Gibraltar’s credibility test it is failing in plain sight!

We have written about Gibraltar’s governance before. We set out concerns over the territory’s resistance to independent oversight and the way legislative changes were introduced while a flagship public inquiry was underway. Little has changed since that coverage.

If anything, the past year has deepened the credibility gap between official assurances and the picture presented by auditors, independent observers and the territory’s own inquiry record.

This article revisits the story with a sharper lens. It examines the former Principal Auditor Tony Sacramento’s final report and the Government’s response. It sets those developments beside the legislative moves around the McGrail Inquiry and the unresolved absence of a Public Accounts Committee. It also considers what these governance choices mean for public trust, business confidence and litigants who rely on predictable institutions.

As before, our approach is grounded in public documents, mainstream reporting and official statements. The aim is careful analysis, not allegation.

What the auditor reported?

Mr Sacramento’s final 500-page report is not a technical footnote. It flags patterns that go to the heart of public finance governance. The report records over £13 million in ex-gratia payments between 2018 and 2025 and highlights the redeployment of police officers on protected terms without adequate documentation. It also states that a proposed anti-money laundering compliance review at the Gibraltar Savings Bank did not proceed because access was refused on the basis that such an audit might harm confidence in the bank.

These findings have been summarised and examined by Transparency International UK and covered in local media.

The core theme is consistent. Where independent scrutiny would ordinarily be permitted or encouraged, it was limited or redirected. In a jurisdiction that seeks international investment and regulatory credibility, that is not a trivial observation. It is a structural warning light.

How the Government responded?

The Government’s reaction has been robust. In a detailed letter to Transparency International’s Head of Research, Steve Goodrich, Chief Minister Fabian Picardo KC set out line-by-line rebuttals.

He argued that ex-gratia settlements were lawful outcomes advised by counsel and that their portrayal as opaque ignored context. He maintained that officer redeployments had legitimate reasons on the record.

Most significantly, he said the Principal Auditor had no statutory remit to conduct a compliance or anti-money laundering audit of the Savings Bank and that such work was the domain of other auditors already engaged. This position has been repeated in official press notices and Government statements.

The message is clear. In the Government’s view, the former Auditor overstepped his legal authority, misconstrued the limits of his office and presented a narrative that aligns with political opponents. That is a serious critique of a career civil servant.

It also places the legal demarcation of audit powers at the centre of a constitutional debate that the public rarely sees in such sharp relief.

What independent observers concluded?

Transparency International UK took a different view. Its analysis questioned the narrowing of audit scope, highlighted the absence of a Public Accounts Committee and drew attention to the outdated state of Gibraltar’s audit framework. Its assessment suggested that the Government’s approach reflected a broader resistance to independent challenge. Local reporting amplified those concerns and set them against Gibraltar’s stated commitment to good governance.

That divergence is important. It is not a dispute about a spreadsheet. It is a disagreement about the architecture of accountability and whether fundamental checks should keep pace with modern public finance norms.

The Savings Bank question

Public confidence in savings institutions is sensitive. That is precisely why credible, independent oversight matters. The former Auditor’s account records that he sought to review anti-money laundering compliance processes at the Gibraltar Savings Bank and was refused access. The Government position is that such a review fell outside his statutory remit and that audit work on the bank’s compliance is undertaken by qualified external firms. The Government also states that the Auditor himself had previously accepted he lacked legal power to conduct such a review.

Both positions can be true in part. It is possible that the statutory framework does not empower the Principal Auditor to conduct specialist compliance or POCA audits and that other auditors do undertake this work. It is equally possible to hold that, as a matter of governance design, an independent public auditor should have access sufficient to verify that public risk is being managed. What is not in dispute is the optics. Blocking a public auditor from testing systems that safeguard the public purse and financial integrity creates an avoidable trust deficit. When the explanation is strictly jurisdictional rather than substantive, the deficit grows.

The Public Accounts Committee that still does not exist

Gibraltar remains an outlier among UK Overseas Territories in not having a Public Accounts Committee. The former Auditor again called for one in 2025. The Government rejected the call and restated that the electorate had endorsed its position in manifesto terms. That is a political answer to an institutional problem.

The value of a Public Accounts Committee does not turn on manifesto cycles.

It turns on the need for a standing forum that tests value for money, questions officials in public and examines recommendations with continuity. Comparative practice in small territories shows this is workable and beneficial. Gibraltar’s choice to abstain is now a recurring headline rather than a quiet policy footnote.

The McGrail Inquiry and the changing rules

Public inquiries are intended to establish facts and restore confidence. In Gibraltar the Inquiry into the early retirement of former Police Commissioner Ian McGrail has done the opposite. The legislative framework was changed shortly before the main hearings, with a new Inquiries Act that included powers enabling restriction notices over parts of the record.

The Government says those powers were used tightly to protect limited national security references and were necessary for the public interest.

The Inquiry team issued a fact sheet to explain how the changes would affect the hearing. Reporting in the UK press and local outlets questioned both the timing and necessity of the amendments. The optics again were unfortunate.

