An investigation ordered by the UK government has recommended suspending the elected government of the British Virgin Islands for up to two years with direct rule by a London-appointed governor after finding a “shocking” failure in governance.

The release of the Commission of Inquiry report was hastily brought forward on Thursday when Prime Minister Andrew Fache of the offshore tax haven was arrested by undercover U.S. agents in a sting operation at a Miami airport and charged with drug trafficking and money laundering.

According to a U.S. court document, Fahie was lured to the airport by promising $700,000 in cash on a plane to the British Virgin Islands as payment for his help in transporting drugs through the British Virgin Islands.

British Foreign Secretary Liz Truss is due to issue a statement later on Friday on the government’s response to the inquiry’s recommendations. In the damning findings, retired judge Sir Gary Higginbarton said “the principles of good governance are almost everywhere . . . ignored” and concluded that it was “highly likely” that island officials had occurred in recent years serious dishonesty.

“It is with a particularly heavy heart that I conclude that unless the most urgent and drastic steps are taken, the present unpleasant situation – the willful disregard of the principles of good governance by elected officials . . . will continue indefinitely. In my opinion , which is completely unacceptable,” Hickinbottom said.

“The only way to address the related issues is to temporarily suspend those parts of the constitution that allocate spheres of government to elected representatives,” he continued.

Cocaine bound for the United States is seized from the home of a police officer in the British Virgin Islands in November 2020. © Royal Virgin Islands Police Force

Like some other British Overseas Territories, the British Virgin Islands has a dual system of government. Governors, appointed by the UK Foreign Office, oversee defence, security and policing, while elected local governments run the budget and all other matters.

In January 2021, outgoing governor Gus Jaspert ordered the January 2021 order after he said he had found evidence of corruption at the highest levels of BVI government and possible collusion with drug dealers to investigate. Fahie has vehemently denied the allegations and called on Jaspert to apologize.

The British Virgin Islands has come under fire from activists for years for hosting more than 370,000 shell companies that have controlled more than $150 million in assets around the world on behalf of undisclosed owners.

Drug trafficking in the islands has increased in recent years, with shipments of cocaine from Colombia through the British Virgin Islands and then to the United States. In November 2020, more than 2 tons of cocaine were seized at a property owned by an active duty police officer on the island.