the establishment of exempt companies, of

which there aremore than 10,000 registered in the TCI. An exempt company is one the

objects of which are to be carried out mainly outside TCI,225 but for 20 years from

221s67ofthe2006Constitution222TheOrganisationforEconomicDevelopment(OECD)identifiesfourkeyfactorstobeusedtodeterminewhetherajurisdictionisataxhaven:1)nooronlynominal taxes;2)whether there is a lackofopenness;3)whether thereare lawsoradministrativepractices thatpreventtheeffectiveexchangeofinformationfortaxpurposes;and4)whetherthereisanabsenceofarequirementthattheactivitybesubstantial.223Transcript,Day1,p27224ibid225s180oftheCompaniesOrdinance,Chapter122

110

incorporation, it is exempted from tax on profits, income, capital gains, estate duty or

inheritancetaxpayableonitsshares.226Inaddition,itisnotsubjecttomanyofthenormal

procedural formalities of TCI company registration.227 All that must be filed with the

Registrar of Companies is a Memorandum of Association with details of the company’s

registeredoffice,detailsof itssharecapital(orguarantee),228adeclarationthatoperations

willbeconductedmainlyoutsideTCI,229andthenameof itsrepresentativewithinTCI. In

particular, the subscribers are not required to inform the Registrar of the identity of the

company’s beneficial owners. The attraction of exempt companies thus lies in a

combination of their tax‐exempt status and the minimal disclosure and administrative

requirements.

3.80Instead,theTCImustlooktorevenuefrommanyothersources,including:1)tourists

andothervisitors,intheformofaccommodationtax,airandseaportsdeparturetaxes,and

landingfees;2)fromlandsalesintheform,notonlyofstampduties,registrationfeesand

surveyfees,butalsoinrecentyearsfromCrownLandrentalsandfreeholdpurchasesales;3)

businessmen in the form of export and import duties and cargo dues, business Licences,

vehicle licences and gamingmachine tax; and4) from immigration‐related sources, in the

formofvisas,permanentresidenceandotherresidenceandworkpermits.

3.81 In the Audited Financial Statements for the year 2005/2006,230 the most recent

available,stampdutyonlandtransactionsaccountedforalmost20%ofrecurrentrevenue,

workpermitsandotherimmigrationfees,andaccommodationtaxforalmost10%each,and

ImportandotherCustomsdutiesforalmost40%.TheTCIGovernmentcan,anddoes,also

raise revenue fromborrowing, although its scope forborrowing is constrained,231 and the

Foreign & Commonwealth Office monitors the level of its indebtedness. The Annual

EconomicUpdateReport2008232showsthattheTCIGovernmenthasusedup itsreserves,

andcannotthereforepresentlyextenditsborrowing.

226s197227ibidSection185228ibidSection182229ibidSection183230TCIAuditOffice(2006),GovernmentoftheTCI,FinancialStatementsfortheyearended31stMarch2006,GrandTurk,Graph1,p30.(TheFinancialStatementsfortheyearendedMarch2007remain,asyet,unaudited.)231TheborrowingratioscurrentlyarethatTotalNetDebtshouldnotexceed80%ofGovernmentrevenue;principalandinterestpaymentsforGovernmentdebtshouldnotexceed8%ofGovernmentrevenue;andReservesshouldbenolessthan20%ofgrossdebtstock.232CompiledinMay2008byOxfordPolicyManagementonbehalfoftheFCO.

111

3.82Thereis,ofcourse,greatdifficultyforthoseattemptingtomonitorthefinancialstate

oftheTerritorywhen itsFinancialStatementsareunauditedandareotherwiseunreliable.

Forexample,astheUKNationalAuditOfficereportedinits2007Report,in2006‐2007the

Foreign&CommonwealthOfficeconsentedto$10millionof furtherborrowingbytheTCI

onthebasisthatitsliquidreservesamountedto$14.6million.However,whenthe2004‐05

AccountswereauditedinJuly2006,itwasrevealedthatcashreserveshadbeenoverstated

by$6.6million.233

3.83Giventhedirestateoftheeconomy,itisallthemoreimportantthatallrevenuesare

collected.ButifsomeoralloftheserevenuesaresubjecttoconcessionsmadebyMinisters,

for example when grants of Crown land at less than market value are made or when

development agreements are being negotiated, the impact on TCI revenues may be

considerable.CynthiaTravis,theChiefAuditorfrom2005to2007reportedsimilarconcerns

aboutthelostopportunityfortheTCIGovernmentresultingfromsignificant,andpotentially

unwarranted,concessions.234AccordingtoherReport,someUS$32millionwasgivenaway

by the Customs Department in the year 2005/2006 through concessions made to

developers.

3.84 The information from many sources before the Commission suggests that such

forgonerevenuehas in largepartbeen theproductofover investor‐friendlydevelopment

policies, often presented by Ministers to the Governor in Cabinet to be absolutely and

imminentlynecessarytosecuretheparticularinwardinvestmentunderdiscussion.Thereal

possibility is that individualMinistershaveoften sold thepass inpre‐Cabinetnegotiations

withdevelopers,byundertakingtosecureforthemfavourableprices,exemptions,discounts

andconcessionsofone sortoranother. Suchnegotiations,oftenconductedprivately, in

haste and without recourse to advice from TCInvest or other professionals, are a ready

sourceof fixingon financialadvantagesbetweendeveloperandMinisternotpresentedto

theGovernorinCabinetorintendedevertobecomepublic.However,signsofitmaylater

surfacewhendeveloperrecipientsofsuchministeriallargessearediscoveredtohavemade

large,andusually secret,donations toor for thebenefitofaparticularMinisteror to the

PNP. ThereisaclearneedfortimelypublicationoffulldetailsofallgrantsofCrownLand

233TCIAuditOffice(2006),Turks&Caicos IslandsNationalAuditReport,AuditReportandFinancialStatements,Fortheyearended31stMarch2005,p14234ibid,page55

112

anddevelopmentagreements,includingthenameoftheproposingMinister,thebeneficial

recipientofthegrantandthetypeandvalueofanyexemptionsgranted.

3.85Quiteapartfromsuchdirectlossorrevenuetheremaybeassociatedlossofcapitalor

revenueontheproceedsofsaleoftheTCI’sprincipal,valuablebutfastdiminishing,asset–

Crown Land. In the year‐ended 31 March 2006, receipts for land sales exceeded $11

million235(areductionofapproximately$4millionfromthepreviousyear’stotal),although

theGovernmenthadbudgetedforreceiptsof$17million.236AsIhavealreadymentionedin

thisReport,theGovernmenthasnotmaximiseditsincomefromlandsales.Verygenerous

discounts have been given to Belongers, and indeed to others,when Crown Land is sold.

There have been cases involving Ministers, their families or associates and some high

ranking civil servants where Belongers and developers have secured separate and

substantialbenefitsontherapidturnoverofCrownLandbytheformertothe latter. The

nobleprincipleofEmpowerment,underwhichBelongersareofferedlandatahugediscount

togivethemastakeinthecountry,hasthusbeenhi‐jackedforotherignoblepurposes.The

Commission has itself discovered allocations that can only be categorised as the result of

greed, favouritism and/or cronyism.237 The corollary of such Belongers’ and developers’

benefitis,ofcourse,significantlossofrevenuefortheTCI.

3.86 Aside from the obvious difficulties of collection of government revenue, where

revenues arederived from indirect taxes, such as stampor import duties and visa/permit

fees,thereismassivescopeforcorruptionamongthosechargedwiththetaskofcollection.

The Commission received a substantial number of reports, almost invariably from

anonymoussources,ofunwarranteddemandsformoneybeingmadetoapplicantsorextra

fees and charges being levied, to ensure their application or matter received favourable

treatment.

________________________

235TCIAuditOffice(2007),FinancialStatementsoftheGovernmentoftheTCIfortheyearended31stMarch2006,GrandTurk,StatementNo2,p2236ibidStatementNo3‐1,p3237Seeparas3.17and3.18aboveandparas4.134–4.135and4.166–4.168below.

113

4–INFORMATIONOFPOSSIBLECORRUPTIONAND/OROTHERSERIOUSDISHONESTY

andRECOMMENDATIONS

Introduction

4.1Inowturntotheissueswhichhaveariseninrelationtoindividualelectedmembers,in

thecourseofevidencepresented to theCommission. TheCommissionhasnot,anddoes

notmakedefinitivefindingsoffact;itisvitaltobearinmindthattheTermsofReferenceof

theCommissionwereonlyevertoestablishwhethertherewasinformationthatcorruption

orotherseriousdishonestymayhavetakenplace.Themoreexactingtestsofproofasmight

beapplied inatrialcouldnotbeemployedbytheCommission,norweretheyrequiredto

be.

4.2 This Chapter necessarily considers other persons beyond simply the elected officials

involved. ItwouldbewhollyartificialtoproduceaReportthatdidotherwise. Insofaras

thereisinformationindicatingcorruption,thatcorruptiondoesnotexistinavacuum(e.g.if

anofficialreceivesapossiblycorruptpayment, itmusthavecomefromsomeoneelseand

theymustbeidentifiedinordertoshowwhyandhowitmaybeiscorrupt.

4.3SeveralpartieshavesoughttoarguebeforetheCommissionthattoconsiderorevento

name parties, apart from elected officials, takes the Commission outside its Terms of

Reference. Related arguments were also raised that no comment should bemade upon

thosewhoprovidednoevidenceorwhoonlygavewrittenevidencebeforetheCommission.

Idonotacceptthosearguments.Ihaveendeavouredtoensurethat,ineverycasewhereI

was minded to make an adverse finding leading to a recommendation of criminal

investigationinrespectofanypersonwhoseconductisthesubjectof,orwhoisimplicated

orconcernedinthesubjectmatteroftheInquiry,thatpersonshouldhaveanopportunityto

comment ahead of the Report, by means of responses to Salmon letters.238 All have

responded.

238Seepara1.86above.

114

4.4 In reporting uponwhat I have found, I have simply relatedwhat emerged from the

evidence,andidentifiedareasofconflict,contradictionandinformationpointingtopossible

corruption.Furtherinvestigationwillberequiredineverycase,buttodolessthanthis,at

this stage,would have been a dereliction ofmy duty under the Terms of Reference, and

wouldhaveriskedpresentingalessthanfullpicture.

4.5 Any final assessmentmade,may ormay not, bear outmy initial assessment on the

materialavailable.Thatassessmentwillbeataskforthosewhocomeafterme,andmayor

may not involve criminal proceedings. What should also be clear is that the process of

inquiry,whichthisCommissionhasbegun,isfarfromcomplete.Thefactthatanindividual

is not named or criticised should not be taken as any form of endorsement of their

behaviour;thefactthatparticularmisdeedsarenotexploredindetailhere,doesnotmean

theywillnotbegivenattentionatalaterstage.

TheHonMichaelMisick

Background

4.6 BecauseoftheHonMichaelMisick’scentralroleinGovernmentinrecentyears,and

therefore in the Inquiry, I turn first in this first section of the Chapter to my findings

concerninghim,findingswhich,inthecontextofcorruption,mayhaveimplicationsforsome

ofthosewithwhomhedealt.Hemadewrittensubmissionsbeforetheoralproceedings,he

gaveevidenceover fourdaysduringthoseproceedings,atwhichhewasrepresentedbya

strong legal team ledMr Edward Fitzgerald QC, and he has since provided a number of

writtendocumentsandsubmissions.

4.7AccordingtohisbiographicalnotesontheTCIGovernmentwebsite,239theHonMichael

Misickwasbornin1966andwaseducatedlocallyandintheUSAbeforetakingadegreeat

theUniversityofBuckinghamintheUK,andbeingcalledtotheBarofEnglandandWales.

His use of the title “Doctor” derives from an honorary doctorate awarded to him by a

University in the Bahamas. He worked in real estate sales in the TCI with Prestigious

239 TCI Government (2008), Honourable Dr Michael Eugene Misick, Premier [online], Available at: http://tcgov.tc/info--ID--181.html[Accessed4thMay2009]

115

Properties Ltd, a company established by his family, between 1984 and 1988, and then

becameChairmanandChiefExecutiveOfficerofParamountGroupofCompanies,aproperty

andfinancialservicescompany.

4.8 Hewas firstelected to theLegislativeCouncil in1991,whenhebecameMinisterof

Tourism,TransportationandCommunications,andwasre‐elected in1995. InMarch2002

hewaselectedLeaderofthethenOppositionProgressiveNationalParty (PNP). Following

theApril2003GeneralElectionsandthesuccessfulpetitioningandwinningofby‐electionsin

two constituencies, hewas sworn in as ChiefMinister of the Turks and Caicos Islands on

August 16th 2003. The information before me indicates that at that time he was a

reasonably successfulbusinessman. HewasalsoanassociateatSaunders&Co,a firmof

attorneys in the TCI, and still had connections with real estate sales through his family

company Prestigious Properties Ltd. He also owned some properties in his own right.

Severalsourceshavequotedhimashavingsaidthathewasworthonly$50,000priortohis

electiontotheLegislativeCouncilin2003.Hedenieshavingsaidthat,andthereisnofirm

informationbeforemetosupporttheassertion.Itmayhavebeenacommenttakenoutof

context.

4.9Hewas,atallrelevanttimesafterAugust2003,firstChiefMinisterandthenPremier.

Hehasalsoheldtheportfolios forTourism,Trade, InvestmentandDistrictAdministration,

andwasthe leaderofhisparty,thePNP. Duringthe latterpartofhisperiodofofficehe

marriedtheAmericanactress,LisaRayeMcCoyinahighprofileweddinginApril2006.The

couple subsequently separated and, during the Inquiry, were engaged in divorce

proceedings.

4.10 I should state straightaway that the Inquiry has produced much information of

possiblecorruptionand/orotherseriousdishonestyinrelationto–thatis,involving–him.

InthefollowingparagraphsIsummarisetheinformationthathasledmetothatconclusion

in relation to a number of matters, and I express findings and, where appropriate,

recommendcriminal investigationswithaviewtopossibleprosecution. In reaching those

findingsandmakingthoserecommendations,Ihavetakenintoaccountallrelevantwritten

and oral information, including evidence in the oral proceedings in Providenciales, all the

variouswrittenandoralsubmissionsmadeonbehalfofwitnesses,includingresponsesand

116

other correspondence in the Salmon exercise. As I have indicated, theremay be other

mattersworthyofsuchinvestigation,which,forwantoftimeandresources,Ihavenotbeen

abletoundertakeinsufficientdetail.

4.11 There ismuch information to show thatheadopteda lifestyleand spendinghabits

once inoffice that farexceededhis salaryandallowancesasaMinisterandpoliticianand

that which he had previously enjoyed. He spent lavishly and extravagantly, indulging in

internationaltravelbyprivatelyleasedjet,andadoptingwhatwasreferredtointheIslands

asaHollywood lifestyle. Itwas this,asmuchasanything, thatattractedpublic comment,

opprobriumandeventuallyinvestigation.

4.12 During a periodwhen his duties and responsibilities as aMinister and a politician

shouldhaveengagedmost,ifnotallofhistimeandefforts,hisbusinessinterestsappeared

toprosperandexpandexponentially.Thoseinterestswereintimatelyconnectedtohisrole

as ChiefMinister and later as Premier. The principle that a politician should scrupulously

avoid any danger of an actual or perceived conflict of interest between their Ministerial

positionandtheirprivate financial interestswasnotonethatheobserved,orencouraged

hisCabinettoobserve.240

4.13Heappearstohavebenefitedonseveralfronts,apartfromhissalaryandallowances:

1) The PNP continued to fund him with Candidate’s Stipends amounting to about

US$900,000 following his election in 2003. His assertion that these represented salary is

largelyamatterofsemantics;noneofthepaymentsborethehallmarksofasalary.Ihave

beenshownnodocumentationtosupporthiscontention.

2) He was also at liberty to spend the Party funds at will: examples of hundreds of

thousands of dollars going out to his wife’s US stylist and to pay for his household

decorations have been found. His assertions that he was entitled to treat these as

reimbursementsofpersonaloutlaysbyhimonpoliticalmatterswerenotsupportedbythe

Hon Floyd Hall, in his capacity as Treasurer of the Party, or by any documentation. It is

noteworthy thathe controlled,orhelped to control at leastoneof theParty’smainbank

accounts.

240Cap2,para2.7etseq

117

3) PartyfundingofhimintheformofCandidate’sStipendwassupplementedbypersonal

donationstohim,largelymadeinthefirstinstanceonaconfidentialbasistohisbrother,the

attorney,ChalMisick,whodisbursedthemorforwardedthemonhisbehalf.Thesewerefor

large amounts of money, and, in one instance, included $500,000 from a businessman

involved inamajordevelopmentproject,whowas in theprocessofnegotiatinga further

large development project with the Government, and who received Belonger status the

sameyear.

4) His spending of government fundswas extensive. As ChiefMinister andMinister for

Tourism, he funded worldwide travel on the Government budget. This extended in due

coursetotheprovisionofaGulfstreamIIIjetwhichhetreatedashisown.Healsoensured

thathiswifereceivedcontractsforpromotionoftheTCI,whichresultedinpaymentstoher

ofhundredsofthousandsofdollars.

5) The Cabinet voted to provide himwith, not just one, but two official residences, and

coveredmuchof thehouseholdrunningexpenditureonhismain,Providenciales,property

frompublicfunds.

6)Hewasthebeneficiaryofanumberoflandgrants,includingoneof18acresintheNorth

WestPointareainApril2007,forwhichhedidnotpay.Hispartners,overseasdevelopers,

paid theentirepurchasepriceofover$1.9million,buthe received50%ownership in the

project.

7) He received a number of payments whilst in office representing finder’s fees or

commissionsfromdevelopersseekingland,includinghalfofafeechargedbytheHonFloyd

Hall,tothedeveloperRichardPadgett.Hedoesnotappeartohaveregardedsuchactualor

perceived conflicts of interest as an obstacle to acceptance of such financial benefits.

Similarly he received a sum of $325,000 for having introducedMr Alden Smith of Ashley

PropertiesLtdtoadevelopernamedMrPeterWehrli,leadingtoasaleofland.241TheHon

FloydHallalsobenefitedfromthistransaction.

8) Whilst promoting development in the Islands, he held a financial interest in projects

consideredby theCabinet thatbenefited fromGovernment grantsofpermission,without

241Seeparas4.33‐4.39below

118

disclosing that interest. Anexamplewas theCasablancaCasino,whereheheldashare in

thecompanythatownedandrenteditsbuilding.TheCasinopaidfortherenovationofthe

building,thusindirectlyenrichinghimandtwoCabinetcolleagues.Hedidnotdeclarethose

interestswhentheywerediscussedinCabinet.

9) He received large sums of money, which he and his brother, Chal Misick, were to

characteriseas loans. Manyof thosereceiptswereundocumentedandnot thesubjectof

anyagreed terms for interestor repayment. In several instances theyhave still notbeen

repaid,despitethepassageofyearsorhisapparentabilitytorepaythem.Hereceivedone

ofsuchloansamatterofdaysbeforethelenders(thesameoverseasdeveloperswholater

paid for the North West Point land) received a favourable decision from the Cabinet

approving conversion of land from residential to commercial use and the grant of

developmentpermission.

10) He receivedpaymentsdescribedas loans fromorwith theassistanceof twoCabinet

colleagues, the Hon Floyd Hall and the Hon Lillian Boyce when relatives of those two

Ministers used their Belonger status to purchase freehold Crown Land for immediate

onward sale to anoverseas developer. Eachof theparties received $1million; eachwas

thenpressedto,anddid,makeasubstantial loantohim,noneofwhichhehasyetrepaid.

AfurtherloanwasalsotakenfromhiscolleagueHonJeffreyHall,whoalsoprofitedfromthe

deal.

11) He receivedmillions of dollars in transactions formally documented as loans, one of

whichwas of a sumof $6millionon advantageous terms from theoverseas backers of a

developmentprojectonSaltCay.Thecollateralonthe loanwas the50%share in theSalt

CayGolfClubLtdagreedbyMrMarioHoffmann, thedeveloperofSaltCay, toacompany

controlled by the Hon Michael Misick’s brother, Chal Misick, following the grant of

development permission promoted by the HonMichaelMisick himself. The pattern of a

relativeorclosefriendreceivingalargeunearnedstakeinadevelopmentcompanywasalso

demonstrated in the case of Joe Grant Cay. This convenient fiction of loans appears in

anothercontext:thatofnever‐to‐berepaidloanstoconstituents,describedbelow.

119

DeclarationsofIntereststotheRegistrarofInterests

4.14 Ihavealreadysetout ingeneral terms242 theevidenceof theHonMichaelMisick’s

disregard for his obligations under the Constitution and the Registration of Interests

OrdinancetomakefullandaccuratedeclarationsofhisfinancialintereststotheRegistrarof

Interests.InadditiontheevidenceofnoorinadequatedeclarationsrevealedbytheRegister

of Interests and his own acknowledgment in evidence of these breaches, there aremany

matterstowhichIreferinthefollowingpagesofthisChapterthatillustratethatdisregardin

abundance.

1–Ifindthathefailedrepeatedlythroughouthisperiodofmembershipofthe

LegislatureoftheTCItomakefullandaccuratedeclarationsofhisinterestsas

requiredbytheRegistrationofInterestsOrdinance1993.

SuchbreachesarepunishableundertheOrdinanceonlybytheLegislature,243andnotbythe

Courts,savepossiblybyrecoursetosomeothermoregeneralprovisionofthecriminallaw

such as the common law offence of misfeasance in public office. For that reason and

because there is much else of importance to investigate in relation to him, I make no

recommendationarisingoutofthisfinding.

DisclosureofIntereststotheCommission

4.15AsiswellillustratedthroughoutthissectiondealingwiththeHonMichaelMisick,he

failed repeatedly for some months to respond adequately, or sufficiently to instruct his

attorneys toenable themto respondadequately, to theCommission’s requestsunder the

CommissionsofInquiryOrdinancerequestforinformationandsupportingdocumentationof

hisfinancialinterests.ItwasonlyastheInquiryreachedthepointoftheoralproceedingsin

January of this year that he became more forthcoming. However, as appears in the

following paragraphs, he had still failed to disclosemuch that was highly relevant to the

Commission’sInquiryandcontinuedtodosoinhisoralevidenceuntilconfrontedbyother

informationandmaterialavailabletotheCommissionandbyevidencefromothersfollowing

242Seeparas2.27–2.28above243RegistrationofInterestsOrdinance,ss7‐10

120

his. To this day, he has still not disclosedmuch of the information that the Commission

soughtfromhim.

2‐IfindthattheHonMichaelMisickhasfailedinseveralimportantrespects

to make adequate disclosures in response to the Commission’s requests,

pursuanttoitspowersundertheCommissionsofInquiryOrdinance,forfulland

accuratedisclosureofhisfinancialinterests.

4.16WhilsttheCommissionsofInquiryOrdinancegivespowertotheCommission,whileit

isinbeing,totakeproceduralstepstoenforcesuchdisclosurebycontemptorbyreference

totheSupremeCourtforsanction,Ihavenotconsidereditnecessaryorappropriateinthe

circumstances. He and his attorneys, Misick & Stanbrook, whom I commend for their

assiduityand speed in responding to theCommission’smany requestsasbest they could,

eventually produced, onhis instructions,muchdisclosure. Thatdisclosure, in conjunction

withmuchother evidence and informationbefore theCommission, is sufficient to enable

metomakefindingsandrecommendationsrelevanttomyTermsofReference,whichismy

mainconcern.

Politicaldonationsor‘loans’

4.17Substantialpoliticaldonationsandotherpaymentscharacterisedasloans,oftenwith

notermsastointerestorrepayment,appeartobereadilyandwidelyusedmeansofmaking

covertpaymentstopoliticiansinpowerintheTCI.

4.18 Ihavediscussed inChapter2ofthisReport,undertheheadingPoliticsandPolitical

Donations,244 the relaxed attitude of the HonMichaelMisick and other PNPMinisters to

what constituted political donations to them and what use they could make of them,

coupledwith the lax or non‐existing accounting controls of thePNP. Such a combination

wasaclearrecipeandcamouflageforcorruption.Theevidence,oralandwritten,givento

theCommissionhasdemonstratedbeyonddoubt theabsenceatallmaterial timesofany

effectivecontroloraccountingwithinthePNPtoactasarestraintormeansofdisclosureof

donors and their possible non‐political reasons for making such large donations or the

244Seeparas2.34–2.40above

121

personal use to which the recipients put them. Massive sums of money from wealthy

individuals and companies passed through its bank accounts with minimal over‐all Party

control or even record keeping. The Hon Michael Misick and the Hon Floyd Hall –

respectively theLeaderandTreasurerof theParty–acknowledged inevidence that there

waslittlepracticaldistinctionbetweenmoniesgivenforpoliticalpurposesandmoniesgiven

forpersonaluse.

4.19 Thispicturewasreinforcedbymanyexamples indocumentseventuallydisclosedto

theInquiryoftheuseofPartyaccountsforpaymentofpersonaldebts.HeusedPartyfunds

forthedecorationofhishouseandforhiswife’sstylist. TheHonFloydHallusedthemto

payhiscreditcardbills.Bothsoughttoattributethisapplicationofthefundsasameansof

reimbursementofpersonaloutlaysbythemonbehalfoftheParty.Butneitherwasableto

identifyordocumentwithanythingapproachingprecisionwhattheyhadpaidoutcallingfor

suchreimbursement.

4.20 Whetherthisbehaviourmayhaveamountedtotheft fromtheParty is lessmaterial

thanitsillustrationofcasualnesstothetreatmentofandaccountingforsupposedlypolitical

fundsandpossiblecarry‐overintotheirministerialroles.Eithermancouldhaveestablished

apropersystemofcontrolsandcheckshadhewishedtodoso.Theconduitofmoneyfrom

richindividualsorcompaniesviathePartytothemforpersonaluseinevitablyinvitesserious

questionsoveranylargedonationstothePartyfromthosedoingbusinesswith,orhopingto

dobusinesswiththeGovernment.Theneedforsuchquestionsisnotlessenedbytheopen

conflict between theMinisters in evidencebeforeme as towhichof them controlled the

Party’sbankaccountwiththeBelizeBank,oneofitstwobankaccounts,andastowhether

theHonMichaelMisickwaspaidasalary.

4.21QuiteapartfromtheprovisionoffundstotheHonMichaelMisickandtheHonFloyd

Hall via the Party, the information before me shows a pattern of anonymous donations

directtotheHonMichaelMisickasanindividualpolitician,orviahisattorneyandbrother,

ChalMisick. Heandothersexplainedinthecourseoftheoralproceedingsthatdonorson

122

occasion might wish to advance the political career of an individual, but without any

publicity.Inhisevidence,hesaid:245

Thisisprimarilybecause,particularlythesmallnatureofourTerritory,personsgivingpoliticalcontributionwouldhavepreferredtobenotnamed

Headded:246

I received contribution from political supporters to further – in relation topolitical support andalso in relation to somepersonal political support. Thecultureof–againofthepolitical,andIthinkyouhavetoputitinthecontextofislandswherepoliticiansarenotonlyhelptheirpartytowinanelectionbutalsoweareexpectedtohelpourconstituentswhentheyhaveproblems.

This isessentiallythesameargumentasthatadvancedbytheHonFloydHall247thatparty

politicians must dispense money to constituents as well as pay for the usual political

expenses.

4.22 What constituted individual political contributions proved to be somewhat elusive.

TheHonMichaelMisickhadmadenomentionofpoliticalcontributionsinhisdeclarationsof

interestsundertheRegistrationofInterestsOrdinanceovertheyearsorinhissubmissions

to theCommissionprior to thestartof theoralproceedings. Hementionedthemfor the

firsttimeinthefollowingpassagefromawrittenstatementpresentedtotheCommissionat

thestartofthoseproceedings:

SomedonationswerepaiddirectlytomewhilstonatleastoneoccasionthePNPpassedontomedonationsofapoliticalnature.Donationssometimestooktheform of personal contributions to me to use as I see fit, rather than politicalcontributionsinthenormalsenseunderstoodbyaUKobserver.Themoneygivento me in this way could be used to help out the people in the Islands, or toreimburse me for money that I spent to help Islanders. And there is anotheraspecttothis.IoftenspentmyownmoneyonPNPactivitiesandIoftendidnotclaimthesumsback.

He provided no details of monies spent on helping Islanders any more than he did of

personalmoniesthathehadspentonPNPactivitiesorofanycorrelationofsumsreceived

by himwith such expenditure. Onhis ownbelated account, set out in a schedule to the

statement,andthelightofPNPaccountsalsoproducedatthelastmomentbytheHonFloyd

Hall,hehadmuchpoliticallargessetoexplain.Hedisclosedtwopaymentsintohisaccounts,

245Transcript,Day1p49246ibid,p56247Transcript,Day5,pp5‐26

123

described as Funds from PNP, one of $18,000 in May 2004 and another of $100,000 in

February2005.ThePNPaccountsshowedpaymentstotheHonMichaelMisickfrom2004

to2008totallingabout$900,000.

4.23Evenwhenheleftthewitnessbox,therewasnoevidencebeforetheCommissionof

undisclosedpoliticaldonationsreceivedonhisbehalfbyhisbrotherChalMisick.Whenthe

lattergaveevidencethefollowingweek,hedisclosed,afterhavingbeenorderedtodoso,

theidentitiesoffivecontributorswhohadchosentomakedonationstothePremierviahis

office. These totalled a further $1,030,000. The largest was for half a million dollars in

January2007,purportedlyforelectioncampaigningexpenses,fromTurksLtd,thecompany

ofDrCemKinay,thedeveloperofDellisCayandtheproposeddeveloperofJoeGrantCay.

InafurtherwrittenstatementtotheCommission,hestatedthathehadomittedtomention

thosesumsbecausehehadbeenconcentratingonhisownaccounts.248

4.24 Other previously undisclosed donations to the Hon Michael Misick continued to

emerge. Chal Misick, in his oral evidence to the Commission, spoke of $50,000 from

SarawakLtd(PaolaSepe);$30,000fromWindsorEnterprisesLtd(RussellGarland);$300,000

fromValentineGrimes,and$150,000 in twopayments fromCherokeeLtd.249 ChalMisick

alsospokeofanumberof loans fromothersources,somefromlargefinancial institutions

anddocumented,otherssmallandundocumentedfromindividualsandsomefromhimself.

Hismethodoflending,onatleasttwooccasions,wastoplacefundsintohisclientaccount

onbehalfofhisbrother,whowouldthendrawupontheaccount.InJuly2006hecredited

$325,000tohisclientaccountandmadeequivalentpaymentsouttotwoaccountsoperated

by or on behalf of his brother; in November 2006 he placed a further $130,000 into the

client account, and dealtwith it in the samewaywithin a fewdays. In all he loanedhis

brothersome$455,000inthatway,noneofwhichhadbeenrepaidwhenhegaveevidence

to the Commission in January this year. The Commission had no time to investigate the

legitimacyorotherwiseofthepaymentsfromthiscompanyorindividuals.

4.25ThereisnoobviousreasonwhypersonalloanstotheHonMichaelMisickwouldneed

to be put through Chal Misick’s client account, the latter’s ledger record of which is

seeminglytheonlybasisforhisassertionthattheywereinfactloans.Itisatleastopento

248Seealsoinparas4.172–4.182inrelationtotheHonMcAllisterHanchell249ChalMisickbundlep380

124

question whether the reason was to obscure the connection between the source of the

funds and theHonMichaelMisick, especiallywhenhehasnever repaid themevenwhen

apparentlyinfundstodoso,andhehasseeminglynotbeenpressedbyhisbrothertodoso.

Without examining the full banking records of Chal Misick, the Commission could not

identifythesourceorestablishanyaudittrailforthesefunds.

4.26AfurthersourceoflargescalefundstotheHonMichaelMisick,whollyundisclosedby

him in the course of correspondence with the Commission or in his oral evidence, was

$500,000allegedlyborrowedfromhisbrotherPhilip.Thesesumsonlycameto light inthe

ledgerofChalMisick,andweresaidtobeloansmadeinNovember2005andFebruary2006.

Aswith theChalMisick loans, theyweredevoidofsupportingdocumentationand,on the

faceoftheclientaccount,havenotbeenrepaid.Attheveryleast,theseraisequestionsas

totheirpurpose.

3‐IfindfromtheaboveandothermaterialbeforetheCommissionthatthere

is information that theHonMichaelMisickmay have abused his position as

Premier and as Leader of the PNP Party by using PNP funds for his own

purposes in that: 1) if and insofar as he may have been entitled to

reimbursementfromthePartyformoniesexpendedonitsbehalf,hefailedto

accountforsuchexpenditure;and2)thatthelevelofhispersonalexpenditure

wasdisproportionatetoanyexpenditureonthePartyhemayhaveincurred.

I,therefore,recommendcriminalinvestigationbypoliceorothersinrelationto

himintopossiblecorruptionand/orotherseriousdishonestyinrelationtosuch

andothersimilarmattersinrecentyears.

4 – I find that theHonMichaelMisick accepted and failed to declare to the

RegistrarofInterestsmanygiftsofmoneyviatheclientaccountofhisbrother

and attorney, Chal Misick, which were not, and could not reasonably be

interpretedasbeing,politicalinnature,andwhichheappearstohaveapplied

tohispersonalexpenditurewithoutdisclosuretotheRegistrarofInterestsor

totheCommission.

125


himofpossiblecorruptionand/orotherseriousdishonestyinrelationtosuch

andothersimilarmattersinrecentyears.

5‐Ifindthatthepaymentof$500,000byDrCemKinay,throughhiscompany,

TurksLtd,totheHonMichaelMisickwasapossiblycorruptpaymentbecause:

1) the Hon Michael Misick did not declare it in Cabinet when Dr Kinay’s

proposals for development were under discussion, or to the Registrar of

Interests or to the Commission; 2) it was paid to him through a third party

account,namelytheclientaccountofhisbrotherandattorney,ChalMisick;3)

it was wholly disproportionate to its stated purpose, namely for political

campaigning,andwasnot,forthemostpart,spentonsuchcampaigning;and

4)itwasreceivedfromadeveloperwhohadacontinuingrelationshipwiththe

Government, with whom further development agreements were under

considerationorbeingnegotiated,andwhobenefited fromCabinetdecisions

generoustohim250


the Hon Michael Misick into possible corruption and/or other serious

dishonestyinrelationtosuchandothersimilarmattersinrecentyears.

OtherPayments

4.27 Thereweremanyotherundeclared,undisclosedandstillnotsatisfactorilyexplained

substantialpaymentstotheHonMichaelMisick.

4.28OnewastheCaltagirone‘Loan’of$250,000,informationofwhichfirstemergedinthe

course of Chal Misick’s oral evidence. The sum had been had been paid into his client

accounton29thJuly2005forthebenefitoftheHonMichaelMisick.251Theloanwassaidby

ChalMisicktobefromInazio&GataenCaltagirone.252TheHonMichaelMisickhadmadeno

mentionofthisindocumentationprovidedbeforethehearingsorduringhisoralevidence;

250SeealsoFindingandRecommendation32,atpara4.182below251ChalMisickSchedule252Transcript,Day10,p69

126

theCommissionwasunawareofitatthatstage,andsodidnotquestionhimaboutit.There

wasno indicationofanyformaldocumentationorofanyrepaymenthavingbeenmade in

theinterveningfouryears.253

4.29TheattorneysfortheHonMichaelMisickhavesinceprovidedtheCommissionwitha

copy of a written agreement of a loan granted in the name of a company calledMarlie

JordanInc,dated29thJuly2005.Theloanagreementdoesnotnametheindividualsbehind

thecompany,butthefunds,passedtoChalMisick,wererecordedbyhimwiththenamesof

theCaltagirones,andnotthecompany.TheagreementwasforrepaymentinJuly2010,and

‐documentedorno–thetimingoftheloanisinteresting.Threeweeksafteritwasmade,

theHonMichaelMisick (thenChiefMinister)placedapaperbefore theExecutiveCouncil

proposingre‐zoningofcertainparcelsofland254fromLowDensityResidentialDevelopment

toTourismRelatedDevelopment,andaskedtheCounciltoapproveanoutlinedevelopment

planforthesite.255Approvalwouldhavesignificantlyincreasedthecommercialvalueofthe

property. The Hon Michael Misick did not inform his colleagues in the Council of the

Caltagirone Brothers’ ownership of the land and interest in the proposal or of any link

between them and him. The Director of Planning, who was present at the meeting,

appeared to be unhappy with the proposal, which was for 76 units as opposed to the

maximumof 36permissibleunder theexisting zoning. TheCouncil approved theplan, in

outline,withoutapparentalteration.Veryshortlyafterwards,on31stAugust2005,theHon

MichaelMisickwrote, as ChiefMinister, to Ignazio Caltagirone at Ericson Investment Ltd,

whichwasevidentlythebeneficiaryofthisdecision,confirmingthechangeofuseandgrant

ofoutlineapproval.256

4.30 The story of thismatter does not end there, because the Physical Planning Board

rejected certain aspects of the application, only to have their decision overturned in

December 2005 by theHonMichaelMisick. The circumstances surrounding this loan, like

some of those others that I have mentioned, clearly raise serious questions calling for

further investigation, but in particular here: the amount and timing of the loan, the Hon

MichaelMisick’spilotingandendorsementofthere‐zoninganddevelopmentproposals,the

253Transcript,Day10,p119254Parcels60904/509,510and511255Minute05/812ofCabinetMeeting24thAugust2005256CoreVolume6,section3letter&appeal

127

covertnatureofthepayment,throughacompanyandnotnamedindividuals,andhisnon‐

disclosure of the loan to the Executive Council, to the Registrar of Interests or to the

Commission.

6– I findthatthereceiptbytheHonMichaelMisickof$250,000on29th July

2005, purportedly byway of loan from Inazio & Gataen Caltagirone, via the

clientaccountofChalMisick,waspossiblyacorruptpaymentinthelightof:1)

theHonMichaelMisick’snon‐declaration to theCabinetofhis receiptof the

moneythreeweeksearlierorofhislinkstotheCaltagironeBrothersandtheir

interest in the proposed development under consideration; 2) the Cabinet’s

decision in favour of the proposal, followed by the Hon Michael Misick’s

subsequentdecisiononappealinfavourofitonplanningmatters;3)hisfailure

todisclosethepaymenttotheRegistrarofInterestsandnon‐disclosureofitto

the Commission; 4) the absence of any documentation identifying the

CaltagironeBrothersasthesourceofthemoneyoranytermsforrepaymentor

interest;and5)theabsenceofanyevidenceofrepayment.


theHonMichaelMisickofpossiblecorruptionand/orotherseriousdishonesty

inrelationtosuchandothersimilarmattersinrecentyears.257

4.31TheSaunders&Coloanof$275,000‐AnotherloantotheHonMichaelMisickthat

deservescommentwastheprovisionin2008of$275,000fromthelawfirmofSaunders&

Co,ofwhichhehadbeenanassociate. Hehaddeclarednoearningsfromthefirminhis

returnstotheRegistrar.HeinitiallystatedtotheCommissionthroughhisattorneysthathe

had been paid forwork done in 2003, but not since. He then produced a list showing a

commission payment in2002, salary payments in2004,2005and2006and loans in2004

and2008,thelatterbeingthe$275,000 loan. InoralevidencetotheCommission,hesaid

that hehadbeenpaid as a consultant by the firm throughout his period as Premier. His

attorneys, clearly on instructions, had informed the Commission on 18th November 2008

that he had not been employed by Saunders& Co since 2003. The precise nature of his

consultancywork forSaunders&Cowas,however,obscure,ashecouldnotnameanyof

theirclientsinrespectofwhomhehadprovidedconsultancyservices. 257TheCommissiondidnotserveaSalmonletterontheCaltagironebrothersbecauseitnotfindthem.

128

4.32 The loan from Saunders & Co was not supported in the Hon Michael Misick’s

submissions to the Commission with any documents. During the course of the oral

proceedingstheCommissionwasinformedthatthefundshadbeenusedtomakeapayment

toajewellerscompanytowhichthehehadowedmoney,andareceiptfromthejewellers

wasproduced.Sincethen,Saunders&Cohaveproducedfurtherdocumentation,insisting,

mistakenly, that the Hon Michael Misick must have previously produced them to the

Commission. According to this further documentation, Saunders& Co did notmake the

loanbutarrangedit.Thesourceofthefundsremainsunclear.TheoralevidenceoftheHon

MichaelMisickwasthathehadstillnotrepaidit,incommonwithalmostallhisotherloans.

Saunders&Cohadnottakensecuritythemselves,butapparentlyacautionhadbeenplaced

onpropertyownedbytheHonMichaelMisickonbehalfofanomineecompanyrunbythe

firm.Intheresult,thisloan,liketheothersraisesseriousquestionsthatremainunanswered

andmeritfurtherinvestigation.

