UK Government Names Conditions for Providing Financial Support to BVI

The UK government has reiterated the conditions under which it is going to provide economic support to its Overseas Territories, including the British Virgin Islands. In the 2020 communique, which was published at the Joint Ministerial Council meeting for OTs, the UK government said it expects Territories to be financially independent as much as possible, as it will only offer financial aid in exceptional circumstances.

The UK government said that while OTs as small and open-island economies vulnerable to external threats, governments must manage public funds to make the economy resilient in times of disasters. It is stated in the communique: “In times of crisis, the UK stands ready to support the Overseas Territories, as happened following the hurricanes in 2017 and during the COVID-19 crisis. As a first step, the UK will look to the Overseas Territories to make full use of their financial resources to address their needs and will consider further requests for financial support on a case-by-case basis.”

The UK government also promised to help OTS increase their economic resilience through technical support and encouraging financial management, and to consult the Overseas Territories on a support programme for next financial year.

The UK pressured the OECD to give the British Virgin Islands loans which it didn’t originally qualify for, by staying as a guarantor for them. However, the BVI government was asked to set up the Recovery Development Agency (RDA) to ensure transparent managing of these funds.

Cabinet Approved Establishment of Borrowing Committee

The BVI Cabinet approved the establishment of Borrowing Committee consisting of eight members and chaired by the Financial Secretary, to secure all funding under the UK Loan Guarantee on behalf of the government. In the last Cabinet post-meeting statement it was said: “The Borrowing Committee will be the sole entity authorised by the Cabinet of the Virgin Islands in collaboration with the Ministry of Finance to source and negotiate loans under the ‘Guarantee’, pursuant to the implementation of the revised Recovery to Development Plan.”

The newly established Committee will review the terms and conditions of loans offered by lending institutions to government, and the borrowing presented by the Minister of Finance Andrew Fahie. The panel will recommend to the Finance Minister all amendments to the loans offered under the Guarantee as well as other borrowings falling under specified stipulations; they will also recommend the most appropriate loans to the Cabinet. 

The Borrowing Committee will be mainly guided by the Virgin Islands Public Finance Management Act and is expected to include the Financial Secretary as Chairman, Permanent Secretary in the Premier’s Office, the Attorney General, a nominee by the Opposition Leader, a nominee representing the Business Community, an External Regional Leader, a representative from the BVI Banking Association and a Secretary from the Premier’s Office.

BVI Financial Management Agreement with UK Considered to be Amended

BVI Premier Andrew Fahie said that it is possible that borrowing restrictions placed on the territory in the Protocols for Effective Financial Management agreement between the BVI and the UK could be waived in case the BVI territory suffers from major natural disaster or catastrophe. The financial agreement, which was signed in 2012 and is currently in force, prohibits the BVI government from borrowing more than 80 per cent of its recurring revenue, but the UK is prepared to consider this through a “natural disaster clause”.

Andrew Fahie noted that making provisions in the agreement for disasters was one of of the things the BVI wanted to discuss, during recent negotiations with the UK about its loan guarantee offer. The Premier commented on the raised concerns: “The UK government stated to us that it is prepared to consider including a reference to natural disasters and catastrophic events in the debt section of the Protocols for Effective Financial Management.” 

In his speech addressing members of the media, Premier Fahie said that, based on the territory’s geographical location, the BVI is not only susceptible to hurricanes, but also to other disasters such as earthquakes, and in case they impact the territory to a high degree, the BVI might need to borrow extensively to rebuild, like in case of hurricanes Irma and Maria.

BVI Premier Responded to Letter by Director of UK OTs

BVI Premier Andrew Fahie has denied claims by Ben Merrick, the Director of British Overseas Territories, that his government caused deterioration of engagements between the UK and the BVI territory.

The UK official representative expressed his disappointment about the administration of Fahie’s government after cancellation of some important meetings, including that with UK minister responsible for Overseas Territories, Lord Tariq Ahmad. In response to the letter which was addressed to the Premier and became public, the Premier confirmed that he and his government have consistently been in contact with the United Kingdom. Fahie also said he believes Merrick’s letter of ‘untrue accusations’ had a purpose to damage his reputation as Premier.