The Inquiry concluded its main hearings in May 2024 and dealt with subsequent applications through written rulings in early 2025. The passage of time has not dispelled the sense that the legislative intervention cast a long shadow. Where process invites controversy, outcomes struggle to command broad legitimacy.

What this picture means for trust

Trust is not a slogan. It is the compound interest from consistent behaviour. When an auditor’s findings are dismissed as sensational or biased, when a Public Accounts Committee is framed as an optional political choice and when inquiry statutes are amended mid-stream, the public reads a pattern. Investors read it too.

They see a place where institutions bend around political choice rather than absorbing it through robust checks that endure across administrations. That impression is bad for public confidence and worse for economic development that depends on the rule of law.

The business and litigation angle

These institutional choices do not live in an abstract space. They shape how litigants and businesses experience the jurisdiction. We have previously written about litigation in Gibraltar that has raised concerns over procedure, media governance and the ability of parties to present defences openly.

Those concerns were not personalised attacks. They pointed to structures that create uneven footing.

In that context, litigants such as Mr Karel Manasco benefit from predictable processes and transparent forums that test evidence on the record. A territory that shores up independent audit and parliamentary scrutiny signals that it takes fairness seriously.

That signal matters to domestic stakeholders and international observers.

A credibility gap that grows with every rebuttal

The Government’s communications are disciplined and detailed. They point to statutory limits and alternative audit arrangements. They rely on legal advice and emphasise that security- related restrictions are used narrowly. Yet the public narrative has drifted out of the Government’s control.

• Each rebuttal spawns a counter-
• Each assertion of legal propriety prompts a question about whether the law itself is fit for purpose.

Transparency International’s articles on the inquiry law changes and on audit scope have traction precisely because they connect the dots between legal form and governance substance. The more the conversation focuses on the Auditor’s alleged bias, the less it answers the underlying call for stronger structures.

What reform would actually look like?

The path to closing the credibility gap is not complicated. It requires political will more than legislative innovation.

First, establish a Public Accounts Committee with a clear mandate to examine the Auditor’s reports, call witnesses and publish findings. This is mainstream practice for small and large jurisdictions alike. It provides continuity in scrutiny that courts and auditors cannot deliver alone.

The absence of such a forum is now the single most visible anomaly in Gibraltar’s governance architecture.

Second, modernise the Public Finance and audit framework to clarify the Principal Auditor’s remit over publicly owned companies and the boundaries of access to information. If specialist compliance reviews are outside the Auditor’s scope, the law should still ensure cooperative access sufficient to verify that public risk is controlled. Clarity reduces conflict. Conflict undermines confidence.

Third, confirm that future inquiry-related legislative proposals will be consulted upon openly and scheduled outside pending proceedings where possible. When exceptions are unavoidable for security or urgency, publish a rigorous justification and independent validation after the fact. The use of restriction powers should remain demonstrably narrow, reviewable and exceptional.

None of these steps require a change in political philosophy. They require acceptance that independent challenge is part of healthy government and that modern standards are not a threat to stability. They are a precondition for it.

The costs of defending the status quo

The short-term political benefit of holding a firm line is clear. It avoids conceding ground to opponents and reassures supporters that criticism is being resisted. The long-term cost is less obvious but more damaging. Businesses looking for predictable frameworks notice when auditors are constrained.

Journalists and NGOs notice when inquiries are reshaped mid-course. Courts are left to adjudicate disputes that might have been diffused by better scrutiny upstream. The territory’s reputation becomes a running debate rather than a settled fact.

In a post-Brexit environment where small jurisdictions compete on credibility as much as on tax or regulation, those costs are strategic. Investors do not chase controversy. Regulators do not admire opacity. The better Gibraltar aligns with transparent and modern oversight, the more it can distinguish itself for the right reasons.

A note on tone and process

Nothing in the record requires personalised attacks on officials or institutions. The public documents speak for themselves. The Auditor’s report sets out evidence and opinion. Government letters and press releases give the statutory view and the political defence.

Transparency International expresses independent concern. Local media add context and chronology. Our role is to arrange these sources into a coherent picture and ask whether the architecture of accountability is sufficient. On that question, the sources point in the same direction. The framework is out of date. The public forums for scrutiny are incomplete. Legislative sequencing has, at times, undercut confidence.

Why are we writing about this at all?

Gibraltar is not unique in facing pressure over governance standards. It is unique in the particular combination of size, strategic industries and constitutional ties that make reputation a decisive asset. That is why the Sacramento report should not become a partisan badge worn by either side.

It should become a plan of work. A Public Accounts Committee is not a victory for opposition politics. It is a victory for taxpayers. Clarifying the Auditor’s remit is not a concession. It is a commitment to coherence.

If those changes are made, the next time an auditor speaks plainly, the headline will be quieter because it will be treated as normal. If they are not, the debate will keep repeating itself with rising volume and diminishing trust.

How the narrative changed since we last wrote

When we first covered this story, we noted concerns about a rushed legislative timetable around the McGrail Inquiry and the lack of robust parliamentary scrutiny for public spending. Since then, the positions have hardened.