4.33TheNorthWestPointLoansof$450,000–TheHonMichaelMisicksaidthat,inJune

andJuly2006,hehadreceiveda totalof$350,000 in three loans,$150,000 fromtheHon

Floyd Hall and $100,000 each from the Hon Jeffrey Hall and the Hon Lillian Boyce. The

moneyfortheseloanswasgeneratedbythesaleoflandatNorthWestPointbyacompany

called Urban Development Ltd to a company controlled by an overseas developer called

DavidWex,andtheloansweremadetotheHonMichaelMisickfollowingthetransaction.I

examinethismatterinmoredetaillaterinthisChapterinrelationtotheHonJeffreyHall.258

Thebeneficiariesofthetransaction,whichinvolvedflipping,259ofCrownLand,weretheHon

JeffreyHallandthreeotherBelongers. Thethreeotherswererespectivelythebrothersof

theHonFloydHall,andtheHonLillianBoyce,andtheformerhusbandofHonLillianBoyce.

TheHonFloydHallandtheHonLillianBoyceeachinsistedinevidencethattheirsiblings,not

they, had loaned themonies, but theHonMichaelMisick disagreed, saying theMinisters

hadbeenthelenders.

4.34Thetransaction,asawholebearsthehallmarksofaflagrantexploitationoftheCrown

LandPolicy,inwhichthreeCabinetMinistersmayhavebeencomplicit.BoththeHonFloyd

258seeparas4.196–4.209below259seeparas3.9–3.15above‐purchasebyBelongersoflandatadiscountandimmediateonwardsaletooverseasdevelopersatlargeprofits.

129

Hall260 and theHon LillianBoyce261 admitted that they hadbenefited personally from the

profitsmadebytheirbrothers.TheHonMichaelMisickseemstohaveknownenoughofthe

transactionandtheprofitsmade, toregard itasanopportunetimetoapproachthemfor

money.Thereisnosignofanyattempttorepay,orevenpretenceatattemptstorepaythe

funds, despite his later acquisition of much greater funds from a Slovakian Bank, J&T

Banka.262 The fact that themoney was being taken from those who hadmade windfall

profitswithouttheneedforinvestmentorriskontheirpartssuggeststhattheHonMichael

Misick took a cut from the profits from each. If that proves to be the case, it would be

shamelessexploitationoftheCrownLandPolicy,andrepresenthispersonalenrichmentat

theexpenseoftheTCIIslanders.

4.35 Aswithallormostof theother loansthat Ihavementioned, thereceiptofmultiple

sums never repaid suggests that – like the loans to constituents – the idea of eventual

repayment is a convenient fiction. This is at itsmostobviouswhen it is remembered that

theyweremadetoanostentatiouslywealthyPremierbycolleagues intheCabinet (orthe

relativesofthetwoofthem),noneofwhomenjoyedatthetimehistrappingsofwealthor

influenceandwhomhehasmadenoattempttorepay.

7 ‐ I find that theundocumentedandun‐repaid,NorthWestPoint ‘loans’ to

theHonMichaelMisick, collectively amounting to about $350,000 fromHon

JeffreyHall,theHonFloydHallorhisbrotherandtheHonLillianBoyceorher

brother,werepossiblycorruptpaymentstohimforfavoursgiveninrelationto

theNorthWest Point transaction,which engendered themoney to facilitate

suchpayments.


theHonMichaelMisickofpossiblecorruptionand/orotherseriousdishonesty,

includingmisfeasance in public office, in relation to these payments and the

NorthWestPointtransactionsgivingrisetothem.

4.36TheThirdTurtleClub–Finders’sFeeof$161,000‐AnothermajorpaymenttotheHon

MichaelMisickwastoemergeforthefirsttimeafterhehadcompletedhisoraltestimony.

260Transcript,Day15,p50261Transcript,Day13,p125262Seepara4.99below

130

TheHonFloydHall,inhisoralevidence,informedtheCommissionthathehadreceivedwhat

hetermedafinder’sfeeinrespectofhisdealingswithadevelopernamedRichardPadgett,

whoranacompanycalledOceanpointDevelopmentLtd. This sumwas$375,000 in total,

andthepropertywaslatertobedevelopedastheThirdTurtleClub.263TheHonFloydHall

acknowledgedthathehadnotdeclaredthepaymenttotheRegistrarof Interests. Hehad

notonlyprovidedafindingservicebuthadalsodonesomeconsultancyworkforMrPadgett,

andhadbilledhimforthesumhalfofwhich,between$161,000and$165,000,hehadgiven

bywayofbanktransfertotheHonMichaelMisick.Hecharacteriseditasaweddingpresent

since, he said, themoney had been awindfall for him. As I have said, theHonMichael

Misickhadnotmentionedthistransfer.Infactasumof$161,618.92waslaterdisclosedby

Chal Misick as having gone into his client account for the benefit of his brother from

Paradigm CorporateManagement Ltd (Paradigm), the Hon Floyd Hall’s company, on 20th

February2006,sometwomonthsbeforetheHonMichaelMisick’swedding.

4.37 The characterisationby theHon FloydHall of thismoney as awindfall, andhaving

passedhalfofitonasagiftisunconvincing.Thepreciseamountofthetransferandmedium

of payment through Chal Misick’s client account, rather than direct to the Hon Michael

Misickdonotreadilysuggestapersonalweddinggift.Moreover,thecircumstancesofthe

HonFloydHall’sreceiptofthe$375,000,includinghisfailuretodeclareittotheRegistrarof

Interestsandhis latedisclosureof it to theCommission, raiseseriousquestionsabout the

probityof thepayment.Themoresuspect thedealon thepartof theHonFloydHall, the

more questionable is the division of it between him and the Hon Michael Misick. The

circumstancesgivingrisetothepayment,andtheHonMichaelMisick’sfailuretodeclareit

clearlyrequirefurtherinvestigation.

4.38TheAldenSmithpaymentof$325,000–TheHonMichaelMisickreceivedapayment

of$325,000 inFebruary2006 fromamannamedAldenSmith,whichhehadpaid intohis

BelizeBankaccount.HedidnotdeclareittotheRegistrarofInterests,andhediscloseditto

theCommissiononlyatthestartoftheoralproceedingsafterhavingbeenaskedtoaccount

for previously unexplained credits to his bank accounts. He said that he had been

approachedbyMrSmith,whohadacompanycalledAshleyPropertiesLtd,toassistwitha

saleofland.ThelandwasonWaterCay,andthepurchaserwasMrPeterWehrli,whowasa 263Transcript,Day6,p113

131

friendof theHonMichaelMisick, andhad loanedhimmoney.264 Heclaimed thathehad

been asked by theHon FloydHall to intervene, but did not knowwhether the latter had

receivedanymoneyfromthetransaction.Healsodeniedthatthelandinquestionhadbeen

CrownLandatthetime.

4.39 In due course theHon FloydHallwas to tell the Commission thatMr Smithwas a

friendofhisandhehadloanedMrSmith$75,000.HesaidthatMrSmithhadhadanoption

topurchase10acresofCrownLandonWaterCayfor$750,000andhadevidentlysoldthe

landonfor$2million,makingasubstantialprofit.Thisallowedhimtorepayhisdebttothe

HonFloydHallandtopayhimafurther$125,000.Onthataccount,thetotalcommissionof

$450,000allegedlypaidbyMrSmithonthe$2millionsalewouldhaveamountedto22.5%

incomparisontomostrealtors’commissionratesinsinglefigurepercentages.Theevidence

of the Hon Floyd Hall is clearly at odds with that of the Hon Michael Misick, as the

transactiondescribedbythe formerwasapurchaseandsaleon (‘flipping’)ofCrownLand

andnotsimplyaprivatesaleofprivateland. Ifthatwereso,theHonMichaelMisick,who

profitedfromthedeal,musthaveknownofit.

4.40TheJanetteVarellaDepositof$95,000–AfurtherpaymenttotheHonMichaelMisick

without proper explanation, was made into his account with the First Caribbean

InternationalBankof$95,000inJanuary2007. HetoldtheCommissionthatithadbeena

deposit by a friend, named Janette Varella, for a private land purchase. He said that

althoughtheyhadlaterjointlyboughtproperty,thismoneyhadbeenintendedasadeposit

onlandshehadbeengoingtobuyonherownaccount.Hesaidshehadsentittohimtopay

thedeposit.Hewasnotable,however,topointtothemoneybeingpaidoutofhisaccount

for that purpose. Thediscrepancy remainedunexplainedduringhis oral evidence, and in

latersubmissions.

8– I find that theHonMichaelMisick in recentyearsacceptedand failed to

declaretotheRegistrarofInterestsmanygiftsorpurportedloansofmoneyvia

theclientaccountofhisbrotherandattorney,ChalMisick,whichwerepossibly

corruptonaccountofpossiblefavoursgivenbyhiminhiscapacityasPremier.

264Seepara4.13above

132


theHonMichaelMisickofpossiblecorruptionand/orotherseriousdishonesty,

including misfeasance in public office, in relation to such and other similar

mattersinrecentyears.

9 ‐ I find that there is information that the Hon Michael Misick may have

promotedtheabuseoftheCrownLandPolicyonanumberofoccasions,and

benefitedpersonallyfromthatabuse:1)inhisreceiptof$161,618.92fromthe

HonFloydHall via the clientaccountofChalMisickon20th February2006,a

possiblycorruptpaymentderivedfromapurportedfinder’sfeeof$373,000in

respectoftheThirdTurtleClubpaidbyMrRichardPadgett,adeveloper,tothe

HonFloydHallinthecircumstancessummarisedabove;2652)inhisfacilitation

of the sale of former Crown Land by Ashley Properties Ltd for which he

receivedacommission,asdescribedabove;3)inhisparticipationintheprofits

of Urban Developments from the sale of land at North West Point to a

companycontrolledbyDavidWex,anoverseasdeveloper,asdescribed;and4)

in fronting the sale of Crown Land to overseas developers, specifically in his

involvement in the company, MIG Investments Ltd, by which he enabled

overseasdeveloperstopurchase18acresoflandentirelyattheirexpense,but

inwhichheacquireda50%interestbyvirtueonlyofhisstatusasaBelonger.266

I, therefore, recommendcriminal investigationbypoliceorothers in relation to

the HonMichaelMisick in respect of the abovematters of possible corruption

and/orotherseriousdishonesty,includingmisfeasanceinpublicoffice.

Tourism

4.41 Over the last decade themain source of income and development for the TCI has

been, and remains, thepromotionof the Islands as a tourist destination. Theyhavebeen

deliberatelymarketedtoattractwhataretermedhigh‐endtourists,thosepreparedtospend

extensivelyonluxuryaccommodation.FromtheformationofthisGovernmentin2003,the

265Seeparas4.36–4.37above;Seealsoparas4.121–4.124andRecommendation19below266Transcript,Day2,pp127‐133

133

HonMichaelMisickalsoheldthepostofMinisterofTourism.Inrecentyears,hehasshared

responsibilityfortourismwithTouristBoardwithsomefulltimepaidofficials,includingthe

Director, Lindsey Musgrove, and Deputy Director, Ralph Higgs. Both of these men gave

evidencetotheCommission,asdidtheChairmantheHonWayneGarland,aPNPMemberof

theHouseofAssembly.AlthoughaBoardmember,theHonGarland’spostisanexecutive

one,makinghimalsoapaidmemberoftheBoard.

4.42 AsMinister forTourism, theHonMichaelMisickhaspresentedhimselfas themain

ambassador for the Islands abroad. The Hon Floyd Hall has commented that this was a

successfulstrategy,andtheHonMichaelMisickdisplayednofalsemodestyinvauntinghis

ownsuccess.Theevidenceof theHonWayneGarlandtotheCommissionwasthat tourist

numbershadbeen rising since2003,buthaddippedduring the financial year2007‐2008.

TheCommissionhasnotseenfiguresfortouristnumbers,andnoevidencewaspresentedto

itastotheeffectivenessofdifferentapproaches.Infact,theChiefAuditor,CynthiaTravis,

in her Audit Report on the Tourist Board for 2005‐2006, stated that the Board had been

unabletocompileaccuratestatisticaldataontouristarrivalsbyair,andhadbeenrelyingon

estimates. TheReportmadedepressing reading. TheChiefAuditordescribed theTourist

Boardasbeing inapoorfinancialstate,withapatternadhocspendingandalargedeficit

becauseofmuchunbudgetedexpenditure in theprevious financial year. Shepointedout

that, of 13 issues raised with the Board, six had also been raised the previous year,

suggesting an unwillingness or inability on the part of the Board to address identified

problems. She did not attribute the deficits to fraud, but seemingly to incompetence and

poorleadership.

4.43TheHonMichaelMisick,whenaskedintheoralproceedingsabouttheChiefAuditor’s

criticisms,respondedwithapersonalattackonherasbeinganti‐government,allegingthat

she was in cahoots with the Opposition. As the Commission learned, he had previously

beratedherpubliclyonatleastoneoccasion.TheCommissionhasseenmuchofherworkin

herauditreports.Nothinginthemsuggestshertohavebeenanythingotherthanobjective

andprofessionalinherwork,rightlyseekingtoaddresstheGovernment’sincompetentand

chaoticmanagementofpublicfinances.

134

4.44ThedivisionorsharingofresponsibilitiesbetweentheMinistryofTourismledbythe

HonMichaelMisickandtheTouristBoardledtoconfusion.TheBoard’sjobwastopromote

tourism, and it had been voted a generous budget for that purpose. However, the Hon

MichaelMisickincreasinglyactedonhisowninitiative,undertakingprojectsandcommitting

theBoardtocontractualobligationswithoutconsultingtheminadvanceor indisregardof

itsadvice.TherewasconfusingevidencebeforetheCommissionastowhowasresponsible

forwhatandwhohaddonewhatinundertakingsomeofthesecommitments.FromApril

2007 themarketing budget of the Board was apparently hived off to allow for a special

budgetformarketing.Boardofficialsunderstoodthatthiswastobemanagedorchannelled

through theOfficeof thePremier. In awritten submission to theCommissionhedenied

that.267TheHonWayneGarlandsaidthat,onoccasion,hehadsigneddocumentsonbehalf

oftheHonMichaelMisickratherthanBoard,thelegalquestionabilityofwhichmayyethave

tobetested.

4.45Theonlyreasonforthisnewbudgetaryarrangementseemstohavebeentogivethe

HonMichaelMisick an opportunity to intervenepersonally inmarketing decisions for the

Islands’ tourism industry, more particularly as to advertising. I do not doubt the Hon

MichaelMisick’senthusiasmforpromotionoftheTCI,butcannotavoidtheconclusionthat

he wished to circumvent governmental bureaucracy andmake his own decisions, usually

involvinghigh‐profileanddeterminedlyup‐marketadvertising.Although,hisspecialbudget

forthepurposewasgenerous,hespentalmostallthesumbudgetedforthefirsttwoyears

in the first year. Meanwhile theBoard hadoverrun its ownbudget in the previous year,

leadingtoanaccumulateddeficitinMarch2006ofover$2million.Thisresulted–according

to the evidence of its Director and Deputy Director – from the Hon Michael Misick’s

directionsthatitshouldundertakeprojectsforwhichtherewerenobudgetedfunds.

4.46KerwinCommunications–OfparticularconcernwasanagreementbetweentheBoard

and Kerwin Media LLC, a New Jersey agency working under the name of Kerwin

Communications.Untilabout2006advertisingoftheTCIintheUSAhadbeenhandledbya

companynamedBlurAdvertising,workingona relativelymodestbudget. In2006Kerwin

Communicationsemergedasabidder for thework. TheCommissionwasshowna formal

267HonMichaelMisick,fourthstatement,dated19thJanuary2009

135

contractbetweentheagencyandtheBoarddated10thMarch2007. Itwasdauntingin its

scope,seeminglyauthorisingtheagencytoactonbehalfoftheBoard intheplacementof

contracts for Print‐Media and Broadcast‐Media advertising without prior agreement. The

billsweregototheBoard;KerwinCommunicationswouldbeheldfreeofanyliability,and

wouldreceivecommissiononalladvertisingplaced;andthecontractplacednorestrictionat

allupontheamountofadvertisingornumberofcontractsplacedbytheagency.Itwas,it

appears, inKerwinCommunications’ interesttoplaceasmuchadvertisingaspossible,asit

receivedastraightpercentageofeverydollarcommitted.

4.47 The contract, on the face of it, had been signed by the Hon Wayne Garland, as

ChairmanoftheBoardandonitsbehalf.Onbeingshownthecontractinthecourseofhis

evidencetotheCommission,hesaidthathehadtakennopartinitsnegotiation,allofwhich

had takenplacebeforehis appointment. He agreed that the contract borehis signature,

but, paradoxically and without explanation, denied that he had ever seen the document

before.HeagreedthatitamountedtoablankchequeinfavourofKerwinCommunications,

and informedtheCommission that theGovernmentwasbeingsued foraseriesofunpaid

debts incurred on its behalf by the agency. He said that the contract would have been

referredtoSaunders&CoasattorneysfortheBoardbeforesignature.

4.48 In fact, Kerwin Communications had already begun to place advertising for the

GovernmentbeforethepurportedsigningofthecontractwiththeBoardinMarch2007.At

around this time they had engaged the services of the Hon Michael Misick’s wife for

advertising purposes from late 2006. Photo‐shoots had been arranged, for which she

appearstohavebeenpaidnearly$300,000throughhercompanyMyWayProductions2Ltd.

TheevidencebeforetheCommissiononthismatterwas,however,unstructuredandpoorly

documented.

4.49 TheTouristBoard’sminutesof itsmonthlymeetings intheAutumnof2006confirm

thatKerwinCommunicationshadalreadybegun toactde factoasagent for theBoardon

instructions of the Hon Michael Misick before the March 2007 contract, and had been

invoicing it for advertising placed. In his evidence to the Commission, the Director, Mr

Musgrove, spokeofameetingheattended inNewYork late in2006withMrKerwin, the

136

HonMichaelMisickandthethenChairmanoftheBoard,DonGardiner,atwhichtheagency

madeapresentationoftheservicesitcouldprovideandtheirprice.Hestatedthatthathe

hadleftthemeetingwiththeimpressionthatKerwinCommunicationswastobetheBoard’s

new advertising agency, although no firm agreement had been reached. In cross‐

examinationonbehalfoftheHonMichaelMisick,hedisagreedwiththesuggestionthat it

hadbeen theBoard’sdecision toengageKerwinCommunicationsand that theBoardhad

decidedhowthe fundsprovidedby thespecialbudgetweretobespent. Evidenceto the

CommissionbytheBoard’sDeputyDirector,MrHiggs,wastolikeeffect,thoughhediffered

astodetail. Accordingtohim,268theHonMichaelMisick’swife’s involvementhadalready

beendecided.

4.50Thus,thethrustoftheevidencefromallthreeTouristBoardofficialswasthattheHon

Michael Misick, not the Board, had chosen Kerwin Communications as the advertising

agency for theTCI, and that theBoardhadeffectivelybeen instructedor asked toaccept

thatchoice.TheirevidenceinthatrespectisofapiecewiththatofMsMcCoy‐Misick,who

saidthatherhusbandhadplayedaroleinnegotiatingtheKerwinCommunicationscontract.

ShesaidthatherhusbandhadtoldtheagencythatshewasgoingtobethefaceoftheTCI,

andhadmadetheappointmentoftheagencydependentuponit.

4.51TheHonMichaelMisick,ontheotherhand,toldtheCommissionthattheBoardhad

selected and appointed Kerwin Communications269 and that he had played no part in the

selectionorintheirchoiceofhiswifetobetheadvertisingfaceoftheTCI.270Hemaintained

thatitwasacoincidencethattheagencychosehiswife.MrKerwinsoughttosupporthis

stance,inalettertotheCommissionassertingthatthecontracthadbeennegotiatedsolely

by the HonWayne Garland on behalf of the Board, and that his agency had negotiated

separately with Ms McCoy‐Misick as to the terms of her engagement. However, he

acknowledged thatKerwinCommunicationshadbeen instructed inmid2006, about the

timeithadengagedhertoadvertisetheTCI,longbeforetheHonWayneGarlandbecame

theBoard’sChairman,and,onhisownevidence,firstmetMrKerwin,namelyinMayorJune

2007.

268Transcript,Day20,p220269Transcript,Day3,p73270Transcript,Day3,p76

137

4.52EveniftheHonWayneGarlanddidsigntheMarch2007contractdocument,itlooks

asifitwaswellaftertheagreementhadbeenstruckbytheHonMichaelMisickandKerwin

Communications, and that the latter’sworkhadbegunwith thepromotionofMsMcCoy‐

Misick’slucrativeworkasthefaceoftheTCI. TheHonMichaelMisickandMrKerwinhad

beenonfriendlytermssinceatleastearly2006,longandcloseenoughforKerwintohave

been invited to theMisicks’wedding inApril 2006. In addition, theHonMichaelMisick’s

involvementintheoperationoftheagreement,oncemade,isalsotelling.Inresponsetoan

expressionofconcernbytheDeputyDirector,MrHiggs,aboutthe levelofexpenditureto

whichKerwinCommunicationswasexposingtheBoardunderthecontract,hewrotetoMr

HiggsinstructingtheBoardtoabidebytheagreementheandtheagencyhadmadeabout

expenditure.

4.53Inmyview,if,asappearslikely,theproperviewofthisconflictingevidenceisthatthe

Hon Michael Misick engineered the Government’s advertising contract with Kerwin

Communications and the agency’s engagement of his wife for high financial reward, it

suggestsattheveryleastabusebyhimofhisofficialposition.Inexpressingthatview,Ido

notcriticiseMsMcCoy‐Misick,whoperformedthedutiesaskedofher,orthequalityofthe

advertisingpurchasedviaKerwinCommunications.

10–IfindthattheHonMichaelMisickbehavedinapossiblycorruptmanner

and/or inmisfeasance of his public duty, by securing highly paid advertising

contracts for his wife with the TCI Tourist Board and with Kerwin

Communications purportedly acting on behalf of the Tourist Board, thereby

potentiallyabusinghisministerialresponsibilityforthetourismintheTerritory

withaviewtoenrichinghiswifeandhimself.


the HonMichael Misick of possible corruption and/or misfeasance in public

office, in relation to him to his exercise of his responsibility as Minister

responsiblefortourisminthismatter.

138

UseofGovernmentandleasedaircraft

4.54OneofthemostcontentiousandhotlydebatedissuesbeforetheCommissionwasthe

use by the Hon Michael Misick of privately leased aircraft and of Government funded

aircraft.HeandhiswifegaveevidencetotheCommissionabouttheiruseofprivateaircraft.

After they met in mid‐2005 they conducted a courtship from afar, flying between Los

Angeles and the TCI, initially on scheduled aircraft. They quickly decided that a privately

leasedaircraftwouldgivethemmoretimetogether. Heprovidedthefunds;shesaidthat

she did not, at first, know the cost, but later learned that each one‐way trip cost about

$50,000.TheyadoptedthismodeoftravelfromaboutJulyorAugust2005,andcontinued,

with twoor three round trips permonth, up to andbeyond theirmarriage inApril 2006.

AssumingprivateleaseswerealwaysatthelevelandratementionedbyMsMcCoy‐Misick,

thePremierwouldhavespentbetween$200,000and$300,000permonthbetweenAugust

2005 and March 2007, when they began to consider a different arrangement. This

represents expenditure of between $4 million and $6 million. Conspicuous and lavish

expenditure of this nature is precisely the reasonwhy therewas suchwidespread public

concern at the behaviour of the Premier, and a legitimate concern as to how he could

possiblyaffordit.

4.55In2007theGovernmentacquireda1976KingAir200aircraft271forlocalandregional

transport.Itboughttheplaneforjustover$1millionfromacompanycalledTCIExportLLC

basedinBoise,IdahowithamailingaddressinChicago.272Theonlynamedmanageronthe

corporate documents is a man named Paul Brassington, whose likely relative, Michael

Brassington, became its regular pilot, once the Government had purchased it. The Hon

MichaelMisickproposed thepurchaseatCabinetMeetingon30thMay2007.273 Cabinet

approved thepurchase, and the followingweek,6th June, theyapprovedpayment for the

employmentoftwopilots.

4.56 Theaircraftofgreaterinterest,however,wasaGulfstreamIII jetaircraft,capableof

internationaland trans‐Atlantic travel. Fromabout themiddleof2007 theybegan touse

271RegistrationnumberN884PG.272TheHonMichaelMisickBundle3,pp1077‐1081273CoreVolume6,tab1,p114‐116

139

anotherGulfstreamIIIJet.274Theirevidencediffersastohowthatcameabout.Hesaidthat

hehadbeeninterestedinleasingaplanetosavethegovernmentmoney.Sherecalledthat

she had jokingly said to him that they needed a plane and he started looking into it and

eventuallytheyacquiredone,andsheusedit. Sherecalledthatononeoccasiontheyhad

borrowed Mario Hoffmann’s private aircraft for a trip to the USA. Michael Brassington

suggestedhe look at a jet beingoffered for salebyWealthAviationof LasVegas. Itwas

flowntoLosAngeleswhilsthewas thereonavisit, forhim lookat. AlthoughanOffer to

Purchasewasdrawnupinhisnamewithaviewtooutrightsaleofthejetfor$6.25million,

his interest, he said, was only in leasing, so he did not continue with the transaction.

However,JeffreyWatson,aUScitizen,afriendofhisandWashingtonDClawyer,knewofhis

interest, andbought theplane in thenameof Indigo TransportationPartners, a company

basedinMiami.ThatcompanythenofferedtoleaseittotheTCIGovernmentfor$165,000

permonthbasedonatotalof400hoursflyingtime.InJuly2007theCabinet,beforewhom

thematterwas raised by theHon FloydHall, approved the purchase on those terms. In

evidence to the Commission, the Hon Floyd Hall maintained that he had at the time

disagreedwiththepurchase,buthadnotspokenoutagainstit.HetoldtheCommissionthat

thedealhadbeendonebytheHonMichaelMisickwithoutreferencetohimasMinisterfor

Finance.TheHonMichaelMisickwasunabletoexplaintotheCommissionhowitwasthat

MrWatsonhadbought theaircrafthehadbeen lookingat in LosAngeles. Soonafter, in

October2007,MrWatsonwasgivenBelongerstatus.

4.57 MsMcCoy‐Misick remembered thedetailsof theacquisitionsomewhatdifferently.

She had been shown theOffer to Purchase document whilst on board the aircraft from

MiamitoProvidenciales.Theyhad,shesaid,boughttheplane;sheknewthatbecauseher

husbandhadtoldherso. Sheandhehadmadearrangementstopersonaliseorcustomise

theinsideoftheaircraft,totheextentofherdesigningapersonalcresttobewovenintothe

carpet. Theyhadalso chosen coloursand fabrics for the interiordesign; sheprovided the

Commissionwith documentation from a designer, quoting forwork on the aircraftwhich

hadbeenfaxedtoCaptainMike.SheknewJeffreyWatsonasafriendofherhusband,who

would stay at the house with them in TCI, but was unaware of his connection with the

aircraft.Atnostageduringhermarriagedidshesuspectthattheydidnotowntheaircraft.

274RegistrationnumberN165G

140

ShehadaccompaniedherhusbandinitonaworkingtriptoDubaiforatouristconference,

but most of her use of it was personal, including many trips to the USA, including Los

Angeles,Europe,includingSwitzerlandtovisitherdaughterinschoolthere,Milan,Prague,

andaholiday inAfrica. HerhusbandwouldsendtheplanetocollectherfromtheUSA, if

shecouldnotmakescheduledflightconnections.275

4.58TheHonMichaelMisick,inhiswrittenstatementattheoutsetoftheoralproceedings,

maintainedthatJeffreyWatsonhadleasedittotheGovernmentandothersforgovernment

useforsetperiodsoftime,andtohimselfforpersonaluse.However,thereisnodoubtthat

theHonMichaelMisickhadalmostexclusiveuseoftheaircraft.TheHonFloydHalltoldthe

Commissionthathehadnottravelledon itandhadneverevensteppedonboard. Ihave

seennoevidenceofotherministerialorothergovernmentaluseofit.NorhaveIseenany

evidenceofpaymentsmadebytheHonMichaelMisicktoIndigoTransportationPartnersfor

hispersonaluseoftheplane,noranyevidenceofreimbursementbyhimtotheGovernment

forthatuse.

4.59 These circumstances of the acquisition and the Hon Michael Misick’s use of the

Gulfstream raise a number of matters, worthy of criminal investigation as to possible

corruption and/or other serious dishonesty in the form of misfeasance in public office

and/ordishonestmisappropriationofpublicfunds,namely:

1)thefactthatMrWatson,afriendoftheHonMichaelMisick,purchasedthe

jet and then leased it to the Government after the Hon Michael Misick had

viewed the same jet, which suggests a much closer involvement of the Hon

Michael Misick in its acquisition and/or beneficial ownership than he has

admittedtotheCommission;

2) the fact thathemadenomentionofMrWatson inCabinetor toapossible

conflict of interest,when the government leased the jet at a very high rental,

whichsuggestsadesiretokeephisconnectionsecret;

3) If the Hon Floyd Hall is correct, the transaction was completed without

advancereferencetotheCabinet,anditsapprovalwasamereformality,and

275Transcript,Day14,p87

141

4)theexclusiveuseoftheaircraftbytheHonMichaelMisickandhiswife,forthe

mostpart,fortheirpersonaluse.

4.60Bywayofpostscript,thereisconflictastowhethertheleasingchargesfortheaircraft

werestillbeingpaidand,ifso,bywhomatthetimeoftheoralproceedingsinJanuaryand

Februaryofthisyear.TheHonFloydHall,whowasstillMinisterofFinanceatthetime,was

under the impression that the Government was paying for it. The HonMichaelMisick’s

evidencewasthatthecontracthadbeenterminatedandthatpaymentshadceased.Istill

donotknowthetruthofthematter.

11 – I find that the Hon Michael Misick behaved in a possibly seriously

dishonest manner, including misfeasance in public office and dishonest

misappropriationofpublicfunds,byhispossiblemisuseofgovernmentfunds

andfacilitiesforhispersonalpurposesinhisuseofaircraftcharteredorleased

bytheGovernmentforofficialpurposes.

I,thereforerecommendcriminalinvestigationbythepoliceorothersinrelation

to him of possible serious dishonesty, including misfeasance in public office

and/ordishonestmisappropriationofpublicfundsinrelationtohispersonaluse

ofsuchaircraft.

CasablancaCasinoandtheWindsorInvestmentGroupLtd

4.61TheCommissionreceivedundocumentedinformationsuggestingthattheHonMichael

Misick andMario Hoffmann, the Chief Executive Officer of Salt Cay Development Co Ltd,

bothhadaninterestintheCasablancaCasino.TheHonMichaelMisickhaddeclarednosuch

interest in his declarations to the Register of Interests. But evidence given to the

Commissionwastosuggestthathe,theHonFloydHallandtheHonMcAllisterHanchelleach

owned10%ofWindsorInvestmentGroupLtd,theholdingcompanyofthelandonwhichit

stood,andthatChalMisickownedtheother70%.

142

4.62 Bya letterof27thOctober2008,276theHonMichaelMisick’sattorneys informedthe

Commission, for the sake of completeness, that he owned 10% of a company properly

describedasWindsorInvestmentGroupLtd,277ofwhichChalMisickwasthesoleregistered

director,companysecretaryandshareholder.WindsorInvestmentGroupLtdowned50%of

HydronoxLtd,aholdingcompanywhichownedthe landuponwhichtheCasinowasbuilt.

The other 50% of Hydronox Ltd was owned by Terrapin Investments Ltd. The beneficial

ownership of Terrapin Investments Ltd or the other shareholders inWindsor Investment

GroupLtdwerenotspecified.

4.63TerrapinInvestmentsLtd,itemerged,washeldbyoronbehalfofMarioHoffmann,as

anassetholdingcompany.TheHonMichaelMisick’sattorneysstatedintheletterthatthe

corporate documents for Windsor Investment Group Ltd would be forwarded to the

Commission; they have not been. In the letter they also stated that Hydronox Ltd had

generatednoprofitsand therehadbeennodrawingson it, and thatWindsor Investment

Group Ltd had no income.278 Searches of the Companies Register show that, since April

2008, Windsor Investment Group Ltd and Terrapin Investments Ltd became joint equal

shareholdersandtheonlytwodirectorsofHydronoxLtd,andthustheeffectiveownersof

theCasinoland.

4.64 ChalMisickacknowledged inhisevidence to theCommission that theHonMichael

Misick owned 10% of Windsor Investment Group Ltd, but refused to identify the other

shareholders.WhenIruledagainsthisrefusal,hesaidthattheHonFloydHallandtheHon

McAllisterHanchelleachheld10%andthatheheldtheother70%. Ishouldmentionthat

neithertheHonFloydHallnortheHonMcAllisterHanchellhaddisclosedtheseintereststo

theRegistrarofInterestsortotheCommissioninwrittenortheiroralevidence.279Hesaid

thatwhenWindsorInvestmentGroupLtdhadacquiredthelanduponwhichtheCasinonow

stood,therewasapropertyonitwhichtheCasinooperatorsconvertedintotheCasino.280

The initial arrangement between the company and the Casino operators was that, as a

reflectionoftheirborrowingofsome$1.8millionforconstructionofthenewbuilding,they

were to pay a nominal rent of $2,500 permonth. But soon the company took over the

276HonMichaelMisickBundle1,page320277registeredon21stApril2004,withChalMisickasthesoleregistereddirector,companysecretaryandshareholder.278HonMichaelMisickBundle1,page323(T/SreftoCorrespondenceBundlep65)279Transcript,Day10,p17280ibid,p20

143

servicingof the loan in return foramonthly rentalof$40,000permonth,whichwaspaid

directtothelenderandmortgageetocoverthecostoftheloan.ChalMisickwasunableto

identifythelender.

4.65 ChalMisick had set up the Casino company, Casablanca Casinos Ltd, in April 2006,

allocating shares in equal amounts to Washington Misick, a brother of the Hon Michael

Misick,andtoamannamedAndyStephens,bothofwhombecamedirectors. ChalMisick

later produced to the Commission what purported to be board minutes at which they

authorisedthecompanytoborrow$1.3millionfromM&STrustCompanyLtd.

4.66 When asked about the possible involvement of Mario Hoffmann in the Casino

operation, Chal Misick said he did not know. He maintained that he had no idea if Mr

Hoffmannwasbehindtheother50%shareinHydronoxLtd,orwhetherhehadbeenbehind

theloanofmoneyfortheredevelopmentoftheCasino.Infact,asMrHoffmannwaslater

tomakeclear inwritten submissions to theCommissionon20thFebruary2009,281hewas

behindboth.Includedinthosesubmissions,MrHoffmannstatedthatonavisitbytheHon

MichaelMisick to Bratislava in October 2005, he,Mr Hoffmann, introduced him to Andy

Stephenswhoranacasinothere.AtthesuggestionoftheHonMichaelMisick,MrStephens

visitedtheTCIwithMrHoffmannandviewedtheCasinositeanditsformerbuilding,which

hedecidedtoconvertintothepresentCasino,withthehelpoffundingfromorfacilitatedby

MrHoffmann.

4.67MrHoffmannstatedinthosesubmissionsthathehadalwaysthoughtthatChalMisick

ownedHydronoxLtd,theownersoftheland.Heistechnicallycorrectaboutthat.Terrapin

Investments Ltd isdescribedbyMrHoffmannasmyTCIassetholdingcompany,whichhe

used to purchase 50% stake in Hydronox Ltd in 2007. He added that he had sold his

investment in the company to Schomer Ltd owned by another, unnamed, Slovakian. The

CompanyRegistry recordsTerrapin Investments Ltd takingup sharesandadirectorship in

April2008,althoughtheir informationwouldonlybeasaccurateasthatwhichChalMisick

gaveto it. AsMarioHoffmannbelievedHydronoxLtdwasownedbyChalMisick,hemust

presumably have dealt with him. ChalMisick’s assertion, that he did not knowwho lay

behindtheother50%shareholdingofHydronoxLtd,isunconvincing.

281MarioHoffmannstatementparas14.1‐14.6

144

4.68 MrHoffmannalsoconfirmed, inwrittensubmissionstotheCommission inFebruary

2009,thathehadloanedthemoneytoCasablancaCasinosLtdandtoBKPartnersLtd(the

latter,apparentlyapartner inmanagingtheCasino, initiallyownedbyWashingtonMisick,

and later jointlybyhimandMrStephens). Accordingly itappears that,whilstChalMisick

managesHydronoxLtd,50%ownedbyhimselfontrustforothers,heclaimsnottoknowthe

identityofthepersonbehindtheother50%share,eventhoughthiswasMarioHoffmann,a

manwithwhomhehasbeen involved later inanumberof transactions.Healsodoesnot

knowthat themoney loanedto thecompany formedbyhimfor renovationof theCasino

(encouraged by his brother, the Hon Michael Misick, and 50% owned by his brother

Washington)wasalsofromMrHoffmann.

4.69Whetherthereisanywrong‐doingintheestablishmentoftheCasinodoesnotemerge

fromthematerialwehaveseen.MrHoffmann,inhiswrittenevidencetotheCommission,

insistedthatitwasastandardbusinessdeal,butevenheexpressedsurprisethatChalMisick

claimednottorecallthedetailsofit,completed,asitwas,onlyafewmonthsearlier.Inmy

view, Chal Misick is almost certainly lying about his recollection. It defies belief that he

wouldnotknowwithwhomhewasdealing.

4.70 The two CabinetMinisters, in addition to the HonMichaelMisick, who had been

investors inWindsor InvestmentGroup Ltd, theHon FloydHall282 and theHonMcAllister

Hanchell,283 both returned to give further evidence in the oral proceedings. Both then

rememberedtheirinvestment,$40,000each,intheCasinoprojectinabout2004.

4.71TheHonFloydHallsaidthathehadnotknownthattheWindsorInvestmentGroupLtd

hadbeenthecompanyinvolvedorthathisshareholdinghadamountedto10%.Hesaidhe

had paid $40,000 from his own account, but had received no paperwork evidencing his

investment. He said that he had not thought it necessary to declare his interest in this

investment to theRegistrar of Interests or todisclose it to theCommission. He also said

that,whilsthebelievedMinisterialcolleagueshadalsoinvested,hehadnotknownwhoorin

whatsums.HeaddedthattheHonMichaelMisick,theHonMcAllisterHanchellandhehad

never discussed their joint investment, despite all being in a similar position, and he had

282Transcript,Day15,p4283Transcript,Day19,p94

145

never asked Chal Misick how the investment was doing, despite the high profile and

apparentsuccessoftheCasino.

4.72TheHonMcAllisterHanchell,unliketheHonFloydHall,knewthecompanynameand

itsborrowings, that theHonMichaelMisickand theHonFloydHallwerehis co‐investors,

and that Chal Misick had co‐ordinated their respective investments. Indeed, he recalled

whenthefourmenhadmettogethertodiscusstheprojectandhadagreedthatitwouldbe

goodinvestment.

4.73 All this information and evidence about the Casablanca Casino suggests a joint

venturebythefourmen,throughWindsorInvestmentGroupLtd,todeveloptheCasablanca

building. That in itself is unremarkable. However, no formal shareswere ever issued in

WindsorInvestmentGroupLtd,andtheCommissionhasnotbeenabletoestablishwhat,if

any,investmenttheyrespectivelymade,orwhenorwherethemoneyfromtheinvestment

came from. The company said toown the land,Hydronox Ltd, although it existedbefore

CasablancaCasinosLtd,wasnotacquiredbyWindsorInvestmentGroupLtduntillate2007,

which isover18monthsafterCasablancaCasinosLtdhadbeenestablished,andafter the

Casino, with the financial involvement and support of Mario Hoffmann, had begun to

operate. It is hard to see how the claimed investment in 2004 could have been used to

redevelopthebuilding.

4.74Icannotsaythatthecircumstancesgivingrisetothisestablishmentandinvestmentin

theCasinobythreeformerGovernmentMinistersandMarioHoffmannwere,ontheirface,

possibly corrupt or otherwise seriously dishonest. However, the contradictions and

evasivenessexhibitedbythethreeMinisterssuggestapossibilityofsomevenalitythatcalls

for further investigation. Ihave inmind, inparticular, the followingcircumstances:1) the

non‐declarationbytheMinistersoftheirrespectiveinterestsintheCasinototheRegistrarof

Interests,andtheirtardyandpatchydisclosureofthemtotheCommission;2)contradictory

accounts of the Hon Floyd Hall and the Hon McAllister Hanchell; and 3) their common

accounts of investing without any form of documentation and apparent lack of curiosity

aboutthevalueofandreturnsfromtheirinvestment,despiteitsapparentobvioussuccess.I

am strengthened in the suspicion of such possibility of venality by the contradictions

inherentintheevidenceofChalMisick.

146

4.75 An interestingside issueandfootnotearisesfromthe involvementofChalMisick in

theWindsorInvestmentGroupLtd.Itconcernsapaymentintooneofthecompaniesthat

ChalMisickhadestablished forMsMcCoy‐Misick,MyWayProductions2 Ltd. Oneof the

itemslistedbytheHonMichaelMisickontheschedule,Schedule5,thatheprovidedtothe

Commission at the start of the oral proceedings in January 2009 purporting to show the

sourcesofvariousfunds,284wasthereceiptofapaymentfromWindsor InvestmentGroup

LtdbyMyWayProductions2Ltd,ofasumof$300,000madeinMarch2007.Whenasked

about it, the Hon Michael Misick referred to his interest as a shareholder in Windsor

Investment Group Ltd,285 and initially suggested that it was a dividend payment to him.

However,hewasunabletoexplainwhyorhowhecouldhaveacquired$300,000asdividend

fromacompanythathadearnednothing.