The Premier further said that he and local delegation had met with Lord Ahmad in the Cayman Islands in June 2019, and discussed different areas that they’ve been working on. He noted that they had made it clear to the UK after being elected that the Fahie administration was a new government that needed to do research to ensure it was fully knowledgeable about the loan guarantee, and said that they needed some time to do that.

BVI Urged UK Government to Back Modern Partnership with OTs

At the recent meeting at the House of Commons with Andrew Rosindell, MP, chairman of the the Overseas Territories All Party Parliamentary Group in the UK government, the special representative of the British Virgin Islands urged to support the renewal of partnership with Overseas Territories including BVI.

Benito Wheatley welcomed the position of the UK government stated by the Foreign and Commonwealth Office not to force the OTs to adopt the UK decisions on the Territories in areas of governance “constitutionally devolved to them without their consent”. He added: “It is now time for the UK Parliament to support a renewal of the modern partnership between the UK and Overseas Territories based on the principle of self-governance and we hope there will be no further parliamentary moves to undermine the UK Government position that rejects the use of Orders in Council against the Territories.” 

Wheatley also praised Rosindell for his long-standing support to the Overseas Territories including BVI and for respecting their constitutions. It is known that the UK government is taking steps to mitigate possible adverse effects that Brexit, which is now planned on October 31, can have on the British Virgin Islands. Governor Augustus Jaspert stated that many of the benefits that the BVI currently receives from its association with the EU, including EU funding and trade benefits, would go unchanged when Brexit is finalised - among them.

BVI will Choose New Premier, Political Parties are to Adhere to Code of Conduct

Political parties which will participate in the general elections in the British Virgin Islands on February 25, 2019, as well as the general public, are asked to strictly adhere to the provisions of the Code of Conduct. According to the statement of the BVI government, “The Code of Conduct now exists for political parties and candidates with the 2019 amendment to the Elections Act now in force. The purpose of the code is to promote conditions that are conducive to free and fair elections, and a climate of tolerance in which electioneering activity may take place without fear or coercion, intimidation or reprisals.”

The code consisting of 11 clauses covers the following areas: politically-motivated violence or intimidation, prohibited conduct: conduct during polling period, announcements of results of elections and respect for media and journalists. 

During the elections, the new political leader will be chosen for the BVI, as Orlando Smith has retired from his post of the territory’s premier. Mr. Smith’s National Democratic Party (NDP) has fractured, opening the possibility for a new party, the Progressive Virgin Islands Movement, to enter the government after long years of the NDP and the Virgin Islands Party domination. The VIP also fractured after the 2015 elections: Andrew Fahie will lead the VIP, while Julian Fraser split to form his own party, the Progressives United.

The new BVI government will face many issues, including the BVI financial sector challenges and the possibility of being potentially blacklisted by the European Union and being subject to the recently implemented UK beneficial ownership rules.

CPA British Islands & Mediterranean Region Invited to Conduct Election Observation Mission in BVI

The Commonwealth Parliamentary Association British Islands and Mediterranean Region (CPA BIMR) was invited by the BVI Governor with approval of the BVI Premier and Leader of the Opposition to conduct an Election Observation Mission (EOM) to the British Virgin Islands in 2019. 

The Mission will observe political campaign, electoral administration, polling and other aspects of BVI elections against international standards, commitments and obligations, as well as BVI legislation. It will issue a preliminary report with initial results within two days upon the elections, and the closing result, which will include recommendations for possible electoral reform, within two months after the elections.

The mission will consist of six members, all of them from different countries, and will be supported by a core team of an election coordinator and two election specialist analysts.

CPA BIMR is one of the nine regions of the network, with its headquarters based in the UK Branch of the Commonwealth Parliamentary Association. Since 2011, the association has been organising short-term Election Observer Missions across the UK Overseas Territories including the British Virgin Islands, Anguilla, Montserrat, Turks and Caicos Islands, Cayman Islands and Jersey. It was also involved in election assessment during the UK General Elections.

