Turks and Caicos Islands

– in Westminster Hall at 12:30 pm on 23rd March 2010.

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Photo of David Clelland David Clelland Labour, Tyne Bridge 12:30 pm, 23rd March 2010

This debate is about the governance of the Turks and Caicos Islands. I led a Commonwealth Parliamentary Association delegation to the Turks and Caicos Islands in the summer of 2004, the first such delegation for 40 years: they were feeling somewhat neglected. The delegation comprised Members of the House of Commons and of the House of Lords. My hon. Friend Jeff Ennis, who is in the Chamber today, was a member of that delegation. Given recent events, I must add that I have no interest to declare as I have not been back to the islands since 2004.

The Turks and Caicos Islands are an archipelago of 40 small islands at the south-eastern end of the Bahamas chain. Only the four largest islands and two smaller islands are permanently inhabited, with a total estimated population of about 36,000, of whom two thirds live on the largest island-Providenciales, or Provo as it is known locally. The islands are divided into two groups-the Turks Islands and the Caicos Islands. Each group is surrounded by a continuous ring of reefs but separated by a 22-mile-wide channel, the Columbus passage, which is named in honour of Christopher Columbus-based on the slightly controversial claim that he made his first landfall in the new world on the island of Grand Turk in 1492. That claim, disputed by many, marks the start of a history of controversy for the islands, a story linked by tax evasion, piracy and exploitation in all its forms. It is also a story of a people who have not got the governance they deserve.

The islands have a fascinating and often painful history. Tourism is a logical consequence of the beautiful crystal-clear waters and white sandy beaches. Some might see the wheel coming full circle, with the islands' notorious history as a haven for pirates in the 1600s and 1700s, along with the fame derived from its salt rakers' refusal to comply with British demands for tax in the 18th century, reflected in the prominence of this tax haven's exploitation in the 21st century.

The islands have struggled with governance. A presidency, although it lasted for 25 years until 1873, was not a great success. Although it provided internal self-government and integrated the Turks and Caicos Islands, the post of President appears to have been viewed by the British Government as a reward for public service. No President was an islander, or belonger as they are called, and none were appointed in consultation with the local population. They governed autocratically and failed to diversify, relying instead on a single product: salt.

In 1874, the islands were officially declared a Crown colony and a dependency of Jamaica. But by the 1950s, Jamaica was moving towards independence, so TCI opted to stay under British rule and a new constitution was introduced in 1959. A general election was held for the first time in the history of the islands on the basis of universal adult suffrage and a secret ballot. A new legislative Assembly was elected and an Executive Council was created to advise the Administrator, a person appointed by the British Colonial Secretary.

Ten years on, TCI saw the hardening of party political lines. The Progressive National Party was the Government of the day and the People's Democratic Movement was in Opposition. But amidst the growing pains of the fledgling political system, accusations were made that three Ministers in particular were overstepping their authority. An already volatile situation was worsened when Miami police charged the same three Ministers with serious felony offences. British lawyer Louis Blom-Cooper was asked to investigate corruption allegations. He found evidence of corruption and malpractice, but the cornerstone of his recommendations-that certain persons were not fit to hold public office-was ignored, thus strengthening the notion that in politics the only crime is being caught.

Following Blom-Cooper came Roy Marshall. From the inception of adult suffrage on TCI, governance was divided into single-member constituencies, based on the true meaning of one person, one vote. Each person had one vote only and could vote for one candidate in one district only. The Roy Marshall commission reacted to the political and social divisions exposed by Blom-Cooper and decided that 11 constituencies returning 11 members had huge potential for cheating and corruption, as well as for giving small groups of friends and family the opportunity to control the electoral outcome.

The commission therefore increased the number of constituencies to 13 and grouped constituencies together, so where there had been three constituencies returning three representatives, now there would be one constituency returning three representatives. Each voter now had multiple candidates for whom to vote. Far from blunting polarisation, the next election heightened it. Strong party candidates pulled weaker ones to victory with them, with the result that the PDM wiped the board, winning 11 seats to the PNP's two.

