Archive for September 4th, 2009

Charity begins at home

Charity begins at home

| 04/09/2009 | 2 Comments

(CNS): Representatives of Cayman’s financial services industry demonstrated their support for local children this week by donating $13,608 to buy essential medical equipment most notably a Bili-Bassinet worth eight thousand dollars that uses phototherapy to treat infants for jaundice. The donation was accompanied by huge bags of toys gathered together by employees of the corporate entities involved for the benefit of the Paediatric Ward at George Town Hospital. The donations form part of an initiative begun by Smile Africa, a Cayman based project launched to raise funds for Facing Africa. Left: Gillian Barlow, Jane Wareham and Camerin Porter (3)

Jane Wareham coordinates donations for Facing Africa, a UK charity dedicated to helping children in Africa who suffer from a devastating flesh eating disease called Noma. She said, “This is the first of what will be many significant events organized by Stuarts Attorneys, Krys & Associates, dms Management Ltd., RBC Wealth Management and Tower Marketing over the coming months. It is a great example of the way in which local organizations can show the importance of corporate social responsibility. Our fund raising is producing tangible results.”

Wareham added, “I would like to express enormous gratitude to all the companies that continue to give their time and money in what are difficult economic circumstances. Now is the time to show the public that the corporate financial services industry in the Cayman Islands adheres to an ethical standard that supports the concept of social contribution with particular emphasis on the improvement of health care for children both locally and in other places of extreme need”.

Lizette Yearwood, Chief Executive Officer of the Cayman Islands Health Services Authority, said, “We are so thankful for the thoughtfulness and support of the Facing Africa team who gave of their time and effort in raising the funds to improve the quality of care for our paediatric patients.” She continued, “This donation reflects the level of commitment and concern within our community about health issues thataffect the lives of residents and visitors to our islands, especially our little ones. The generosity of the Facing Africa team will make a life changing difference in the care of newborns with jaundice.”

Smile Africa’s efforts continue in earnest with a high profile fundraising marathon that will take place in February 2010 in Cayman. Corporate groups are encouraged to enter and sponsor teams of five, each of whom will cover a distance of 10k. The marathon has already attracted interest from local organizations. Kenneth Krys, Smile Africa supporter and Managing Director of Cayman-based corporate recovery and Insolvency firm, Krys & Associates, will be drawing on his recent experience of completing the grueling Marathon Des Sables, a 6 day, 151 mile endurance race across the Sahara desert in aid of Facing Africa, to help organize the marathon.
Additional fundraising events are planned that will incorporate a financial forum introducing international speakers and the continued promotion of the financial services industry. This begins on the 14 January 2010 with the 2010 International Funds Conference, to be hosted by local law firm, Stuarts Attorneys in affiliation with Krys & Associates.

Earlier this year, seven year old Tiggi Kohl, raised over two thousand dollars for Smile Africa through a fundraising effort at her school, Cayman Prep School, by garnering support from her fellow students, encouraging them to donate their toys that Gillian Barlow, Nurse Manager for the Paediatric Ward was thrilled to receive. Ms. Barlow commented, “It is vitally important to us that we create a warm and child-friendly environment for our young patients. We rely heavily on donations to provide toys for our children so we are very grateful to everyone involved with Smile Africa for making this great contribution to us.”

Smile Africa is actively seeking corporate support and welcomes enquiries from local organizations about how they can help or take part in upcoming events such as the marathon. Enquiries can be directed to Jane Wareham at

About Facing Africa:

According to the World Health Organisation (WHO), 100,000 children, aged between one and seven years of age are affected each year by Noma, a gangrenous disease found in Sub-Saharan countries from Senegal to Ethiopia, a region now dubbed “the Noma belt”. The WHO currently estimates that ninety percent of Noma sufferers will be left to die as a result of the disease. These children are outcasts in their own communities, unable to smile, talk, or eat. The lucky ones will receive care and will survive with severe scarring thanks to the efforts of experienced medical teams.

Facing Africa sends four surgical teams from Europe to Africa every year, at a cost of $100,000 per trip. The dedicated efforts of fundraisers have allowed the charity to carry out more than 1,000 facial reconstructions since its inception in 1997. The donations of cash, clothes and toys raised have saved lives. Please continue to give to this vital cause.

