- How do you assess the quality of good governance, public financial management and economic planning in your Territory/the Territories?
- What are the priorities for improvement?
- How can the UK best work with your Territory/the Territories to strengthen these areas?
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The public consultation is now closed.
All the responses received will be studied and will help inform the Government’s strategy for the Overseas Territories as we prepare for the publication of a new White Paper in 2012, which will set out in detail this Government’s approach to the Overseas Territories.
Discussion areas
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I feel that we have come a long way in the past few years but that there is also still a long and difficult road ahead of us. The priorities need to be linked with access to information, openness, and transparancy, not only at a local level but in terms of information exchange between the Territories and the UK. Partnerships are built on trust, trust is built through being open with one another…
A couple of years ago we had a serious case of corruption in our government. This was rubber stamped by the governor at the time also by F.C.O. Would things be different now , or is F.C.O still managed by the same people ?
Re #1: We still have some work to do in this area, primarily because the system of accountability does not work effectively or efficiently within government. For example, financial reporting is often in arrears, and there appears to be a perennial resistance to the role of the Auditor General and his department. For these reasons the public has low confidence in our government’s ability to manage our money wisely. On the positive side, the recent legislation that allows the public to have access to government decisions through the Freedom of Information is good (after the fact).
RE #2: Priorities for improvement should include “de-politicising” the Auditor General’s office and letting him do his job–the Governor should correct the AG if and when he/she politicises the position, just as the elected government should leave him/her to fulfil his job description. Less rancour is better for us all.
RE #3–The last suggestion above would apply here. I would also offer that some more direct guidance be offered as part of parliamentary/governance training through the CPA in areas of ethics; this rather than after-the-fact reactions to “bad governance” practices. Effective paternalism, if paternalism at all.
The Cayman Islands need to stop printing work permits to generate revenue and put some real financial projections in place. Projections that will include manufacturing of goods and services, marketing, a Theme water park that will draw tourists from all over the world, build factories, manufacturing various items, products and go into exporting to other countries. Set aside Farming and produce food for exporting and local consumption.
the government is not encouraging economic growth in the right direction. Currently the interest is selling every square foot of the island to foreigner developers who are tax dodgers and plan to own the entire island to become Mayor at some point. This has to stop. Investment in education and research other types of investments need to be encouraged and stop selling the entire island. Politicians need to not be allowed to engage in sale of real estate to developers who do business with government it is corrupt and needs regulation. Cayman has no transparency.
The 21 days standing orders for bills to be passed need to be upheld by the premier and the governor should not sign into law anything that did not comply with the constitution which requires 21 days for all members, including opposition to review laws to be passed. The governor has failed the people on this recently. Do not let it be repeated.
The UK needs to do a survey and a review on how much crownland or unclaimed land there is in the Cayman Islands and allow Caymanians to apply to purchase it or lease it for up to 100 years if they can not afford to purchase it.
Todate our government is swapping crown land and the people’s public roads giving them away to rich developers and upsetting and saddening and stressing out the should of the people who work tirelessly to get government to stop the corruption.
Caymanian families born in the Cayman Islands for generations should be able to make use of Government land whether build on it or farm on it.Too many people are homeless and have no where to go and the government is helping rich developers while ignoring and neglecting poor people. The UK needs to intervene and see to the needs of Caymanians.
Caymanians that have NO land should be able to apply for pieces of land and be granted land without charge., It is time our people get rest from all the injustices and oppression coming from the powers that be.
MLA’s should not be allowed to double dip in the sense that they are elected to the house and are drawing a Salary plus a Pension check. This is serious and it is a serious strain on our people and on the public purse. MLA’s should not be receiving a pension while drawing a hefty salary. It is unfounded they make more than a US Senator and it is a shame while the people struggle to put food on the table and can’t even get a job in their own country. This has to stop, people get a retirement or pension check when they retire not while they are still employed. The UK must step in and Stop the double dipping it is bankrupting this country and we can not borrow millions annually just to give it to double dippers.
Ethics, good governance, proper financial management and economic planning are all things that the Cayman Islands have not seen over the past two political terms. Politicians have become more concerned with being re-elected than the performance or the country. They have forgotten that a country must be run like a business and in business the aim is to see a profit.
We have taken on projects and they were not properly budgeted for; therefore have been out on hold, but yet we still invest in larger projects in hopes that there will be a turn around.
Our government is laced with immaturity and this needs to stop, as a public figure you will be exposed to scrutiny it comes with the position; the people are not required to agree with your decisions; that is a right they have.
The lack of transparency is also an issue that we face, although the Freedom of Information Office is doing a good job the government still passes plans and begins projects without proper public discussion. Items that are to be brought before the Legislative Assembly are now being done on an ad-hoc basis with the majority party having their proposals passed with ease.
As I have stated before it is time for term limits I hope that this white paper brings about the changes needed for Cayman to begin to step in the right direction.
The British government responsible for trade and commerce can work with the OT’s and dependencies on different trading policies of services and goods.
