Letter to the Chairman of the Committee
from Rt Hon David Miliband MP, Secretary of State for Foreign
and Commonwealth Affairs
Thank you for your letter of 28 January
in which you requested further information on issues relating
to the Turks and Caicos Islands (TCI) which have been brought
to the attention of the Foreign Affairs Committee.
We are well aware of the difficulties created
by the fiscal problems in TCI and their impact on the work of
the Special Investigation and Prosecution Team (SIPT). We are
doing all we can to stabilise the fiscal position so that the
work of the SIPT and all the systemic reforms required can proceed
as swiftly as possible.
Ms Garlick and other members of the SIPT are
in regular contact with the Governor and his office in TCI and
the Overseas Territories Directorate (OTD) in the FCO. She has
been kept up to date on the situation in TCI including the level
of the TCI Government's debt (US$135 million) and our efforts
to stabilise the situation. We are aware of her concerns about
the funding of the SIPT. However, it was made clear to Ms Garlick
at a very early stage that the costs of the criminal investigation
into the findings of the Commission of Inquiry report would fall
to the TCI Government (TCIG). It has always been our view that
the former TCIG is responsible for its present financial crisis.
It is for territory governments to fund commissions of inquiry
and criminal investigations within their jurisdiction.
The circumstances against which the SIPT has
been established by the Governor have been very difficult. Nevertheless,
good progress has been made to date. Inevitably, the time needed
to conclude the criminal investigations and prosecutions will
last well beyond 2011. However, steps will be taken to ensure
that following the elections in 2011, the new TCIG will not be
able to repeat past mistakes, that good financial management will
be ensured for the future, and that key funding commitments such
as the SIPT will be met.
You asked a number of specific questions, please
find below.
1. What funding has been provided by the FCO
to the Special Prosecutor for the TCI? When was this funding provided,
and what specifically was it for?
The Government agreed to provide the initial
funding needed to set up the SIPT until TCIG finances were stabilized
by an US$85m loan being sought by the TCI Government.
Accordingly, my Department has funded the SIPT's
work since its creation in August. We have spent approximately
£435,000 to the end of January. This includes the fees
of the five members of the senior management team (approximately
60% of the total cost), one researcher, the rental costs of London
offices and associated IT and telephone costs, as well as travel
by the team to TCI and to the US. In October, Ms Garlick put a
proposal to the FCO for additional funding of £36,000 to
allow the SIPT to start to recruit an intelligence and research
unit and to rent additional UK office space. This was agreed in
November, and four new members of the SIPT have been employed
(two intelligence managers and two financial investigators). The
FCO has also agreed to fund an analyst for four weeks at a cost
of £5,000.
The FCO extended this start-up funding until
10 February 2010. Funding has now reverted to TCIG. Appropriate
arrangements have been made by TCIG to meet any further costs
incurred up to the end of this financial year. Though negotiation
of the $85 million loan facility is proving more difficult
than anticipated, we expect to have the first tranche in place
very shortly.
2. Why has the UK Government refused to advance
a loan to the Special Prosecutor and the Special Investigations
and Prosecution Team (SIPT)? Why was the UK Government unwilling
to guarantee a separate line of credit to be agreed by the TCIG?
Officials in the FCO and the Governor and his
team made clear to Ms Garlick from the outset that the costs of
the criminal investigation into the findings of the Commission
of Inquiry report would fall to TCIG and that the Government would
not provide a loan for the full cost of the investigation. Additionally,
Chris Bryant wrote to Ms Garlick in December 2009 to explain
that TCIG were working hard to get a loan agreement in place with
a regional bank which would enable TCIG to pay some of its outstanding
debt and to restructure the remaining debt. I expect the first
tranche of this loan facility to be in place later this month.
DFID has not directly provided loans as an aid
instrument for more than twenty years and does not have the capacity
for such an approach. They are a grant funding organisation. Nor
is DFID able to guarantee loans or lines of credit. The costs
of the SIPT are part of TCI's recurrent budget obligations. They
should not be seen as a separate funding line.
3. The budgeted costs of the SIPT will amount
to approximately 5% of the TCIG's budget. What is your assessment
of the impact of this on other TCIG expenditure? If other government
expenditure has to be reduced as a result of the TCIG's support
for SIPT—what impact will this have on public support in
the TCI for the work of the Special Prosecutor?
The cost of funding the SIPT will be one of
the most significant payments the TCI will face over the coming
years and will have a considerable impact on TCI finances. The
costs of the SIPT, civil recovery, and loan will be included in
TCIG's 2010-11 budget and any payments due to the SIPT will
be given very high priority. Similarly an appropriate amount will
be included by the current Government in the 2011-12 budget.
This will necessitate further measures to reduce expenditure and
raise revenue.
To help close the gap between expected revenue
and expenditure, steps to further reduce expenditure are being
developed. This is likely to include reductions in public service
emoluments. Inevitably some members of the public, and especially
of the civil service, will probably equate any cuts with the additional
$10m expense of the SIPT and civil recovery. In fact significant
further steps will be needed to cut expenditure and raise revenue
if TCIG is to balance its budget. But public displeasure at the
cost of the SIPT needs to be weighed against strong support (and
impatience) for criminal prosecutions to begin. When the 2010/2011 budget
is published in a few weeks, we expect that some sections of the
TCI public will be concerned at the cost of the SIPT.
4. Is it right in principle that the Special
Prosecutor is funded by the TCIG?
It has always been the UK Government's view
that the former TCIG is responsible for the present financial
crisis. It is for territory governments to fund commissions of
inquiry and criminal investigations within their jurisdiction.
You are aware of the extent of the former TCIG's
financial mismanagement and the level of debt it incurred. Repayment
of these debts and stabilizing TCI's finances have been the current
TCIG's priority since 14 August. UK-funded technical experts
in the TCIG are working hard to help the Territory return to sound
financial management and to restore good governance.