For more information about Noma and Facing Africa visit

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Cayman is insolvent

Cayman is insolvent

| 04/09/2009 | 53 Comments

No, you didn’t read that incorrectly. Cayman is  insolvent, bust, broke, unable to pay its debts.This is not a rumour, this is fact. This fact is confirmed by the speaking notes used by the Hon. McKeeva Bush for a meeting held with senior Cayman civil servants, government boards and private sector business leaders last Thursday (27 Aug).

So desperate is the current crisis that the Caymans turned to the UK to cover September’s deficit, and have been politely told they may not borrow the necessary funds to pay wages and other commitments in that month. The letter saying so is here. That means just one thing: Cayman is insolvent. It cannot pay its debts. The UK has refused to let Cayman borrow because it does not believe it will cut government spending and it has seen no commitment by Cayman to raise taxes. And the UK makes it clear in no uncertain terms that is exactly what it thinks Cayman should do.

Look at what he (Chris Bryant) is saying:

  1. The US is fragile;
  2. The hedge fund business is fragile;
  3. The G20 will have an impact;
  4. The Foot Commission will have an impact;
  5. Trust fund income will fall;
  6. Cayman cannot assume it will keep tax haven status;
  7. Taxes must be imposed.

It’s hard to see how much more could have been said to make clear that Cayman’s business model is dead.

This is extraordinary. Bear in mind Cayman has the thirteenth highest GDP per head in the world, and the highest in the Caribbean. It has more multinational corporation subsidiaries than any other tax haven. It has more banks than any other tax secrecy jurisdiction, and more hedge funds too. And it is bust.

So what are they proposing to do? Unbelievably all proposed taxes are on ordinary people in Cayman:

  • Imposing taxes on money transfers from foreign workers in Cayman, – Jamaicans being the biggest group;
  • Introducing property taxes;
  • Revision to various miscellaneous fees, some of which have remained unchanged for decades;
  • Increasing customs duties;
  • Increasing alcohol and tobacco duties;
  • Increasing gasoline tax;
  • Legislate the requirement for money in dormant bank accounts to be turned over to the Government; and the
  • Introduction of a national lottery

That is grossly unfair on the poor in Cayman (the very people the UK says should be protected), shows no real broadening of the tax base but does, most of all, look like rearranging the deck chairs as the ship is sinking. Which is extraordinary by itself in two ways. First, for a place supposedly so clever this is a remarkably poor list of initiatives, and second it does of course say yet again that the vested interest of wealth is being protected.

The odd thing is that is not possible in this situation. If Cayman really is insolvent, and that seems likely, then it is very clear that law and order may fail, property rights may not be protected, and so on. Wealth, in other words, is under real threat and such is the size of Cayman activity I doubt much of it can get out in a hurry without causing massive instability.

So this really is a crisis at the heart of the whole tax haven / secrecy jurisdiction system. The totem of the offshore location is seeing its business model fail, and with it the whole edifice of offshore – including the whole hedge fund edifice that claims to be built around this small island, could fall with it.

This could be a Lehman scale failure.

And all for the sake of a few dollars. But a few dollars none the less the UK will not let them have.

Watch this unfold: if London sticks to its guns (and it should) then Cayman is over as a tax haven – as they themselves predict. The fall out will be enormous. The whole hidden economy could fall apart with it – and do not think that will not have onshore ramifications, because it will.

Richard Murphy is a founder of the Tax Justice Network and director of Tax Research LLP. An expert on tax policy, he writes a daily blog which provides regular news on his activities and opinions at


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MCRU issues warning over mosquito breeding

MCRU issues warning over mosquito breeding

| 04/09/2009 | 13 Comments

(CNS): Following leaked information that suggested the Mosquito Research and Control Unit (MRCU) would not be engaging in its aerial spraying campaign because of government cuts in overtime, the unit has issued a press release telling residents to take proper control measures around their homes to reduce breeding of the Aedes aegypti mosquito, which has the potential to transmit dengue fever, and greater vigilance on the part of residents would complement the unit’s routine vector control exercises aimed at eliminating these potentially dangerous mosquitoes.