4.76 Chal Misick was to suggest in a later statement that he thought his brother was

mistaken and that the $300,000 came from a share sale option on a North Caicos

property.286InfacttheclientaccountledgerprovidedbyChalMisickdidnotsupporteither

explanation.Theclientaccounthadreceivedalmostexactlythesamesumaboutsixweeks

before the transfer toMyWay Productions 2 Ltd, byway of apolitical contribution from

ValentineGrimes,believedtobeaBahamas‐basedlawyerandpolitician.

JoeGrantCay

4.77 TheissueofthedevelopmentofJoeGrantCayhasarisenbeforetheCommissionin

different contexts, and has given rise to various concerns. Joe Grant Cay (sometimes

referredtoasJoeGrant’sCay) isasmall islandofabout740acres(1.16sqmiles)situated

between Middle Caicos and East Caicos. The earliest documentation seen by the

Commission relating toaproposeddevelopmentof this island is a letterof1st September

2006totheHonMichaelMisickfromalocalfirmofattorneys,MillerSimonsO’Sullivan,on

behalf of Arturo Malave, a Venezuelan national known to him. The letter contained a

proposal for developmentof theCay through a company in formationnamedEast Caicos

Ltd,andsoughtGovernmentapproval.287Theletteralsomentionedyourrecentdiscussions

284HonMichaelMisick,BundleA,Appendix5285Transcript,Day2,p51286ChalMisickstatement,p6287CoreVolume7,tab2,p3

147

withourclient. TheHonMichaelMisick,whenaskedaboutthis,agreedthathemayhave

hadearlierdiscussionswithMrMalaveonthesubject.288

4.78 Theproposalwasraised inCabineton18thOctober2006.289TheCabinetdecidedto

approve in principle what was termed a high end resort project on Joe Grant Cay to be

developed by Arturo Malave or a designated company. Various elements of the likely

agreementfortheprojectwereincludedintheCabinetminute,includingacceptanceofan

offer from Mr Malave to pay $5 million to the Government on completion of the

Development Agreement. TCInvest, which is the Government agency responsible for

encouragementofinwardinvestmentintotheIslands,wrotetoMrMalave’sattorneyson6th

Novembertothateffect.290However,aduediligencereportonMrMalavepreparedinlate

2006 painted him in less than glowing colours. The HonMichael Misick, who agreed in

evidencethathewasafriendofMrMalave,correctlypointedoutthatthereportconfirmed

thathehadnocriminalconvictions. TheHonMichaelMisicktoldtheCommissionthathe

hadbeenintroducedtoMrMalavebyanexecutivefromtheCarnivalCorporation,andhad

hadnocausetobesuspiciousabouthispastbusinessdealings.291Headdedthateventually,

however,theGovernmentdidnotenterintoagreementbecauseoftheduediligencereport

anditsperceptionofhisinabilitytoperform.

4.79 An internet search against thenameofArturoMalavequickly reveals a numberof

adversereferencesalleginghisinvolvementinfraudulentactivity.Theremaybenothingin

these allegations; the Commission has not received any information to suggest that his

involvement in Joe Grant Cay was not above board. It is clear, however, that he was

attractingcriticisminhisownnameoversomeperiodoftime,andhiscontinuingassociation

withtheprojectmighthavebeenembarrassingfortheTCIGovernment.

4.80ChalMisickalsoknewMrMalave.InhisoralevidencetotheCommission,hesaidthat

hehadacted forhim in theestablishmentof a company calledCaicosPlatinumCompany

Ltd292forthepurposesofthisproject.Thecompanywasincorporatedon30thOctober2006

288Transcript,Day3,p115289CoreVolume6tab1p88290CoreVolume7,tab2p20291Transcript,Day3,p119292Transcript,Day10,p152

148

intheTCI,andhadonlyeverhadoneissuedshare,whichwasheldbyChalMisick’snominee

company,WindsorEastLtd.ChalMisick’sothernomineecompany,ChalmersManagement

Ltd, was the sole director.293 Chal Misick told the Commission that since Miller Simons

O’SullivanrepresentedMrMalaveinhisdevelopmentambitions,hisonlyrolehadbeento

incorporatethecompany.

4.81ChalMisickwentontosaythat,becauseArturoMalavecouldnotpaysomemoneyby

lateNovember2006totheGovernment,theofferofadevelopmentagreementlapsed.This

is not reflected in the Cabinetminutes or in the TCInvest letter, but ChalMisickmay not

havehadfullaccesstothat informationatthetime. What isclear is that inthefollowing

year,2007,theCabinetsetadeadlineof30thNovember2007foraction,adeadlinethatthe

then proposed developers did not meet. This failure may have been confused with the

eventsoflate2006.Bythen,accordingtoChalMisick,MrMalavehaddroppedoutofthe

picture, and he, ChalMisick, had retained Caicos PlatinumCompany Ltd for use by other

clients.294

4.82 What ChalMisick said aboutArturoMalave is demonstrablywrongon thebasis of

other evidence. In mid‐March of 2007MrMalave had not dropped out of the proposed

project. InthatmonthMillerSimonsO’SullivanwrotetothePremier295andtoTCInvestby

emailedletterundertheheadingCaicosPlatinumCompanyLtd,copiedtoMrMalaveandhis

associates,statingthatfundswerenowinplacetostartdevelopment.

4.83However,asChalMisickacknowledgedinevidencetotheCommission,therehadalso

beenanotherpotentialandshort‐livedcompetingdeveloperforJoeGrantCay,PaolaSepe

and three associates, each of whom was a nephew of the HonMichael Misick and Chal

Misick,forwhomhehadformedacompanycalledOceanicDevelopmentLtd.296Hedidnot

seem to think there had been any conflict of interest in his assistance to two separate

contendersfortheprizeoftheJoeGrantCaydevelopment. However,PaolaSepeandthe

threenephewsdroppedoutoftheracebytheendof2006.297

293ChalMisickbundlep143‐153294Transcript,Day10,p154295CoreVolume7,tab2,pp37‐38296 Paolo Sepe featured in a different context in that hewas said to have provided a donation froma company called Sarawak Ltd of$50,000tothePremierviatheaccountsofChalMisickon8thDecember2006.297Transcript,Day10,p174

149

4.84ChalMisicktoldtheCommissionthatatthatstageathirdpotentialdeveloperforJoe

Grant Cay appeared and for whom he acted: Don Gardiner, a real estate agent with

PrestigiousPropertiesandformerChairman,nowDeputyChairman,oftheTCITouristBoard.

Hewasjoinedbyafourthpotentialdeveloperofsubstance,DrCemKinay,thedeveloperof

DellisCay,usingforthispurposeacompanyknownTheStarLionsLtd.298

4.85Asaresultoftheinstructionsreceived,ChalMisickwrotetotheGovernmentabout

theproposeddevelopmentagreementforJoeGrantCay.Hisproposalwasthattheoriginal

development agreement in the name of Arturo Malave / Caicos Platinum Company Ltd

shouldbeamendedtodescribethedevelopersasOceanicDevelopmentLtdandStarLions

Ltd.299TheCabinetconsideredandapprovedthisproposalon16thMay2007.

4.86However,fivedayslater,on21stMay2007,DrKinaywrotetothePremierinforming

him that his hotel group, The O Property Collection, was working with Caicos Platinum

Company, the company originally destined as the vehicle for Mr Malave’s proposed

developmentofJoeGrantCay.Intheletter,hereferredtoalettersentbytheGovernment

toCaicosPlatinumCompanyon1stDecember2006asastartingpoint,aletternotproduced

to the Commission. One possible inference that could be drawn from the letter and the

changeofnameofthedeveloperisthatMrMalavewasstillinvolved,eventhoughhisname

had been taken off the development agreement. The public controversy surrounding his

otheractivitiesmightwellbethereasonwhytheGovernmentwouldnotwishtobeseento

bedoingbusinesswithhim.Ifanotherdeveloperwasthepublicfaceofthedeal,thatwould

havemadetheprocesslesscontroversial.

4.87 Foranycriminal investigatorwhomighthereafterhaveto lookat thestoryofwhat

happenedtotheJoeGrantCayproposalthereismuchperplexingdetail.Whowasactingfor

which potential developers at different stages? Why the differences in account between

ChalMisickandDrKinayandastowhoownedexactlywhatinthevariouscorporatevehicles

circlingtheproposeddevelopment?Thatdetailhasbeencloselyexaminedandanalysedby

theCommission,anditsanalysiswillbeavailableifrequired.Iamnotgoingtoburdenthe

298Transcript,Day11,p3299CoreVolume7,tab2,p42

150

readersofthisReportwithit. It isenoughformetosaythat,giventhesharplyconflicting

and/orinexplicableaccountsprofferedbythevariousplayersatdifferentstagesofthestory

and to theCommission, someonemustbe lying,and there isapossibilityofotherserious

dishonesty. Theproposeddevelopmentmovedforwardslowly,withextensivenegotiation

betweentheGovernmentandtheconsortiumheadedbyDrKinay.Thesaleofthelandon

JoeGrantCaytothemwasnotfinaliseduntil2008.WhentheCommissionbeganitsworkin

mid2008theproposalsfordevelopmentwerestillintheirearlystages.300

4.88 Political interferenceintheallocationoftheJoeGrantCaydevelopmentpermission,

particularlybytheHonMichaelMisick,thesuddenchangesindevelopersandintheidentity

of theBelonger partners associatedwith them, the close links between the HonMichael

Misick and those individuals, and the coincidence of a large political contribution to him

aroundthetimeoftheinitialdevelopmentgrant,allpointtothepossibilityofacorruptdeal

involvingtheHonMichaelMisick.Thisisatopicwhichclearlyrequirescloseinvestigation.

4.89Theheartofthematteranditshistoryillustratestothefullthesystemicweaknesses

of the way in which the Crown Land Policy in recent years may be open to abuse by

developers, Ministers and Belonger partners, or fronters, and those skilled in pairing the

fronters with the Ministers and developers, and documenting the latter’s corporate

relationship. All such players in the chain can and do make undeserved profits at the

expense of the TCI public. The various possibilities for abuse here are to be found in the

chainofevents leadingtotheGovernment’sapproval intheearlySummerof2007forthe

saleofthelandatJoeGrantCayatwellbelowmarketpricetoaconsortiumledbyDrCem

Kinay for development, to which I shall return in this Report when looking at the Hon

McAllisterHanchell’sinvolvementinthattransaction.

12 – I find, for the reasons set out above, that there is a possibility of

corruption and/or other serious dishonesty, including misfeasance in public

office, inrelationtotheHonMichaelMisick inthechainofevents leadingto

theeventualdisposaloflandatJoeGrantCayatwellbelowmarketpricetoa

consortiumledbyDrCemKinay,followingthesecretpaymentbyDrKinayof

300Seealsoparas4.172–4.181below

151

$500,000tohiminJanuary2007,followedbytheapprovalbyCabineton16th

May2007,towhichtheHonMichaelMisickwasaparty.

Accordingly, I recommend criminal investigation by the police or others of the

possibility in relation to the HonMichaelMisick of corruption or other serious

dishonesty,includingmisfeasanceinpublicoffice,inrelationtothismatter.

SaltCay

4.90 The issue of Salt Cay is a recurring theme in the submissions received by the

Commission.ItisclearlyanareaofgreatconcerntotheinhabitantsoftheTCI,inparticular

those of Salt Cay, its renowned natural beauty, the fragility of its environment and the

historicalsignificanceoftheIslandmakeanyattempttodeveloptheislandatopicofserious

debate. I do not seek to intrude on that debate, but Imust consider the handling of the

proposed development, in so far as itmay cast light upon the issues at the heart of the

Inquiry.

4.91ThedevelopmentofSaltCayhasbeencontemplatedforalongtime,butonlybecame

a real possibility in recent years with the proposals advanced by Salt Cay Development

Company Ltd (DEVCO), which is ultimately owned and controlled by the Slovakian

businessman,MrMarioHoffmann. MrHoffmann, inextensivewrittensubmissions to the

Commission,describedhisinvolvementwiththeproject,beginningwithhispurchaseofland

ontheIslandheldbytheCaribbeanIslandsInvestmentCompanyLtdin2001,intotalabout

11 acres of mixed freehold and leasehold property. Over the following years he bought

furtherlandaddingaboutsixacresmoretohisholding.

4.92 From 2005 onwards proposals for the development gathered pace and grew in land

take.MrHoffmann reached an agreement in principlewith theGovernment to obtain 41

furtheracresoflandtobuildahotelandresidences.AtaroundthistimetheHonMichael

Misick and the Hon Galmo Williams made a trip to Bratislava at the invitation of Mr

Hoffmann.

152

4.93Inearly2006afeasibilitystudywaspreparedbyKPMGonbehalfofDEVCOenvisaging

afarwiderreachingdevelopmentoftheisland.Thisdocumentfloated,forthefirsttime,the

ideaofagolfcourse.InMay/June2006MrHoffmannalsoreachedagreementwithhisthen

Belongerpartnerstobuyouttheirsharesinthebusiness.

4.94OneparticularaspectofthedevelopmentthathascausedconcerntotheCommission

wasthehandlingoftheproposalfortheSaltCayGolfClub.Followinginformalconsideration

anddiscussionsabout thepossibilityof a golf course,MarioHoffmannwrote formally,on

behalfofDEVCO,on1stAugust2006totheHonMichaelMisickseekingaparceloflandfora

golfcourse. Hesought, in formal terms,a longterm leaseof222acres for99years. The

letter of 1st August stated that Salt Cay Golf Club Ltd would be established to run the

course.301Itmadenomentionofwhowouldbeinvolvedbeyondthat.

4.95 TheHonMichaelMisickshowedthelettertotheCabinetmeetingscheduledforthe

following day, 2nd August. There had clearly been no possible chance for any formal

governmentalassessmentof it in the intervening24hours,andthere isno indicationthat

therehadbeenbeforehand. Nonetheless,Cabinet immediatelyapproved it inprinciple,302

and the Hon Michael Misick wrote to Mr Hoffmann telling him the good news on 8th

August.303TCInvestinstructedtheChiefValuationOfficer,MrShaabanHoza,toundertakea

valuationofthesite.Heplacedafreeholdvalueonitof$7.76million.304By29thNovember

2006theCabinethaddecided–followingarequestforarelativelysmallincreaseinacreage

–thattheywouldgrant238.72acresfortheproposedgolfcourse,atapeppercornrentof

$1peracreperyear. AtthesametimetheyapprovedthegrantofBelongerstatusforMr

Hoffmann.Theeffectof thisgrantwas toavoid theneed forMrHoffmanntoengageany

otherBelongerpartnerintheproject,sincehewasnow,himself,theBelonger.

4.96 FromtheviewpointofMrHoffmann thiswasaverygooddeal.Hehadhis full golf

course for a tiny initial outlay, and his Resort development would be a valuable extra

resourcethatwouldmakethemarketingofthedevelopmentfarmoreattractive.Evenso,

theCommissionhasreceivedseveralrepresentationsthatthedealwasvulnerabletofailure

301CoreVolume7,tab3,p1302ibid,pp2‐3303ibid,p4304ibid,p5

153

without adequate and timely ancillary facilities such as thoseproposed. And, it hasbeen

pointedout,giventhevastdevelopmentcosts, landforgolfcoursesisfrequentlyprovided

bywayoflongtermleaseandatlowornominalrates.

4.97Iflong‐termleasingatanominalsumhadbeenanticipatedbytheGovernmentwhen

first considering the proposal in August 2006, it is surprising that TC Invest, inNovember

2006, sought a market valuation of the land from the Chief Valuation Officer. Having

received the freehold valuation of $7,760,000, TC Invest had, on 14th November 2006,

prepared a memorandum for the lease suggesting a commercial rent of $194,000 per

annum,calculatedat2.5%ofthefreeholdvalue.305However,theCabinetdidnotevenseek

tonegotiateon the strengthof that valuation. They chose to forego the$194,000 rental

(worthover$19millionover the termof the lease)and let the leasego forapeppercorn

rent.

4.98SaltCayGolfClubLtdhadbeenincorporatedbyChalMisickon4thAugust2006,two

daysaftertheAugust2006Cabinetapprovingtheinitialproposalinprincipleandbeforethe

receipt of the letter from the HonMichaelMisick informingMr Hoffmann of it. On 15th

December 2007 Windsor East Ltd, a nominee company of Chal Misick, was appointed

company secretaryandadirector, andStefanKralofDEVCObecame the seconddirector.

Moreimportantly,atthattimethesharesofthenewcompanyweresplit50‐50.Halfwent

toMrHoffmann’sCyprusbasedholdingcompany.Theotherhalfwentintoacompanywith

the innocuoustitleofBusinessVenturesLtd. Thiswasanotherholdingcompany,based in

theBritishVirgin Islands,but itheldshares forChalMisick. Inessence,hehadbeengiven

halfofSaltCayGolfClubLtd,andtherebyownedhalfofitsassets.

4.99Thefollowingyear,2007,theHonMichaelMisickapproachedJ&TBankainPrague,to

which he had initially been introduced byMarioHoffmann, for a loan of $6million. The

Bankagreedtogranttheloantohimandhiswife. MsMcCoy‐MisicktoldtheCommission

that she had signed a form presented to her by her husband, but had not queried its

contents.ShetoldtheCommissionshehadnotunderstoodwhatshewassigning,hadnot

appreciatedthatheneededtoborrowmoney,andwouldnothaveconsentedtoithadshe

305ibid,p8

154

beenknown.TheloanwassecuredonthesharesheldbyBusinessVenturesLtdintheGolf

Club,suggestingthatintheeyesoftheBank–ifitwastreatingthe$6millionasagenuine

loan–a50%shareinSaltCayGolfClubLtdwasgoodsecurityforit.ChalMisicksignedthe

documentsforthissecurity.WhenaskedbytheCommissionaboutthefiguresinvolved,he

expressednosurprise,andseemedunperturbedbythevalueofhisnewasset.

4.100TheHonMichaelMisickwasaskedwhetherheknewabouthisbrother’sinvolvement

inthisprojectwhenheandtheCabinetapprovedthe leasetothenewcompany. Hesaid

thathehadnot.306Hesaidthathecouldnotrecallwhenhehadbecomeawareofit.307He

suggested, and has argued since, that his brother must have become involved at a later

stage.ChalMisick’sevidencetotheCommissionwasIwasinvitedbytheproponentstoget

involved,308referring,asheexplained,toStefanKral.Hesaidthathehadbeeninvolvedas

anattorney,andhadnegotiatedwiththearchitectonbehalfofSaltCayGolfClubLtd;and

that those activities had led them to invite him to become further involved in about

NovemberorDecemberof2006,shortlybeforeallotmenttohimof50%ofitsshareson15th

December2006.

4.101 ChalMisicksaidthathehadhadnodealingswithMrHoffmann,onlywithMrKral.

ThisiscontradictedbyaletterfromMrHoffmanntotheCommissionof12thJanuary2009,

addressedoriginallytotheattorneysfortheHonMichaelMisick,stating:

...I’veappliedforleaseofadditional239acresofCrownlandforgolfcourseand

infrastructurewithmypartnerChalMisickin2006aswell.

In a statement to the Commission, provided after the oral proceedings, on 20th February

2009, Mr Hoffmann gave more detail. He stated that, having started out on the

developmentofSaltCaywithtwolocalpartners,inMaytoJune2006hehadboughtoutthe

interestofone,BenWalkin, andhad reachedagreementwithanother, SimonWoodwho

wastocontinuesimplyasthearchitectoftheproject.Hecontinued:309

In July/August 2006 having not having or applied (sic) for Belonger status andknowing therewasapolicyestablishedbyMichaelMisick’s cabinet thatCrownlandwould be transfer (sic) only to Belongers or companieswith at least 50%Belongerownership,IaskedStefantoinvolveanotherBelongertomeettherules.

306Transcript,Day3,p137307TranscriptDay3,p139308Transcript,Day11,pp43‐45309MarioHoffmannstatementpara2.17

155

Wewere looking for someonewhocouldbehelpful, not justbecause theyhadBelongerstatus.

4.102TheevidenceofChalMisick,andtosomeextenttheHonMichaelMisick,thathehad

not been invited to become a partner until November or December 2006, is therefore

contradictedbyMrHoffmann.IfMrHoffmanniscorrectaboutJuly/August2006,thenthe

HonMichaelMisickshouldhaveknownatamuchearlierstagethanhehasadmitted,that

hisbrotherwasinvolved. Clearly,MrHoffmannregardedChalMisickashispartneratthe

timeoftheapproachinearlyAugust.IfMrHoffmannisright,italsomeantthatChalMisick

liedonoathtotheCommission.

4.103 MrHoffmann’sassertionthat, inselectingChalMisickashispartner,hehadbeen

concernedtohaveaBelongerpartnerisalsounconvincing.DEVCOwasthemaincompany

workingontheprojectasawhole,anditdidnothaveanyBelongerelementonitsbooks.

The involvementofMrWalkinandMrWoodintheGolfClubprojecthadbeenadvertised

prominentlytotheGovernmentinthesubmissionsmadeatearlierstages(seeforexample

theAgreedUponProceduresReport of February2006attached toMrHoffmann’swritten

evidence). However,by the summerof2006hehad removed themasBelongerpartners

withoutreplacingthem.

4.104 Inanyevent,MarioHoffmann,onhisaccount,hadbeenapproachedtobecomea

Belonger as early as May 2006. He had made written application for the status. The

Commissionhasseenafaxedcopyofthatapplication,whichbearsthetransmissiondateof

29th September 2006,310 twodays after theCabinet had already granted it to himon the

suggestion of the Premier.311 It is plain from this and much other evidence before the

CommissionthatPremierhadbeenonfriendlytermswithMrHoffmannforsometime,and

itisreasonabletoassumethathewouldhavetoldhimofhisnewstatussoonafterthevote.

4.105 Accordingly, well before the division of the Salt Cay Golf Club Ltd shares on 15th

December2006,MrHoffmannalreadyknewhedidnotneedanyBelongerpartnerforthe

new company, and he had dispensedwith his partners on themain company. And Chal

Misickwasremarkablyvagueastothespecialskillshehadbroughttotheearlynegotiations,

310HonMichaelMisickbundle3,p1099311ibid,p1098

156

beyondmentioning that he had a qualification in engineering. As to his claimed value in

negotiationswiththearchitectfortheprojectatthattime,hewasunable,whenasked,to

identify either the architect or the firm involved.312 Subsequently, by letter, Chal Misick

identified the architect as being Arthur Hills of Steve Forrest & Associates, Golf Course

Architects.313 TheCommissionhasnot seenanyother reference to this firm in anyof the

documents presented to it, and has not seen any correspondence with this firm. Such

correspondence as has been presented byMr Hoffmann suggests that Troon Golf LLC of

ScottsdaleArizona(whocorrespondedwithMrKral)wouldhavebeenthecontactwiththe

golfcoursearchitect,SimonWood.

4.106MrHoffmann,bycontrast,makesnoreferencetoChalMisickhavingnegotiatedwith

thearchitect.Hisonlyrecollectionisofhavingsetaconditionthatheshouldnotnegotiate

withtheGovernment.Eventhelegalworkwastakenawayfromhim,andplacedwiththe

regular lawyers for Mr Hoffmann, Miller Simons O’Sullivan.314 The only demonstrable

contributionhemadewastoformthecompany,whichisalowleveltaskusuallydelegated

toparalegalstaff.

4.107 ChalMisick’s explanation is therefore that he performed a role that nobody else

describeshimperforming,withsuchskillthat,althoughhehadhadnodirectdealingswith

theoverall developer, thedeveloper chose to givehima50% share in theenterprise.Mr

HoffmannsayshemadeChalMisickapartnerprincipallybecausehewasaBelonger,when

hedidnotneedaBelonger,andbecausehewantedacontributor,buthedoesnotsaywhat

ChalMisickevercontributed. Finally,whenthelatterwasaskedifhewasconcernedthat,

havingprovideditascollateral,hemightnowstandtoloseitifhisbrothercouldrepaythe

loansecured,hesaidthathewasnotconcerned.

4.108 ThesubmissionsfromtheHonMichaelMisickandMrHoffmannastotherelative

lackofworthof thegolfcoursearemeaningless. Thewillingnessof J&TBankato lend$6

millionplusinterestagainstthesecurityofthesharestellsonealloneneedstoknowabout

howvaluableanassetwasgivenawaybytheCabinetatthebehestofthePremier.

312Transcript,Day11,p68313ChalMisickbundlep381314MarioHoffmannstatement,para2.20

157

4.109Thereis,inmyview,informationandevidencebeforetheCommissionsuggestiveof

the involvement of the Hon Michael Misick in corrupt dealings in relation to the

Government’s transactionswithMarioHoffmannonbehalfofDEVCOandofChalMisick’s

knowing assistance and complicity in it. Whatever the value and worth of the Salt Cay

developmentasawhole,theCommissionisunabletoaccepttheaccountofMrHoffmannin

relationtotheappointmentofMrChalMisickasapartnerintheproject.

13 – I find that there is information of possibly corrupt and/or otherwise

seriouslydishonestinvolvement,includingmisfeasanceinpublicoffice,ofthe

HonMichaelMisickinrelationtotheGovernment’stransactionswithMario

Hoffmann of DEVCO for the development of Salt Cay: 1) in respect of his

participationinthatdevelopmentwithChalMisick’sknowingassistanceand

complicity in it, as described above; 2) in the potential abuse of his public

office by accepting lavish and disproportionate hospitality from Mario

Hoffmann,includingtheuseofprivateaircraft,theprovisionofinternational

flightsandotherhospitalityinthecourseofdevelopingbusinessrelations

betweenDEVCOandtheGovernment;and3)inpotentialabuseofhispublic

officebyseekingandacceptingaloanof$6millionfromJ&TBankawhenthat

Bank, on its own account,315was in negotiationwith the Government over

fundingandparticipationinthedevelopmentofSaltCay.

I,therefore,recommendcriminalinvestigationbythepoliceorothersofthe

possibility of corruption and/or other serious dishonesty, including

misfeasanceinpublicoffice,inrelationtotheHonMichaelMisickinrespect

ofthosematters.

_________________

315SeeJ&TBankaweb‐site

158

TheHonFloydHall

Background

4.110 TheHon FloydHallwas at all relevant timeseitherDeputyChiefMinisteror later

DeputyPremieroftheTCI.HewasalsotheMinisterofFinance,havingalsoresponsibilityfor

NationalInsuranceandEconomicPlanning,andwastheTreasurerofhispoliticalparty,the

PNP.HeisaCertifiedPublicAccountant.BeforebecomingaGovernmentMinisterhehad

workedinBarclaysBankandtheninCharterTrustasChiefAccountant.

4.111 OwingtohiscentralroleinGovernmentformanyyears, Ihavehadtoexaminehis

conduct insomedetail,havingregardtoanumberofallegationsmadeagainsthimwithin

my Terms of Reference. He made written submissions prior to the Commission’s oral

proceedingsinJanuaryandFebruaryofthisyear,andgaveevidenceovertwodaysinthose

proceedings,whenhewas representedbyMrOliver Smith. He has provided a series of

writtendocumentsandsubmissionssubsequenttothehearings.

DeclarationsofInterests

4.112TheHonFloydHall,incommonwithhisCabinetcolleagues,failedtocomplywiththe

statutory requirements requiring declarations to the Registrar of Interests.316 The most

strikingandconsistentomission in this respectwasofhis receiptofgiftsorcontributions,

including so‐called political contributions. In particular, he did not mention Party

contributionstohiminanyofhisreturnstotheRegistrarof Interests. Inoralevidenceto

theCommission,heproducedaledgershowingpaymentsinhisfavourfromanaccountof

the Party heldwith the First Caribbean Bank totalling $355,500 over three years. He also

admitted receipts, largely undocumented, of further Party funds from a second account,

heldwiththeBelizeBank.

4.113HealsofailedtodeclaretotheRegistraranyofhisoverseasvisitsduringtheperiod

coveredby the Inquiry, ofwhich therewere several. Hehas admitted inevidence to the

Commission that he was flown from London to Slovakia in the private jet of Mario

316Seepara2.29above

159

Hoffmann,317 and from Slovakia on to Dubai to see motor‐racing. He sought to draw a

distinction between the requirement under the Registration of Interests Ordinance to

declareevery visit relating to yourmembership of the Legislative Council undertaken...the

costofwhichhasnotbeenwhollyborneby yourself...orbypublic funds, andhis role as a

memberoftheexecutivebranchofgovernmentbyvirtueofbeingMinisterofFinance.Ido

not regard this as a meaningful distinction so as to constitute an exemption from the

Ordinance. Theoffice ofMinister of Financederives fromhis electedmembershipof the

Legislature,ofwhichheremainsamemberwhenactingasMinister.Attheveryleastthetrip

shouldhavebeendeclared,sothattheRegistrarcoulddetermineitsrelevance.Itwassaid

by Mario Hoffmann that its purpose was to enable him to see his, Mr Hoffmann’s,

operations in Slovakia, none of which, according to him, was tourism‐related. Their

relevance to Salt Cay was not explained. The trip to Dubai, similarly, had no overt

connectiontoMinistryofFinancework,andcouldbedescribedasajunket.

14–Ifindthat,throughouthisperiodofmembershipoftheLegislatureofthe

TCI,theHonFloydHallrepeatedlyfailedtomakefullandaccuratedeclarations

ofhisintereststotheRegistrarofInterestsasrequiredbytheRegistrationsof

InterestsOrdinance.

15– I find, as an important exampleof his failure tomake full and accurate

declaration of interests to the Registrar as required by the Registration of

InterestsOrdinance,hisfailuretodeclarehisinterestintheCasablancaCasino

inProvidenciales,throughhisinvestmentinWindsorInvestmentLtd.318

As in the case of the Hon Michael Misick, the breaches of the Registration of Interests

Ordinance arepunishableonlyby the Legislature, andnotby theCourts (savepossiblyby

recoursesomemoregeneralprovisionofthecriminallawsuchasthecommonlawoffence

ofmisfeasanceinpublicoffice). Inhiscasetoo,thereismuchelseofsubstanceworthyof

criminalinvestigation.I,therefore,makenorecommendationarisingoutofeitherofthose

findings.

317Transcript,Day6,pp161‐163318Seeparas4.61–4.74.above

160

4.114 FurthermattersthattheHonFloydHallshouldhavedeclaredtotheRegistrar,and

whichhedidnot,includeloansorpurportedloanstohim,withwhichIdealwithbelow.

DisclosuretotheCommission

4.115 In addition to the Deputy Premier’s failure tomake adequate declarations of his

intereststotheRegistrar,hedidnotmakefullandaccuratedisclosureofhisfinancialaffairs

to the Commission prior to his attendance on summons to give evidence in the oral

proceedings. For example, he did not disclose until hewas in thewitness box apolitical

contributionof$150,000paidbyJakCivre,amajordeveloperontheIslands,intothebank

accountofhiscompany,Paradigmon8thFebruary2007, thedaybefore theelection. Mr

CivrehasconfirmedinwritingtotheCommissionthatthiswasapoliticalcontributionand

thathehadpaiditintotheaccountofParadigmontheinstructionoftheHonFloydHall.He

alsostatedthathehadmadesuchpaymentstopoliticalpartiesandindividualsinthepast.

Heinsisted,however,thathedidnotseekorreceiveanyfavoursinreturnforthepayment.

4.116AnotherinstanceoftheHonFloydHall’snon‐disclosuretotheCommission,towhich

Ihavealreadyreferred,emergedonlyafterhehadcompletedhisinitialoralevidence.Chal

Misick, who gave evidence after him, spoke of his 10% interest, through the Windsor

Investment Group Ltd, in the Casablanca Casino in Providenciales, along with the Hon

MichaelMisick,319theHonMcAllisterHanchellandMarioHoffmann.WhentheHonFloyd

Hallwasrecalledtothewitnessbox,saidthathehadforgottenthis investment,whichhe

saidwasof$40,000,butclaimedignoranceofthepercentageofhisshareintheproject.In

additiontohisnon‐declarationtotheRegistrarandnon‐disclosuretotheCommissionofthis

interest,heneverdiscloseditatCabinetmeetingswhentheCasinoprojectwasthesubject

ofapplicationsforvariousapprovals.AsIhavementioned,320hisevidencewasthatheonly

hadavague ideathatsomeofhisministerialcolleaguesmightbe involved intheventure,

and that they had not discussed their involvement.321 The Hon McAllister Hanchell’s

319Seeparagraph4.71above320ibid321Transcript,Day15,p11

161

evidence,ontheotherhand,wasthathehadknownwhotheothertwowere,andthatthey

haddiscusseditasaninvestmentbetweenthem.322

16– I findthat theHonFloydHallhas failed inseveral importantrespects to

makeadequatedisclosuresinresponsetotheCommission’srequests,pursuant

toitspowersundertheCommissionsofInquiryOrdinance,forfullandaccurate

disclosureofhisfinancialinterests.

WhilsttheCommissionsof InquiryOrdinancegivespowertotheCommission,while it is in

being, to takeprocedural steps toenforcesuchdisclosurebycontemptproceedingsorby

referencetotheSupremeCourtforsanction,Idonotconsideritnecessaryorappropriatein

the circumstances, especially as hewas apparently acting on themisjudged advice of his

attorney,MrOliverSmith,ofStanfieldGreene. Moreover,theHonFloydHallmadeupin

somepart forhispreviousnon‐disclosureto theCommissionbyhis frankdisclosurewhen

givingevidenceofmanymattersinexaminationbyCounseltotheInquiry.

PoliticalPartyFinances

4.117TheHonFloydHall, inresponsetoclosequestioningbyCounseltotheCommission

abouthisroleofTreasurerofthePNP,spokeofthreebankaccountsoftheParty.Again,I

havereferredtothesemattersunderthegeneralheadingofPoliticsandPoliticalDonations

inChapter2ofthisReport. Forconvenienceofreferenceinthiscontext, Ireturntothem

here. The first, andmain, accountwaswith the First Caribbean International Bank, from

which,hesaid,bankstatementscouldbeobtained,andinrespectofwhichhekeptaledger

account at his home. In the course of his evidence the ledger account and partially

supporting bank statements from the First Caribbean International Bank were, with his

consent,323providedtotheCommission.Itappearedtocomeasasurprisetoothersenior

membersofthePartythathehadmaintainedsuchaledger.Theaccountsrevealedthat,as

TreasurerofthePNP,hehadpresidedoverachaoticsystem.Evenallowingfortheabsence

of any legal requirement in the TCI for political parties to keep and publish accounts, his

322Transcript,Day19,p96323TheCommissionrejectedasubsequentchallengebyMrNormanSaundersonbehalfofthePNPtotheCommissionretainingortakinganyaccountofthoserecords,whichhethenmodifiedtoanapplicationthatthenamesofanypoliticaldonorsidentifiedintheaccountsshouldnotbepubliclyrevealed,achallengethattheCommissionalsorejected;Seealsopara2.35above.

162

wereatravestyofwhatcouldhavebeenexpectedfromacertifiedpublicaccountantinhis

role as Party Treasurer. Theywere inaccurate, incomplete andpotentiallymisleading. In

addition,hehadpreparedonlyoneformalandmisleadingTreasurer’sreportforthepartyin

2006 covering the previous five and half years –misleading because it reflected only the

Party’saccountwiththeFirstCaribbeanInternationalBank.Seemingly,hehasnotprepared

anyfurtherreportsontheParty’sfinances.

4.118 The second and third accounts of the Partywerewith 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.TheHonFloydHalldescribedthecurrentaccountattheBelizeBankasaclearing

account for itsmain account there, by which he presumablymeant the supporting Party

Loan Account. He maintained that the Party Executive had known of the Belize Bank

accounts,butthattheirexistencehadbeenkeptfrompartymembersbecausefulldisclosure

of theParty’s financial affairswasa sensitive issueandnot all of itsmembershiphad the

Party’sbest interestsatheart. HeaddedthattheParty’sSecretary‐General,theHonDon‐

HueGardiner, knew of the accounts. However,MrGardiner gave two differing accounts

aboutthis.Thefirst,inhisoralevidencetotheCommission,wasthathehadnotknownof

themuntil theHonRoyalRobinsontoldhimabout them inNovemberorDecember2008,

that is, very shortlybefore theCommission’soralproceedings.324Thesecond, inawritten

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

resolutionofthePartyof5thJune2002mandatingtheopeningofthecurrentaccount.

4.119 The Hon Floyd Hall acknowledged to the Commission his failure tomaintain and

presenttotherulingPartyproperaccountsofitsfinancialaffairs.Suchfailure,ofwhichhe,

the HonMichaelMisick and possibly a few others in the Party leadershipwere potential

beneficiaries, smacksofdishonesty in keeping to themselves theexistenceanduseof the

secondandthirdPartybankaccountswiththeBelizeBank.


163

4.120 Ofmajorconcernalso,mustbethescopethatsuchsecrecymayhavegiventothe

passageoffundsfromwealthyindividualswithbusinessrelationshipswiththeGovernment,

andwhostoodtogainfromitsdecisions,tofundonalavishscaleextravagantlifestylesof

theParty’s representatives in theCabinet. InformationreceivedbytheCommission from

varioussourcesindicatesthatPNPPartyfund‐raisingconsistedinlargepartofdemandsby

theHonMichaelMisickandtheHonFloydHallonoverseasdeveloperstoprovidelargecash

donationstotheParty.Themessageimplicitinthosedemands‐truetothefearsvoicedby

MrfJnrwhentrying,bywayofsubmissiononbehalfofthePNP,tokeepitsbankaccounts

fromtheCommissionandtheTCIpublic325wasthatfailuretopayupwouldorcouldhave

hadanadverseeffectontheGovernment’sviewoftheacceptabilityoftheirprojects.

17‐IfindthattheHonFloydHall,inhiscapacityasTreasurerofthePNPParty:

1)failedtoadministerandkeepproperaccountsofthefundsofthePNPsoas

toallowpartymoniestobedisbursedforhispersonaluseandthatoftheHon

MichaelMisickandotherseniorPartyMembers,withouthavingdevisedany,

oranyeffective,systemforaccountingtothePartyforsuchuse;and2)misled

thePartyasawholeastothetruestateofitsfinancialaffairsandthepurposes

towhich itsmonieswerebeingput, by keeping secret frommembersof the

Party, including senior Party officials, the existence of certain Party bank

accountsmaintainedandoperatedbyhim,andbyproducingin2006apartial

andmisleadingTreasurer’sReportconcealingthetruestateofitsfinancesand

thepurposestowhichitsfundswerebeingapplied.

I recommend criminal investigationby thepoliceor others in relation to the

Hon Floyd Hall of possible corruption in respect of his administration of the

Party Accounts and/or other serious dishonesty, including theft and false

accounting.

18 – I find that the payment by Jak Civre, the developer of the Seven Stars

Resort,totheHonFloydHallof$150,000on8thFebruary2007,thedaybefore

theelection,purportedlyasacampaigndonation,butwhichtheHonFloydHall

325Seepara2.35above

164

paid into the business account of his company, Paradigm, and also other

unexplainedpayments,werepossiblycorruptpayments.326

I recommendcriminal investigationbypoliceorothers in relationto theHon

FloydHallofpossiblecorruptionand/orotherseriousdishonestyinrespectof

thatpaymentbyJakCivreand/orotherunexplainedpayments

LinkswithRichardPadgett

4.121 TheCommissionbecameconcerned inthecourseofthe Inquirywiththeapparent

close links between the Hon Floyd Hall and Mr Richard Padgett. Mr Padgett is a well‐

established developer in the TCI, responsible, through his TCI company, Oceanpoint

Developments Ltd, for a project known as the Third Turtle Club, begun in 2004. Hewas

shownonPNPrecordsashavingmadeaseriesoflargecontributionstothePartyin2005to

2007,amountingto$500,000.

4.122TheprojecttodeveloptheThirdTurtleClubisrelevanttotheconductunderinquiry

oftheHonFloydHall.Inthecourseofitsplanninganddevelopment,MrPadgettappliedto

the Physical Planning Board for an exemption from the five storeys height restriction on

beachfront properties. He sought permission to build a hotel to a level of seven storeys,

with a view to increasing its profitability. The Board refused his application, and, in

December 2005, he appealed, as was his entitlement, to the Hon Michael Misick in his

additionalroleasMinisterforDevelopment.IntheabsenceoftheHonMichaelMisickwhen

theappeal fell tobe consideredandbecause itwas said tobeurgent, theHonFloydHall

dealt with it. By a letter of 14th December 2005, he allowed the appeal.327 In his oral

evidencetotheCommission,hemaintainedthathehadnotmadetheactualdecision,but

hadsimplysignedtheletterinsteadoftheHonMichaelMisick,asifitwerehisowndecision.

Only a week later, on 21st December 2005 the Government announced the grant of

BelongershiptoMrPadgett.However,MrPadgett’sfairwindfaltered,becausethedecision

oftheHonFloydHall inhisfavourontheappealwasstruckdowninthefollowingyearby

the Supreme Court on a judicial review challenge. The Court’s decision was not on the

326Seepara4.115above327CoreVolume6,tab3

165

planningmerits ofMrPadgett’s application tobuild to seven storeys, but because, in the

absenceofthePremierastheresponsibleMinister,theHonFloydHallhadactedultravires.