UK Government Extending Deadline for Public Registers in BVI

The UK government has given its Overseas Territories including the British Virgin Islands an allowance to continue without implementing the public registers of company beneficial ownership until the year 2023. In fact this is a 3 year extension to the initial deadline set by the United Kingdom in its Sanctions and Anti-Money Laundering Act, which was forcing to implement public registers by the year 2020.

UK Minister responsible for OTs, Lord Tariq Ahmad, gave his comments about the deadline extension: “It is our intention that if by 2020 there is no public register, for whatever territory, we will then issue an Order in Council, which will then have a requirement for an operational public register by 2023.” By his words, the 2023 deadline will give the UK time to advance its mission of making public registers become a global standard. 

The public registers mean that the BVI along with other Overseas Territories will be required to disclose the names of beneficial owners of offshore companies registered in the jurisdictions. The BVI is objecting the implementation of public registers before they become a global standard, as it would place the territory in a disadvantageous position to other countries providing financial services.

Director for Overseas Territories Paying Visit to BVI

The director for Overseas Territories in Britain’s Foreign and Commonwealth Office Ben Merrick made a four day visit to the British Virgin Islands, during which he was focusing on governance, financial services of the territory, and the post-hurricane recovery. He was talking with the BVI Premier and Minister of Finance Dr Orlando Smith, the Cabinet, the leader of the opposition and representatives of the financial services industry.

One of the main purposes of the visit is to evaluate the influence of financial and technical support from the UK to the BVI after hurricanes, and to discuss further funding and loan guarantees for BVI recovery and development. Government departments and agencies visited by Merrick include the Royal Virgin Islands Police Force, the Department of Disaster Management, the BVI Ports Authority, the BVI Airports Authority and the Recovery and Development Agency.

Elise Donovan to Become Interim Director of BVI London Office

The Director of the BVI House Asia Elise Donovan has been appointed by the Government as Interim Director of the BVI London Office. She will change in this post Benito Wheatley, and will be transitioning there from August 20 to December 31. After this period, she will return to the BVI to the post of Chief Executive Officer of BVI Finance, which will be left by Lorna Smith.

The duties of the Director of BVI London Office include advising the Premier on matters for implementation and making recommendations to ministries, international agencies, the private sector and other agencies. She will be also responsible for “strengthening BVI’s voice with Her Majesty’s Government and the Foreign and Commonwealth Office”; monitoring political, legislative and diplomatic developments in the UK and EU, and providing timely analysis of those affecting or potentially impacting the BVI. 

Meanwhile, the BVI Government has already started to search for new and permanent directors of the BVI House Asia and the BVI London Office.

BVI Government Appoints Legal Council to Advise on Public Register

In the press briefing held on May 30, BVI Premier and Minister of Finance, Dr Orlando Smith, announced that the government has appointed legal counsel to advise on potential legal issues related to the public register of beneficial ownership imposed by Britain. This appointment followed the UK Sanctions and Anti-Money Laundering Bill which requires Overseas Territories, including the BVI, to make public beneficial ownership of all registered companies. With this Bill, the UK receives the right to implement sanctions on individuals, companies and states, and address money-laundering after the Brexit.

BVI Premier said that the legal team “is confident that the imposition of a public register would raise serious constitutional and human rights issues and would be subject to constitutional challenge.” 

A week earlier, BVI diplomat Benito Wheatley has informed the British government that the UK decision to force public registers of beneficial ownership will negatively impact the jurisdiction’s financial services sector that makes more than 60 percent of government revenue.

BVI Premier and Opposition Speak about UK Amendments

After the discussions with the UK parliamentarians concerning the controversial amendments to the Sanctions and Anti-Money Laundering Bill, BVI Premier Dr Orlando Smith made the statement where he said: “Be in no doubt, that if the UK Parliament proceeds with seeking to impose public registers on the British Virgin Islands, this could fundamentally alter our relationship with the UK and we will take all necessary steps to protect our constitutional rights.”

In his turn, the Opposition Leader Andrew Fahie agreed that this is a “constitutional overreach”, and said that the Opposition and Premier “stand united on protecting the constitutional rights of the British Virgin Islands.” 

