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The first sign to greet visitors to Gorey, on the east coast of Jersey, is a bright red plaque with white lettering that says, "Caution: Ducks crossing". Tripping over a duck is about the most dangerous thing you would expect to happen in this picture-postcard village, where the hotel tourist literature boasts of how safe the streets are.

Visitors are encouraged to explore the warren of backstreets which are pitch-black at night and consist, at this time of year at least, of empty tea rooms and restaurants serving the fresh "catch of the day" to the occasional tourist. High above, on top of the cliffs above the town's medieval harbour, Mont Orgueil casts its shadow, the 13th-century bastion built to protect the island from the threat of invasion from the French.

But now a much darker shadow looms over this village. Further up the hill, to the east of the castle, stands another historic building, a 19th-century grey stone structure built to house "young people of the lower classes of society and neglected children", which has become the setting of one of the worst cases of child abuse in the recent history of the British Isles.

The team mounting a painstaking forensic excavation of the Haut de la Garenne former children's home have pinpointed six more places where they think corpses are buried, in addition to the one set of child's remains they have already found. The police suspect that hundreds of minors were abused at Haut de la Garenne in the 1960s and 1970s.

One of the most disturbing features of the grim tale emerging is the silence and the secrecy that has hung over the building for so long. The guilty had good reason to be quiet, but there are victims who have grown into late middle age on the island without telling what they knew, and political leaders who seemed to be lacking in any curiosity about what went on in that home on the hill. But then, Jersey is an island of secrets, an anomalous place that is neither a country, nor part of another country, a tight-knit community of 91,000 now suffering the glare of unwelcome publicity.

The Bailiwick of Jersey has been linked to England constitutionally longer than Wales or Scotland have. It came with the Norman Conquest in 1066, as part of the William the Conqueror's personal estate. While England progressively lost its possessions on mainland France, finally giving up Calais in 1558, the Channel Islands stayed with the English crown.

Victor Hugo took refuge on Jersey in the 1850s, when things were too hot for him in France. The island n 100 miles south of Weymouth but only 12 miles from the French coast and has never been a colony nor is it classed an Overseas Territory, such as Gibraltar. Its archaic status is that of a Crown Dependency. The islanders have no representatives in the UK Parliament, pay no British taxes except for a "voluntary" contribution towards defence and diplomatic costs, and are not subject to English law.

Long after birching had been abolished on the mainland, it was still practised on Jersey. The death penalty was formally abolished only in 2006, though it had been in disuse since the 1960s. The island is governed by a 53-member legislature called the States of Jersey, headed by a Bailiff, and made up of senators, who are elected every six years, constables, and deputies. There are no political parties.

Many islanders say that, except for the odd maverick politician such as the former health minister, Stuart Syvret, the island is a de facto one-party state. This strange constitutional status has made Jersey one of the most pleasant places in the world for those who do not like to be heavily taxed, giving its wealthier residents a strong motive not to invite outsiders to look too hard at the island's affairs.

Since it is not in the EU, there is no VAT, although this year a 3 per cent tax on most goods and services will come into force for the first time. Income tax is capped at 20p in the pound. There is no capital gains tax, or estate tax. This, unsurprisingly, makes it one of the world's favourite locations for offshore banking, supported by a highly sophisticated infrastructure of trust companies, banking services, accountants, lawyers etc.

Until recently, you could put your money in a Jersey bank and be sure no one outside would know. Only in 2002, reluctantly and under threat of sanctions, the island agreed to join a scheme run by the Organisation for Economic Co-operation and Development to share information on tax evasion.

Add to that the 730,000 tourists who arrive every year, and its buoyant farming industry, with thousand of tons of Jersey potatoes exported annually, and the island has, on paper, a higher per capita income than any other self-governing territory apart from Bermuda and Luxembourg.

The 40mph speed limit that applies across most of the island has not stopped it from having the world's highest concentration of Porsche owners per head. So the banks and their clients have their secrets. And then there is the past, with its memories of jackboots and occupation. The greatest trauma in the island's history, until now at any rate, was the Nazi occupation.

Jersey and other Channel islands surrendered without a fight after Winston Churchill decided they could not be defended, and they became the only parts of the British Isles held by the Nazis. The absence of armed resistance has prompted suggestions that the islanders collaborated. They certainly did as their occupiers told, offering only passive resistance that included listening secretly to the BBC, but there was a particularly heavy armed German presence, and unlike other occupied states, Jersey had no pro-Nazi movement.

Its small Jewish population was singled out for revolting persecution, but no islander was ever accused of helping the Nazis to track them down. And there are stories of heroism, notably the case of the physiotherapist, Albert Bedane, to whose house Erica Richardson, a Dutch Jew, fled after she had given her German guard the slip in June 1943.

The Germans combed St Helier for her, and Mr Bedane risked execution by hiding her until the island was liberated almost two years later. He also sheltered an escaped French prisoner of war and Russian slave labourers, on the principle that he "might as well be hanged for a sheep as for a lamb". But one secret that was buried for years was the fate of the "Jerseybags" n the women who had sexual relations with German soldiers n and the children born from these relationships. Documents released in 1996 suggested that there may have been 900 such babies. One of the documents referred to a building called the Westaway Creche, in St Helier, which was said to be "full up with those little bastards". What became of them has been kept secret.

Some are thought to be still living on the island. "The effect of German occupation on the Jersey psyche cannot be underestimated," says the Very Rev Bob Key, the island's dean. "Barely a week goes by that there isn't an occupation story in the Jersey Evening Post. The memories are very much alive, and each year when I hold a Remembrance Day survey I realise just how vivid those memories are."

Few people are willing to give their names when speaking to the myriad reporters who have descended on Jersey since human remains were first found at Haut de la Garenne over the weekend. Many inhabitants are prepared to offer reasons why they believe the politicians are corrupt, or whether there has indeed been a cover-up over the child abuse allegations but few speak openly about it.

Stuart Syvret, a lone voice among Jersey politicians, has claimed there is a culture of cover-up and concealment. "There's a great feeling of solidarity on this island so it's not really surprising that people are not happy to talk openly," admitted Brian Lawrence, who came to the island in 1962 and has lived in St Helier ever since.

"It's never really been a transparent island and we're fiercely proud of the way we rule ourselves. But it does make me uncomfortable to think that some of the people who might have carried out the abuses at the hostel are probably still living on the island today."

The Rev Lawrence Turner, whose parish church at St Martin's is one of those nearest to Haut de la Garenne, believes the child abuse scandal will force the islanders to do some painful soul-searching. "If you are a certain way inclined, the island can easily feel very claustrophobic," he said.

"Say you were a social worker at Haut de la Garenne and you saw someone kicking a child, who do you tell? Whistleblowing is not exactly the most popular activity round here. "I'm not necessarily saying Jersey is worse than anywhere else but it's not like whistleblowers can just up sticks and leave the local community as you can on the mainland.

"I've always joked that if you sneeze on your arrival at the airport by the time you get home there'll be a coffin waiting for you. Word and rumour travels fast. But the darker side to that is that there is a real feeling we shouldn't wash our dirty laundry in public."He added: "There was shock when the abuse allegations came to light and a stunned silence when the bodies started to be uncovered.

But that shouldn't be interpreted as islanders not caring; they are just utterly shocked by the scale of all this. There's going to be a lot of healing and I think we're only at the beginning."