Marauders, drifters, tourists, and fortune-seekers come and go, yet the unspoiled Caribbean of the imagination endures. Up here, 1,500 feet above the Turks and Caicos Islands, it's easy to believe that there's still such a thing as virgin territory, that it's possible to start over in a perpetually golden-lit and languorous world. "We call it the land of prosperity and blind optimism," chirps Lucy Mott Lee from the backseat of the single-engine Cessna piloted by her husband, Jeff.
Spread out below are the 40-odd islands, most of them uninhabited, that make up Turks and Caicos. The blue water is so clear you can count every reef, so still you can see the odd cloud reflected in it. Lucy and Jeff have agreed to offer a view from the sky of what wary developers wrought on the ground: shuttered private-island resorts and abandoned luxury hotels marring the landscape, suspended in time by financing woes, criminal investigations, or both. This British territory, largely undeveloped in the 20th century, became a playground for celebrities and the ultrarich as its reputation grew along with the easy money and loose credit of the boom years. In the last 10 years, dozens of new developments were started, almost all of them aimed at the most extravagant end of the luxury market. When the credit spigot was shut off, it didn't take long for things to screech to a halt.
The economic collapse was exacerbated by a charismatic and allegedly corrupt leader, Premier Michael Misick, whose actions helped drive Turks and Caicos into financial and political ruin, according to evidence presented by a Commission of Inquiry that was appointed by the local British governor at the recommendation of the British Parliament's Foreign Affairs Committee. Once, condos couldn't be built fast enough to meet demand; now the money has vanished, and locals wonder whether there are enough prison cells for the former government officials being investigated by the British special prosecutor.
Around the world, the popping of the credit bubble has resulted in relatively few arrests. In countries such as Greece, Ireland, and the U.S., taxpayers are footing most of the bill for what happened in that murky zone between greed and criminality. The British have determined that here it will be different: There will be a full accounting, there will be consequences, and then this island nation will start over. In 2009, as the global economic chill hit Turks and Caicos, which had enjoyed a peak annual gross domestic product of $800 million the year before—65 percent from construction, finance, and tourism—the British announced that they'd found evidence of deep-seated corruption throughout the state. After public hearings two years ago, they dissolved the ministerial government, suspended parts of the constitution, and postponed elections. Civil and criminal investigations are under way.
Turks and Caicos still has exquisite beaches, English as a native language, the U.S. dollar as its currency, and British oversight—all appealing to visitors and investors. Even as the sun-hungry and the wealthy have begun to return, the Islanders are still waiting: for punishments to be doled out, for the return of self-rule, maybe even for a long-term economic plan.
The Cessna makes its way back to the air base on Provo, short for Providenciales, the main island where Misick once had two private jets on call. The plane glides by the mansion complex he put on the market in February 2010 for $15 million. The house, named Villa Belview, features Greek-style porticos, a cigar den, a screening room, and a glass-bottom pool. It hasn't sold.
Lucy Lee, a Floridian who has been here for 30 years, offers another name for the place: "Land of Incredible Failures."
In retrospect, Turks and Caicos was primed to rise and fall with the real estate excesses of the most recent Gilded Age. The cluster of islands is an offshore tax haven, though it has never enjoyed the prominence of Cayman or the British Virgin Islands. Unlike those islands, it was almost entirely undeveloped, despite being only 90 minutes from Miami. The local population, descendants of stranded African slaves, numbered just 10,000, and anyone determined to find an education or a job beyond fishing or local government had to leave.
That showed signs of changing in 1984, when Club Med arrived and paved a road from its new resort to the airport. Today, Club Med and the Sandals-owned Beaches resort remain the only major chains in a country that has no Hilton, no Marriott (MARR), no McDonald's (MCD). It also has nothing in the way of agriculture or manufacturing. What it does have, it has in abundance: some of the best beaches in the region, pristine and white-gold and turquoise.
The plan, if there was one, began and ended with luxury. The geography could offer the seclusion demanded by the ultra-high-end customer, and the islands lacked the restrictions on foreign ownership of many of its neighbors. Turks and Caicos soon had better flight access than similarly positioned Anguilla and St. Barths as well. And for the first major wave of overseas investors, Turks and Caicos was a bargain. "Here you could get beachfront land for $350,000 an acre, compared with $2 million in Cayman," says Stan Hartling, a Canadian-born resort and condominium developer. "And there were no major players to knock you out of the marketplace."