MRCU Research Manager Fraser Allen said the MRCU survey officers continually perform house-to-house inspections throughout the island paying particular attention to highly populated areas such as George Town and West Bay. Allen explained that containers are treated with larvicides to kill the mosquito larvae or are overturned to prevent collection of rain water which would initiate breeding. Surfaces where the adult mosquito might rest are also treated with adulticide sprays by the survey crews.

Despite those efforts however, public action is still necessary to keep the mosquito population in check, save resources and prevent the spread of mosquito-borne diseases.

“Aedes aegypti mosquito larvae thrive in home settings, particularly in containers such as flower pots, vases and water troughs which may hold fresh rain water for extended periods of time,” Allen said, improperly discarded garbage such as old tyres collect rain water, also facilitating the breeding of the Aedes aegypti larvae.

“The fact that these mosquitoes breed mostly in domestic environments and as a result of human activity, gives residents a major role to play in eliminating the insect. By taking simple actions such as emptying water vessels regularly and punching holes in old household items prior to disposal, residents can prevent breeding and reduce the chance of a dengue fever outbreak in the Cayman Islands,” Allen advised.

Turning over buckets and placing a screen cover over drums used in water collection residents would assist with at least 60% of the control of this mosquito throughout the islands. While Cayman has not had a major incidence of this mosquito-borne disease, Allen pointed to outbreaks in a number of regional countries last year including Jamaica and Cuba.

 “Although Cayman remains one of the few Caribbean countries in which local transmission of dengue fever does not occur, widespread regional travel means that from time to time, we do see a number of dengue cases in returning residents or visitors.

“Infected persons travelling to Cayman present a real possibility of local transmission,” Allen said, adding that this reinforces the need for precautionary measures. 


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Travers says UK ‘No’ all about competition

Travers says UK ‘No’ all about competition

| 04/09/2009 | 10 Comments

(CNS): The UK decision to withhold its permission for the Cayman Islands government to utilize the loan it has secured for the 2009/10 budget is Anthony Travers’s says designed to disadvantage the jurisdiction. In his latest foray to promote Cayman in the media, the Chair of CIFSA told the international news agency Reuters that the move is all about competitive rivalry in financial services at a time when the UK sector itself is under threat.

The OT minister’s refusal was sent to the government last month and the Leader of Government Business will be approaching Chris Bryant with a number of proposals to raise revenue this week, none of which include taxation. However, if Bryant refuses the government may not be able to meet September’s Civil service salary roll or pay any bills. Travers said the UK refusal was part of another agenda.

"We believe there is another agenda, which seems to have more to do with the competition for financial services and concern that unreasonable tax rates in G20 countries will cause an exodus of people and financial services companies," said Travers who is also head of the Cayman Islands’ Stock Exchange.

Speaking to Reuters this week Travers explained that three banks had been lined up to lend $275 million to government and that while Cayman is predominantly self-governing it still needs the British government’s permission if it increases borrowings above a certain threshold.

Reuters observed that Cayman has suffered from increasing pressure from G20 governments in recent months with it said the future of offshore locations remaining uncertain. The news agency wrote that Cayman is reliant on financial services and tourism, both of which have been hit heavily by the financial crisis.

Travers confirmed the problem and said income from hedge funds on the Cayman Islands has dropped by up to 40 percent, bringing it to similar levels seen in 2005. This has lead to many offshore locations reviewing their long-term business models. Travers said the Cayman Islands is looking to bulk out its service providers on the islands through cutting red tape and encouraging an inflow of talent.But in the short term, the government of the Cayman Islands is focused on plugging the deficit gap.

Travers said the government is reviewing a number of options which include public finance initiatives due to much of the debt burden stemming from the overrunning of two large school projects.Other measures include reviewing the introduction of gambling or a lottery, and increasing taxes on tobacco and alcohol, as talks continue between the UK government and the Cayman Islands, he added.


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Tempura flaws exposed

Tempura flaws exposed

| 04/09/2009 | 19 Comments

(CNS): Scotland Yard Investigators made up their minds over Operation Tempura within three days of their arrival in the Cayman Islands, former police commissioner, Stuart Kernohan, revealed in court on Thursday.  Testifying via video link from the UK at the Lyndon Martin trial, Kernohan said he was extremely concerned when he realised what approach the first two undercover officers were taking so soon after they had arrived to begin an investigation into alleged leaks from the RCIPS to Cayman Net News.