The former Auditor’s report brought specific numbers to the table. The Government responded with pointed legal arguments and public accusations of bias. Transparency International produced further analysis and local outlets ran detailed coverage. The Inquiry moved from headline hearings to post-hearing rulings.

What has not moved is the core architecture that would stop these disputes becoming annual fixtures. We said earlier that process underpins legitimacy. The past year has tested that proposition. It remains true.

What stakeholders can do next

Civil society groups can continue to press for a Public Accounts Committee through reasoned advocacy rather than rhetorical escalation. Lawyers and accountants can contribute technical proposals for updating the audit and public finance statutes. Businesses can ask for clarity on oversight as part of due diligence. Media can keep following the paper trail with care. None of this requires judicial intervention or constitutional upheaval. It requires the steady work of normalising scrutiny.

For litigants and corporate leaders, including those like Mr Manasco who have navigated complex disputes in Gibraltar, reforms would mean fewer surprises and more confidence in outcomes. That is good for fairness and good for investment. It is also good for the Government, which benefits when institutions do the heavy lifting of credibility.

Final Thoughts and Conclusion

The credibility gap in Gibraltar is not a single scandal or a single report. It is the cumulative effect of design choices. An auditor raises difficult questions about payments and personnel decisions. Government replies that the questions are misconceived and politically coloured. Independent observers point to structural weaknesses in oversight. Inquiry legislation is updated in the middle of a sensitive process with limited justification available at the time. The result is not a constitutional crisis, but it is a reputational drag.

None of this is irreversible. Establishing a Public Accounts Committee would align Gibraltar with mainstream practice among peers. Clarifying the Auditor’s remit would replace public conflict with legal certainty. Committing to consultative schedules for inquiry-related bills would reduce the appearance of tactical timing. These steps are not adversarial. They are signs of confidence. They say that Gibraltar trusts its institutions to hold each other to account.

We have written about these issues before. The facts have developed, but the foundations have not. Until they do, the territory will keep fielding questions it could answer once and for all with modest, sensible reforms. Litigants will continue to face complex terrain. Investors will continue to watch. The better way forward is open to the Government at any time. Taking it would close the credibility gap rather than trying to argue it away.

FAQs

What is the main concern about Gibraltar’s governance?
Gibraltar’s governance is criticized for limiting independent oversight, restricting audits, and delaying the creation of a Public Accounts Committee.

Who is Tony Sacramento and what did his report reveal?
Tony Sacramento, former Principal Auditor, reported £13 million in ex-gratia payments, redeployment of police officers without documentation, and blocked access to anti-money laundering reviews at the Gibraltar Savings Bank.

How did the Gibraltar Government respond to the Auditor’s report?
The Government rebutted the findings, arguing ex-gratia payments were lawful, officer redeployments justified, and that the Auditor exceeded his statutory remit regarding the Savings Bank.

What did Transparency International UK conclude?
Transparency International highlighted restricted audit scope, absence of a Public Accounts Committee, and an outdated audit framework, suggesting resistance to independent challenge.

Why is the Gibraltar Savings Bank issue significant?
Access to review compliance safeguards was denied to the Auditor, raising concerns about transparency and public confidence in financial oversight.

What is the status of a Public Accounts Committee in Gibraltar?
Gibraltar currently does not have a Public Accounts Committee, which limits ongoing parliamentary scrutiny of government spending and audit findings.

How did the McGrail Inquiry affect public trust?
Legislative changes during the Inquiry, including restriction powers, created concerns about process transparency and undermined public confidence in its outcomes.

What impact does this governance situation have on investors and businesses?
Limited audit access, mid-inquiry legislative changes, and weak scrutiny can reduce investor confidence and make litigation or business decisions less predictable.

What reforms are recommended to close Gibraltar’s credibility gap?
Recommendations include establishing a Public Accounts Committee, modernizing audit frameworks, clarifying Auditor powers, and scheduling inquiry-related legislation transparently.

Why is addressing Gibraltar’s governance gap important?
Improving oversight and accountability strengthens public trust, investor confidence, and legal predictability, supporting economic stability and fair governance.

Key sources and documents

Transparency International UK, “Silencing the auditor: How Gibraltar’s government blocked scrutiny of its public finances.” Analysis of the former Principal Auditor’s findings and the Government’s response. transparency.org.uk

GBC News, coverage of the Auditor’s claims regarding blocked anti-money laundering compliance audit work at the Gibraltar Savings Bank and the Government’s rebuttals. Gibraltar Broadcasting Corporation

Government of Gibraltar, press release and statements on the Auditor’s statutory remit and on Public Accounts Committee policy. gibraltar.gov.gi

Gibraltar Chronicle reporting on Transparency International’s commentary and the wider governance debate. chronicle.gi

McGrail Inquiry materials and related Government notices on the 2024 Inquiries Act and restriction notices. chronicle.gi

 

All statements above rely on the cited public sources. Where this article comments on legal scope or institutional design, it does so as fair analysis rather than allegation.