Tom Nicholson in Bratislava -

The Caribbean resort planned by Slovak financial groups Istrokapital and J&T was massive in scope - a €400m playground for rich jetsetters in the Turks and Caicos Islands, featuring two hotels, 75 villas, 130 condos, a golf course and a private harbour for 80 boats.

Equally generous was the support that the developers enjoyed from Michael Misick, prime minister of the tiny British overseas territory, which is situated about 970 kilometres southeast of Florida. Misick personally pitched Istrokapital boss Mario Hoffman's plans to his cabinet and secured permanent resident status for the Slovak investor. In turn, Misick flew on private jets owned by Hoffman and attended his 30th birthday party. The two men shared more than just a personal bond, however. Misick's brother was given a 50% stake in one of Hoffman's development companies, while Misick himself received a $6m loan from Hoffman's investment partner, J&T.

But the party is finally over, thanks to a Commission of Inquiry set up by the UK Home Office last year to investigate graft in the Turks and Caicos. Following lurid testimony at public hearings, Misick abdicated as leader of his party, the PNP, and promised to resign as premier by the end of March. On March 16, the Commission, head by retired judge Robin Auld, released its interim report, in which it found there was a high probability of systematic corruption in the territory, adding there were "clear signs of political amorality, immaturity and of general administrative incompetence." The British government has now revealed extraordinary plans to seize control of the Caribbean tax haven if Auld's final report, due by the end of April, confirms this view.

At your service

Allegations of corruption have dogged Misick since he came to power in 2003, especially over how the Slovak-owned firm Development Company (Devco), which was the principal vehicle Hoffman is using for his Turks and Caicos project, managed to secure 86% of the land on tiny Salt Cay, much of it on a sweetheart lease from the Misick cabinet.

Testimony before the Commission finally gave substance to the rumours. When Hoffman wrote Misick in 2006 to express his interest in building a golf course on Salt Cay, for example, Misick submitted the letter the following day to his cabinet. The Turks and Caicos ministers agreed to it immediately, even though Hoffman had not even said what he was willing to pay for the Crown land he required. The cabinet later agreed to lease Hoffman 238 acres for 99 years at an annual rate of a dollar per acre. At the time, the ministers had before them an audit they themselves had ordered valuing the property at almost $8m - over 300 times the cumulative value of the lease. "The decision (by the cabinet) shows at best a reckless disregard for public finances as well as possibly raising other concerns," declared an audit by Deloitte.

When the Turks and Caico Islands government's own planning commission rejected a proposal by Devco to build a dock on Salt Cay, fearing damage to the marine environment, Misick intervened and secured a new meeting of the planning commission - and a new verdict approving the dock, which is key to Devco's project. The chairman of the planning commission subsequently quit, citing pressure from Misick and the cabinet to break the law.

And when Hoffman wanted permanent resident status, it was Misick who submitted his application to cabinet and secured its approval. "It seems, Mr Premier, that when it comes to Mr Hoffman, every deal goes his way," said Alex Milne, the senior counsel to the Commission, who led the hearings."

Mystery solved

As Milne proceeded to show, Hoffman's relationship with Misick was not just based on personal sympathies. Hoffman's partner in the company set up to build the golf course is Chal Misick, the premier's brother. A few months after Hoffman secured planning permission for the course, Misick obtained a $6m loan from the J&T bank in Prague. The loan was secured by Chal Misick's shares in the golf course company, meaning that if the premier defaults, J&T would end up with a stake in a project it is already financing. So far, Misick has not paid anything on the loan, just as he has paid almost nothing on the other $14m in debt he carries.

"I would suggest, Mr Premier, that this raises questions, very broad questions, about how you got these loans, and whether in fact they are really loans at all," said Milne.

"That's your opinion," replied Misick.

J&T Banka submitted a letter to the Commission on January 12 declaring that the loan to Misick had been a standard one. "The fact the loan was granted to a so-called politically exposed person was handled in compliance with the law of the European Union and internal rules of the J&T Banka."

The same bank also issued exclusive Centurion credit cards to Misick and other members of his cabinet and close entourage, on which they rang up millions of dollars in bills. The card was created by American Express for the super-rich, and comes with minimum spending requirements, generally about $250,000 a year. According to the documents that Misick handed over to the Commission, he has spent $1.7m on his Centurion card so far, although 12 months of records were missing. The Commission thus pegged his probable spending at $2.5m.

The Commission also found that Hoffman had donated $100,000 in late 2006 to the party that Misick used to head, the PNP. "In your view, did the payment of $100,000 to the ruling party smooth the progress of those [Salt Cay] developments [through the cabinet]?" Milne asked Deputy Premier Floyd Hall. "No" was the answer.

In earlier questioning, Misick had admitted that such gifts were commonly used for personal ends. "The purpose of a political donation in the Turks & Caicos is to assist the person receiving it with his or her political ambitions, but also to use at your discretion, because you use your personal money to advance your political ambition."

"What is in the least bit political about that?" Milne asked. "What is the difference between that and a bribe?"

"You are obviously not a Caribbean politician," Misick replied.

In the end, Milne had the last word. "The provision of the golf course to Mr Hoffman is the clearest possible case of the exploitation of the power of his office by the premier for personal gain," he said in his final submission. "It is, in a word, corrupt.

Hoffman, for his part, has refused to answer any questions about his relationship with Misick. "I find myself pained not by the statements of Mr Misick, but by the fact that a 'journalist' like you is given space in the media," he wrote to bne.

Misick hasn't denied having good personal relations with Hoffman, and has consistently said the Salt Cay project would benefit the entire Turks and Caicos. Other cabinet members were also on good terms with the Slovak financier. Deputy Premier Hall told the Commission that a year ago he and Misick had visited Slovakia as Hoffman's guests, and had flown on Hoffman's private jet to watch a car race in Dubai.

This warm relationship may be in danger, however. Misick told the Commission he believed the Salt Cay project was "probably dead" due to the global economic crisis.

And the news may be no better for J&T. Misick admitted he had no money to pay off the $7.2m he owes the bank when his loan falls due this April. "I will definitely want to renegotiate it," he said. "I'm in the middle of a divorce."

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