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Tax haven's leader arrested on suspicion on corruption

Wednesday 12 Dec 2012 7:18 a.m.

Cayman Islands Premier McKeeva Bush (Reuters)

Cayman Islands Premier McKeeva Bush (Reuters)

By David McFadden

The top official in the Cayman Islands was arrested Tuesday on suspicion of corruption in the famed Caribbean tax haven.

Premier McKeeva Bush was arrested at his home Tuesday morning in the West Bay section of Grand Cayman island by officers from the financial unit of the Royal Cayman Islands Police Service, said spokeswoman Janet Dougall.

The 57-year-old Bush was detained "in connection with a number of ongoing police investigations", Dougall said in a statement. Those include probes into suspected theft related to misuse of a government credit card and breach of trust for the alleged importation of unspecified explosive substances without valid permits.

Authorities in the British Caribbean territory did not provide any details about the allegations. "It would be inappropriate for the RCIPS to make any further comment in relation to these matters at this time," the police statement said. "Further updates will be made available in due course."

Leonard Dilbert, the premier's chief of staff, stressed that Bush will continue working as the three-island territory's leader amid the ongoing police probes.

"There have been no charges," Dilbert said in a brief phone interview from the small island chain.

Meanwhile, the islands' 700-member Chamber of Commerce applauded news of the top official's arrest by investigators.

The premier's arrest "demonstrates Cayman's robust law enforcement and anti-corruption systems and the islands' intolerance (of) any alleged unethical behaviour or corruption even at the highest level of political office," the chamber said in a statement.

The islands' monetary authority and bankers' association did not immediately respond to emails and calls.

Private equity and hedge funds flock to the Cayman Islands, which offers tax advantages for fund managers and some of their foreign and nonprofit investors. Setting up shop in the islands, usually nothing more than a mail drop, also provides them a large degree of financial secrecy while avoiding the far tighter financial regulations of the US and other nations.

Bush was elected premier in May 2009 when his United Democratic Party won nine spots in the 15-seat Legislative Assembly, defeating the People's Progressive Movement. Bush created the UDP in 2000 when he was tourism, environment and transport minister.

Bush wields great power within the territory because he is finance minister as well as head of government. He also is the longest serving member of the Legislative Assembly, having first been elected in 1984.

Following the elections, Bush has focused on retaining foreign finance firms and generating more revenue for the British territory. It is the world's sixth largest financial centre, with US$1.6 trillion in officially booked international assets.

In July, Bush created waves when he proposed the islands' first direct tax, which had targeted expatriate workers who earned more than US$20,000 annually. It had outraged investors and many people living on the islands, where financial services and tourism are the pillars of the economy. Bush later scrapped the plan following an international outcry.

Bush had been the target of several police investigations prior to his arrest.

In late 2010, police began investigating allegations of financial irregularities. Then in April, police said they had opened another investigation of Bush. He has said he has done nothing wrong, and that the investigations are politically motivated.

AP

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