By Gary Brough, KPMG

When KPMG opened our office in the Turks & Caicos Islands (TCI) in September, 1990, TCI was very different from the country we know today. There was only one direct commercial flight into the country — Pan-Am flying from Miami. There were only seven miles of paved road on the entire island of Providenciales and when you joined Leeward Highway you didn’t need to look to your left or right because you knew nothing was coming! Unpaved were the road to the airport, downtown and the road to Leeward from the current Allegro Resort. Club Med was here, as was the original Ocean Club, but there was no Provo Golf Course or IGA. The opening of the Turquoise Reef Resort & Casino (later to become the Allegro) was eagerly anticipated and the current impressive Beaches Turks & Caicos Resort and Spa property was a single story “white elephant” on the beach, with little expectation that it would evolve into the development it has become. Similarly, the Parrot Cay project was about to represent a multi-year “tease.” The magnificent structure was unable to accept guests for various reasons until it was acquired by the current owners in 1998, who developed it into the superb resort that it is today justifiably recognized as one of the world’s most luxurious destinations.

TCI’s two major industries are hospitality (tourism) and financial services. Let’s take a closer look at the changes in these sectors over the last 15 years, as they have been of a magnitude and scope that both industries have never previously experienced.

* For a few days during the early 1990s when Pan Am collapsed, there were no scheduled direct commercial flights to the Turks & Caicos. Today there are more than 60 direct commercial flights to TCI per week from the USA, Canada, Britain, Bahamas and Jamaica.

* In 1990, there were 48,000+ visitors to TCI. In 2001, TCI had 165,000+ visitors.

* In 1991, the three-year moving average price of land per acre on Grace Bay was approximately US$200,000. In 2001, the equivalent figure exceeded US$1,000,000.

* In 1988, TCI’s GDP was approximately US$63,000,000. In 2001, TCI’s GDP was approximately US$220,000,000.

* In 1980, approximately 7,500 people lived in TCI. In 1990, that figure was 12,500 people; now, it is approximately 21,000.

* In 1980, less than 1,000 people lived on the island of Providenciales. In 1990, that figure had risen to 5,500 people and it is now approximately 14,000.

* In 1991, there were less than 1,000 hotel or condominium rooms available to visitors. There are now well in excess of 2,000.

These are extraordinary statistics by anyone’s standards and with this growth comes a number of challenges and growth management issues, for example in the areas of education, health, immigration, housing and policing. Such exponential growth necessitates existing infrastructure (such as roads) having to be maintained and improved.

It is partly because of these challenges that TCI’s target tourism market is primarily the high net worth niche market rather than the volume market targeted by other Caribbean jurisdictions such as Jamaica, Bahamas and, increasingly, Cuba. It is to TCI’s great credit that it has attracted 5+ star resorts such as Parrot Cay, Point Grace and the forthcoming exciting resort developments at North West Point on Providenciales and on West Caicos. It is this market sector which is increasingly important to the future of TCI’s hospitality industry.

Typically, such resorts are low density developments generating high revenues for government through their high nightly rates and valuable real estate sales. They also tend to attract the quality of clientele and developers with strong philanthropic tendencies and who are more likely to develop emotional and cultural attachments to the TCI and its citizens and residents, a factor critical for sustainable development.

At KPMG, our primary interaction with the hospitality industry has been through the provision of audit services, which represent the core of our practice in TCI. Some development projects may need to be audited to satisfy financiers or to satisfy the requirements of management agreements. Many of the increasingly sophisticated investors who are attracted to TCI voluntarily choose to have their projects audited, as they recognize that an independent audit is a healthy discipline for their organization. However, an audit is not always practical for every operating entity and in certain cases, KPMG’s business advisory department can, on an outsourced basis, help projects achieve the financial reporting standards that they are seeking utilising generic accounting software.

Investors considering business opportunities in TCI increasingly engage us to conduct a feasibility study that incorporates extensive local knowledge. Businesses seeking financing also utilize our corporate finance services for assistance in negotiations with financial institutions and other financing sources.

ADAPT OR BECOME EXTINCT
TCI’s financial services industry is somewhat impervious to the factors which have had such a significant impact on the hospitality industry. While one would expect the volume of financial service business to increase as the number of visitors and the profile of TCI have, there is not necessarily a direct correlation.

In fact, over the last 15 years the financial services industry has experienced changes in landscape every bit as dramatic as those experienced by the hospitality industry. Bodies such as the OECD, FATF, EU and others were almost unheard of a decade or so ago and issues such as tax harmonization, anti-money laundering and anti-terrorism financing were nowhere near as high profile as they are today.
As a result, financial service jurisdictions and practitioners are recognizing the need to adapt to the new landscape or become dinosaurs. Changes are taking place from the very outset of business relationships. The critical importance of knowing your client (“KYC”) and the due diligence needed to achieve that knowledge is increasingly recognized.

In order to comply with TCI’s anti-money laundering regulations, all TCI financial service providers must have documented client acceptance, identification, record keeping and internal reporting procedures. Financial service providers must also appoint a money laundering reporting officer and provide staff with training on anti-money laundering procedures, as well as the provisions of TCI law. At KPMG, we have set up a regulatory compliance department to help service providers adapt and comply with these mandatory requirements.

Other than in the insurance and reinsurance fields, TCI has yet to attain a critical mass of financial service activity. But it may be to TCI’s advantage that it does not have a concentration of activity in any one area that may be unable to adapt to the new regulatory landscape.
The future for TCI’s financial services industry will likely be based on developing and sustaining niche products, a strategy not dissimilar to that achieved within the hospitality industry. No one is pretending it will be easy. The competition amongst jurisdictions is fierce, the regulatory environment is increasingly complex and success requires teamwork, skill and speed of action by all participants.

TCI’s financial services industry can also attain significant growth by simply securing a very small share of established markets in the banking, trust and fund industries.

THE NEXT 15 YEARS
So what will be the landscape changes faced by TCI’s hospitality and financial services industries over the next 15 years? It would have been almost impossible to predict the changes of the last 15 years, so any predictions for the future must be viewed with a healthy degree of skepticism. Analysis of the past can, nonetheless, help predict the future and certain trends do appear compelling.

TCI’s hospitality industry appears to have developed a momentum that will lead to continued growth, particularly in the area of 5+ star, low density resorts targeted at the high net worth visitor and investor.
One area of massive change experienced by the hospitality industry has been in the utilization of technology and further advances are inevitable. The clientele of upscale resorts have very high expectations in terms of service delivery. High net worth clients expect the same technology delivery systems they enjoy in New York, Toronto or London. They expect seamless high-speed access to the Internet and they expect all their technology gadgets to work in TCI. With the increased use of fibre optic, access to the ARCOS link and liberalization of the communications markets locally and globally, TCI is moving into a position to meet these expectations.

In recognition of this change and so as to facilitate and manage these expectations, KPMG’s Information Technology (IT) Department provides a wide variety of IT solutions, concentrating on state-of-the-art networks that simultaneously support video, voice, and data. We recognize that today, solving a problem is often not enough. It must be solved quickly and decisively.

OTHER PREDICTIONS
Another area that is expected to play a role in the future development of TCI’s hospitality industry is that of public private partnerships (“PPPs”), a concept that is rapidly gaining currency worldwide. During the last 15 years of development, TCI has had successful examples of PPPs long before the concept gained international recognition.

When Pan-Am collapsed, the public and private sector worked together to attract other airlines into TCI. The public and private sector also worked together to pave the road from Allegro to Leeward. In the future, more formal, larger scale PPPs may contribute positively to TCI’S development.

