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Politicians in the British Virgin Islands have formed a national unity government in a last-ditch attempt to resist the threat of direct rule from London as fresh details emerged of how alleged drug traffickers tried to control the Caribbean tax haven’s ports and airports.
Legislators voted overwhelmingly on Thursday to remove disgraced premier Andrew Fahie and install his former deputy, Natalio Wheatley, to lead the BVI, a major offshore financial centre that is home to 30,000 people out of the worst crisis in its recent history.
Fahie and BVI port authority director Oleanvine Maynard were arrested on April 28 after US undercover agents caught them in sting operations at a Miami airport inspecting a $700,000 bribe stuffed into designer shopping bags aboard a private jet. The money was intended as payment for helping a Mexican drug cartel smuggle large shipments of Colombian cocaine through the BVI into the US, according to a US court filing.
The Financial Times has learnt that Fahie had allegedly planned to give Maynard oversight of the BVI’s airports as well as its ports and insisted on the use of radar barges hired by his office to monitor shipping movements. Both actions could have helped ensure that drug shipments were not intercepted.
“In regard to the arrest of the premier, persons have been shocked, disappointed, in a state of dismay,” Wheatley told the Financial Times in an interview after being sworn in by Governor John Rankin. “But I believe that some of the steps we have taken, chief among them what we did today in removing former premier Fahie and swearing in a government of national unity, has gone a far way in lifting persons’ hopes for change.”
Wheatley’s administration may be the shortest-lived in recent history if the British government accepts the central recommendation of an official inquiry into high-level corruption on the eastern Caribbean archipelago.
The report concluded that the only way of tackling “parlous failings in governance” was to suspend part of the BVI’s constitution, remove the elected government for up to two years and impose direct rule from London by the governor.
Amanda Milling, UK minister for the overseas territories, visited the BVI this week and has returned to discuss next steps with foreign secretary Liz Truss. A decision is expected in the coming days but the islands’ politicians, and neighbouring Caribbean nations, strongly oppose direct rule.
“It would send the wrong message to the international community to remove . . . democracy from the Virgin Islands and have a situation, even though it’s temporary . . . that’s somewhat of a dictatorial situation,” Wheatley said. “I don’t think it’s anything anyone wants.”
Bishop John Cline of the New Life Baptist Church, who last Monday led a protest of about 140 people against possible direct rule, said the demonstration was “only the beginning” of what might happen if London ignored the islanders.
But Wheatley’s new administration is facing scepticism in some quarters that it can deliver real change, given the extent of the failings in governance found by the inquiry and the scale of the drug smuggling plot.
According to the court filing, a confident-sounding Fahie promised an undercover American agent safe passage of three-tonne shipments of cocaine each month through the BVI to the US, concealed in buckets of paint.
Fahie and the agent even discussed sending some low-purity cocaine for interception by police, allowing the premier to claim he was fighting drug trafficking. “Fahie loved the idea and explained that in the past he never got paid at the end of his involvement in schemes like this,” the court filing said.
An explanation for the former premier’s confidence has emerged: according to interviews conducted by the FT, Fahie was planning for his alleged co-conspirator, ports chief Maynard, to take control of the islands’ airports as well. Fahie had pushed through the islands’ assembly last year a proposal to merge the two authorities.
“It was presented in such a way that it would be efficient, save resources,” Wheatley said of the merger. “But of course, with what we’ve learned about the managing director [Maynard] and what we’ve learned about Honourable Fahie, all of those things will be viewed in a different light”.
In the weeks before his arrest, Fahie had, according to a source familiar with the discussions, revived an idea he had championed since 2019 — he was pressing his administration to renew the use of radar barges obtained by his office from a local contractor to monitor shipping movements.
The radar barges had been strongly opposed by British officials responsible for security as ineffective and a poor use of public money but Fahie deployed them — without proper approval — from August 2020 to January 2021 at an initial cost of $420,000 per month, according to the inquiry report. The now-disgraced premier claimed they were needed to prevent people from illegally entering the islands during the Covid pandemic.
As part of the alleged drug smuggling plot, Fahie told a US undercover agent that “he would handle the ports and airports” to allow safe passage for the cocaine, the court filing said. The barges appear to have been part of his alleged strategy, according to a person familiar with the BVI administration.
At the inquiry, former BVI police chief Michael Matthews said his officers had picked up vessels that the radar barges had not found and queried why the barges had not detected them. “For example, between November 2020 and April 2021, the [police] seized over 3.6 tons of cocaine — and Mr Matthews wondered how significant quantities of drugs still managed to arrive in the BVI when barges were in place”.
“What the barges allowed them to do was look like they were tackling crime, but in reality they were facilitating their own pathway through [for drug shipments],” said the source familiar with the Fahie administration.
Fahie’s lawyer has argued to the Miami court that as a sitting head of government, Fahie should enjoy diplomatic immunity and be released immediately. Federal prosecutors have rejected this claim, saying the US does not recognise the BVI as a sovereign state. Prosecutors are also appealing against a judge’s decision to grant him bail of $500,000 and he remains behind bars while that appeal is considered, the Miami Herald reported.
The prosecutor said Fahie was recorded telling a federal undercover informant who approached him about smuggling thousands of kilos of cocaine through the British territory that this was “not my first rodeo at all”, the newspaper said.
As the BVI struggles to emerge from the scandal, the islands’ financial services industry, which provides 60 per cent of government revenues, is anxious to distance itself. Elise Donovan, head of BVI Finance, a trade body, said the industry was “operationally independent” and met “the highest international regulatory standards”.
The BVI is home to more than 370,000 offshore companies whose owners are not publicly disclosed, that control more than $1.5tn of assets around the world. Although many have legitimate functions, they have drawn fire from transparency campaigners because of the potential for abuse by criminals or tax dodgers, highlighted in leaks of offshore company data such as the Panama Papers.
Corporate lawyers stress that institutions valued by investors, such as the commercial court, the arbitration centre and the financial regulatory bodies had not been impugned in the inquiry.
But the tax haven’s offshore companies are likely to suffer some reputational damage after Maynard dragged them into the scandal.
According to the US court filing, when asked by the undercover agent how to get payment of the bribes to the islands, Maynard replied: “What we do is set up shell companies.”
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