Investors

One last quote from the TCI Journal is called for.  There is an article from a foreign investor published by the Journal.  It is so applicable to Anguilla, that I thought it was wasted on TCI.  So, I reproduce it here for Anguillians to read.  The scenario described is exactly what the investor faces when he visits Anguilla, that you may well ask yourself how he could have confused Anguilla with TCI.  This is what he wrote [replace TCI with Anguilla everywhere]:

“Through your Journal I would like to state the case for our investment group, and for the local population to understand the difficult situation any investor currently faces when doing business in the TCI.  This is in the sincere hope that our stance may assist future inward investment and the resultant development of your country.  Although I write as an individual from within the group, our feelings are fairly universal. 

Our group of mainly European based investors has had a presence in the TCI on and off over a number of years, primarily to gauge development potential, and to get a "real feel" for the islands; we have also secured private property there.  We have been considering a major development within the islands for some time, and in fact presented our plans and ideas to the previous administration.  However, we were far from impressed with the way in which they expected us to do business, so quickly lost interest (most investors/developers are honest hard working people who risk very much and will not be compromised as a matter of principal).  

In the meantime we visited three other Caribbean Islands and one central South American country, and presented our proposal to their respective governments, but more about that later. 

When the British partially suspended the constitution and took over the administration of the islands, it renewed our interest and we felt that the TCI could once again be a safe bet. 

Our planned development would have created many new jobs, new services, business opportunities, brought many new high net worth individuals to your shores and would have assisted greatly with economic diversification; all of which the islands desperately need at this time.  However, after recent events we have decided that the TCI is "not for us" and the USD100M+ project we had planned, and which was fully capitalised with our own in house funding, will now be executed elsewhere.  I know for a fact that we are not alone in this regard and generally for the same reasons stated below. 

This was NOT as a result of the British, who we strongly believe will eventually turn the economy around and develop a more sustainable economic base for the TCI’s long term future.  It is because of the attitude of very many locals, who believe that the rest of the world owes them a living.  Most of whom want our money and developments, but DO NOT want us and will do all in their power to prevent us from gaining a fair path to citizenship, regardless of the amount of pure financial input or socio economic benefit we bring.  

The simply appalling and vastly over staffed TCI Civil Service was another reason for not wanting to do business here.  Compared to other Caribbean destinations, the TCI civil service is light years behind, and is the single most inefficient organisation we have ever come across in thirty years of doing business on three continents. 

Over the last few years we have had literally dozens of TCI people offer to be our "belonger partners", but the very same people brought absolutely nothing to the table.  No skills, no experience, no cash or assets even, just the promise of getting our development rubber stamped through the back door by friends and relatives; the very scenario we were trying to avoid. 

Incidentally, the term "belonger" appears to not even be an actual word, and is certainly not listed in the Oxford English Dictionary, and to the uninitiated it seems to be a derogatory term; maybe you should consider moving into the 21st century and changing this? 

The way in which many locals propose to do business, have monopolies on business licenses, certain trades etc. is also discriminatory.  Ironically however, I have heard in recent weeks certain locals bleating about making representation to the European Union court of human rights etc..  However, the EU would certainly view much of what goes on in the TCI as discriminatory.  As one social group is favored politically and otherwise over others; so good luck with that, you cannot have your "cake and eat it’! 

The talk of independence is also of great concern to our group.  How can we be sure our USD100M+ investment would have been safe in five years time?  In our opinion the TCI is far from ready for independence and such talk is complete folly by one of two types of people.  Either, completely uneducated people who know no better and who usually follow everyone else, or people who will do anything to avoid the long arm of the law for previous wrong doing.  Sadly, Mugabe and Zimbabwe spring to mind. 

The honesty, integrity and skills of your politicians is also of great concern.  The current leaders of the two major political parties, would never inspire confidence in any savvy investor group.  One seems to make completely irrational and arbitrary statements that lack any real thought or intelligence.  The other has a large cloud hanging over his head from the previous administration, which may rain rather heavily on him in the very near future!  Neither could be considered true statesmen and appear to be nothing more than pure "chancers" from the exact same mould as all the other previous non-entities. 