The UK amendments impose the requirement for its Overseas Territories including the British Virgin Islands to make public the names of beneficial owners of offshore companies incorporated in the jurisdictions. This could bring harm to the financial services sector which is so important to the BVI, comprising about 60 percent of its annual revenue.

In another press release, the BVI Premier noted that the BVI will not impose public registers unless they are a global standard.

BVI Eligible for Association Membership in the Caribbean Forum

CARIFORUM director has confirmed that the British Virgin Islands is eligible for associate membership in this regional organization which engages in policy dialogue with the European Union on behalf of a number of Caribbean states. Confirmation of BVI eligibility became part of a CARIFORUM regional consultation in Barbados in April, which focused on establishing an effective platform for dialogue between CARIFORUM and French Caribbean Outermost Regions and British and Dutch OCTs.

The BVI will no longer be treated as OCT after the UK exits the European Union in March 2019, so the government of the territory is seeking the way to continue BVI current relationship with the EU through CARIFORUM. Currently member states of CARIFORUM include Antigua and Barbuda, The Bahamas, Barbados, Belize, Cuba, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St Kitts and Nevis, Saint Lucia, St Vincent and the Grenadines, Suriname and Trinidad and Tobago. 

The assistant secretary for external affairs in BVI Premier’s Office Christopher said in her comments: “We welcome that associate membership is open to the BVI. This status would give us a more meaningful status in CARIFORUM whereby we can participate in the Caribbean’s policy dialogue with the EU and regional coordination. At the moment we remain an observer.”

British House of Lords Voting Against Public Beneficial Owners Register

The amendment proposal for the Cayman Islands, British Virgin Islands and four other British Overseas Territories to implement public register of beneficial owners behind offshore companies registered in these jurisdiction was rejected in British House of Lords, by 211 to 201. The peers voted during the debate on the proposed Sanctions and Anti-Money Laundering Bill; the public register requirement was for the purposes of “preventing money-laundering”.

The amendment, if accepted, would allow the UK government to demand the offshore countries to provide details of companies’ owners. It was already the fourth time when the idea of public registers was discussed in the House of Lords.

In the opinion of the Conservative member of the Lords who argued against the proposal the law enforcement agencies do not support public registers as they actually don’t help law enforcement. He also noted that the UK overseas countries already shown themselves“extremely efficient in responding to the requests of policing and other agencies”.

Other concerns expressed included the potential identity theft that can be facilitated by the public register of beneficial ownership, as well as possible loss of business in favour of competitors. There were also warnings against legislating for self-governing overseas territories.

UK MP Standing for British Overseas Territories to be Represented in Parliament

The British Conservative member of Parliament, Andrew Rosindell, was speaking for the Friends of the British Overseas Territories in London, saying that the BOTs should have better and equitable parliamentary representation. He also said it was wrong that the British territories are dealt with by the British Foreign and Commonwealth Office (FCO) because they are not foreign.

Rosindell is the chairman of the Friends of the British Overseas Territories and is in a senior position on the various committees relating to the British territories. He is also a long-time defender of the rights of the BOTs, supporting more equity for them in the British family. He has called for the territories to be dealt with by a single UK government department, and noted that in case of disaster, for example a recent hurricane, the British government should act as in case of natural disaster in the UK. 

The Conservative politician and his supporters in the UK suggested that Crown Dependencies of Guernsey, Jersey and the Isle of Man and the Caribbean territories of Bermuda, the Cayman Islands and Turks and Caicos should have one MP each, while the British Virgin Islands, Anguilla and Montserrat should have a shared representative, and the same should be done for Gibraltar, Cyprus Sovereign Base Areas and British Indian Ocean Territory.

Augustus Jaspert Became the 13th Governor of the Territory

Augustus Jaspert was sworn in as the new governor of the British Virgin Islands. The governor took the oath of allegiance and the oath of due execution of office before the audience of government ministers, high court justice, members of the House of Assembly, senior government officials and other guests.

The new governor was welcomed by BVI Premier and Minister of Finance, Dr Orlando Smith, who pledged his government's support and commitment, saying: “The BVI has much to offer and I am confident that you will make a valuable contribution to the territory’s growth and development. I encourage you to explore our beautiful islands and become intimately acquainted with the people of these islands in whose interest we must work.” 