Speaking publically for the first time since he was suspended, the former commissioner told the court that he had been instrumental in bringing the outside investigation team to Cayman following the accusations that had been made about the possibility that Anthony Ennis, his deputy commissioner, was leaking sensitive information to Desmond Seales. But the former senior RCIPS officer said he soon had very serious reservations about their conduct and the process of their investigation.

Kernohan revealed that, although information regarding the leak had come via word of mouth from Lyndon Martin and John Evans, no further progress could be made without some kind of documented evidence. He explained that at that point there was not even enough evidence to apply for a search warrant for the Net News offices.

Having consulted with the governor, the attorney general and the FCO’s OT security officer, Larry Covington, Kernohan explained that a decision was made to bring in a team from Scotland Yard in London, which arrived in Cayman in September 2007. The team later came to be known as the Special Police Investigation Team (SPIT) when Senior Investigating Officer (SIO) Martin Bridger retired from the Met and a number  of other team members, which numbered up to a dozen officers at one time, were recruited from outside Scotland Yard.

Martin’s defence attorney, Trevor Burke QC, asked Kernohan about his first meeting with the two UK SPIT officers, who the ex-commissioner said he went to meet three days after they arrived. Burke suggested that Kernohan had a number of reservations from the get-go regarding the early conclusions made by SIO Bridger and his deputy, Simon Ashwin, and the rationale for what they had decided. Kernohan agreed and told the court he was “very concerned” and confirmed that almost the first words from Ashwin on meeting Kernohan had been, “Now, what about this burglary?”

He expressed his concerns that they were getting things horribly wrong so early in the investigation because of a lack of objectivity and they had already made up their minds in just a few days of being on island. John Evans’ entry into Net News, Kernohan confirmed, could by no stretch of the imagination ever be called a burglary. “At the very first meeting I had with them they had spoken to no witnesses and they had already reached the conclusion it was a burglary,” he said. “It was clearly a fundamental error from the outset,” he noted, adding it was not something one would expect from professional police officers.

Kernohan said from that moment on he became apprehensive that the integrity of the investigation could be brought into question because of the rash conclusions and their lack of objectivity. The court heard how Bridger and Ashwin had dismissed Martin as a credible source, adopted Evans as a truthful witness, vindicated Ennis and placed Desmond Seales in the role of victim within days of arriving, having talked to no one.

Kernohan confirmed that he was officially distanced from the investigation by the governor, so there was no real supervision of the SPIT officers.  The court heard that in January 2008 Kernohan had written to the then Chief Secretary, George McCarthy, in confidence about his concerns regarding the Operation Tempura officers and their overall behaviour, as they were serving as special constables in the RCIPS. Kernohan had alerted McCarthy to the officers’ conduct, the decisions that were being made, the early conclusions, the breach of local procedures and protocols, and above all that there was simply no oversight of their operation.

Burke suggested that Kernohan’s memo to McCarthy had been “something of a prophecy” as he had warned that the reputation of the Cayman Islands and the integrity of the original investigation were at risk without proper oversight of the investigators. Kernohan emphatically agreed that this was indeed the unfortunate outcome.

The former commissioner also noted that Bridger’s technique of taping witness statements and then writing them up later from the tapes himself was vulnerable to abuse and had also given him cause for concern. Burke asked if this had been aptly illustrated with the unlawful arrest of Grand Court Judge Alex Henderson, which was based on Bridger’s written version of John Evans’ statement and not the actual testimony that Evans had given. Kernohan agreed and said he had been very worried by this technique and he would not be interviewed that way as he insisted he would want to write his own statement.

Kernohan also revealed to the court that he was still not entirely sure exactly what the criminal allegations were against him and why Bridger had in February 2008 sought a search warrant for Kernohan’s house on two occasions, which had been refused by the chief justice. Kernohan, who confirmed he was suspended from his job in March 2008 and dismissed in November 2008, said he could not reveal any more because of his own pending civil suit.

Kernohan did confirm that the he had instigated the outside investigation because, from his own UK experience, any internal questions of a specific force would be investigated by the Police Complaints Commission or would be handed to another regional force. And he was aware that the only way an internal RCIPS investigation could take place would be with outside help.

