Introduction

In 2009, an inquiry by a retired British Court of Appeal judge cast a light on widespread corruption in the Turks & Caicos Islands (‘TCI’), a British Overseas Territory in the Caribbean, popular for tourism and financ ial services. His findings included recommendations for various measures to address swiftly the problems he had discovered. These included the suspension of the constitution which allowed direct rule by the Governor with the assistance of an advisory council, and the appointment of civil and criminal investigators to search for evidence of transactions tainted by corruption. Our firm, Edwards Wildman Palmer UK LLP (‘Edwards Wildman’), has handled the civil recovery work. In this article, we describe the characteristics of a successful civil asset recovery programme by reference to the background to the inquiry and our subsequent work in the TCI.

The Commission of Inquiry

On 14 July 2008, Sir Robin Auld was appointed as Commissioner to investigate allegations of corruption faced by the former Government of the TCI, led by former Premier Michael Misick, who had been in power since 2003. In January and February 2009, following six months of extensive interviews and written investigation by the Commission, oral hearings were held on the island of Providenciales, the main tourist hub of the TCI. Sir Robin heard from various ministers of the Government as well as from other individuals involved in the subject matter of the Inquiry.

In his report, Sir Robin excoriated the former regime. He noted that prior to oral hearings he had identified

... possible systemic corruption and/or of other serious dishonesty involving past and present elected Members of the Legislature in recent years. I also found indications of systemic weaknesses in legislation, regulation and administration and related matters calling, in my view, for attention. “Following the oral proceedings his views had crystallised, and he reported” a high probability of such systemic venality. Coupled also with clear signs of political amorality and immaturity and of general administrative incompetence...

Sir Robin made 65 recommendations in his detailed final report, published on 17 July 2009, which ran to over 250 pages (‘the Auld Report’). These included the suspension of the constitution, cessation of ministerial government, dissolution of the House of Assembly and the appointment of civil and criminal recovery teams to investigate the allegations of corruption he had considered. Sir Robin also made recommendations on amendments to legislation that could be put in place to ensure that such events did not reoccur in future. The report was the subject of a prolonged judicial review initiated by two developers accused of corruption. Their action required the redaction of passages where they were involved, until its eventual publication in unexpurgated form in August 2011. The judicial review reached the Privy Council, where one of the developers argued that he had been treated unfairly and that Sir Robin’s decision to investigate him was not within his remit as Commissioner. The Privy Council rejected these claims in May 2012.

Asset Recovery Programme

In December 2009, Edwards Wildman were appointed by the Attorney General to conduct a civil investigation into the allegations of corruption identified in the Auld Report. Although Sir Robin had made wide-ranging recommendations, he had not passed judgment, and our task was independently to verify whether the evidence merited issuing proceedings. In some cases urgent investigation was required, as third parties who had entered into contracts with the Government, which were now tainted with corruption, were threatening civil claims against the Government. Our initial work focussed on the key developments identified by Sir Robin; these were all proposed developments on islands in the TCI where the developer was accused of bribing the Government in order to obtain land and/or concessions and development permissions. However, as our investigations continued, we started to look into other issues including the payment of excessive “political donations”, the “flipping” of Crown land for profit, and the evasion of stamp duty. Some of these areas were identified by Sir Robin in his Report, but others were new. Widespread publicity in the Islands of the civil programme brought forward further information from a variety of sources. The wide range of cases we encountered reinforced Sir Robin’s conclusions.

Our work has required close co-operation with various government departments from the out set. All relevant documentation was primarily held in hard copy files in the TCI. The early stage of the investigation on each case required face to face meetings with key individuals at the relevant government departments followed by requests for relevant documents. The process was key to the progress of each of our matters, but required a great deal of the time of over-worked government officials during a tough period of economic contraction. The appointment of responsive contacts at each department was a vital step in the identification and sourcing of relevant documents, and the benefits that are achieved from the able assistance of government officials on the ground cannot be overstated.

