Government of Anguilla Rental of Private Office Space

 

You may have heard the Premier’s answer to Mr Carlton Pickering Sr’s question at the last Government Press Conference.  He asked whether in this time of limited resources, government needed to rent so much private office space around The Valley.  He asked, would it not be a better use of public funds to limit occupation to government-owned premises.  I was struck by the Premier’s response.  He replied, in essence, that while he agreed with the sentiment, government could not give up the rentals at this time.  Government must keep a balance between the public good and private needs.

It would be wrong, he said, to bring those rental leases to an end when the private owners may have mortgages to repay.  Enough Anguillians have lost their properties to the banks when they were unable to pay their loan instalments.  Some of them, he suggested, need the rental money to put food on the table.  Government, he said, must consider these private needs alongside government’s duty to protect public monies.  But I question this stance.  Is it ever right to show such generosity to certain selected individuals when scarce public money is being spent?

Setting aside for a moment the important question of the ethics, even legality, of using public funds to benefit private individuals, let us look at the merits of the explanation he offered in relation to the specific rentals.

We start in the grounds of the government secretariat with the Hubert Hughes building.  Mr Hughes was a prominent Anguillian, for some forty years a Member of the House of Assembly, and a past Chief Minister.  The ground floor of his building is rented for the use of the Department of Social Development.  The floor above is rented for the Probation Department.  I suppose that it is possible, though unlikely, that the late Mr Hughes had a mortgage that is still unpaid.  But I would hardly call him a man who was short of resources.  His children are all grown up adults now, prominent in politics and business.  I am sure that they are all capable of maintaining themselves.  Besides, the building is right adjacent to the government Secretariat, a much sought-after location.  Mr Hughes’ building could probably be rented to private businesses for more than government is paying.  It would, in effect, be doing the family a favour to give notice and move to available government-owned spaces.

Then, there is the Wallblake House that the Catholic Church leased to the Ministry of Tourism some years ago.  Are we still paying the rent, and keeping up the insurance and maintenance of the building and grounds?  It must be an expensive exercise, especially when you consider that we do not use the building but have essentially abandoned it.

For many years, the Attorney-General’s Chambers have occupied extensive rental space in Mr Clement Ruan’s Caribbean Commercial Center.  Can they not be fitted into the old National Bank of Anguilla (NBA) building presently partially occupied by the Premier’s office and the Inland Revenue Department?  The Premier might appreciate having his lawyers’ offices close at hand.  The proximity would make advice on tricky situations easier to obtain.  Of course, the NBA building is not owned by government, so far as I know.  But I believe I heard they stopped paying rent on it to NBA’s Receiver.  Are they occupying it rent-free on some private arrangement that has not yet emerged from the fog of NBA’s liquidation?

Mr Clement Ruan also rents office space to the Ministry of Social Development.  Mr Ruan is one of the biggest businessmen in Anguillian commercial life.  I don’t think he has any need for government largess or generosity in renting office space from him.  I doubt he has a mortgage, and he is unlikely to have small children needing food on the table.  I can’t imagine he was pleased, if he heard the Premier, at being placed in the ranks of the needy in Anguilla.

The late Mr Roy Rogers was a past Speaker of the House of Assembly.  He was a prominent politician and a distinguished member of one of the elite business families of Anguilla.  He moved in the highest political and business circles.  I find it hard to believe that his family needs the rental money from WISE for his building next to the Princess Alexandra Hospital.  I can’t imagine they have any mortgage problem or difficulty putting food on the table.  Besides, now that the Secondary School is moving to its new premises in the Farrington, the old Comprehensive School classrooms in The Valley would be an ideal substitute for the Rogers building.  Is there any reason why the Department of Education could not find space in the old school building for WISE to occupy?

And does the Air and Sea Ports Authority have to continue to rent space from Mr Quincy Gumbs at the Fairplay Complex building?  Mr Gumbs is a well-known businessman and political consultant around town.  He has been a close adviser to one government after the other over the past forty years.  The office space in question is in a desirable location.  Would he not fill it immediately the Authority gave notice they were vacating?  We all expect that ASPA will give notice as soon as their new building at the port is completed.

The late Mr Albert Lake OBE was reputedly the richest man in Anguilla when he died some years ago.  The upper floors of his building on the other side of the road from the Albena Lake-Hodge Comprehensive School have for years been rented by the Education Department.  Now that the school is moving to its new building in the Farrington, it does not seem likely they will continue to require this space in The Valley.  No one can realistically suggest that Mr Lake’s family needs the government rental of this property to put food on the table.