The 1976 constitution marked the pivotal moment in the islands' constitutional history, clarifying how the powers and responsibilities of elected members of the legislative and executive arms of government should exist and function in relation to the powers of the Governor, and paving the way for self-determination. Broadly, this constitution said there would now be a resident Governor, appointed by the British monarch, with specific responsibilities for defence and foreign affairs, internal security and the police and the public service. But it also said that there would be an Executive Council of the Governor, the Chief Secretary, the Financial Secretary and the Attorney-General who would be responsible for other Departments of Government-education, health, tourism, etc. The Governor was obliged to consult the Executive Council in formulating Government policy.

The second part of the 1976 constitution was the Legislative Council, consisting of a Speaker drawn from inside or outside the Council, but elected by the Council members; 13 members democratically elected from 13 districts; plus three members appointed by the Governor, the Government and the Opposition, the Chief Secretary, the Financial Secretary and the Attorney-General. Since that time, yet another constitution has been adopted, and so it goes on.

That was the history of governance when we visited in 2004. The Legislative Council had experienced a very eventful year, with two by-elections taking place in marginal constituencies, resulting in a change in government. We were struck-I certainly was-by the youthful make-up of the new Government; the average age of Ministers was about 28. Personally, I was concerned about the apparent lack of experience of the Ministers and vowed to inaugurate an all-party group in Parliament to engage with TCI politicians on their regular visits to London. This I did, but until yet more problems arose regarding accusations of maladministration and corruption following a visit by the Select Committee on Foreign Affairs, TCI Ministers did not give much priority to meeting us on any regular basis.

There was a flurry of activity following the publication of the Select Committee report, but alas the damage was already done. Subsequently, Her Majesty's Government dissolved the Government and Parliament and returned the islands to direct rule via the Governor. I do not wish to explore the detail of the allegations: broadly, politicians were accused of selling Crown land for personal gain. But I understand why Turks and Caicos residents see Her Majesty's Government's actions as tantamount to a recolonisation of the islands.

We have to make a clean break with the mistakes of the past. We have to create a path towards economic and political stability that will last-unlike previous attempts. The economy has to be sustainable and financially sound. Above all, the new economic and political systems have to be transparent and strong enough to withstand the possibility of corruption.

At the start of this new century, there is a 50-year history of constitutional changes that have not bedded down into the people's consciousness; a history of corruption amongst politicians; and, worse, examples of Ministers charged in the USA with felonies and drug trafficking, yet continuing to hold public office. We also have examples of a civil service that is blatantly embroiled in politics. This extremely volatile situation was not helped by the emergence of wealthy eastern European groups seeking investment opportunities in TCI, so I was unsurprised by the decision last year of Governor Gordon Wetherell to suspend the islands' self-governance pending investigations into ministerial corruption.

During our visit in 2004, we had full and frank discussions about the islands' future. We were interested to hear the plans to empower the islanders, who are known as belongers, by enabling them to own land and property. We heard much about their increasing prosperity through the tourism and financial services that have benefited many of their neighbours, and the Government's plans to improve the islands' infrastructure to support the flourishing economy.

There were discussions about the possibility of public-private partnerships and private finance initiatives to achieve that objective. The islands' Speaker and other politicians hope that the islands will have a future with good governance and greater prosperity of their people. Some politicians with good will were properly motivated, but they were struggling with big problems as well as big opportunities.

The Turks and Caicos Islands are geographically close to Haiti and the Dominican Republic, which has resulted in mass migration, both legal and illegal, in recent years. The full impact of that migration is still unknown, but there could be problems for the community in public health, and with HIV/AIDS and poverty. In particular, we discussed the problem of Haiti, drug and gun trafficking, registration policies for immigrants and those born on the islands, and the potential knock-on effect for the tourism industry.

Discussions on constitutional review and the powers of the Governor, the Chief Minister and the Attorney-General provided a useful insight into the delicate balance of power in small legislatures. The desire for more self-governance, short of independence, was clear. Tragically, inexperience and lack of judgment, combined with downright criminality, have led to the imposition of temporary direct rule pending new elections in due course.

