WeeklyWorker

05.05.2022
City of London is the hub: BVI is just one of many spokes

Trouble in paradise

Like other such territories, the British Virgin Islands is an outpost of corrupt City of London financial scams and operations, writes Eddie Ford

T  hough completely overshadowed by the Ukraine war and ‘partygate’, last week American authorities carried out a sting operation against the premier of the British Virgin Islands, Andrew Fahie, and the director of its port authority, Oleanvine Maynard. They were arrested at Miami airport after expecting to receive $700,000 for ‘services rendered’ from a Drug Enforcement Agency agent posing as a member of Mexico’s Sinaloa drug cartel. The two were charged with drug trafficking and money laundering. In response, Fahie - who plays the organ at his local church and opens government meetings with prayer sessions - said the British “didn’t pay him much”. So what do you expect?

Part of an archipelago, the BVI is a British Overseas Territory to the east of Puerto Rico with a population of 30,000 - most of whom are British citizens. The first colonial administration was Dutch, but Britain took the islands in 1672. The British introduced sugar cane, which was to become the main crop and source of foreign trade, and large numbers of slaves were brought in from Africa to work on the plantations. An administrator was appointed to the islands from 1887, and then replaced by a governor in 1971, when the islands became a ‘distinct territory’. However, the ultimate executive authority remained vested in the British monarch, who exercises power through the offices of the governor - who since 2020 has been John Rankin, former ambassador to Nepal. Alongside that we have a premier who is normally the leader of the main party in the House of Assembly, but who is appointed by the governor. In other words, the whole set-up is only semi-democratic.

Nowadays, of course, BVI is one of those tax havens - a paradise for shady business tycoons, kleptocrats and the downright criminal. In other words, no different to, say, Panama, which, thanks to the leaking of 11.5 million documents (or 2.6 terabytes of data) that were published from the beginning of April 2016, we know all about.1 The ‘Panama papers’ detailed financial and attorney-client information for more than 214,488 offshore entities, some going back to the 1970s. Embarrassingly for the then prime minister, David Cameron, one of the many revelations was about his father’s Panama-based Blairmore Investment Trust. After days of repeated questioning, Cameron finally admitted that he had benefited from the trust - owning shares in the fund, which he sold for £31,500 just before becoming prime minister in 2010.

BVI is basically the same sort of operation, run for exactly the same motive - greed. So obviously, when we look at the global situation, we are dealing with not just Russian oligarchs. It goes deep down into the ruling classes in Britain, US, China, the Middle East, former Soviet republics, etc. Though it has only a tiny population, the islands have 370,000 companies registered there, accounting for $1.5 trillion of assets - pretty impressive by any measure. Importantly, we need to think about the BVI not as some weird foreign territory on the other side of the Atlantic, but as what it actually is: a British crown territory and one of the many outposts of the City of London, which is at the core of this particular financial scam. The City has spokes going out not just to the BVI, it goes without saying, but to a whole host of British tax havens, like the Cayman Islands, Bermuda, Turks and Caicos Islands, Anguilla - not to mention the Channel Islands just off the British mainland, which have British laws, but no British taxes.

What you have got are British lawyers and British accountants enriching themselves by creaming off a percentage here and a percentage there from their extremely monied clients. Most prominently we have the ex-attorney general and frustrated thespian, Sir Geoffrey Cox, of the absurdly booming voice - one of his clients being none other than Andrew Fahie. Working in 2021 as “consultant global counsel” to the international law firm, Withers LLP, he earned £468,000 a year for 48 hours of work per month, including over £150,000 for advising the BVI government about corruption in a case brought by the foreign office. As a result, Cox spent one month in the Caribbean and, with the permission of the chief whip, continued to vote in parliament via a proxy, due to the coronavirus lockdown.

At one point, Sir Geoffrey nearly got into serious trouble for conducting his very lucrative legal business from his parliamentary office. He defended himself by pointing out - with some logic, it has to be said - that MPs of all parties have practised as QCs over the years, and that the attorney general and solicitor general are normally chosen from their ranks. He also argued that 70- and 80-hour weeks were quite normal for the legal profession and the Nolan report actually concluded that parliament needed people with current experience “of a wide range of professional and other backgrounds”. For good or bad, Cox won the argument and wriggled free.

