Rupert Neate (The Guardian) writes about recent developments in the British Virgin Islands saying that “With a judicial inquiry looming and the EU looking to blacklist the territory, the BVI is debating where its future lies.”
The shuffling of diplomats around the UK’s Caribbean territories rarely makes much of a splash. But Gus Jaspert ensured his last days as governor of the British Virgin Islands would be remembered.
In an emotional Facebook video post to the BVI’s 30,000 inhabitants, he accused the country’s government of overseeing a “plague” of corruption, interfering in the criminal justice system and attempting to silence anyone who raised concerns about the misuse of funds, including £30m to help the islands’ fight against the coronavirus pandemic. [. . .]
Amid reports that the EU is getting ready to blacklist the BVI as a tax haven, the career civil servant – who for a time served as private secretary to Britain’s former prime minister David Cameron – had a message for BVI’s citizens: “Your voices have been heard. We have received the message loud and clear – the people of BVI want better.”
The allegations will now be examined in a commission of inquiry, a formal process overseen by a British high court judge. Jaspert is acting with the backing of Dominic Raab, the British foreign secretary, who issued a written statement saying the UK had a “constitutional and moral duty to protect the interests of the people of BVI”.
The surprise move has plunged the BVI into a constitutional crisis, and the coming months could determine whether these islands sever the last of their ties with the British crown. The BVI exports rum and fruit, and hundreds of thousands of tourists disembark each year from yachts and cruise liners to bask on its white sand beaches, but more than half of government receipts come from the financial sector.
Around 400,000 offshore companies are registered in the BVI. While most ordinary citizens will never need to park money in a tax haven, the Panama Papers and successive data leaks have revealed just how widely used they are by the rich and famous. The anonymity they provide also appeals to shady oligarchs and corrupt despots. BVI businesses are black boxes, with no public register of their owners and no duty to publish accounts or pay taxes. Many hold property. In London alone, the real estate held by BVI shells is worth billions of pounds.
The BVI is an overseas territory, where the Queen remains head of state and the judicial committee of the privy council in London is still the court of final appeal. Following recent clashes over UK legislation designed to limit its activities as a tax haven, the number of incorporations has plummeted and many on these islands are now calling for greater independence.
“Is this a prelude on a pre-step to the United Kingdom coming in and taking over?” Claude O Skelton-Cline, a well-known BVI talk radio host, asked last week. A paid government consultant, Skelton-Cline’s views are though to be aligned with many of those in the higher echelons of BVI politics.
His fears are not unfounded. In 2009 the UK suspended the constitution of the Turks and Caicos and assumed day-to-day control, after a commission of inquiry found widespread corruption.
Victor Bulmer-Thomas, a fellow at Chatham House and Caribbean expert, said the situation “looks very much like a rerun of the Turks and Caicos crisis a few years ago and is a reminder of how vulnerable the overseas territories are to the actions of unscrupulous individuals”. [. . .]
Sir Gary Hickinbottom, whose experience includes a period as a supreme court judge in the Falkland Islands, has been chosen as the man for the job. He has already arrived on the main island of Tortola, where he gave a press conference on Friday. He has until July to make recommendations for action, including whether criminal proceedings should be brought against individuals.
For its part, the BVI government had been due to review its constitutional relationship with the UK later this year. Officials had talked of moving to a model of “free association” with the old colonial power, which would mean having a political alliance with the UK but more independent governance.
In 2018 a cross-party coalition of Westminster MPs led by the Labour politician Margaret Hodge and her Conservative colleague Andrew Mitchell won parliamentary support for legislation obliging the BVI and other UK dependencies to publish the names of shell company owners in public registers. Islanders took to the streets in protest, branding Hodge a modern-day imperialist. The slogans held aloft by the crowd made no bones about it: “No imperial legislation”; “You chained us, didn’t sustain us, now you constrain us”; and “Racist UK”.
“This week’s shocking revelations that corruption may be rife in the BVI are a shameful indictment of the tax haven model,” Hodge said. “It is clear that an economy based on secrecy and low taxes is a recipe for bad governance, corruption, and criminality.” [. . .]
[Yachts at Paraquita Bay in Tortola, British Virgin Islands. Photograph: Morrelli & Melvin Design and Engineering in Newport Beach.]
For full article, see https://www.theguardian.com/world/2021/jan/25/british-virgin-islands-at-a-crossroads-as-outgoing-governor-decries-corruption
British Virgin Islands corruption scandal threatens its dependable tax haven reputation
Will Fitzgibbon, ICIJ, January 26, 2021