The TCI really needs a fresh approach when it comes to politics and politicians, because the dead horse you have been flogging for years has completely had it!  It would be nice to see some TCI youngsters getting into politics for all the right reasons, taking a fresh look at the problems the country faces and not being tainted by the dishonest practices of old. 

The TCI has missed out on an excellent development opportunity because of the blinkered attitude of a good portion of locals, an awful civil service, an appalling TC Invest and a general apathy we find hard to fathom in the current climate. 

The other countries we have visited in the region worked hard to build our confidence in an efficient, professional and transparent manner; reassured us where necessary and generally welcomed us for the long haul.  We have never expected "something for nothing", in fact quite the opposite is true. However, you cannot have it both ways, and need to learn to compromise.  This is the first step to flourishing and eventually prospering as a nation. 

As long as the current attitude towards foreign investors prevails, you will never achieve this goal, but Good Luck and God bless anyway!”

Beach Development

Is it Illegal to Build a Villa on a Beach. I received the following email. I thought of just answering it. Then, I thought, “Why not make it a post?” This is the result. First, the email:

“Dear Mitch:

Sunset Homes is building a large beach front villa next to Bananas by the Sea on Meads Bay. The place is huge. I thought beachfront personal dwellings were against the law in Anguilla. Also, Viceroy has erected a large sales office right on the beach - how can that be allowed? Photo attached.”

First, on the building of beach villas, generally. No, there is no law against building a beachfront villa. For this to be prohibited would mean that there is in Anguilla some sort of enforceable zoning or planning law that is being infringed. Those of you who read this blog regularly, will by now be aware that there is no enforceable Planning Act in Anguilla. Such law as there is, is so antiquated and irrelevant to modern town and country planning concepts as to be laughable. It is a law that we inherited from the old St Kitts Administration, before the Anguilla Revolution of 1967.

Second, Yes, there was a policy at one time of making it difficult for villas to be built on the beachfront. Early in Emile Gumbs’ administration, after people complained about Chuck Norris being given permission to purchase a lot of land on West End Shoal Bay, the government established and published a policy that in future no licences would be given for the building of a villa on a beach. Villas were relatively non-productive, and would be discouraged. Beaches were to be reserved for the development of Anguilla’s tourism plant, ie, hotels.

When a non-Anguillian applies for an Aliens Landholding Licence, as is obligatory, to own property on Anguilla, it is a simple matter to prohibit the acquisition of land on a beach for the purpose of building a villa. Aliens were not allowed to do it. When it came to an Anguillian building on a beach, that tool or leverage never existed. The Anguillian is not required to apply for any licence to build on a beach. There is no law restricting building on the beachfront. Any officer of the Planning Department who contemplated prohibiting an Anguillian from building on a beach would have been slapped down by the Attorney-General’s Department. It is the Attorney-General who would advise on any action by any Department that will have legal consequences, at least, the strong likelihood of having to defend a legal suit. The A-G would know that such a case could not be won. So, even before the policy of using administrative discretion to limit building on beaches was relaxed, Anguillians have been building on the beachfront.

Third, is the question of fronting. Fronting occurs when an Anguillian pretends to own some or all of a business or property in order to assist the real, foreign, owner from having to comply with alien taxes and other burdens. When the property is land or a business, the Anguillian puts his name forward to government as the owner. When the property is a company, the Anguillian holds some or all of the shares and directorships “in trust” for the foreigner. The share ownership is accompanied by pre-signed, undated share transfers to permit a swift and unilateral transfer of the shares out of the hands of the Anguillian. This is generally a crime. That has never stopped it happening. Law firms have been accused of doing it. Politicians have been alleged to do it. Some civil servants are said to supplement their meager income by doing it. Even ordinary Anguillians do it. It is one of the commonest industries in Anguilla today. Many of the fine “locally owned” developments on the island are owned and funded by foreigners. When the development is sold, the Anguillian is supposed to receive his compensation by way of a small but healthy percentage of the proceeds of sale.