But the latest turn of events must be an embarrassment even for him. Fahie spent several million dollars of public money, including for the services of Sir Geoffrey, to defend his administration - and we now know beyond any reasonable doubt that the BVI government is hopelessly corrupt. It does not speak well of Cox’s moral judgement - though no-one can deny his financial acumen!

Colonialism

After the outgoing BVI governor, Gus Jaspert, made allegations of corruption at the highest levels of the BVI government in January last year, the British authorities had been conducting an inquiry led by retired judge Sir Gary Hickinbottom. When the Americans arrested Fahie and Maynard, the UK felt compelled to hastily publish the long-delayed report.

Hickinbottom found “appalling” failures in the BVI’s governance “almost everywhere” and a “high likelihood” that serious corruption had occurred. “Unless the most urgent and drastic steps are taken”, he said, “the current unhappy situation … will go on indefinitely”, citing multiple examples of dubious government contracts being awarded without scrutiny. Therefore his central recommendation, “made with a heavy heart”, was to partially suspend the constitution and impose direct rule from London for up to two years. Amanda Milling, the minister responsible for overseas territories, was immediately dispatched to the BVI to speak to the governor and “key stakeholders”. Liz Truss - foreign secretary and still a hot favourite to replace Boris Johnson as prime minister - said she was “appalled” by the allegations and Fahie’s “shocking” arrest, promising that the British government will very shortly “announce a clear path forward” - possibly before the weekend.

Unsurprisingly, imposing direct rule could prove to be very controversial in the Caribbean, especially when you bear in mind that Barbados last year scrapped the British monarch as head of state and some neighbours are considering following suit. Natalio Wheatley, now the BVI’s acting premier, has said direct rule from offices in London was “unacceptable”, and would “undermine all the progress that our people have made over generations”. Wheatley went on to say in a Facebook broadcast that “we have the strong belief that the people of the Virgin Islands are capable of working collaboratively with the United Kingdom to implement agreed recommendations” of the inquiry report - adding that the BVI administration is “preparing proposals towards this end”.

Wheatley’s words are conciliatory, but we could possibly be on course for a confrontation with the UK government. There has been a small demonstration of around 200 against the plans for direct rule outside Government House in Tortola, the office residence of the governor. Was this a real demonstration or a protest paid for by those who want to carry on in the tradition of Fahie? Only the hopelessly naive would take the chanted slogans such as “No to British rule” and “No going back to chains” on face value. One (unamed) speaker told the little crowd that the UK government wants “to take our rights away and deny us the opportunity of having a democratically elected government” - condemning the “colonialist mindset” behind the inquiry’s recommendations.

But what was most interesting about the Hickinbottom inquiry was not that he said the BVI is thoroughly corrupt - which is merely stating the obvious - but rather that, while he went into great detail on numerous smaller allegations of general BVI government malpractice, he did not deal with the more serious claims of top-level collusion with drug traffickers, even though the Americans knew all about it. It is impossible to believe, in that case, that the British government did not know about it too.

The UK and US, along with Canada, New Zealand and Australia, constitute the Five Eyes intelligence alliance. The US might spy on Germany, but the five countries are not meant to spy on each other and must share information. How much they share is difficult to say, but you would have thought at the very least that the US would disclose the information it has about the prime minister of a British territory - not forgetting the not insignificant fact that he was about to be arrested for drugs trafficking and money-laundering.

For communists, the entire BVI story says less about the corruption of the individual, Andrew Fahie, and more about the systematic corruption of global finance itself - with Britain acting as number two to the US top dog. The entire capitalist system is thoroughly corrupt from top to bottom. In Britain recently we have had the seizure of the assets of various oligarchs, but the whole of the City of London runs precisely on the basis of such corruption. There is, of course, Russian money, but there is also Ukrainian money, Saudi money and so on.

This is not something you hear from the likes of Liz Truss and Boris Johnson ... What a surprise!

eddie.ford@weeklyworker.co.uk


  1. en.wikipedia.org/wiki/Panama_Papers.↩︎