[John Bercow in the Chair] — Overseas Territories

Part of the debate – in Westminster Hall at 2:30 pm on 23rd April 2009.

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Photo of Mike Gapes Mike Gapes Chair, Foreign Affairs Committee 2:30 pm, 23rd April 2009

I do not believe that the Government had much alternative in the short term but to act quickly with regard to the interim report. However, I have some questions for the Minister about the fact that the Governor of the TCI, Mr. Wetherell, has just announced that although the original deadline for the report was November 2008, which was extended until April 2009, the final report will now not be published until 31 May. Therefore, the interim period before the Order in Council comes into effect has been extended for several more weeks, raising some questions about what will happen in the meantime. There are provisions and powers for the British Government to stop further land sales or other measures. Nevertheless, it is not entirely satisfactory that the period before the Order in Council comes into force has been extended.

I agree with my hon. Friend Jeremy Corbyn. Political and parliamentary accountability are important. That is one reason why I am pleased that we have secured this debate, so that the Minister can respond to the concerns that I have expressed and that my colleagues will no doubt express later. I have a large area to cover in discussing the report, so I will leave the TCI for now.

Our inquiry received allegations about corruption in other overseas territories, including in Bermuda and Anguilla. The Committee recommended that the Government should encourage the Anguillan Government to introduce anti-corruption measures and to hold an independent inquiry into the allegations that Ministers accepted bribes from developers. The Government have declined to do so and have told us that

"no substantive evidence has come to the Governor's attention that Anguillian Ministers have accepted bribes from developers. The Chief Minister of Anguilla has publicly rejected the allegations. Nevertheless, the Governor will ask the Government of Anguilla to explain how they plan to deal with the allegations made to the Committee."

In a letter to the Committee, the Anguillan Government commented that they were

"not disposed to sanction a system of governmental accountability based on gossips, rumour and unproven innuendo".

They requested that the Committee provide more evidence for the allegations. Given that we were told originally by the Foreign and Commonwealth Office that there were lots of allegations in the Turks and Caicos Islands, but that there was no evidence, I am not reassured by the position that has been taken so far. Will the Minister reassure us in her remarks that the Government are looking closely at these matters?

Similarly, we received allegations about corruption and electoral fraud in Bermuda. No detail was provided on the investigations into the issuing of contracts, as the Committee recommended. The Government pledged to encourage overseas territories to promote transparency and, where necessary, to improve their public accounting and auditing capabilities. I understand that the National School of Government project on strengthening public services is under way. It was due to visit the majority of overseas territories by this month. I would be grateful for an update on that.

We recommended that the Government introduce legislation to extend the Witnesses (Public Inquiries) Protection Act 1892, which does not apply to overseas territories. Failing that, our alternative was for the Government to urgently require overseas territories to introduce equivalent legislation to encourage good governance. The Government responded by stating that the Governments of overseas territories should propose any necessary legislation themselves. We note that the Cayman Islands has passed legislation to implement the witness protection programme and that the Government supported that. I would be grateful to know whether there has been progress elsewhere.

We recommended that the Foreign and Commonwealth Office consider transferring the responsibility for the terms and conditions of employment of chief justices to the UK Ministry of Justice. That was not accepted by the Government. In addition, we recommended that the FCO consider whether judges in overseas territories would be less vulnerable to interference if they were on longer, non-renewable contracts, with appropriate safeguards in case of incapacity. If they are on shorter, renewable contracts, they might be more sensitive to local political pressures. The FCO agreed to look further at that issue and to update us. Can the Minister say anything on that today?

Concerns have been expressed over matters of governance in the British Virgin Islands. There is a difficult relationship between Premier Ralph O'Neal and the Governor and deputy governor. I understand that the Minister has been in close contact with the British Virgin Islands through correspondence and through a visit just a few days ago. Did she have a fruitful, productive and friendly discussion with Mr. O'Neal? Have the outstanding issues been resolved to her satisfaction? Is she confident that relations between the Premier, the political establishment, the Governor and the deputy governor will get back to an even keel?

This is a time of major global financial turbulence. Many overseas territories have roles in the international financial system. Financial service industries are important to a number of the territories. Some of them are tax havens. Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Montserrat and the Turks and Caicos Islands have been named by the OECD as failing to deliver on promises to be more transparent. At the beginning of April, it was agreed at the G20 summit to take action against tax havens. That has caused concern and alarm in some overseas territories.

Following the Guardian report that the Prime Minister has written to all British Crown dependencies and overseas territories setting a September deadline to sign up to agreements to share tax information with the authorities, will the Minister say what response, if any, there has been from the relevant overseas territories? How will that matter be taken forward?

We recommended that the Government should encourage Bermuda, the British Virgin Islands, the Cayman Islands and Gibraltar to continue to improve their financial regulation and the investigation of money laundering. The Government accepted that recommendation. However, they did not accept the National Audit Office conclusion, which was supported by the Committee, that they had been complacent in managing the risk of money laundering in Anguilla, Montserrat and the Turks and Caicos Islands, where the UK is directly responsible for regulation. It is therefore most exposed to the financial liabilities that might follow in those places.

In the opinion of the Committee, the Governors of those territories should use their reserve powers to bring in more external investigators or prosecutors to strengthen their investigative capacity. The Government accepted that recommendation, but stressed that using reserve powers to bring in those people would be a last resort. That may be true, but there is a question over when they should use their last resort.

The Committee recommended that the FCO continue to work with the Department for International Development to introduce a financial services regulatory regime in St. Helena that is appropriate for the local economy and for development. We are pleased that that recommendation was accepted.

Committee members split into three groups for the travel involved in this inquiry. Two members went to the Falkland Islands via Ascension Island. That communication link is vital for the Falkland Islanders. There was discussion of the air bridge at the time of our report. A commercial aircraft contracted by the Ministry of Defence now operates on that route. The new contract came into effect in October 2008. It now operates four times a fortnight, whereas it used to be three times. The Governments of the Falkland Islands and Ascension Island are given the number of seats that they request for each flight, plus 10 premium economy seats.

I understand that the FCO and the MOD are negotiating on a joint policy statement on civilian use of the air bridge. There has been controversy over the pricing structure. There is currently a single tariff with no concessions for children. Concerns were expressed to us by Falkland Islanders who have sons or daughters who wish to come to the UK for education. The lack of concessions would mean additional costs when such children want to get in touch with their families or to return home. The MOD has stated that the islands' Government are able to take their own decisions on fares and discounts on the route and, presumably, therefore expects them to make the necessary payments for that.