By Mellica McPherson
“This decision does not speak well for the UK partnership,” Premier and Minister for Finance, Dr. the Hon. D. Orlando Smith admitted to members of the media on Wednesday after the United Kingdom Parliament accepted the amendments for an Order in Council to impose public registers of beneficial ownership on the BVI and other Overseas Territories. A register that is expected to take effect in 2020.
As he fielded questions from the media that echoed the concerns and fears of residents of the Territory Premier Smith was optimistic that the BVI’s main economic pillar can weather this storm.
Financial services, which have been described as the bread and butter of the BVI economy for over three decades are now under serious threats as mounting concerns for the BVI’s future appear to be on the mind of not only legislators but members of the public from last Thursday when Premier Smith announced that the devastating amendment was in the pipeline. In fact, even divine intervention was sought as Bishop John Cline called for prayers on the matter.
On 1 May attention focused on the United Kingdom as the Parliamentary Bill, the Sanctions and Anti-Money Laundering Bill headed to the House of Commons, and persons from all walks of life discussed the ramification of the amendment which will publicly reveal the beneficial owners of BVI-incorporated companies.
The crux of the situation in the House of Commons was that the Ministers of the UK government yielded to the majority view and did not oppose an amendment to the sanctions and anti-money laundering that was piloted by the Labour MP Margaret Hodge and the Conservative MP Andrew Mitchell. According to the Guardian newspaper the Theresa May Government’s hand was tied after the Speaker “rejected a string of government compromise amendments which would have watered down the disclosure commitment, because they were tabled so late.”
This “Hodge/Mitchell amendment requires the 14 overseas territories, including the financial centres of the British Virgin Islands and the Cayman Islands, to introduce public ownership registers by the end of 2020 or face having them imposed by the UK government.”
The BVI fought vehemently to avoid the success of such an amendment. Even before the UK parliamentarians met Executive Director of BVI Finance, Lorna Smith OBE, the BVI first lady was interviewed on the BBC flagship radio programme, Today, where she was able to speak valiantly to Dame Margaret Hodge MP who piloted the amendment.
In her passionate appeal Mrs. Smith outlined the steps the Territory has made to remain compliant and pointed out that the imperial legislation was a “constitutional infringement” that subverted the BVI’s right to self-determination. Mrs. Smith said the step taken by the United Kingdom parliamentarians “is simply not right,” and “smacks of colonialism.”
It was reported that Sir Alan Duncan, the Foreign Office Minister in his address to Members of Parliament announced that ministers were reluctant to dictate to the overseas territories, but yielded to the majority and did not vote against additional clause six (6): “We have listened to the strength of feeling in this house on this issue and accept that it is without a doubt the majority view of this house that the overseas territories should have public registers,” he said.
The territories must have public registers by the end of 2020. Cayman Islands Premier Alden McLaughlin, said the territory was keeping all options on the table and emphasized that the May government decision was “reminiscent of the worst injustices of a bygone era of colonial despotism”.
A call for Independence?
The success of the amendment sent the BVI government into action on Tuesday with Premier Smith adjourning the House of Assembly sitting that was scheduled to continue and instead called an urgent meeting with legislators.
Later in the day the BVI Leader issued a statement assuring that all is not lost: “Certainly, these are difficult times. But, I firmly believe that working together and with strong and collective commitment, our financial services industry will develop and adapt successfully as it has done in the past. Over the past few years, we have prepared the financial services sector for changes such as this. In the coming weeks, we will be taking action on those plans,” he announced.
In his speech of assurance Hon. Smith said: “Now is also an opportune time for us to embrace new businesses to support not only our recovery and development, but a futuristic economy with modern and innovative ideas and technology. Our current assessment is that any potential changes are at least two years away but we will not now rest on our laurels. My Government will remain focused on maintaining the economic viability of these islands and on rebuilding our community. We recognise the key role of our private sector partners that support the financial services sector and appreciate their continued commitment to this Territory.”
On Wednesday when he sat with the press the Premier disclosed that he has since spoken with MP Tariq Mahmood Ahmad, the Minister of State for the Foreign and Commonwealth Office who explained that the UK government did all that it could but did not succeed in its attempts against the amendment.
The Premier also mentioned that His Excellency Governor Augustus Jaspert also fought against the amendment. Nonetheless, the Premier skirted the question about whether a call should be made for independence and stated instead that it is the right of any country to seek self-determination.
However, the BVI Leader was frank in his view that the move by the UK infringed on the Territory’s constitution. He further announced that the advice of a constitutional lawyer will be sought. Additionally, Hon. Smith mentioned that the Territory’s constitution should be amended.
The BVI Leader also stated that he is surprised that the BVI and its sister Caribbean Overseas Territories were targeted, while the crown dependencies were exempted. It is obvious that the affected territories must unite in a coalition and devise a strong strategy to reverse Tuesday’s disastrous legislation.
