News from Anguilla
20 February 2000. Issue 7

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Our North American readers will observe that today is/was 2-20-2000; so may you all have 20-20 vision (figuratively, at least)!

A couple of items arising from the last issue, prompted by comments received:

(1) Yes, we will consider asking any court to throw out any request for assistance received from/on behalf of U.S. fiscal authorities on the grounds that those authorities are illegally constituted (and therefore have no legal existence, so cannot make any application to a court in Anguilla) as is the legislation passed! This may be effective; it might not…..

(2) Ohio was not a legally recognised state when the Constitutional Amendment was allegedly passed. Congress accepted the constitution of the state of Ohio on 19 February, 1803; however, statehood was not ratified until 1953. (And they say things happen slowly in the islands!?!)

Latest News from Anguilla....

Following on from Sonesta Hotel, Covecastles has now re-opened after hurricane "Lenny". For a list of what's open and what (still) remains closed, please send an e-mail to: marva@gov.ai

1. It was Nomination Day on Friday. Prospective candidates therefore registered themselves at The House of Assembly, having been relieved of their EC$1,000 deposit which they had left at the Treasury. As in the UK system, the deposit is refundable depending on a candidate's percentage of votes cast. Each candidate had to be proposed and seconded by a voter resident in the district and these two names/signatures required a witness. If there were only one Candidate for any district nominated by 4.00 p.m. on Friday, that person would have been declared the elected candidate there and then. Unfortunately for the politically weary and happily for the proponents of democracy or change, each district will be contested. As you may know, Anguilla's political parties have hardly been riven ideologically (a fashion which has caught on, in recent years in places like the US and UK!). However, in so far as some can get on with their contemporaries better than others, here is a table of the nominees (which those who visit the island regularly will recognise), based roughly on the left-right seating in the French National Assembly (this may need to be re-tabulated on receipt):

DISTRICT	ANGUILLA UNITED MOVEMENT	INDEPENDENTS	MOVEMENT FOR GRASSROOTS DEMOCRACY	UNITED FRONT (ANA/ADP)	ANGUILLA PATRIOTIC MOVEMENT
1. ISLAND HARBOUR	-	BARBARA WEBSTER	-	KENNETH HARRIGAN **	FRANKLYN (KELLY) RICHARDSON
2. EAST END	-	MARGARET AUGUSTUS	-	OSBORNE FLEMING **	QUINCY GUMBS
3. VALLEY NORTH	-	VENECIA HODGE	JOHN BENJAMIN	ERIC REID **	-
4. VALLEY SOUTH	-	I-WANDI-I GUMBS	JOYCE KENTISH	VICTOR BANKS **	-
5. ROAD NORTH	-	EDISON BAIRD*/RHONA RICHARDSON**	-	-	-
6. ROAD SOUTH	HUBERT HUGHES*	FRANKLYN CONNOR	-	-	-
7. WEST END	BELTO HUGHES*	-	-	KENSWICK RICHARDSON	-

* Member of the incumbent (elected minority) Government
** Other elected member (present opposition parties)
*** Independent Candidate supported/endorsed by United Front

As you can see there are lots of possibilities here, although it is worth noting that the only possibility of the present government being effectively returned to power would be in a coalition with one or more successful Independents.

(2) Despite calls for tolerance from the (influential) Anguilla Christian Council, requests to "stick to the issues" by some in the media, and appeals to avoid character assassination by others, the Candidates are well into the swing of things now and are, on the whole, scrapping it out in the sewers. Although the U.S. media makes a big thing of Presidential Candidates' negative campaigning, those candidates would be horrified if they were subject to anything like the abuse that West Indian candidates routinely dish out. (Locally, this is the best kept secret apart from Pokemon). However, as we are becoming more civilised, the Anguillian politicians are becoming more sophisticated. A few years ago, in The House of Assembly, Eric Reid floored our present Chief Minister with a well placed punch. Nowadays, on the other hand, Victor Banks' lawyer has published a letter written to the Chief Minister threatening legal action for (alleged) defamation, and Victor himself has written to the Anguilla Bar Association asking them to report his former lawyer ? and now political opponent ? John Benjamin (President of The Bar Association) to the Ethics Committee for (alleged) breach of client/attorney privilege, relative to remarks made by Benjamin at the hustings.