Photo of Gordon Prentice Gordon Prentice Labour, Pendle

My hon. Friend referred to corruption on the islands, which I have never visited. Were any UK or Belizean nationals involved in corrupt practices? I understand that people from Belize have extensive business interests on the islands.

Photo of David Clelland David Clelland Labour, Tyne Bridge

I know that some British nationals have substantial interests, and I shall refer to that.

It is true that some politicians on the islands have abused and misused their position of power and influence, but as some might ask, who are we to criticise? As in the UK, a small minority has blackened the reputation of the majority, but many good, dedicated and honest politicians in TCI have the interests of their country folk at heart. They should be included in, not excluded from, the temporary governance of their homeland pending a return to democratic elections.

The country has been buffeted by hurricanes, political scandal and outside influences seeking to exploit its natural beauty and the good nature of its people. Rich men and women from across the globe have made their way to TCI, including Russian and American millionaires who have sought to exploit the islands' beauty and status for profit, and those whose expertise is tax avoidance. I believe that Lord Ashcroft has substantial interests there and is a regular visitor.

During our visit in 2004, we learned of the islanders' desire for future independence, but some former politicians expressed the view that the UK would have to ensure that the offshore finance industry and Government procedures were corruption-free as part of the process. Clearly, they were anxious about how things were developing. It is regrettable that, as we spoke, corrupt practices were undermining those desires, and leading to instability and the end of democracy. For the sake of the people of the Turks and Caicos Islands, stability and democracy must be returned soon.

Will the Minister tell the House when the new administrative arrangements for direct rule will be expanded to include local politicians again? When will the next elections take place to return the islands to the control of their own people? What has Her Majesty's Government discovered about the activities of wealthy foreigners and the ownership of former Crown land? What is Lord Ashcroft's involvement in TCI, and is it yet another tax avoidance? How many other British nationals have business interests in TCI? What progress is there on major developments, such as the airport expansion programme, Leeward highway and the hospital building programme? I look forward to the Minister's response.

Photo of Chris Bryant Chris Bryant Parliamentary Under-Secretary (Europe) 12:44 pm, 23rd March 2010

It is a delight, Mr. Sheridan, to speak under your chairmanship. I congratulate my hon. Friend Mr. Clelland on securing this debate. It has been a long time since the Turks and Caicos Islands have been debated, which is a fault of the House. I also congratulate him on his role in creating the all-party group and sustaining it over the years. The House will lose a doughty politician when he leaves it at the general election, because I understand that he will not stand again. We shall miss him. I had many battles with him over an elected House of Lords.

Unlike my hon. Friend, I have never visited the Turks and Caicos Islands. I understand that they are very beautiful. For several years, they enjoyed a booming tourism industry. Enormous hotels, vast residences, and beautiful and luxurious beach clubs were built, and things blossomed. Unfortunately, at the same time so did corruption, but until the special investigation and prosecution team under Helen Garlick has completed its work, we cannot be sure of the precise contours or the extent of that corruption in TCI.

Hon. Members know that on 10 July 2008, in response to an increasing number of complaints about corruption involving senior politicians in TCI, the then Governor appointed Sir Robin Auld to inquire into

"corruption or other serious dishonesty in relation to past and present elected members of the TCI House of Assembly."

Following Sir Robin's report, we decided to implement his recommendations that ministerial government be suspended, that the House of Assembly be dissolved, and that provision be made for criminal and civil trial by a judge alone in certain cases. Those recommendations were implemented on 14 August 2009, as my hon. Friend adumbrated. We did not take that step lightly, for the reasons that he suggested. We have no desire to return to colonial rule.

Sir Robin's report is impressive, and extremely damning. He outlines what can only be called a perfect storm of political intrigue and corruption. He cites the

"considerable discretionary power in...allocation of Crown Land", and in planning and the award of Government contracts and belonger status. I must correct my hon. Friend, because not everyone who lives on the islands is a belonger-far from it. In fact, that is one of the problems.