The trick was getting financing. "The first time I had a FedEx (FDX) package sent here, it went to Istanbul," says Mark Durliat, an American who is chief executive officer of the Grace Bay Club hotel and condos. Potential lenders would ask, "'Turks what? How much equity do you have?' They would ask for three times what we said we had." Construction was fueled by brisk presales among affluent boomers, most of them from the northeastern U.S., and a crop of luxurious condo-hotels soon sprouted along Grace Bay beach in Provo. The private island resort market, with an eye toward the success Singaporean luxury barons Christina Ong and husband, Ong Beng Seng, had had with Parrot Cay, launched an arms race for celebrity anchor tenants and exotic amenities. Never mind the logistical challenges of building on far-flung cays with no infrastructure. As Andy Wimsatt, former managing director of the West Caicos project, put it: "The nail's imported, the hammer's imported, and often times the worker swinging the hammer is imported, too." The cost of building was high, but as long as the money kept flowing, no one cared. The population swelled to 36,000 with guest workers and expatriates from around the world. "You could fall down the stairs and fall into a pot of money," says local lawyer Timothy P. O'Sullivan.
It wasn't the first gold rush Turks and Caicos had seen; the outer islands are littered with the marks of previous centuries' failed exploits, and legitimate businesses have always co-existed with swindlers and despoilers. The Ritz-Carlton, which was to be built on West Caicos, is named after Molasses Reef, a Spanish shipwreck, which was plundered by rogues 30 years ago before archaeologists could get to it. Local lore has it that Parrot Cay's original name was Pirate Cay, before marketers renamed it.
For modern-day Turks and Caicos, the economic hangover was already setting in when the British alleged, in a May 2009 report from the Turks & Caicos Islands Commission of Inquiry, that there had been a "high probability of systemic corruption in government." The treasure in question: thousands of acres of prime public land, the islands' only natural resource, and millions of dollars spent on private jet travel, stylists, and sundry personal enrichment. The alleged rogues: deep-pocketed businessmen and Turks and Caicos' local elected government, chiefly Misick, its Premier.
Misick, 45, describes himself on his Facebook page as a "charismatic visionary," and few who know him dispute the first part. One former associate says he moved around with an intimidating bodyguard, and the British, charged with oversight of the islands, including defense, financial regulation, police, and the court system, stood by as Misick's flamboyant lifestyle became intertwined with the local economy.
Misick's nickname was Iron Mike. His stated dream was to make Turks and Caicos the Monte Carlo of the Caribbean. He had trained as a lawyer in England and, in Turks and Caicos, ran a property and financial-services firm. After rising through the Progressive National Party, or PNP, ranks to become Tourism, Transportation, and Communications Minister, he was narrowly elected Chief Minister, the highest elected office, in 2003. (In 2006 the Chief Minister title was changed to Premier.) He and his cabinet came to be known as "Mike and the boys."
In 2006, with the island economy booming, Misick married actress LisaRaye McCoy, a lithe, fiercely determined American who had worked as a model and hip-hop video star. "I had just wrote a list of the type of man that I wanted in my life," McCoy would later testify before the British commission. She "felt that God kind of sent him to take me away." Since McCoy was busy shooting a sitcom called All of Us, Misick flew her by private jet from Los Angeles two or three times a month, at a cost of $100,000 round-trip, according to her testimony at the Commission of Inquiry hearings. They married at the Amanyara resort, McCoy in a Swarovski crystal-encrusted dress with a 30-foot train. "Fairy tales do come true," she told Ebony.
The couple lived in Villa Belview and planned another palace in Los Angeles. A Gulfstream III took McCoy on vacations to Africa and to visit her daughter in boarding school in Switzerland, according to her testimony. For years, McCoy has dressed exclusively in white, and she told the commission that she required a "First Lady" wardrobe complete with gloves and hats in the same color, by her own estimate spending as much as $200,000 a month. Never mind; Misick had an American Express (AXP) Centurion Card. "He would always say constantly … 'We ain't broke, we rich.' That was, you know, our little slogan around the house," McCoy testified. She said she assumed he'd made the money in his previous business ventures. McCoy also told the commission of Misick's generosity to constituents, handing out cash while campaigning—"not a lot, a $100 bill here and there." Former Deputy Premier Floyd Hall testified that he spent about $15,000 annually on the 200 mothers in his constituency, much of it on jewelry. The entire electorate was fewer than 7,000 people.
Like all modern fairy tales, this one had its own reality show, a pilot produced by Lifetime. It was going to be called The Premier and I. The vice-president for reality programming at Lifetime told Variety it would be "a voyeuristic look at the lifestyles of the rich and famous." It also had an ad campaign for the islands, for which Misick's tourism ministry paid McCoy $300,000 to star in an eight-day photo shoot, according to the commission. The ads ran in W and Vanity Fair. McCoy told Bloomberg Businessweek that the campaign boosted tourism by 40 percent, although a recent British-commissioned Tourism Working Group report put the annual net increase at less than 2.5 percent. Turks and Caicos spent more than twice the Caribbean average per tourist, according to the same report. Condé Nast has since sued the country for more than $1 million in unpaid bills.
