Turks and Caicos Islands

Tuesday 11th December 2012 Written Statements

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)]

My right hon. Friend, the Minister of State for International Development, and I wish to update the House about developments in the Turks and Caicos Islands (TCI), a British overseas territory.

On 9 November 2012 elections were held in TCI that brought back a democratic Government to the territory. There was an impressive 84% turnout of voters. The Progressive National Party (PNP) won eight seats and the People’s Democratic Movement (PDM) seven seats. Dr Rufus Ewing, the leader of the PNP, was sworn in as Premier on 14 November.

The Commonwealth Parliamentary Association organised an election observer mission with participation from Gibraltar, countries from the Caribbean region and the hon. Member for Dunfermline and West Fife (Thomas Docherty) and my hon. Friend the Member for Rochford and Southend East (James Duddridge). The mission’s full report will be issued shortly, but I note their initial statement that

“the voters had a genuine choice from among the candidates. The process was transparent and accountable and the results reflect the will of the people”.

This election opens a new chapter for TCI. In August 2009, the ministerial Government and the House of Assembly were suspended after Sir Robin Auld’s Commission of Inquiry identified a high probability of systemic corruption in Government and the legislature and among public officers in TCI. Since then there has been much progress. In a written ministerial statement on 9 December 2010, Official Report, columns 20-41WS, UK Ministers agreed milestones for progress towards elections. Over the last three years an interim Administration led by the Governor and supported by the UK Government has implemented a wide-ranging reform programme to meet the milestones, including putting the public finances on the road to recovery, establishing a robust framework for good governance, and strengthening the public service. The Foreign and Commonwealth Office and the Department for International Development Ministers last updated the House on progress against the milestones on 12 June 2012, Official Report, columns 20-23WS.

I have just returned from a visit to the Turks and Caicos Islands and in this statement today, I wish to inform the House on the progress made by the interim Government under each milestone in the run-up to the elections;

Implementation of a new TCI Constitution Order, in support of recommendations of the Commission of Inquiry, which underpins good governance and sound public financial management.

The new constitution was brought into force by the Governor on 15 October, and elections held on 9 November within the prescribed 30-day limit. Preparations for the elections were made in line with the revised elections ordinance. A new register of electors was compiled on the basis of a registration exercise for all islanders. An Electoral Boundaries Commission defined 10 new electoral districts with broadly similar numbers of electors. Practical preparations were made for elections at 17 polling stations across TCI’s main islands. The interim Administration adopted a statement of governance principles on 15 June. Under the new constitution, all organs of Government in the islands have a duty to give effect to the statement of governance principles established under the constitution and the Governor has certain powers to ensure compliance with the principles.

An equality ordinance became law in October to clarify the rights of all members of the community, in line with the non-discrimination provisions in the new constitution.

Introduction of a number of new ordinances, including those making provision for: i) the electoral process and regulation of political parties: ii) integrity and accountability in public life: Hi) public financial management

The political activities ordinance was introduced in August to define acceptable political financing and oversight. Work in this area was assisted by a visit in July by UK political party members, organised by the Westminster Foundation for Democracy, led by my hon. Friend the Member for Brigg and Goole (Andrew Percy).

The chief financial officer (CFO) ordinance was introduced in June 2012 to define this role within the restructured TCI Government, and as provided for in the 2012 Constitution Order and under the arrangements for the $260 million UK loan guarantee.

Establishment of robust and transparent public financial management processes to provide a stable economic environment and a strengthening of the TCI Government’s capacity to manage its public finances

Financial management regulations for the public sector were amended in line with the public financial management (PFM) ordinance and international good practice. A public financial management framework document was agreed that sets out the key principles of good financial management and the debt threshold targets agreed by the Secretary of State. Key requirements are that net debt is less than 110% of revenue by end of 2015-16 and less than 80% of revenue by the end of 2018-19, and that debt service is less than 10% of annual operating revenue and liquid assets at least 25% of annual operating revenue.

The public procurement ordinance was introduced in October creating a central public contracts unit, and defining the framework for future tenders and contracts.

Reforms to the Audit Department in the TCI Government split it into two distinct bodies: the National Audit Office, to operate outside ministerial control; and the Internal Audit Department to focus on internal Government controls, risk management and governance processes.

Implementation of budget measures to put the TCI Government on track to achieve a fiscal surplus in the financial year ending March 2013

The TCI Government are working towards achieving a budget surplus for the full year at the end of March 2013. The interim Government made good progress in stabilising the public finances. A recent mid-year forecast indicated that the expected surplus remains in line with the budget.