4.123InFebruary2006,twomonthsaftertheHonFloydHall’spurportedappealdecision

inMr Padgett’s favour andbefore itwas struck downby the SupremeCourt,Oceanpoint

DevelopmentsLtd,madetwo largepayments, totalling justunder$375,000, into thebank

account of the Hon Floyd Hall’s company, Paradigm. The Hon Floyd Hall revealed those

paymentsinoralevidenceaftertheCommissionhadaskedhimtoaccountforunexplained

income on a schedule it had prepared from his disclosed bank accounts. He said the

paymentswereforinvoiced328serviceshehadprovidedtoMrPadgett,asfarbackas2002,

foradvisoryassistanceandinhelpinghimin2004findthesitefortheThirdTurtleClub.He

saidthathehadpaidhalfofthe$375,000totheHonMichaelMisick,viaChalMisick’sclient

account.ItwillberememberedthattheHonMichaelMisickhadnotdeclaredthisreceiptto

theRegistrar,ordisclosedittotheCommission,eveninhisoralevidence.329TheHonFloyd

HallsoughttoexplainhispaymenttotheHonMichaelMisickasagift,claimingthathehad

regardedMrPadgett’spaymenttohimasawindfall.

4.124 However, the timingofMrPadgett’s payment of $375,000 to theHon FloydHall,

shortlyafterhis seemingly successfulplanningappeal to theHonMichaelMisick, theHon

FloydHall’s favourable fieldingof it, theyearsofdelaybetweenhispurportedservices to,

andhisinvoicingMrPadgett,forthem,andtheformerMinisters’commonnon‐disclosureof

thepaymentsuntiltheinformationwasdraggedoutofthembytheCommission,suggestat

leastthepossibilityofcorruption.

4.125 The links between Mr Padgett and the Hon Floyd Hall are also to be seen in Mr

Padgett’s real estate company, Elite TCI Ltd, which operates under the trading name of

RemaxElite.Atsomepointin2007thiscompany,evidentlyincorporatedinFebruary2007,

was divided between Mr Padgett and the Hon Floyd Hall’s wife, Mrs Lisa Hall.330 In his

declarations to the Registrar for 2006 and 2007, the Hon Floyd Hall declared a 49%

shareholding in her name in this company. He indicated in his evidence in the oral

proceedingsthatshehadinfactownedonlyonethirdofthebusinessandthathehaderred

328MrPadgettprovidedtheCommissionwiththeinvoiceonthedaytheHonFloydHallwasaskedabouttheissueintheoralproceedings,stipulatingthatpaymentshouldbemadetoParadigm.329Seealsopara4.36‐4.37,above330TheHonFloydHallhasprovidedapurportedcopyofthatagreement(undated)totheCommission.

166

in his declarations. Mr Padgett owns the other two thirds. This is the Hon Floyd Hall’s

accountofthisarrangementandofhowitcameintobeing:331

ItcameaboutbecauseMrPadgetthadinvitedmetostartarealestateoperationwithhimandItoldhimthatIcouldnotbeinvolvedwithanyrealestatebusinesswithhimbecauseIamingovernment, Idon’thavethetimetodedicatetothatand Ialsohada realestatecompanyat the time,PlatinumRealty, thatwasn’tgettingmyattentionandneededmyattention. I toldhim that I know thatmywifeis interestedintherealestateactivityandhecouldverywellapproachherconcerningitandhedid.

4.126 It appears thatMrsHall didnothave the funds topurchase the shares (valuedat

$228,000), but was allowed an arrangement by which she could pay for them from her

dividendswhenearned.AsofOctober2008shestillowed$234,911.20toRemaxElite.The

value to Mr Padgett or Remax Elite of this arrangement is unexplained. However, Mr

Padgetthasmadenocomplaintabout it,and I suppose there isapossibility in the longer

termofMrsHall bringing something to the company. Nonetheless, it looks like a further

instance in which the Hon Floyd Hall potentially exploited his position of governmental

influencetoobtainapotentiallylucrativefinancialbenefitatnorealcosttohimorhisfamily

–apossiblycorruptarrangement.

4.127FinallyinthecontextofMrPadgett,on1stAugust2007hemadeapaymenttothe

Hon FloydHall of $200,000. Bothmenhavemaintained, respectively by attorneys’ letter

andinevidence,thatthiswasaloan.TheCommissionhasseenapromissorynotesignedby

the Hon Floyd Hall, undertaking to repay the loanwith interest at 8% per annum, by 1st

February2009or, ifrepaymentwasnotmade,at10%interestperannum.TheHonFloyd

Halldidnotdeclare the loan to theRegistrarof Interestsordisclose it to theCommission

untilhegaveevidence.

19 – I find that the Hon Floyd Hall, in accepting payment fromMr Richard

Padgettof$375,000inFebruary2006,purportedlyasafinder’sfeeforservices

renderedsomeyearsbefore,butshortlyafterhisplanningappealdecision in

MrPadgett’sfavourinrelationtohisproposedconstructionoftheThirdTurtle


167

Club, possibly acted dishonestly, including by way of misfeasance in public

office,andpossiblycorruptlyinacceptingsuchsum,given:1)thelengthoftime

andapparentdisproportioninvaluebetweenthepaymentof$375,000andthe

servicesforwhich itwassaidtohavebeenpaid;2)theHonFloydHall’snon‐

declaration of the payment to Registrar of Interests and his late and

incompletedisclosureof it to theCommission;and3)hisdivisionof thesum

withtheHonMichaelMisick,whohadhadnoostensibleconnectionwiththe

provisionofanyservicesinrespectofwhichitwaspurportedlymade.


HonFloydHallinrespectofpotentialseriousdishonesty,includingmisfeasance

inpublicofficeandcorruptioninrelationtoMrRichardPadgett’spaymentto

himof$375,000inFebruary2006

20 – I find that there is information of possible corruption in the Hon Floyd

Hall’sarrangementwithMrRichardPadgettinoraboutJune2007forhiswife,

LisaHall, tobeappointedadirectorof, andmadeaone‐third shareholder in

Elite TCI Ltd, a real estate brokerage company controlled by Mr Richard

Padgett, the agreed value of her shareholding being about $280,000, but for

whichshewastoprovidelittleornoconsideration.


HonFloydHallinrespectofthispossiblycorrupttransaction.

21 – I find that there is information that the Hon Floyd Hall possibly acted

corruptlyand/orinmisfeasanceofhispublicofficeinfailingtowithdraworto

declarehislinkswithMrRichardPadgett,atCabinetdiscussionsconcerningthe

Government’sdealingswithMrRichardPadgett’sbusinessaffairs,inparticular

at CabinetMeetings on 21stMarch 2007 and 8thMay 2008 atwhichmatters

relatingtoOceanpointDevelopmentsLtdwerediscussed.

Irecommendcriminalinvestigationofpossiblecorruptionand/ormisfeasance

inpublicofficeinrelationtotheHonFloydHallinrespectofthosematters.

168

22–Ifindthattheloanof$200,000fromMrRichardPadgetttotheHonFloyd

HallinAugust2007,whichtheHonFloydHalldidnotdeclaretotheRegistrarof

Interests, or to the Commission, until hewas examined in the Commission’s

oralproceedings,wasapossiblycorruptpayment.332

I recommend criminal investigation by the police or others of possible

corruptionand/orotherseriousdishonestyinrelationtotheHonFloydHallin

respectofthisloantohimof$200,000.

‘Flipping’ofCrownLand

4.128 A further issuearoseduring theHonFloydHall’sevidence in theoralproceedings

concerning his undeclared and hitherto otherwise undisclosed financial links. The Hon

MichaelMisick, in his oral evidence had disclosed for the first time payment to him of a

finder’s fee $325,000 for introducingapurchaser to a sellerof landonWaterCay,Ashley

Properties Ltd, controlled byMr Alden Smith. According to the HonMichael Misick, his

understandinghadbeenthatthelandforsalewasprivatelyowned. Hesaidhehadbeen

approached by the Hon Floyd Hall on behalf of that company to propose a purchaser,333

whichhedid,resultinginasaletoMrPeterWehrli.334

4.129TheHonFloydHallgaveaslightlydifferentaccount.HesaidthatMrAldenSmithwas

amutualfriendoftheHonMichaelMisickandhimself,andthatMrSmithhadapproached

him toask theHonMichaelMisick forhelp.Hemaintained that the land fordisposalhad

been Crown Land, not privately owned. He said that Mr Smith had made an offer to

purchaseCrownLandforthesumof$750,000,andwishedtodosoandsellitonforaquick

andsubstantialprofit–toflipit.TheHonFloydHallalreadyhadafinanciallinktoMrSmith,

towhom,hesaid,hehadloanedmoneyatvarioustimesleadingtoanoutstandingdebtof

$75,000. WhenMrSmithacquiredtheCrownLandandsoldittoMrWerhli,whichhedid

for$2million,hepaidthe$750,000totheGovernment,$325,000totheHonMichaelMisick

332Seepara4.127333Transcript,Day2,p41334Seeparas4.38–4.39above

169

and$200,000totheHonFloydHall,whichwastoincludetheloanrepayment,leavinghim

withaprofitonthetransactionofover$500,000.

4.130TheHonFloydHallemphasisedtotheCommissionthatMrSmithhadbeengivena

provisional offer oroption tobuy theCrown Landby theearlier PDMadministration, and

haddelayed taking itup. However,even if the transactionwasa legitimatesale, itwasa

clearexampleofseniorministersfacilitatingtheabuseoftheCrownLandregime,whereby

quick profits aremade by islanders exploiting their option to buy Crown land and sell to

overseas developers. The fact that both the HonMichael Misick and the Hon Floyd Hall

madelargesumsfromitshowsthattheywereawareof,andwillingtofacilitateandbenefit

fromthatexploitationinthisinstance.

23–IfindthattheHonFloydHall,inacceptingthepaymentof$200,000from

Mr Alden Smith, purportedly for services rendered, did so possibly corruptly

and/orbyconductpotentiallyamountingtomisfeasanceinpublicoffice,since

the payment followed the advantageous sale of Crown Land to Mr Smith’s

company,AshleyPropertiesLtd,whichhadimmediatelysoldthelandonfora

largeprofittoanoverseasdeveloper,andhadmadepaymentsfromthatprofit

totheHonFloydHallandtheHonMichaelMisick.


corruptionand/ormisfeasanceinpublicofficeinrelationtotheHonFloydHall

inrespectofthismatter

4.131 Oneof the clearestandmostbrazenexamplesof “flipping” is thatwhicharose in

relationtofourparcelsof landatNorthWestPointinwhichfourBelongers–oneofthem

beingaMinister theHon JeffreyHall–used thecompanyUrbanDevelopmentLtd (Urban

Development)topurchasepropertyandthensolditonimmediatelytoaCanadiandeveloper

namedDavidWex. Idealwithhis transaction inmoredetailbelow inrelationtotheHon

JeffreyHall.335 The funds fromMrWexwere channelled via the TCI attorneyMelbourne

WilsontothefourBelongers.OneofthemwasQuintonHall,brotheroftheHonFloydHall,

who, likehis three fellowBelongers in thetransaction,benefitedtothetuneof$1million

withouthavingtolayoutanyfundsortakeanyriskinthepurchaseandonwardsaleofthe 335Seeparas4.196–4.209below

170

property.TheCabinetdiscussedtheprojectonanumberofoccasions.TheHonFloydHall

attended all or most of the meetings at which it was discussed, but, on his account,

withdrewfromthediscussiononatleastoneoccasion,presumablybecauseheappreciated

hispotentialconflictofinterests.

4.132ShortlyafterthetransactiontherewasatransferoffundstotheHonMichaelMisick

of$150,000,whichhedescribedtotheCommissionasaloanfromtheHonFloydHall.The

latteracceptedthatthatsumwaspaidtotheHonMichaelMisick,butsaidthatitcamefrom

hisbrotherQuinton.336HesaidthattheHonMichaelMisickknewofhisbrother’s$1million

windfall,andthereforesoughtaloanfromhim.NeithertheHonMichaelMisicknortheHon

FloydHall,whenquestionedintheoralproceedings,waspreparedtoconcedeonthispoint.

Itispossible,butunlikelythatoneorotherofthemmayhavemisunderstoodwhomadethe

loan. It is also possible that oneor theother has deliberately sought tomisrepresent the

agreement.

4.133 Although both the Hon Michael Misick and the Hon Floyd Hall characterised the

payment to the former as a loan, there was no evidence before the Commission of any

documentary record of it as a loan ‐ no terms agreed for repayment or as to interest; no

evidenceofrepaymentorevenrequestfororattemptatrepaymentdespitethepassageof

three years. The Hon Floyd Hall acknowledged that he too had receivedmoney from his

brother,Quinton,ataboutthesametime,some$25,000or$50,000.337Whetherornotthe

moneypaidtotheHonMichaelMisickwasaloan,thefundsfromwhichitwasderivedwere

theproceedsof flippingCrownLand. TheHonMichaelMisickandotherCabinetmembers,

including theHon FloydHall, are likely to have been aware of that, despite theHon Floyd

Hall’sdenialofsuchknowledge.

24–IfindthattheHonFloydHalltookpartinpossiblycorrupttransactionsby

acceptingproceedsoftheprofitsmadebyhisbrother,QuintonHall,forsaleof

partof theequityofUrbanDevelopmentLtd involving thedisposalofCrown

LandatNorthWestPointtoanoverseasdeveloperatalargeprofitinthathe:

1) purportedly loaned part of those profits to the Hon Michael Misick, or

assisted his brother, Quinton Hall, to do so; and 2) failed to declare those


171

profitsorthepurportedloantotheRegistrarofInterestsortodisclosethemto

theCommission.


corruptionand/orotherseriousdishonesty,includingmisfeasanceinpublic

office,inrelationtotheHonFloydHallinrespectofthesematters.

MinisterialInterventionintheAllocationofCrownLand

4.134 During theoralproceedings itemerged that theHonFloydHallhadapproached

theHonMcAllisterHanchell onbehalfof certain companies asking for grantsofCrown

Landtothosecompanies.Heacknowledgedinevidencethathehadputtheproposalsto

hisCabinet colleague, theHonMcAllisterHanchell,Minister forNaturalResources,and

sought to justify them to the Commission, saying that they did not need to follow the

normal route for application.338 He also acknowledged that, having secured grants of

land for the companies, they were able to obtain loans totalling $19 million secured

againsttheland,partofwhichborrowing,$1.1million,heobtainedforhimself.

4.135TheHonFloydHalldidnotappeartoregardallthisasabuseofhisCabinetposition.It

is, however, arguable that this is precisely what it was, and that by advancing certain

companies with his personal endorsement to the Ministry of Natural Resources, he was

ensuringthat theyobtainedanunfairadvantage in landselection.He in turnbenefitedby

virtueofthefinancedeal,towhichhewouldnototherwisehavehadaccess.Thefactthat

hewasobligedtorepaythe loan,whichhesuggestedwasrelevant,doesnot, inmyview,

diminishthepossiblecorruptionsuggestedbyhisactions.Closingsubmissionsmadeonhis

behalf by Mr Oliver Smith sought to argue that his and others’ actions in promoting

individualpersonsorcompaniesforgrantsoflandsimplyreflectedasmallsocietyinwhich

everyoneknewthepoliticianspersonally,andwouldinevitablyseektousethatcontactfor

favours. Healsoarguedtheparties receiving landwereentitledto itanyway,sonoharm

wasdone.Theseargumentsdonotmeet theadverse implicationscapableofbeingdrawn

fromthe fact that thecompaniesbeingpromotedwere, in somecases,ones inwhich the


172

HonFloydHallhadadirectfinancialinterest.Therewas,inanyevent,asysteminplacefor

distributionofland,nomatterhowflawed,anditwasbeingsubvertedbytheactionsofan

influentialminorityinCabinet.

25 – I find that the Hon Floyd Hall, in making private requests to the Hon

McAllister Hanchell,Minister for Natural Resources, for allocations of Crown

Landforcertaincompaniestoenablethemtousethelandassecurityforloans,

from which he personally derived a substantial borrowing of $1.1 million,

perverted and/or undermined the Crown Land Policy for and process of

allocationofCrownLand,anddidsopossiblycorruptlyand/orinmisfeasance

ofhispublicoffice.


corruptionand/ormisfeasanceinpublicofficeinrelationtotheHonFloydHall

inrespectofthismatter

Scholarships

4.136 InasimilarfashiontohisinterventioninCrownLandallocation,theHonFloydHall

intervened onmany occasions to ensure that candidates were advanced for government

scholarshipsoutsidetheprocedureestablishedbygovernmentfortheiraward.Thispractice

wasdocumentedbytheChiefAuditor,CynthiaTravis,inanAuditReportontheScholarships

ProgrammeinOctober2006,inwhichshestated:339

ThepolicyandproceduresestablishedbytheMinistryhavebeencircumvented,andthereisalackofsupportfromthegovernmenttoensurethatthepolicyisfullyimplemented.

4.137 Allocation of scholarships was the responsibility of the Education Advisory

Committee, but the Chief Auditor found that several hundred scholarships had been

awardedwithoutithavingproperlyscrutinisedthem.Ministers,specificallytheHonMichael

Misick and the Hon Floyd Hall, repeatedly intervened to solicit scholarships for particular

pupils,thustakingthematteroutofthehandsoftheCommittee.WhilstIhavenoevidence

339TCIAuditOffice(2006),AuditReport‐ScholarshipsProgramme,S/22.035/06R,p8

173

tosuggestthatsuchinterventionwasforthepersonalbenefitofanyindividualMinister, it

was an improper disregard of the proper procedures of government, and yet another

exampleofabuseofministerialinfluence.ThesuggestionbyMrOliverSmith,inhisclosing

submission on behalf of the Hon Floyd Hall, that this practice was simply one of

recommendationsforscholarshipisunreal;itwasineachcaseeffectivelyaninstruction.

HealthCare

4.138AtopicofmajorconcernintheTCIforseveralyearshasbeentheprovisionofhealth

care. The PNP government has, throughout its administration, laid great emphasis on the

provisionof goodqualityhealthcare forTCI Islanders, and therehasbeenunderstandable

support for the concept. The longer term project to provide hospitals on the Islands is

another manifestation of the Government’s concern in this area. The medium term

approachbytheGovernmentwas,however,toarrangefortransporttotheUnitedStatesfor

persons requiring health treatment beyond the currentmedical resources on the Islands.

ThiswasknownastheTreatmentAbroadProgramme.

4.139 TheHonFloydHalltoldtheCommissionthat,uptoAprilof2006,arrangementof

such overseas medical care had undertaken by a company named Canadian Medical

Network(CMN),inconjunctionwithanairambulanceprovider,TrinityAirAmbulance.340In

early 2006 theGovernment invited both of them to submit tenders for further contracts,

whichtheydid.Thetenorofbothsubmissionswasthattheywouldorganisetransporttothe

mainlandUSA,andprovidecasemanagementforthecasesreferred.

4.140 An internal memorandum from the Ministry of Finance, Health and National

InsurancesentbythePermanentSecretary(Health)totheChairmanoftheTenderBoardon

11thAugust2006 soughtpermission toproceedwitha limited tender341between the two

bidders.Thiswas soughtbecause,as thememorandumpointedout, theGovernmenthad

workedsatisfactorilywithbothcompaniesinthepast.Thememorandumstatedclearthat

thenewtendershadbeenobtainedwithaviewtoslowingthegrowth incostsofmedical

careforwhichtheTreatmentAbroadProgrammeprovided. TheTenderBoardconsidered

340Transcript,Day15,p117341Seepara3.53above

174

andgrantedtherequest. AmemorandumfromtheBoardof15thAugust2006setoutthe

historyofCMNandTrinityAirAmbulance,andconcludedthatCMN’smanagementcharges

weretoohigh,andthattwoquotesshouldbesoughttoobtainabetterprice.Italsostated

that theMinistry had drawn up terms of Reference for the service required and that the

quotes should take account of that service requirement. That was followed by a draft

undated and unsigned Cabinet paper for presentation to the Cabinet on behalf of the

Minister,theHonFloydHall, thePermanentSecretaryandtheDirectorofHealthServices,

Dr Rufus Ewing. The paper made a careful comparison of the two tenders and invited

Cabinettochoosebetweenthem.

4.141 However,when thequestionof continuedprovisionofoverseasmedical carewas

raisedbeforetheCabinetatitsMeetingon23rdAugust2006,matterstookawhollydifferent

turn,asthefollowingextractfromtheMinutesoftheMeetingrecord:

TheDeputyPremierraisedthismatterinformingCabinetthatthecontractwithC[M]Nrecentlyexpired,aproposalwasreceivedfromSouthernHealthNetworkwhichwasofferingthesameservicesatmuchbetterprices.HeadvisedthathewasmoreinclinedtoenterintoanagreementwithSouthernHealthNetworkastheyareaUSbasedCompanywhichwouldbeabletooverseethemedicalcarethatpatientswhichwerereferredtoMiamiwerereceiving.Theywouldreceive50%ofthesavingstheyachieved.

TheCabinetthereandthenacceptedtheHonFloydHall’sproposal,subjecttothedrawing

upasuitablecontractbytheAttorneyGeneral’sChambers.

4.142 Not only were the limited tendering procedures not followed in reaching that

decision,buttheHonFloydHalldidnot,inthecourseoftheMeetingorthereafter,mention

ordeclarethatthepersonbehindSHNwasDelroyHowell,apersonalfriendofhisandwith

whomhehaddonebusiness.Althoughhelatermaintained,342thathehadhadnobusiness

involvementwithDelroyHowell,andthattheyweremerelyfriends,inhisoralevidenceto

theCommissionhedescribedhimasaclientforwhomhetransferredfunds.343And,asthe

Commissionhasascertained,hehad indeedmadeanumberofpaymentsonhisbehalf in

respectofHarbourHouse,acommercialrentalcompanyinGrandTurk.Thesignificanceof

thelackofreferencetoMrDelroyHowell intheCabinetMinutes isunderlinedbytheoral


175

evidence to the Commission of the Hon Lillian Boyce, then Minister of Education, who

attendedtheMeeting. Shesaidthat,althoughshehadknownthetwomenwerefriends,

shehadnotknownthatHowellwasbehindSHN,andthatsheshouldhavebeentold.344

4.143 TheHonFloydHall, inthecourseofhisoralevidencetotheCommission,saidthat

the Cabinet had at itsmeeting on 23rd August 2006, considered the tenders of CMN and

TrinityAirAmbulance.Hisevidencewasasfollows:345

Cabinetwasgiventhreeoptionstochooseoneofthethree.Q. Didtheyhavethreepresentationsplacedbeforethem?A. Tothebestofmyknowledge, I thinktheywouldhavehad informationonallthreepresented.TheCabinetpaperwouldhavebeenstructuredinsuchawaythatwoulddiscussthethreeoptionsthatwerebeforeus.

Thatrepresentation isnotsupportedbytheCabinetMinutes,whichdonotrefertoeither

theCMNortheTrinityAirAmbulancetenderpaper, letalonetoanycomparisonofthem.

The Hon Lillian Boyce recalled being told of the other tenders only after Cabinet had

approvedtheselectionofSHN;herevidencewasthatshehadneverseentheothertender

documents.346Itlooks,therefore,asifthedraftCabinetpaperandassociatedtenderswere

not put before or discussed by the Cabinet, and that the Cabinet was only given one

candidateforselection,SHN.

4.144 The qualifications of SHN for the task were to cause concern. It had been

incorporatedonlya fewdaysprior to thepresentationof itsproposal to theCabinet.The

HonFloydHall said inevidence thathewouldhaveaskedhow long ithadbeenproviding

such services, but couldnot recall theanswer. TheHon LillianBoyce’s recollectionwasof

having been left with the impression that SHN was a long established company. An

executionofduediligence,ifundertaken,wouldquicklyhaverevealedthetruth.

4.145WhenaskedabouttherationaleforCabinetinselectingsuchacorporatenewcomer

inthefield,theHonFloydHallclaimedthatthosebehindSHNhadexperienceof,andcould

provide access to, reinsurance in respect of exceptionally large claims, that is, claims in

excess of $1 million,347 a resource that CMN or Trinity Air Ambulance could not have

344Transcript,Day17,p19345Transcript,Day15,pp116‐117346Transcript,Day17,p27347Transcript,Day15,pp126‐128

176

matched.Thisdoesnotappeartohavebeenafactortowhichweightwasgiveninthedraft

CabinetPaperormentionedintheCabinetdecision.Whenaskedthenameoftherelevant

re‐insurancecompanytowhichSHNimportantlyhadsuchaccess,theHonFloydHallcould

notrecallit.

4.146 Insubsequentwrittensubmissions,theHonFloydHallcontendedthatSHNwasan

extensionofMrHowell’sinsurancebrokerage,FirstFinancialInsuranceBrokersLtd.Hesaid

that it could provide a number of facilities not provided for in either of the other two

tenders, in particular, preparation of a claims history for the TCI to secure adequate

reinsurancecoveragefortheTreatmentAbroadProgramme.Healsosoughttomakewider

points about the comparative offers, and suggested that the SHN offer wasmuch better

than the others. He also suggested that he had simply added the SHN tender for

considerationatthe23rdAugust2006CabinetMeetingontheassumptionthattheTender

Board would have included it if they had seen it. He maintained that it was more

comprehensive the other two proposals, and that they were simply one page letters of

expressionofinterestintheproject,andthatneitherhadbeenvettedasSHNhadbeen–an

apparentsuggestionthattheCabinetpaperandaccompanyingtenderdocumentsfromCMN

andTrinityAirAmbulancewerenotevenputbeforetheCabinet.

4.147ThetenderfromCMNwas10pageslong,baseduponitsexistingexperienceasinthe

fieldoftransferringpatientsabroad,andtheTrinityAirAmbulanceproposalwasninepages

long, and similarly detailed.348 The SHNproposal, bearing a date after the TenderBoard’s

decision,wasalsoninepages long,plusacoveringletter.ThesuggestionbytheHonFloyd

Hallthattherehadonlybeenoneserioustenderisthereforeatravestyofthefacts.Whatis

more serious is the strong implication from his evidence that the Cabinet paper and the

accompanyingtenderdocumentsofCMNandTrinityAirAmbulancewerenotputbeforethe

CabinetandthepossibilitythatnoteventhetenderdocumentofSHN,which includedthe

nameofDelroyHowell,wasshowntothem.

4.148TheHonFloydHall’sconductofthismatterwas,inmyview,possiblycorruptinthat

it suggests subversion of the proper workings of government, in particular its tender

348HonFloydHallBundle2,tab2,pp88‐106

177

processes,toensurethattheonlyproposalputbeforetheCabinetforseriousconsideration

wasthatofafriendandbusinesscolleague,DelroyHowell.

4.149Asapost‐script,IshouldmentionthattheHonFloydHallconcededinevidencethat

the reinsurance aspect never took effect. He blamed that on lack of support from the

MinistryofHealth,andsuggestedthatthatwasthereasonforthesubsequentcatastrophic

cost of the SHN contract. An independent analysis of the Treatment Abroad System

operatedbySHN,carriedoutinJuly2008bySterlingHSAonbehalfoftheTCIGovernment,

reporteda varietyof failingsonbehalf of SHNand theGovernmentas the causes for the

very poor and expensive performance by SHN. The analysis did notmentionwant of re‐

insuranceasamajorfactor.Poormanagementand lackofcoordinationbetweenSHNand

theGovernmentaccountedformostofthewasteandloss. TheHonFloydHalleventually

concededthatitwasunfortunateandperhapsregrettablethattheSHNtenderhadnotbeen

consideredbytheTender’s(sic)Board.Theendofthestorycameon1stApril2009withthe

Government informing SHN that it was terminating the contract, and with SHN

contemplating litigation in respect of claims against theGovernment in respect of unpaid

invoicesforservicesrenderedunderthecontract.

26 – I find that there is information that the Hon Floyd Hall’s conduct in

promoting in Cabinet the award of the contract for administering the

Treatment Abroad system to SHN was possibly corrupt and/or otherwise

seriously dishonest and/or amounted to misfeasance in public office, in

subverting the proper workings of government, in particular its tender

processes,toensurethattheonlyproposalputbeforetheCabinetforserious

considerationwasthatofafriendandbusinesscolleague,DelroyHowell.


HonFloydHallofpossiblecorruptionand/orotherseriousdishonestyand/or

misfeasanceinpublicofficeinhispromotioninCabinetofSHNfortheawardof

theGovernmentcontracttoadministertheTreatmentAbroadSystem.

178

Cabinetresponsibility

4.150 TheevidencethatunfoldedbeforetheCommissionduringtheoralhearingsdidso

against a back‐drop of constant press speculation and reports as to infighting within the

Cabinet.Aspoliticalalliesovermanyyears,itislikelythattheHonMichaelMisickandthe

Hon FloydHall hadbeen, at least at some stage, friendlywith one another. Thepopular

view inearly2009was that any friendshiphad turned intoa rivalry, vergingonantipathy

between the two men. There were certainly a number of matters on which they gave

contradictoryevidence,andinwhich,byimplication,eachaccusedtheotheroflying.

4.151However,theyhadservedtogetherinCabinetsince2003,andhadbeenleadinglights

of thePNPbeforethen. Theyhadclearlyworkedclosely together,andcanreasonablybe

assumedtohaveknownagreatdealabouteachother’sattitudesandworkingpractices.If

andinsofaraseithermanmightbesaidtohaveactedimproperlyinoffice,itisreasonable

toconsiderwhethertheotherwouldnothaveknownofit.

________________


Background

4.152TheHonMcAllisterHanchellwasaMinisterfrom2003untilhisresignationafterthe

Commission’s oral hearings in early 2009. He was, at all relevant times the Minister for

NaturalResources,andtherefore,carried,withotherresponsibilities,ultimateresponsibility

fortheallocationanddistributionofCrownLand.HewastheelectedMemberoftheHouse

of Assembly for South Caicos North. In his private life he was, and remains, a wealthy

businessman,withavarietyofcommercialinterests.Hismainprivatebusinessappearstobe

AL Services Ltd, a shipping company based in the TCI. He also owns a half share in a

company called Caicos Oil Ltd, the other half being owned by his brother, currently

proposingtodevelopoilstoragefacilities,deliveryservicesandservicestationsthroughout

theIslands.

179

4.153 As in thecaseof theother formerMinisters,hehashadan important role in the

Governmentforsomeyears,inrecentyears,inparticular,asMinisterforNaturalResources.

Ihavehadtoexaminehisconductinsomedetail,especiallythemannerinwhich,inrecent

years,hehasexercisedhisresponsibilitiesforthedirectionandoversightoftheworkingof

the Crown Land Policy in its various manifestations. Through his attorneys, Misick &

Stanbrook,hemadewrittensubmissionstotheCommissionpriortoitsoralproceedingsin

January and February of this year, and gave evidence over a number of days in those

proceedings.Hehasalsosinceprovided,throughhisattorneys,anumberofdocumentsand

furtherwrittensubmissions.

DeclarationsandDisclosureofInterests

4.154 In commonwith all other Cabinetmembers theHonMcAllisterHanchell failed to

makeadequatedeclarations to theRegistrarof Interestsofhis financial interests. Also in

commonwithmostofthem,hefailedtomakefullandadequatedisclosureofhisfinancial

affairs to the Commission. In his written and oral evidence to the Commission, he

acknowledgedthathehadreceivedpoliticaldonationsovertheyears,andhadnotdeclared

them. He said that his impression had been that political contributions were not being

declared. Inaddition,hehadnotdeclaredto theRegistrarseveralparcelsof landthathe

disclosed to theCommissionashavingbeen inhisownership foranumberofyears. As I

have already mentioned,349 he attributed these failures to errors on his own part in

understandingandcompletingtheforms,andinrespondingtotheCommission’s lettersof

requestforinformation.

27 ‐ I find that, throughout his period ofmembership of the Legislature, the

Hon McAllister Hanchell repeatedly failed to make full and accurate

declarations of his interests to the Registrar of Interests, as required by the

Registrations of Interests Ordinance, including his shared interest through

Windsor Investment Group Ltd in the Casablanca Casino on Providenciales;

andhewasalsoslowandpatchyinhisdisclosuretotheCommission.

349para2.30above

180

ForthereasonsthatIhavegivenforsimilarfailuresbytheHonMichaelMisickandtheHon

Floyd Hall, Imake no recommendations in respect of thesematters for any investigation

withaviewtopossiblecriminalorothersanction.

4.155Astonon‐declarationstotheRegistrarandnon‐disclosurestotheCommissionprior

to giving oral evidence, the first formention is a total of $90,000 in PNP stipends over a

numberof years. The second is amuch largerpolitical fundingpurportedly for campaign

expenses in the February 2007 election. He effectively controlled and operated the

campaignforthePNPinSouthCaicos.Althoughonebankingformdocumentinhisearlier

disclosure to the Commission made passing reference to campaign finances, it was only

when theBelize Bank statements of the Partywere disclosed during theHon FloydHall’s

evidence,350 that the size of the purported funding for the election became clear, namely

$389,000 donated between lateNovember 2006 andApril 2007. The bulk of that figure,

over 81%, had been donated by ArlingtonMusgrove, a friend of theMichaelMisick and

otherMembersoftheCabinet. MrMusgrove isandwasthenanestablishedGovernment

contractorthroughhiscompany,JACALtd.HewasalsomentionedinevidencebytheHon

JeffreyHallassomeonewhohadoncepaidacreditcardbillof$7,000forhim.351

4.156ThefundsforFebruary2007electioncampaigninSouthCaicoswerelavish,giventhat

thetotalnumberofthoseontheIslandregisteredtovoteatthattimewasonly547(318in

South Caicos North, the HonMcAllister Hanchell’s constituency, and 229 in South Caicos

South).Thecampaignchestwas,therefore,over$1,223foreveryvoterinhisconstituency

or$711.15foreveryregisteredvoteronthewholeislandofSouthCaicos.Andthatdidnot

takeintoaccountgeneralfundsavailablefromthePNPforspendinginbothconstituencies.

Although,asIhavementioned,352thereisnostatutorylimitintheTCIonelectioncampaign

funding, the provision by oneman of suchmassive funds for a small single constituency

campaigncouldbeconsideredastrongattempttobuytheelection.However‐andthismay

be an alternative and equally serious concern ‐ the lack of accountability by politician

recipients of such funds as to their use of them renders them readily available for their

personaluse.

350cfUKParliamentaryelectionsrulesthatlimitpoliticalparties’spendingto£30,000(about$44,000)perconstituency.UKconstituencieshaveanaverageelectorateof68,492persons,namelyover125timeslargerthanthetotalvotingpopulationofSouthCaicos351Transcript,Day12,p128352aslongastheyareincurredingoodfaithatorconcerninganelectionanddonotamounttobribingortreatingvoters,Seepara3.1,above

181

4.157 The PNP ledger for the South Caicos PNP Campaign Fund, produced by the Hon

McAllisterHanchell,disclosedsomedetailsoftheexpenditureontheaccount.Someofthe

entries appeared to relate to political expenditure, sometimes identified only as sums for

reimbursement, but without any reconciliation with items for actual expenditure. There

were regular debit entries in large round figures andwithminimal detail, for example, a

payment of $60,000 to the Hon McAllister Hanchell on 10th January 2007 for Services.

Duringthefivemonthperiod,28thNovember2006to30thApril2007,betweenthefirstand

lastreceiptsfromMrMusgrove,theaccountshowedabalancingtotalofabout$390,000in

receiptsanddrawings.

4.158TheHonMcAllisterHanchellmaintainedinevidencetotheCommissionthatmuchof

the money had been applied to meet the cost of travel to and accommodation for his

constituency workers at a Convention on Grand Turk. Quite apart from an instinctive

scepticism that all ormostof the$390,000 fromMrMusgrove couldhavebeen spenton

such hospitality, the PNP ledger entries simply do not reflect the type or pattern of

expenditurethatwouldbeexpectedinmeetingthecostsofsuchagathering.Inaddition,

thebulkofthemonieswerereceivedintotheaccountinDecember2006,aftertheholding

of the Convention in the previous month, as is shown on the Treasurer’s report to that

meeting producedby theHon FloydHall. I, therefore, find theHonMcAllisterHanchell’s

explanation of the purpose and use of the large donations by Mr Musgrove to be

unconvincing,andunsupportedby theavailableevidence. All that isa rather roundabout

wayofsayingthattherearequestionmarksoverArlingtonMusgrove’slargessetotheHon

McAllisterHanchelloverelectiontimeinearly2007.

28 ‐ I find that the HonMcAllister Hanchell, in accepting fromMr Arlington

Musgravepaymentstotallingover$300,000intothePNPSouthCaicosaccount

purportedly as campaign funding for the February 2007 election, possibly

entered into a corrupt transaction in that: 1) the payments were

disproportionately large for the purported purpose of financing an election

campaign in such a small constituency; 2) the payments were made by an

established and substantial public works contractor; 3) the Hon McAllister

Hanchell held a public office in which he could influence the award of such

182

contracts;and4)he failed todeclare thispersonaland financial linkwithMr

MusgraveinrelevantCabinetdiscussions.


corruptionand/orotherseriousdishonesty,includingmisfeasanceinpublic

office,inrelationtotheHonMcAllisterHanchellinrespectofthismatter.

Loans

4.159 In written and oral evidence to the Commission, the Hon McAllister Hanchell

disclosed that he had borrowed extensively byway of private loans, and on credit cards.

These were all loans or receipts of money that he had not declared to the Registrar of

Interests, and only at the last moment to the Commission. Despite being requested in

advanceoftheproceedingstoprovidedetailsofanycreditcardsused,hefailedtomention

until the day before giving oral evidence that he had obtained an American Express

Centurion card, following an introduction in 2007 to J&T Banka in Prague by Mr Mario

Hoffmann, the principal developer of Salt Cay. He has since used the card extensively.

However, he did not always clear the debit on a monthly basis, allowing monthly

outstandingbalances to accumulate. This, from time to time, engendered chasing letters

fromtheBankseekingpaymentofoutstandingsums,onoccasion,inexcessof$300,000.

4.160 The Minister made late disclosure, in the course of his oral evidence to the

Commission,ofother loans thathehadneverdeclared to theRegistrarof Interests. One

wasaloantotalling$1.168million,whichhesaidthathehadobtained,withtheagreement

ofNormanSaundersJnr,fromhisfirmofattorneys,Saunders&Co.Heagreedthattheonly

documentationoftheloanwasachargeinfavourofSaunders&Coimposedonaparcelof

land.Infact,theloanwasfromanun‐namedprincipalofthefirm.

4.161Anotherloan,whichtheHonMcAllisterHanchelldisclosedjustbeforehebeganto

giveoralevidence,wasof$1millionfromtheHonMichaelMisick,whohadnotatthatstage

discloseditinhiswrittenororalevidence.353TheMinisterexplainedthathehadaskedthe

HonMichaelMisickfortheloantohelppayoutstandingsumsonhisAmericanExpresscard

353whichtheHonMichaelMisickthenpromptlydisclosedbyane‐mailedmessagetotheCommission.

183

bills. TheHonMichaelMisickmadea seriesofpayments tohelpout, in at leastone case

fromalineofcredithehadfromLichtenstein‐basedArlingAnstaltinstitution.Accordingto

the Minister, this borrowing was informal, interest‐free and undocumented, on the

understanding thathewould repay itas soonaspossible. TheCommission isunawareof

any repayment by him of the loan or when or how he anticipates doing so. His limited

accounts,disclosinganexcessof spendingoverhisdisclosedadhoc incomestreams inAL

ServicesLtdandCaicosOilLtd,donotindicateearlyrepayment.

4.162WhilsttheMinisterbrokenolawinborrowingmassivelybeyondhismeanstorepay,

his behaviour raises someworrying questions. His Cabinet salary of $203,000 per annum

couldnotprovidehimwithfundsthatwouldgoveryfartowardsrepaymentofcapital,never

mind servicing interest obligationswhen charged. Andhe seemsnot to have felt able to

makedrawing fromhis company interests toput him in credit. Yet he embarkedon and

persisted in a lavish spending spree, as the debits incurred on his American Express card

show,andwhichhecouldonlymeet in the first instanceby furtherborrowing. Itmaybe

thathehadexpectationsofotherandsubstantialsourcesofrevenue.

CaicosOilLtd

4.163 One possible source revenue may have been a willingness to use his ministerial

positiontofurtherhisownfinancialinterests,forexampleinrelationtohiscompany,Caicos

Oil Ltd. On 8th October 2008 the Hon Michael Misick put a proposal to the Cabinet in

supportofhisinterestinobtainingCabinetapprovalforthecompanytobuildanumberof

storagefacilitiesaroundthe Islands.Theproposalenvisagedthegrantofoutright freehold

ownershipof landforservicestations, longleasesforestablishmentofstoragefacilitieson

anuninhabitedisland,taxexemptionfor15yearsand5%customsdutyonmaterialsneeded

forestablishmentofthefacilities.

4.164Whenquestionedintheoralproceedingsabouttheneedforsuchaprovision,hetold

theCommissionthattherehadbeenalongstandingproblemontheIslandsofshortagesof

fuel.Hewasunabletopointtoanysupportingdocumentationforthiscontention,sayinthe

formofGovernmentFuelStrategyPapers,andthereappearstohavebeennoreferenceto

184

suchaproblematthe8thOctober2008CabinetMeeting.Hisproposal, ifapprovedbythe

Cabinet,would,however,createavaluablecommercialopportunityforCaicosOil.