When the Blowing Point Ferry Terminal and Police Station were destroyed by Hurricane Irma in 2017, government had to find temporary accommodation close to the port.  The heirs of the late “Big Jim” Romney came to the rescue with their building that the terminal presently occupies.  But now that construction of the new Ferry Terminal building is rapidly progressing, we would hope that government plans to move all their activities into the new building and give up the Romney building.

The idea that the Harrigan family needs the government rental money paid for the use by the Department of Youth and Culture of part of their Cannonball building is laughable.  They are one of the wealthiest of the elite families of Anguilla.  Members have long been prominent in politics and local business.  If Youth and Culture were relocated to some government office space, no one could believe that the family would be put to any hardship.

The Anguilla Development Board (ADB) has long rented other space in the Cannonball building.  This Board is part of the Ministry of Finance, and could easily, I imagine, be squeezed into the NBA building.  Besides, a few years ago the ADB had plans to build new office space on the open field to the south of the NBA carpark.  This is government land that has been designated for use by the ADB.  The new ADB building should be designed to be big enough, at little extra cost, to house other government offices.

The Babrow building behind the library has been occupied by the Environmental Health Department since Hurricane Irma.  I am sure that the family welcomed the business at the time, but there is a vast, new Public Health building that has just gone up next door.  I find it difficult to imagine that there is no plan to give notice to the Babrows and for Public Health to move to their own new building.

The Social Security Board is one of our wealthiest corporate citizens, banking millions of dollars, we are told.  Does the Department of Disaster Management really need to keep the Board in funds by paying rent to it?  And why does the Anguilla Civil Servants’ Pension office have to rent space in the same building?  It can’t be a very big office, probably no more than one or two staffers.  Both these Departments should rank no more than a desk each in the spacious new offices of the Department of Inland Revenue.

I wonder if the Premier might reconsider the explanation that he gave Mr Pickering.  Is it ever right to spend public resources to benefit private interests even if they have a mortgage to pay?  After all, whose side is government on, the masses or the elite?  If this matter were brought to the attention of the Chief Auditor, what would be his response, I wonder?  Might he question whether some of these rentals smack of cronyism?

Constitutional Reform Again

 

Constitutional and electoral reform is in the air again.  I heard the Minister on the radio some days ago promising that we should see the roll-out of Government’s new draft proposals that it intends to urge on the UK Foreign Commonwealth and Development Office (FCDO), within the next month or two.

When Government publishes the promised draft Constitution, I shall study it carefully.  Will it be a version of the constitutional abortion that the AUF Administration in 2019 presented to the FCDO team during the November negotiations?  Or will it accord with the 2017 draft that the Constitutional and Electoral Reform Committee presented to the Government of Anguilla (GOA)?  Or will it be based on the 2020 FCDO draft that they sent GOA shortly after the 2019 consultations but which Government concealed from us until early 2022?  It can be found on the government website.  It is based on our locally produced 2017 draft.  I suggest that whatever Government proposes, it must be consistent with, if not identical to, the FCDO draft.  I wonder why Governments like keeping us in the dark about these matters for so long!

I don’t blame you for not remembering what the previous Administration did in 2019 to ruin our 2017 proposals for constitutional reform.  So much time and so many traumatic events have occurred since them, that the memory is hidden under psychological scar tissue.  So, I’ll briefly remind you of the assault by the AUF administration on the original reform proposals.  Those 2017 proposals (set out in a draft Constitution, Elections Act, and Electoral Boundaries Commission Act, emerged from extensive public discussions in person, on several radio stations, and in widely published newspaper articles and papers, between 2000 and 2017.  The AUF administration presented to the FCDO in 2019 their changes to the 2017 proposals with no real attempt to explain their changes to us, far less to secure our agreement with them.  These changes gutted the Committee’s 2017 reforms.

Electoral reform was part of the mandate of the 2000 David Carty Committee, the 2006 Commission, and the 2017 Committee.  The resulting draft new Elections Act of 2017 was contained in the 2017 Report.  The AUF Administration succeeded in 2019 in persuading the FCDO, in effect, to help them sabotage the most vital electoral reform proposals.

The first insult to the 2017 electoral reforms was to remove the provision for regulating campaign financing.  The people wanted to bring an end to the old vote-buying system.  Each party was to prepare and publish a budget showing where its campaign financing is coming from and how it will be spent.  They will go to jail if they are found to have lied.

In some countries, campaign financing legislation prohibits a political party from soliciting funds from the public.  Campaign financing laws limit each party’s spending only to the sum of money provided by government to each party.  That way, all parties are financially on the same footing.  You go to jail if you are found to have cheated.  The AUF’s draft Constitution completely omitted any mention of campaign financing.