It is certain that the future of TCI’s financial services industry will continue to change. The industry and its practitioners, like those in competing jurisdictions, will have to adapt to the new landscape or become extinct. Already some rationalization within the industry has occurred and that process will only continue. To try and avoid change and hold on to old ways of doing business is futile. The new landscape, with its increased regulatory demands and sensitivities, is here to stay.

Financial service practitioners must know their clients and conduct appropriate due diligence at the very outset of professional relationships. They must have documented client acceptance, identification, record keeping and internal reporting procedures, appoint a money laundering reporting officer and train their staff to recognize suspicious transactions. All of the above are now considered minimum standards for those intending to deliver professional services within the financial services industry in the future.

TCI’s financial services future will likely depend primarily on how the insurance and reinsurance industry is serviced and developed. The hope and expectation is that it will lead to TCI increasingly becoming a well respected and well regulated insurance and reinsurance center. Successfully developing a critical mass in this area can lead to the success of other financial service products.

In conclusion, the extraordinary changes in landscape experienced by TCI’s hospitality and financial services industries over the last 15 years show no signs of slowing down. Fasten your seat belts! There is every indication that the future will bring changes that are every bit as dramatic.

Gary Brough is the Managing Director for KPMG in TCI. He is the President of the TCI Society of Professional Accountants and Chairman of the TCI Insurance Managers Association. He can be reached at gbrough@kpmgtci.tc

Long ago, on a small island in the Turks & Caicos, a group of friends wondered why the beautiful baskets, hats and bags made from local palmtops and grasses were so hard to find. This is the story of the Middle Caicos Co-op and their successful efforts to restore pride in traditional handcrafts, encourage production of all types of crafts and ensure local handcrafts are available for sale in shops throughout the Turks & Caicos Islands.

IN THE BEGINNING

In 1998, the team developing the Crossing Place Trail on Middle Caicos often talked with the villagers about their history and experiences. The tales of the “Federation” were intriguing — a network for TCI artisans making and selling traditional straw work; groups of women working together, cleaning grasses, making sisal mats, sewing fanner baskets . . . but what happened?

The fanner grass still grew along the shores and in the marshes, the palm trees were plentiful and healthy, but very few artisans were producing traditional straw work for sale or even for their own use. A long and somewhat sad story emerged. The distribution of the straw work from this isolated island to shops on other islands was difficult and irregular. Most of the handcrafts were sent on a commission basis and the funds often never came back. Items would be ordered, but never picked up, with no deposit paid. The National Museum was one of the few regular clients for straw work that paid reasonably well and reliably, with a few retailers from tourist shops occasionally purchasing the crafts, often at very low prices. People moved to other islands, younger hands turned away from working the grass and palmtops . . . and so, by 1998, only a few local residents still produced traditional baskets on a regular basis.

The Middle Caicos Co-op (MCC) began as a volunteer project to set up a collection and distribution system to sell traditional handcrafts and to revitalize the pride and income potential of artisans. The preservation of traditional straw work skills, designs and knowledge was a difficult objective, but the Middle Caicos Co-op boldly started in 1999 with four gifts of $250 to set up an inventory fund so handcrafts could be directly purchased when delivered. The marketing and distribution was undertaken as a whole for all the artisans, with tags designed and printed, crafts marketed and distributed to retailers — all volunteer work for the first year! A small wholesale mark-up was added to the artisan cost of each item, but this did not nearly cover the ongoing expenses.

The logistics of distribution to small retail outlets, a few baskets at a time, led to a myriad of problems with cash flow — before worrying about further sales, making a profit or even breaking even. More volunteers pitched in to help with transport, tagging, accounting and storage, all the operational tasks to move forward the market for traditional handcrafts and to ensure actual benefit to the artisans.

The increase in supply of local handcrafts was supported by a dedicated group of retailers who continue to respond with interest and loyalty. They’ve absorbed in turn a creeping rise in the prices of wholesale crafts and an undersize retail margin, acknowledging the value of promoting and protecting local handcrafts.

It was increasingly obvious to all that the money received by the artisans for handcrafts was too low. The financial compensation paid them was disproportionate to the work effort invested and the heritage being lost was significant. The goal became to actually study the raw material collection, working processes and the weaving/sewing involved to move prices towards a living wage of $4/hour (the suggested minimum hourly wage in TCI) for the artisans.

A QUESTION OF MATERIALS

The issue of raw material supply is becoming more important as development expands throughout the country. Traditional straw work in TCI utilizes three main plants: fanner grass, silvertop palm and whitetop palm. Fanner grass is a very distinct grass growing in salty areas, shoreline or marshes. It is plentiful only on North and Middle Caicos, but now becoming harder to find. A recent government subdivision offers building lots in one of the most important fanner grass sites in the country! In the past, brush fires would regenerate the fanner grass sites, but fires no longer run along the shore freely. A study is to be commissioned shortly to ensure the future of the traditional handcrafts is not brought to a halt by lack of raw materials! Fortunately, palmtops are still plentiful and the use of the fronds does not harm the trees in any way.

STRAW WORK BASICS

These raw materials must be gathered from diverse sites on the Islands, dried, cleaned and prepared into working materials — a process that takes several days to complete. The handcrafts are made either from plaiting the palmtop fronds in a variety of shapes and patterns or by sewing baskets with the fronds used as thread over and around the fanner grass. While plaiting can be likened to braiding — a repetitive and soothing twisting of fibers that is almost hypnotic to watch — sewing the fanner grass baskets is a focused task that demands strength and accuracy in each stitch, pulling the frond thread tightly over the grass to shape the basket as it grows. The plaits, made from split palmtop fronds, can use from 4 to 19 strands intertwining in the pattern. The finished plaits form long, undulating coils of flat straw work, from 1 to 3 inches wide, that are later sewn round and round into bags and hats. Interestingly, the lengths of plait are still measured and paid for in fathoms, an early nautical measurement brought with the sailing ships!

Fanner grass baskets were once used to carry water and the stitching is small, even and rigid. Today, the shapes and sizes of the fanner grass work produced are a tribute to the creativity of the artisans. An amazing array can be seen at the wholesale depot and in special orders completed.

MODEL SAILBOATS

The introduction of traditional hand-carved model sailboats was another major step for the Middle Caicos Co-op and drew in a new group of artisans. Sailing these boats is a treat of splashing alongside, adjusting the tiller and sails to follow the wind (or the race course).

These model sailboats are built in Bambarra, Middle Caicos from large branches of the Gum-Elemi tree (Bursera simaruba), a Caribbean softwood found throughout the Turks & Caicos Islands. The sail plan reflects all the actual rigging found on a full size sloop. Stays/shrouds can be tightened as needed, sails hoisted/furled with sheets as normal. Each boat has its weatherboard to stabilize it in the water, as the gum-elemi wood is very light and there is no weight in the boat’s keel.

This type of model boat was a common childhood treasure, with children and adults involved in carving, building and racing their sailboats. An energetic and active sport beloved by participants and spectators, the boats are sailed in the shallow waters of the salt ponds or along the seashores.

Middle Caicos Model SailboatThe Middle Caicos Sailing Fleet (eight boats from 15 to 54 inches long) can be booked for special events and several model sailboat races are held each year on the island. The annual New Year’s Day Race is a welcome beach day to usher in the new year; the Valentine’s Day Cup fills an exciting weekend in mid-February and in August at the traditional MC Expo festival, the beach is lined with folks cheering both the big sloop race and the model sailboats.

A GROWING INTEREST

The fundamental principle of the Middle Caicos Co-op has remained unchanged: to pay the artisans directly when they deliver their handcrafts. This has proved to be a fine motivating factor for encouraging artisans to take up straw work and their number grew from 5 to over 20 in the first two years. The use of cheques was introduced and eventually accepted as reliable payment. With no banks on many of the Islands this was a tricky process, but essential to allow the Co-op to organize its working capital and payments. More retailers were becoming interested, additional marketing efforts were being made, demonstrations of the handwork and talks on traditional crafts were organized and the momentum carried the Middle Caicos Co-op forward.