4.165ThefactthatHonMcAllisterHanchellwasknowntobetheownerofCaicosOilLtdand

thathewithdrewfromCabinetdiscussionontheproposaldoesnotexcludetheproblemofa

potentialconflictofinterestsonhispart.Itwashighlylikely,giventheHonMichaelMisick’s

espousal of theproposal thathis other closeCabinet colleagues and friendswould follow

suitwhilehewaitedoutsidethedooroftheCabinetRoom.

MinisterialallocationofCrownLand

4.166 There was considerable potential for more direct abuse by the Hon McAllister

HanchellofhisCabinetpositioninhisroleasMinisterforNaturalResources.Ithasbeena

commonthemeofofficialandotherconcernsputbefore theCommissionthat thesystem

for allocation of Crown Land has been routinely abused in a number of complementary

ways, including, critically,ministerialmisuse of power. I have detailed these concerns in

Chapter 3 of this Report.354 Broadly they fall under two main headings. The first is that

allocation is not fair or equitable in that not all Belongers can obtain Crown Land,whilst

someareabletoprofiteerbyobtainingitatthediscountedrateandimmediatelysellingitto

overseasdevelopers.Thesecondistherecentgovernmentalapproachofcoveringrecurrent

publicexpenditurefromthedisposalofvaluablecapitalassetsintheformofCrownLand.

4.167Inresponsetoquestionsposedbyhiscounsel,MrArielMisickQC,theMinistergave

anaccountoftheadministrationofallocationofCrownLandthatIhavealreadysetoutin

Chapter3,355partofwhich,forconvenience,Irepeathere:

Theofficerstrytodotheirverybesttoserviceonafirstcome,firstservedbasis.After that process is over, then there is a review process with a number ofapplicationswhererecommendationsaremadebystaffmembersintheindustrybased on the representations received to get Crown land...The review processinvolves the Permanent Secretary, the Commissioner of Lands, the AssistantCommissionerofLands,theDeputyCommissionerofLands,and italso involvedme.Icomeinsometimesduringtheoveralldiscussionoftheallocations,orImay

354Paras3.10–3.50above355Transcript,Day9,p29

185

comeinverylatewhentheletterisalreadypreparedasarecommendation,andIsimplysignthem,andthepersonsaresuccessfulintheCrownlandapplication.

As I have indicated, the Permanent Secretary of theMinistry for Natural Resources,Mrs

Garland‐Campbell, in response to a written enquiry from the Commission about this

account, wrote on 29th January 2009 contradicting it.356 She stated that there were no

formal procedures for allocating land and that no such arrangement as a review group

existed. She stated that applicationswere handled in one of three possibleways: 1) the

Ministergave instructions,orallyor inwritingastowhomthelandwastobeallocated;2)

anotherMinisterintervenedtodothesame;or3)sheortheLandCommissionersprovided

theMinisterwith lists of long‐standingunsuccessful applicants for his approval. Theonly

review that took place was after allocation had been made simply to ensure that each

successful applicant qualified for it as a Belonger, and had not exceeded the maximum

numberofparcelsoflandallowable.

4.168 The Permanent Secretary provided the Commissionwith a number of letters and

emailsbywayofexamplesoftheHonMcAllisterHanchell’spracticeofunilaterallyallocating

land,andofotherMinistersinterveningtodothesamefortheirownpreferredapplicants.

Therewereevendocumentedexamplesofhimgrantinglandtohimself. Oneofthemwas

theallocationofanumberofconditionalpurchaseleasestoacompany,AkitaHoldingsLtd,

of which he owned 60% of the equity, which he communicated by letters bearing his

signature – effectively writing to himself, as he acknowledged in evidence. He also

acknowledgedthat itdidnot lookgood,butdefendedtheuseofthediscretiongrantedto

himbytheCabinet,tomakeallocationstohimself.Evenmorestrikingwasaletterhewrote

onbehalfoftheMinistrytoPalmBreezeLtd,acompanywhollyownedandoperatedbyhim,

granting it freehold title to a parcel of land at 75% of openmarket value ‐ said to be in

accordancewithCabinet’sdecision. Whenaskedaboutit,heclaimedthathehaddeclared

his interest in Cabinet when the decision was made and that he had not in the event

accepted his offer. The Commission has not been able to identify the claimed Cabinet

decision,andhedidnotdeclarehisinterestinPalmBreezeLtdtotheRegistrarofInterests.

Inshort,theMinisterdidnotappeartoregardtheuseofhisministerialpowertograntland

356Seepara3.18above

186

tohimselfaspresentinghimwithaconflictofinterests,since,asheemphasised,hetoowas

aBelonger.

29‐IfindthattheHonMcAllisterHanchell,inhisofficeofMinisterforNatural

Resources,enteredintopossiblycorruptand/orotherwiseseriouslydishonest

transactionsand/orinmisfeasanceofpublicoffice,byofferingonbehalfofthe

Government grants of Crown Land to himself and/or to companies that he

substantially ownedor controlled, thereby creating and ignoring the obvious

conflictsofinteresttowhichhisoffersgaverise.

Irecommendcriminalinvestigationbythepoliceorothersinrelationtohim

of possible corruption and/or serious dishonesty and/or misfeasance in

publicofficeinrespectofthesematters.

30– I findthattheHonMcAllisterHanchellpossiblyabusedhisministerial

positionbyinstructingthePermanentSecretary intheMinistryforNatural

ResourcestoallocateCrownLandtoindividualsofhischoice,ortoallocate,

orinstructthePermanentSecretaryorotherofhisdepartmentalofficersto

allocate,CrownLandtoindividualsidentifiedandnotifiedtohimbyfellow

Ministers, in all or most cases without proper regard to the Crown Land

Policy.

Irecommendcriminalinvestigationbythepoliceorothersinrelationtohim

ofpossiblecorruptionand/orotherseriousdishonestyand/ormisfeasance

inpublicoffice,inrespectofsuchactions.

4.169OneassociatedaspectoftheallocationofCrownLandarosefromtheevidenceofMr

GaryLightbourne,whohadbeenaformerbodyguardofthePremier.Hesaidthathadbeen

offeredaparcelofCrownLandpersonallybytheHonMcAllisterHanchellforwhichhehad

not even applied, following a series of unsuccessful applications over the years for other

parcels.ItwasinDecember2006,hesaidthattheHonLillianBoyceMinisterhandedhima

letter at ProvidencialesAirport bearing theHonMcAllisterHanchell’s signature, informing

himof the grant ofhis application for a commercial lease of a parcel inWest Caicos.Mr

187

Lightbourne said that he had never made any such application and had never had any

interestinstartingabusinessonWestCaicos.He,rightlyorwrongly,interpretedtheletter

asanattempttoplacatehimaheadoftheFebruary2007election,ashehadlefttheservice

oftheHonMichaelMisick,forwhomhehadbeenadriverandbodyguard.

4.170Onthefollowingdayithappenedagain.ThistimetheHonMichaelMisickpersonally

handed him a letter, again at theAirport and again signed by him, now for a conditional

purchase lease of a residential property at Proggins Bay, but again for which he had not

applied.Heregardeditasafurtherattemptatanelectoralbribe.

4.171 When these matters were put to the Hon McAllister Hanchell, he said that Mr

Lightbournehadmademanyapplicationsforleasesovertheyears,anddidnotacceptthat

offershadbeenmadetoMrLightbournethatdidnotreflecthisapplications.Hesuggested

thataresidentialoffermighthavebeenmadeifanexistingleaseelsewherewascomingto

anend, althoughMr Lightbourne sawno such circumstance inhis case. TheMinisterwas

unabletoexplainwhyanofferwouldhavebeenmadetoMrLightbourneforacommercial

parcel of land on another island, when Mr Lightbourne’s home was established in

Providenciales.

31–IfindthattheHonMcAllisterHanchellmayhaveparticipatedinpossibly

corruptarrangementsinwhichoffersofCrownLandweremadetoindividuals,

includingMrGaryLightbourne,whohadnotappliedfortheland,withaview

to the recipients of the offers selling the land on quickly to developers at a

substantialprofitforallthepartiesinvolved.


Hon Michael Misick of possible corruption and/or other serious dishonesty

and/ormisfeasanceinpublicofficeinrelationtosuchoffers.

JoeGrantCay

188

4.172 I have summarised earlier in this Chapter,357 the complex issues relating to the

proposeddevelopmentofJoeGrantCayinrelationtotheHonMichaelMisick.FollowingMr

Malave’s application in 2006 for permission to develop Joe Grant Cay, the Government

soughtavaluationof the landon theCay. TheChiefValuationofficer,MrShaabanHoza,

prepared, on 7th November 2006, a valuation of the whole of the Cay,358 based on

instructionsfromTCInvestthataninvestorgroupwasinterestedinundertakinganultrahigh

end development. Mr Hoza would evidently have preferred more detail, but made an

assessmentnonetheless,andindicatedthatforthepurposeofthevaluationhehadvisited

theCay.Hisputhisvaluationasbetween$230,000to$330,000peracre,stating:

Itismyopinionthat,withtheaboveassumptionsinmind,themarketvalueofthefreeholdinterestinthelandcomprisedintheJoeGrant’sCayisrepresentedin$230,000peracre(or$145,000,000forthewholeCay).Thisfigurecomparesfavourablywithtotalprojectcostswhichareestimatedat$500,000,000.

There is no evidence to suggest that the Government acted upon or communicated the

valuationtotheproposeddevelopers.Thevaluation,aswithallsuchdocuments,borethe

cautionaryriderthatitwasvalidfornomorethansixmonthsfromthedateofproduction.

4.173 Some18months later, inJune2008,MrHozawasagainaskedtovalueJoeGrant

Cay,butonlyasto300acres, forahotel,villasandcondominiumsasdescribed ina letter

fromChalMisickonbehalfofanewdeveloper,DrCemKinay.MrHoza,inareportof10th

June3008,359valuedthe300acresat$75million. TheHonMcAllisterHanchell,onbeing

notifiedofthatvaluation,communicatedatleasttwicebye‐mailwithMrHozarequiringhim

to produce a further valuation. The Commission has been shown some of the email

correspondence between the twomen. The first was a request by theMinistermade at

5:18pmonThursday12th June for sightof the10th Junevaluation report.MrHoza sent it

back by email at 8:35am the nextmorning.360 TheMinister wrote back at 8:59am in the

followingterms:

357para4.73etseq358CoreVolume6,tab9359CoreVolume7,tab2,p63360HonMcAllisterHanchellbundleprovidedon9thFebruary2009,p15

189

I am in receipt of your valuation report and make reference of the NON‐PUBLICATIONCLAUSE. Werespectfullyrequesttheactualmarketvalueoftherawlandinitspresentstate.

Why theMinister thought it necessary to stress the non‐publication clause is unclear.Mr

Hoza had inserted, and always inserted, that phrase in valuation reports, and would be

awareoftheneedforconfidentialityinhiswork.

4.174MrHozarepliedat9:13amindicatinghisconfusionattherequest,andstating:

Thevaluefor landisdeterminedbyforcesofdemandandsupplyforgoodsandservices.Intryingtosatisfythisdemand,suitablelandfordevelopmentis sought after. This means that the demand for suitable land is deriveddemand.

Heindicatedthatheawaitedfurtherinstructions.TheCommissionhasnotbeenshownany

correspondence to suggest he received any. The requestmade by theMinisterwas a tall

order,asitsoughtafreshvaluationthesameday.MrHozaapparentlycomplied,producing

tworeportsonthe13thJune.Onesetouttovaluethelandasifforagriculturaluse361and

the secondon thebasis of commercial use.362 In each case, at the specific requestof the

Minister, he addressed four specific parcels of land. For agricultural use he valued them

collectivelyat$26.76million.Forcommercialusehevaluedthemcollectivelyjustover$89

million.

4.175 The remarkable difference in the two valuations clearly demonstrates the

professionaltruismofavaluationofficer,thattheperceivedusetowhichlandmaybeputis

criticaltoitsvalue.

4.176 The Hon McAllister Hanchell was later to say that he had not seen the report

referringtoagriculturaluse,althoughMrHozahadclearlyprepareditatthesametimeas

theotherreportofthesameday,andonewouldhaveexpectedthemtobesenttogether.

TheMinister’scomplaintinevidencetotheCommissionwasthathehadnotrequestedany

assessmentbasedonagriculturaluse,whichwastrue.Heseemedtoassume,however,that

361CoreVolume7,p67 362ibid,p71

190

anassessment foravalueofraw landwasonethatMrHoza,asavaluationofficerwould

understandandrespondaccordingly.

4.177CorrespondencedisclosedtotheCommissiontowardstheendofitsoralproceedings

on 9th February 2009363 showed that at 8:27am on 13th June 2008, before he had even

receivedMrHoza’svaluationof10thJune,theHonMcAllisterHanchellhadsoughtafurther

valuationonabasisofrawlandfromafirmofsurveyorsinProvidenciales,calledBCQS.His

email asked for a response by close of business the same day. Unsurprisingly BCQSwere

unabletoprovideareportinthespaceofafewhours.Theyprovidedonefourdayslateron

17thJune,indicatingavaluationof$7.7million.364BCQSacknowledgedintheirreportthat

they had not even had time to visit the site, given the rushed nature of the instructions.

Their valuation approach was to make comparisons with other islands, and the rates

achievedonthoseotherislandsperacre.ThisechoedtheapproachofMrHoza.However,

BCQSchoseascomparatorspricesachievedin2007,2006andasfarbackas2004.MrHoza’s

comparatorswereforpricesachievedinAprilandMay2008,amatterofweeksbeforethe

currentvaluation.

4.178 TheHonMcAllisterHanchell,as Ihavesaid,maintains thathehadonlyMrHoza’s

commercial valuations of just over $89 million and that of BCQS at $7.7 million. The

remarkabledivergencebetweenthetwofiguresmighthavecausedhimenquirewhythere

wassuchadifference,butthereisnoevidencethathedid.Onemightalsohaveexpected

that he would have wished at least useMr Hoza’s valuation as a negotiating tool in the

proposedsaletoDrKinay;buthedidnot.Onthefollowingday,18thJune2007,theCabinet

approvedthesaletohimatBCQS’valuationof$7.7million,under9%ofthevalueadvisedto

Cabinetbytheirownvaluationofficer.Avaluationmoreover,arrivedatbyasurveyorwho

hadnotvisitedthesite,whohadbeengivennosignificantdetailsoftheproposeduse,and

who used demonstrably out‐of‐date comparators for the valuation exercise. For good

measure,theHonMichaelMisickchosetocriticisetheMrHozainCabinetforinconsistency.

4.179 The Hon McAllister Hanchell was later to say that he had just wanted a simple

valuation for the land. His attitude appeared to be that landmust have a single intrinsic

363ibid360,p28364CoreVolume7,tab2,p78

191

marketvalue.Theadviceandpracticeofprofessionalvaluers,inthiscasetheGovernment’s

own experienced valuation officer, and common knowledge as to the variability of land

valuationsaccordingtotheperceivedpotentialuseoflandforvaluationwoulddemonstrate

tomostinformedpeoplethatthereisnosuchthingasintrinsiclandvalue.Onemighthave

expectedtheHonMcAllisterHanchell,asMinisterforNaturalResourcestoknowthat,orat

least to trust the Government’s own professional advice, and, as it was in its strong

commercialinterest,todosowithgusto.Butwhenaskedinthecourseofhisoralevidence

abouthispublicdutytonegotiatethebestpriceforCrownLand,hesaid:365

Ourpositionisthatwedon'twanttobeinapositionnegotiatethegovernmentland.Wewanttobeinapositionofthevalueofthemarket‐‐thevalueofthelandinitspresentstate.

TheHonMcAllisterHanchellalsoclaimedthattherehadbeencomplaintbylawyersforthe

purchaser,DrKinay,aboutthevaluation.366Hesaid:

Inthisparticularcase,whenthevaluationwouldhavebeencommunicatedtothedevelopers,atsomepoint in timedeveloperswillhavechallengedtheevaluation,saying that they thought itwas toohigh.My instructionswouldhave come fromCabinettoaskMrHozatokindlyreviewhisevaluations.

4.180Thiswaswhollymisleading.ThereisnoevidencethattheNovember2006valuehad

beendisclosedtoDrKinay; itwas inanyeventconfidential. The10th June2008valuation

wasonlycommunicatedtotheMinisterintheearlyhoursof13thJune,and,beforeiteven

reachedhim,hewasseekingasecondopinion.TheCommissionhasseennoCabinetminute

requiringtheMinister toseekasecondopinion. When itmetontheday followingBCQS’

valuation, it simply accepted it. There is,moreover, no evidence of any complaint by Dr

Kinayabout thevalidityofMrHoza’s10th June2008valuation; if therehadbeen itwould

havefeaturedinthecorrespondence.AndwhytheGovernmentshouldhavebeensofearful

ofsuchacomplaint,ifithadbeenmade,soastodeteritfromnegotiatingthebestavailable

price for thedisposalofCrownLand is inexplicableonanynormal considerationsof good

governanceandcommercialdealing.

4.181WhenthemattercamebeforeCabinetitwastheHonMichaelMisickwhoraisedthe

transactionasanoralmention,367inwhichheappearedtohaveapersonalinterest.Thefact

365Transcript,Day19,p155366ibid,p153

192

thatthelandwasbeingsoldtoaconsortiumledDrKinay,amanwho,throughhiscompany,

TurksLtd,hadgivenhimanundeclaredandunpublicisedpoliticaldonationofhalfamillion

dollarson9thJanuary2007,368mayormaynothaveinfluencedhisviewofthismatter–it

didnotinfluencehimenoughtodeclarethatlinkortowithdrawfromthediscussion.Inthe

result,theGovernmentsoldthelandtoDrKinay’sconsortiumforarelativepittance.

4.182Inmyview,inthecircumstances,theCabinet’sdecisiontosellthelandtoDrKinayat

wellbelowmarketprice raisesapossibilityof corruptionand/orother seriousdishonesty,

includingmisfeasance in public office, on the part of itsMembers, in particular, the Hon

MichaelMisickandtheHonMcAlisterHanchell.Inshort,thereisinformationofapossibly

corrupttransactioncallingforfurtherandcloserinvestigation.

32 – I find for the reasons set out above, that there is possible corruption

and/orotherseriousdishonestyand/ormisfeasanceinpublicoffice,inrelation

the HonMcAllister Hanchell in respect of the chain of events leading to the

secret payment by Dr Cem Kinay of $500,000 to the HonMichael Misick in

January2007,followedbytheapprovalinprinciplebytheCabineton16thMay

2007, to which the Hon McAllister Hanchell was a party, of the sale for

developmenttoaconsortiumledbyDrKinayoflandatJoeGrantCay,followed

by the agreement in 2008 to sell it to the consortium atwell belowmarket

price.369

Accordingly,Irecommendcriminalinvestigationbythepoliceorothersofthe

possibilityinrelationtotheHonMcAllisterHanchellofcorruptionand/orother

serious dishonesty and/or misfeasance in public office, in relation to this

matter.

33 – In addition, I find that the HonMcAllister Hanchell possibly abused his

ministerialpositionand/oracted corruptlyorotherwise seriouslydishonestly

and/or acted inmisfeasanceofhis public office, bydeliberatelyundermining

theauthorityoftheChiefValuationOfficer,inrelationtothevaluationofland

367CoreVolume6,tab1,p166368Seepara4.23above369SeeinrelationtotheHonMichaelMisick,para4.23above,andFindingandRecommendation5;andparas2.34–2.35astosecrecyofsuchpayments.

193

at JoeGrantCay,by rejecting thevaluationsundertakenbyhim,withaview

possibly, toensuringaswiftcompletionofsaleofthe landtotheconsortium

ledbyDrKinayataverylargeundervaluation.


HonMcAllisterHanchellofpossiblecorruptionand/orotherseriousdishonesty

and/ormisfeasanceinpublicoffice,inrelationtothismatter.

SaltCayDock

4.183 TheHonMcAllisterHanchellalsoplayedarole inthepolitical interventionintothe

affairsofthePhysicalPlanningBoard(PPB)inlate2008andearly2009.ThePPBhadbeen

askedtoconsideranapplicationfortheestablishmentofadockonSaltCay,an important

precursorfortheproposeddevelopmentoftheIsland.Therewasgeneralagreementthata

dockwasnecessary,butnotastoitslocation.

4.184Thetwoalternativesforthedockwereconsideredtobethetowncentre,neartothe

historicWhiteHouseonthenorthoftheIslandoronitssouthside.ThePPBatameetingon

15th December 2008 received a comprehensive and thorough advice from theDirector of

Planning, Mr Clyde Robinson. He was trenchant in his assessment of an earlier

EnvironmentalImpactStatementrelatingtothesiteforadock.Hefeltthattheassessment

was incomplete and needed further consideration before the PPB could recommend

approvalofasite. ThePPB,afterdiscussingMrRobinson’sadvice,decidedtorecommend

theHonMcAllisterHanchellnottoapprovetheapplication.Thatmeetingwasthelastone

for2008.TherewouldinduecoursehavebeenafurthermeetinginJanuary2009.

4.185 Before the next scheduled meeting could take place there was an impromptu

gatheringcalledattheHonMichaelMisick’sofficeonthemorningof9thJanuary2009.He

andtheHonMcAllisterHanchellhadapparentlyissuedrequeststomembersofthePPBand

Mr Robinson to attend themeeting. Mr Robinson was later to describe how, when he

attended,hefoundtheHonMichaelMisickwiththeHonMcAllisterHanchell,StefanKralof

DEVCOandacolleague.MrKraltookseveralminutesexplainingtheimportanceofthedock

194

totheoveralldevelopmentofSaltCay,andheandhiscolleaguethenleft.Therewasthena

heated discussion, the general content ofwhich,Mr Robinson indicated, consisted of the

HonMichaelMisickberatinghimfordaringtorejectagovernmentproposal.

4.186TheHonMcAllisterHanchell,inhisevidencetotheCommission,saidthatthathe

hadcalledthevariousmembersofthePPBtothemeeting,andthatitwashismeeting.He

explainedhisconcernfortheearlyconstructionofadockforthepeopleofSaltCay,and

saidthattheissuehadbeendraggingonsince1991.MrRobinsonevidentlydefendedhis

positionvigorously,andtherewasnomeetingofminds.

4.187LaterthatdayafurthermeetingofthePPBwashastilyconvenedtoreconsiderthe

matter. This was called by the Deputy Chairman of the Board. The Chairman Mr Earl

Handfield, had been notified of the further meeting, and decided not to attend. Mr

Robinsonalsodecidednottoattend,thoughhemadeclearthatheheldtohisposition.Mr

Handfield, in his evidence to the Commission, argued that this meeting was unlawful

because the Deputy Chairman was not entitled to convene a meeting of the Board. In

addition,hemaintained, theBoardhadnopowertoreopendiscussionaboutaprojecton

whichithadtakenadecisionforarecommendationtotheMinister.

4.188 Those present at themeeting reconsidered the issue discussed in December and

concluded this time in favourof locating thedockonnear theWhiteHouse, ashadbeen

sought by the Hon Michael Misick and the Hon McAllister Hanchell. Mr Handfield, on

learning of their decision, resigned his post in disgust. He was later to say in a press

conferenceandbefore theCommission that thiswas the latest in a seriesof attemptsby

Ministers to pressurise him into hurrying decisions along, and by implication to reach

conclusionsthattheywishedtosee.

4.189TherelevanceofallthistotheCommission’sInquiryisthatitcastssomelightonthe

attitude of the Cabinet to development projects. The machinery of government is not

designedtomoveslowly for thesakeofdoingso; it isdesignedtodebate, testandcheck

ideasbeforethereisarushtojudgementandtherebytoavoidill‐thoughtoutprojectsbeing

undertakenatpublicexpense. TheCabinet’sresponsetobeingquestionedon itsdecision

195

ondevelopment–evenwhenthosedecisionsaremadeonthehoofandwithoutthebenefit

ofproperconsultation–appearstohavebeentoapplypressuretothoseindividualstobend

toitswill.Thissmallsagaappearstobeanexampleofjustsuchanexerciseinpressureby

HonMichaelMisick and the HonMcAllister Hanchell. Ironically, the latter could, had he

wished, simply have rejected the PPB’s first recommendation. Insteadhewas party to an

attempttoextractadubiousendorsementfortheGovernment’spositionfromthePPB.

___________________

TheHonJeffreyHall

Background

4.190TheHonJeffreyHallbecameanelectedmemberoftheformerLegislativeCouncil in

1999, representingMiddleCaicos, and served as a PNPMemberof the Legislature and in

Government, when the PNP was in power, from that time onwards. In the Misick

Administration, hewasMinister forHousing,Agriculture,Works andTelecommunications.

Priortohisentryintopoliticsandelectedpublicoffice,hehadbeenaCustomsOfficer,and

rosetotherankofDeputyCollector.

Declarationanddisclosureofinterests

4.191InhisevidencetotheCommission,theHonJeffreyHallsaidthathehadknownofthe

existenceoftheRegistrationofInterestsOrdinance,butnotitstermsbecausehehadnever

read it. In common with all his fellow Cabinet members, his compliance with the

requirements of thatOrdinancewas poor in the extreme. Such annual declarations of his

interests as he made were patchy, inconsistent and strewn with errors, failures that he

attributed,inhisevidence,tocarelessness.Hefailedtodeclareintereststhathehadheldin

companies.Hehaddeclaredinterests,inparticularinrelationtoacompanycalledAlliance

Realty Ltd, thathe told theCommissionhehadnothadat the time. He failed todeclare

Interests concerning land that he and his wife owned and from which they had derived

196

substantial rental income, suggesting that he had thought it only applied to government

land,anabsurdsuggestiongiventheplaintermsoftherequireddeclaration.370And,hehad

failed to declare receipt of a total of $153,000 from the PNP in respect of Candidates’

Stipend,an interest thatheonlydisclosed to theCommission following itsexaminationof

the PNP accounts obtained from the Hon Floyd Hall. However, he did disclose to the

CommissionasingleCampaignContributionof$10,000,which,itlateremerged,camefrom

aCanadianpropertydeveloper,MrDavidWex,ofwhommorebelow.

4.192 ExaminationoftheaccountoftheHonJeffreyHall,withtheScotiaBank–theonly

disclosed bank account in his own name371 ‐ revealed that between 2004 and 2008 (the

statementsfrom2005weremissing)unexplainedcreditswerepaidintohisaccount.These

paymentstotalledover$560,000.Only$36,000ofthePNPmoneycanbeidentifiedasthe

likelysourceof thosesums.Thesourcesofoverhalfamilliondollars remainunexplained,

saveforhissuggestionthatsomeofthecreditsmighthavebeenlumpcashpaymentsofrent

andsomepaymentsofPNPStipend.372

4.193TherewereotherverylargeomissionsfromtheHonJeffreyHall’sdeclarationstothe

RegistrarandinhisdisclosuretotheCommission.

4.194ThefirstrelatedtohisaccountwithScotiaBank,thepartiallydisclosedstatementsof

whichshowunexplainedcreditsofover$550,000,unexplainedthatis,savefor$36,000,part

ofthedeclaredtotalofPNPStipendof$153,000referredtoabove.Astothebalanceofthat

Stipend,$117,000, it doesnot appear in the ScotiaBank account, andhehasdisclosedno

otheraccountintowhichitmighthavebeenpaid.

4.195Therewerealsosubstantialdeficienciesofdisclosureaboutthesourceoffundsused

byhimtosettlehiscreditcardbills, identifiableinstatementsthathehaddisclosedtothe

Commission. A number of those credits came from his ScotiaBank account where the

Commission found corresponding debits, and similarly a number fromAlliance Realty Ltd,

thecompanyreferredtoabove.Butthereremainedover$334,000unexplainedcreditcard

account credits, money to which he had had access, but did not declare to Registrar or

370Seepara2.21above371saveforajointaccountwithhiswife372Asthosepaymentshavebeentakenintoaccountintheprecedingparagraph,anyfurtherpoliticalcontributionsmustbeinadditiontotheonlypaymentactuallydeclaredtotheCommissionof$10,000

197

disclose to the Commission. His only attempt at an explanation was that a number of

repayments, which he could not identify, had been made on his behalf by a man called

Rhynie Campbellwho had owed himmoney. He told us thatMr Campbell had borrowed

$200,000fromhim,drawnontheaccountofAllianceRealtyLtd,373inSeptember2006.The

Commissionhasseenacopyofachequedrawnonthatcompany’saccountandcopyofa

promissory note from Mr Campbell to Alliance Realty Ltd, but has seen no evidence to

supporttheassertionthatalloftheuntracedcreditscamefromhim.TheHonJeffreyHall

maintainedthathehadkeptnorecordrentalpaymentsorrepaymentsbyMrCampbell.

34‐IfindthattheHonJeffreyHallfailedrepeatedlytomakeanyoranyfullor

adequatedeclarationsofintereststotheRegistrarofInterests,inbreachofthe

Registrationof InterestsOrdinance,andalso failedadequately todisclosehis

financial intereststotheCommission,pursuanttotheCommissionsof Inquiry

Ordinance

For reasons that I havegiven in relation to theHonMichaelMisick andotherMinisters, I

makenorecommendationforcriminalinvestigationwithaviewtoanysanctioninrespectof

thosefailures.

35‐IfindthattheHonJefferyHallhasfailedtoaccount:1)forhisreceiptand

expenditureoffundsinexcessof$800,000creditedtohisaccounts,assetout

above; 2)forhisreceiptof$200,000fromMrEvanHarvey,assetoutabove;

and3)foragifttohimof$10,000fromDavidWex.374


corruptionand/orotherseriousdishonestyand/ormisfeasanceinpublicoffice

inrelationtotheHonJeffreyHallinrespectoftheabovematters.

MelbourneWilsonandtheFirstNorthWestPointtransaction

4.196 Any analysis of Hon Jeffrey Hall’s positionmust necessarily include business links

betweenhimandhisattorney,MrMelbourneWilson.MrWilsoninitiallyrepresentedhimin

373Seepara4.214below374Seepara4.191aboveandparas4.196–4208below

198

the Commission’s Inquiry, but eventuallywithdrew on the grounds of possible conflict of

interest.MrWilsonwasthencalledbeforetheCommissionasawitnesstospeakabouthis

own involvement in transactions that he had helped to broker for his former client and

others.

4.197OnesuchtransactionwasthesaleofanumberofparcelsofCrownLandintheNorth

WestPointareaofProvidenciales, towhich Ihavealready referred in relation to theHon

MichaelMisickandtheHonFloydHall,andwillreferinrelationtotheHonLillianBoyce.The

HonJeffreyHallhadappliedforacommercialconditionalpurchaseLeaseforaparcelinthat

areainMay2004.Hedidnotindicatethepreciseplotforwhichhewasapplying,and,inthe

event, he did not take up any plot that may have been unofficially allocated to him.

However,in2005aCanadianbusinessman,DavidWex,expressedinterest,eventually,toMr

Wilson,thenapartnerinMcLeans,afirmofattorneyspractisingintheTCI,inpurchasing20

acres of land in the TCI. On Mr Wilson’s account in evidence to the Commission, he

discoveredfromtheLandRegistrythattheHonJeffreyHallhadaninterestinlandatNorth

WestPoint. MrWilson, stillonhisaccount, identified threeotherpersonseachofwhom

hadalsoappliedforaparceloflandinthatareaand,therefore,hadaninterestinit.They

were Quinton Hall, brother of the Hon Floyd Hall, Earlson Robinson, brother of the Hon

LillianBoyce,andSamuelBeen,formerhusbandoftheHonLillianBoyce,andaMemberof

theHouseofAssembly.Quitewhatthenatureoftheinterestwasthateachofthemhadin

thelandisunclear,sinceIhaveseennodocumentsindicatinganyofthemhadformoftitle

orentitlementtoacquireatitletolandinthatarea.

4.198 AsMrWilson acknowledged in his evidence and submissions to the Commission,

followingMrWex’sapproach,heorchestratedanapplicationbytheHonJeffreyHallandthe

otherthreetoapplyforfourcontiguousparcelsatNorthWestPointtomakeupthe20acre

plotsought.Why?Because,they,asBelongers,couldapplyforaconditionalpurchaselease

oftheplotandatgreatlydiscountedprices,MrWex,asanon‐Belonger,couldnot,andthey

andhe,MrWilson,couldprofitfromthedeal.Heclearlytooktheroleofcoordinatorand

didallormostofthearrangingoftheacquisitionbythefourBelongersofthelandandtheir

onwardsaleof it toMrWex. Hisevidence intheoralproceedingswasthathehadbeen

involvedinallaspectsofthetransaction,actingforbothsidesandtakingapercentageofthe

dealasacommission.

199

4.199 ThearrangementsandnegotiationforthedealwithMrWexprogressedapace. In

June2005MrWilsondrewup‘OffertoPurchase’documentsinthefourBelongers’names,

intrustforayet‐to‐beincorporatedcompany.Thatcompanywas,inturntotransferall20

acrestoMrWexforatotalof$7million,theamounthehadapparentlyagreedtopay.In

July2005theExecutiveCouncilapprovedthegrantoffreeholdsofthefourparcelsoflandto

the four men for a total of about $2.7 million less their Belongers’ substantial, 50%,

discounts,forthepurposeofpursuingtheirtouristrelateddevelopmentinaccordancewith

thetermsoftheCrownLandPolicy.375OnthefaceoftheExecutiveCouncilMinute,thiswas

to be their development to be conducted through the vehicle of a company, already

identified in the name of Urban Development Ltd, but not yet formed. There was no

suggestionthattheultimatedeveloperwouldbeanoverseasentity,andthereisnorecord

of theHon JeffreyHallwithdrawing fromtheCabinetdiscussionsat that stageconcerning

theroleofUrbanDevelopmentLtd.376Onthestrengthofthatapproval,MrWilsoninAugust

2005, formed the Company, the sole shareholder of which was a nominee company of

Mcleans, Windsor Nominees Ltd. At about the same time he arranged for Urban

Development Ltd to resolve to issue share certificates to the four Belongers, but never

registered them. TheHon JeffreyHall told theCommission inevidence that thecompany

wassetuponhisbehalf,soheclearlyknewofthelinkwiththeotherthreeBelongersfrom

thestart.

4.200HavingestablishedUrbanDevelopmentLtd,MrWilsonnegotiatedonitsbehalfwith

theGovernment a development agreement in the name of the company. That document

was signed by the Governor on 7th February 2006. The nominee directors of Urban

DevelopmentLtdsignedforthecompany.Whetherthedevelopmentagreementwasplaced

beforeMrWexforhisapprovalisnotclear.MrWilsonmaintainedthattheBelongers,apart

fromtheHonJeffreyHall,hadeachintendedtoremaininvolvedintheprojectinsomeway.

Intheevent,inApril2006allfoursoldtheirsharesinUrbanDevelopmentLtdfor$7million

toacompanyestablishedbyMrWexshortlybeforetheGovernorsignedthetransferofland

tothemon2ndMay2006for$1.367million.Thus,thegrossprofitonthedealforthefour

Belongerswasabout$5.5million.Whetherornotthatamountedtoempowerment,itwas

certainlyenrichment. 375Minute05/426ofCabinetMeeting376Thoughhedidinlaterdiscussions.

200

4.201MrWexpaidthe$7milliontoMrWilsonatMcLeans.MrWilsonplaceditondeposit

with Temple Securities, an associated finance company, which, in due course made the

following payments by way of cheques: about $1.5 million to the Government for the

freeholdandassociatedfeesandduties;$1.8milliontoAllianceRealtyLtd,whichhadalso

been established by Mr Wilson, $1 million of which was for the Hon Jeffrey Hall, and

$800,000forMrWilson;$1milliontoeachoftheotherthreeBelongers;and$500,000toa

MrTimSmith,anestateagent,whoatanearlystagehadhadahandinintroducingMrWex

toMrWilson.Therewassomeuncertaintyabouttheinvolvement,ifany,oftheHonJeffrey

Hall inAllianceRealtyLtd.Thishasrelevanceto:1)MrWilson’spaymentoftheMinister’s

$1millionintothatcompany’saccountinsteadofintohisclientaccount,asonemighthave

expected;2)theHonJeffreyHall’suseofthataccountasamediumfor lendingMrRhynie

Campbell 200,000;377 and 3) Mr Wilson’s claimed and incomplete list of payments

approaching$800,000madeon theMinister’sbehalf, including that loanand somecredit

cardbills.

4.202 Theshares inUrbanDevelopmentLtdhavingbeensoldon toMrWex’scompany,

BlueResortDevelopments(TC)Ltd,thefourBelongersdroppedoutofthepicture.MrWex’s

lawyerbythisstagewasMrHughO’Neill,apartnerinthefirmofHughGO’Neill&Co.He

soughtandobtainedanindemnityfromthefourBelongersinfavourofUrbanDevelopment

Ltd and Blue Resort Developments (TC) Ltd in the event of the Government seeking to

reclaim the Belonger’s discount on the sale of the land. The Commission has seen no

evidence that it has done so, or that it has been offered by any of the four Belonger

participants.

4.203 Interestingly, and it is hard to know if this was a deliberate attempt to avoid any

liability to repay the discount, Cabinet persuaded itself that there was no necessity to

impose a charge on the land in respect of the discount. The Commission has seen that

normally, theGovernmentprotected itsposition inrelationtodiscountsbycreatinga first

chargeoverCrownLanddisposedof. Thiswouldensurethatonanysubsequentsale, if it

waswithintenyearsandtoanon‐Belonger,theGovernmentwouldbeinapositiontoforce

repayment.Inrespectofthistransaction‐andsaidtobesoasnottoinhibitcondominium

sales in due course – the Cabinet agreed to no charge inmeetings at which all the four 377Seepara4.195above

201

Belongerswererepresented inthepersonsoftheHonJeffreyHall, theHonFloydHalland

theHonLillianBoyce.378

4.204 The Commission invited comment from each of the Belongers involved in the

transaction.OnlySamuelBeenacknowledgedthathehadknownthetransactionwastobe

acoordinatedoneoffourseparateapplicationsforcontiguousplotsoflandtobeacquired

andsoldasone.QuintonHallandEarlsonRobinsoneachsuggestedthathewasactingalone

andthatMrWilsonapproachedhimtojoinanexistingproject.However,theiraccountsare

consistentinanumberofimportantrespects:1)thatMrWilsonarrangedeverything;2)that

theyhad known littleornothingof themechanicsof the transaction; 3) theyhadhadno

involvement in the negotiations; 4) they had expected a substantial reward in money or

money’sworthfortheirparticipation;and5)thattheyhadsignedandindemnityinfavourin

favourofUrbanDevelopmentLtdandMrWex’scompany,BlueResortDevelopments (TC)

LtdinrespectofanyliabilitytheymightincuriftheGovernmentweretoseekrepaymentof

thediscountsBelongerdiscountsgranted.

4.205TheoutcomeofthiscomplicatedtaleisthatthesefourBelongerseachreceivedlarge

sumsofmoneyforthesaleoffreeholdpropertythattheyhadneveractuallyowned.Their

title to shares in Urban Development Ltd had been transferred before the land was

transferred by the Crown. At no stage did they have tomake any outlay with their own

funds.Theytookeffectivelynorisk,andprofiteeredattheexpenseoftheIslands.Ofcourse,

theGovernmentcouldhavevaluedthe landcloser to the truemarketvalue (MrWexwas

clearlyableandwillingtopay$7millionforaplot,whichCabinetwascontenttovalueat

$2.7 million), and this failure contributed to the big margin that was available to be

exploited.

4.206 A sequel to these transactions, one towhich I have already referred,379were the

loansfromthreeofthefourBelongerstotheHonMichaelMisick.HetoldtheCommission

thathehadbeen lent themoneyby theHonJeffreyHall, theHonFloydHallandtheHon

Lillian Boyce. The Hon Jeffrey Hall agreed that he had loaned $100,000 to the Premier,

drawingonthemoneyintheAllianceRealtyLtdbankaccount.TheHonFloydHallandthe

HonLillianBoycedenymakinghimanyloan,eachsayingthatthemoneycamefromhis/her

378HonJeffreyHallBundle1,pp546‐561379Seeabove,paras4.28–4.30

202

brother.AsIhavesaid,ontheinformationbeforetheCommissiontheHonMichaelMisick

hasnotrepaidanyofthese loans,seeminglywithout interestortermsforrepayment,and

hasnotbeenpressedbythelenderstodoso.

4.207ItmaybeacoincidencethatthefourBelongersinvolvedinthistransactionwereall

intimately connected to the Cabinet; one of them a Member of it, two the brothers of

serving Ministers, one the ex‐husband of a Minister. It may be a coincidence that the

Premierseemedtoknowagreatdealaboutexactlywhoprofited,andwhen,totheextent

that he felt able to ask for a loan from the three Cabinet colleagues – a loan apparently

unreturnedineachcase.TheHonFloydHallandtheHonLillianBoycemaintainedthathad

nopartorinterestinthetransactions.However,theHonFloydHallacknowledgedthathe

might have had something from them, but only because he had been generous to his

brotherinthepast.TheHonLillianBoycecertainlybenefited.ShetoldtheCommissionthat

shehadused someof themoney fromher brother as collateral for a loan, and some for

building work on hermother’s house. These benefits toomay simply be attributable to

coincidence.

