The hurricane season may be drawing to a close in the Caribbean but there is a storm brewing in the Turks & Caicos (TCI) likely to hang over the islands for some time.

Arrests and charges are now being brought in the TCI in the Special Investigation and Prosecution Team (SIPT) long running corruption investigation as it enters a new phase.

While the SIPT investigation is headed by London barrister Helen Garlick it has instructed Andrew Mitchell QC as lead prosecutor – as confirmed in a press release on Andrew’s chambers website.

Andrew’s appointment completes a formidable team for what will be a landmark corruption case.

Declaration of interest

To be fair, we should declare an interest at this point. We know Andrew well and have succesfully worked with him on both the same and opposing sides in the past.  He is a leading expert in his field.

Reports and intelligence confirm that the TCI case will be very large.  The Turks & Caicos Weekly News reporting within the last few days that: “It has been unofficially stated that a number of arrests of former officials and leading businesspersons – possibly as many as 20 – may be made within the next few days, with them all being dragged before the court next month.”

Some speculate that in the final reckoning the numbers charged could exceed this figure.  The SIPT investigation has been running for nearly two years and follows a government enquiry and report which identified numerous lines of enquiry.

That a former minister and now a developer have been charged is in line with the SIPT investigation to date which, broadly speaking, appears to have focussed on two groups: local politicians (and those connected with them) and international property developers.

There is reportedly a parallel investigation being conducted by the SIPT into lawyers on the island who were engaged in the relevant property transactions. However, there are no reported arrests in this group so far.

A textbook enforcement?

Given that the prosecution is a landmark case what is the position in relation to those subject to prosecution in what will be a textbook case for English style international corruption cases?

In the first instance it is worth looking at the position of those in the TCI subject to prosecution and in particular the use of restraint orders. In the UK these are a powerful tool in the prosecutor’s toolkit – for some background readers may be interested in this SFO publication on them.

In the TCI?

For those in the TCI the prospect of asset restraint under the TCI’s existing proceeds of crime legislation, (broadly speaking similar to the UK’s Criminal Justice Act legislation which pre dated POCA in the UK) awaits.  This is fairly straightforward to deal with.

International enforcement co-operation for those outside the TCI?

What is the position for a developer (or someone else who is out of the TCI jurisdiction) who has no immediate wish to return to the TCI.

We have first hand experience of this situation.  We were involved in the fight over the international assets of Sir Alan Stanford and his bank wrapped up as they were with the PONZI scheme allegations emanating from the US.

In the UK there is detailed legislation in place to enable a foreign prosecuting authority who has identified an offense giving rise to criminal proceeds to request the UK authorities, in the Stanford case the SFO, to seek to freeze assets within the UK jurisdiction.

The legislation in the UK is the External Requests Order 2005. It is detailed in its provisions but broadly speaking it is as effective as POCA in allowing the UK authorities to freeze alleged criminal proceeds. The aim of course is to re-patriate the assets to the requesting country to await the outcome of criminal proceedings and satisfy any confiscation order made as a result of the trial.

Comprehensive legal provisions exist in many jurisdictions around the world to enable a foreign prosecutor to access alleged proceeds of crime. The US through the DoJ and SEC works closely with the UK authorities and has efficient procedures to freeze alleged criminal proceeds.

The Canadian position is the same.  Indeed, the Stanford case was a good example of the efficiency with which the Canadians are able to give effect to an external request from a foreign prosecutor for the freeze and return of alleged proceeds of crime. The commitment of the Canadian authorities was evidenced as being 100% and the efficiency of the implementation of existing legislation leaves no doubt as to its effectiveness.

Anyone embroiled in the TCI prosecution with a Canadian connection would be wise to factor this in.

The Swiss authorities, known for years to be slow to investigate their banking system and money flows within it, have radically altered their position in recent times. Criminal proceeds in flight through the Swiss banking system are likely to be dealt with swiftly by the Swiss authorities in response to a request from a foreign prosecutor who can establish a case showing criminal proceeds in accounts in Switzerland.

Another real problem for those outside the jurisdiction of the TCI who are implicated in the prosecution is the simple fact that all currency transactions converting to Dollars route through the US and are therefore susceptible to freezing by the DoJ at the request of the TCI prosecutors.

We have first hand experience of all of this from our professional dealings in the Stanford case. Against this backdrop, we believe that it is no co-incidence that Andrew Mitchell was also the lead prosecutor acting on behalf of the DoJ and the SFO in the Stanford asset freezing and re-patriation cases.

We have written many times about how the Bribery Act is designed to work efficiently with other legislation to deal with corruption. developers who may be swept up in the current TCI criminal proceedings may be about to experience the effectiveness of the global enforcement co-operation concerning alleged corrupt capital flight through the banking system.

In short, it may no longer be an answer to refuse to submit to the jurisdiction of a small but important part of the world. Those caught up in the TCI (or other international investigations and prosecutions) may discover that trading on an international scale becomes extremely challenging as they attempt to salvage assets from international freezing orders.

History is often a useful guide for the future.  For anyone who may be concerned about potential personal implications please contact us directly confidentially (you can email barry.vitou@pinsentmasons.com) Richard and Barry have put together a dedicated team (details here) to assist those swept up in the TCI prosecution.