By early 2003, there were about 40 artisans submitting their work to the Co-op, average age roughly 60. Initially, artisans were from Middle Caicos and North Caicos, but slowly, artisans from South Caicos, Grand Turk and Providenciales are becoming involved.

GROWING PAINS

The principle of direct and full payment for handcrafts received by the Co-op has recently become vulnerable as growth in both the number of artisans and the amount they produce requires an ever-increasing supply of working capital. The logistics of operating from Middle Caicos became more unwieldy as the majority of both artisans and clients were from other islands. Amazingly, in the first quarter of 2003, the Co-op purchased $14,000 worth of handcrafts; sorting, tagging and transporting it to and from Middle Caicos was crazy!

The need for volunteer efforts and further working capital to properly market and distribute the handcrafts are critical, as the wholesale margin applied cannot yet support the full operating costs and increasing inventory. Both tourists and the home market need to be educated to accept a realistic price for handcrafted goods made in TCI; a price that offers both dignity and encouragement to the artisans.

A BIG STEP FORWARD

In July 2003, the Middle Caicos Co-op took a huge step, and consequent risk, to bring the handcrafts to greater visibility by opening a wholesale depot in Providenciales. The Caicos Handcraft Co-op at The MarketPlace will take over the wholesale inventory, marketing and distribution operations under a separate business license. Over 60 artisans are fulfilling an active role and legislation now exists for a registered co-operative to be formed, owned and operated by the members.

Hopefully, the longtime dream of four friends will soon be real: an established and stable cottage industry of crafts, handmade in TCI. As a secure income becomes attainable for more self-employed individuals, the Co-op fulfills the original goals of preserving, promoting and protecting TCI culture, while diversifying local income potential.

THE FUTURE

The Middle Caicos Co-op — the artisans and many volunteers — have worked hard to achieve a resurgence of traditional TCI craft production. They are now ready to reach out into the market across the Islands and abroad with a website, but the future for traditional straw work and new handcrafts is fragile. Deliberately stimulating supply to create a significant inventory, the Caicos Handcraft Co-op is overflowing with a wide range of wonderful TCI handcrafts . . . and more steadily arrive!

An open opportunity exists to contribute to TCI’s future cultural health — as a retailer looking for goods to display/sell, as a volunteer interested in handcrafts, as an artisan member, as a company wanting displays or decorations for the office, as a promoter looking for event gifts/prizes, as an individual looking to buy presents! All these types of assistance and active interest are needed to stabilize the Co-op as an ongoing business and to support the growing numbers of artisans.

In addition, funds are being sought to enable the registered, legal Co-op to take over all the operations and business developed to date. A copy of the project proposal is available on request. The dream is tangibly close — an open, non-profit, stable co-operative, its business operations managed by its members to promote traditional TCI handcrafts, new local works made in TCI and local culture. Let’s make “Handmade in TCI” a proud, visible statement that TCI heritage and creativity are valuable.

The Caicos Handcraft Co-op Wholesale Depot is open at The MarketPlace in Providenciales on Wednesday, Thursday and Friday from 10 AM to 3 PM. For more information, fax (649) 946-6132 or e-mail middlecaicos@tciway.tc.

This Spring a hummingbird mother chose to build her nest in a frangipani tree outside our screen porch. By cutting a small hole in the screen I was able to share her ups and downs over the next three weeks as she raised her little family — and what a roller-coaster ride it was!

Her first problem was that the tree was in a pot. It was a big pot, and seemed stable enough, but then a monstrous and unseasonal cold front, five miles high and a thousand long, came roaring down on the tiny family. It brought fierce, gale force winds howling out of the north. The pot did what pots do in such cases. It blew over. This was the day after the young had hatched, which I suppose was lucky, because the eggs would have just rolled out. As it was, the tiny chicks clung on like grim death. They were too young for their eyes to be open, so could not see the peril they were in — their home swaying precariously on its side, a foot above the storm-tossed swimming pool.

That is how I found them when I came home at lunch. I tried to right the pot, but it blew over immediately. Struck by a flash of genius, I watered it to make it heavier. It still blew over. In the end the only thing to do was to take it round to the sheltered side of the house. It was then I regretted watering the pot to make it heavier. However, desperately struggling to hold it upright, I dragged it out of the wind and tied it to a real tree. If you have ever tried tying a knot with your teeth while clinging to a wayward frangipani in a gale, you will understand the difficulty.

But it worked. The mother soon found her relocated young. The new location was much better photographically — a pure coincidence, but an added bonus. Although the nest was only a few feet from the porch, the birds did not seem able to see through the mosquito screening, so I could sit quietly behind it without disturbing them. I was only caught out when the mother flew in through the open door of the porch to have a look. Once in, she could not find her way out, trying desperately to escape through the screen and declining all attempts to usher her politely through the door. In the end, I had to catch her and throw her out, but even that did not seem to give the game away or disturb her calm on the nest.

And so I settled in to supervise the family upbringing. I did have criticisms of the way she tended her brood — she was altogether too skittish, and stayed away too long. My wife said I was like an interfering mother-in-law. But despite the mother’s inadequacies, she brought them a feed of nectar every 15 minutes or so throughout the day and the two chicks grew astonishingly fast, feathers sprouting almost before my eyes. Two weeks after the storm, the tiny cup-shaped nest was too small for both of them and they continually fussed and battled each other for space. They also bullied their mother for food, gaping at her to display the bright yellow lining of their mouths, in the hope of stimulating her feeding instincts.

At this critical stage we had three days of torrential rain, again wholly unseasonal. Rain is always welcome in Grand Turk, which is really a desert island, but my poor babies! Of course I expected the mother to shelter them with her own body, bravely sitting over them in the worst of the downpour, but she would have none of it. She went and sat in the shelter of a nearby tree. They were going to have to learn the hard way that the world is a cold and unforgiving place. But the truth was that they were by now just too big for the nest, and she could not fit on top of them if she tried. Indeed, she often tried, and they would buck her off, as they exercised their pathetic little wings.

Then the sun came out, the rain had gone, and it was a bright day. All was well until the larger of the two, while exercising those pathetic little wings, unexpectedly rose into the air like a large bumble bee, and was gone. Panic! The mother was on its tail, twittering furiously, but whether she was saying “Get back into bed this instant!” or “Go for it!” I could not tell, but she had no business letting it blunder around the garden at its age. Eventually the baby bird settled on one of the ropes holding up the tree, and everything calmed down. A little later, it moved into the dense shade of a nearby tree, crying out plaintively to be fed and the mother responded, hovering in front of it and squirting nectar into its gaping mouth.

So all was well. The mother continued to feed the prodigal son, while its stay-at-home sibling seemed to enjoy having more space in the nest, and remained there on its own for a further two days. It obviously lacked the adventurous instincts of its sibling, and I thought it would never go. “Must be a girl,” I said to my wife. (Not wise, although she is now speaking to me again.) And one sunny morning, three weeks after it had hatched, the little bird too was gone. I am afraid I was relieved as it had been very inconvenient not being able to go out the back door for fear of startling it into the air before its time. We had guests coming for lunch, and they would have thought it weird if they had to eat in the kitchen, and talk in whispers.

I never saw the little family again. They moved out of the tree and off into the bush. There the mother would continue to feed them until they could fend for themselves, but that would be beyond the reach of my prying lens.

NATURAL HISTORY NOTES
The hummingbird featured in this piece is the Bahama Woodstar (Calliphlox evelynae). It is the only hummingbird which occurs in the Turks & Caicos Islands and is endemic — in other words unique — to the Bahamas chain. The female is a bit drab, but the male sports an iridescent purple throat.

