December 1, 2020

Old expensive trial and it wasn’t Operation Tempura

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MI6-Verbal-Reasoning-Test-jobtestprepCayman approaches the 10th anniversary of a major trial that rocked the very foundations of our banking industry. It was an expensive farce and involved corruption and money laundering and a UK’s MI6 ‘mole’.

If you thought Martin Bridger and his connection with the UK’s Anti- Corruption Squad “The Untouchables” CIB3 investigation into Operation Tempura was a farce, have you forgotten Euro Bank?

Whether you have or not, or you are new to the Cayman Islands you will find the following interesting reading:

MI6 role in Cayman investigation exposed as Austin Powers farce

Paul Lashmar, The Guardian, Saturday 18 January 2003

The call from an MI6 controller in London to his top agent on the small island was electrifying: “Destroy everything that connects you to us!” Brian Gibbs unlocked his filing cabinet and reached for the shredder.

But events that followed the dramatic phone call last July to Grand Cayman have since proved to be more like Austin Powers than James Bond.

The sun-soaked Cayman Islands, a former haunt of pirates and turtle catchers tucked away in the Caribbean between Jamaica and Cuba, have a reputation for iniquity.

A short flight from the drug barons and tax dodgers of Miami, the islands’ lucrative off shore industry has made them a magnet for organised crime. They claim to be the world’s fifth largest financial centre, but the Caymans spent some time on an international blacklist imposed by the anti money laundering organisation Financial Action Task Force.

Britain, which is still the colonial power, has come under pressure in recent years to clean up the islands. And since the end of the cold war MI6 itself has found a new role gathering intelligence on drugrunners, organised crime and money launderers.

The tragi-comic story of this week’s collapse of a major trial and the subsequent exposure of MI6’s operations shows, however, how difficult the secret service still finds it to reconcile intelligence gathering with law enforcement.

MI6 appears to have been desperate to hide its true role during the prolonged trial. For much of last year, lawyers and agent-runners were shuttled between London and George Town, the Caymans Islands’ tiny capital. But they failed.

The saga began in 1999, when a US arrest led the Cayman’s UK-appointed governor to close one of the local banks, the Euro Bank Corporation.

A bank client, Kenneth Taves, had been arrested in California and charged with masterminding a $25m credit card fraud. Investigations began into alleged personal payments he had been making to a British banker in the Caymans.

A former Metropolitan Police detective, Brian Gibbs, director of Cayfin, the Cayman Islands’ financial reporting unit, played a key role in the investigations. But, unknown to many on the island, he was also working for MI6.

In 2000 the Cayman authorities laid charges against nine people connected to the Euro Bank scandal. Four people still on the islands were brought to trial, Brian Cunha, Judith Donegan, Ivan Burges and Donald Stewart, who are all believed to be British expatriates.

But when the trial began a team of expensive QCs, including Michael Hill, former chairman of the Criminal Bar Association, began to investigate the background of prosecution witness Edward Warwick, a Euro Bank assistant manager. They unearthed his role as an informant to the head of Cayfin, in a trail that eventually led to MI6.

In a seven-page statement seen by the Guardian, Mr Gibbs was forced to disclose some of his links. He said: “I first met Edward Warwick when he was employed at Finsbury Bank & Trust in the early 1990s, regarding a drugs inquiry, whereby monies had been fed through a company used by a drugs organisation in Thailand.”

Mr Warwick subsequently moved to work for Euro Bank. Chief justice Smellie said in his judgment this week, “It has now come to light that W[arwick] was a long standing source of intelligence from within the bank. He was regarded as being of high value to Gibbs and the UK government agency within the context of the intelligence operation against [Euro Bank]. That operation was code-named Operation Victory and for the purposes of Operation Victory – as between Gibbs and his controlling agent… in London, W was assigned the code name Warlock.”

As pressure mounted during the trial for Mr Gibbs to reveal his mole, there was a bizarre development. The former detective claimed he discovered that the Royal Cayman Islands police – a separate body – were planning to execute a search warrant against the head of Cayfin, saying that they suspected that he was tapping the telephone of the chief justice. Mr Gibbs claimed there were no grounds for such suspicions.

According to this week’s judgment his London controller, an MI6 officer identified only as “John Doe”, then told the Cayfin chief to destroy all evidence connecting him to MI6.

Mr Gibbs says in his statement: “This was done in order to protect the confidentiality of my contact with the UK government. Accordingly, all records… relating to the UK were destroyed.”

But reaching for the shredder turned out to be an error of judgment. The defence counsel pushed for information and Mr Gibbs was ordered to produce records of all his dealings with his informant.

To help their man out of the crisis, MI6 constructed an elaborate scheme to return a censored version of the records Mr Gibbs had originally sent to London. This could be produced as though it was a genuine Cayfin document.

The plan didn’t work. The records were contradictory and the deception unravelled.

His MI6 controller was eventually forced to testify to the Cayman court under the pseudonym “John Doe” and conceded Mr Gibbs had destroyed evidence “completely and unquestioningly” on MI6 orders. The judge decided to rule that efforts by Mr Gibbs and MI6 to hide the intelligence files fatally prejudiced the case against the Euro Bank defendants.

And this week the judge completed MI6’s embarrassment by pointing up the clash between the “James Bond” ethos and the rules of the courts.

“The decision to allow Gibbs to inhabit the shadows without having to appear in the searching light of this case encouraged and indeed, in my view, emboldened him in his misplaced sense of priorities for his relationship with the UKG agency to the point, as the examination of the circumstances will show, of placing his own position and that of the UKG agency above his duties to this court. And above his duty to ensure that the defendants received a fair trial.”


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