Also, proper and enhance legislation will be needed to be drafted by the OT’s and the UK to ensure transparency in good financial management in that sector and also the local governments budgets and other operations.
Transparency is a key issue not just within government but in the private sector.Asking for basic information on a company, such as the names of the directors is not only impossible but is an offense under the law. Memorandum and Articles of Association are also unavailable.
Our Company Law needs to be shredded, after all it is based on the UK 1868 Act. Directors Disquailification laws needs to be introduced. I could go on for ever.
I don’t know if I am being naive but I think we have traditionally done well in this area and continue to do so. Of course I still wonder about the logic regarding the types of vehicles ministers drive and the frequency with which they are changed, but recognising that there are egos involved…
ASEED (Japan), Biofuelwatch (UK), CAPPA (Indonesia), Ecologistas en Acción (Spain), Indigenous Peoples’ Links – PIPLinks (UK), Japan Center for Sustainable Environment and Society (Japan), Rettet den Regenwald (Germany), Salva la Selva (Spain), Sawit Watch (Indonesia), Ulu Foundation (USA), Urgewald (Germany), WALHI (Indonesia), World Rainforest Movement (Uruguay),Yayasan SETARA Jambi (Indonesia)
December 29, 2011
Concerns about Due Diligence in FCO-linked Secrecy Jurisdictions regarding the Potential Processing of the Proceeds of Criminal Activity in the Natural Resource Sector
We, the undersigned, are concerned about the potential use of U.K. Foreign and Commonwealth Office-linked secrecy jurisdictions such as the British Virgin Islands, the Cayman Islands, and others to process the proceeds of criminal activity in the natural resource sector.
We are heartened by the statement in the May 2011 DFID report titled “Summary of DFID’s work in the British Overseas Territories 2011-2015” that the UK is responsible for the “good governance” of its Overseas Territories.
We urge the FCO and the Overseas Territories to ensure, in the context of good governance, that trust agents, governmental oversight and investigative bodies and financial institutions domiciled in the Overseas Territories are conducting robust due diligence to ensure, amongst companies active in the natural resource sectors such as logging, paper and pulp, palm oil, mining, oil and gas, that there is no use of Overseas Territories to facilitate the proceeds of criminal activity associated with these sectors, and that proper due diligence is conducted to identify the involvement of any Politically Exposed Persons, and the source of their funds, in any such companies.
Please see the enclosed Memorandum which provides an example of concerns associated with illegal logging in Indonesia. Similar concerns pertain to other natural resource sectors in other countries.
Sincerely,
Shingo Katayama
ASEED, Japan
Almuth Ernsting
Biofuelwatch, UK
Rivani Noor
CAPPA, Indonesia
Tom Kucharz
Ecologistas en Acción, Spain
Yuki Tanabe
Japan Center for Sustainable Environment and Society, Japan
Andy Whitmore
Indigenous Peoples’ Links – PIPLinks, UK
Klaus Schenck
Rettet den Regenwald, Germany
Guadalupe Rodríguez
Salva la Selva, Spain
Abetnego Tarigan
Sawit Watch, Indonesia
Stephanie Fried
`Ulu Foundation, USA
Knud Vocking and Korinna Horta
Urgewald, Germany
Deddy Ratih
WALHI, Indonesia
Teresa Perez
World Rainforest Movement, Uruguay
Rukaiyah Rofiq
Yayasan SETARA Jambi, Indonesia
Contacts: Stephanie Fried, `Ulu Foundation, stephf99@gmail.com; Rivani Noor, CAPPA, rivani@cappa.or.id
Enclosed: Memorandum: Use of Secrecy Jurisdictions, Indonesian Illegal Logging, Anti-Money Laundering Statutes, Involvement of Politically Exposed Persons
Memorandum
Use of Secrecy Jurisdictions, Indonesian Illegal Logging, Anti-Money Laundering Statutes, Involvement of Politically Exposed Persons
Indonesia has the third largest tropical forest area on earth, yet is the largest emitter of CO2 from deforestation and “forest land use change.” In 2009, Indonesian President Yudhoyono announced that Indonesia would cut emissions by 26% by 2020 compared to the “business as usual” level and, potentially, if sufficient international support were available, by up to 41%. This has served to place Indonesia at the heart of international climate finance efforts, including those of the World Bank, designed to provide support for a reduction in deforestation.
Indonesia, however, is one of the countries which suffers greatly from substantial revenue losses from illegal logging. In recent years (most recently in 2010) the Indonesian government has taken important steps taken to attempt to curb rampant illegal logging, including the passing of legislation defining forest crimes and environmental crimes as predicate offenses triggering the implementation of Anti-Money Laundering statutes.
As a result of the global focus on climate change, the annual climate meetings of heads of state (most recently in Durban this month), the recent $1 billion Letter of Intent signed between Indonesia and the Government of Norway to reduce deforestation in Indonesia, there is a tremendous amount of international governmental, non-governmental and media attention to tracking the proceeds of illegal Indonesian logging.