The male is a philanderer — he will guard a patch of nectar-rich flowers, only allowing females to feed from them if they will mate with him. He then shows no further interest in them, leaving them to build the nest and rear the young entirely on their own.

The female builds her cup-shaped nest out of plant fragments and spider’s silk, cementing it all together with her own saliva. In it she lays two white eggs. These hatch after about two weeks, and it takes a further three weeks to raise the young to a size where they can leave the nest.

When not serving as Chief Justice of the Turks & Caicos Islands, Richard Ground enjoys photographing the country’s natural wonders. His most recent book, The Birds of the Turks & Caicos Islands, is a spectacular 96 page, full-colour compilation of his work, the photos accompanied by fascinating natural history facts. For ordering information, contact the Turks & Caicos National Trust at Tel: (649) 941-5710; Fax: (649) 941-4258; or E-mail: tcnattrust@tciway.tc.

ONE OF NATURE’S MOST UNUSUAL AND BEAUTIFUL DISPLAYS, the “Green Flash” leaves a lasting impression on everyone fortunate enough to have seen it. Jules Verne was struck by its exquisite beauty and in his novel, Le Rayon Vert, expressed his sentiments in verse:

“Only those who have seen it,
Can know the peace without compare,
That comes to those touched by its greenness,
The mystique of le rayon vert.”

The rare “Green Flash” occurs when the last sliver of the sun momentarily turns a vivid brilliant green, just as it disappears below the horizon. The phenomenon is caused by a combination of refraction of the sun’s rays by the atmosphere, the filtering of sunlight through the air and an unusual thermal structure in the upper air, all occurring simultaneously.

As rays of light pass through the atmosphere, they are “bent” or refracted a little, causing the image of the sun that you see near the horizon to be slightly higher than it ought to be. The amount of refraction depends on the wavelength of the light, therefore the “blue image” of the sun is displaced slightly higher in the sky than its “red image.” In the absence of any other complication, the setting sun ought to have a blue rim along the top.

In turn, the blue light is filtered very effectively by molecules of air and dust, leaving the colour green as the shortest wavelength to survive the long trip through the atmosphere when the sun is near the horizon. Usually, this green upper rim cannot be seen with the naked eye and only becomes visible in rare circumstances when the thermal structure of the atmosphere makes the air act like a giant magnifying glass. At the moment when the green rim passes through this magnifying region, it is momentarily enlarged, producing a hauntingly beautiful and spectacular green flash.

HOW TO ENHANCE YOUR CHANCE AT SEEING THE GREEN FLASH

1. Watch the sun set over the ocean; this provides a straight uninterrupted horizon.

2. Choose a cloudless evening. The changes of temperatures with height in the lower layers of the atmosphere are likely to be greater than usual, increasing the variations in the extent to which the different colours of the sun’s rays are refracted.

3. Conduct your vigil around the time of the summer solstice. At this time of year, the sun makes a relatively shallow angle with the horizon when it sets. If it occurs, a green flash will then last longer.

4. Don’t look directly at the sun, as this may injure your eyes. Observe from an oblique or circumspect angle.

Queen Angel Condominium Resort

Not everyone chooses to live beachfront, especially as prices for such properties on Providenciales escalate into the stratosphere. Investor representative Cosmo Kerr has long recognized the need for reasonably priced condominium suites in a prime location that offers panoramic views, a range of amenities and easy beach access. He believes that the new Queen Angel luxury condominium resort offers all of that and more.

Queen Angel Rendering

The Queen Angel rises majestically on a sloping hilltop property just southeast of Turtle Cove. Views from the site sweep across Providenciales’ north shore, encompassing the picturesque Turtle Cove Marina and superb sunsets over the ocean-etched horizon. Upper floor suites boast 360 degree views that revolve over the island’s southern shores and cays. Steady tradewinds ensure that the elevated resort enjoys a comfortable breeze year-round.

Its central location above Turtle Cove — Providenciales’ original tourist mecca — allows Queen Angel owners and guests to walk to no fewer than six restaurant/bars, an array of watersports, fishing and boating operators at the marina and a selection of shops and services. The Queen Angel’s beach access road leads directly to the golden sands of the 13-mile long north shore Grace Bay Beach; plans are to landscape this lane to create an attractive beachfront path.

In keeping with its tropical, seaside theme, the Queen Angel’s three residential buildings are aptly named the Mahi-Mahi, Amber Jack and Eagle Ray. Cunningly placed on the 2.6 acre site to ensure the best views, the 56 units on three levels include studio, one bedroom, deluxe one bedroom and two bedroom suites, with sizes ranging from 658 sq. ft. to 1,446 sq. ft. for the upper level penthouses. Completed suites are move-in ready, outfitted with everything required for tropical comfort, including large private balconies with oversize sliding glass doors; split level air-conditioning and ceiling fans; ceramic floors and wall tiles; eight-piece kitchen appliances; Kohler bathroom fixtures, in-unit washer/dryers; private closet safes; multi-port telephones and cable TV/satellite dish conduits.

While the building design reflects a romantic Colonial/Spanish influence, the interiors function to bring the out-of-doors inside. Kitchens overlook bright and open living areas with balcony views of either ocean vistas or lush tropical gardens. Larger units boast ensuite baths (some with deep soaking tubs), breakfast counters and walk-in closets. Complete furniture packages are included in the price.

The Queen Angel also provides for the recreational needs of its guests. Buildings are grouped around a large central pool and outdoor Jacuzzi, surrounded by an expansive deck and connected by a series of gently winding garden paths. The fine dining restaurant and informal cabana bar and grille feature prime ocean views and there is also an on-site spa and fitness center. A secure, gated entranceway and ample guest parking are other tasteful touches.

Cosmo says he envisions the Queen Angel attracting a wide cross-section of the market. “First of all, as a clean, modern, European-style (not all-inclusive) resort with highly competitive rates, it will appeal to the middle-range guest, such as vacationers on a budget and business travelers. I also anticipate condominium purchases by companies who conduct a lot of business in the Islands; it would be an affordable and appreciated way to house staff and entertain clients. We’ll also be targeting business conferences and group meetings. Finally, I believe that local residents would enjoy living at the Queen Angel — I certainly plan to! Condominiums offer low-maintenance, exceptionally secure housing and the Queen Angel’s prices, especially pre-construction, are still affordable.”

In fact, Kerr believes the Queen Angel makes an excellent investment for several reasons. “The property will be professionally managed as a resort hotel, so owners will benefit from a rental income. Because we are targeting business travelers, we anticipate high occupancy rates year-round, not just in the peak winter/spring tourist seasons. And because of the property’s excellent location, the investment can only continue to increase in value.” It seems that many agree with Kerr’s assessment — about 1/5 of the units are already sold.

Kerr, a sales associate at RE/MAX TCI Ltd., can take credit for much of the Queen Angel concept. A group of Canadian and American investors owned the land for several years, and asked for Cosmo’s advice on developing it. They agreed with his ideas, attracted more investors to the project, and have put much of the responsibility for managing its development into Cosmo’s hands. “This,” he says, “has been a fantastic learning experience, going through everything from government procedures to creating marketing materials.” He adds that there is much interest in the project among the Turtle Cove community, who view the new hotel as an opportunity to revitalize the area.

Queen Angel Groundbreaking

In putting together the construction team, Cosmo chose from among skilled local talent. Architect Kevin Been finalized the initial drawings, Chal Misick is project engineer and contractor Princie Harris will do the building. Norman Saunders Jr. is the project lawyer. Ground-breaking was in late November, 2003, with construction to take place in one phase over the next two years.