4.208 There is a possible alternative interpretation. It could be suggested that the Hon

MichaelMisick and his three Cabinet colleagues involved took the opportunity to get an

insidetrackonalandtransaction,whichtheyallowedMelbourneWilsontoorchestrateso

astoenableallinvolvedtoprofiteerfromabuseoftheCrownLandPolicy.

36‐ I findthat theHonJeffreyHallpromoted,andpersonallybenefited from

abuse of the Crown Land Policy in relation to the sale to a non‐Belonger of

CrownLandbyparticipatinginapossiblycorrupttransactioninrespectofthe

sale (‘flipping’) of land at North West Point, Providenciales, to an overseas

developer,DavidWexby:1)knowinglyparticipatinginthetransactionasone

oftheflippersandsharinginthelargeprofitsmadefromthesale;2)loaningor

givingpartoftheproceedsofthoseprofitstotheHonMichaelMisick;and3)

failingtodeclaretotheRegistrarofInterestsortotheCommissionhisshareof

theprofitsor themakingof the loanorgiftofpartof theprofits to theHon

MichaelMisick,ortodeclarehis involvement inthesaleofthe landtoDavid

WexwhenitwasbeforeheCabinetfordiscussion.

203


HonJeffreyHallofpossiblecorruptionand/orotherseriousdishonestyand/or

misfeasanceinpublicoffice,inrespectoftheabovematters.

4.209IhavedealtwiththeNorthWestPointlandtransactioninsomedetail,becauseitisa

goodexampleofapparentabuseofCrownLandPolicy

MelbourneWilsonandtheSecondNorthWestPointtransaction

4.210 The Hon Jeffrey Hall, in a written statement to the Commission after he had

completedhisoralevidence,disclosedforthefirsttimethathehadreceivedasubstantial

payment for political purposes from a Mr Evan Harvey arising out of a further land

transactionatNorthWestPointinlate2006.Itisnotclearwhattriggeredhisrecollection.

This contribution,oneof $200,000,was far greater, and receivedmore recently, than the

politicalcontributionhehadreceivedfromDavidWex.HesaidthathehadputMrHarveyin

touch with Melbourne Wilson at the latter’s request about a potential property deal at

NorthWestPoint,andthatMrHarveyhadofferedtomakeacontributiontohisimpending

re‐election campaign if the dealwent through. Seemingly it did go through, becauseMr

Harvey,havingmadeaprofiton itof$800,000,paidhim$200,000. Hemaintains thathe

hadagreedtogiveMrWilsonhalfofthatsum.ButMrWilsonhasdeniedthat,sayingthat

MrHarveyhadmerelyaskedhimtoholdthemoneyonhisbehalf,whichhedidbylodgingit

in thebankaccountofhiscompany,AllianceRealtyLtd. Itwasa transaction inwhichMr

Wilsonhadapparently again acted for both the sellers and thepurchaser,with the result

thatAllianceRealtyLtdreceivedahandsomecommissionof$320,000.

4.211 TheconflictbetweentheHonJeffreyHallandMrWilsonastowhethertheformer

hadgiven$100,000tothe latterorhadmerelyaskedtohold it forhim isnotresolvedby

examination of their respective bank accounts and that of Alliance Realty Ltd. The

movementsofmoniesinthoseaccountsareabitconvoluted,likethetransactiongivingrise

tothem.Undoubtedlybothmeritfurtherinvestigation.Forwhatitisworth,itlooksmeas

iftheHonJeffreyHallhadthebenefitofthewhole$200,000commissionpaidbyMrHarvey.

Butwhetheritwas$200,000or$100,000,hedidnotdiscloseittotheRegistrarofInterests.

204

___________________

TheHonLillianBoyce

Background

4.212TheHonLillianBoycebecameanelectedmemberoftheformerLegislativeCouncilin

1999, and has continued as aMember of theHouse of Assembly to this day. She is the

Member for Five Cays, a constituency on Providenciales. She became aMember of the

Cabinetin2006,servingfirstasMinisterofEducationand,fromFebruary2007,asMinister

ofHealth.ShelivesinChalkSoundandisabusinesswomanaswellasaMemberofCabinet,

beingtheManagingDirectorofKSK–amanagingcompanythatoperatestheAirportInnin

Providencialesanda linkedcar rentalcompany. She is theex‐wifeofanotherMemberof

theHouseofAssembly,theHonSamuelBeen,whoisnowaMinisterintherecentlyformed

AdministrationoftheHonGalmoWilliams.SheisnowmarriedtotheEditoroftheTCISun

Newspaper,HaydenBoyce.

DeclarationstotheRegistrarofInterests

4.213 The annual declarations provided by the Hon Lillian Boyce to the Registrar of

Interests, like thatofher colleagues,were incompleteandotherwise inadequate, ignoring

thestatutoryobligationssetout insimpletermsintheRegistrationof InterestsOrdinance.

In2004shedidnotfileadeclarationatall,anomissionthatshewasunabletoexplaintothe

Commission. Sheneverdeclared receiptsof any financial sponsorship, although thePNP

recordsshowthatshereceived$72,500fromthePartybetween2005and2007inpayments

ofCandidate’sStipend.Shedidnotdeclareanyoverseastrips,althoughitisclearfromthe

material she disclosed to the Commission, that she has travelledwidely in her successive

rolesasMinisterforEducationandMinisterforHealthandHumanServices.

205


4.214 TheHonLillianBoycealsofailedtodisclosetotheCommissionthesubstantialsum

she had received by way of Candidate’s Stipend over a disclosure exercise that spanned

manymonths.TheCommission’srequeststoherattorneysforfullandaccuratedisclosure

of her financial interests, pursuant to theCommissions of InquiryOrdinancewere specific

and clear as to the information required. It was not until the Commission came into

possessionofvariousPNPrecordsinthecourseoftheHonFloydHall’sevidenceintheoral

proceedings that the existence of payments byway ofCandidate’s Stipend came to light.

Whenquestioned,shesaidthatsheregrettednothavingtoldtheCommissionaboutit.She

receivedthevastbulkofthemoney,twopaymentstotallingalmost$70,000,verycloseto

thedateoftheFebruary2007Election.

4.215Havingsaidthat,theHonLillianBoycemadeupforherpoorrecordofdeclarationsof

interest to the Registrar in the course of the long disclosure exercise undertaken by the

Commission. Apart from her silence about the Candidates Stipend payments, she co‐

operatedwithitsrequestsforinformation.Shedisclosedlargevolumesofbankaccountand

credit card statements for the relevant period, along with correspondence and title

documentsinrelationtoherinterestsinland.SheprovidedtheCommissionwithdetailsof

her involvementwith companies, including a full set of company accounts dating back to

2003.

37 ‐ The Hon Lillian Boyce failed to declare to the Registrar of Interests, or

initially to the Commission, her receipt of payments of Candidates’ Stipend,

totalling$72,000.

NoRecommendation

Allocationand‘Flipping’ofCrownLand

4.216AsdetailedinearliersectionsofthisChapterrelatingrespectivelytotheHonMichael

Misick,theHonFloydHallandtheHonJeffreyHall,theHonLillianBoyce’sbrother,Earlson

Robinson,wasoneofthefourBelongerswhowereeffectivelygrantedanoptiontopurchase

adjoining parcels of Crown Land inNorthWest Point, Providenciales,which they sold on,

206

through the company formed for the purpose byMelbourneWilson,UrbanDevelopment

Ltd,totheCanadiandeveloper,DavidWex.Sheacknowledgedinheroralevidencetothe

Commission that she had not withdrawn from Cabinet discussions when the matter was

considered,includingthementionofherbrother’sinvolvementinit.AsIhavementioned,

herbrotherreceivedforhisinvolvementachequefor$1million.$600,000ofthatsumwas

paidintoabankaccountoperatedbyher,linkedtohercompanysothatshecoulduseitas

security for a loan to her car rental company, as she explained in evidence. She

acknowledged,whenthematterwasputtoher,thatthesecuritydepositdidnotappearin

thecompany’saccounts.

4.217 The Hon Lillian Boyce also acknowledged in evidence that, by way of a personal

cheque, she had paid $100,000 of the $1 million to the HonMichael Misick, which, she

maintainedwasaloanfromherbrother,EarlsonRobinson.AsIhavealreadymentionedin

thisReport,thispurportedloanof$100,000wasoneofthreeidenticalloans,theothertwo

madebytheHonJeffreyHallandtheHonFloydHall,whosebrotherQuinton,andhadalso

received $1 million in the transaction. She confirmed in evidence that the HonMichael

Misickhasnotrepaidthemoney,and,whenaskedwhetherithadbeenakickbacktohim,

shesaidthatshehadnotatthetimeconsidereditassuch.

38 ‐ The Hon Lillian Boyce participated in a possibly corrupt transaction in

relationtothesale(flipping)ofCrownLandby:1)acceptingtheproceedsof

profitsmadebyherbrother,EarlsonRobinson,fromthesaleofashareinthe

interest of a company, Urban Development Ltd, which had involved the

disposalofCrownLandatNorthWestPoint,Providenciales,forlargeprofitsto

anoverseasdeveloper,DavidWex;2)loaningorgivingpartofthoseprofitsto

theHonMichaelMisick,orassistingherbrother indoingso;and3) failing to

declare those profits to the Registrar of Interests or to disclose them to the

Commission,andfailingtodeclareherbrother’sconnectiontothetransaction

inrelatedCabinetdiscussions.


Hon Lillian Boyce of possible corruption and/or other serious dishonesty

and/ormisfeasanceinpublicoffice,inrespectoftheabovematters.

207

Awardofscholarships

4.218 During her time as Minister of Education, her Ministry of Education was the

subjectofheavycriticismfromanumberofpeople.Therewasparticularcriticismofthe

awardofoverseasscholarshipsoutsidethestrictmeritcriteriaoftheScholarshipsPolicy,

asaresultofMinistersrequestingthegrantofscholarshipstoparticularstudents. This

was highlighted by the Chief Auditor in her 2006 Audit Report on the Scholarships

Programme,380 in the preparation of which she found little cooperation from the two

most senior officials of the Ministry, namely the Permanent Secretary and Under

Secretary:

Our audit highlighted that the policy and procedures established by theMinistry have been circumvented, and there is a lack of support from thegovernmenttoensurethatthepolicyisfullyimplemented....Inparticular,wenotedalargenumberofscholarshipswereawardedoutsideofthescrutinyofthe Committee. Several problems arose out of this. The majority of suchrecipients did not apply through the prescribed application process; not allawardsmet the predetermined criteria set by the policy; inmost cases, theawardsdidnotfocusonpriorityareas;andwerenotbasedonmerit....

...Withregardtotheadministrationofthescholarships,unlessthereareclearbreachesofgovernmentpolicy,ministerialinvolvementinindividualcasescanonly hinder the efficient operation of Ministry and the Committee, inimplementingpolicyinacosteffective,transparentandequitablemanner....

4.219TheHonLillianBoyce,asMinisterofEducation,clearlysetthetonefordisregard

at thehighest level of the Scholarships Policy, for the administrationofwhich shewas

responsible. Oneof thestudentswhoawardedascholarshipoutsidethePolicy for the

year2005/2006washerowndaughter,notedasMinisterAwardedinAppendixDtothe

2006AuditReport,381undertheheadingAwardsissuedoutsideofCommitteescrutinyfor

2005/2006.

4.220 In the course of its information gathering, the Commission received reports of

chequesmadepayablepersonallytotheHonLillianBoycefromoverseasuniversitieswhen

TCI studentswhowere holders of such scholarships had failed to complete their courses.

380TCIAuditOffice(2006),AuditReport‐ScholarshipsProgramme,S/22.035/06R,p3381ibid,p29

208

TheCommissionfoundnohardevidenceofthishavingoccurred,butowingtothelaxwayin

whichtheScholarshipsProgrammewasoperated,therewasscopeforit.

39 ‐ TheHonLillianBoyceabusedherministerialpositionby:1) assistingor

permitting her fellow Cabinet Ministers, specifically the HonMichael Misick

andtheHonFloydHall,tointerfereinandoverridetheScholarshipsPolicyfor

nominating according to set criteria, in particular merit, candidates for

overseas scholarships, thereby by‐passing the control of the Scholarships

Committee; and 2) granting a scholarship to her own daughter without

referringhercandidaturetotheScholarshipsCommitteeforscrutiny.

NoRecommendation.

Profitmakingfromgovernmentcontracts

4.221TheHonLillianBoyce’scompany,KSKLtd,rentsspaceintheAirportInntotwoquasi‐

governmentaldepartments,theTouristBoardandtheKidneyFoundation.Whenitwasput

to her in the course of her evidence to the Commission that it could be considered

inappropriateforamemberofCabinettoprofitfromgovernmentbusinessshesaidthather

brother, Phillip Robinson, had arranged the contracts with those two entities, that

accommodationislimitedinTCIandthetenantschosetheirpremisesandwerehappywith

them.

SouthernHealthNetwork

4.222TheHonLillianBoycebecameMinisterforHealthinFebruary2007,shortlyafterthe

contractwithSHNhadbeensigned.HerevidencetotheCommissionwasthatshehadnot

knownofanyothercompany thathad tendered for thecontractas shehadnotbeen the

responsibleMinisteratthetime.

_____________________

209

TheHonGalmoWilliams

Background

4.223 TheHonGalmoWilliamswas an electedMemberof theHouseofAssembly from

2003, andwas appointed to the Cabinet in 2004.HewasMinister for Social Services and

NaturalResources,andlaterMinisterforImmigrationandLabour,beforebecomingMinister

forHomeAffairs, includingImmigrationandLabour, in2006.FollowingtheinterimReport

of this Commission at the end of February 2009, and the resignation of theHonMichael

MisickasPremier,hewaselectedleaderofthePNPandsworninasPremieroftheTCIat

theendofFebruary2009.

4.224DuringtheCommission’sinvestigations,theHonGalmoWilliamssubmittedextensive

documentationinresponsetoitsrequestsfordisclosureofhisfinancialinterests.Itisplain

fromthatdisclosureandfromwhattheCommissionhasotherwiselearnedofhim,thatheis

a successful andwealthy businessman,who has had a prominent business profile on the

Islands for a number of years. He has a substantial private income from his extensive

interests in therestauranttradeandfromthesaleofbeers,winesandspirits. Heandhis

companiesownseveralplotsof land. Healsoowns somecompanies jointlywithhiswife

Althea, most notably Provo Travel Ltd, which appears to have a near‐monopoly on the

provisionoftravelservicestotheGovernment.ThecouplealsoholdinequalsharesCreeker

Investments Ltd, a property holding company that controls a five acre commercial lot in

NorthCaicos. In all, he is involved, both as aDirector andbeneficial owner, in some18

companies.

DeclarationstotheRegistrarofInterests

4.225 Regrettably, the Hon Galmo Williams’ annual declarations to the Registrar of

InterestsdidnotmatchthequalityofhisdisclosuretotheCommission.Likethemajorityof

hisparliamentaryandCabinetcolleagues,hemadewhollyinadequatedeclarations.Indoing

so, he ignored his constitutional obligations so simply expressed in the Registration of

InterestsOrdinance.Givenhiswillingnesstoseekanduseprofessionalaccountingadvicefor

210

thepreparationofhismanycompanyaccounts,itisunfortunatethathedidnotseeksimilar

adviceinrespectofhisobligationsofdisclosureofhisfinancialintereststothepublic.

4.227 In2003,he signedhis returnanddelivered it theRegistrar, leaving itblankunder

everyheadingofdisclosurerequired,causingtheRegistrartorecordintheRegisternothing

todeclarethroughout.In2004hemadenoreturnatalltotheRegistrar,noteveninblank.

In2005hedeclareddirectorships inonly fourcompaniesandemployment inoneof them

(Gilley’sEnterprisesLtd),butdidnotdeclareanyshareholdingsoroverseasvisits.Inrelation

to land and property, he declared only a dwelling house and Commercial Properties on

Providenciales.His2006declarationwasinalmostexactlysimilarterms.Inhis2007return,

submitted inMarch 2008, he failed to declare any directorships, although he did declare

paid employment in three of his businesses. He also declared his ownership of shares in

DiscountLiquorsLtd,butmentionednoproperty.Inthislatterregard,theCommissionhas

seenasubsequent letterofapologyonhisbehalftotheRegistraron28thJuly2008forhis

failure to declare details of his properties, and setting themout. The letter followedmy

publicopeningoftheInquiryjustoveraweekearlier,on15thJuly2008inProvidenciales,in

which I indicated that I would seek, and if necessary resort to my powers under the

Commissions of InquiryOrdinance to enforceproduction, specific information and records

fromthosepossiblyimplicatedinthesubjectmatteroftheInquiry.

4.228 In none of the Hon Galmo Williams’ declarations did he disclose any financial

sponsorship or gifts, although the PNP records the Commission has seen show that he

received$63,500fromthePNPbetween2005and2007inpaymentsofCandidate’sStipend.

Nordidhedeclareanyoverseas trips,althoughwenowknowthathe travelled toEurope

with the HonMichaelMisick in 2005, returning early from the trip without the Premier,

owingtofloodingintheTCI.382

4.229MrCarlosSimonsQC,inhisclosingsubmissionsonbehalfoftheHonGalmoWilliams,

characterisedhisfailuresovertheyearsadequatelytodeclarehisintereststotheRegistrar

astechnicalbreachescommittedinadvertently.FromthehistoryofthosefailuresthatIhave

attempted to summarise above, I could not possibly regard them as merely technical or

inadvertentfailures,howeverengaginglyMrSimonsputthematteronhisbehalf.NordoI


211

accept that any of the failures, as was subsequently suggested in correspondence to the

SalmonlettertotheHonGalmoWilliams,areattributabletolooseproceduresonthepartof

theRegistrar.


4.230 As I have said, the Hon Galmo Williams provided the Commission with much

documentationabouthis financial interests,mainly in the formofauditedaccountsofhis

principalcompanies.However,foravarietyofreasons,theCommissiononlyreceivedallthe

accounts in late November, by which time it did not have the time or the resources to

examinethemas itwouldhavewished.383However, Inotethat internationalaccountants,

PriceWaterhouseCoopers,hadauditedsomeofthem.

ConflictsofInterest

4.231 Theownershipby theHonGalmoWilliamsandhiswifeofProvoTravelLtd iswell

knownontheislands,and,ofcoursetothoseintheGovernment.Theeffectivemonopolyof

theircompanyinmakingalmostallgovernmenttravelarrangementscreatesapotentialfor

conflictsof interest, in that,asmemberofCabinet,andnowthePremier,heandhiswife

benefitpersonallyfromincomederivedfromthosetravelarrangements.

4.232Similarly,thegrantofCrownLandtofamilymemberswhilstHonGalmoWilliamswas

aMinister createsa furtherpossibilityof conflictof interests.Hisandhiswife’s company,

CreekerInvestmentsLtd,wasgrantedaparcelatBottleCreek,NorthCaicosbyadecisionof

theCabinetatameetingon20thJuly2006.Althoughhewasnotpresentatthemeeting,and

hisinterestinCreekerInvestmentsLtdwasdisclosedatit,theCommissionhasbeenunable

to traceanyreference in theCabinetpapers ithasseentoanearliergrantof land inEast

CaysmadetohiswifeinMarch2006.


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FirstFinancialCaribbeanTrustCompany

4.233 Records disclosed to the Commission show that the Hon Galmo Williams was a

shareholderofFirstFinancialCaribbeanTrustCompany(FirstFinancial),fromwhichashort‐

term loan is recorded in the accounts of Discount Liquors Ltd for 2004. His ownership of

theseshareswasneverdeclaredtotheRegistrar,andnevermentionedtotheCommission.

HisownershipofthememergesfromtheFirstReportoftheLiquidatorofLeadenhallBank&

Trust Company Ltd, (Leadenhall) to First Financial of 9th December 2005,384 to which

Leadenhallhadtransferred$14millionintrustassetsin2002,andwasclaiming$19million.

4.234TheLiquidator’sreport,whichwaspreparedforthecentralBankoftheBahamas,the

Supreme Court of the Bahamas and others, reveals that First Financial had been jointly

ownedbyDelroyHowell, theHonGalmoWilliamsandChristopherDonnachie. Dr Jospeh

Marzouca,whowas to become theDeputy Chairman of SouthernHealthNetwork (SHN),

acquired Mr Donnachie’s shares. In the time available to the Commission, it has been

unable to establishwhether the HonGalmoWilliams’ financial links toMr Delroy Howell

werestillinplacein2006whentheHonFloydHallfirstproposedSHNastheAdministrator

for the TCI Treatment Abroad Programme. Certainly, the Hon Galmo Williams has not

declared any current connection with First Financial, and he was not present when the

Cabinet, on 23rd August 2006, approved the grant of the contract to SHN.385 But if he

appreciated that Mr Howell was behind SHN, he did not make any reference to his

connectionwithhiminsubsequentCabinetdiscussions.

Immigration

4.235TheCommissionhasnotbeenabletoundertakeadetailedstudyoftheoperationand

managementof the ImmigrationDepartment. However, ithas information in the formof

numerous complaints about its inefficiencies, and possible departmental corruption. The

onlyrecentauditofpracticewasanInternalAuditReportbythethenChiefAuditor,Cynthia

Travis, inMay2006,386 inwhich she found that controlofexpenditure systemswithin the

384CoreVolume5,tab2p83385Seeparas4.155–4.165above386TCIAuditOffice(2006),ExpenditureSystems:ImmigrationDepartment,S/12/061/06R

213

Departmentwasveryunsatisfactory,andthatseveralchangeswererequiredasamatterof

high priority. Much more recent information provided to the Commission suggests a

continuingpatternofgross inefficiency inadministrationandpettycorruptionamongst its

officials.

4.236TheCommissionhasalsobeenalertedtotheprovision,orthewholesalewaiver,of

workpermitsformajordeveloperswhobringinlargenumbersofoverseaslabourerstothe

TCI forworkontheirbuildingprojects. Thereare linkedallegationsthatsuchworkersare

accommodatedinpoorconditions,andpaidlowwages.Thisraisesseveralissues:1)thelack

of protection for the rights of immigrantworkers, as demonstrated by recent high‐profile

protests; 2) the undermining of the local labour market by the use of foreign low‐wage

employees;and3) thewillingnessof theGovernment towaivestatutory requirements for

work‐permits for favoured developers, anyorallofwhich is likely to createunfairness, to

underminecompetitionandalsotoengendercorruptiononalargescale.Theseareinlarge

partattributabletothepreviousCabinet’sattitudeofdevelopmentatanycost,areadiness

tocutcornersandtomakeorchangepoliciesonthehoof.

4.237 These are all areas inwhich theHonGalmoWilliamswouldhavebeen intimately

involvedasMinisterwith responsibility for Immigration. TheCommissionhasnobasis, on

the information before it, for suggesting corruption on his part, but it does suggest a

willingnesstogoalongwiththegeneralattitudeofthethenCabinetwithoutdemur.Italso

reflects a lack of control over, or sufficient awareness of, the running of his own

Department,whichhasallowedinefficienciesandthepossibilityforcorruptiontothrive.

____________________

214

5–SYSTEMICLEGISLATIVEANDGOVERNMENTALWEAKNESSES

Somegeneralfault‐lines

5.1Undermysecondandthirdtermsofreference,Iamtoconsider,inthelightofallthe

information before me, whether to make findings as to any systemic weaknesses in

legislation,regulationoradministrationand/oronanyrelatedmatter.AsIindicatedinthe

InterimReport, I have interpretedany relatedmatter as one that bears in a fundamental

way on any statutory, regulatory and/or administrative reform or changes that I

recommend. That includes the Franchise, the Constitution, the Criminal and Civil Justice

Systems and other areas of law and procedures, the over‐all system of governance and

financial control, any relevant codes of professional conduct, and, electoral and party

politicalfinances.

5.2AsshowninearlierChaptersofthisReport,theinformationIhavegatheredintheten

months of this Inquiry points at least to a possibility – but more realistically a high

probability ‐ of systemic corruption and/or other serious dishonesty involving past and

present electedMembers of the Legislature in recent years. The information leading to

those conclusions and, where I have expressed them, preliminary findings in relation to

individuals,hashighlightedmanyweaknessesinthelawanditsadministration,allormostof

whichIhavetouchedonindifferentcontextsintheReport.InthisChapterIshallreferto,

but not rehearse in detail, systemicweaknesses or failures that I have already identified,

and,whereIthinkitmaybehelpful,venturerecommendationsforremedyingthem.

5.3Beforedoingso,Ishouldliketomentionsomegeneralfault‐lines,asInowseethem,in

thegovernanceanddifferentculturalattitudesgivingrisetothetroublesthatbroughtmeto

thesebeautiful,hurricaneprone,friendlyandpotentiallyprosperousIslandsinthesun.Ido

notclaimanyoriginalityinthisexercisebecause,aftertenmonthsofthisabsorbingInquiry,I

amlittlemorethanasoundingboardforallthatIhaveread,heardandseen.

5.4 First, there is the phenomenon sowell described by Sir Louis Blom‐Cooper QC ‐ a

largelysingleeconomicbaseatdifferentstagesoftheIslands’history, fromwhichasmall,

comparativelydiverseandwidelyspreadpopulationhashadtomakealiving.Initially,and

215

for some time, there was production of salt on some of the Islands combined with

subsistence farming and fishing on others. Therewere fleeting periods of settlement by

American loyalist settler/planters at the end of the 18th century, the establishment of

Americanmilitarybases intheSecondWorldWarandthenslowopeningofthe Islandsto

tourism,acceleratinginthe80’sand90’stotheoverridingeconomicdominancethatithas

now.TheTerritory’spopulationisstillcomparativelysmall,diverseandwidelyspread.But

with an economic power and potential derived from its geographical attractions, it is

capable, if properly led and governed, of punchingwell above its weight in world terms.

Such economic power in a small population, wheremoney‐making combines so naturally

with politicking, demands a special sophistication and discipline if an efficient and fair

system of governance is to be achieved. For whatever reasons, such sophistication and

discipline have not been evident in the TCI for some time. In the result its democratic

traditionsandstructureshavebeentestedalmosttobeyondbreakingpoint.

5.5Suchproblemsarebadenoughforanysmallstatewithstrongeconomicpotential.But

they are compounded by the tripartite system of governance that is a feature of many

British Overseas Territories. First, there is the Foreign & Commonwealth Office with a

generaloversightandresponsibilityforthepeopleoftheIslandsandultimatecontrolover

theGovernor of the day. Yet it has only partial financial input to the governance of the

country. Secondly, there is theGovernor,usuallyofbroadanddeepexperienceofmany

overseasjurisdictions,butastrangerforawhiletotheIslands,andhereonlyforafewyears.

HehasgeneraloversightoveranExecutiveofwhichheispartandinaccordancewithwhose

adviceheisboundtoactsaveincertainreservedmattersorwheninstructedfromLondon.

Forhim,therearepoliticalandfinancialpressuresinCabinetfromthefront,distant,albeit

experienced,guidanceorinstructionfromLondonfrombehind,andallaround,expectations

frommanyofthosewho liveherethathewillstandupforthem. Andthirdly, there isan

Executive in the form of the Cabinet consisting of a third or more of the members of a

politically polarised Legislature of locals closely involved with the commercial and social

sinewsoftheirsocietyandtheirconstituents,representativeatbestoflessthanhalfofthe

long‐termresidentsoftheIslands.

5.6Thepressures,goodorbad,upwardsonMinistersandonwardtotheGovernor,andthe

limitedfinancialcloutandimmediateauthorityhecanbringtobearonmatters,possiblyor

216

possiblynot,callingforreferencetohissuperiorsontheothersideoftheAtlantic,arethe

stuffoftheweeklyCabinetMeetingsoverwhichhepresides.Itisatthosemeetings–calling

Ishouldthinkfortheskillsofaseasonedpokerplayer‐thatheisoftenpressedbyCabinet

Ministers to approvemattersof greatpublic andprivate consequenceproposedby them.

They are inevitably matters in respect of which they know more than he does – the

approacheshavebeenmade to them;mostof the talkingand thedeal‐makinghavebeen

donebeforetheyputittohimintheCabinetRoom.AsCabinetAgendasandMinutesshow

–hisapprovalforproposalsisfrequentlysoughtasamatterofurgencyandoninadequate

information,withtheclearimplicationthat,ifhedoesnotapprove,thefleetingopportunity

ofsecuringavaluableinvestmentfortheTerritorywillbelost.

5.7 TheConstitutiondoesnot, it seems tome,assistaswellas itmight inbalancing the

countervailinginterestsandinputsinthistripartitesystemdecision‐making. Perhapssuch

tensions are unavoidable. The 2006 Constitution, to a far greater extent that its 1988

predecessor, leaves individual Cabinet Ministers with a wealth of discretions, by way of

grants,exemptions,concessions,discountsetctooverrideorside‐stepmattersofprinciple

ororderlyandfairadministration.Norhastherebeenforsometimeacultureofprobityin

governance at the highest level, or openness in the management and control of public

finances, to engender what democracy should be there to deliver, an efficient system of

governanceandfinancialorderthatishonestandfairtoall.Putatitsnarrowest,thereisa

dearthofeffectivechecksandbalancestopreventministerialandotherofficialabuseofthe

systemofgovernanceanditsfinancialmanagement.

5.8Behindalloftheseproblemsliesthepowerandpoisonofpolitics,sinceitisthroughthe

largely secret and publicly unaccountable donations to politicians direct or through the

medium of their political parties – notably in recent years the PNP ‐ that corruption of

individualministers bydevelopers andother investorsmayhavebeenenabled to flourish

unseen.Thispossiblecorruptionmayprovetobe,notonlyafeatureofpersonalenrichment

of Ministers, and in some instances, their officials or families or associates, but also of

correspondinglossestothepeopleoftheIslandsinthebadgovernancetowhichitreduces

thecountryandthediminutionofitsnaturalassetsandrevenuereturns.

217

5.9InthefindingsandrecommendationsthatfollowIhaveattemptedtokeepthefocuson

possible/potentialcorruptionandotheralliedseriousdishonesty‐whatencouragesoraidsit

andhowbesttopreventordeter it. Ihavetried,notalwayssuccessfully,tokeepinmind

the imperativeexpressed inmy InterimRecommendation9,Keep it simple,which I think

worthyofrepeating,notsomuchasarecommendation,butasareminder:

Those conducting reviews of governance and governmental financial

managementandcontrol,andanysubsequentreviewfor,sayaConstitutional

Commission,shouldkeep inmindthesmallnessoftheTerritory’spopulation.

While allowing for the size of an economy disproportionately large for the

population, the Territory should not be burdened with unnecessary

governmentaloradministrativetrappingsmoreappropriatetoalargernation.

Inevitably,however,Ihavehadtolookatthebroaderconstitutionalandotherstatutory

frameworkofgovernancethatprovidetheinstitutionalsettingandclimateforvenality–

systemicas itprobably is– inthese Islands. ThenatureandTermsofReferenceofthe

InquiryaresuchthatIcanonlyaimtoexpressmyviewsinthebroadest,andsometimes,

mosttentativeterms.And,evenifitwerewithinmycompetence–whichitisnot–such

recommendations that Imakecannotberegardedasapanacea forallorevenmostof

theillsofthecountry’sgovernancethatnowurgentlyneedattention.

5.10 In turning first to my individual findings of systemic weaknesses and related

matters and tomy associated recommendations, I should start, as I did inmy Interim

Report of 28th February 2009, with the most urgent, namely suspension or partial

suspensionofthe2006Constitution.

PartialSuspensionoftheConstitutionandInterimDirectRulefromWestminster,acting

throughtheGovernor

5.11 Mypubliclyexpressedviewattheendoftheoralhearings inProvidencialeson11th

February 2009 was that the TCI were in such dire constitutional, political and economic

218

straits that I should submit an InterimReport by 28th February 2009,387which I did – see

Appendix 3 to this Report. In the Interim Report I adhered to that view, and made 24

Interim Recommendations for later development and elaboration, some of which, I

indicated,Iregardedas:388

ofgreaturgencytomeetwhatIconsiderchronicillscollectivelyamountingtoanational emergency. The others are for the middle and longer terms, butrequire early consideration with a view to making ready for their timelyintroductioninduecourse.

Icontinued:389

... I am ... satisfied on the information before me ... of a high probability ofsystemic corruption and/or other serious dishonesty involving past and presentelectedMembersoftheHouseofAssemblyandothersinrecentyears.However,I am not ready to formulate provisional findings for institution of criminalinvestigation in relation to any individual or any such interests he or shemayhave.When I am ready to do so, I shall ... give each individual concerned anopportunitytomakerepresentations....

5.12 Nothing that has happened since then has prompted me to take a different view.

Certainly not the newAdministration established under the leadership of theHonGalmo

Williams after much delay and bumpy internal PNP political manoeuvring, and now

functioningsomewhatfitfullyunderthewatchfuleyesoftheHonMichaelMisickandother

formerCabinetcolleagues.Therehasbeenlittleapparentlegislativeactivityontheseveral

broadfrontsurgentlyneededforsometime, thoughthat isnodoubt inpartowingtothe

unsettled conditions towhich the Inquiry has contributed, coupledwith thewait for this

Report. But,perhapsmost importantofall,mycloseexaminationof the informationand

evidencebeforetheInquirydrivingmetothePreliminaryFindingsandRecommendationsin

Chapter4inrelationtoindividualMinistersintheMisickAdministrationhasreinforced,not

weakened my conviction of the need of a need for urgent and wide‐ranging systemic

change.

5.13 Accordingly, I confirm my Interim Recommendation 5 for Suspension of the 2006

Constitution,butvariedsoastotakeaccountofthealternativeofpartialsuspensionthatI

considered,which isnowenacted in the2009ConstitutionOrder,namely for cessationof

387Seeparas1.79above388InterimReport,para9389ibid,para10

219

ministerial government, dissolution of the House of Assembly and suspension of certain

relatedprovisions,initiallyfortwoyears,subjecttopossibleextensionorabbreviation.390I

expressthatconvictionasrecommendation40soastocontinuethesequenceofnumbering

of findings and recommendations in Chapter 4, rather than establish two separately

numbered series of recommendations, even though a few Chapter 4 findings are not

accompaniedbyrecommendations.

40‐Recommendation:cessationofMinisterialGovernment,dissolutionofthe

House of Assembly and suspension of certain related provisions, initially for

two years, subject to possible extension or abbreviation, as provided in

Schedule1tothe2009ConstitutionOrder,yettocomeintoforce.

5.14 Similarly, I confirm my Interim Recommendation 6 for Direct Rule through the

GovernorandCouncil,butvariedsoastoaccordwiththeformulaadoptedinSchedule2to

the 2009ConstitutionOrderofgovernmentby theGovernor,withdiscretionarypower to

make laws for the peace, order and good government of the TCI,391 assisted by: 1) an

Advisory Council consisting of four ex officio members392 and up to seven nominated

membersappointedbytheGovernor,ofwhomatleastfivemustbeBelongers,toaidhimin

theformulationofpolicyandtheexerciseofhisfunctions;and2)byaConsultativeForum,

consistingofbetween11and15membersappointedbytheGovernorfromamongpersons

representative of the TCI community and three ex officio members,393 to make

recommendationsinrelationtolegislationandotherpolicyissues.394

41 ‐ Recommendation:direct ruleby theGovernorwith theassistanceofan

AdvisoryCounciltoadvisehimontheformulationofpolicyandexerciseofhis

functionsandofaConsultativeForumtomakerecommendationsinrelationto

legislation and other policy issues, as provided in Schedule 2 to the 2009

ConstitutionOrder,yettocomeintoforce.

390TheTurks&CaicosIslandsConstitutionOrder2009ConstitutionOrder,Schedule2,para3;SeeAppendix4(ii)tothisReport391ibid,para8;SeeAppendix4(ii)tothisReport,392TheDeputyGovernor,theChiefExecutive,theAttorneyGeneralandthePermanentSecretary,Finance393opcit390,para9,theexofficiomembersbeingtheChiefExecutive,theAttorneyGeneralandthePermanentSecretary,Finance;394cftheviamediafavoured,albeitsoftly,bySirLouisBlom‐CooperQCinhis1986Reportopcit26,whenrecommending,atCapXX,pp99–100,inresponsetolesserallegationsofcorruption,amendmentofPartIIofthe1976ConstitutiontoallowtheGovernortoadministertheTerritorywiththenon‐bindingadviceofanAdvisoryExecutiveCouncilconsistingofuptofourmembersnominatedbyhimfromtheLegislature,whichwouldremainintact,and/oreminentBelongers.

220

5.15Iconfirm,withslightvariation,myInterimRecommendation10,forAnnualReviewof

need for continuance of rule through Governor and Council, namely that the Governor

should annually, or otherwise as he considers necessary, take the advice of his Advisory

Council as to the earliest practicable date on which to seek the revocation by Order in

Council395 of the 2009 Constitution Order and return to ministerial government and an

electedHouseofAssembly.

42 ‐ Recommendation: the Governor should annually, or otherwise as he

considersnecessary, taketheadviceofhisAdvisoryCouncilas to theearliest

practicabledateonwhichtoseektherevocationbyOrderinCouncil396ofthe

2009ConstitutionOrderandreturntoMinisterialGovernmentandanelected

HouseofAssembly.

5.16IconfirmmyInterimRecommendation3,ReplacementofPublicOfficersetc.,butin

the form setout in Schedule2397 to2009ConstitutionOrder,namely giving theGovernor

powertomakeappointmentstoanypublicofficeinhisdiscretion.

43‐Recommendation:theGovernortohavepower,actinginhisdiscretion,to

makeappointmentstoanypublicoffice,asprovidedinSchedule2tothe2009

ConstitutionOrder,yettocomeintoforce.

5.17IconfirmmyInterimRecommendation1.i),forstrengtheningtheGovernor’sPrivate

Office.WhilsttheadvisoryandconsultativesupportfortheGovernorprojectedbythe2009

ConstitutionOrdermaybeadequateonaninstitutionalbasisfortheheavyburdensitputs

onhimduringtheperiodofinterimgovernment,hemaywellbenefitfromastrengthening

ofhisPrivateOfficebothinstaffandadministrativeaccommodationandfacilities.Hewillbe

abletojudgefarbetterthanIwhathewillneedtomeettheadditionaldemandsofhispost

intheinterimperiodandalsointhelongerperiodonreturntoMinisterialGovernment.My

only contribution, which I venture as a recommendation, is that he will need some

strengtheningofresourcesand,inanyevent,heshouldhavethesupportofanexperienced

Foreign&CommonwealthOfficeadministratorof the level, inFCOclassification,ofaFirst

Secretary.

395opcit390,Schedule2,para3396ibid,para3397ibid,paras6and7

221

44 ‐Recommendation:strengtheningof theGovernor’sPrivateOfficeboth in

the numbers and seniority of staff and administrative accommodation and

facilities, including the addition of an experienced Foreign& Commonwealth

administratorofthelevelofaFirstSecretary.

5.18IalsoconfirmmyInterimRecommendations1.i)andii)forstrengtheningtheAttorney

General’s Chambers. One of the first concerns for the Governor, in the exercise of his

interimpowers,islikelytobetheneedtosecureadequateandtimelyadviceonthelawasit

affectsanymattertouchingthegovernanceoftheIslandsandtheeffectiveenforcementof

thecriminalandcivillaw.Tothaturgentend‐andinthemedium‐to‐longertermfollowing

restorationofministerialgovernment–itisvitalthattheAttorneyGeneral’sChambersare

strengthened with adequate numbers of high quality staff of a disposition to withstand

politicalandotherinappropriatepressures.Theyshouldalsobeprovidedwithsuitableand

securepremises toenable them to copewith the surgeof legalwork likely to flow in the

shorttermandthereafterberequiredbysuchacceptanceasthereisofthisReport.

45 ‐ Recommendation: the Attorney General’s Chambers should be

strengthenedwithadequatenumbersofhighquality staffof adisposition to

withstandpoliticalandotherpressuresinappropriatetotheirrole,andsuitable

andsecurepremisestoenablethemtocopewiththesurgeoflegalworklikely

tobeengenderedintheshorttermandthereafterrequiredinthemedium‐to‐

longertermbysuchacceptanceasthereisofrecommendationsinthisReport.

5.19Inaddition,bothintheshortandthemedium‐to‐longterm,Ibelievethatthereshould

beconsiderationofappointmentofaDirectorofPublicProsecutionstohaveresponsibility

under the general oversight of the Attorney General for the initiation and conduct of

criminalinvestigationsandprosecutionsintheIslands.Suchanappointmentwouldrelieve

theholderoftheofficeofAttorneyGeneralfromtheofteninvidiouscombinationofrolesof

member of the executive and/or legislature and governmental adviser with that of

prosecutor. That is so, notwithstanding the provision in section 39(5) of the Constitution

that, in the exercise of his powers in criminal proceedings,he shall not be subject to the

direction or control of any other person or authority. Any holder of the office, given his

membership of the executive and the legislature as well as his main job, advising the

Government on the law and applying and enforcing it in the public interest, is inevitably

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vulnerableinacloselyknitandhighlypoliticisedcommunity,suchasthatintheseIslands,to

speculativeandunfoundedperceptionsandcriticisms.whateverhedoesordoesnotdoin

theexerciseofhislegalresponsibilities.Inmakingthefollowingtworecommendations,my

intention, therefore is to enhance the authority and reachofwhoever holds theoffice of

AttorneyGeneralbydistancinghimabitfromboththepoliticalandforensicarenas.