And the wonderful thing is that we have two more weeks of increasing vitriol before it's over. This will be followed (possibly) by a period of feverish activity if a coalition needed to be formed and certainly by the proclamation of a national holiday/day of deliverance. Within a week, if there were a change of guard then, as is customary, there will be an announcement by the new Minister of Finance of "the deplorable state of the island's finances, and that things are much worse than we were ever lead to believe". Regardless of who wins, it is likely that the House of Assembly would be convened as a matter of urgency; much needs to be done in that area.

And then, of course, we have Royalty coming soon, too, in the form of Prince Andrew.

Raising the profile

A local reader has forwarded these recent items in the U.K broadsheets on Anguilla: both are copyright. Readers are recommended to subscribe to this publication if they wish to see more of the same.

THE INDEPENDENT: IT MAY LOOK LIKE PARADISE BUT IF YOU ARE GOVERNOR THEN IT'S HARD WORK. HONEST IT'S A TOTAL NIGHTMARE IF YOU ARE THE GOVERNOR (The Independent - United Kingdom, Jan 29, 2000, 499 words)

ROBERT HARRIS did not enjoy his time in the Caribbean. It was a waste of time, he said as he flew out.

But then Mr Harris was not a holidaymaker. He was one of the last of a dying breed, the Governor of one of Britain's overseas territories, and like many of those hard-pressed men and women, he discovered that there is more to it than wearing a feathered hat. As Governor of Anguilla, Mr Harris had a tough time, a symptom of the increasing problems of many of the last red dots on the map.

"I did not have a successful tour and I have not found it possible to work closely with the government of Anguilla any more than my predecessors did," Mr Harris said as he departed. "I would go as far as to say I personally
regard it as a waste of my professional time."

Anguilla, a flat, dusty patch of scrub in the Leeward Islands, is the destination of choice for wealthy tourists seeking a quiet but luscious time: it has some of the best beaches in the world. But it is not necessarily paradise if you live there.

The island has been struggling with a constitutional crisis that has meant there is no effective elected government and no budget. For a community of 11,000, that is a big crisis. The British government has intervened to press for a solution to the problem, which is as much about personalities as policy, but to no avail. "The people of Anguilla have to make a choice either to go independent or accept the very light conditions that Britain imposes for its relationship with the country - to work together with the British rather than in conflict with them, for to do so would be foolish," Mr Harris said.

Anguilla is one of the very few territories that can claim to be a British possession by active choice, though it has a troubled relationship with London. Britain tried to put it into a federation with St Kitts and Nevis, and the islanders revolted. Soldiers and shirt-sleeved coppers from the Metropolitan Police were flown in to keep order, and the Union flag continued to fly in the Valley, the island's capital.

The islanders, especially Mr Hughes, interpret British policy as pressing them towards (unwanted) independence. Britain's White Paper on the Overseas Territories was a big issue in the elections, with some parties claiming it would have drastic consequences for the island. Yet the White Paper was intended to improve relations between Britain and its remaining colonies. There have been rows in St Helena, Pitcairn Island and volcano- devastated Montserrat about the terms of the ties between often small, poor, isolated islands and the motherland.

An additional problem is that Britain, which once churned out imperial officials as fast as it did steam locomotives and ships, no longer has a cadre of dedicated administrators. Most Governors or their equivalent are former diplomats at the end of their careers. Mr Harris had no experience in the field; neither does Peter Johnstone, his successor. Being consul-general in Edmonton (Mr Johnstone) or Lyon (Mr Harris) is a very different task from running a small country.

New elections in Anguilla may sort things out. A week after that, in early March, another relic of the Empire will arrive: Prince Andrew, on a visit to the Caribbean islands.

News 9 World Reporter All Material Subject to Copyright

CLASSIFIED SUPPLEMENT: Anguilla's big gamble: MICHAEL PEEL The country hopes to thrive by exploiting uncertainty about dealings over the net (Financial Times, Feb 10, 2000, 730 words)

The small Caribbean island of Anguilla is sending a kitsch but clear message to the rest of the world.

"Little acorns really do grow into big oaks!" is the dictum that appears on the screens of those using Acorn, the country's novel system for incorporating companies online.