In a press release issued on Tuesday night Leader of the Opposition Hon. Andrew Fahie announced that God has a plan in store for the BVI. “My people of the Virgin Islands, now that the UK Parliament has voted to impose public beneficial ownership registers upon the BVI and other Overseas Territories, the onus is now on us in the BVI to take full assessment of the repercussions and, most importantly, to determine what opportunities this vote brings.”
The Opposition Leader also proposed that a meeting be held with the financial services industry to gain insight into the concerns voiced by their customers. Hon. Fahie also announced that the establishment of additional economic pillars is now critical. “No longer can we afford to generalize…Despite the current actions by the UK, we must realize that, although challenging times are ahead, once we work together and stay together, keep praying and keep trusting, then the best days of the BVI are not our yesterdays but rather our tomorrows,” Hon. Fahie added.
It was Minister for Education and Culture Hon. Myron Walwyn who announced during his budget debate contribution on 27 April that the Territory should enter into preparation mode as a means of safeguarding its economic well-being.
“We are dealing with a matter that we cannot treat in isolation of the budget. It has to be viewed with what has happened here. At the time you are going through the budgetary exercise in Standing Finance this matter wasn’t there …It behooves us as a responsible House of Assembly, as responsible elected officials to go back and look at this budget a second time; because you cannot pass it as if nothing has happened,” Hon. Walwyn explained.
Disrespect for Constitutions will fail miserably
Following the news that the amendment was successful Bermuda’s Premier and Minister of Finance David Burt announced that the action taken in the UK Parliament on Tuesday signaled a significant backwards step in the relations between the United Kingdom and the Overseas Territories.
In fact the Bermuda Premier announced that his government is prepared to take steps to ensure its constitution is valued. “In the case of Bermuda, it is ironic that in the very year we celebrate the 50th Anniversary of our Constitution, Bermuda is confronted with this regrettable ‘about face’ which fails to acknowledge this long history of full internal self-government…The Government of Bermuda has a strong constitutional position and the people of Bermuda can rest assured that we will take the necessary steps to ensure our Constitution is respected.”
Mr. Burt also noted that the UK Crown dependencies such as Isle of Man and others are exempted while mainly the Caribbean Territories will be subjected to the amendment. “This attempt to legislate for Bermuda from London is a return to base colonialism and is an action that has no place in 2018. It is especially telling that the Crown Dependencies are not included in this amendment which is restricted to the Caribbean OTs and Bermuda,” he pointed out.
CARICOM Echoes Concern & OECS Defends BVI
The Caribbean Community (CARICOM) announced on 28 April that CARICOM Associate Members such as the BVI are an integral part of the Caribbean Community family whose circumstances, self-governance and democratic rights should not be disregarded.
“In that context, we are deeply concerned about the potential impact on their economies by any impositions that would go against the spirit of democracy and diminish their standard of living. A number of our Associate Members have for some time run successful financial centres that meet the high standards of regulation set by international standard setting bodies such as the Financial Action Task Force (FATF) and OECD Global Forum,” the regional body stated.
In a press release issued on Monday 30 April the Organisation of Eastern Caribbean States (OECS) included a statement declaring its opposition to certain provisions of the Sanctions and Anti-Money Laundering Bill. In fact the OECS mentioned that the passage of these provisions effectively disenfranchises the BVI people and will undermine the constitutional relationship between the BVI and the UK.
The OECS noted that contentious provisions impose a requirement for public registers of beneficial ownership on the financial services of the Overseas Territories; the OECS made reference to the point that the requirement does not apply to UK Crown Dependencies. Therefore, the regional body said that the provision appears to specifically target the Caribbean at a time when Member States like the BVI are still reeling from the devastation caused by hurricanes Irma and Maria.
In further championing the BVI’s cause the OECS pointed out that “The BVI not only meets (FATF) requirements but has enhanced its system through the introduction of an innovative digital platform by which such information is immediately and directly accessible to BVI competent authorities. Further, BVI has firmly stated that if such a requirement is adopted as an international standard then it will comply. In contrast the UK Register while public, is actually not verifiable, and thereby arguably does not technically meet FATF requirements,” the OECS said.
The BVI public reaction to these UK impositions is one of dismay and great concern for the future. Some call into question the BVI rapport with a mother country that unilaterally passes legislation and plan to impose it at any cost on the territories while exempting the Channel Islands and the Isle of Man. This turn of events will undoubtedly have a strong influence on the outcome of the next general elections due in 2019; pundits feel strongly that the NDP government will have to deliver tangible solutions and viable alternatives to sustain its popularity. For sure, the way Executive Director of BVI Finance, Lorna Smith conducted herself, responded and interacted during the BBC radio program was impressive, appropriate and highly skilled and generated very positive vibes in the BVI. “We would also like to add our thanks to her for her great effort,” editor of The Island Sun newspaper said.