Sir Robin also refers to the booming tourism industry, which caused land to become valuable, but the supply of that land is limited. In addition, he refers to considerable exposure of Ministers to conflicts between public duty and their private and personal interests, and widespread disregard of the constitutional obligation to declare financial interests. As Sir Robin said in his report:

"The all pervading impact of politics on people's lives and livelihoods in the TCI and the seemingly imperceptible line between political payments or donations on the one hand and bribes on the other has become a canker in the economic and social life of the TCI."

A key element of that vicious circle is the status of belongership, which stems from birth or personal connection with TCI through a spouse or descent, or from the Governor, acting on the advice of the Cabinet, who can hand out belongership. With belongership comes the right to vote-in fact, only 7,000 of the 36,000 inhabitants have that right-the right to sit on a jury, the right to purchase Crown land at a substantial discount, and the right to sell that land on at a substantial advantage.

The UK 2007 national audit report indicated widespread departures from competitive tendering in the TCI, which is a matter of substantial concern, and there have been many serious allegations. I will read briefly from the commission of inquiry's report. Sir Robin cites

"major contracts for services, such as that made in November 2006 with Southern Health Care Network for referral of TCI Islanders for overseas medical treatment...major construction contracts, for example...PFI contracts awarded to Johnston International for two new TCI hospitals, said to have been overpriced and awarded without any or any appropriate tender process, with an initial budget of $40 million and costs to date of $125 million...major road-building and other public works contracts, for example...the Lower Bight Road. Providenciales, said to have been contracted to Johnston International"- again-

"at a significantly higher price than some other bidders had offered, and built, it is said, to a low standard; and...road works in North and Little Caicos, contracted to Herzog".

He also cites the sale by Ministers of property to the Government at above the market rate, and there is a whole series of cases in which offices have been rented on behalf of the Government, again at above the market rate.

Photo of Meg Munn Meg Munn Labour, Sheffield, Heeley

As the Minister rightly says, I was the Minister responsible for overseas territories for a while, including when the inquiry was set in place, although I, too, have never visited the Turks and Caicos Islands. One of the concerns that the Foreign Affairs Committee reported to me was that people were frightened to speak out and say what was going on. Has the inquiry that the Minister is reading from looked at that issue in relation to these contracts, and will he say whether it has been fully addressed? The fear that the people of the islands had in speaking out about corruption was clearly a fundamental concern for the islands' future.

Photo of Chris Bryant Chris Bryant Parliamentary Under-Secretary (Europe)

My hon. Friend is right, and I pay tribute to the work that she did when the inquiry was set up. She is right about the level of fear. A lot of allegations were made to the Foreign Affairs Committee, some of which have been investigated and some of which have not. It is vital that I do not say anything that would jeopardise the investigation led by Helen Garlick. She has set up offices in London and in the Turks and Caicos Islands, and it is important that she and her team pursue the logic of their investigation without interference from anybody else.

Consequently, I cannot confirm or deny whether the instances that I referred to are being investigated. However, it would be extraordinary if the major contracts for overseas health care, building the Lower Bight road and the two new hospitals-all of which have been completed-and the airport expansion, which has not yet been agreed on, were not being investigated.

Photo of Gordon Prentice Gordon Prentice Labour, Pendle

A BBC programme on the Turks and Caicos Islands has been blocked by the intervention of Lord Ashcroft's lawyers. Is there any evidence that contracts were awarded to Lord Ashcroft by people who are being investigated for possible corruption?

Photo of Chris Bryant Chris Bryant Parliamentary Under-Secretary (Europe)

The precise nexus of companies and organisations on TCI is enormously complicated, and it is sometimes difficult to be precise about who owned what at any particular moment. Mrs. Misick, the wife of the former leader, believed that the major construction firm Johnston International, which I referred to, was owned or at least controlled by Lord Ashcroft, and the former governor believed that that was the case for both that company and Belize bank.

