A VIEW FROM THE BAHAMAS
By Larry Smith
Tuesday, July 27, 2010.
For those who were shocked at the recent Budget in the Bahamas, be thankful for what we have. The Turks & Caicos Islands, which share the same archipelago with us, are politically and financially destitute, and no-one knows when or how they will be able to climb out of the hole.
The British suspended the TCI's constitution last year to clean up systemic corruption and political malfeasance. And now matters have worsened to the point where the TCI cannot meet its basic financial commitments, even though civil service pay was cut by 10 per cent in April.
Under the premiership of Michael Misick, public finances in the TCI were an absolute mess. Spending was consistently over budget and without prior legal authorisation, according to the 2008-2009 commission of inquiry. Public money was being used to support extravagant ministerial lifestyles, Crown land was being sold off to generate revenue, and public debt was skyrocketing.
Now the British are being forced to bail out TCI. "Without immediate UK support, TCI would fall further into economic crisis," Development Minister Andrew Mitchell said recently in London. "Our aim is to restore and firmly embed the principles of sound financial management, sustainable development and good governance."
London is arranging a package of financial support from commercial lenders, which is conditional on the TCI government strengthening its ability to manage public finances, and balancing its budget within the next three years. In the meantime, a $15 million emergency loan has been advanced to pay police, medics and teachers.
Fiscal irresponsibility was part of a pattern of bad behaviour in TCI, which the inquiry attributed to the "extravagant and ill-judged commitments of those in public office." It identified "systemic corruption" in the TCI government, legislature and civil service - mainly the acceptance of bribes from overseas investors during the economic bubble that preceded the current recession.
The inquiry report called for direct rule from London while constitutional and legal reforms were enacted over a two-year period. A veteran fraud investigator was brought in from Britain to lead a massive criminal investigation at a cost of some $7 million a year. Elections have been tentatively set for July 2011.
The first legal action in the British clean-up campaign was filed in May. The writ alleges that the foreign developers of Salt Cay bribed former premier Michael Misick and former Cabinet minister McAllister Hanchell for hundreds of acres of prime land. Eight others are also under investigation for corruption.
Misick, who resigned as premier in March 2009, recently claimed he was unafraid of jail, adding "they can never take away my burning desire to live in a free Turks and Caicos Islands.” He also said would try to regain the leadership of the Progressive National Party and is seeking to present himself as a nationalist hero.
"What am I going to say to my kids when they ask 'where were you when the British were taking our country away?'” Misick asked in a recent speech. "If I have to be the sacrificial lamb to get the movement started, then so be it."
Misick has no children with his wife Lisa Reye, the American model who filed for divorce in 2008 after only two years as first lady. But he does have children with another woman, one of whom was born during the first year of his marriage to Lisa Reye.
The inquiry report said Misick's behaviour as premier "would have caused raised eyebrows in a pirate sloop." And over the past year, the global recession combined with public sector retrenchment and wide-ranging criminal investigations have led to a collapse of the TCI economy.
Topping the fallout was the closure of TCI Bank, which began operations in the early years of the Misick regime. Millions of dollars in government funds had been invested in or deposited with this institution, which was touted as the islands' first indigenous bank. It was forced to close in April after mounting loan defaults and significant withdrawals left it unable to operate normally.
Anthony Kikivarakis and Mark Munnings, of Deloitte & Touche Bahamas, were appointed to evaluate the bank’s assets and consider buyout offers. The TCI Supreme Court has urged the liquidators to save the bank if possible, but that will require a large cash injection.
"It is plainly obvious that TCI Bank has been affected by the decisions of the PNP," said Peoples Democratic Movement leader Doug Parnell. "And the domino effect of the suffering in the TCI has only increased because of the financial devastation perpetrated by the PNP government under a cloud of deception, maladministration and failures."
Like TCI Bank, TCI New Media was introduced with much fanfare by Misick in 2008 as a state broadcaster, but went off the air last fall after failing to pay its bills. Former ZNS presenter and GEMS radio station principal Debbie Bartlett advised Misick on the set up of TCI New Media, which operated largely as a propaganda agency for the PNP. The Government Information Service, which was part of TCI New Media, was also closed.
in 2008 Misick cut a $124 million deal with a Canadian company to build two new hospitals with a total of 60 beds - more than $2 million per bed. Public healthcare in the TCI now costs $5 million a month, with National Insurance contributions covering less than a third of that amount. The government has to find another $3.5million a month for construction repayments and overheads.
Although the free-wheeling days of the Misick government are over for now, questions remain about the way forward for the TCI. Who should be allowed to vote, how election campaigns are financed, and the role of the governor are among the issues being hotly debated in the run-up to a new constitution - which will be the TCI's sixth since 1959.
Perhaps most controversial is the proposal to extend the franchise to non-citizens. Currently, of the TCI's 36,000 residents, only 12,000 locally descended Belongers can vote. Some observers believe the British will scrap the two-party system and/or radically change the way in which the Turks and Caicos Islands will be governed in the future.
One commentator summed it up like this: "Every primary school kid knows of the financial dire straits we are currently in and what brought us to this point. But no political party up to this day has even suggested solutions to possibly assist the country in relieving the huge debt.
"The Brits have insisted that they would prefer enacting legislation for an extended franchise. With these facts in mind we should endeavour to come to a compromise with a system that is favorable to us, the Brits, developers and residents alike."
Larry Smith writes a column called "Tough Call" every Wednesday for the Bahamas Nassau Tribune. A former reporter and editor, he now operates a communications agency in Nassau (www.bahamasmedia.com). He also blogs at Bahamapundit.