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How corruption in paradise ensnared Canadians' dream deal Add to ...

Many a visitor to the Turks and Caicos islands has dreamed of driving a stake into its white sandy beaches and laying claim to a plot. Rolling Stones guitarist Keith Richards and actor Bruce Willis both own seaside estates in the Caribbean nation. A few years ago, former New Brunswick premier Frank McKenna and Conservative MP Peter Goldring were involved in a brief, ill-fated campaign to annex the country as Canada's 11th province.

But, as some prominent Canadian developers have recently discovered, grabbing hold of paradise has its downside.

A condominium and resort project headed by Toronto developer David Wex and celebrity realtor Brad Lamb has found itself - through no fault of the developers - ensnared in a judicial inquiry into systemic corruption among the islands' public-office holders.

A recent report by British judge Sir Robin Auld found that the Turks and Caicos government, led by former premier Michael Misick's Progressive National Party, routinely accepted bribes from overseas developers and that Mr. Misick and his ministers exploited the government's Crown land policies "for their own corrupt reward." The United Kingdom, which has sovereignty over the islands as one of its 14 overseas territories, has suspended the country's Constitution, appointed special prosecutors to pursue criminal charges and thrown Mr. Misick - who is crying "modern colonialism" to anyone who will listen - out of office.

Stuck in the middle of this probe into multiple questionable land deals, as well as into Mr. Misick's illicit use of a private jet, sits Blue - a yet-to-be built resort that Mr. Wex, Mr. Lamb and a group of Irish investors first conceived of in 2005.

There is nothing in Sir Robin's report that suggests the Canadian developers approached the government to help them acquire the resort site. Nevertheless, the inquiry found that their purchase of the land produced a $5.5-million windfall for the same government ministers who approved the development.

"I'll tell you, I had no idea about this," Mr. Wex said of the behind-the-scenes kickbacks that ensued from his project. "How do you think we feel? We look like idiots."

Mr. Lamb, best known for his corny, if effective, advertisements featuring his head superimposed on a lamb's body, as well as his reality-television show Big City Broker , said in a separate interview: "We bought the land for fair market price. I think we probably overpaid for it. At no time were we … aware of anything going on that was untoward."

The saga of Blue began in 2005 when Mr. Wex and a group of potential investors - Mr. Wex recalls it as "a day I rue" - visited the islands, about 200 kilometres north of Haiti, to scout out possible sites. Such a purchase is tricky for a foreigner. Island law dictates that the 12,000 or so local inhabitants known as "Belongers" are first in line to acquire the pristine beaches and coves that encircle the archipelago.

So when the Canadians set their sights on 20 acres of untouched beachfront property, they connected with a local lawyer and friend of the ruling PNP party, Melbourne Wilson, a power broker known throughout the islands as "Mebby."

Mebby rounded up four Belongers, all of whom happened to have strong ties to the government, to apply for the land. One applicant was a sitting member of cabinet, Jeffrey Hall, then the minister of housing and agriculture. Two others were the siblings of ministers, and the fourth was the ex-husband of the education minister, Lillian Boyce.

The government handed the land to the Belongers at a discounted price of $1.4-million and approved the development of a resort. When the land transfer came up before cabinet, none of the ministers with ties to the deal excused themselves, nor did they declare their interest in the deal, Sir Robin found. The official cabinet minutes show "there was no suggestion that the ultimate developer would be an overseas entity," the judge wrote.

The Belongers quickly turned around and sold their interest to the Canadian developers at the inflated price of $7-million, the inquiry found. "[The Belongers]took effectively no risk and profiteered at the expense of the Islands," the inquiry report states.

After the deal went through, the Belongers distributed hundreds of thousands of dollars to their relatives in government who had approved the Crown land transfer. Eventually, $350,000 trickled down to the now-deposed premier, Mr. Misick. Under cross-examination at the inquiry, many of the public officials involved said the payments given to Mr. Misick were "loans."

(Whenever Sir Robin referred to these payments in his report, he italicized the word "loan." He also highlighted the fact that Mr. Misick was considerably more wealthy than any of the people lending him money, that the loans had no terms or rates of interest, and that no attempt had been made to repay them. He dubbed the loans a "convenient fiction.")

The Canadian developers say they had no idea about the kickbacks that were set in motion by their acquisition and weren't aware they paid about 500 per cent more than the Belongers. An appraisal valued the property at about the price they paid, they said.

A lawyer for Mr. Wex pointed out that the developers didn't receive from the inquiry what is known as a "Salmon letter," a formal warning that an individual is about to be criticized. The absence of such a letter "indicates that Sir Robin cannot have intended to cast any aspersion against Mr. Wex and any attempt to infer such criticism from the report is plainly mistaken," the lawyer, Martin Green, wrote in an e-mail.

Mr. Green also said that $10,000 that Mr. Wex sent to the islands in February of 2007 was mischaracterized in the inquiry report as a "gift" for Mr. Hall, the former housing minister.

Mr. Wex acknowledged giving $10,000 to Mr. Wilson - the lawyer and PNP insider known as Mebby - as a political donation to his party more than six months after the Blue site was purchased. The developer said he sent the money at the behest of Mr. Wilson, who was soliciting donations in the lead-up to an election. It was never meant to be given to Mr. Hall as a gift, but that's what the minister called it when it came time for him to testify. This was a common theme that Sir Robin highlighted in his report - the inability of Mr. Misick and his ministers to distinguish between party funds and personal funds.

The Canadian development group was annoyed by Mr. Wilson's request for a party donation, said Mr. Wex's lawyer, Mr. Green.

"They didn't want to make any payment. They thought it was cheeky for him to ask, but rather than upset him they took the line of least resistance. In plain view of what's transpired perhaps that was unwise, but they thought the easiest thing to do was, in the context of these things, give what was a fairly modest donation and hopefully that would be the end of it," Mr. Green said.

The cleansing process in Turks and Caicos is under way. Recently an auction was held to rid the government of one of the more ostentatious symbols of Mr. Misick's rule - the seven black Range Rovers that the former premier acquired, at public expense, for himself and his cabinet shortly after his election.

Britain has promised the country will hold an election, in which island-dwellers will select a new government, by 2011.

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