Today’s Guest Post is by Robert Barrington, Professor of Anti-Corruption Practice at the Centre for the Study of Corruption, University of Sussex (UK); and formerly the Chair of Transparency International’s International Council.
With a population of a mere 34,000 and a parliament of 17 elected members, Gibraltar seldom attracts the world’s attention, except in the periodic spats between Britain and Spain as to its territorial status. One of Britain’s Overseas Territories, like the Cayman Islands and British Virgin Islands, it’s part of the remnants of the Empire which never became independent. Like those other territories, Gibraltar has become a financial centre – particularly known for online gambling – and is officially ruled by a hands-off Governor on behalf of the British crown.
Small states have a very mixed record when it comes to corruption. Some, like Singapore and Hong Kong (prior to the recent ‘Chinafication’), have in the past successfully led crackdowns on corruption, backed up by powerful and effective anti-corruption agencies. But small states can all too easily be captured by vested interests and go in the opposite direction – see, for example, Wouter Veenendaal’s article on ‘How smallness fosters clientelism; a case study of Malta.’
The picture in Britain’s Overseas Territories is relatively obscure. They are so small that they do not generally feature on global indices of corruption. There is usually a non-existent, or at best government-friendly local media and civil society; independence – in the judiciary, police, or other pillars of the state – is hard to achieve when everyone knows everyone. Ideal conditions for state capture.
Many of the Overseas Territories dance on the edges of the FATF greylist, periodically creeping on and off. Gibraltar was added to the list in June 2022 and removed in February 2024. The British Virgin Islands, Turks & Caicos and Cayman Islands have all had corruption scandals at the heart of government, often related to dirty money. In fact, it is thanks to those scandals and the subsequent attention they garner (via the international media, public enquiries, and occasionally prosecutions) that we have at least a partial picture of what is going on.
So what is happening in Gibraltar?
The focal point for those interested in corruption is the McGrail Inquiry, a judge-led investigation into the apparently forced retirement of Ian McGrail, the former Commissioner of Police. It is alleged that he was about to expose corruption at the heart of the government and was therefore effectively dismissed from office. Having been instrumental in his ‘retirement’, the Government of Gibraltar has been sending out contradictory signals. On the one hand, it instigated the McGrail Inquiry, and on the other hand, the Chief Minister has since threatened defamation action against Ian McGrail’s barristers, apparently for doing little more than laying out their case. Moreover, just as the Inquiry is about to start its substantive work, the Government of Gibraltar is rushing a new law through parliament which, according to Transparency International, risks fettering the independence of the Inquiry.
To add to the mixed messages, in early 2023 the government passed new legislation to create an anti-corruption authority, but has since then remained silent on the timetable, the size it will be, and the identity of the independent board members it was aiming to recruit. Why the delay? We can only guess, but the Spanish government and media, always quick to seize on an opportunity to bash the government of a territory long coveted by Spain, do not hold back on allegations about high level collusion between the Gibraltarian authorities and tobacco smuggling gangs. Meanwhile, connoisseurs of the role of the UK’s Overseas Territories in illicit financial flows see many of the same ingredients at play in Gibraltar as in the more notorious Caribbean territories – such as secrecy, cronyism and alleged links to organised crime.
If the McGrail Inquiry does its job – and there is some optimism that it will, given the calibre of the presiding judge and McGrail’s own legal team – then we may see something very significant emerge. With such an explosive case in such a tiny territory, it is no exaggeration to say that the Government of Gibraltar is effectively on trial for corruption. What the case reveals about the nexus in the territory between politics, business, law enforcement and possibly organised crime, may require direct intervention from the UK, and perhaps the prosecution of a cadre of senior politicians. Already, as with the Caribbean territories, there is an inescapable impression that Britain has been asleep at the wheel when it comes to governing this Overseas Territory.
That matters both to the Gibraltarians themselves — and also to the UK. These do not look like conditions to keep Gibraltar off the FATF greylist, which is a precarious position for an international financial centre. More significantly, the scandal may place Gibraltar’s very future at stake. If the picture that emerges is of a corrupt government that is complicit with organised crime, it becomes harder to sustain the case that such a rogue territory should be permanently attached to the UK. Spain – supported by its EU partners – hovers in the background for such a moment.
But there is an upside as well. The government could set up an independent and effective anti-corruption agency. The UK has plenty of expertise to help out, should the political will be present. The aspiration for Gibraltar could be Singapore not Malta. This is a familiar scenario to those who study corruption: a scandal leading to reform. Is it possible that Gibraltar’s big bang moment is on the horizon?