For more information, contact Cosmo Kerr at (649) 941-3394 or 231-0042 or e-mail cosmo@tciway.tc.

Toscana on Grace Bay

By Kathy Borsuk

What does the Caribbean island of Providenciales have in common with the timeless countryside of northern Italy? More than you might think. Both share an ethereal golden light and proximity to brilliantly hued turquoise seas and refreshing breezes that carry the tang of salt. Italy’s Tuscany region is often described as the wellspring of Italian culture, from where Renaissance art originated — a tangent to Providenciales’ own development Renaissance. And soon, there will be a slice of Tuscany in the Turks & Caicos.

Toscana on Grace Bay is one of the island’s newest proposed condominium resort developments. A collaborative effort between U.S.-based City Bay Developers, the architectural firm of Netta International and local designer Mike Fenimore of Innovative Interiors, the team says they’ve dedicated the last three years to researching just the right location, concept and design that would appeal to the upscale market they wish to attract. Toscana is located directly to the west of Coral Gardens on a wide stretch of ivory beach that fronts the White House Reef snorkeling trail.

The developers believe that the Toscana experience will be truly original to the Islands. “We want our owners and guests to feel like they are in a northern Italian village. Everything at Toscana will support this theme.” Architect Nicholas Netta has re-created a typical Tuscan piazza (long central plaza) around which the buildings are grouped. Offering a magnificent vista to the sea through a gracefully arched breezeway, the piazza’s highlight is a series of infinity edge pools that lead towards a beachfront oasis with a swim-up bar and restaurant. Another prominent feature is a sculptured fountain, the centerpiece around which life at Toscana revolves. Diners in either the trattoria or casual espresso/gelato cafe can enjoy outdoor dining, vibrant with the sights, smells and sounds of a seaside Tuscany town. Jacuzzi spas and private alcoves will offer quiet places for reflection under the dappled shadows of lofty palms.

Toscana’s gated entrance leads to the Grand Villa, reminiscent of an Italian country estate. Besides serving as the reception lobby, with a signature two-story atrium, it will house an internationally acclaimed wellness spa and fitness center, as well as a formal restaurant and shops offering the latest fashions, jewelry and sundries.

Condominium suites occupy six, four story buildings on the rectangular, 4 1/2 acre site. Utilizing Mediterranean design elements, including arches and columns, and the earth-toned colors of ochre and sienna, the elevator-serviced buildings house massive 2,500 sq. ft., two-bedroom suites that could very well be the secret retreats of nobles for which areas of Italian Tuscany were known. Nick Netta explains the advantages of the design, “We made each suite into a corner unit to take advantage of the wonderful views across Grace Bay. The open floor plans lead seamlessly onto expansive private balconies that wrap around each unit, inviting the splendor of the outdoors into your private living area.”

Interiors are of superior quality, utilizing travertine marble, custom milled cabinetry, solid granite countertops and an assortment of custom hardware and fixtures. Says Mike Fenimore, “We want to allow our buyers the freedom to express their personal style in every detail.”

Besides working to ensure that the Toscana’s atmosphere evokes its Tuscany namesake, the developers say that service is a top priority. “We know that our upscale clientele value first-rate service and careful attention to detail and our goal is to meet the standards of the world’s finest luxury resorts.” Other amenities will include an on-site sports center, offering truly island-style activities such as scuba diving, snorkeling, parasailing and horseback riding.

Toscana on Grace Bay is represented by Landmark Realty Ltd., an established local firm led by Doug Fenimore. He anticipates strong pre-construction sales, limited to a first-come, first-choice basis offered under a risk-free reservation policy. He believes, as do most savvy investors, that pre-construction purchasing offers maximum returns. Owners can also profit from renting their units when they are not using them. In support, Toscana will offer professional on-site management and an international marketing and reservations system.

For more information, contact Doug Fenimore at (649) 946-5118 or via e-mail at landmark@tciway.tc. Or, visit the Toscana sales center located at the beach off Penns Road.

The Waterfront. . . the evolution of lifestyle

By Kathy Borsuk ~ Artwork courtesy Simon Wood Associates

function is often best defined by simplicity . . .
The natural world is rich in examples . . . the sheer strength of a spider’s web; the aerodynamic curve of a bird’s wing; the explosive speed invoked by a shark’s powerful tail.

The Waterfront is a cutting-edge new condominium development that melds the concept of functional simplicity with the pristine natural environment of the Turks & Caicos Islands. The result is an evolution of lifestyle matched in few places on earth.

The Waterfront Aerial ShotThe Waterfront occupies nearly seven acres north of Providenciales’ Leeward Marina, with 700 feet of water frontage on Leeward-Going-Through Channel. In this pristine natural environment, describing the colors of the landscape gets tricky. “Turquoise” only hints at the sea’s intense blue tones; “verdant green” doesn’t quite capture the brilliant hues of the mangrove backdrop. The only answer, believe The Waterfront’s developers, is to keep the living spaces elegantly simple, and let nature speak for itself.

And nature has much say in The Waterfront experience. Views from the residences stretch beyond the channel to encompass the nature reserves of Little Water Cay, Mangrove Cay and the Caicos Banks. Fragrant sea breezes tinged with the hint of pine waft across the site, and the sound of seagulls punctuates the soothing lap of waves over the textured ironshore. Nature allows The Waterfront to serve as a sanctuary for unraveling the senses and replenishing the soul.

The Waterfront is being developed by James Slattery, Managing Director of The Waterfront Company Ltd. Simon Wood Associates are the architects and designers, with Connolly Zahm Properties, led by Joe Zahm, acting as the exclusive sales and marketing agent and management consultant. This group’s previous triumph was the creation of Point Grace, one of Providenciales’ original five-star properties and still the standard bearer by which suitors are judged. The Waterfront offers a somewhat different experience . . . a new island chic . . in both attitude and architecture.

Joe Zahm explains, “We see The Waterfront appealing to the hip and trendy upscale traveler who is searching for a design-driven property providing good value and an active lifestyle based around the water.” Poised at the gateway to the Caicos Cays, The Waterfront is an ideal location for people who enjoy boating, diving, fishing or simply exploring the Islands’ rich ecosystems.

The Waterfront’s architecture is trend-setting as well. Christened TiMo (Turks Island Modern) by the developer, it blends elements of the country’s traditional Bermudian-based style with a clean, sleek, modern design, resulting in a tropical minimalism that well suits The Waterfront concept. Rory Stevens, representing SWA Ltd., explains, “TiMo’s clean lines and simple forms mirror the vivid beauty of the environment in which the play of light and bold coloring of fauna, sky, sea and sand form the primaries in the landscape. In framing themselves against the typically cloudless sky, the heavy white-washed walls appear to deepen rather than detract from this brilliant blue, while subtly reflecting the changing colors of the day and providing a clean canvas for the continuous dance of bright light and cool shade. Precise use of render, stone, glass and timber provide a palette of textured surfaces to complete the sensory experience.”

He notes that while TiMo embraces the traditional forms of local architecture, driven primarily by the exacting climatic conditions of the Islands, it is also sensitive of the lifestyle requirements and materials of a 21st century development. “There is a greater use of glass and steel alongside more traditional materials such as stone and timber, which are manipulated to suit the contemporary style. By example, the use of rough hewn timber poles may be reminiscent of the Islands’ original vernacular (think Arawak homesteads), but their application will emphasize the development’s intention to be appropriately modern.”