In the spring of 2008, Misick was accused of raping a woman at the villa (the case was investigated by the FBI but no charges were filed), and in August, McCoy and Misick brought domestic violence charges against each other and announced their intention to divorce. In December seven members of Misick's PNP publicly turned on him, announcing that they'd tired of his "tabloid, D-list, Hollywood-style of leadership."
They had reason to distance themselves: The British governor had called for a Commission of Inquiry into possible corruption in the Misick administration. Its hearings, which began in January 2009, laid bare the commingling of PNP funds, public assets, and Misick and his inner circle's personal spending, and led to the naming of a special prosecutor, Helen Garlick, and a Civil Recovery team charged with clawing back as much loot as it could. The commission recommended a criminal investigation into "high probability of systemic corruption in government," naming Misick and four senior members of his cabinet.
A policy had long been in place to empower Belongers—the favored political status given to indigenous Turks Islanders—to purchase public "Crown land" at a deep discount. That policy, the Commission of Inquiry report suggested, had been abused by ministers and their families, who purchased adjacent tracts of land at a deep discount and then "flipped" them to developers at great profit. The Natural Resources Minister actually wrote a letter addressed to himself, approving his own purchase of Crown land, according to the Commission of Inquiry.
The British also demanded explanations for vaguely worded "loans" made to Misick or his brother; "finder's fees" for private land sales to developers who were currying his favor; undisclosed ownership interests in major projects; and "donations" to the PNP of as much as half a million dollars by developers. Of one $100,000payment from a company called Caicos Construction to the PNP, the U.K. counsel demanded, "What is political about that, Mr. Misick? … Here is some money to use for yourself. That is not a political donation. It is a gift possibly."
"You are obviously not a Caribbean politician," said Misick.
"I am still waiting to hear from a Caribbean politician, with respect, sir, what it is about $100,000 from a construction company that has a political angle to it when it is put into his wife's company so she can go and spend it in the USA," the lawyer replied. (PNP payments of hundreds of thousands of dollars had been made to McCoy's American stylist, according to the findings.) "Explain it to me again, please."
The Commission of Inquiry hearings devoted considerable time to the relationship between Misick and Slovakian developer Mario Hoffman, characterizing it in a way that Hoffman's representatives vigorously fought. The commission's report alleged that Hoffman gave a company controlled by Misick's brother Chal an undisclosed 50 percent share in Hoffman's grand-scale development on Salt Cay, which was in turn used as collateral for a $6 million loan to Misick. A Salt Cay homeowner who resisted selling her plot there testified before the commission that Hoffman had said he "owned" the government. Stefan Kral, CEO of Salt Cay Devco, Hoffman's company, told Bloomberg Businessweek that the company was fighting back in civil proceedings after Garlick filed a writ to halt the development. Chal referred requests for comment to Kral.
Misick resigned in March 2009, replaced by another PNP member, until the British dissolved the entire government and suspended the constitution in August. The governor, Gordon Wetherell, announced, "Our goal is to make a clean break from the mistakes of the past by establishing a durable path towards good governance, sound financial management, and sustainable development." It would be yet another new start.
Misick did not respond to repeated requests for an interview submitted to Karen Misick, operations and sales manager for his company, Prestigious Properties. (She is also his niece.) In Misick's resignation statement, he said he had "regrets and personal pain and agony" partly resulting from his "mistaken judgment." Later he told The Times of London that to create the Monte Carlo of the Caribbean, "You need First World infrastructure, First World accommodations, celebrities, businessmen. … That is a policy direction. Is that corrupt? No." He has said several times that he dreams of leading the islands to independence from the British.
According to a recent British report, the economy doubled between 2002 and 2008, yet in that time public spending tripled and public-sector employment almost doubled. Even without its criminal problems, the country faces around $365million in public-sector liabilities, and lawsuits over unpaid bills have piled up. All of this happened as prize Crown land was sold off to the politically connected at far below market rates. It seemed that the days of the pirates weren't in the past after all.
Misick told The Times of London, "I am a simple island boy who grew up here, was born here, and will always live here."
Two years after the Commission of Inquiry hearings, Turks Islanders aren't blaming Misick for their bleak future; they're blaming the British. At a forum the British set up to give Turks Islanders a say in the reorganization, a local woman named Linda Williams complained that the British "are saying to the world, 'This is a bunch of crooks.'" Misick himself called the British governor a "racist dictator" before the Turks' House of Assembly, before the House itself was dissolved, according to press reports. With cuts looming in the civil service and construction jobs long gone, as many as 10,000 people, almost a third of the population, are believed to have left the island since January 2009, according to two executives at local utilities. The only locally owned bank has been liquidated. A crime wave—robbery, arson, a small number of murders—has shocked locals. Canadian contractors are set to take over the police force.