Government agencies involved in climate change finance, international financial institutions as well as global networks of environmental and indigenous rights activists are interested in the financial aspects of Indonesian forest crime, including the involvement of “politically exposed persons” in illegal logging operations and the use of “offshore jurisdictions” by Indonesian companies linked to the forestry industry.
Preliminary research indicates that there are a quite number of companies domiciled in secrecy jurisdictions which are part of or linked to the major Indonesian timber sector operations. Yet, as of early 2011, it appeared that secrecy jurisdiction officials and trust companies may not be aware of the Indonesian legislation making illegal logging a predicate offense for money laundering, associated due diligence methodologies and requirements, the rampant extent of illegal logging in Indonesia, or the growing international governmental, public financial institution and media spotlight on tracking the proceeds of illegal logging in the context of global climate change negotiations.
Two of the most significant drivers of deforestation in Indonesia are the paper and pulp sector and the palm oil sector which often involve the logging of timber which is not legally sourced and which may be located on lands occupied and managed by indigenous and other forest-dwelling communities, leading to high rates of social conflict.
The World Bank has found that “forest loss and forest crime dominate the [Indonesian forestry] sector.” The Bank found that “Indonesia is losing forests at a remarkable rate, one of the fastest in the world and concluded that “industrial timber demand exceeds sustainable supply.”
According to a 2009 analysis based on Indonesian government statistics,
Indonesia’s official wood supply between 2003 and 2006 was roughly 20 million cubic meters per year, while the amount of wood consumed by Indonesia’s forest industry (pulp and paper, plywood, veneer, and other wood-based products), was more than 50 million cubic meters, outstripping legal supply by 150 percent, some 30 million cubic meters per year,[18] as shown in Figure 1 below. The shortfall, represented by the shaded area, is the minimum amount of wood that came from illegal logging or smuggled imports. (See Figure 1 below)
Figure 1: Reported volume of wood consumed by Indonesia’s forestry industry, compared with legal supply (including wood imports), 2003-2006 (HRW 2009)
[Figure 1]
Given the prevalence of illegally sourced timber and the definition of illegal logging (forest crime) as a predicate offense for money laundering, it would appear that financial institutions and company agents would need to carry out substantially enhanced due diligence to ensure that companies engaged in the Indonesian forestry sector are not linked to the proceeds of illegal logging, specifically in Indonesia.
In the BVI, as of early 2011, it appeared that neither government officials nor trust company representatives seemed to be informed about:
(1) the fact that the government of Indonesia has declared illegal logging as a predicate offense for money laundering;
(2) the extraordinary level of forest crime and illegal logging associated with Indonesian paper, pulp, palm oil and timber companies;
(3) the significant association of politically exposed persons with Indonesian logging operations;
(4) the need for specific enhanced due diligence practices necessary to determine whether companies are involved in illegal logging and thus trigger AML statutes;
(5) methods for conducting such enhanced due diligence in a reliable fashion.
This is likely to be the case in other secrecy jurisdictions, as well. It would seem that it would be important for there to be more information available to enable secrecy jurisdictions to be aware of these issues, including potential PEP involvement and potential AML statute triggers in order to ensure that proper, legally mandated due diligence is carried out and that FCO-linked jurisdictions are not utilized to facilitate the laundering of the proceeds of criminal activity in the natural resource sector.
The Indonesian government’s definition of forest crime as a predicate offense for AML statutes is important, unusual, and is not likely to be generally known by authorities in other jurisdictions.
Our understanding is that, in many cases, laws in secrecy jurisdictions makes it an offense to assist another to retain the benefit of criminal conduct or to acquire, possess, or use the proceeds of criminal conduct. We believe that the fact that illegal logging has specifically been labeled a predicate offense for money laundering by the Indonesian government means that trust agents dealing with Indonesian companies involved in logging, paper, pulp and palm oil would have to be able to document that they have conducted heightened due diligence to prove, essentially, that the companies can show via public, documented, and internationally recognized third party chain of custody tracking that the timber they utilize or log has come from fully legal documented sources. It is unclear that, at present, this is happening.
The British Virgin Islands, for example, has enacted legislation appearing to ban the aiding of companies utilizing the proceeds of criminal activity. The BVI, however, appears to be used by Indonesian forestry conglomerates as a domicile for what appear to be shell companies. In early 2011, it appeared that BVI officials were unaware of the massive scale of illegal logging in Indonesia and the Indonesian Anti-Money Laundering statutes making illegal logging a predicate offense. No special due diligence steps appear to have been taken regarding BVI registered shell companies set up by Indonesian forestry conglomerates.
It would appear, therefore, to be quite useful to ensure that those at the highest level of secrecy jurisdiction government (financial, enforcement, regulatory etc. agencies), as well as national and international oversight and enforcement bodies are fully informed about the extent of potential connections between illegal logging, PEP involvement, AML issues as well as the due diligence needs associated with Indonesian forestry sector companies. There is reason to believe that a few simple and inexpensive due diligence measures could help not only ensure avoidance of the use of secrecy jurisdictions to utilize or process the proceeds of criminal conduct.