-Caveat Lector- from: http://www.nationalpost.com/financialpost.asp?f=990403/2440667 <A HREF="http://www.nationalpost.com/financialpost.asp?f=990403/2440667">National Post Online - financialpost </A> ----- Saturday, April 03, 1999 Islanders irked by RCMP raid on tropical tax haven Paradise Threatened Peter Kuitenbrouwer Financial Post Penrhyn Brooks, National Post / Arawak House is home to British West Indies Trust, raided by RCMP. Penrhyn Brooks, National Post / A typical scene on Grand Turk Island. Lynn Farrell, National Post / Inspector Gary Nichols, right, who is in charge of the Newmarket, Ont.-based Proceeds of Crime Section, says "we are sorting, scanning, and photocopying to complete this [investigation] as quickly as possible." Turks and Caicos Islands PROVIDENCIALES, TURKS AND CAICOS ISLANDS - Wealthy Canadians who bring their assets to this necklace of arid islets, east of the Bahamas in the Atlantic, have one thing in common with the 18th-century pirates, or turks, from whom the islands derive their name. Both like to bury their treasure on a desert island, where no one can find it. In the past few years, a considerable number of Canadians have quietly moved here to avoid Revenue Canada. These snowbirds don't bring snorkels. They still wear ties and set up law firms, accounting offices, and brokerages up and down the beaches. The draw is a jurisdiction without income taxes and some of the most secretive banking laws on Earth. But now a raid by Canadian and local police on a trust company -- as part of a money-laundering case -- has turned into an international battle over police jurisdiction in this tiny remnant of the British Empire. And the case raises questions about law enforcement on these few strips of sand where police are trained to catch speeders and burglars while the main industry, other than sunning oneself on the beach, is high finance. So far just one man, Richard Hape of Fergus, Ont., the chief executive of a trust company based here, has been charged with conspiracy to launder money. Still, police, who have spent three years and considerable resources on this problem, say they are on the trail of a much wider money-laundering operation. But "the invasion," as some call it, has sparked outrage in the growing professional community. "If I was the RCMP, I wouldn't want to be up there in Canada freezing my ass off on a horse," says Hugh O'Neill, an Irish-trained lawyer whose 18 years here make him one of the senior statesmen. "I'd rather be down here sunning myself at the expense of the poor bastards who pay 56% taxes for it." The backlash against the police has produced casualties. Last week, Lieutenant-Detective Thomas Bryan Davies, the most senior English police officer here, surprised both police and defence lawyers when he abruptly quit. Of four British officers in the Royal Turks and Caicos Police, two have returned to the United Kingdom since the February raid. "They're leaving like rats," says a police source. Still, before he quit, Lt.-Det. Davies insisted the police action, the biggest in the island's history, is necessary. "We must build confidence within the international community that we will root out such transgressions as may be uncovered," he says. "This is the ill that could ruin much larger establishments." Eager to finish their work, for the past two weeks at least 13 Toronto officers, most from the Royal Canadian Mounted Police, have been holed up at Allegro Resort, an all-inclusive luxury hotel on Providenciales, the most densely populated of the Turks' 30 islands. They are scanning thousands of pages of documents seized from Mr. Hape's trust company. According to Inspector Gary Nichols, they are working 24 hours a day in two 12-hour shifts to copy every document. He is the RCMP co-ordinator of the Turks and Caicos action. Insp. Nichols is the officer in charge of the Newmarket, Ont.-based Proceeds of Crime Section, a task force set up to fight money-laundering that groups the Mounties with five local police forces, plus Canada Customs and the Crown Prosecutor's office. "We are sorting, scanning, and photocopying to complete this as quickly as possible," says Insp. Nichols. "We're flying in another printing machine from Miami." Hotel security at the Allegro prevents entry to everyone other than guests. A reporter last week, posing as an interested guest, took a tour of the resort, an imposing spread of Spanish colonial splendour where rooms cost $250 (US) per person, per night. Included are meals at either a Caribbean or an Italian restaurant, all drinks, plus use of the Catamarans, windsurfers, snorkeling equipment, a disco, and a nightly dance performance. Hotel reception said the police were not in their rooms, and they were not visible elsewhere. While locals questioned the Mounties' choice of hotel, they are livid about the police copying all of BWIT's files. "There's an awful lot of very legitimate business people in Canada who have been doing very legitimate business with BWIT for many years," says Mr. O'Neill. "Their lives are being opened. If this turns out to be a fishing expedition it is an appalling abuse of process." Meanwhile, defence lawyers say they have restricted police action, and released details of the investigation. "It's all been cloak and dagger, dead of night, supposition and innuendo," says Andrew Rogerson, Mr. Hape's lawyer in Providenciales. "It's a sting operation that the RCMP have got out of their depth in." Through interviews with Canadian and local police and lawyers involved, the Financial Post has pieced together an account of the raid and its aftermath. On Feb. 16, a group of Mounties and Turks and Caicos police armed with a search warrant arrive at Arawak House, a colonial two-storey building on the tiny, sleepy island of Grand Turk (population 3,146) that houses the offices of the British West Indies Trust Co. Ltd. (BWIT). The police scoop everything into boxes -- including an air conditioner repair file, pilots' books on how to fly an airplane, instructions for deck furniture, and copies of the local statutes. In the building, police also search and take documents from both the office of lawyer Raimo Heikkila, and an apartment on the building's second floor. All told, they carry 101 boxes of documents out of Arawak House and, according to defence lawyers, load them on a Canadian police plane, preparing to fly to Canada. The same day as the Grand Turk raid, Mounties in Toronto arrest Lawrence Richard Hape, 47, chief executive of BWIT, charging him with conspiracy to launder $311,000, "knowing that all or part of that property or those proceeds was obtained . . . as the result of a commission in Canada of an offence under Part I of the Controlled Drugs and Substances Act." Police also say they searched "an accountant's office," in Toronto. Mr. Hape