5. What impact has the delay in resolving
issues around funding had on the ability of the Special Prosecutor
to get her office "up and running" and to begin investigations?
I understand that the Special Prosecutor has
felt frustrated, considering the very difficult set of circumstances
the current TCIG inherited and has had to resolve. The inability
of the TCIG to assume the full funding of the SIPT from the start
has delayed the recruitment by Ms Garlick of her full team. Nevertheless,
I am pleased to report that the SIPT has made good progress since
it was appointed in August 2009. They first visited TCI in August
and continue to visit TCI regularly. Their London offices were
taken on in September. They prepared a project proposal which
has been agreed by the Governor. A website has been set up and
a mailbox created to take inquiries. Some members of the team
have visited the United States on a number of occasions to follow
up lines of inquiry and to interview witnesses. Additionally,
officials from my Department went to TCI in October to assist
the SIPT with the recording of data seized from the offices of
former TCI Ministers. Several promising lines of inquiry have
been followed up.
Ms Garlick has reported that the team has made
initial enquiries with a number of people in TCI who might be
able to offer credible and substantial evidence to the investigation.
They continue to receive information and telephone calls offering
assistance.
The Senior Investigating Officer (SIO) and Deputy
SIO (DSIO) visited the US in December 2009 to carry out a
detailed interview of a highly significant witness which directly
impacts on two development projects in TCI. Significant progress
was made in respect of these two projects as a result of the visit
to US. Enquiries are being made with US counterparts and the Dominican
Republic where it is believed former Premier, Michael Misick has
assets. Recent meetings have been held with Federal Agencies and
agreement has been reached in respect of sharing evidence and
information on key individuals/projects. The DSIO and two other
members of the SIPT were in TCI in January to interview key individuals
who have come forward and to make priority follow up enquiries.
Arrangements are being made to take on office
and living accommodation for the SIPT in TCI.
6. Given the delay in establishing the office
of the Special Prosecutor, what is your assessment of the likelihood
of any criminal cases being concluded before July 2011?
It would not be appropriate to speculate on
how long any individual criminal trials might take. But we accepted
that the criminal process could last many years. It was certainly
never envisaged that any major criminal trials would be concluded
before July 2011. The Commission of Inquiry's work was extremely
thorough and wide ranging. However, it was only charged with the
duty to recommend whether full criminal investigations should
take place. Criminal and civil proceedings have different and
far stricter rules of evidence. The SIPT needs to undertake a
fresh investigation, including in other jurisdictions. Any charges
brought will have to meet the criminal standard of proof of guilt
beyond a reasonable doubt.
7. What consideration, if any, has been given
to extending the proposed dates for elections in TCI in 2011,
in order to allow sufficient time for any investigations and court
cases to be concluded?
While we keep the situation under regular review,
it remains our intention that elections should be held by July
2011, if not sooner.
We have not yet defined post 2011 arrangements.
We will do so in consultation with the people of TCI over the
next nine months or so. I am aware that there are many views on
this, both in TCI and elsewhere. Some criticise the steps we have
taken. Others argue that we should extend the interim government
well beyond 2011 to ensure all the necessary reforms can
be embedded. One thing is clear. There will be no simple return
to the status quo ante. There cannot be a repeat of the
sort of systemic failures noted by the FAC Committee and picked
up in more detail by Sir Robin Auld in his Commission of Inquiry
report.
To this end, the UK Government will shortly
launch a full review of the constitutional and electoral arrangements.
A UK-funded constitutional and electoral reform team leader will
start work later this month. The team will consider the current
constitutional and electoral system and, following wide consultation,
will put forward suggestions to improve both.
The end result must be a system which gives
the people of TCI, the UK Government and the international community
confidence that the basic principles of good governance will be
upheld. This will mean a greater degree of oversight by the UK
Government than existed before August 2009.
8. Concerns have been expressed to us that
many of the individuals identified in Sir Robin Auld's Report
have already liquidated assets in order to put funds beyond the
scope of the authorities. What is your understanding as to the
extent of this type of activity in the TCI?
We, and the SIPT, are aware of these concerns,
though we cannot quantify the likely extent of liquidated assets
at present. That is why co-operation with the relevant authorities
in third countries is an important strand of the SIPT's work.
Any action to restrain assets must be supported by reasonable
and credible information. It can not be taken based on conjecture,
no matter how well founded.
9. What steps, if any, are being taken to
secure funding of the SIPT following a potential change of government
in 2011?
Arrangements will be put in place to ensure
that funding continues after the 2011 elections and the restoration
of elected ministerial government.
10. In your assessment, what impact has the
delay in the Special Prosecutor establishing a presence in TCI
had on public support for and confidence in both the role and
work of the Special Prosecutor and in the role of the UK Government
in TCI?
Whilst the public are, no doubt, frustrated
that progress has not been swifter, support for the Special Prosecutor
remains strong. There is impatience for criminal prosecutions
to begin. The public are also fully aware of all of the work that
has been done over the past few months to stabilize TCIG's finances,
which should enable the SIPT to increase the pace of the criminal
investigation. The decision on the timing of establishing an office
in TCI was a matter for the Special Prosecutor. We understand
that the SIPT will shortly open an office there. The continued
presence of the team should reassure the public that the UK Government
and TCIG remain committed to completing the criminal investigations
and prosecutions.
The Governor will shortly publish his second
quarterly statement providing an update on the work of the TCIG
since August. He will also undertake a second series of "town
hall meetings" on each of the inhabited islands, to meet
the TCI public, update them and answer their questions.
I remain grateful to you and other Members of
the FAC for the attention and interest they have shown to TCI.
24 February 2010
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