Another 2017 provision that was left out without explanation was for the regular revision of the Voters List.  At present, there is continuous registration with no revision.  Once you get on the List, you can practically never be removed.  If you emigrate and remain away from Anguilla for forty years, you remain on the List.  The List is never cleaned up.  The Committee recommended it be revised every ten years after the usual decennial Census exercise.  The people demanded it.  They left it out.

Yet another provision that was omitted was to reform the Assembly by having thirteen elected seats instead of seven, to abolish the nominated members, and to remove the votes of the two ex-officio members.  They merely got rid of the nominated members.  The voters were supposed to be more fairly distributed among the constituencies as settled on by the Electoral Boundaries Commission, with nine more or less equal districts and four at-large seats.  In 2019, the AUF and the FCDO changed this without warning or discussion with us.  They imposed a rushed 2019 Amendment Constitution and an Elections Act that kept the same old unfairly populated seven constituencies, merely adding the four at large seats.  They omitted to abolish the position of Parliamentary Secretary, or to remove the voting power of the ex officio members, or to revise the boundaries.  They said it was too urgent to discuss.

This abortion of electoral reform missed the entire point of the exercise.  If it was designed to keep the incumbent party in office, it failed.  They lost the later 2020 elections.

Voters knew that the aim of the popular 2017 reform proposal was to ensure that Government would have six Ministers from the ranks of thirteen elected members of the Assembly.  With the proposed thirteen voting members distributed between six ministers, Government backbenchers, and the opposition, the six Ministers would never outnumber backbenchers plus the opposition.

Under the previous system, with four Ministers, a Parliamentary Secretary, and two ex officio members, (seven out of nine) ExCo dominated the Assembly.  The opposition hardly had a say in the deliberations.  The 2019 change to five Ministers, a Parliamentary Secretary, and two voting ex officio members (eight out of thirteen) did not alter the balance of control in the Assembly.  It was no reform at all.

Constitutional reform was the other part of the 2017 proposals to replace the 1982 Constitution.  What the AUF did in 2019 to amend the 1982 Constitution, just days before the general elections, was to cut the heart out of them.  And this without any explanation, save to assure us that the amendments were too “urgent” for further consultation.

What the FCDO did in 2019 in accepting the AUF’s betrayal of the 2017 constitutional and electoral reform proposals was to shore up ExCo’s domination of the Assembly.  With now five Ministers, two ex officio members, and a retained Parliamentary Secretary, ExCo controlled more than half of the thirteen voting members of the Assembly. 

An obvious omission made in the AUF’s 2019 Amendment Constitution was the Integrity Commission.  This watchdog institution was the most vital of the proposals for ensuring integrity, transparency, and accountability in Government going forward.  It may be obvious to us why the AUF omitted it without explanation, but we must insist it be put back in.  The FCDO’s draft 2020 Constitution now before us for discussion does so.

The 2017 public finance constitutional reforms were strongly resisted by the previous Administration.  In 2019, they circulated a paper claiming that these provisions were unnecessary as they were already present in existing laws.  In fact, they sprang from a draft Anguilla Public Finance 2015 Order in Council circulated by the FCO in that year.  This essentially proposed that Anguilla’s management of her public finances be turned over to a UK appointed official.  He would be empowered to cancel all ExCo decisions and repeal laws passed by the Assembly if he did not approve of them.  This caused an almighty stir in the community.  The FCDO backed off.

By 2015, because the Government of Anguilla had for so many decades been living beyond its means, its finances were in a disastrous state.  There were various statutes and Memoranda of Understanding with the FCDO that were designed to ensure that government spending was conducted in a regulated manner.  We never followed any of these statutes or agreements.  The FCDO must have been at its wits’ end.  That is why they wanted to impose on us by a 2015 Order in Council the rules we were supposed to be following.  To ensure the rules were followed, the control of our finances would be entirely placed in the hands of a UK administrator, superior even to the Governor.

What the 2017 Committee proposed was that we introduce the most important contents of the 2015 draft Order in Council into our Constitution.  We would, of course, omit the unacceptable provision that a UK bureaucrat could reverse decisions of our Cabinet and laws passed by our Assembly.

The idea behind our 2017 proposal was that if we imposed these financial management rules on ourselves through our Constitution, there would be no need for the UK to take our finances away from us.

Further, by our taking the financial management rules out of the previous long-ignored statutes and rules, and placing them in our Constitution, we would give the rules increased force.  Breach of them would be not only against a law but be unconstitutional.

It is essential that whatever our new Government proposes to the FCDO, it must be consistent with, if not identical to, the substance of the 2020 FCDO draft Constitution.  This draft came out of the negotiations conducted with the AUF’s negotiating team in November 2019.  Through this 2020 draft, the FCDO has redeemed itself from its earlier betrayal of us in 2019.  It accepts nearly every one of our 2017 proposals.  Only a few provisions remain to be resolved.  These are clearly marked in the FCDO draft and should be the only issues remaining for discussion.  None of them is particularly difficult.  Stay tuned.