Implementation of a transparent and fair process for acquisition of Turks and Caicos Islander status

A revised immigration ordinance and immigration regulations were introduced in July. There is now no discretionary provision in law for the granting of Belonger status. The newly elected Government will need to bring forward an ordinance defining Turks and Caicos islander status in line with the new constitution.

Significant progress with the civil and criminal process recommended by the Commission of Inquiry, and implementation of measures to enable these to continue unimpeded

Thirteen people, including four former Ministers, have been charged with corruption and other serious criminal offences. These cases are now before the courts. The plea and directions hearing has been delayed at the request of the defence and is now expected to be held in April 2013. International arrest warrants and Interpol red notices were issued in respect of the former Premier Michael Misick and the developer Cem Kinay, and Michael Misick was subsequently arrested in Rio de Janeiro in Brazil on 7 December. His extradition to the Turks and Caicos Islands is being sought. The civil recovery team continued to recover property and redress loses arising from corruption. Some 52 separate recoveries of Crown land totalling 2,447 acres have now been made, and financial settlements totalling US$16 million have been reached.

Implementation of a new Crown land policy

The Crown land ordinance came into force in March 2012. The Lands Commissioner has continued to implement the reforms for land transactions, and assisted with the appointment of a new Lands Registrar.

Substantial progress in the reform of the public service

Progress has continued. The public service has focused on raising the standard of policy development in preparation for transition to an elected Government and providing support to new Ministers. The public service ordinance was introduced in October and defines the roles of Ministers and permanent secretaries, describes new discipline procedures and expects all staff to be subject to measurable performance management. The general orders regulating the work of the public service were updated and a new public service handbook issued to public servants.

Conclusion

A solid foundation has been built for the return to elected Government. Over the last three years an interim Administration, supported by the UK Government, has implemented a wide-ranging reform programme to meet the milestones, including putting the public finances on the road to recovery, establishing a robust framework for good governance, and strengthening the public service. The interim Administration has also modernised the management and delivery of public services, attracted substantial inward investment and restored economic growth. This programme of reforms has been a significant achievement.

The hard work is far from over. The TCI Government benefit from a $260 million UK loan guarantee. We will keep vigilant to help ensure they meet their fiscal objectives and can finance their borrowing independently and on an affordable and sustainable basis from the end of 2015-16 without a UK guarantee.

A robust framework for the management of public finances has been put in place. The constitution requires the new Turks and Caicos Islands Government to formulate and conduct macro-economic and fiscal policy for the sustained long-term prosperity of the people of the islands, and to manage public funds according to established principles of value for money, affordability and regularity and in the interests of long-term financial stability. The constitution provides the Governor with reserve powers to ensure compliance with the principles of good governance. It establishes a number of institutions to protect good governance including an Auditor-General and a National Audit Office.

A framework document has also been put in place that sets out the key principles of good financial management as well as the debt targets agreed by the Secretary of State. Key requirements are that net debt is less than 110% of revenue by the end of 2015-16 and less than 80% of revenue by the end of 2018-19, and that debt service is less than 10% of annual operating revenue and liquid assets at least 25% of annual operating revenue. The incoming Government will need to meet the provisions of the framework document including agreeing with the Secretary of State a fiscal and strategic policy statement (FSPS) which is a medium-term plan that includes revenue and expenditure forecasts for at least the next three financial years. The Turks and Caicos Island Government must seek agreement to the FSPS before proposing a budget.

It is important that the new Government maintain a credible and sustainable fiscal policy, including reducing their net debt levels, so that they can refinance themselves independently by the time the debt guaranteed by the UK Government is due to be repaid in March 2016. UK approval to the budget and fiscal plans will be contingent on TCIG formulating credible policies to meet these key objectives. DFID are providing a chief financial officer whose authority and responsibilities are set out in TCI law and who is expected to ensure that fiscal plans are delivered.

We are confident that the above arrangements will ensure sufficient financial controls over the public finances are maintained, including with the objective that a UK loan guarantee is no longer required after March 2016. Achievement of this objective will depend on many factors including the conduct of the Government of TCI and the performance of the TCI economy. Lenders will expect a record of sound fiscal policy as a necessary pre-requisite for the TCI Government to refinance independently.

In line with the overseas territories White Paper published in June 2012, the UK Government look forward to working with the newly elected TCI Government to promote good governance in order to help them attract new investment, maintain economic growth and so deliver sustained long-term prosperity for the people of the islands.

The UK will continue to support TCI to develop its democracy and in its efforts to build on recent reforms, particularly prudent financial management, economic growth and sustainable prosperity.