Cayman Islands leader arrested in corruption case

KINGSTON, Jamaica (AP) -- The leader of the Cayman Islands' government was arrested Tuesday on suspicion of theft, abuse of office and breach of trust in the famed Caribbean tax haven.

Premier McKeeva Bush was detained Tuesday morning at his home in the West Bay section of Grand Cayman island by officers from the financial unit of the Royal Cayman Islands Police Service, police spokeswoman Janet Dougall said.

By evening, the 57-year-old Bush had been released on overnight bail after a series of interviews. Police said he would be questioned further Wednesday and a decision on any further bail would be made then.

Bush was detained "in connection with a number of ongoing police investigations," Dougall said in a statement. She said the probes involve suspected theft related to misuse of a government credit card and breach of trust, abuse of office and conflict of interest for the alleged importation of unspecified explosive substances without valid permits.

Authorities in the British Caribbean territory did not provide any details about the allegations involved in the arrest.

"It would be inappropriate for the RCIPS to make any further comment in relation to these matters at this time," a police statement said. "Further updates will be made available in due course."

Authorities said another man was arrested Tuesday in connection with the Bush case involving the alleged importation of explosive materials. Police did not reveal his identity.

Phone calls to Bush's home number went unanswered. A top Caymanian lawyer who previously represented Bush did not return calls for comment.

Leonard Dilbert, the premier's chief of staff, said Bush would continue working as the three-island territory's leader amid the investigation.

"There have been no charges," Dilbert said in a brief phone interview from the small island chain, which is the world's sixth largest financial center, with $1.6 trillion in officially booked international assets.

In a written statement later in the day, Dilbert advised people not to rush to judgment. "Being suspected of having done something is far from ... having been proven that you did that thing," he said.

Cayman Islands police revealed last April that they had a total of three investigations under way involving Bush and that they had been investigating allegations of financial irregularities involving him since late 2010. Bush said he had done nothing wrong and called the investigations politically motivated.

Shortly after the police investigations were announced, an article in the newspaper Caymanian Compass quoted Bush as saying that Britain's Foreign and Commonwealth Office did not like him and that he had been warned in 2009 they would try to "ruin" him.

The territory's 700-member Chamber of Commerce applauded news of Bush's arrest. It "demonstrates Cayman's robust law enforcement and anti-corruption systems and the islands' intolerance (of) any alleged unethical behavior or corruption even at the highest level of political office," Chamber President Chris Duggan said in a statement.

The Coalition for Cayman, an advocacy group for good government, called for Bush to immediately resign.

"We must always be careful not to prejudge anyone and allow the due process of the judicial system to run its course. However, as a nation we must be clear that we will not tolerate corruption in any form," the group said.

Bush was elected premier in May 2009 when his United Democratic Party won nine spots in the 15-seat Legislative Assembly, defeating the People's Progressive Movement. Bush created the UDP in 2000 when he was tourism, environment and transport minister.

He wields great power within the territory because he is finance minister as well as head of government. He is the longest serving member of the Legislative Assembly, having first been elected in 1984.

In July, Bush ignited a heated debate when he proposed the islands' first direct tax, to target expatriate workers who earned more than $36,000 annually. It outraged investors and many people living on the islands, where financial services and tourism are the pillars of the economy. Bush scrapped the plan.

For years, private equity and hedge funds have flocked to the Cayman Islands, which offer tax advantages for fund managers and some of their foreign and nonprofit investors. Setting up shop in the islands, usually nothing more than a mail drop, also provides them a large degree of financial secrecy while avoiding the far tighter financial regulations of the U.S. and other nations.

___

David McFadden on Twitter: http://twitter.com/dmcfadd