88. On 19 April 2002 the Foreign Secretary wrote
to the Chief Minister making, in the Chief Minister's words, "certain
allegations about statistics and alluding to transparency and
probity of government".
Mr Caruana replied on 30 May, stating that the Foreign Secretary
had been "misinformed", that "none of those issues
has ever been raised with me by the Governor or the FCO"
and that "the transparency and probity of my Government is
self-evident, and ... compares favourably with other Governments
in Europe, including HMG in the UK".
On 31 May the Chief Secretary to the Gibraltar Government sent
a more detailed letter to the Deputy Governor.
In this, he remarked on the substantial and widely acknowledged
work carried out by Mr Caruana's Government to improve the transparency
of public finances in Gibraltar. He noted:
(i) that National Income Accounts had never
been published in Gibraltar; that the Chief Minister had decided
that this situation was unacceptable on coming to office; that
work to allow the Government to produce accurate National Income
Accounts had been delayed by a number of factors, but that the
Gibraltar Government was at last in a firmer position to prepare
(ii) that no Annual Abstract of Statistics
had been published since 1998, but that almost all of the information
for subsequent years was available elsewhere; that the failure
to publish resulted from a decision to await the results of the
study which had also delayed production of National Income Accounts;
and that the Chief Minister had announced publicly in November
2001 that the delay had become unacceptable and that a new Annual
Abstract would be prepared forthwith.
89. On 3 June 2002, an article appeared in The Guardian,
claiming that the Foreign Secretary had "asked the Gibraltar
government to explain why it has failed to publish key accounts
and economic statistics amid growing concern in Whitehall that
the colony is being used as a centre for money laundering".
Similar articles followed in other British newspapers over the
In evidence to us on 19 June, the Foreign Secretary said:
"I am interested in official statistics,
always have been, I have a Statesman's Year Book on my desk and
I wanted to look up GDP and other figures for Gibraltar and I
discovered that the most recent figures in the up-to-date version
of the Statesman's Year Book were 1995. Then I started to ask
questions. I said 'Could someone go and get me the annual abstract
of statistics' like you can get them from any other country, OECD,
EU country, not forthcoming. Then I raised this by polite letter
to Mr Caruana, still nothing forthcoming. I raised it with him
when I saw him on my visit. I am afraid to say I got a bombastic
reply from him. Now I have had a lengthy explanation with a promise
that this will be forthcoming in due course. The answer is it
is the clearest responsibility on governments which subscribe
to standards of transparency to provide proper abstracts of statistics
that make them public."
90. The Foreign Secretary also described the fact
that national income accounts had never been published as "a
dereliction of duty by successive governments of Gibraltar".
The Foreign Secretary claims that he raised this issue "in
the spirit genuinely of an enquiry. Nobody, as it were, put me
up to it, I just wanted to know where the figures were".
91. On 5 June 2002, the Gibraltar Government issued
a press release in which it stated: "The allegations concerning
the finances of the Gibraltar Government are totally fabricated
and completely untrue ... The fact that several UK newspapers
carry the same story at the same time, containing the same mistakes
of fact and confusion of issues, proves beyond doubt that this
is an orchestrated smear campaign".
In his memorandum, the Chief Minister adds that "before the
first of these articles appeared ... , we had been alerted by
members of the UK press that these issues were being briefed out
to them by 'Foreign Office sources'"
and that "it is entirely unprecedented for any issue between
HMG and GOG [Government of Gibraltar] to be raised at Secretary
of State level in writing directly to the Chief Minister without
it having previously been raised and discussed with the Chief
Minister by the Governor or FCO officials".
92. An abstract of statistics was published late
in June 2002, including information up to and including 2001 for
most categories, although not for national income. The abstract
contains national income figures for 1979/80 to 1995/96 and provisional
gross domestic product figures for 1999/2000, but figures for
1996/97 to 1998/99 were still in the process of being recalculated
when the abstract was published.
93. The Foreign Secretary is correct that an annual
abstract of statistics and national income accounts had not been
published in Gibraltar for some time (or, in the case of national
income accounts, ever). In our view, there was nothing wrong in
him raising these specific issues with the Gibraltar Government.
The question of why the Foreign Secretary wrote only to Gibraltar,
given Peter Caruana's point that "Gibraltar's entry [in the
Statesman's Year Book] is not dissimilar to that of the majority
of UK Overseas Territories", can be explained by the fact
that Gibraltar, unlike other Overseas Territories, has obligations
relating to its membership of the EU.
94. It was surely unnecessary, however, for the Foreign
Secretary to raise these issues in such a public manner, and to
link them to wider issues of transparency and probity in government.
The Chief Minister's reply may well have been "bombastic",
but this does not change the fact that his letter and the one
from the Chief Secretary to the Deputy Governor did in our view
explain and put into context the failure of the Gibraltar Government
to publish these figures. It was very soon after these letters
had been received by the FCO that negative and inaccurate reports
about financial transparency in Gibraltar began to appear in the
British press. The Chief Minister's claim that these reports were
being "briefed out" to the press by FCO sources is highly
plausible, given that the articles appeared at about the same
time and seemed to have been written with some knowledge of private
correspondence between the Foreign Secretary and Chief Minister.
95. We conclude that it would have been entirely
right for the British Government to raise discreetly with the
Gibraltar Government and/or the Financial Secretary, at an official
level, its failure to publish certain statistics. We further conclude,
however, that this failure in no way compromised the generally
very good record of the Gibraltar Government in probity and transparency,
contrary to what the British Government has suggested in evidence
to us, and apparently in briefings to the press.
96. We also note that the Financial Secretary, who
has indicated both his irritation and his dismay at the public
criticism of the Gibraltar Government in relation to the abstract
of statistics issue, is in fact appointed by the United Kingdom
Government; a factor which the Foreign Secretary appears to ignore.