The logic behind the software is simple: the internet is the future, and offshore financial centres are the place to use it.

"The big jurisdictions see this as a threat," says Alan Jones, registrar of companies. "It cuts out the middle man."

Like all the boldest talk, it risks over-optimism. For every attraction Anguilla has to offer, there is a corresponding concern. The suspicion is the country could be trading short-term gains for trouble later on.

Anguilla might be a case study for consultants piling in to internet business. The country hopes to thrive, in part, by exploiting global uncertainties about the status of dealings over the world wide web.

In doing so, it is tapping into a paradox of the net world. Companies might operate in the ether, but their location is of first-order importance. They must choose their country with care, knowing that laws on issues such as tax and due diligence could make or break an aspiring industry.

Anguilla's position amounts to a huge bet that deregulation will be the way forward. In 1998 laws were changed to recognise digital signatures. This built on long-standing rules that mean neither offshore nor local companies pay income tax.

Acorn is very much a part of all this. Its development was funded by the UK government, which wants to diversify the economies of overseas territories such as Anguilla. Mr Jones came out 2 1/2 years ago on secondment from the Department of Trade and Industry.

He has overseen development of an impressive system. The user inputs details and a name, which is accepted as long as it is not offensive or misleading. It took about five minutes to incorporate FT Limited. Due diligence comes in the form of restrictions on access. Users must be government-approved agents from Anguilla or overseas. Mr Jones says checks are stricter than in pre-Acorn days, when the authorities relied on local companies to vet foreign operators.

Mr Jones says the effect of going paperless has been modest but tangible. Incorporations rose 10 per cent last year to 750, a climb attributed to Acorn. "Effectively what Acorn does is give overseas agents a virtual presence on the island," says Mr Jones.

Immigration to Anguilla has not only been electronic. Internet businesses are setting up here, taking advantage of the island's fine environment and proximity to the US. "Anguilla is a quick place to get to," says Jon Gilliam, president of Hush Communications, which has offices in the US, Canada and Anguilla. "It's nice to go there for a board meeting and hit the beach."

There are more substantial reasons for Hush's arrival. The company offers software over the internet that allows users to encrypt e-mails. Anguilla's laws relating to this kind of business are more relaxed than those in most big economies.

This argument has two sides. Anguilla benefits from variations in the law that are unlikely to endure. The US has already slackened its regulations on encryption and the trend will probably be to scrap rather than make rules.

The same thinking can be applied to some of Anguilla's other competitive advantages. If the big economies get their way, the zero income tax regime may have to be scrapped. That may not be a problem for profitless internet companies such as Hush now, but it will influence their long-term thinking.

Anguilla also suffers from the problems and prejudices that afflict many small countries. Hurricane Lenny hit the island late last year. All communications went down as people were forced into hiding.

Perhaps Anguilla's greatest problem is one of perception. The country is a relative newcomer to offshore finance, and is disparaged by competitors. It is held to be poorly regulated, giving other jurisdictions a bad name.

Acorn has provided grist to this mill. People in other havens attack it as a licence for criminals to run amok in a country of 12,000 people that does not have the structures to cope. One such says: "They have started to run without walking."

This is unjust, say Mr Jones and others. The same goes for international efforts to force offshore centres to raise income taxes. Even the frequency of hurricanes has increased, adding further to the sense of unfairness. Mr Jones is all too aware of the potency of this outside pressure. A one-time critic of tax havens, he now defends Anguilla's cause with passion. He knows that for all Acorn's technical quality, the country's fate may be settled by decisions made elsewhere.

The ambivalence is reflected in Acorn's slogan. It is surely no accident that the aphorism of choice has a flip side. While every acorn can grow into an oak, the vast majority do not.

Copyright ' The Financial Times Limited

On to our scams section (same magazine):

Speaking of advertising, the web page of C.E.G. is being redesigned and rebuilt. Check it out at http://www.ceg.ai (there are other addresses and I'll provide them next time round when I find them!). It is being done (for consideration received) by Sombrero Information Services, one of the best website designers in the Universe. They can be contacted at Corporate@sombrero.ai. Availability is limited though, for all sorts of reasons, so if they cannot immediately help you, be patient and get in line. The wait will be worth it; meantime, shun impostors and upstarts!

Best wishes,

Graham