Working hand in hand with the Attorney General’s Chambers has been a key feature of the programme. Not all cases we have been considering have resulted in civil proceedings, but there have been many sets of proceedings. The day to day handling of those proceedings has been dealt with members of Chambers who have provided important input on local law and practice, with the use of two partners of the firm (with limited admission to the TCI Bar) as well as a London QC and Caribbean junior to handle the more significant hearings.

A good asset recovery programme needs to have civil and criminal teams to investigate different aspects of corruption cases, e g contractual issues often require civil investigation, while some conduct is so serious that the individuals must be prosecuted. It is important at the outset of an asset recovery programme objectively to analyse the advantages and disadvantages of pursuing civil and criminal routes for each case. However, care must be taken to ensure a proper separation of the work; for example, it is not appropriate for a criminal team to obtain documents by compulsion for use in civil proceedings. The criminal investigation arising from the Auld Report is being handled by the Special Investigations and Prosecutions Team (‘SIPT’).

Some civil defendants have elected to settle rather than take their chances in court. From the outset, the Government has agreed to keep settlements broadly confidential consistent with the Government’s accounting for cash and land recovered so that the success of the programme can be judged by the people of the Islands. A counter argument could be made that no settlements should be confidential following a corruption investigation. However, the practical reality is that many parties would not settle without the comfort of confidentiality, and this could lead to lower recoveries and higher fees; and particularly prior to the commencement of civil proceedings, confidentiality provides an additional incentive to defendants for quick settlements.

Salt Cay

The proceedings against the developers of Salt Cay (an idyllic island, close to the administrative heart of the TCI, Grand Turk) provide a good example of the type of civil claims being pursued. These were the largest proceedings undertaken to date by the Government in relation to the issues identified in the Auld Report. They involved a dispute over 1,500 acres of land on Salt Cay, which had been acquired by the developers over a period of almost ten years partly from the Government and partly from other private owners. The developers planned to construct a luxury hotel and villa complex with golf course and leisure facilities at a cost of over $200m. The Government’s claim was that the developers had bribed the Government to obtain the land and necessary development permissions. These claims were strongly denied.

The allegations principally involved the issuing of credit cards to certain ministers where balances were allegedly settled by a third party; the gift of 50% of the shares in one of the development companies to a relative of a minister; and a substantial loan to a minister which had been granted by a third party. The developers denied that any of these transactions were bribes. The Government’s claim was issued in April 2010 and was defended by the developers who did not admit liability. In August 2012, after several years of claims and counterclaims a civil and criminal settlement was reached. The developers agreed to pay $7m and return land totalling 1,500 acres to the Government. There was no admission of civil or criminal liability.

Results

The asset recovery programme in the TCI is still ongoing. The Government has now made over fifty civil recoveries since December 2009 and there are a number of further trials scheduled for 2013. The recoveries that have been made to date are substantial and are regularly reported via press release and press conference on the Islands. The current key figures are:

  • Cash recoveries by the Government in respect of civil recovery claims (some jointly with SIPT) total $15.9m. A further $1m has either been agreed to be paid or has been ordered to be paid, and is in the process of being collected.
  • 2,447 acres of land has been recovered to date by the Government and is now registered in the Government’s name.

Key characteristics of a good asset recovery programme

We have sought to identify the key characteristics of a good civil asset recovery programme on the basis of our experience over the past few years working in the TCI. We hope that other government and anti-corruption bodies that are embarking on a corruption investigation of this nature may find them helpful. We have broken them down by key stages:

Initial stages: these steps should all be taken as early as possible

  • Make appointments which enable the range of civil and criminal mechanisms to be considered
  • Appoint key contacts at each department
  • Preserve all hardcopy and electronic documentation

Proceedings

  • Select a balance of cases: these should include those with the potential for early success as well as more complex issues, that may take time
  • Focus on a manageable number of cases 
  • Progress will be slow at first
  • Focus on the key issues
  • Allow confidential settlements consistent with the Government’s need to account publicly for recoveries as well as for the cost and benefit of the programme

General

  • Keep regular contact between the key decision-maker at the client and advisers
  • Provide the public with regular progress updates via the media
  • Agree a realistic budget which is consistent with the objectives of the programme and monitor regularly