Kernohan confirmed that, as Martin was reluctant to go public with what were serious allegations, he was frustrated in his investigations into the RCIPS leak even before it started as he had no hard evidence. He acknowledged it was a particularly sensitive investigation because it was a newspaper. However,  he said he was not too concerned about what Desmond Seales may have thought if he had succeeded in securing a search warrant.

During his time on the video-link stand Kernohan confirmed that he had received a separate allegation from John Evans that Ennis was Seales’ source on the disparaging stories about the helicopter, as well as concerns from the now leader of government business and then opposition leader, McKeeva Bush, that Ennis was leaking to Net News. Kernohan said he had met Bush at the Ritz Carlton Hotel, where Bush had told him that “the bald one” was leaking information to Seales. He went on to confirm that the main allegations had originally been made by Martin to Rudolph Dixon.

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Moodys says it’s watching Cayman’s cash trouble

Moodys says it’s watching Cayman’s cash trouble

| 04/09/2009 | 13 Comments

(CNS): Credit ratings agency Moody’s says it is carefully monitoring developments in the Cayman Islands and the possible implications for the government’s triple A ratings and at present the outlook on the ratings remains stable. In a press release theglobal standard agency said that the recent revelations about the state of public finances had captured its attention along with the Cayman Islands Government request to the UK to extend borrowing levels beyond those laid out in the Public Management and Finance Law.

“For the first time in the territory’s history, the government made an explicit request to the UK Foreign and Commonwealth Office (FCO) in order to increase its debt levels,” said Alessandra Alecci, Vice President–Senior Analyst in Moody’s Sovereign Risk Group. “The request was necessary because some of the principles in the territory’s Public Management and Finance Law were violated last year, also an unprecedented development given traditional adherence to the fiscal responsibility law.”

Alecci added in the press release that the main reasons for the violations were falling revenues due to a drop in tourism and other services’ income and higher expenditures associated with a one-off ambitious capital expenditure programme. Among the principles violated Moody’s observed correctly was maintaining an operating surplus in the government budget. 

Noting the UK’s initial refusal to Cayman’s request to increase government debt until a medium-term strategy was established to create sustainable revenues in the longer term, Moodys still said it believed based on history, Cayman had a stable outlook with it said, “the expectation of a significant improvement in fiscal outturns once the capital program is completed.”

Moody’s said it believed Cayman’s fiscal trouble was down to one off projects and would soon recover as it was looking into a number of expenditure and revenuemeasures to address the FCO’s concerns. “In addition, the government is contemplating changes to the financing of its capital programme, which might include private finance initiatives that would both limit the need for additional public debt and boost liquidity. The government plans to present its revised plans to the FCO over the next couple of weeks before the budget is presented.”

The ratings agency said that the developments were not a complete surprise. “In a report published in June this year, Moody’s discussed the deterioration in public finances and the sharp increase in the Cayman Islands’ debt levels, which reached close to 20% of GDP during the 2009 fiscal year, double the size just a few years prior,” it said. “While this level of debt is still highly affordable, it is higher than the average such debt ratios in Cayman Islands’ Aa peers.’

The agency noted that the UK is concerned about Cayman’s “unusual tax structure” with no direct taxes but revenue coming from import duties and license fees on off-shore entities. 

However the agency was less concerned: “Given the islands’ long history of fiscal prudence, Moody’s views the significant widening of the central government deficit during 2004/2005 (when the costs associated with Hurricane Ivan were incurred) and subsequently as being more the result of extraordinary circumstances than a fundamental policy shift away from fiscal conservatism,” said Alecci. “However, we will be monitoring the situation to confirm that these are only temporary deviations.” 

Meanwhile, the Los Angeles Times reported yesterday that Moody’s parent company, Moody’s Corp, saw its shares plunge after a US district judge in New York ruled late Wednesday that Moody’s Investors Service and Standard & Poor’s can’t invoke the 1st Amendment to hide from subprime-related legal challenges, forcing the credit ratings firms to respond to fraud charges in a class-action by investors claiming the raters hid the risks of securities linked to subprime mortgages.