Necessary Cost Adjustments

 

Under the Quarantine Act and the Regulations made under it, Anguillians and residents of Anguilla returning home from certain countries that are experiencing dangerous levels of the Covid-19 disease, such as the USA, must be taken directly from the port they arrive at to an authorized place of quarantine.  There, they are provided with lodging, medical attention, security, food, and drink, all at the public expense.  This lasts for a period of approximately two weeks.  They are not allowed to pay for it.  Even if they wish to pay for their board and lodging, they are not permitted to do so.  The rules, they are told, require that this be a public expense.  Millions of dollars, I understand, have been disbursed by the past and present government on this venture since quarantines started in March.  This is an expense that was never budgeted for.  It is money that we can ill afford.  Our economy has tanked with the failure of our tourism industry since the start of the year due to the pandemic.

The House of Assembly should be asked to vote on a Bill to require persons who are detained, quarantined, or placed in isolation, to pay the costs of their quarantine.  Most if not all Anguillians will agree that this is a necessary reform.  It is unfair to the Anguillian public that we should have to pay the costs incurred by persons who choose to return to Anguilla at this time, and put us all to the risk of contracting the disease.  If returnees wish to enjoy the comfort and safety of home, they should be willing to pay for all associated costs incurred by their return from abroad.  This has become the international standard, and we will not be doing anything unusual in having our law ensure this.

Care must be taken to ensure such a provision does not offend against our constitutional right to freedom of movement.  There is an exception in cases of public health and safety.  The necessary Orders must first be made by the Governor and Executive Council under the Constitution and the Public Health Act.

It is a simple enough measure to enforce.  One of the conditions for permitting the return to Anguilla should be a payment of a deposit, say US$10,000.00, per person into the Treasury.  That would give the provision teeth.  The deposit will be refunded, less the cost of all disbursements associated with their quarantine, at the end of their quarantine.  If this proves too expensive for any would-be returnee, he or she is not obliged to make the payment.  They can simply stay where they are and save the cost of returning.

The duty to refund government’s costs should not be limited to persons who return to Anguilla with the permission of the Quarantine Authority.  It should extend to persons who enter illegally.  In the case of persons who are caught illegally entering Anguilla in breach of the Quarantine Act or any Regulations made under it, the Act should provide that one of the conditions for their release from custody is the payment of a cash bond, say US$10,000.00, to secure the refund to government of all costs incurred in their arrest and detention and medical treatment including but not limited to transportation, board, lodging, medical and other.  It should cover all costs of tracing and treating the persons who have encounter the illegal entrant.

Nor should this bond be limited to persons who want to return in the future.  There is nothing legally impossible or morally wrong in the law being drafted to authorize Government to demand a refund of part or all the past costs paid in maintaining earlier returnees in quarantine at the public expense.  Every effort should be made to recover the past costs incurred in relation to persons who have been given permission under the Quarantine Act and its Regulations to enter Anguilla since January 2020.  This may be hard on some of the persons and families affected.  They can be given time to meet the refund, and other terms.  In suitable cases, perhaps certified by the Department of Social Development after the application of a Means Test, the law might even provide for exceptions to be made.  In my view, most if not all the persons who have had their quarantine expenses paid for by government should be obliged to refund all the costs that were paid out of public funds.

What is certain is that we cannot continue to meet this expense.  We simply do not have the money in the public purse.  In one of his last speeches in the House of Assembly, the outgoing Minister of Finance revealed that our projected tax revenue for the year 2020 will be about one half of the amount budgeted.  Further, we do not know how long the quarantine provisions will have to continue into the future.  Given the irresponsible behaviour of the US and certain other governments in dealing with their own infections, it might last until well into 2022.

Since I wrote the above paragraphs, someone has pointed out to me a draft Quarantine (Amendment) Bill on the Order Paper for debate on 11 August.  It is a noticeably short Bill.  It provides,

“(1a) Notwithstanding subsection (1) the Quarantine Authority may require persons who are detained, quarantined or in isolation pursuant to this Act to pay in part or in full the expenses incurred by the Quarantine Authority in detaining, quarantining or isolating such persons.”

This is inadequate.  It is a token provision.  It is for show only.  It lacks teeth.  It is filled with loopholes.  It gives a power to charge the costs without any mechanism for collection. 