46‐Recommendation:Considerationshouldbegivenbywayofconstitutional

amendmentre‐definingtheAttorneyGeneral’sprincipalfunctions398and‐for

as long as the Attorney General remains a member of the executive and

legislative arms of government ‐ the appointment of a Director of Public

Prosecutionswith responsibility under the general oversight of the Attorney

General,forinitiationandconductofcriminalinvestigationsandprosecutions.

5.20 While on the subject of the Attorney General, and looking ahead to the eventual

returnoftheIslandstoministerialgovernment,Ibelieve,forsimilarreasons,that,whatever

the traditional role of the Attorney General in most British Overseas Territories,

considerationshouldbegiventohimnolongerbeingexofficoamemberoftheexecutiveor

legislative arms of government. Hismembership of both bodies is in practice somewhat

restricted in function. Hispresenceat thedeliberationsofbothbodieswhennecessaryas

independentlegaladviseris,howevervitaltotheirproperfunctioning.Itisforhimtoadvise

the Governor in Cabinet on matters of law and practice when necessary, rather than

participate in Cabinet discussions and decisions on the extra‐legal merits or demerits of

manymattersofCabinetbusinessunderdiscussion. Similarly,andafortiori, Ibelievethat

the Attorney General should no longer be aMember of the House of Assembly on its

resumption. Both positions are, in my view, inimical to the quality, in addition to legal

expertiseandjudgmentthat,inthepubliceye,bringsstaturetotheoffice–independence

ofthegovernmentofthedayandassociatedpoliticalpressures.IftheGovernorinCabinet

and the House of Assembly need his legal advice he can be present at their respective

deliberationsinhislegalcapacity,butnotasaMemberprivyto,butconventionallysilenton,

theirdeliberationsastopolicy.

47 ‐ Recommendation: In the interests of preserving and enhancing the

independence and stature of the office of Attorney General, consideration

398Sees39ofthe2006Constitution,whichdetailshispowers,allinthecontextofcriminalproceedings.

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should be given before return to ministerial government to amending the

Constitutiontoprovidethat:1) theAttorneyGeneralshouldbeavailableand

entitled to advise the Cabinet and the House of Assembly on the law and

practicalitiesofitsformandadministrationasitaffectstheirdeliberations;and

2) for thosepurposesheor she shouldbeentitled toattend their respective

meetings, but to do so in the capacity of independent legal adviser not as a

memberofeither.

5.21Thefinalmatterhighlyrelevanttotheproposedperiodofinterimdirectrulethrough

theGovernor has beenwell canvassed inmany audit andother reports over the last few

years, discussed in various parts of this Report. It is the urgent need for a thorough

examination–stock‐taking‐oftheTerritory’sfinancialstateandtheintroductionofrigour

tothemanagementandcontrolinthefutureofitsfinancialaffairs. Thisisbothtoobroad

andtoospecialisedanareaofexpertiseformetoaddanythingofsignificancetowhathas

beensaidbysomanyobjectiveandexpertobserversovertheyears.Itiswellunderstood

by the Governor and others recently seconded to assist him in his task of financial

regeneration.

5.22 My Interim Recommendation 8, Governance and Fiscal Review, and 19, More

effectiveauditing,werebothblindingglimpsesoftheobvious.TheGovernor,with,Ibelieve,

theassistanceoftheDepartmentforInternationalDevelopment,hasalreadybeguntowork

with experts seconded to the Territory to assist in certain aspects of the immediate task,

including recovery from hurricane damage. And there are various initiatives under way

within the public service which he, with the assistance of the proposed Advisory Council

shouldbewellequippedtolead.Butifandtotheextentthattheyarenotalreadyplanned

orinhand,thepriorities,itseemstome,are:

1) anurgent assessmentof capital and revenue foregone in recent years from

possibleundervaluationandundeserveddiscountsonthedisposalofCrownland

and of revenue in respect of waivers and/or concessions in respect of stamp,

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import, and other duties, fees and taxes, to which I have referred in various

passagesinthisReport,mostparticularlyinChapter3;399

2) a review of public funding, particularly the financing of recurrent public

expenditurefromdisposalsofCrownLand;and

3)More generally, an urgent reviewor otherwise from an International Flying

Squad of experts from other Commonwealth Countries and/or appropriate

Internationalagencies,withaviewtosecuring,onatemporarybasisand/oras

appropriate and necessary in the longer term, an efficient and rigorously

accountable system of governance and control at all levels, including

departmental and island administrations and public boards, commissions etc.

In this connection, thewordsof Sir LouisBlom‐CooperQC in the1986Blom‐

CooperReport400areasapttoday,withafewnotableexceptions,astheywere

then:

TheurgentneedforfinancialcontrolwithingovernmentDepartmentsdemands a vast improvement in the quality of senior and middlemanagement. The vital need is to establish an active trainingprogramme.

CriminalSanctionsandCivilRecovery

5.23 Whatever theoutcomeofmyrecommendation,401asproposed inRecommendation

16inmyInterimReport,forsuspendingadefendant’srightunderthe2006Constitution402

totrialbyjudgeandjury,criminalinvestigationsundertakenpursuanttoallorsomeofmy

recommendationsinChapter4,wouldbelikelytoleadtoanincreaseinprosecutions.There

would thus be a greater workload on TCI judges, courts and court staffs. Accordingly, I

confirm my Interim Recommendation 2, Additional Judges and Courts, for early and

contingent preparation for such increase in workload by the appointment of additional

judges and court officers of high calibre, probably on temporary secondment, and the

provisionofadditionalcourtpremisesandsupportingresources.

399Seepara3.76etseq400opcit26,recommendation45,atp106401s8andSchedule1,para1402s6(1)(g)

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48‐Recommendation:Makeearlyandcontingentpreparationfor increase in

judicial workload that may result from criminal and/or civil recovery

investigations undertaken pursuant to this Report, by appointment of

additional judges and court officers of high calibre and the provision of

additionalcourtpremisesandsupportingresources.

5.24Iftherearetobecriminaland/orcivilorcriminalrecoveryinvestigationswithaview

to proceedings, I anticipate that they will need to be conducted by separate but closely

liaisingspecialistteamssecondedforthepurpose,probablyunderthegeneraloversightof

theAttorneyGeneral.403Asamatteroftiming,giventhegenerallymorespeedyprocesses

available in civil and criminal recovery than in criminal prosecutions, and the urgency of

taking steps to preserve and/or secure the return of potentially misappropriated public

assets, priority should probably be given to establishing machinery for recovery. I

accordingly confirm the substance ofmy InterimRecommendations 3 and 4,Recovery of

Public Assets – Special Civil and Criminal Recovery Units, for the establishment of such

Units and of secure accommodation and other resources for them to secure civil redress

whereappropriate.Ihaveinmindproceduresforsecuringearlyfreezingorrecoveryofland

and/or assets pending recovery and other interim or final relief in support of civil

proceedings,pursuanttotheProceedsofCrimeOrdinance2007404and/orforrestraintand

confiscationorders405intheTCIorworldwide.

49‐Recommendation:TheestablishmentofaCivilandCriminalRecoveryUnit

orUnitsandofsecureaccommodationandotherresourcesforthem,pursuant

to the Proceeds of Crime Ordinance 2007, for securing early freezing or

recovery of land and/or assets pending recovery and other interim or final

relief in support of civil proceedings406 or for restraint and confiscation

orders407intheTCIandworldwide.

5.25IconfirmmyInterimRecommendation17fortheappointmentofaSpecialProsecutor,

operating under the general oversight of the Attorney General to instigate and direct

403Inanyevent,arequirementoftheProceedsofCrimeOrdinance2007.404ProceedsofCrimeOrdinance,s2,ss59‐60andss127‐130405ibid,ss42(a)and/or(b)–53and58406opcit404407opcit405

226

criminal investigations and for any consequent prosecutions resulting from

recommendationsinChapter4ofthisReport.Sheorheshouldbesupportedbyaspecialist

team of prosecutors in the field of corruption and fraud and of experienced fraud and

forensic accounting investigators, all drawnwholly fromoutside the TCI, and be provided

withadequateandsecureaccommodationandotherresourcesforthejob.

50‐Recommendation:TheappointmentofaSpecialProsecutorandsupporting

specialist team, to operate under the general oversight of the Attorney

General, for the criminal investigation and prosecution of matters that may

resultfromrecommendationsinChapter4ofthisReport.

5.26 I confirmmy InterimRecommendation16 forCriminalTrialby Judgealone,andas

providedbythe2009ConstitutionOrder,yettobebrought intoforce.408 Ihave inminda

provisionfortheintroductionofaspecialcourtorcourtsand/orspecialprocedureoftrialby

judgealoneforcaseswheretrialwithajurywouldriskimpairmentoftheadministrationof

justice. Thiswouldcover,butnotnecessarilybeconfined to, casesofpossiblecorruption

and/orotherseriousdishonestygivingrisetothisInquiry.See,forexample,theprovisions

inEngland&Walesundersections43and44ofCriminalJusticeAct2003fortrialbyjudge

aloneincasesrespectivelyofseriousandcomplexfraudandwherethereisadangerofjury

tampering; also, inNorthern Ireland under the Justice and Security (Northern Ireland) Act

2007,sections1–9. Seealsothewide‐spreaduseofbenchtrials(i.e.trialwithoutjuryat

theoptionofthedefendant)incommonlawjurisdictions,forexample,inmanyoftheStates

oftheUnitedStates,theCommonwealth,includingCanada,AustraliaandNewZealand,the

FalklandIslandsandStHelena.

5.27Suchacoursewouldinvolvetheremovalofthepresentrighttotrialbyjurycontained

insection6(g)ofthepresentTCIConstitution,forsuspensionofwhichthe2009Constitution

Orderprovides,409butideallyleavingitfordecisionbythetrialjudgeonacasebycasebasis.

Buttrialbyjuryisnotapre‐conditionofthefairtrialrequirementofArticle6oftheECHR,

whichsection6(g)reproducesinsubstance.Trialwithoutjuryisalsoafeatureofanumber

ofjurisdictionsthroughouttheWorld,includingIndiaandHolland.If,asisclearlythecase,it

is Article 6 compliant in themany jurisdictions that permit trial of even themost serious

408s7andSchedule1,para1409ibid

227

offencewithoutjury,itisnotsuchabigsteptotakewherenationalandculturalconditions

aresuch,ashere,thatnofairoreffectivetrialcouldtakeplacewithajury.Thereare,inmy

view,atleastsevenreasonswhysuchastepshouldbetaken:

1)thestancetakenbyallattorneysactingforMinistersand/orotherMembers

of the House of Assembly and others in the Inquiry was that their respective

clientscouldnotpossiblybegivenafairhearingbyajury,giventhewideadverse

publicitytoallegationsagainstthembefore,duringandasaresultoftheworkof

theCommission;allormostof theattorneys,expressedwithsomecogency, in

myview,thehighlikelihoodthatanytrialjudge,facedwithanapplicationfora

stayoftheprosecutiononaccountofsuchprejudice,wouldstayit.410

2) the contrary consideration, if any prosecution were to survive such a stay

application, is that, in this small community of close family political and

commercialaffiliations,itwould,intheevent,bewellnighimpossibletosecure

convictions of politicians by jury trial, where the panel is of only seven jurors

entitledtobringinmajorityverdictsbyasfewasfive,411andwhere,forsomany

potential jurors inthis jurisdiction,muchturnsoncommitmenttopartypolitics

andlocalandfamilyallegiances;412

3)theclearrisk,insuchcircumstances,ofjury–tampering;

4) the potential complexity of allegations of corruption or other serious

dishonesty of the sort canvassed in the Inquiry – taxing for any jury panel,

whetherintheTCIoranyjurisdiction‐astrongcontributortothereasoningof

Lord Roskill’s Committee on Fraud Trials recommending trial of serious and

complexfraudwithoutjuries;413

5)thelengthandpublicandprivatecostofanylikelyprosecutionsiftriedwitha

jury – insomecasesofsomemonths–andtheconcomitant intrusion,burden

onthelivesanddistress,toalltrialparticipants;

4102006Constitution,s1411SeeTCIJuryOrdinance,ss23and36412cfSirLouisBlom‐CooperQC’s1986Report,pp58and103,para20;andtheReportoftheConstitutionalCommission1986(theMarshallCommission),paras3.28–3.31413FraudTrialsCommittee(1986),TheRoskillReport,London:HMSO

228

6)thefragilityoflongandcomplexjurytrials–seee.g.thecollapseoftheJubilee

LinetrialattheCentralCriminalCourtaftermanymonthsatareportedcostto

thepublicpurseofsome£60million;414and

7)thestrongpublic interest inwhathasbecomeastateofnationalemergency

forthoseresponsibletobebroughtswiftlytojusticeand,iffoundguilty,madeto

expiatetheircrimes–anoutcome,which, inmyview,willbe impossible if it is

attemptedintheTerritorybywayoftrialbyjury.

5.28Thesameconsiderationsshould,inmyview,applytocivilissues,whicharepresently

alsotriableintheTCIwithajury.

5.29Inbothcriminalandcivilcaseswheretheissueofjurytrialisraised,itshould,inmy

view,beamatter fordeterminationby the judgeassignedtohear thematterwhether, in

hisjudgment,therecouldbeafairandeffectivetrialwithajury,orsomesuchtest,andhis

decisionontheissueshouldbefinal.

51‐Recommendation:Provisionshouldbemadeforcriminalandciviltrialby

judgealone,atthetrialjudge’sdirectioninanycaseinwhichheconsidersno

fair or effective trial could take place with a jury, and the judge’s direction

shouldbefinal.

5.30ForreasonsthatIhavegiveninChapter2ofthisReport,415considerationshouldbe

given to introducing, by way of statutory amendment and/or if necessary by way of

amendmentofSchedule1tothe2009ConstitutionOrder,apartialreversaloftheburden

of proof, or so called evidential burden, in cases of corruption and other appropriate

casessoastoenableacourttoconvictapublicofficialwherethereisevidencethathe

has been living above his present or past officialmeans, forwhich he has not given a

satisfactoryexplanation.Suchaprovisionistobefoundinvariousformsinanumberof

jurisdictions, where national and social conditions have been such that it has been

necessarytointroducesuchaprovisiontoprovideaproperbalanceofthepublicinterest

against the individual rights of defendants in cases of alleged corruption. I emphasise

414RvRayment&Ors(2005)–therearemanyothersimilarexamplesinEngland&Walesoflengthytrialsabortedforreasonsarisingfromthevulnerabilityjuriestoprejudiceorotherfactorsrequiringtheirdischargebeforeverdict.415paras2.18etseqabove

229

thatIhaveinmindaproceduralandevidentialchangefortheexistingcriminaloffences,

notthecreationofanewsubstantivecriminaloffenceintheform,say,asinHongKong.416

52 ‐ Recommendation: Considerationof introductionof a statutoryprovision

partiallytoreversetheburdenofprooforevidentialburdenincasesofcharges

of corruption against a public official, so as enable convictionwhere there is

evidencethathehasbeenlivingabovehisorpresentorpastofficialmeansand

forwhichhehasnotgivenasatisfactoryexplanation.

5.31 Disqualification fromPublicOffice ‐ There is statutoryprovision insection47of the

2006 Constitution for disqualifying persons from standing for election asMembers of the

House of Assembly if, within the preceding five years, they have served part or all of a

sentenceofimprisonmentofatleast12months.Criminalconvictionfollowingelectiondoes

notappeartoresultinautomaticdisqualificationofanelectedMemberorrequirehisorher

resignation.Inmyview,considerationshouldbegiventodisqualificationfromMembership

oftheHouseforlongerperiodsofuptolifewhereacourtconsidersitnecessary,and/orfor

anenforceabledeclarationtobemadethatasuchaperson,whetheraMemberornot, is

unfittoholdanypublicofficeorspecifiedpublicoffices.

5.32 In an Inquiry such as this, even where prosecution for a criminal offence is not

recommendedorcontemplated,asinthefirstBlom‐CooperInquiry,417itisnotunknownfor

the report to include a finding that the conduct of a public office holder a subject of the

Inquiry is so seriously reprehensible that he should be declared to beunfit to hold public

office.Itisnotcleartomewhat,ifany,legalforcesucharecommendationoractiontaken

in consequence of it in the context of a commission of inquiry; the TCI Commissions of

InquiryOrdinancemakesnoprovisionfor it. Suchadeclarationwhereappropriate,clearly

basedandsufficientlypreciseastotimeandextent,couldbeanimportantprotectionand

reassurancetothepublic.Inmyview,considerationshouldbegiventotheintroductionofa

statutorybasis, saybyamendmentof theOrdinance, for suchadeclarationand forgiving

effecttoit.

416See,forexample,section10oftheHongKongPreventionofBriberyOrdinance(Cap201)andotherexamplesreferredtoinpara2.6above.417Seepara1.28above

230

53 ‐ Recommendation: Consideration should be given to providing for:

1)disqualificationfrommembershipoftheLegislatureofthosewhohavebeen

convicted of serious criminal offences, for longer periods than presently

prescribed; 2) for an enforceable declaration that such aMember is unfit to

hold to hold any public office or specified public offices; and 3) for the

provision to a Commission of Inquiry appointed under the Commissions of

Inquiry Ordinance of a power to make such a declaration, enforceable if

necessarybythecourt.

Integrityinpubliclife

5.33 Codes of Conduct ‐The2009 ConstitutionOrder, so long as it lasts,will remove or

neutralisemanyoftheinstitutionalcontextsconducivetocorruptionthatIhavementioned

inthisReport,inparticularthosegoingtoministerialdiscretion.However,stepsshouldbe

taken in the meantime by legislation and otherwise, including, eventually, constitutional

change to minimise the opportunities for recurrence. The first requirement is the

establishmentofasystemofgovernancethatremovesorminimisesthescopeforconflictof

interests for those holding public office, and,where such scope remains, ensures full and

publicdisclosureofit.AsindicatedinChapter2,someofthesafeguardsarealreadythere;

buttheyneedconsiderablestrengtheningifintegrityinpubliclifeistodevelopandendure.

5.34 The starting point should be a clear andwidely publicised statement from the top

emphasisingtheneedforprobityinpubliclife,notjustforitsownsake,butforthegeneral

well‐being and economic health of the Islands. The key‐stone of that stance should be

formal and public adoption of the Code of Conduct forMinisters of the Turks and Caicos

Islands,whichhasbeenheld,asifinescrow,bythePNPAdministrationforsometwoyears,

and itsexistence,evenasan instrument for theguidanceofMinisters,deniedbysomeof

them.418 There is another document, which appears to have been given equally little

priority by the PNP Administration, the precise status of which is seemingly unknown by

those in thepublic servicewhomightbeexpected toknow, theTCIPublicServicecodeof

418Seeparas2.7–2.14and2.27–2.28above.

231

Ethics.419 Whilst there are professions by the present PNP Administration under the

leadership of the Hon GalmoWilliams shortly before submission of this Report of doing

somethingaboutit,nothinghasyetbeendonetoconveytotheTCIIslandersachangefrom

the culture to the contrary about which the HonMichael Misick spoke so confidently in

evidencetotheCommission. I, thereforerecommend,asamatterofurgency, formaland

widepromulgationofbothCodesandanynecessaryassociatedrevisionofGeneralOrders

as a clarion call to all in public service ofwhat is expected of them. Promulgation should

includeanexpandedGovernmentweb‐site.

54‐Recommendation:TheCodeofConductforMinistersoftheTurks&Caicos

Islandsandanyothersimilarcodeorprovisiongoverningthoseinpublicoffice

should be formally and widely promulgated, and used as a permanent

reminderbyprovisiontoallpublicofficersonappointmentandpublishedasa

permanent feature on the Government’s web‐site. It should also be

strengthenedbyregularreinforcementandreminderbytrainingandinpublic

educationalmediaprogrammes.

5.35 Secondly, consideration should be given to the introduction of a Freedom of

InformationAct

5.36Thirdly,thereshouldbeearlyimplementationoftheIntegrityCommissionOrdinance

enactedon15thMay2008,presumablyintendedinpartasareplacementoftheRegistration

of InterestsOrdinance1993. The latter, though relatively basic as to its requirements for

disclosure,couldpossiblyhavecontinuedtoserveifithadbeentakenseriouslybyMinisters

and other elected representatives of the Territories. Full and accurate public disclosure

under its provisions would have gone a long way to deterring or bringing to light much

earlier the rampant conflicts of interest to which Minister appear to have exposed

themselvesandofwhichtheypossiblytookadvantage.

5.37 The new Ordinance is more demanding and provides investigative powers and

sanctions outside the parliamentary context that should encourage a more rigorous and

cooperativeapproachbypersonsinpubliclifetotheneedtoavoidconflictsofinterestand

419IunderstandthattheTCIOfficeofPublicServiceManagementandtheChangeManager,ratherthantheMisickAdministration,wereresponsiblefortheintroductionofthisdocument,andhavenowcirculatedittocivilservantsinadvanceofitsformallaunch.

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to be open about andminimise them if they are unavoidable. However, theOrdinance

could do with some tightening up by way of the following steps, but not so as to delay

bringingitintoforce:

1)conductinganearlyandwidely‐spreadexaminationundersection13(1)(f)of

theOrdinanceofthepracticesandproceduresofthoseinpublic lifeandpublic

bodies in order to facilitate the discovery of corrupt practices, if and to the

extent that no other person or body has a statutory duty to perform that

function;

2)instructing,advisingandassistingthemanagementofpublicbodies,pursuant

to section13(1)(g)of theOrdinance, as to changes inpracticesorprocedures

thatmay be necessary to reduce the occurrence of corrupt acts, if and to the

extent that no other person or body has a statutory duty to perform that

function;

3) the Commission itself and/or any other appropriate public body providing

early publicity to, and education in respect of, theOrdinance’s definition and

manifoldcategoriesofcorruptionsetoutinsection44;

4)reviewingthesufficiencyofparticularityrequiredfromperson[s]inpubliclife

inannualDeclarationsoftheirFinancialAffairsrequiredofthembysection25of

andSchedule2totheOrdinance,and

reviewing the procedures for enforcement by the Attorney General or other

appropriate public bodies, pursuant to section 35 of the Ordinance, of the

section 25 duty to declare their financial affairs, so as to ensure speedy and

otherwiseeffectiveproceedingsandtimelyimpositionofsignificantpenaltiesfor

non‐compliancewhererequired.

55‐Recommendation:Earlyimplementationandamendmentalongthelines

indicatedaboveoftheIntegrityCommissionOrdinanceenactedinMay2008,

inreplacementoftheRegistrationofInterestsOrdinance.

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5.38 In the lightof thedeclared ignoranceof someMinistersandotherMembersof the

HouseofAssemblyofwhatwasrequiredofthemaspublicservants,andpossiblyothersin

publicoffice,andwithaviewtogreateropennessaboutthewayinwhichtheGovernment

conducts its business, its web‐site should be expanded and kept up to datewith, among

otherinformation:

1)theCodeofConductforMinistersoftheTurks&CaicosIslandsandanyother

similarcodespromulgatedforthoseinpublicoffice;

2)theIntegrityCommissionOrdinance;

3)annualdeclarationsoffinancialaffairsmadebyMembersoftheLegislature

pursuanttothatOrdinance,withinashortperiod–tobeprescribed–oftheir

final dates for submission or a notation that no declaration has been

submitted;

4)detailsofanysanctionimposedfornon‐compliance;

5) all audit reports preparedby the TCIAuditOffice and required tobe laid

beforetheLegislature‐withinaperiodtobeprescribedaftertheduedatefor

suchaction–orastatementofexplanationfornon‐compliance;

6) all minutes and reports of the Public Accounts, Expenditure and

AdministrationCommitteesoftheHouseofAssembly(orcognatebodiesinthe

interim)within a short period ‐ to be prescribed – after their due dates for

reporting;

7)acompleteandup‐to‐datesetofTCIOrdinances(lastrevisedin1998),giving

prominence to a new Constitution if and when there is one, the Integrity

Commission Ordinance and the Crown Land Ordinance when enacted and in

force;

8) an up‐to‐date copy of the electoral roll, by constituency, but omitting

addressesandanypointsofcontact;and

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9) posting, as they occur, all entries in the Gazette, including allocation of

CrownLand,grantsofBelongerstatus,PermanentResidenceetc.

56‐Recommendation:TheGovernmentshouldexpanditsweb‐sitewithaview

toinformingandremindingallinpubliclifeofwhatisrequiredoftheminthe

matterofconflictsofinterestanddeclarationsofinterests,andwithaviewto

greater openness about the way in which the Government conducts its

business,soastoprovidetheabove,amongotherinformation.

5.39.AsdiscussedinChapter3andasERISdetailedinitsexcellentReportontheFebruary

2007 election,420 there has long been much potential for abuse by politicians and their

associates of purported campaign funding. First, there is no specific legislative control of

election campaign funding. Secondly, such legislative control as there is in the Elections

Ordinance,namelyprohibitionsonbribingandtreatingvotersatoraroundelectiontimehas

long beenwidely disregarded. The ERIS Report deserves attention in their expression of

general concern about lack of legislative provision for campaign financing and electoral

malpractices, which it has detailed in the present system. I strongly endorse their

recommendationfor legislationtoregulatepartycampaignfinanceandtorequirepolitical

partiestopublishtheirincomeandexpenditureonelectioncampaigns.Iwouldgofurtherin

the light of the information rehearsed in Chapter 4 as to the use of PNP accounts as a

medium for channelling possibly corrupt payments to the Premier and a number of his

Cabinetcolleagues.Iwouldrecommendlegislationrequiringpublicationoftheamountsof

all purported political donations, the identities of the true donors and donees and the

mediumofpayment.Therecanbenohonestreasonorlegalbasisforsecrecyaboutpolitical

donations and their sources if the motive for giving and receiving them is in the public

interest,asitshouldbe

57‐Recommendation:legislationto:

1)regulatepartycampaignfinance;

2) require public disclosure by contributors to and recipients of election

campaignexpenses;

420paras3.1–3.8

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3) of details of the true source, recipient, amount of all other purported

politicaldonationsandtheusetowhichtheyareput;

4) external and published audit of political parties’ accounts, with criminal

sanctionsfornon‐compliance;and

5)ingeneral,toremedythemanyotherelectoralabusesidentifiedbyERISin

theirReport.421

5.40Abuseofoffice‐ChecksandBalances‐AsIhavementionedinanumberofcontextsin

thisReport, therehavebeen serious shortcomings ingovernmental financialmanagement

andaccounting systemsover theyears, including serious inadequacies in internal auditing

systems. These have been routinely drawn attention to and criticised in successive audit

reportsbyTCIChiefAuditorsandothers,andmostly ignoredbythoseMinisters inCabinet

responsiblefordoingsomethingaboutit.Thereislittlepointinmydetailinghereeventhe

moreimportantdeficienciesandthemanyoverlappingcriticismsofthem,manyofwhichI

havesummarisedinChapters1and2.422

58 ‐ Recommendation: introduction or facilitation of rigorous internal and

external audit systems for all governmental departments and public and

statutorybodies,whereauditreportsarepromptlypublishedandtreatedwith

respect by Ministers and used by them, board chairmen and directors, and

other senior public officials to inform budgetary decisions and give effect to

necessaryfinancialcontrol.

5.41 As isalsoapparent fromChapter2of theReport, there isendemic lackofeffective

checksandbalances in thesystemofgovernanceof theTCI,eitherbecauseof insufficient

constitutionalorother legislativeunder‐pinningand/orbecauseofsystematicdisregardor

neglectofwhatlegislativeorotherimperativesthereare.Thisismostevidentinthetotal

breakdownofthesystemofparliamentarystandingcommittees–oversightcommitteesor

constitutional watch dogs as they are variously called – for which the 2006 Constitution

421Seeparas3.5–3.8above422Seeparas1.38and2.50‐2.51above

236

provides,asdid the1998Constitution.423 Theyhavebeenso inactiveover theyears that

neitherthepublicofficersresponsibleforservicingthemnortheMembersoftheHouseof

Assemblytowhichtheyshouldreport,orothers inthepublicservice, letalonethepublic,

are barely aware of what, if anything, they do. The Commission has had extraordinary

difficulties intryingtoextractbasic information, intheformofrecordsorotherwise,asto

whatthesebodieshavedoneinprotectionofthepublic’sentitlementtogoodstewardship

by the government and its servants of the day. There have been very fewmeetings and

even fewerreports fromthemover the last fewyears,all inbreachof theirconstitutional

intentionandtheHouseofAssembly’sStandingOrders.

5.42 On return to ministerial government, firm steps should be taken, by increasing

constitutional underpinning, amendment or replacement as necessary of the Legislative

Council (Powers and Privileges) Ordinance 1988 and Standing Orders of the House of

Assembly, andby rigorousoversight and insistenceby theHouseon compliancewith its

StandingOrdersandforprovisiontotheCommitteesofthenecessarysupportfacilitiesto

enablethemtodotheirjobs.Inadditiontosuchparliamentaryscrutiny,provisionshould

be made for other public scrutiny as to the action or inaction of their watchdogs, by

broadcastingandreporting,ontheGovernmentweb‐siteandotherwise,theirproceedings,

includingexaminationofwitnessesandtheirreportstotheHouse. AstheChiefAuditor,

CynthiaTravis,commentedinher2005and2006AuditReportswithregardtothePublic

AccountsCommittee,424maintenanceofanaccountabilityprocesscanonlybeachievedifit

regularly submits a report of its recommendations to the legislature, followed by a

governmental reply in the legislature, and, unless reports are tabled, the exercise is an

entirely empty one. Consideration should be given to holding PAC sessions in public,

broadcastsontelevisionorontheradioasinothercountries,suchasintheUK.

59‐Recommendations:

1)Onreturntoministerialgovernment,constitutionalandotherlegislativeor

parliamentaryinstrumentsshouldprovideforrigorousscrutinyofthefinancial

and other governance of the Territory through parliamentary oversight

committees and for a regimeof strict andwell publicised adherence to their 423Seeparas2.52–2.53424Seeparas3.38and2.58above;2006TCIAuditReport,pp15‐16

237

duties,includingregularpresentationoftheirreportstotheHouseofAssembly

anddebatebytheHouseofthem;and

2) consideration should also be given to amending the 2006 Constitution to

enable, on return to ministerial government, appointment to the Public

Accounts Committee, if not all three Committees, of one or more ex officio

members qualified and experienced to introduce financial management

experienceintotheprocess.

5.43 Abuseofoffice–wideandunfetteredMinisterialdiscretion ‐ Theabsenceofchecks

andbalancesarecomplementedandaggravatedbythemanymattersengagingpublicand

privateintereststhataresusceptibletodiscretionarydeterminationbyMinistersratherthan

regulatedbylegalandclearlyspecifiedcriteria.

60 ‐Recommendation:There is anurgentneed for removal,or reduction,by

reference to clearly expressed criteria, of ministerial lawful or unlawful

exerciseofdiscretionarypowers inmanyandvariousaspectsofgovernment.

These include inappropriate interference in and by‐passing of statutory,

administrativeorpolicyproceduresinanumberofareas‐forexample:

1)administration,managementanddisposalofCrownLand;

2) award of public works contracts and other public contracts, and their

fragmentationtoevadeopentenderingrequirements;

3) development approval, planning permission and control, the grant or

revocation of licences or franchises or effective government‐protected

monopolies, the grant of exemptions, waivers and discounts of any type, in

particularastostampdutyonthetransferofland,andastoimportduties;and

4) in immigrationmatters, including thegrantofBelongershipsandthegrant

and terms of Permanent Residence Certificates; Residence Certificates and

WorkPermits

238

CrownLandAllocation,SaleandManagement:

5.44 I have setoutat length inChapter3,425by reference toanumberofobjectiveand

highlyexperiencedexperts,theills,injusticesandpossibilityforcorruptionofMinisterstheir

families andassociatesandpublicofficials in the system in theTCI for administrationand

disposalofCrownLand.Ihavealsosetoutthemany,oftenoverlappingrecommendations

forreformmadeintheFuller,426Barthel/TerraInstitute427andRobinson428Reports,whichit

would be otiose to repeat byway of summary here, all ofwhich should be given careful

consideration for inclusion in theCrown LandBill, now in preliminary draft, or other new

legislation, regulatory or administrative forms as appropriate. TheCrown LandBill,when

enacted, should go a longway to removingmanyof thedefects in thepresent systemof

CrownLandadministration,managementanddisposal,bothastoprincipleandpracticality.

Importantly,itshouldalsoremoveorseverelyreducethepossiblescopeforcorruptionand

diminutionatgreatlosstothepublicofitsmostvaluableasset.Butmorethoughtneedsto

begiventothemattersthatIhavelistedinthefollowingrecommendation:

61‐Recommendation:

1)deviseaspartoftheproposedCrownLandOrdinancetheessentialstatutory

criteria for the administration, management and disposal of Crown Land, in

replacementoftheCrownLandPolicyoftheday–amoreprincipledapproach

toCrownLandReform;

2)ensurecompleteindependenceofthedepartmentalbodytobeentrustedby

theproposednew legislation fromministerial involvement or interference in

itsindividualallocationsofCrownLandbywayofleaseorsale;

3)maketheManualofCrownLandAdministrationandProcedure,partofthe

Bill,aswasintendedbyitsauthors,theTerraInstitute;429

425Cap3,para3.9etseq426ibid,paras3.9,3.24‐3.26427ibid,paras3.27‐3.28,3.31‐3.37428ibid,paras3.38‐3.39429inPartIIIoftheBill,forwhichdraftinginstructionswerecontainedinChaptersIIIandVoftheTerraInstitute’sFinalReportofFebruary2008,

239

4)inthelightofMarch2008SpecialAuditReportoftheActingChiefAuditor,

theHonMcAllister Hanchell’s evidence to the Inquiry and other information

recently received pending enactment and the bringing into force of the new

legislation,giveimmediateeffecttotheManualbyseekinganinstructionfrom

theSecretaryofStateundersection25(1)(a)and/or(3)oftheConstitutionnot

toapproveanyCrownLand transactiongovernedby theManualunlesshe is

satisfiedthattherehasbeenfullcompliancewithitsprocessesandterms;

5) arrange for secondment to the Governor and/or to the Interim Successor

DepartmentoftheMinistryofNaturalResourcesofanindependentexpertor

expertsonthemanagementandallocationofCrownLandsoastoensurerapid

implementationoftheCrownLandManualandforvettingcompliancewithit

ofproposedlandgrants;

6)atanearlystage,enactandimplementtheCrownLandBill,amendedalong

thelinesIhavesuggested,includingtheManual;

7) strengthen the Crown LandValuationOffice and introduce clearly defined

criteriaforvaluation,andpublishallvaluationsintheGazette;

8) require all corporate bodies and those acting for others in a trustee or

nominee capacity to disclose the true beneficial ownership of or interest

involved to any public body required or seeking to exercise due diligence in

contemplation of the grant of Crown Land or of development approval ‐

coupled with substantial potential civil (including rescission) and/or criminal

sanctionsfornon‐compliance;and

9)publishintheGazettefulldetailsofoffersforleasesorsaleofCrownLand,

includingtheidentityoftheproposedbeneficialowner,andtheextentofany

discount,fulldetailsofallDevelopmentAgreements,includingthenameofthe

recipientandthetypeandextentofallconcessionsgranted.

240

ANewConstitution

5.45 It will be necessary to considerwhat, if any changes should bemade to the 2006

ConstitutioningoodtimebeforetheTerritory’sreturntoministerialgovernment.Thisisan

area into which I trespass with some diffidence, since I have neither experience nor

competence for such a task. Clearly a Constitutional Commission shouldbe appointed to

consider and draft such amendments, or a new Constitution, as soon as the Secretary of

Stateand/ortheGovernor,actingontheinstructionsoftheSecretaryofState,considersit

practicabletodoso. However, I inviteconsideration inanysuchexerciseof the following

few, but important matters. Broadly they are designed to correct what I regard as

weaknesses in thepresentConstitution,other legislationandadministrativepractices,and

toensuregoodgovernanceandproperfinancialmanagementandcontroloftheTerritory.

5.46EnlargementoftheFranchise‐Iappreciatethatthisisaverysensitiveareainwhich,

asastrangertotheTCI,Ishouldtreadwithextremecaution.Idosoonlyfortworeasons:

1) The electoral base ‐ Belongers only – is so narrow,well below half of the

permanent residentpopulationof the Islands, that it calls inquestionwhether

thepresentHouseofAssembly is trulyademocraticallybased legislativebody.

ThisappearstohavebeenaconcernoftheImmigrationReviewTribunal,chaired

by theDon‐HueGardiner, in 2004,430 albeit softly said, andof ERIS in its2007

Election Observation Report,431 in its expression of the need to consider an

enlargement or possible replacement of Belongership, with a more inclusive

formofcitizenship.

2) As recognised by the 2004 Immigration Review Commission and by ERIS in

2007,thescopeforabusethroughintimidationofthemajorityoftheTerritory’s

effective permanent residents by those voted into political power by the

minority, isanaffronttoanysocietywithaspirationstocallingitselfcivilisedas

wellasdemocratic.TheevidencebeforetheUKForeignAffairsCommitteeofa

climateoffearwasandisstillbeingreplicatedinfulltothisCommission432–fear

thatis,oflosingtheirhomeandplaceofworkintheIslands.Thoseexpressingit

430ibid,para3.62etseq431ibid,para4etseq432ibid,para56etseq

241

are not just long‐standing TCI Residents who were only prepared to give

information to the Committee and/or the Commission in confidence, but also

thosewhoareevennowunwillingforthesamereasontohaveitpassedtoany

prosecutor whomight follow the Commission. It was the acceptance of such

vulnerabilityandinsecuritythatledthe2004ImmigrationReviewCommissionto

recommendtheestablishmentofaCitizenshipCommissionsoconstitutedthatit

wouldnotbesusceptibletothepressuresandinfluenceofinterestedindividuals,

and not subject to any overriding power of the Government of the day as to

grantofBelongership‐arecommendationthatIendorse.

62‐Recommendation:ConsiderationofreformoftheFranchisesoasto:

1) place its determination in an independent statutory body appointed

annuallybythePublicServiceCommission,suchasaCitizenshipCommission

recommendedbythe2004ImmigrationReviewCommission;

2)removetheGovernor,theCabinetandMinistersandtheirpublicofficials

from any involvement in the grant, withholding or revocation of grant of

citizenship;

3)introduceclearlydefinedstatutorycriteriatowidentheFranchisetolong‐

termresidentsoftheTerritorytobeappliedbysuchindependentpublicbody

on an individual basis to grant, withholding and revocation of citizenship,

subjecttoappealonlytotheSupremeCourtbywayofjudicialreviewortoa

tribunalchairedbyaservingorretiredSupremeCourtJudge;and

4) thereby to enhance democracy and reduce the scope for political

patronage,bribery,electoralabuseandintimidation.

5.47 District Commissioners/Island Administrators and Electoral Districts ‐ A number of

contributorstotheCommission’sproceedingshavewrittenoftheneedforakeypersonfor

eachmajorIslandorgroupofsmallerIslandstoactasanofficialpointoflocalreferenceand

liaison for government matters and local concerns, District Commissioner or Island

Representatives. Suchaproposalcouldperhapsbeconsideredalongwithareviewof the

distribution and number of electoral districts so as to produce a more equable and

242

consistentratioofparliamentaryrepresentationacrosstheIslands. Itwillberemembered

that ERIS, in their 2007 Election Review Report spoke of an imbalance in the number of

registeredvotersbetweendifferentelectoraldistrictsthatmayaffectthequalityofthevotes

cast.433

63‐Recommendations:Considerationof:

1) strengthening the role ofDistrict Commissioners or Island Administrators,

subjecting them to appointment by the Public Service Commission in

accordance with a public and regulated procedure,434 giving them clearly

defineddutiesandpowers;and

2)areviewofthedistributionandnumberofelectoraldistrictswithaviewto

producing a more equitable and consistent ratio of parliamentary

representationacrosstheIslands.

5.48 Considerationshouldbegiventopossibleconstitutional imbalancesandweaknesses

inthe2006Constitution. Onepossibleexample istherelationshipbetweentheForeign&

Commonwealth Office and the Governor, and of the Governor and the Cabinet. The UK

ForeignAffairsCommittee’sviewwasthat theGovernor is tooweakandwithout financial

muscle and the Cabinet too strong and not democratically or otherwise accountable.435

Anotheristoprovidegreaterconstitutionalunder‐pinningoftheroleandresponsibilitiesof

theparliamentaryoversightcommitteesthanisnowprovidedbysections60and61ofthe

2006Constitution,asrecommendedbytheTCIChiefAuditor,CynthiaTravis,inher2005and

2006AuditReports.

64 ‐ Recommendation: Consider possible constitutional imbalances and

weaknessesinthe2006ConstitutionasbetweentheForeign&Commonwealth

OfficeandtheGovernor,theGovernorandtheCabinet,andtoprovidegreater

constitutional underpinning of the role of the parliamentary oversight

committees than is now provided by sections 60 and 61 of the 2006

Constitution.