The Waterfront InteriorAn Asian minimalist philosophy of “less is more,” shapes The Waterfront interiors. Black slate floors and sheer walls of glass frame the environment and the innovative use of space floods the rooms with light and sea breezes. Zahm is excited about SWA’s unique design of the studio apartments. “By using glazed walls around a triangular shaped bathroom in the middle of the suite, the space is divided into separate living and sleeping areas without losing any of the light flowing in from the entry and terrace areas.” James Slattery points to the functional simplicity of every element in the apartments, from the modular furniture and built-in dressers and cabinetry to unique bathroom fixtures. He says, “We want each element to be thought-provoking and the living experience to be sybaritic.”

Expertly located across The Waterfront property is a central hotel with reception area, concierge and Internet lounge and three condominium residence buildings, including signature studios, one bedrooms and flexible two and three bedroom lock-out suites. (Owners can include these suites in the rental program and a comprehensive management plan is offered.)

Shared by residents and guests are a sandy beach cove, two waterfront pools, a floating dock and boat slips along the channel. An active lifestyle is further encouraged with a fitness center, spa and tennis court, with dive shops and watersports charters a stroll away.

Stylistic, cutting-edge and appealing to a high-tempo crowd is the best way to describe The Waterfront’s dining, entertainment and shopping areas. Rory Stevens adds, “We see these areas as a magnet for residents, guests and the island population to enjoy a relaxed, yet youthful experience.”

Oasis Construction will build The Waterfront. They have emerged as a TCI builder of choice, the result of ongoing success at providing a high quality product without losing sight of the finishing touches. Ground-breaking is anticipated for mid-2004, with the project expected to be completed in over two years.

With an average price in the $300,000 range, its developers believe that The Waterfront offers a viable waterfront alternative to beachfront property. And with style, substance and function coordinated to succeed on all levels, The Waterfront is a step away from tradition that sets its own precedent.

For more information, visit www.thewaterfront.tc

Most of the men who made up the West Indies pirate fraternity were rough, crude and uneducated. Many were formerly indentured servants or came from the pressed ranks of the navies, having been sandbagged down some dark alley or outside a tavern after too good a night out.

Life on board the navy ships was certainly no picnic. The food was atrocious, the pay abysmal, the conditions harsh and overcrowded and punishments frequent and brutal. These unwilling sailors had nothing to lose and everything to gain, including possible personal wealth, by going “on the account” as pirating was called. Life was relatively free and easy by comparison, although even pirates in their lawlessness had a code of conduct about sharing plunder, duties, and behaviour on board.

The Spaniards had made it a policy to stock all the islands with a few cattle and hogs, so that shipwrecked crews would have a chance of survival. These animals had run wild and multiplied, so food was there for the shooting. One other essential was an ample supply of strong liquour, rum being the main staple, to keep the men “hot.” A well known saying of the day was that sailors would rather have strong drink than clothing.

The ship’s company was entitled to elect its officers and the Quartermaster was the most important, being responsible for provisions and liquor supplies, for discipline and overall welfare of the ship and crew. After a prize was taken, he decided what plunder should be kept, how it should be apportioned, and its value. The captain was selected for his fighting knowledge; he decided likely targets and battle tactics. During the chase and attack, his word was paramount. As the pirates never built a ship, but relied entirely on captured vessels to keep them in business, everyone had say in whether a newly taken prize should become their new home. All ships officers could be voted out if they didn’t measure up.

Unlike the Buccaneers, 40 years previously, whose terror was aimed almost exclusively at the Spaniards, anything and everything was fair game to the pirates, who operated as individual, self-contained units, usually sailing within sight of land. They preferred fast, shallow draught sloops that could quickly weave their way through the reefs, cuts and creeks that abounded in the islands. Being fore and aft rigged, these sloops were able to sail closer to the wind and were more easily manoeuvred than square riggers.

In the main, pirates didn’t often slaughter or mistreat their victims, especially if they offered no resistance and asked for quarter, as the pirates recognised the trials and tribulations of the ordinary sailor. They reserved harsh treatment for seamen in authority, especially if it was thought they had something to hide. One condemned pirate made this plea from the gallows: “I do wish Masters of vessels would not use their men with such severity as many of them do, for it exposes us poor sailors to great temptations.”

The Turks Islands — since the discovery and raising of the fabulous haul of silver from the wreck Nuestra Senora de la Concepcion by William Phips in 1687 on what is now called the Silver Bank east of Grand Turk — might provide a chance to waylay a successful treasure hunter. And, more particularly, the Caicos Islands were favourite hiding places for the pirates as they were well charted for the times and there was an abundance of shipping using the main Windward/Caicos Passage route to and from the Caribbean and the large islands of Hispaniola, Cuba and Jamaica. A very early chart shows a safe anchorage on the northwest coast of West Caicos and indicated a well on Providenciales, the only source of fresh water specifically mentioned on the chart.

Among those who favoured the Islands were Captain Charles Vane and his Quartermaster “Calico” Jack Rackam, so called because he always wore calico, a type of coarse cotton. They were among those who had made a fortune capturing the silver that the Spanish authorities had retrieved from the “Plate Fleet” galleons sunk by a hurricane off the Florida Keys. This put them high in the pecking order among the pirates based in the Bahamas.

It was known that Governor Woodes Rogers was bringing a King’s Pardon for those pirates prepared to surrender, but when news came that the new Governor had been appointed to terminate the pirate rule that dominated New Providence, Vane and his crew were all for terminating the Governor first. But Vane soon discovered that he was on his own in such a defiant gesture; however, he was not prepared to surrender.

When the Governor duly arrived, accompanied by two 28 gun Frigates and two 14 gun Sloops of War, Vane sent an ultimatum:

24th July 1718
To His Excellency the Governor of New Providence.
Your Excellency may please to understand that we are willing to accept His Majesty’s most Gracious Pardon on the following terms.
Viz: That you will suffer us to dispose of all our good now in our possession. Likewise to act as We see fit with everything belonging to Us, as His Majesty’s Act of Grace specifies. If Your Excellency shall please to comply with this We shall with all readiness accept His Majesty’s Act of Grace. If not we are obliged to stand on our Defence.
So conclude
Your Humble Servants
Charles Vane and Company.
PS We await a speedy answer.

The Governor was not impressed with such defiance and ordered the warships to block the harbour. Vane saluted them, but with guns that were loaded and shot away some of the rigging. At 8 o’clock that night, when one Man o’ War fired the 8 o’clock gun as regulations decreed, Vane replied with another shot which peppered the frigate. Vane and his crew knew that come daybreak, all attention and guns would be turned on them, so in the darkness they upped anchor and slipped away through the unguarded East Channel.

They soon captured a prize and Rackam was given command, which caused a near fatal falling-out. Vane’s ship had run out of liquor and a message was sent to Rackam requesting supplies, as the newly taken prize had a large quantity of drink among its cargo. Vane was furious that Rackam hadn’t sent what Vane considered to be enough, so he rowed across to Rackam’s ship to demand more. A violent argument took place, during which time Vane tried to “pull rank.” Calico Jack reminded Vane that this was HIS ship and concluded the matter by saying “By my blood Sirrah, if you do not leave this deck I shall shoot you like a dog and sink your ship. Now Go!”

Vane was in no position to argue and left. Nor was Vane prepared to retaliate as Rackam’s ship was the larger. This encounter added hugely to Rackam’s prestige — Vane had backed down and sailed away.

Rackam’s prize was heavily loaded, but they couldn’t go back to New Providence to dispose of their loot in the light of Vane’s act of defiance to the Governor, so they sailed to the deserted islands in the south where the plunder was divided among the crew. The loot was then packed into casks and buried on an unidentified island. All that was known was that the island had a name that began with the letters PR and sounded something like Princes.

Whilst there, the vessel was careened (scrubbing the hull), a job that had to be done at least twice a year, or more often if they wanted the chase to be effective. It was during this careening that they were at their most vulnerable, with the ship unloaded, on its side in shallow water and defenceless. Two naval ships came across the unprepared pirates who fled inland whilst their prize was re-floated and taken to Jamaica. Rackam and his crew were in dire straits with only two small boats and a canoe left. So they decided to try to sneak back into Nassau to take the King’s Pardon.

