Thursday, March 26, 2009

Turks and Caicos aka Taxes and Corruption

Turks and Caicos, a small Caribbean British protectorate, 230 miles of white sandy beaches, premier diving destination with one of the longest coral reefs in the world. Paradise. Thing is, it's also a paradise for tax evasion, making it a financial centre, which can only mean one thing these days - corruption and abuse of the system. Things have gotten so bad that on March 16th Gordon Wetherell, the Governor of the Turks and Caicos Islands (known as TCI), announced that he had taken the decision to suspend parts of the 2006 constitution; the British government plans on taking over administrative control of the islands. This follows a corruption probe into the governance of the territory, focusing mostly on the actions of the former Premier of the dependency Michael Misick, who resigned on the 23rd.

A little about Misick before we look closer at the island. After studying law and a short stint in the private sector, in property and finance, he entered politics in 1991 following in much of his family's footsteps. He became chief minister of the island when his Progressive Nation Party (PNP) took power on August 15th, 2003. When the islands new constitution came into force on August 9th, 2006, he assumed the role of Premier. Since assuming power, he's been a busy boy. In addition to being the elected head of government, he was also the minister for Civil Aviation, Commerce and Development, Planning, District Administration, Broadcasting Commission, Tourist Board, Turks and Caicos Investment Agency, and Tourism as well as being an estate agent, a law firm consultant and a director of property companies. What's that expression about absolute power? Something about corrupting absolutely I believe... Fulfilling this destiny, Mr. Misick has married and separated from a Hollywood actress, had a child with another woman, been accused of raping a girl in Puerto Rico, oh, and increased his personal wealth from an estimated $50,000 to $180 million.

The British Foreign Affairs Select Committee was conducting a routine review of administrations in Britain's 14 remaining overseas territories when they received dozens of allegations of corruption from TCI. Upon visiting the islands, they determined there was a "a palpable climate of fear", with people afraid to come forward and give evidence. Their report charged that Misick had built up a multi-million dollar fortune since he was elected in 2003 by enriching himself and fellow ministers "by selling off Crown (government) land to fund current investment." MPs were told that members of Misick's Progressive National Party, who had to borrow cars in 2003, now lived in beautiful mansions. A Commission Enquiry led by Sir Robin Auld was launched last July whose partial findings led to the British decision to suspend the constitution and seize administrative control.

His estranged wife, LisaRaye McCoy Misick, star of cancelled sitcom All of Us, was paid $300,000 from government funds to be the face of an international tourism campaign. During their courtship Mr. Misick paid $100,000 to hire a private jet for flights between the islands and her Hollywood home two or three times each month. They flew by private jet for a holiday in Africa, to visit her daughter at the school she attended in Switzerland and for trips to Milan, Prague and Los Angeles. Mr Misick spent £190,000 on jewellery and charged more than £600,000 to an American Express account with his wife in 2006. She told the inquiry there was no limit on the couple's spending.

How could an island of 30,000 inhabitants be big enough to fund all this you may be wondering? Easy, the islands have become one of the most glamorous destinations in the Caribbean. Tourism has risen from 87,000 visitors annually in 1996 to 264,000, thanks to the arrival of a succession of luxury resorts, while GDP has soared from $216 million in 2003 to $722 million. Most tourists are from Canada and America but the islands are also popular with British holidaymakers. Donna Karan and Bruce Willis have homes in Parrot Cay, where the price of villas starts at nearly £6 million. England footballer Rio Ferdinand has reportedly bought a £1 million villa and Sir Paul McCartney took Heather Mills there on holiday soon after they met. Oh yeah, did I mention the island has no income tax? This could be how Mr. Misick was able to secure undeclared loans of $20 million from a number of financial institutions.

No wonder Misick stepped down a week before expected, it's time to get outta Dodge as they say. For years the British government not only sanctioned, but encouraged the "tax haven" status of TCI where there are no taxes whatsoever, corporate or personal, on income, profits, capital or capital Gains. Further, there are no real estate taxes, estate or inheritance taxes, sales taxes or use taxes. Companies incorporated in TCI enjoy the same tax free status as individuals regardless of nationality of ownership. The commission heard how Mr. Misick and other ministers had grown rich by acquiring publicly-owned Crown land, selling it to developers and receiving commissions. One deal saw an east European mogul secure land worth millions for an annual rent of £170. Another illustration is provided by a letter which was produced from the islands' minister for natural resources, McAllister Hanchell, awarding himself a grant of Crown land: "Dear Honourable Hanchell, I refer to your request for a freehold title. I am pleased to inform you in accordance with Cabinet's decision, it has been agreed freehold title shall be granted. Yours sincerely, Honourable Hanchell." The inquiry's interim report said yesterday there was a high probability of systematic corruption or serious dishonesty, adding there were "clear signs of political amorality, immaturity and of general administrative incompetence".

A lot of trouble could have been avoided if TCI had joined Canada as has been proposed a few times over the past century. While the Brits have encouraged reckless banking behaviour, Canada's financial industry has been hailed as a model of consistency - the World Economic Forum recently named the Canadian banking industry the soundest in the world. Back in 1917, then Canadian Prime Minister Robert Borden first suggested that Canada annex TCI. In 1974, Canadian New Democratic Party Member of Parliament Max Saltsman introduced a failed attempt at consolidating the islands. The idea was brought up again in 1986, but it was rejected by the governing caucus committee on external affairs. As an ammendment to the constitution may be necessary for the islands to join Canada as a province, the province of Nova Scotia voted to invite TCI to join the province in 2004, should the islands ever become part of Canada. Hmmm, a Caribbean island becoming part of Canada you say? Could be enough to lure me back to my homeland!

3 comments:

RE Ausetkmt said...

Have Mercy..

Michael Misick is the modern day Blackbeard; literally.

he sould be keelhauled and then bbq'd and served to roaches.


this is why I so love your blog.
so did you read my coverage of this crap earlier in the week ?

Shane said...

Hey RE Ausetkmt,
I agree with you about Misick, quite a piece of work. How do these people attain positions of power?

Missed your post earlier, just checked it out, you've even got dirt on him there that I neglected to point out!

Loved the Cheney series BTW, great work!

RE Ausetkmt said...

Shane,
can we chat off entrecard, and off the blog please.

hit me on my email, see your entrecard desktop message

thanks

~RE