Corruption allegations in the Cayman Islands
The British overseas territories often seem to have the best of both worlds. They are 14 island nations that represent a hangover from Britain’s imperial past.
On the one hand, they have a high degree of autonomy and constantly agitate for more. But on the other hand, they remain British territory, which gives them a huge advantage as financial centres.
Foreign investors like the fact that countries like the Cayman Islands, Bermuda and the British Virgin Islands offer the British rule of law. Left to themselves, the British would have given these islands their independence long ago. But whilst local politicians want the maximum freedom of action, they cling to the British connection because they believe it is to their financial advantage.
But for many of them, a relatively small political elite, a billion-dollar financial services industry means that their politics constantly teeter on the brink of scandal. So Turks and Caicos, for instance, has been ruled directly from Britain for three years because of a corruption scandal.
Now, the Cayman Islands are being touched by allegations of corruption. But whereas in Turks and Caicos it was the local politicians who were alleged to be corrupt, in Cayman allegations of corruption swirl around the British governor.
In 2007, the Metropolitan Police sent a team out to Cayman to investigate allegations of wrongdoing. This inquiry has cost an estimated £20 million in salaries, costs and damages payouts. However, last week British newspapers carried reports that the head of the Metropolitan Police team sent to Cayman has accused the former governor, Stuart Jack, of attempting to pervert the course of justice.
The Independent newspaper in London quotes a letter from Scotland Yard’s Commander Allan Gibson to the current governor accusing Jack of “misconduct in public office, attempting to pervert the course of justice and wasting police time”.
The letter goes on: “It is my view the allegations are serious and contain sufficient detail to warrant a criminal investigation.”
The foreign office is apparently fighting in the courts against the release of the full inquiry report, because “disclosure could lead to a loss of confidence within the international community which could impact negatively on the Cayman Islands’ reputation and, more directly, on its financial industry”.
Presumably, another reason why the foreign office doesn’t want the full investigation made public is that it might reflect badly on their own man — former governor Stuart Jack.
Now that the Metropolitan Police have said that events warrant a full criminal investigation, such an investigation should go ahead in view of the fact that the initial inquiry cost £20 million. To ignore the recommendation for a full criminal investigation would mean that this significant sum had been poured down the drain. But the authorities seem to be delaying.
Some people suspect that the powers that be will do everything in their power to hush matters up. Author Nicholas Shaxson, who has written extensively about tax havens, is scornful about the possibility of a full criminal investigation.
“The Cayman Islands’ authorities are completely and utterly captured by the financial sector… I wouldn’t trust them to do an independent investigation if the reputation of the Caymans is at stake.”
British Prime Minister David Cameron has had a lot to say recently about the importance of transparency in tax havens like the Cayman Islands. But the complete lack of transparency about a prolonged and expensive Metropolitan Police inquiry makes his words ring rather hollow.
— Diane Abbott is a British Labour party MP and spokeswoman on public health