This they did, taking with them the most valuable of the loot that they were able to carry. They sold what plunder they had and went on the town, during which time Rackam met Anne Bonny and “took a great fancy to her.”

As well as always being ready to squander their hard-won money when in town, pirates were only too happy to put ashore on some deserted island for rest and recreation, just as tourists do today. They particularly enjoyed play-acting, where they enacted a mock trial portraying their version of justice (or lack of it). One such “play” has been reported in its entirety, and goes like this:

“The Court and Criminal being both appointed, as also Council to Plead, the Judge got up in a Tree and had a dirty Tarpaulin hung over his shoulders. This was done by way of Robe, with a Thrum Cap upon his head and a pair of Spectacles upon his nose. Thus equipped he settled himself in his place and an Abundance of Officers attending him below, with Crowbars and Handspikes, etc. instead of Wands and Tipstaves and such like.

The Criminals were brought out, making a Thousand sour faces; and one who acted as Attorney General opened the charge against them; their speeches were very laconik and their whole proceedings concise.

ATTORN. GEN: An’t Please Your Lordship, and you Gentlemen of the Jury, here is a Fellow before you that is a Sad Dog, a Sad Sad Dog, and I humbly hope Your Lordship will order him to be hanged out of the way immediately. He has committed Pyracy upon the High Seas, and we shall; prove, an’t please Your Lordship, that this Fellow, this Sad Dog before you, has escaped a thousand storms, nay has got safe shore when the Ship has been cast away, which is a certain sign that he was not born to be drown’d; yet not having the Fear of Hanging before His Eyes, he went on robbing and ravishing Man, Woman and Child, plundering Ships’ Cargoes fore and aft, burning and sinking Ship, Bark and Boat as if the Devil had been in him. But this is not all My Lord, he has committed worse Villanies than all these, for we shall prove that he has been guilty of drinking Small Beer and Your Lordship knows there never was a sober Fellow but was a Rogue. My Lord, I should have spoke much finer than I have now but as Your Lordship knows our Rum is all out, and how should a man speak good Law that has not drunk a Dram. However, I hope Your Lordship will order the Fellow to be hang’d.

JUDGE: Harkee me, Sirrah! You lousy pitiful, ill-look’d Dog; what have you to say that you should not be tucked up immediately and set sun-drying like a Scarecrow? Are you guilty or Not guilty?

PRISONER: Not Guilty an’t please Your Worship.

JUDGE: Not Guilty! Say so again Sirrah, and I’ll have you hang’d without any Tryal.

PRISONER: An’t please Your Worship’s Honour, My Lord, I am as honest a poor Fellow as ever went between stem and stern of a Ship, and can hand, reef, steer and clap two ends of Rope together as well as e’er a He that ever crossed Salt Water. But I was taken by one John Rackam (or the name of him that sits as Judge), a notorious Pyrate, a Sad Rogue as ever was unhang’d and he forc’d me, an’t please Your Honour.

JUDGE: Answer me Sirrah. How will you be try’d?

PRISONER: By God and my Country.

JUDGE: The Devil you will. Why then Gentlemen of the Jury, I think we have nothing to do but proceed to Judgement.

ATTORN. GEN: Right My Lord, for if the Fellow should be suffered to speak he may clear himself, and that’s an affront to the Court.

PRISONER: My Lord. I hope your Lordship will consider . . .

JUDGE: Consider! How dare you talk of considering! Sirrah!, Sirrah! I never considered in my life. I’ll make it Treason to consider.

PRISONER: But I hope your Lordship will hear some Reason.

JUDGE: D’ye hear how the Scoundrel prates? What have we to do with Reason? I’d have you know Raskal, we don’t sit here to Reason — we go according to Law. Is Dinner ready yet?

ATTORN. GEN: Yes My Lord.

JUDGE: Then harkee, you Raskal at the Bar. Hear Me, Sirrah, hear me. You must suffer for three Reasons. First because it is not fit that I should sit here as Judge and Nobody be Hang’d. Secondly, you must be hang’d because you have a damned hanging look. And thirdly, you must be hang’d because I am hungry; for know, Sirrah, that ’tis a custom that whenever the Judge’s dinner is ready before the Tryal is over, the Prisoner is to be hang’d, of Course. There’s the Law for you, ye Dog. So take him away Gaoler.”

After his set-to with Rackam, Charles Vane disappeared from the scene until he was cast ashore on an island in the Bay of Honduras. His privation was finally brought to an end when a passing vessel stopped to refill their water casks and he was rescued. He had the bad luck to be recognised and was immediately overpowered, clapped in irons and delivered to Jamaica where he was tried and executed by hanging.

Rackam, on the other hand, became more notorious in his own right, especially when he took up with female pirate Anne Bonny.

Anne Bonny and Mary Read sailed on Calico Jack’s ship until its capture by the British Navy in 1720, when all the men were executed. The two women could not be killed because they claimed to be pregnant.

Anthony Sweeting’s interest in Turks & Caicos history was sparked by Bertie Sadler of Grand Turk and Mary Kalton, who helped him with research in London.

In the last few years, the offshore financial sector has been undergoing dramatic changes. The Turks & Caicos Islands (TCI), albeit a relatively small boutique financial jurisdiction, has been playing its part in introducing a braod array of laws and regulations to ensure a propertly regulated and safe environment in which to conduct offshore financial services business.

Indeed, as a British Overseas Territory, TCI is now more heavily regulated and has more laws in place to ensure the proper conduct of business than many of the “onshore” territories, including the United States and the United Kingdom. In this changing environment, we are seeing a change in the profile of individuals who utilize these offshore financial products and commensurately, we are seeing a change in the products they are seeking. This change is being driven by two factors: increased regulation on the home front making it difficult and expensive for onshore investors to gain access to onshore products that meet their needs, and an increasing level of sophistication of offshore centers, where these needs are being identified and products that are able to meet investors’ objectives are being created.

During the roaring bull market of the 1990s, investors became somewhat complacent in their choice of investment vehicle to access stocks and other investment instruments. On many occasions I met with overjoyed investors who had made significant capital gains on their portfolios and who wanted advice on how to realize those gains without realizing a significant tax charge. In particular, U.S. clients were concerned–especially in the dizzy heights of late 1999 and early 2000–that many of their gains were short term and that they were going to have to pay 40% of their gain in taxes to realize the position.

In the event, many investors who might have taken their profit decided to hold on. The end result has been that in many cases, rather than taking a profit and paying the taxes, they held and paid more in losses in the ensuing collapse.

In addition to these tax issues, investors were (in my humble opinion) duped by the Wall Street money machine and the talking heads of CNBC and other media channels that the road to riches simply involved buying a few stocks and sitting on them for the long term. If you fundamentally believe that this is true, then have a chat with a Japanese investor, who is seeing their stock market hit 19 year lows, and who will have to see the Nikkei index rise by over 400% simply to get back to where it was in 1989! Of course if you believe the commentators, this simply cannot happen in the U.S., just as they would have pronounced in early 2000 that you would have to be mad to think that with the Nasdaq trading over 5,000 it could possibly fall to 1,000–well, we are nearly there. Whether I am right or wrong, the point is: Can you afford to take that risk?

Clearly I am not denying that if you buy stocks, in the long term they will go up. The question is, will it be you or your children or your grandchildren who see this benefit? Furthermore, if you are putting your faith in asset managers who base their investment philosophy on relative performance then you are bound to be doomed. Imagine the phone call from your asset manager in 10 years time: “Hello, Mr. Client. You will be delighted to know that we have outperformed the S&P 500 by 10% in the last 10 years.” It sounds good, but not if the S&P 500 is down 30% and your portfolio is down 20%!