Bearing in mind that the Constitution limits the power of the Assembly to pass an Act restricting our freedom of movement, care must be taken to ensure that the necessary State of Emergency and Public Health Orders and Proclamations are renewed from time to time.  The ones made earlier this year all appear to have expired without being renewed.  Without care being taken, any law restricting entry into Anguilla by Anguillians may be unconstitutional and unenforceable.

And, while we are on cost cutting measures, is there any reason why a 40% tax cannot be imposed on all pensions previously paid to Ministers and Parliamentarians?  These payments have been a huge drain on our Treasury.  They have met with universal condemnation in Anguilla.  I do not have the exact figures at hand.  We have all seen various sums circulating in the media.  If these are correct, we have paid out tens of millions of dollars in the past several years in gratuities and pensions to retiring parliamentarians.  They need to do their part now that we are in crisis.  They need to refund some of this undeserved largess they paid themselves.  A 40% tax should be immediately imposed retroactively on the pensions and gratuities of every living parliamentarian who benefitted.  Retired parliamentarians and Ministers should be happy to agree to refund 40% of the very generous pensions and gratuities paid to them.  To answer the question at the start of the paragraph, care will have to be taken to ensure that such an Act does not offend against the protection of private property provision in the Anguilla Constitution.  If it does, then retired parliamentarians will need to be shamed into making a voluntary return of their ill-gained pensions.

Such an essential reform, if legal, is not intended to be retroactive only.  Entitlement to pension and gratuity for future retirees should be reduced accordingly, ie, by 40%.  Those who are presently in the House of Assembly and in Government would be aware of how untenable and unsustainable their overly generous pension provisions are.  There is no possible legal or moral objection that can be made to such a reduction.

While we are on the topic of curtailing benefits, why not extend the cuts to parliamentary salaries and allowances?  Anguillian politicians are in receipt of a high level of remuneration that is not matched in any other West Indian nation.  We have heard a previous Minister of Finance make a boast of the fact.  The levels of salaries were set during the 1980s and 90s when money was flowing into the Treasury like water under a bridge.  Those days are now long gone.  We cannot afford these excessive salaries any longer.  Ministers and Parliamentarians should agree in the public interest to reduce their salaries and allowances by 40% with immediate effect.  Such a contribution would meet with universal acclaim and appreciation in Anguilla.

Anguillians join in calling on Dr Ellis Lorenzo Webster, the Hon Premier and Minister of Finance, to move the necessary actions in the Executive Council.  We urge all Ministers and Ministerial Assistants to support these initiatives.  We call on all members of the Opposition to support these measures when they arrive before them as a series of Bills for debate.  We call on all members of the House of Assembly to pass the reforms into law without undue delay.

Sustainable Recovery - Part 2

Anguilla: Sustainable Recovery and Resilient Development Post Irma – Part 2

We looked last week at the first 9 of the 22-paragraphs letter bearing the above title from Mr Ben Merrick.  It was addressed to Anguilla’s Chief Minister (the CM) and was dated 23 December 2017.  Together, these 22 paragraphs set out the conditions of integrity, transparency and accountability that the Government of Anguilla (the GoA) must meet in order to be able to access the £60 million offered to us as a grant to rebuild after Hurricane Irma. 

Let us look briefly at the remaining 13 paragraphs.  We need to understand what this letter says about the task facing our government before they can receive the offered funding.

It appears the CM optimistically told the Foreign and Commonwealth Office (the FCO) that he would take a draft budget to the House of Assembly in early January.  He anticipated a shortfall in revenue for 2018:  GoA would need to borrow money from the Caribbean Development Bank (the CDB) to meet its recurrent expenses.  Mr Merrick explains that if GoA does have a shortfall, the British Government will not be able to provide funding to cover it.  Given, he writes, that the first CDB meeting at which a loan for Anguilla could be agreed would be in May 2018, he wanted to know how the CM would meet our immediate cash requirements for the first part of the year.  Indeed, Mr Merrick explains, the FCO will not even look at our draft budget unless they can be assured how GoA will meet its immediate cash requirements.  I pause to comment that, hopefully, the CM successfully accomplished this challenge, as we have not heard anything to date.

Mr Merrick next wants the CM to explain how Anguilla will meet its debt servicing and amortisation costs in the fiscal projections he made up to the year 2025.  Whatever fiscal projections the CM made, this requirement is going to be particularly challenging.  The grace period associated with the previous CDB loan the CM took out to assist him with the Banking Resolution crisis of 2016 is about to run out.  The full cost of our borrowing is about to hit us, leaving precious little to cover new borrowing.

He wants the CM to send a revised and updated Medium Term Economic and Fiscal Reform Programme (the MTEFRP) for the FCO to consider and approve.  The CM must satisfy the FCO that concerted efforts are being made to implement the FTEFRP.  In other words, we must now move from promises to action.