Defaults on the debt ignited a credit crisis that has led to more than $1.6 trillion in writedowns and losses since the start of 2007.

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The Cayman Brand

The Cayman Brand

| 04/09/2009 | 1 Comment

Our recently published “Bankruptcy” and a subsequent proposal for property taxes put the integrity of the Cayman Brand in jeopardy. Fortunately our LoGB has now come out with a definitive “No Property or Income Tax” statement.

But the fact that it was considered, however briefly, indicates that under stress our leaders behave erratically. Anyone thinking to domicile wealth here will take this into consideration. Ironically offshore entities already have tax defensive structures in place and we never see that money. The money that we do see is primarily invested in real estate and second homes. So we threaten the only offshore investment that directly benefits us with this resent proposal for property tax. Additionally since government business is not managed prudently the threat of taxation could very well reappear in the future. Branding is all about whom we trust and whom we don’t.

Cayman’s brand was built on integrity: A guarantee of privacy, freedom from taxation and the strict enforcement of the rule of law. We touted our connection to a protective mother England and our stubborn resilience to foreign influence. The Cayman Islands had an enviable reputation as a smart, tough and safe country that provided good stewardship of the assets of its stakeholders, both local and offshore. Our message was simple: Honest, law-abiding individuals and business would find a safe home for their wealth both tangible and intangible in the Cayman Islands. Cayman demonstrated its integrity and the financial world, trusting us, flocked to our Island andwe prospered.

Retaining integrity is a constant battle of building trust. Brand owners must believe in the value of their product, constantly protect it, grow it and manage it for the future. As a brand matures it defines itself and becomes something magical, a force bigger than anyone would have imagined. Its owners and band managers have to constantly find ways to reinforce the truth and principles that underline the integrity of the brand.

Positive customer experience becomes trust and then expectation. Fulfilling expectations is a full time job. Fortunately, satisfied customers become passionate evangelists, spreading the word to their friends and business acquaintances. The profit from owning a world-class brand is huge. Brand management is not about advertising and marketing campaigns; it’s about creating evangelistic clients who promote the brand for free.

Now we need to ask ourselves how are we doing on the integrity side of our brand management responsibility. Are we believers in our own brand? Or was it all a lie? Have we proven to be good stewards of a world-class brand that took so long to build or are we about to tell our friends and clients that our promises of no tax on the wealth that they placed in our care is inconvenient when we overspend. That their tangible wealth, land and homes that can’t be move quickly to our OFC competitors will be our first breach of trust, but we promise that it won’t happen again and that their other form of their wealth are sacrosanct. So trust us, we are the Cayman Islands.

Like a folded corner on a page in a book, you can smooth it out later, but the crease will always remain and mistrust is the most damaging crease of all. Our reputation for good fiscal management and integrity is on the line and the loss of our brand is at stake.

Raw steel repetitively hammered and forged in red-hot coals eventually become tougher, stronger and with careful polishing sharper. This is our chance to prove to the world that out of adversity will emerge a stronger Cayman. We will be forgiven for being over extended and making tough choices in hard times but integrity is about keeping promises, especially when the going gets tough.

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Eastern cops nab another burglar

Eastern cops nab another burglar

| 04/09/2009 | 6 Comments

(CNS): A teenager has been charged with burglary and other offences this week following a spate of break-ins in the eastern districts. Roland Welcome, 19, who appeared in court facing charges of burglary, handling stolen goods, failing to provide a urine specimen and various traffic offences has been remanded in custody detectives from the eastern districts said on Thursday. These charges come in the wake of charges laid against another teenager last week for similar offences which occurred in the eastern part of Grand Cayman.

Police said that the RCIPS is working hard to tackle burglaries, which includes having burglary teams in operation across the Island, holding regular road checks to disrupt criminal’s movements on the road and targeting known offenders.

Police also reminded residents to play their part in addressing property crime by ensuring their homes and property are secure and by recording the serial numbers of electronic and high value goods.

Anyone with information about crime taking place in the Cayman Islands should contact their local police station or Crime Stoppers on 800-8477 (TIPS). All persons calling Crime Stoppers remain anonymous, and are eligible for a reward of up to $1000, should their information lead to an arrest or recovery of property/drugs.

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