Inept financial institutions selling the glory of equity investment to the unsophisticated general public propagate the “Buy for the Long Term” mantra. The very fact that 80% of equity fund managers underperform their benchmark indices would at least indicate that if the investor wishes to invest in the stock market, then they should do so through an index-tracking fund.

This argument is, however, directed mainly at those investors currently seeking relative performance. It is an amazing quirk of current financial expectations that the average investor will pay in the range of 3% per annum of their money to the 80% of fund managers who underperform their index. What is even more amazing is that most private investors will pay a manager to try and outperform an index that itself may collapse and lose them money. Surely one would pay a manager to make money irrespective of market conditions.

Indeed, if you have a look at Mr. Warren Buffet’s Berkshire Hathaway, at the time of writing the stock in this company is trading at around $74,000, on a Price to Earnings ratio of 82, whilst the net asset value of this company (i.e. the actual value of the underlying stocks held by this fund) is $40,000. Clearly the bear market cannot be over when “investors” are still ignoring the fundamentals despite nearly three years of a bear market.

Most clients who I talk to agree wholeheartedly that they wish to make money and they are not greedy. “If I could make 10% per annum in the markets, with interest rates on bank deposits at just over 1%, I would be very happy.” So what the client is really saying is that they want absolute returns. I have never had a client say to me, “I would be really happy to outperform the S&P 500 by 5% per annum.” Yet that is what the investment industry offers to most private clients, and all private clients are not happy with that when the S&P 500 is down 25% year-to-date.

So, to summarize the issues above, we might conclude the following:

* If we could wrap our investments in a tax-free umbrella, we could be more flexible with them, which in the long run could help enormously in taking profits and allowing re-investment into emerging opportunities.

* If we could gain access to money managers who focus on absolute performance, we might never have to go through the pain again of seeing our funds track the S&P 500 and Nasdaq etc. down and down and down.

* If our actively trading absolute return managers are not constrained by tax issues in their trading, then they can buy and sell at will without creating a large tax liability.

To this end we therefore need two products. Firstly, we need a recognized tax-efficient wrapper that shields the underlying investments from the tax consequences of active trading. Secondly, we need a trading fund whose managers are paid to make money irrespective of the direction of the stock or other markets.

In the first instance, for U.S. tax payers, the tax-efficient wrapper is the single premium deferred variable annuity contract. In the case of substantial investors whose net asset base is at least $5 million and who are looking to invest at least $1 million, the private placement variable life insurance product is the product of choice, but for the purpose of this article I will focus on the variable annuity.

The offshore variable annuity is structured in exactly the same manner as the onshore U.S. version. Utilizing this approach ensures that one is not trying to be clever with the mighty Internal Revenue Service. We are simply cloning the product available onshore and are respecting the rules and requirements laid down by the IRS and the U.S. Treasury.
The essential characteristics of the product are as follows:

*A single premium is invested.

* Funds accumulate on a tax-deferred basis.

* Withdrawals can be taken from the contract after the age of 59 1/2 without penalty. (The IRS imposes a penalty of 10% of gains on withdrawals taken before 59 1/2).

* On withdrawal the gain in the amount withdrawn is taxed at the marginal income tax rate of the owner.

The result is that funds, which would in the short term have been paid in taxes, are allowed to carry on working for the investor, thus resulting in a significantly greater accumulation of assets in the long run.

So why invest in an offshore deferred annuity when there are onshore versions available? The answer is two-fold:

Firstly, from a cost basis, offshore annuities are much cheaper to purchase and manage for the larger investor. The onshore versions are designed for an average investment in the $10,000 range, whereas the offshore minimum investment is in the $100,000 range, and these versions are not structured to pay the substantial commissions that onshore annuities pay (ranging from 5% to 15%!).

Secondly, and most importantly, the offshore annuities are not constrained by primarily State-imposed rules and regulations governing where the funds can be invested. The typical onshore annuity issuer provides a selection of standard mutual funds covering the common array of investment styles, from U.S. large capitalization stocks to emerging country funds. What they do not provide is the flexibility for the investor in the annuity to determine a more flexible investment position, choose his investment advisor to manage the funds, or seek access to alternate investment vehicles that focus on absolute return performance.
Therefore, for our U.S. investor clients what has worked extremely well has been the combination of this U.S. approved tax deferral vehicle, underlying which is a portfolio of alternative investment vehicles focusing on absolute return performance.

Within the industry, these underlying vehicles are very loosely referred to as “hedge funds.” We do not like or approve of this definition as it is in most cases grossly misleading, in that the underlying assets of these funds are not hedged. “Alternative Investment Vehicle” seems far more appropriate as the funds are able to invest in asset classes not normally available to the private investor through domestic funds. These asset classes will incorporate the normal ability to access stocks and bonds, but will also allow access via stock and bond index futures and options, foreign exchange markets, base metals such as copper and aluminum, precious metals such as gold and silver, grains such as wheat and corn, and the meat markets such as live cattle and pork bellies.

The managers of these funds therefore have a much larger selection of investments to choose from and are not constrained by the requirement to buy the investments long, but can also sell the investments short so as to profit from declining prices. The managers may also employ leverage to enhance the gains experienced from relatively small moves.

One has to be extremely careful to select managers who have a proven ability to manage these types of strategies and who have the proven ability to make money in declining as well as rising markets. For example, there are many former mutual fund managers who are trying to become “hedge fund” managers when they have no real experience of trading. The most effective funds tend to employ former proprietary traders from the world’s major banks, where they have had extensive experience in trading and the risk management techniques necessary to manage these funds effectively. For this reason, we focus on selecting fund management groups with extensive experience in this area of investment with proven performance in both up and down markets, in order to measure their correlation to the more traditional markets.

In selecting the investment managers to undertake these programmes, it is entirely possible to put together a portfolio of funds that have achieved compound annual returns in the 10% to 20% per annum range over a period of at least 5 to 10 years. Ideally, we look at structuring a group of funds in order to diversify risk, lower the volatility of the portfolio, and meet some of the diversification rules of the Treasury Department that relate to variable annuity products.

In addition to selecting funds that have sound track records in all market conditions, some of the larger groups issue closed-end funds that have guaranteed minimum returns assuming the investment is held for the entire duration of the holding period. For example, one fund group which issues closed end funds on a regular basis and has achieved historical returns in the 15% per annum range is issuing new funds with a guaranteed minimum return of 120% of the amount invested so long as the investment is held for the full term (usually 10 years). Leading international banks such as Royal Bank of Scotland, Bank of America and Lloyds TSB provide the guarantees.

So in conclusion, the offshore world has a great deal to offer the onshore investor who is seeking a tax efficient means of accessing alternative investment programmes with the aim of targeting absolute returns. With the bursting of the stock market bubble and the ensuing bear market, investors are realizing that preserving capital is just as important as making money, and millions of investors who have been let down by investment managers targeting relative performance are unaware of the opportunities available to select managers focused on absolute returns.

So, if you want to play it safe, is now the time to target absolute returns? Absolutely!

Mark Smallwood is Managing Director of Smallwood Trust Company Ltd. and Smallwood Insurance Company Ltd., based in Providenciales since 1994. Smallwood Insurance Company Ltd. issues a deferred variable annuity called The Sanctuary Investment Plan, details of which can be located on the company’s website at: www.smallwoodco.com.

Mark Smallwood has extensive experience in using insurance products to mitigate tax liabilities for high net worth investors. Mark Smallwood is a full member of the Society of Trust and Estate Practitioners and is President of the Association of Licensed Trustees of the Turks & Caicos Islands.