Mr Merrick refers to “the most recent quarterly progress report”.  Since his letter is written in December 2017, we can assume he is referring to the quarter ending September 2017.  It would have been good if the CM shared this progress report with the people of Anguilla.  We have a real interest in it.  But, we don’t know what is in it.

He also refers to a letter from the CM dated 27 October 2017 in which the CM identified the issues facing Anguilla.  I assume this letter accompanied the quarterly report and gave certain assurances.  But we have not had the privilege of seeing the letter and knowing what promises or predictions our CM made on our behalf.  Mr Merrick responds to this 27 October letter from the CM by stating that the FCO needs his revised programme to be more ambitious.  In other words, he is not satisfied with the predictions made in the CM’s 27 October letter.

In particular, the CM must explain the steps he will take to improve the easing of foreign direct investment into Anguilla, and to privatise key utilities including electricity.  Foreign direct investment is presently discouraged under our xenophobic economic system.  Anguilla was famously described by the late Martin Crowley of Pyrate Rum as “the cemetery for American capital.”  Clearly, this discouragement has to change.

Water and electricity can already be said to be privatised in that they are owned by companies and are no longer government departments.  But, they are not really private since GoA is the sole shareholder in the Water Corporation of Anguilla and a major shareholder in the Anguilla Electricity Company.  We need to sell these assets to the public to raise much needed cash.

Mr Merrick demands that the CM set out sufficient details so that progress in implementing the economic reform package can be monitored.  He wants the CM to go beyond merely identifying policy leads, completion dates and priority ratings.  He wants the CM to provide a clear work plan for each measure he proposes to take.  The CM must set out in detail the actions that need to be taken.  He must set targets for each quarter.  These are some of the ways in which the CM’s unseen letter of 27 October appears to have failed.

Mr Merrick insists that the CM must identify the Senior Accounting Officer responsible for each measure.  This procedure of making Department Heads responsible for the management of his or her Department’s funding is set out in the Act, but in recent years it does not seem to have been followed.  Senior civil servants who waste government resources are no longer held accountable.  To take advantage of this grant, GoA will have to reinstitute this safeguard.  There must be somebody to take responsibility and answer from his or her pocket for any shortcoming.

Mr Merrick acknowledges that there are multiple barriers to growth in the Anguilla economy.  The CM must set out a clear timetable and process for reporting on a quarterly basis to ensure that the momentum on reform efforts is maintained.

Mr Merrick asks the CM to identify the priority reforms that will deliver the greatest impact.  He does not identify the reforms that he claims the FCO have been discussing with GoA.  I think we already know what some of the areas for economic reform in Anguilla are.  They have appeared in previous publications.  As I recall, these include, without claiming any order of priority,

(a) removing the Aliens Landholding Licence restrictions that prevent foreigners from investing in Anguilla unless they submit to going through hoops and jumping over procedural barriers, and months of bureaucratic delay.  We can already adequately control them through our immigration procedures once we carry out adequate due diligence on them;

(b) revising the work permit regulations to allow us to grant multiple-year work permits to major investors and their senior staff so they can manage their investments to their satisfaction without the current level of uncertainty.  The present procedure is based on government policy and can shift from government to government and from minister to minister.  There needs to be the certainty of a law;

(c) providing by law a certain and consistent mechanism for granting permanent residence to investors who invest a minimum amount of foreign currency in our economy, as the Americans and the British themselves do (except they grant citizenship, which we can’t).  The present procedures rely on constantly shifting and uncertain government policies; and

(d) eliminating the impractical security of a “charge” under our Registered Land Act, which makes it almost impossible for a lender to recover the proceeds of a loan from a defaulting borrower.  We need to make it easier for a lender to recover against the security provided by a borrower who then fails to meet his commitment under the loan agreement.  It was this hindrance or obstacle, more than any other, which in my opinion led to the 2008-2013 failure of our two indigenous banks.  Unless the law is changed to bring back mortgage remedies, which involve, eg, title shifting to the lender at the time of the mortgage, a right of foreclosure, and the right to sell by private contract if the loan falls into arrears, only a very foolish bank is likely to continue to lend money secured by a charge on real estate in Anguilla.

GoA will need to agree a Memorandum of Understanding (an MOU) with the FCO on any project that will be supported by the UK grant.  The MOU must set out a “robust business case” consistent with the UK’s Green Book framework.[1]  The Green Book and its supplementary guidance sets out the framework for the appraisal and evaluation of all governmental policies, programmes and projects.  So, where, for example, GoA has to choose between repairing existing buildings and constructing new ones, it must set out in detail the proportionate economic appraisals of these project options.  GoA has to satisfy the FCO that its proposed choices will guarantee maximum value for money.