I understand that Michael Ashcroft also had an involvement in a sugar mill in Grand Turk, but I am not sure whether that continues. He was involved during 2006 and 2007-during which time he visited the islands alongside the shadow Foreign Secretary, Mr. Hague-in discussions about his company, Airport Holdings Ltd, taking over part ownership of Providenciales airport and doing major reconstruction work in exchange for a 49-year share of the departure tax on TCI. That is to say nothing of the Belize bank which, as Sir Robin Auld's report makes clear, was the holding bank for the party-political slush fund accounts that were held on behalf of the Progressive National party.

Photo of Jeff Ennis Jeff Ennis Labour, Barnsley East and Mexborough

I congratulate my hon. Friend Mr. Clelland on securing this important debate. As he said, I was part of the delegation in 2004 to the Turks and Caicos Islands, and I endorse many, if not all, of the comments that he made. I am also a member of the all-party group on Turks and Caicos Islands, which my hon. Friend established in the House as a consequence of that visit.

The Minister has touched on the issue of potential corruption in the awarding of public sector contracts on the islands. In many respects, the present governor and previous governors have acted as honest brokers on the islands ever since they played a role within the legislative process. Will the Minister confirm that both past governors and the present governor have expressed concern over the years about the awarding of public sector contracts on the islands?

Photo of Chris Bryant Chris Bryant Parliamentary Under-Secretary (Europe)

Absolutely. Former governors have made it clear that they have been troubled by some of the processes used to award contracts, the personal nature of the way contracts have sometimes been awarded and the involvement of people from elsewhere. Governors have expressed ongoing, continuing concerns, and those exist in the archives of the Foreign Office.

Photo of Gordon Prentice Gordon Prentice Labour, Pendle

I have a simple question. Will Lord Ashcroft be invited to give evidence to this inquiry into corruption?

Photo of Chris Bryant Chris Bryant Parliamentary Under-Secretary (Europe)

As I said earlier, I do not want to say anything that could in any sense prejudice or jeopardise the investigation. Helen Garlick is a fiercely independent-minded woman and she must do the investigation that needs to be done. I will not be drawn on that point.

A point detailed in Sir Robin Auld's report is that one of the elements of corruption was the inexplicable wealth that many people seemed to enjoy. In some countries-Hong Kong, for example-such wealth would overturn the burden of evidence necessary when trying to prove that there has been bribery or corruption. One element of that, which was particularly virulent in the TCI, was that nobody ever registered their financial interests. Mr. Misick stated that

"in relation to gifts and party political donations, there has been no one who has ever declared, probably with the exception of one new member who probably declared a small amount and this is primarily because, particularly the small nature of our Territory, persons giving political contributions would have preferred to be not named."

We have no idea who made political donations in the TCI whether in cash or in kind, or whether people provided aeroplanes, houses, larger houses, additional finances or shopping opportunities for people's wives. We have no idea what was provided to politicians by any of the people being investigated or otherwise.

If anybody has a clear understanding and experience of business in TCI, they should present themselves with any information that they have as a matter of urgency. They might have given money, entirely innocently, as a political donation to a party that they wanted to support. However, if they found out that that gift was never registered, they should be worried about whether the other person might have thought that they were being bribed, whether the donor concerned thought that they were bribing or not.

My hon. Friend the Member for Tyne Bridge asked some important questions about the future for TCI. The financial situation is difficult, and part of my sense of anger about the situation in TCI is that it is difficult in part because some enormous contracts were awarded. Contracts were awarded for 25 years using PFI and PPP arrangements and, in the case of the two hospitals, it was unclear how important or necessary those arrangements were at all, let alone the cost that they have come in at. That is going to weigh as a heavy financial burden on the people of TCI in the future, making it difficult for the governor to come forward with a sustainable economic model for the next few years.

We are keen to return to full constitutional government in TCI as soon as possible. We have to clarify a series of different things and change the system of belongership and how that is handed out. We must change the allocation of Crown lands, and ensure that the electoral system is ready. However, unless there is some terrible problem, our clear commitment is to have elections in July 2011, which is the date when the next round of elections would have been held.

I hope that the future for TCI will be rosier than the last few years have been. I hope that the investigation led by Helen Garlick is able to proceed without interference and brought to a successful conclusion, not least so that some of the assets that have frankly been stolen from the people of TCI can be returned.