spends the night in jail. The next day, he appears at a bail hearing at Toronto's Old City Hall. According to a transcript of the bail hearing, Mr. Hape protests when a Crown attorney suggests he be released on $10,000 bail and a $100,000 surety, surrender his passport to the RCMP, and remain in Canada. "I work for a living," Mr. Hape tells the court. "I have a job." Hushing him, his own lawyer says: "Mr. Hape, I indicated to you that there is another venue for that type of application." The court grants bail. At the same time, police obtain restraint orders in Canada and in the Turks and Caicos freezing the assets of Mr. Hape, other BWIT employees, and BWIT itself, including Arawat House. Originally, police said they had also seized a company airplane, but now admit that so far they have been unable to put their hands on it. Right after his release, Mr. Hape puts in a call to Providenciales, an island at the other end of the Turks and Caicos chain where most of the professionals work. His call is to McLean McNally -- the most prominent law firm in the colony -- housed in a colonial building where the Maple Leaf flutters out front. Hugh McLean, the senior partner, is Canada's honourary consul. The firm puts Mr. Rogerson on the case. Mr. Hape then retains Conrad Griffiths of Misick & Stanbrook, the second-largest local firm, to act for BWIT. In so doing, Mr. Hape sews up the two top litigators in the colony. "Clients often hire both Conrad and myself," says Mr. Rogerson, "so the other side won't have an experienced litigator." But he notes there is nothing odd about the Canadian consul's law firm representing Mr. Hape against the RCMP. "The RCMP asked us to act on their behalf but telephoned us two hours too late, as we were already giving assistance to Mr. Hape, a Canadian national," says Mr. Rogerson. "It's called the cab ride principal, you have to take on the first person who is in need." Events since then suggest police didn't count on the hurricane that would bear down on them from these two gold-cufflink-sporting English barristers. Mr. Rogerson and Mr. Griffiths are just a half-hour hop by airplane from the Grand Turk courthouse and well-schooled in the intricacies of the colony's byzantine legal system. While based on British Common Law, the system is still unique -- marriage dissolution, for example, is governed by the Jamaican divorce act of 1840. In a flurry of motions -- all restricted from public viewing --the defence says it has already severely clipped the polices' wings, leaving authorities scrambling to fight back. "The British government at one stage had five [lawyers from the Crown Prosecutors Service] in from London to help out," says Mr. Rogerson. In seven court appearances since Feb. 18, the two lawyers say they have: z Stopped the RCMP plane from taking off for Canada with BWIT's documents; z Won a court order forcing the RCMP to return items seized from Mr. Heikkila's office and erase a copy of his database, in the Turks and Caicos in the presence of his representative, and pay all his costs; z Won another order forcing the return of material taken from Mr. Hape's apartment above the BWIT offices; z Obtained about 125 pages of transcripts of wiretaps and secret recordings of meetings; z Filed civil suits here against the RCMP and officers Scott Boyle and Donald Clark, seeking return of documents and damages. Officer Boyle has since been pulled off the case and returned to Metro Toronto; z Uncovered details of a secret RCMP night search of BWIT one year ago. Sources confirm that in March, 1998, Mounties and local police broke in to Arawak House at night, downloaded all the computer files and took them back to Canada , leaving no trace of their presence. "BWIT says searching in that way is unlawful," says Mr. Griffiths. "At the very least they should have left a warrant and no warrant was left." A source close to the investigation, though, says such a secret search is legal under certain conditions. "[The police must] satisfy a judge that it's not in the public's interest to divulge that [they] were there," the source says. "This is all as a result of court authorization." The Financial Post has confirmed that the investigation of Mr. Hape began in April, 1996. Sources on both sides confirm the police case is based on a tape-recorded interview with Mr. Hape and a police informant posing as a dealer who earned money selling drugs in Canada. "The alleged crimes would have never taken place were it not for the incitement of the RCMP," Mr. Rogerson says. But a source counters that "it's a police technique acceptable in Canada, acceptable abroad." Mr. Griffiths further counters that the RCMP were never sworn in as Turks and Caicos police as is common practice. "Nobody's saying they couldn't apply for a lawful warrant and carry out a lawful search," Mr. Griffiths says. But he added: "There are a significant number of private clients who have nothing to do with the investigation whose businesses are being disrupted and potentially damaged." David Jerimiah, attorney-general, did not return calls. The police admit the legal backlash has slowed their work. "They're dropping motions and lawsuits on us at an alarming rate," Insp. Nichols says. After a court ordered that BWIT's original documents must not leave the colony, Insp. Nichols says police then flew the boxes from Grand Turk to Providenciales, "because there are no facilities on Grand Turk." Police then flew down a planeload of electronic equipment from Canada, including a super gravity optical scanning system, in a bid to catalogue the material. "We're opening the boxes and scanning them in one by one," says Lt.-Det. Davies. "This is the first time anything of this magnitude has ever been done. It's like when you're fishing, it's easy to catch the little fish." But the source close to the probe says that when the full story comes out, critics will understand why police have acted in the way they have. The source says Mr. Hape's assets in Canada are minimal, but he is suspected of owning properties abroad. The source says the police search warrant restricts officers to copying documents relating directly to those named in the investigation. Others, whose assets are now frozen, are not under scrutiny, the source says. "Crimes are committed every day and there are innocent victims," says the source. "This is not a witch hunt or a fishing expedition." "The only information we're interested in is with respect to people named in the investigation," the source says. "Our people will see documents but will return those documents from people not linked to the investigation, and no disclosure will be made." Copyright © Southam Inc. All rights reserved. ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! 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