Leader of the opposition Andrew Fahie also welcomed the new governor. The governor in his turn assured the BVI government and the opposition of his commitment to the British Virgin Islands, and said he sees his role as one of service and partnership with the elected government, public service, the United Kingdom; the faith, voluntary and community organisations, and the people of the territory.

British Virgin Islands Among Top Destinations for Offshore Investments

The research was conducted in Netherlands looking at how particular countries and jurisdictions are used by corporations to minimize their tax liabilities. It was found that the Netherlands, the UK, Ireland, Singapore and Switzerland are the five large countries most popular as intermediate destinations for corporations to access low-tax financial centres. The British Virgin Islands, Hong Kong and Jersey are the largest offshore financial centres in terms of investment volume.

The report says: "Our results show that offshore finance is not the exclusive business of exotic small islands far away... Countries such as the Netherlands and the United Kingdom play a crucial yet previously hidden role as conduits of offshore finance on its way to 'tax havens.'"

BVI Implementing Beneficial Ownership Search Platform

The BVI government completed legislative requirements to implement the Beneficial Ownership Secure Search system - an innovative technology-enabled searchable portal changing the way how beneficial ownership information on BVI companies is held and accessed, and also shared with competent authorities in the BVI and the United Kingdom. The new platform was developed following the exchange of notes with the UK in April 2016.

Corporate service providers are required to upload the beneficial ownership of their clients to the new system, where the BVI competent authorities may find information available within 24 hours. By words of BVI Premier and minister of finance, Dr Orlando Smith, “Through its use of technology BOSSs perfectly blends the principles of privacy and security and is entirely fit for purpose. Working with BDO, we have developed a world class platform that will benefit all stakeholders, including corporate service providers, company owners and law enforcement agencies.

Other jurisdictions are acting similarly to further improve standards for holding and making beneficial ownership information accessible to competent authorities.

BVI Discussed Freedom of Movement to EU with UK Representatives

Representatives of the UK Home Office and UK Department for Exiting the EU held a meeting with the BVI delegation to discuss freedom of movement to the European Union for Overseas Territories citizens at a Brexit technical roundtable in London held on May 9. During the roundtable, BVI London Office director and EU representative Benito Wheatley emphasised the importance of visa-free travel to the EU for the BVI business persons and stated that the jurisdiction is the headquarters of the Commercial Court Division of the Eastern Caribbean Supreme Court and home to a new International Arbitration Centre.

Previously, the BVI delegation took part in a Brexit technical roundtable on fisheries and agriculture in April this year, and is planning to attend upcoming technical roundtables on European Union funding, trade, and financial services. 

The BVI Premier Dr Orlando Smith mandated Brexit Task Force chaired by permanent secretary in the Premier's Office, Brodrick Penn, to prepare a White Paper on the opportunities and risks posed to BVI by Brexit, ahead of the second UK-OT Joint Ministerial Council on Brexit Negotiations on July 12.

BVI EU Representative Takes Part in Discussions with CARIFORUM and ACP

In the mid of March, BVI EU representative Benito Wheatley had a meeting in Brussels, Belgium with secretary general of the African, Caribbean and Pacific (ACP) group of countries, to discuss the alternative post-Brexit relationship between the British Virgin Islands and the European Union. Wheatley expressed interest of the BVI in establishing close ties with the organization in the future agreements with the EU.

Also, the BVI EU representative attended CARIFORUM ambassadors meetings where discussed BVI plans to engage with the Caribbean states organization and participate in their future arrangements with the EU. Financial services were emphasized as the main area of immediate cooperation, especially concerning Caribbean jurisdictions' ongoing dialogue with the European Union on international tax cooperation. 

Wheatley's discussions with the ACP group of countries and CARIFORUM are in line with BVI Premier's mandate given to BVI EU representative, to explore different options for jurisdiction's relationship with the organization. The meetings in which Wheatley participated on behalf of the BVI were part of Caribbean Tourism Organization's mission to Brussels to discuss with EU stakeholders the impact of Brexit on the Caribbean.