This £60 million grant, if we can ever qualify to receive any of it, is not going to come in one lump sum, or even in one year.  It will be disbursed in tranches, tied to annual budgets, over several years.  The funding must be based on an agreed dispersal plan, with an agreed list of projects for which this money may be used.  This requires a costed work plan, clearly setting out our priority projects.

This framework is a great advantage to us.  It means that we don’t have to prepare in advance detailed plans for every project we have in mind and for the spending of every penny of the aid.  We must break up the work load by priorities.  It seems to me we need only do the detailed planning and reporting on the most immediate ones.  We can leave those of lower priority to be costed and planned in detail at a later date.

The grant funding will be disbursed under something called the Conflict, Stability & Security Fund.  This means that disbursements will, additionally to the Green Book framework, be subject to the reporting and governance requirements of that fund.  We don’t have to become expert in any of these reporting requirements.  Repeatedly, throughout his letter, Mr Merrick offers to provide GoA with the expertise needed to meet the requirements for the disbursement of this grant.

One final condition is that if any of the grant is to be spent in the UK, both the Financial Adviser and the FCO must approve.  Any expenditure in Anguilla must be approved by the Financial Adviser.  Overall, the Governor’s Office will work with the FCO in applying the most appropriate mechanisms for managing the funding programme.

Some of the reasons for these strict oversight provisions are well known to us.  We need only look at the first 5 pages of the Chief Auditor’s last Audit of Accounts for the year 2013 published in 2016 and available on the GoA website, to understand the reluctance of the British to believe we can handle the funds responsibly if left on our own.[2]

The Chief Auditor has refused (for the past 42 years that Anguilla has been essentially self-governing) to give our public accounts a clean Certificate for four main reasons.  The first one is that when the Minister wants to shift money voted by the House of Assembly from one department to another, the Financial Administration and Audit Act 2010 (the Act) states that the Minister of Finance may do so by a Reallocation or Virement Warrant and with the approval of the House of Assembly.  But, all these Warrants for 2013 were authorised by the Permanent Secretary or the Deputy Permanent Secretary instead of by the Minister of Finance.  And none of them had the approval of the House of Assembly.  This was clearly illegal.

He further qualified his report because GoA has not developed or operated adequate processes to show that all payments due for Property Tax, Interim Stabilisation Levy, customs duties, and other taxes on goods and services, were identified for collection in accordance with the relevant legislation.  Certain persons seem to be permitted to get away with not paying their Property Tax, Interim Stabilisation Levy, or Hotel Accommodation Tax, while the rest of us dutifully comply.  This is patently unjust and an abuse.

He yet further qualified his opinion on the regularity of our accounts because, though the Act states that the Minister of Finance may, by Advance Warrant signed by him, authorise the Accountant General to make advances from the Consolidated Fund, advances made during the year 2013 were not authorised by the Minister.  In other words, the 2013 advances were unlawful.

Finally, he further qualified his opinion because where a law gives Executive Council power to remit any tax, fee or other amount, the Act provides that such remission may not exceed EC$1,000 “or such greater amount as may be prescribed by Regulation” made by Executive Council, and with the approval of the House of Assembly.  While remissions during 2013 were approved by Executive Council, the GoA does not appear to have bothered to seek approval from the House of Assembly.  Clearly, if the House of Assembly has made a law saying that a certain transaction must be taxed at a certain level, it must be illegal for anyone to authorise a reduction in the amount due, without the approval of the House of Assembly.

I think we can all agree that if the monitoring and management provisions set out in Mr Merrick’s letter are adhered to, this will be the best-managed economic reform and infrastructure development programme ever enjoyed in Anguilla.

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[1]         https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/685903/The_Green_Book.pdf

[2]       www.gov.ai/documents/hoa/Government%20of%20Anguilla%202013%20Accounts.pdf

Sustainable Recovery

Anguilla: Sustainable Recovery and Resilient Development Post Irma

This is the title of a letter Mr Ben Merrick, the supervisor of all British Overseas Territories’ Governors, wrote to Anguilla’s Chief Minister on 23 December 2017.  In it, he offers us a £60 million (approximately EC$250 million) reconstruction grant.

This British taxpayers’ money is to help us build back stronger after the devastation of Hurricane Irma.  It is a grant, a gift:  we don’t have to pay back a cent of it.

There has been no discussion of this letter in the public domain that I know about, other than a cursory mention by the Chief Minister in his January press conference.[1]  The letter came to my attention only last week.  It deserves to be publicly discussed.

