Truth and lies in the Cayman Islands: Tax haven’s former police chief calls for corruption inquiry documents to be released

For the career diplomat nearing retirement, there are worse postings than the Cayman Islands.

The grand residence of the Governor – who is appointed in London – backs on to the white sands of Seven Mile Beach and offers stunning sunset views across the Caribbean Sea.

After postings in Tokyo and Moscow, the islands must have held a strong attraction for Governor Stuart Jack. In his inaugural ceremonial speech to parliament he named disaster planning (for hurricanes) as one of his top priorities – along with law and order for the population of about 50,000 people.

So when he learned of allegations that a senior officer in his tiny police force had leaked sensitive information to the media, he must have thought it prudent to call in some of Scotland Yard’s finest to help him investigate.

Now retired and living in Kent, Mr Jack’s decision six years ago continues to follow him. The inquiry in the Caymans spiralled into a multi-million pound corruption inquiry and spanned two years – but fell apart in 2009 without anybody ever being charged.

And any possibility that the controversy might fade away has just been dispelled, with the Metropolitan Police asked to investigate whether Mr Jack – and other senior Foreign Office officials – misled Yard detectives.

The development once again throws an uncomfortable spotlight on the former Caribbean backwater that has become one of the most controversial of Britain’s 14 overseas territories.

The Governor is the most powerful man on the islands, with a beach named after him, not to mention presiding over the Cayman cabinet and appointing key posts like members of the judiciary and the police commissioner.

But Martin Bridger, a former senior detective who headed the corruption inquiry, Operation Tempura, claims that the former governor used his powerful position to authorise an apparently illegal search during the leak inquiry, and never told him about it.

The alleged failure to disclose the decision triggered the long-running investigation of the island’s police leadership, who were suspected of going “on a frolic of their own” by overseeing the search of a newspaper office in pursuit of evidence for the leak inquiry.

The investigation resulted in a £1m pay-out to a judge who was wrongly arrested, the ousting of the islands’ British police chief, and major criticisms of the inquiry in a judge-led review. The investigation petered out.

Mr Bridger has now responded, asking his former employers to look into the actions of Mr Jack and other senior FCO colleagues for possible misconduct in public office. The former Scotland Yard anti-corruption officer has vowed to hand over all the documents that he holds on the case to investigators – which could prove acutely embarrassing to officials in both Britain and the Caymans.

The governments have refused to release a report into the affair because it would have a “negative impact” on the islands and its financial sector. It could also raise difficult questions for senior Foreign Office officials in London about what they knew, and whether or not they were involved in discussions about withholding information, overseen by former assistant commissioner John Yates.

Mr Bridger says in his complaint to police: “They [Mr Jack and other senior officials] concealed from me, and the Metropolitan Police, the fact that they knew of the circumstances of the entry and that the Governor had directly authorised it.

“As a consequence over a number of months we conducted an investigation on a totally false premise.”

Mr Bridger’s request for a Met police inquiry is backed by one of the men he investigated and who was sacked as the island’s police chief as a result of the inquiry. Stuart Kernohan left the Caymans after he was suspended by the governor and was sacked when he refused to return. He has embarked on a claim for wrongful dismissal which is yet to be heard on the islands.

Mr Kernohan, a former senior officer in Merseyside, said: “At nearly every juncture, these probes have been resisted... this leads to the inevitable question: What are they hiding?”

Mr Jack, who spoke of the importance of increased transparency and openness in Cayman Island affairs, retired in 2009 after his final posting to the Cayman Islands, and moved back to Britain. He declined to comment to detailed questions sent by The Independent and referred all inquiries to the Foreign Office.

The Foreign Office official said: “Given this is a matter before the courts, we cannot comment further.”

Scotland Yard confirmed it has received papers on the case. Mr Bridger was interviewed last week by an officer from the department of professional standards at the Met. “We are currently considering our response. We have not commenced an investigation,” said a spokeswoman.

Mr Bridger made a complaint in 2010 about senior Foreign Office officials and members of the islands’ judiciary. The complaint was rejected but the 185-page findings have never been made public.

The Foreign Office has declined to release the report because it feared the fall-out could damage the Cayman Islands – and offshore banking. Mandarins felt that “disclosure of the information requested could lead to a loss of confidence within the international community.”

The island’s information commissioner has ordered its release but the islands’ current Governor, Duncan Taylor, is challenging the decision, a ruling without precedent.

“Show us the truth,” said Mr Kernohan in a statement. “I have nothing to hide.”