"I suspect if you dug deeply enough and took a jaundiced enough view of it, you could probably throw these kinds of claims against half the population," says attorney Gordon Kerr, a financial-services commission member who worked on some of the deals being scrutinized and works for a law firm run by Misick's brother. "Do you sue someone whose kids got a scholarship because they were connected politically? How far do you go?" Overall, the expat-dominated business community expressed frustration that all business done on the island has been sullied before any charges of corruptions have been brought.
Misick's associates included Jamaican businessman David Smith, who had moved to Provo and been granted Belongership. The U.S. has charged him with fraud and money laundering in a $200million Ponzi scheme in federal court in Florida. Smith pleaded not guilty. In January a PNP protocol officer became the first Turks Islander to be arrested in connection with the case. Garlick recently told the local Turks & Caicos Sun that money laundering forms a major part of the investigation.
The Independent newspaper in England is currently locked in litigation with Lord Michael A. Ashcroft, whose British Caribbean Bank is a major lender to developers on the island and where PNP and Misick accounts were held. At the center of the libel suit, on which a judgment is expected this week, are two reports in the paper that Ashcroft's bank funded Misick's lavish lifestyle with a $5 million loan. A spokesman for Ashcroft, a major donor to the British Conservative Party, told Bloomberg Businessweek: "Neither Lord Ashcroft nor any business with which he is or has ever been associated has extended a loan to fund Michael Misick's lavish lifestyle." A recent report on Ashcroft by the BBC's Panorama said his dealings in Turks and Caicos are a subject of Garlick's investigations. The spokesman said, "Nobody connected with Lord Ashcroft has any knowledge of it."
The Civil Recovery team appointed by the British has so far attempted to regain what it says was lost revenue on the sale of a $48 million private island villa and a handful of Crown land sales, and recently asked the Supreme Court to allow it to terminate a development agreement for a Provo resort, Third Turtle Club & Spa, which it says was tainted by bribes to Misick and his deputy. This month the British came through as guarantors of a $260 million commercial loan to the islands—a Caribbean Troubled Asset Relief Program.
Jeff and Lucy Mott Lee are still waiting for the lights to go back on in Ambergris Cay so they can pilot their Cessna to their plot there. From the sky, all looks well on the island, with its dramatic 5,700-foot jet strip jutting into the water and the ultraluxurious residential community where Anne Hearst and Jay McInerney own a home. But water and power have been shut off since November, when the development went into receivership.
At least that project was mostly finished. The private island resort of Dellis Cay, near Provo, promised to be an eco-friendly haven, as imagined by star architects Zaha Hadid and Piero Lissoni. Catherine Zeta-Jones and Michael Douglas were going to build there, not far from a planned Mandarin Oriental hotel. But with the development in receivership for a year and a half, all that can be seen is a cluster of naked concrete hulks. In late January, 20 parties sued the developer, Cem Kinay, in a U.S. court, accusing him of "stealing" much of the $50 million they gave him for Dellis Cay villas. Kinay did not respond to a request for comment. He has denied the allegations to the Turks and Caicos Free Press.
The collapse of Lehman Brothers, the major backer for the Ritz-Carlton on West Caicos island, led to an abrupt halt in construction in October 2008. Hundreds of Chinese workers held their Israeli contractors hostage over a wage dispute, and diplomats were called in. Two years later the most action West Caicos has seen is the sloop of Haitian refugees that recently landed on its shores. They were promptly sent home.
The Tourism Working Group report questioned the sustainability of focusing exclusively on the high-end tourist. "There is a notion to have a broader mix of affluent and more middle-of-the-road—I don't want to say budget—tourism," says local director of tourism Ralph Higgs. "While the luxury market is more recession-proof, you need a certain amount of mass to make things happen." Although an airport expansion is under way, just in time for new direct flights on Continental (CAL) and JetBlue (JBLU) from Boston and New York, the island lacks the capacity for large numbers of less-than-wealthy visitors.
For the foreseeable future, Turks and Caicos remains dependent on the same ultrarich who've paid little or no price for the past. For average Turks Islanders living with unemployment and massive public debt, the return of the moneyed is bittersweet. On the morning after New Year's, the private airport was the busiest in the world, its general manager told the local press, with 113 jets coming in and out. Donna Karan's, with its signature copper-colored trim, is always easy to single out from the pack.
"They were stacked on top of each other," says Jeff Lee of the Citations and Gulfstream Fives he spotted. "It was like a maze just to walk through."