Reading it, I gather that they have no intention of just dropping the money on us.  They have set out a number of conditions we have to meet before they let us have the first payment.  And, we have to satisfy them at quarterly intervals that we are keeping our promises and commitments, if we are to continue receiving disbursements.

First, we must agree a revised Medium Term Economic and Fiscal Reform Programme (MTEFRP); [2]

Second, we must appoint a Financial Adviser to sit in ExCo and in the Ministry of Finance;[3] and

Third, we must submit a clear list of the projects we will spend the money on, with agreed implementation arrangements.

The letter claims that if we can meet the first condition, we will not just be building back infrastructure, but also maintaining strong public finances and creating an environment that encourages business and attracts significant investment.

We already have an MTEFRP.  But Hurricane Irma committed euthanasia on it.  It has been put to sleep.  That is why we have to agree another one.  Meanwhile, our national debt is well over EC$400 million and growing (EC$206.53 million in 2015 and EC$419.24 million in 2016.)[4]

The full aid package will not be handed over in one lump sum.  It will be disbursed in stages, and only if we can show that we are making progress in implementing the MTEFRP.  No more will we be permitted to submit wonderful sounding promises, take the money, and then just go back to the old ways of spending it.

The MTEFRP was due by 31 January 2018.  In it we had to show (1) how we would manage our public finances; and (2) how we would progress sustained economic development.

Anyone who has read the 5-page certificate to the Chief Auditor’s ‘Audit of Accounts 2013’, published in 2016 on the Government website, will be aware that we have failed to manage our public finances.[5]  Many departments of government keep no proper record of where they got their money.  They can’t account for where they spend it, or who they spend it on.

Taxes, duties and levies are forgiven without authority, and with no record made.  The result is that for the past 40 years we have never had a clean audit.

To get this promised money, we have to set out in detail the steps we intend to take to achieve a current account budgetary surplus from 2019 onwards.  In my opinion, it is simply impossible for us to achieve a current account budgetary surplus from 2019 onwards. Our public debt continues to increase.  I would guess that we won’t achieve a surplus for decades to come.  Alternatively, we could set out the steps we intend to take from 2019 onwards.  But, we would not be able, on past evidence, to stick to our undertaking.

We can supply, as they request, an updated public finance projection from 2018-2025.  That is not difficult.  We are experts at drawing up projections and writing reports.

They ask us to clearly identify what actions we will take to manage public spending, and increase the efficiency of the public service.  I don’t think we can meet this condition.  We permit public servants to arbitrarily reduce assessments, duties and taxes without any record being kept, or any report being made, as the ‘Financial Administration and Audit Act’ requires.  See the Chief Auditor’s Certificate.

Next, they want us to take clear steps to raise revenue through increasing tax compliance rates, reducing arrears, and extending taxation.

We have to provide a clear Work Plan for each measure, including actions that need to be taken and target outputs per quarter.

We must prepare a Risk Register including mitigating steps to manage future pressures from such things as more hurricanes in the years to come.

We must provide a Timetable and a process for reporting on a quarterly basis to ensure the momentum on reform efforts is maintained.

These are high bars for us to cross.  We long ago decided that we will never enforce our tax laws if it means, to repeat the memorable words of a former Chief Minister, “criminalising innocent Anguillians”.

In my opinion, it is unlikely we can meet these conditions for receiving this money.  Unless we change our past ways, we will never receive one penny of the offered grant.  If we get any of the money, it will most probably be for having successfully pulled the tam down over their eyes.

Edited 12 March to include (a) in the 3rd paragraph mention of the Chief Minister’s January press conference; (b) in a footnote to the 5th paragraph, the preparation and approval of a draft MTEFRP; (c) in a footnote to the 6th paragraph, the appointment of a Financial Adviser; (d) in a footnote to the 12th paragraph, a link to the Chief Auditor’s Report; and (e) a revision of the 13th paragraph for clarity.

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[1]       http://theanguillian.com/2018/01/governments-press-conference-anguillas-2018-budget-and-uk-assistance/

[2]       The Minutes of Executive Council for 8 February 2018 reveal ExCo’s approval of a draft MTEFRP with instructions to the Ministry of Finance to send it to the FCO for discussion.  This draft has never been publicly mentioned or discussed: http://www.gov.ai/documents/exco/180208%20Mn18-128.pdf

[3]       In the Anguillian Newspaper of 26 February, we learned that Mr Stephen Turnbull was recently appointed the new Financial Adviser: http://theanguillian.com/2018/02/editorial-who-is-guarding-the-guard/

[4]       http://theanguillian.com/2016/12/what-is-the-national-debt-owed-by-anguilla/

[5]       http://www.gov.ai/documents/hoa/Government%20of%20Anguilla%202013%20Accounts.pdf