What these foreign speculators are only now beginning to learn is that, unless the illegal fronting is organised by an attorney with experience in these matters, they are likely to get ripped off by the Anguillian. What typically happens is that the Anguillian holds out for more than the agreed reward. He pretends that he thought he was really the majority owner. He then threatens to put a spoke in the works unless the demanded payment is made.

I have no idea who owns Sunset Homes. Nor, have I any reason to believe they are doing anything illegal. They probably fall into the category of an Anguillian owner doing what he wants with his own land. That is not against the law.

That is simply evidence of Anguilla not yet being mature enough to establish clear and fair planning laws.

Back to the Constitution next post.

Overlooked

International Anti-Corruption Day. I suppose it was the house-full of guests over Christmas. I completely missed the anniversary date of 9 December 2007. That was the day I started this blog back in 2006. It commemorates International Anti-corruption Day. This is the day set aside by the United Nations for all of us to look at the state of governance in all our countries. The problem with corruption, and how it permeates the fabric of all our West Indian societies, seems almost intractable. It is easy to see how high-level corruption involves people in power. So many of our leaders at all levels of government get involved in terms of contracts, money laundering, health and education. But, it has often been pointed out that there is another, lower, level. It involves simple expediency. We give in to corrupting influences because it is the easy way out. Too many of us are coerced into submitting to the machinations of corruption. The hurdles that are put in our way have to be crossed. We give in because it is the easiest way to move forward.

Restaurants are the scene and source of significant amounts of corruption in Anguilla. The varieties of corruption involved in running a restaurant in Anguilla are numerous and ingenious. When you are a foreign owner of a restaurant, you have licences and permits to obtain that locals do not. There is the Aliens Landholding Licence to hold the lease. There is the Work Permit for your French chef. There is the Restaurant Licence itself. There are electricity and water mains connections. There are conditions that you have to satisfy to get some of these. Some of the conditions are legal. Others are not. Typically, the foreign restaurant owner is told that he has to have a “local partner”. There is nothing wrong, in theory, with having a local partner. Government’s insistence on it originated with the best of intentions. Partnership encourages Anguillians to get involved in business with international entrepreneurs. Anguillians can learn how to be successful in business from such associations. In return, the Anguillian partner contributes part of the start-up capital, and provides local know-how and contacts, so essential in business.

In practice, local partnership has not worked in such a straightforward way in Anguilla. Much of the time it is the cause of a great deal of corruption. I could tell you a dozen awful stories from the restaurant scene in Anguilla. Often, the “local partner” is purely a front. He puts in no capital, yet gets 10% of the equity and the income. Oh, he gives value all right. He “arranges” exemptions from the work permit regulations. He “arranges” for customs duties to be evaded. On occasion, he even “arranges” to appear on the record as the majority owner of the business, thus converting it into a “local” business for the purpose of evading all Aliens Landholding Licence requirements.

This business of insisting on a “local” partner is one of the most corrupting influences in Anguilla today. This corruption is pervasive and widespread. It makes many of the restaurants in Anguilla smell to high heaven. And, the practice of fronting does not only apply to restaurants. It reaches even up to hotel ownership.

So, it was with a great deal of satisfaction that I heard of one foreign restaurateur who refused to give in to the pressure. He had bought an existing restaurant. He had thought it would be straightforward to do business in Anguilla. The British flag, he was told, is a guarantee of integrity and good governance. Instead, he learned he would not get his licences unless he took a “local partner”. His chef and senior staff were on-island. They were ready to open the restaurant. They were stopped. They could not begin work in the restaurant until all the licences were in place. The licences would not be forthcoming unless he took a “local partner”. Months passed. A year passed. His restaurant remained closed. I am told he was adamant. He simply refused. Fortunately, he could afford to. He refused to enter into any corrupt arrangement. Eventually, good sense prevailed. His licences were forthcoming. The restaurant is now open. Without one of us fronting for him.

I shall enjoy dining there.

Very few of us have the resources to be able to do what he did.

Let us celebrate integrity when we meet it. It is rare enough in Anguilla to be considered of high value. Let us try to make every day in Anguilla an anti-corruption day.