433ibid,para3.5(2)434Ifthatisnotalreadythecase.435Opcit24,paras17,30,88‐98,112‐118,183‐197

243

5.49 The Legal Profession Ordinance should be reviewed, in consultation with the Bar

Association, inparticular sections21 to23as to themaintenanceandauditofattorneys’

accounts, with specific reference to their handling of clients’ funds, and keeping them

separatefromtheirownmonies.

65 ‐ Recommendation: The Government should review, in consultation with

the TCI Bar Association, the provisions of the Legal Profession Ordinance, in

particular,: 1) Section 21 of the Ordinance, as tomaintenance of separate

clients’accounts;2)Section22,astothemakingandeffectiveenforcementby

theBarCouncilofRulestherefor;and3)pursuanttosection23,widerpowers

to be given to the Supreme Court to secure effective audit of attorneys’

accounts,byspotcheckswhereconsiderednecessaryinindividualcases.

________________

244

6–SummaryofFindingsandRecommendations

FromChapter4–InformationOfPossibleCorruption

And/OrOtherSeriousDishonesty

TheHonMichaelMisick

1–Finding:TheHonMichaelMisickfailedrepeatedlythroughouthisperiodofmembership

of the Legislature of the TCI to make full and accurate declarations of his interests as

requiredbytheRegistrationofInterestsOrdinance1993.436

NoRecommendation

2 – Finding: The Hon Michael Misick has failed in several important respects to make

adequate disclosures in response to the Commission’s requests, pursuant to its powers

undertheCommissionsofInquiryOrdinance,forfullandaccuratedisclosureofhisfinancial

interests.437

NoRecommendation

3‐Finding:ThereisinformationthattheHonMichaelMisickmayhaveabusedhisposition

asPremierandasLeaderofthePNPbyusingPNPfundsforhisownpurposesinthat:1)if

and insofar as he may have been entitled to reimbursement from the Party for monies

expendedonitsbehalf,hefailedtoaccountforsuchexpenditure;and2)thatthelevelofhis

personal expenditurewas disproportionate to any expenditure on the Party hemay have

incurred.438

Recommendation: Criminal investigationbypoliceorothers in relation tohimofpossible

corruptionand/orotherseriousdishonesty inrelationtosuchandothersimilarmatters in

recentyears.

4–Finding:TheHonMichaelMisickacceptedandfailedtodeclaremanygiftsofmoneyvia

theclientaccountofhisbrotherandattorney,ChalMisick,whichwerenot,andcouldnot

436Seeparas2.27–2.28and4.14above437Seeparas2.18–2.20and4.15above438Seeparas4.17–4.23above

245

reasonablybeinterpretedasbeing,politicalinnature,andwhichheappearstohaveapplied

to his personal expenditure without disclosure to the Registrar of Interests or to the

Commission.439


corruptionand/orotherseriousdishonesty inrelationtosuchandothersimilarmatters in

recentyears.

5–Finding:Thepaymentof$500,000byDrCemKinay,throughhiscompany,TurksLtd,to

theHonMichaelMisickwasapossiblycorruptpaymentbecause:1)theHonMichaelMisick

did not declare it in Cabinet when Dr Kinay’s proposals for development were under

discussion,ortotheRegistrarofInterestsortheCommission;2)itwaspaidtohimthrougha

thirdpartyaccount,namelytheclientaccountofhisbrotherandattorney,ChalMisick;3)it

waswhollydisproportionatetoitsstatedpurpose,namelyforpoliticalcampaigning,andwas

not,forthemostpart,spentonsuchcampaigning;and4)itwasreceivedfromadeveloper

whohadacontinuing relationshipwith theGovernment,withwhomfurtherdevelopment

agreementswereunderconsiderationorbeingnegotiated,andwhobenefitedfromCabinet

decisionsgeneroustohim.440

Recommendation:CriminalinvestigationbypoliceorothersinrelationtotheHonMichael

Misickofpossiblecorruptionand/orotherseriousdishonestyinrelationtosuchandother

similarmattersinrecentyears.

6 – Finding: The receipt by the Hon Michael Misick of $250,000 on 29th July 2005,

purportedlybywayofloanfromInazio&GataenCaltagirone,viatheclientaccountofChal

Misick, was possibly a corrupt payment in the light of: 1) the HonMichaelMisick’s non‐

declarationtotheCabinetofhisreceiptofthemoneythreeweeksearlierorofhislinksto

the Caltagirone Brothers and their interest in the proposed development under

consideration;; 2) the Cabinet’s decision in favour of the proposal, followed by the Hon

MichaelMisick’s subsequentdecisiononappeal in favourof itonplanningmatters;3)his

failuretodisclosethepaymenttotheRegistrarof Interestsandnon‐disclosureof it tothe

Commission;4) theabsenceof anydocumentation identifying theCaltagironeBrothers as

439Seeparas4.24–4.26above440Seeparas4.23aboveandFindingandRecommendation32,below

246

thesourceofthemoneyoranytermsforrepaymentorinterest;and5)theabsenceofany

evidence of repayment. Recommendation: Criminal investigation by police or others in

relationtohimofpossiblecorruptionand/orotherseriousdishonestyinrelationtosuchand

othersimilarmattersinrecentyears.441

7‐Finding: Theundocumentedandunrepaid,NorthWestPointloanstotheHonMichael

Misick,collectivelyamountingtoabout$350,000fromHonJeffreyHall,theHonFloydHall

orhisbrotherandtheHonLillianBoyceorherbrotherwerepossiblycorruptpaymentsto

himforfavoursgiveninrelationtotheNorthWestPointtransactionengenderingthemoney

tofacilitatesuchpayments.442

Recommendation:Criminal investigationbypoliceorothers in relationtohimofpossible

corruptionand/orotherseriousdishonesty,includingmisfeasanceinpublicoffice,inrelation

tothesepaymentsandthetransactionsgivingrisetothem.

8– Finding:TheHonMichaelMisick in recentyearsacceptedand failed todeclare to the

Registrarof Interests manygiftsorpurportedloansofmoneyviatheclientaccountofhis

brother and attorney, Chal Misick, which were possibly corrupt on account of possible

favoursgivenbyhiminhiscapacityasPremier.



totheNorthWestPointtransactionandothersimilarmattersinrecentyears.443

9‐Finding:ThereisinformationsuggestingthattheHonMichaelMisickhaspromotedthe

abuseof theCrownLandPolicyonanumberofoccasions, andbenefitedpersonally from

thatabuse:1)inhisreceiptof$161,618.92fromtheHonFloydHallviatheclientaccountof

ChalMisickon20thFebruary2006ofapossiblycorruptpaymentderivedfromapurported

finder’s fee of $373,000 in respect of the Third Turtle Club from Mr Richard Padgett, a

developer, in the circumstances summarised above; 4442) in his facilitation of the sale of

former Crown Land by Ashley Properties Ltd for which he received a commission, as

441Seeparas4.28–4.30above442Seeparas4.33–4.35and4.196–4.209443Seeparas4.36above444Seeparas4.36–4.307

247

describedabove;4453)inhisparticipationintheprofitsofUrbanDevelopmentsfromthesale

oflandatNorthWestPointtoacompanycontrolledbyDavidWex,anoverseasdeveloper,

asdescribed;446and4) in fronting thesaleofLandtoCrownLandtooverseasdevelopers,

specifically in his involvement in the company,MIG Investment Ltd, bywhich he enabled

overseasdeveloperstopurchase18acresoflandentirelyattheirexpense,butinwhichhe

acquireda50%interestbyvirtueonlyofhisstatusasaBelonger.447

Recommendation: Criminal investigation by police or others in relation to him and the

abovemattersofpossiblecorruptionand/orotherseriousdishonesty,includingmisfeasance

inpublicoffice.

10 – Finding: The Hon Michael Misick behaved in a possibly corrupt manner and/or in

misfeasanceofhispublicduty,bysecuringhighlypaidadvertisingcontractsforhiswifewith

theTCITouristBoardandwithKerwinCommunicationspurportedlyactingonbehalfofthe

TouristBoard, therebypotentiallyabusinghispowerwithaviewtoenrichinghiswifeand

himself.448

Recommendation:CriminalinvestigationbypoliceorothersinrelationtotheHonMichael

Misickofpossiblecorruptionand/orotherseriousdishonesty,intheformofmisfeasancein

publicoffice,inrelationtohimtohisexerciseofhisresponsibilityasMinisterresponsiblefor

tourisminthismatter.

11–Finding:TheHonMichaelMisickbehavedinapotentiallyseriouslydishonestmanner,

includingmisfeasanceinpublicofficeanddishonestmisappropriationofpublicfunds,byhis

possiblemisuseof government funds and facilities for his personal purposes in his useof

aircraftcharteredorleasedbytheGovernmentforofficialpurposes.449

Recommendation: Criminal investigation by the police or others in relation to the Hon

MichaelMisickofpossibleseriousdishonesty,includingmisfeasanceinpublicofficeand/or

dishonestmisappropriationofpublicfundsinrelationtohispersonaluseofsuchaircraft.

445Seepara4.38above446Seepara4.33–4.35447SeeTranscript,Day2,pp127‐133448Seeparas4.41–4.53449Seeparas4.54–4.60above

248

12–Finding:Thereisapossibilityofcorruptionand/orotherseriousdishonesty, including

misfeasanceinpublicoffice,inrelationtheHonMichaelMisickinthechainofeventsleading

totheeventualdisposaloflandatJoeGrantCayatwellbelowmarketpricetoaconsortium

ledbyDrCemKinay,followingthesecretpaymentbyDrKinayof$500,000tohiminJanuary

2007, followed by the approval by Cabinet on 16thMay 2007, towhich the HonMichael

Misickwasaparty.450

Recommendation:Criminalinvestigationbythepoliceorothersofthepossibilityinrelation

totheHonMichaelMisickofcorruptionorotherseriousdishonesty,includingmisfeasance

inpublicoffice,inrespectofthismatter.

13–Finding:Thereisinformationofpossiblecorruptand/orotherwiseseriouslydishonest

involvement,includingmisfeasanceinpublicoffice,oftheHonMichaelMisickinrelationto

theGovernment’stransactionswithMarioHoffmannofDEVCOforthedevelopmentofSalt

Cay: 1) in respect of his participation in that development with Chal Misick’s knowing

assistanceandcomplicityinit;2)inhisthepotentialabuseofhispublicofficebyaccepting

lavish anddisproportionate hospitality fromMarioHoffmann, including theuseof private

aircraft, the provision of international flights and other hospitality in the course of

developingbusinessrelationsbetweenDEVCOandtheGovernment;and3)inhispotential

abuseofhispublicofficebyseekingandacceptingaloanof$6millionfromJ&TBankawhen

thatBank,onitsownaccount,451wasinnegotiationwiththeGovernmentoverfundingand

participationinthedevelopmentofSaltCay.452

Recommendation: criminal investigation by the police or others of the possibility of


totheHonMichaelMisickinrespectofthosematters.

450Seeparas4.77–4.89and4.172–4.181above451SeeJ&TBankaweb‐site452Seeparas4.90–4.109above

249

TheHonFloydHall

14–Finding: Throughouthisperiodofmembershipof theLegislatureof theTCI, theHon

Floyd Hall repeatedly failed tomake full and accurate declarations of his interests to the

RegistrarofInterestsasrequiredbytheRegistrationsofInterestsOrdinance.453

NoRecommendation

15–Finding:AnimportantexampleoftheHonFloydHall’sfailuretomakefullandaccurate

declaration of interests to the Registrar as required by the Registration of Interests

Ordinance,washisfailuretodeclarehisinterestintheCasablancaCasinoinProvidenciales,

throughhisinvestmentinWindsorInvestmentLtd.454

NoRecommendation16–Finding:TheHonFloydHallhasfailedinseveralimportantrespectstomakeadequate

disclosures in response to the Commission’s requests, pursuant to its powers under the

Commissions of Inquiry Ordinance, for full and accurate disclosure of his financial

interests.455

NoRecommendation

17 ‐ Finding: The Hon Floyd Hall, in his capacity as Treasurer of the PNP: 1) failed to

administerandkeepproperaccountsofthefundsofthePNPsoastoallowpartymoniesto

bedisbursedforhispersonaluseandthatoftheHonMichaelMisickandotherseniorParty

MemberswithouthavingdevisedanyoranyeffectivesystemforaccountingtothePartyfor

suchuse;and2)misledthePartyasawholeastothetruestateofitsfinancialaffairsand

thepurposestowhich itsmonieswerebeingput,bykeepingsecret frommembersof the

Party, including senior Party officials, the existence of certain Party bank accounts

maintained and operated by him, and by producing in 2006 a partial and misleading

Treasurer’s Report concealing the true state of its finances and the purposes towhich its

fundswerebeingapplied.456

453Seeparas4.1124.113above454Seeparas4.61‐4.74above455Seeparas4.115‐4.116456Seeparas4.117–4.120

250

Recommendation:CriminalinvestigationbythepoliceorothersinrelationtotheHonFloyd

HallofpossiblecorruptioninrespectofhisadministrationofthePNPPartyAccountsand/or

otherseriousdishonesty,includingtheftandfalseaccounting

18–Finding:ThepaymentbyJakCivre,thedeveloperoftheSevenStarsResort,totheHon

FloydHallof$150,000on8thFebruary2007,thedaybeforetheelection,purportedlyasa

campaign donation, but which the Hon Floyd Hall paid into the business account of his

company, Paradigm, and also other unexplained payments were possibly corrupt

payments.457

Recommendation:criminalinvestigationbypoliceorothersinrelationtotheHonFloydHall

ofpossiblecorruptionand/orotherseriousdishonestyinrespectofthatpaymentbyJak

Civreand/orotherunexplainedpayments

19–Finding:TheHonFloydHall,inacceptingpaymentfromMrRichardPadgettof$375,000

inFebruary2006purportedlyasafinder’sfeeforservicesrenderedsomeyearsbefore,but

shortlyafterhisplanningappealdecisioninMrPadgett’sfavourinrelationtohisproposed

constructionoftheThirdTurtleClub,hadpotentiallyacteddishonestly,includingbywayof

misfeasance in public office, and possibly corruptly in accepting such sum, given: 1) the

lengthoftimeandapparentdisproportioninvaluebetweenthepaymentof$375,000and

theservicesforwhichitwassaidtohavebeenpaid;2)theHonFloydHall’snon‐declaration

ofthepaymenttoRegistrarof Interestsandhis lateand incompletedisclosureof ittothe

Commission;and3)hisdivisionof thesumwith theHonMichaelMisick,whohadhadno

ostensible connection with the provision of any services in respect of which it was

purportedlymade.458


Hall in relation to potential serious dishonesty, includingmisfeasance in public office and

corruptioninrelationtoMrRichardPadgett’spaymenttohimof$375,000inFebruary2006.

20–Finding:TheHonFloydHall,inarrangingwithMrRichardPadgettinoraboutJune2007

forhiswife, LisaHall, tobeappointedadirectorof, andmadeaone‐third shareholder in

EliteTCILtd,arealestatebrokeragecompany,theagreedvalueofhershareholdingbeing 457Seepara4.115above458Seeparas4.121–4.124

251

about$280,000,butforwhichshewastoprovidelittleornoconsideration,wasapossibly

corrupttransaction.459


Hallofthispossiblycorrupttransaction.

21–Finding:TheHonFloydHallpossiblyactedcorruptlyand/orinmisfeasanceofhispublic

office in failing to withdraw or to declare his links with Mr Richard Padgett, at Cabinet

discussions concerning the Government’s dealings with Mr Richard Padgett’s business

affairs, in particular at CabinetMeetings on 21stMarch 2007 and 8thMay 2008 at which

mattersrelatingtoOceanpointDevelopmentsLtdwerediscussed.460

Recommendation:CriminalinvestigationbythepoliceorothersinrelationtoHonFloydHall

ofpossiblecorruptionand/ormisfeasanceinpublicofficeinrelationtothosematters.

22–Finding:Theloanof$200,000fromMrRichardPadgetttotheHonFloydHallinAugust

2007, which the Hon Floyd Hall did not declare to the Registrar of Interests, or to the

Commission, until hewas examined in the Commission’s oral proceedings,was a possibly

corruptpayment.461

Recommendation: Criminal investigation by the police or others of possible corruption

and/orotherseriousdishonesty inrelationtotheHonFloydHall inrespectof this loanto

himof$200,000.

23 – Finding: the Hon Floyd Hall, in accepting the payment of $200,000 fromMr Alden

Smith, purportedly for services rendered, did so possibly corruptly and/or by conduct

amounting tomisfeasance in public office, since the payment followed the advantageous

saleofCrownLandtoMrSmith’scompany,AshleyPropertiesLtd,whichhad immediately

sold the land on for a large profit to an overseas developer,making payments from that

profittotheHonFloydHallandtheHonMichaelMisick.462

459Seeparas4.125–4.126above460Seeparas4.116and4.121–427above461Seepara4.127above462Seeparas4.128–4.130above

252

Recommendation: Criminal investigation by the police or others of the possibility of

corruptionand/ormisfeasanceinpublicofficeinrelationtotheHonFloydHallinrespectof

thismatter

24 – Finding: The Hon Floyd Hall took part in possibly corrupt transactions by accepting

proceedsoftheprofitsmadebyhisbrother,QuintonHall, forsaleofpartoftheequityof

Urban Development Ltd involving the disposal of Crown Land at NorthWest Point to an

overseasdeveloperatalargeprofitinthathe:1)purportedlyloanedpartofthoseprofitsto

the HonMichaelMisick, or assisted his brother, Quinton Hall, to do so; and 2) failed to

declarethoseprofitsorthepurportedloantotheRegistrarofInterestsortodisclosethem

totheCommission.463


and/orotherseriousdishonesty,includingmisfeasanceinpublicoffice,inrelationtotheHon

FloydHallinrespectofthesematters.

25 – Finding: The Hon Floyd Hall, inmaking private requests to theMinister for Natural

Resources for allocationsofCrownLand for certain companies toenable them touse the

landassecurityforloans,fromwhichhepersonallyderivedasubstantialborrowingof$1.1

million,pervertedand/orunderminedtheCrownLandPolicyforandprocessofdistribution

ofCrownLand,anddidsopossiblycorruptlyandinmisfeasanceofhispublicoffice.464


and/ormisfeasanceinpublicofficeinrelationtotheHonFloydHallinrespectofthismatter

26–Finding:TheHonFloydHall’sconductinpromotinginCabinettheawardofthecontract

for administering the Treatment Abroad system to SHN was possibly corrupt and/or

otherwise seriouslydishonest, includingmisfeasance inpublic office, because it subverted

the properworkings of government, in particular its tender processes, to ensure that the

only proposal put before the Cabinet for serious consideration was that of a friend and

businesscolleague,DelroyHowell.465

463Seeparas4.131–4.133above464Seeparas4.134–4.135above465Seeparas4.138–4.149above

253

Recommendation:Criminalinvestigationbythepoliceorothersofpossibilityinrelationto

theHonFloydHallofcorruptionand/orotherseriousdishonesty, includingmisfeasance in

publicofficeinhispromotioninCabinetofSHNfortheawardoftheGovernmentcontractto

administertheTreatmentAbroadSystem.


27–Finding: Throughouthisperiodofmembershipof theLegislature, theHonMcAllister

Hanchell repeatedly failed to make full and accurate declarations of his interests to the

Registrarof Interests,asrequiredbytheRegistrationsof InterestsOrdinance, includinghis

shared interest through Windsor Investment Group Ltd in the Casablanca Casino on

Providenciales; and he was also distinctly slow and patchy in his disclosure to the

Commission.466

NoRecommendation

28 – Finding: The Hon McAllister Hanchell, in accepting from Mr Arlington Musgrove

payments totalling over $300,000 into the PNP South Caicos account purportedly as

campaignfundingfortheFebruary2007election,possiblyenteredintoacorrupttransaction

in that: 1) the payments were disproportionately large for the purported purpose of

financinganelectioncampaigninsuchasmallconstituency;2)thepaymentsweremadeby

anestablishedandsubstantialpublicworkscontractor;3)theHonMcAllisterHanchellhelda

public office inwhich he could influence the awardof such contracts; and 4) he failed to

declarethispersonalandfinanciallinkwithMrMusgroveinrelevantCabinetdiscussions.467


and/orotherseriousdishonesty, includingmisfeasanceinpublicoffice, inrelationtothe

HonMcAllisterHanchellinrespectofthismatter.

29–Finding: TheHonMcAllisterHanchell, inhisofficeofMinister forNaturalResources,

enteredintopossiblycorruptand/orotherwiseseriouslydishonesttransactionsbyoffering

onbehalfoftheGovernmentgrantsofCrownLandtohimselfand/ortocompaniesthathe

466Seepara154above467Seeparas4.155–4.158above

254

substantially owned or controlled, thereby creating and ignoring the obvious conflicts of

interesttowhichhisoffersgaverise.468


McAllisterHanchellofpossibleseriousdishonesty, includingmisfeasance inpublicoffice in

respectofthesematters.

30 – Finding: The Hon McAllister Hanchell potentially abused his ministerial position by

instructingthePermanentSecretaryintheMinistryforNaturalResourcestoallocateCrown

Landtoindividualsofhischoice,ortoallocate,orinstructthePermanentSecretaryorother

ofhisdepartmentalofficerstoallocateCrownLandtoindividualsidentifiedandnotifiedto

him by fellow Ministers, in all or most cases without proper regard to the Crown Land

Policy.469


McAllister Hanchell of possible corruption and/or other serious dishonesty, including

misfeasanceinpublicoffice,inrespectofsuchactions.

31 – Finding: The Hon McAllister Hanchell may have participated in possibly corruption

arrangements inwhichoffersofCrownLandweremade to individuals, includingMrGary

Lightbourne,whohadnotapplied for the land,withaview to the recipientsof theoffers

sellingthelandonquicklytodevelopersatasubstantialprofitforallthepartiesinvolved.470

Recommendation: Criminal investigation by the police or others in relation to him of

possiblecorruptionand/orotherseriousdishonesty, includingmisfeasanceinpublicoffice,

inrelationtosuchoffers.

32–Finding:Thereisapossibilityofcorruptionand/orotherseriousdishonesty, including

misfeasance inpublicoffice, in relationtheHonMcAllisterHanchell in thechainofevents

leadingtosecretpaymentbyDrCemKinayof$500,000totheHonMichaelMisickinJanuary

2007,followedbytheapproval inprinciplebytheCabineton16thMay2007,towhichthe

HonMcAllisterHanchellwasaparty,ofthesalefordevelopmenttoaconsortiumledbyDr

468Seepara4.168above469Seepara4.166–4.168above.470Seepaaras4.169–171above

255

Kinay of land at Joe Grant Cay, followed by the agreement in 2008 to sell it to the

consortiumatwellbelowmarketprice.471

Recommendation:Criminalinvestigationbythepoliceorothersofthepossibilityinrelation

to the Hon McAllister Hanchell of corruption and/or other serious dishonesty, including

misfeasanceinpublicoffice,inrespectofthismatter.472

33 – Finding: TheHonMcAllister Hanchell possibly abused hisministerial position and/or

actedcorruptlyorotherwiseseriouslydishonestlyand/orinmisfeasanceofhispublicoffice,

bydeliberatelyundermining theauthorityof theChiefValuationOfficer, in relation to the

valuation of land at JoeGrant Cay, by rejecting the valuations undertakenby him,with a

view,possibly,toensuringaswiftcompletionofsaleofthelandtotheconsortiumledbyDr

Kinayataverylargeundervaluation.473

Recommendation: Criminal investigation by the police or others in relation to him of

possiblecorruptionand/orotherseriousdishonesty, includingmisfeasanceinpublicoffice,

inrespectofthismatter.

TheHonJeffreyHall

34 ‐ Finding: The Hon Jeffrey Hall failed repeatedly tomake any or any full or adequate

declarations of interests to the Registrar of Interests, in breach of the Registration of

Interests Ordinance, and also failed adequately to disclose his financial interests to the

Commission, pursuant to the Commissions of Inquiry Ordinance.474

NoRecommendation

35‐Finding:TheHonJefferyHallhasfailedtoaccount:1)forhisreceiptandexpenditureof

fundsinexcessof$800,000creditedtohisaccounts;4752)forhisreceiptof$200,000from

Mr Evan Harvey; and 3) for a gift to him of $10,000 from David Wex.476


471Seeparas4.172–4.182above472SeealsoinrelationtotheHonMichaelMisick,para4.23above,andFindingandRecommendation5.473Seeparas4.173–4.182474Seeparas4.191–4.195above475Seeparas4.192–4.195above476Seeparas4.191and4.196‐4.208above

256

JeffreyHallofpossiblecorruptionand/orotherseriousdishonesty,includingmisfeasancein

publicoffice,inrespectoftheabovematters.

36–Finding: TheHon JeffreyHall promoted, andpersonally benefited fromabuseof the

CrownLandPolicyinrelationtothesaletoanon‐BelongerofCrownLandbyparticipatingin

apossiblycorrupttransactioninrelationtothesale(‘flipping’)oflandatNorthWestPoint,

Providenciales, to an overseas developer,DavidWex by: 1) knowingly participating in the

transaction as one of the flippers and sharing in the large profitsmade from the sale; 2)

loaningor giving part of the proceeds of those profits to theHonMichaelMisick;and 3)

failingtodeclaretotheRegistrarofInterestsortotheCommissionhisshareoftheprofitsor

themakingoftheloanorgiftofpartoftheprofitstotheHonMichaelMisick,ortodeclare

his involvement in the sale of the land to DavidWexwhen it was before he Cabinet for

discussion.477


JeffreyHallofpossiblecorruptionand/orotherseriousdishonesty,includingmisfeasancein


TheHonLillianBoyce

37–Finding:TheHonLillianBoycefailedtodeclaretotheRegistrarofInterests,orinitially

to the Commission, her receipt of payments of Candidates’ Stipend, totalling $72,000.478

NoRecommendation

38–Finding:TheHonLillianBoyceparticipatedinapossiblycorrupttransactioninrelation

to the sale (flipping) of Crown Landby: 1) accepting theproceeds of profitsmadeby her

brother, Earlson Robinson, from the sale of a share in the interest of a company, Urban

Development Ltd, which had involved the disposal of Crown Land at North West Point,

Providenciales, for largeprofits to anoverseasdeveloper,DavidWex; 2) loaningor giving

partofthoseprofitstotheHonMichaelMisick,orassistingherbrotherindoingso;and3)

failingtodeclarethoseprofitstotheRegistrarofInterestsortodisclosethemCommission,

477Seeparas4.196–4.208above478Seepara4.213above

257

and failing to declare her brother’s connection to the transaction in Cabinet discussions

concerningthetransaction.479

Recommendation:CriminalinvestigationbythepoliceorothersinrelationtotheHonLillian

Boyce of possible corruption and/or other serious dishonesty, including misfeasance in


39 ‐ Finding: The Hon Lillian Boyce abused her ministerial position by: 1) assisting or

permitting her fellow CabinetMinisters, specifically the HonMichaelMisick and the Hon

FloydHall, to interfere inandoverridetheScholarshipsPolicy fornominatingaccordingto

setcriteria,inparticularmerit,candidatesforoverseasscholarships,therebyby‐passingthe

controlof theScholarshipsCommittee;and2)grantingascholarship toherowndaughter

without referring her candidature to the Scholarships Committee for scrutiny.480

NoRecommendation

FromChapter5–SystemicWeaknesses

PartialSuspensionoftheConstitutionandInterimDirectRule

40 ‐ Recommendation: cessation of Ministerial Government, dissolution of the House of

Assembly and suspension of certain related provisions, initially for two years, subject to

possibleextensionorabbreviation,asprovidedinSchedule1tothe2009ConstitutionOrder,

yettocomeintoforce.481

41 ‐ Recommendation: direct rule by the Governor with the assistance of an Advisory

Council to advise him on the formulation of policy and exercise of his functions and of a

Consultative Forum to make recommendations in relation to legislation and other policy

issues,asprovidedinSchedule2tothe2009ConstitutionOrder,yettocomeintoforce.482

479Seeparas4.216–4.217above480Seeparas4.218–4.220above481Seeparas5.11–5.13above482Seepara5.14above

258

42 ‐ Recommendation: the Governor should annually, or otherwise as he considers

necessary,taketheadviceofhisAdvisoryCouncilastotheearliestpracticabledateonwhich

toseektherevocationbyOrder inCouncil483of the2009ConstitutionOrderandreturnto

MinisterialGovernmentandanelectedHouseofAssembly.484

43 ‐ Recommendation: the Governor to have power, acting in his discretion, to make

appointmentstoanypublicoffice,asprovidedinSchedule2tothe2009ConstitutionOrder,

yettocomeintoforce.485

44‐Recommendation:strengtheningoftheGovernor’sPrivateOfficebothinthenumbers

andseniorityofstaffandadministrativeaccommodationandfacilities,includingtheaddition

of an experienced Foreign & Commonwealth Office administrator of the level of a First

Secretary.486

45 ‐ Recommendation: the Attorney General’s Chambers should be strengthened with

adequate numbers of high quality staff of a disposition to withstand political and other

pressures inappropriate to their role,andsuitableandsecurepremises toenable themto

copewiththesurgeoflegalworklikelytobeengenderedintheshorttermandthereafter

requiredinthemedium‐to‐longertermbysuchacceptanceasthereisofrecommendations

inthisReport.487

46‐Recommendation:Considerationshouldbegivenbywayofconstitutionalamendment

re‐defining the AttorneyGeneral’s principal functions488 and ‐ for as long as the Attorney

General remains a member of the executive and legislative arms of government ‐ the

appointmentofanindependentDirectorofPublicProsecutionswithresponsibilityunderthe

general oversight of the Attorney General, for initiation and conduct of criminal

investigationsandprosecutions.489

483opcit390,s3;SeeAppendix4(ii)484Seepara5.15above485Seepara5.16above486Seepara5.17above487Seepara5.14above488Sees39ofthe2006Constitution,whichdetailshispowers,allinthecontextofcriminalproceedings489Seepara5.19above

259

47‐Recommendation: Intheinterestsofpreservingandenhancingtheindependenceand

stature of the office of Attorney General, consideration should be given before return to

ministerial government to amending the Constitution to provide that: 1) the Attorney

GeneralshouldbeavailableandentitledtoadvisetheCabinetandtheHouseofAssemblyon

thelawandpracticalitiesofitsformandadministrationasitaffectstheirdeliberations;and

2)forthosepurposesheorsheshouldbeentitledtoattendtheirrespectivemeetings,butto

dosointhecapacityofindependentlegaladviser,notasamemberofeither.490

CriminalSanctionsandCivilRecovery

48 ‐ Recommendation: Make early and contingent preparation for increase in judicial

workload that may result from criminal and/or civil recovery investigations undertaken

pursuant to this Report, by appointment of additional judges and court officers of high

calibreandtheprovisionofadditionalcourtpremisesandsupportingresources.491

49‐Recommendation:TheestablishmentofaCivilandCriminalRecoveryUnitorUnitsand

ofsecureaccommodationandotherresourcesforthem,pursuanttotheProceedsofCrime

Ordinance 2007 for securing early freezing or recovery of land and/or assets pending

recoveryandotherinterimorfinalreliefinsupportofcivilproceedings492orforrestraintand

confiscationorders493intheTCIorworldwide.494

50 ‐Recommendation: Theappointmentofa SpecialProsecutorand supporting specialist

team, operating under the general oversight of the Attorney General, for the criminal

investigationandprosecutionofmattersthatmayresultfromrecommendationsinChapter

4ofthisReport.495

51‐Recommendation:Provisionshouldbemadeforcriminalandciviltrialbyjudgealone,

atthetrialjudge’sdirectioninanycaseinwhichheconsidersnofairoreffectivetrialcould

takeplacewithajury,andthejudge’sdirectionshouldbefinal.496

490Seepara5.20above491Seepara5.23above492ProceedsofCrimeOrdinance,s2,ss59‐60andss127‐130493ibid,ss42(a)and/or(b)–53ands58494Seepara5.24above495Seepara5.25above496Seeparas5.26–5.29above

260

52 ‐Recommendation: Consideration of introduction of a statutory provision partially to

reversetheburdenofprooforevidentialburdenincasesofchargesofcorruptionagainsta

publicofficial,soasenableconvictionwherethereisevidencethathehasbeenlivingabove

his present or past official means and for which he has not given a satisfactory

explanation.497

IntegrityinPublicLife

53‐Recommendations:Considerationshouldbegiventoprovidingfor: 1)disqualification

from membership of the Legislature those who have been convicted of serious criminal

offences,forlongerperiodsthanpresentlyprescribed;2)foranenforceabledeclarationthat

suchaMemberisunfittoholdtoholdanypublicofficeorspecifiedpublicoffices;and3)for

the provision to a Commission of Inquiry appointed under the Commissions of Inquiry

Ordinanceofapowertomakesuchadeclaration,enforceableifnecessarybythecourt.498

54‐Recommendation:TheCodeofConductforMinistersoftheTurks&CaicosIslandsand

anyothersimilarcodeorprovisiongoverningthoseinpublicofficeshouldbeformallyand

widelypromulgated,and formapermanent reminderbyprovision toallpublicofficerson

appointmentandpublishedasapermanentfeatureontheGovernment’sweb‐site.Itshould

also be strengthened by regular reinforcement and reminder by training and in public

educationalmediaprogrammes.499

55 ‐ Recommendation: Early implementation and amendment along the lines indicated

above500oftheIntegrityCommissionOrdinanceenactedinMay2008,inreplacementofthe

RegistrationofInterestsOrdinance.

56‐Recommendation:TheGovernmentshouldexpanditsweb‐sitewithaviewtoinforming

and reminding all in public life of what is required of them in thematter of conflicts of

interestanddeclarationsofinterests,andwithaviewtogreateropennessaboutthewayin

whichtheGovernmentconductsitsbusiness.501

497Seepara5.30above498Seeparas5.31and5.32above499Seeparas5.33–5.34above500Seeparas5.35–5.37above501Seepara5.38above

261

57‐Recommendation: legislationto:1)regulatepartycampaignfinance;2)requirepublic

disclosurebycontributorstoandrecipientsofelectioncampaignexpenses;3)requirepublic

disclosure of details of the true source, recipient, amount of all other purported political

donations and the use to which they are put; 4) require external and published audit of

politicalparties’accounts,withcriminalsanctionsfornon‐compliance;and5)ingeneral,to

remedythemanyotherelectoralabusesidentifiedbyERISintheirReport.502

58 ‐Recommendation: introduction or facilitation of rigorous internal and external audit

systems for all governmental departments and public and statutory bodies, where audit

reports are promptly published and treatedwith respect byMinisters and used by them,

boardchairmenanddirectors,andotherseniorpublicofficialstoinformbudgetarydecisions

andgiveeffecttonecessaryfinancialcontrol.503

59‐Recommendations:

1) On return toministerial government, constitutional and other legislative or

parliamentary instruments should provide for rigorous scrutiny of the financial

and other governance of the Territory through parliamentary oversight

committees and for a regime of strict and well publicised adherence to their

duties,includingregularpresentationoftheirreportstotheHouseofAssembly

anddebatebytheHouseofthem;

2) consideration should also be given to amending the 2006 Constitution to

enable,onreturntoministerialgovernment,appointmenttothePublicAccounts

Committee, if not all three Committees, of one or more ex officio members

qualified and experienced to introduce financialmanagement experience into

theprocess.504

60‐Recommendation:Thereisanurgentneedforremoval,orreduction,byreferenceto

clearly expressed criteria, of ministerial lawful or unlawful exercise of discretionary

powers in many and various aspects of government. These include inappropriate

502Seepara5.39above503Seepara5.40above504Seeparas5.41–5.37above

262

interference in and by‐passing of statutory, administrative or policy procedures in a

numberofareas‐forexample:

1)administration,managementanddisposalofCrownLand;

2) award of public works contracts and other public contracts, and their

fragmentationtoevadeopentenderingrequirements;

3) development approval, planning permission and control, the grant or

revocation of licences or franchises or effective government‐protected

monopolies, the grant of exemptions, waivers and discounts of any type, in

particularastostampdutyonthetransferofland,andastoimportduties;and

4)inimmigrationmatters,includingthegrantofBelongershipsandthegrantand

terms of Permanent Residence Certificates; Residence Certificates and Work

Permits.505

CrownLand

61‐Recommendations

1)deviseaspartoftheproposedCrownLandOrdinancetheessentialstatutory

criteria for the administration, management and disposal of Crown Land, in

replacementoftheCrownLandPolicyoftheday–amoreprincipledapproachto

CrownLandReform;

2)ensurecompleteindependenceofthedepartmentalbodytobeentrustedby

theproposednewlegislationfromministerial involvementorinterferenceinits

individualallocationsofCrownLandbywayofleaseorsale;

3)make theManual of Crown LandAdministration andProcedure, part of the

Bill,aswasintendedbyitsauthors,theTerraInstitute;506

4)inthelightofMarch2008SpecialAuditReportoftheActingChiefAuditor,the

HonMcAllisterHanchell’sevidencetotheInquiryandotherinformationrecently

505Seepar5.43above506inPartIIIoftheBill,forwhichdraftinginstructionswerecontainedinChaptersIIIandVoftheTerraInstitute’sFinalReportofFebruary2008.

263

receivedpendingenactmentandthebringing into forceof thenew legislation,

giveimmediateeffecttotheManualbyseekinganinstructionfromtheSecretary

ofStateundersection25(1)(a)and/or(3)oftheConstitutionnottoapproveany

CrownLandtransactiongovernedbytheManualunlessheissatisfiedthatthere

hasbeenfullcompliancewithitsprocessesandterms;

5) arrange for secondment to the Governor and/or to the Interim Successor

Department of theMinistry ofNatural Resources of an independent expert or

expertsonthemanagementandallocationofCrownLandsoastoensurerapid

implementationoftheCrownLandManualandforvettingcompliancewithitof

proposedlandgrants;

6)atanearlystage,enactand implement theCrownLandBill,amendedalong

thelinesIhavesuggested,includingtheManual;

7) strengthen the Crown Land Valuation Office and introduce clearly defined

criteriaforvaluation,andpublishallvaluationsintheGazette;

8) require all corporate bodies and those acting for others in a trustee or

nominee capacity to disclose the true beneficial ownership of or interest

involved to any public body required or seeking to exercise due diligence in

contemplationofthegrantofCrownLandorofdevelopmentapproval‐coupled

withsubstantialpotentialcivil(includingrescission)and/orcriminalsanctionsfor

non‐compliance;

9)obtainanexpertevaluationoftheJune2008DeloitteReportintoanumberof

disposalsofCrownLandinSaltCayforcommercialpurposes inrecentyears;507

and

10)publishintheGazettefulldetailsofoffersforleasesorsaleofCrownLand,

including the identity of theproposedbeneficial owner, and the extent of any


264

discount,fulldetailsofallDevelopmentAgreements, includingthenameofthe

recipientandthetypeandextentofallconcessionsgranted.508

ANewConstitution

62‐Recommendation:ConsiderationofreformoftheFranchisesoasto:

1)placeitsdeterminationinanindependentstatutorybodyappointedannually

by the Public Service Commission, such as a Citizenship Commission

recommendedbythe2004ImmigrationReviewCommission;

2)removetheGovernor,theCabinetandMinistersandtheirpublicofficialsfrom

anyinvolvementinthegrant,withholdingorrevocationofgrantofcitizenship;

3) introduce clearly defined statutory criteria to widen the Franchise to long‐

termresidentsoftheTerritorytobeappliedbysuchindependentpublicbodyon

anindividualbasistogrant,withholdingandrevocationofcitizenship,subjectto

appeal only to the Supreme Court by way of judicial review or to a tribunal

chairedbyaservingorretiredSupremeCourtJudge;and

4)therebytoenhancedemocracyandreducethescopeforpoliticalpatronage,

bribery,electoralabuseandintimidation.509

63‐Recommendations:Considerationof:

1) strengthening the role of District Commissioners or Island Administrators,

subjectingthemtoappointmentbythePublicServiceCommissioninaccordance

withapublicandregulatedprocedure,510givingthemclearlydefineddutiesand

powers;and

2)a reviewof thedistributionandnumberofelectoraldistrictswithaview to

producingamoreequitableandconsistentratioofparliamentaryrepresentation

acrosstheIslands.511

508Seepara5.44above509Seeparas5.45and46above510Ifthatisnotalreadythecase.511Seepara5.47above

265

64‐Recommendation:Considerpossibleconstitutional imbalancesandweaknesses in the

2006Constitution asbetween theForeign&CommonwealthOfficeand theGovernor, the

GovernorandtheCabinet,andtoprovidegreaterconstitutionalunderpinningoftheroleof

theparliamentaryoversightcommitteesthanisnowprovidedbysections60and61ofthe

2006Constitution.512

65 ‐ Recommendation: The Government should review, in consultation with the TCI Bar

Association,theprovisionsoftheLegalProfessionOrdinance, inparticular:1)Section21of

theOrdinance, as tomaintenance of separate clients’ accounts; 2) Section 22, as to the

makingandeffectiveenforcementbytheBarCouncilofRulestherefor;and3)pursuantto

section 23, wider powers to be given to the Supreme Court to secure effective audit of

attorneys’accounts,byspotcheckswhenconsiderednecessaryinindividualcases.513

______________

512Seepara5.48above513Seepara5.49above

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