Minister says G20 could be watershed for Cayman

| 03/03/2009

(CNS): Facing what he described as very challenging times for offshore financial service centres, Minister Alden McLaughlin told CNS that the forthcoming G20 summit in April could present a watershed for the Cayman Islands. A government delegation is heading to Washington this week, and as the Minister with responsibility for International Financial Services Policy, McLaughlin said government would be doing all it could to persuade members of congress that Cayman does not hide information from the onshore world and that there are many ways for the US to get any information it needs.

“With all that is transpiring there is a need among the major nations to find scapegoats for the global financial crisis,” McLaughlin said. “We need to weigh in as heavily as we can to ensure that they understand the problems do not stem from the Cayman Islands. We must make them understand what we are. It is all about re-enforcing the message and differentiating our jurisdiction.”

The minister explained that, given the global rhetoric surrounding what onshore countries refer to as tax havens, there are very real concerns that during the G20 meeting in April the European Union states and the US will be pushing for blacklists akin to those created in the 1990s, and Cayman must avoid being on any such list, he said. “The G20 could be something of a watershed for us and it will be a major part of this trip,” he added.

Despite the criticisms hailed at government, McLaughlin noted that the recent passage of the Tax Information Exchange Treaty, which now allows Cayman to communicate with any country when necessary, has made the jurisdictions more flexible when it comes to information exchange. Coupled with existing regulations and exchange treaties, this helps to establish Cayman as a reputable financial centre and not a tax haven swathed in secrecy, he said.

However, the minister said he was fully aware of the current climate and the existing perceptions about Cayman. In the end it was impossible to tell how world leaders will react, regardless of how transparent and well regulated the jurisdiction is or how much Cayman does to mitigate the situation.

Although the visit to Washington comes at the same time that the UK Prime Minister Gordon Brown is visiting the US capital to meet with President Barack Obama, McLaughlin said the CI government delegation would not be able to gain access to either leader, although Cayman was busy working on meeting Gordon Brown in London later this month.

“We have opened very important political channels of communication with the UK Financial Services Secretary Lord Myners and we are hopeful that we will secure a meeting with the UK prime minister shortly,” he said.

On this particular visit the Portfolio of Finance announced yesterday (2 March) that the delegation would meet with Congressional representatives who are also members of committees with jurisdiction over legislation in taxation, financial services, trade and international cooperation. The ministers, including Leader of Government Business Kurt Tibbetts and the Financial Secretary Kenneth Jefferson, will be hoping to engage with the US on key global topics, including the G20 Summit, regulatory reforms, transparency and financial services innovation, and talk to stakeholders and interest groups outside of the US government who, the portfolio said, share a mutual concern in ensuring US access to offshorein a responsible way.

“Despite the current economic crisis and associated political positioning by various governments in areas of taxation and offshore, intelligence from external sources suggests that changes to US domestic tax and financial services policies on offshore are still fluid,” Tibbetts said in a statement. “Our commitment to upholding international standards in financial services and our track record of international cooperation – particularly with the US – necessitate us to be engaged and proactive as stakeholders in any decisions made in these areas.”

The last official ministerial visit to Washington, DC, was in March 2007, following the mid-term Congressional elections in 2006. This visit, the portfolio said,is part of ongoing efforts managed by the Public Relations Unit and it was identified as a matter of priority that the new US government administration gains a first-hand understanding of the Islands’ financial services sector.

As well as the LoG, McLaughlin and Jefferson, the delegation going to Washington on the three-day visit, from 4-6 March, will include Attorney General Samuel Bulgin and Cayman Islands Monetary Authority Chairman Carlyle McLaughlin. The delegation will also be supported and advised by Portfolio of Finance Public Relations Director, Ted Bravakis and the Washington, DC team from Fleishman-Hillard, the government’s global external public affairs counsellors in the financial services area.

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Comments (3)

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  1. Anonymous says:

    It is foolhardy to agree to give more access to foreign regulators than would normally be possible even among friendly G7 taxpayer nations.  Cayman should not feel duress to volunteer any further concessions except to educate those at the meeting about how open and cooperative our jurisdiction actually is when approached through the correct channels. 

    For decades Cayman has failed to correct Hollywood’s ongoing fictional portrayals of what is possible here.  Silver briefcases that instantly deliver wires to sinister numbered accounts?   

    The reality is that through the appropriate channels we are among the most open jurisdictions in the world, further, one of the few nations in the world to have completed the retroactive KYC objective from the last FATF witchhunt.  

    How can the average person reconcile these strangely different images?   For years there has been a failure to correctly represent Cayman’s Financial Services industry and that’s why we are lumped in with 34 backward jurisdictions, some with little regulation at all.  What Cayman requries is a seasoned veteran from the sector to serve as an ambassador to accurately represent and convey what we have already done.

  2. Anonymous says:

    Compared with George McCarthy when he was Financial Secretary, Kenneth Jefferson appears to have no image, especially international, no clout, no passion for financial and management reform which he is supposed to spearhead , no vision for Cayman’s financial future, no real desire to make government departments conform to the Public Finance and Management Law which he likes to quote in the LA to show that Moodys and A M Best give Cayman sound ratings. Why doesn’t he demand that his Finance Portfolio set the example? Civil servants say the staff of the Portfolio dont have the intellectual chops to handle their high paid responsibilities.

    • Anonymous says:

      The writer has so roundly and soundly condemned Kenneth Jefferson that one wonders whether there is some axe to grind.  Ken Jefferson is a young Caymanian who assumed this demanding role only a few years ago, and must be given time to grown into his role. 

      Certainly, no one who knows Ken Jefferson can have any question about his intellectual "chops".  Neither have there been any dramatic changes in recent years in his chief officers — the same ones who apparently so ably supported his predecessor.

      As for "international image" — who among the Cabinet has that?  Not one.  Some may have achieved a degree of comfort and some personal relationships from developing those roles over the years, but I hardly think that would amount to any significant "international image." Cayman is simply not in the international big league, by virtue of our size.

      As to laying it at Mr. Jefferson’s door to be responsible for civil servants’ compliance with the Public Finance Law — why does it become hissingular responsibility?  We have a Cabinet whose Members need to demand this of their Chief Officers — the same COs who these days have been given the requisite power and autonomy to get their jobs done.  We have a Governor who is responsible for the civil service.  If he is not exercising his considerable "clout" to get the job done — why one would one to single out this young Caymanian?

      As for having "no passion for financial management reform" — from my knowledge, major changes have already been instituted in a huge reform exercise taking place over the last decade.  While we have to continue to improve what we have, appropriate systems and procedures are in place. 

      As to "no vision for Cayman’s financial future" — is this a fair allegation?  Cabinet as a whole is responsible for the vision of the future of the Cayman Islands — and the Ministers will no doubt hold sway given that they are the ones that the people elected and are therefore answerable to the people. 

      Civil servants are daily executing huge resposibilities that the public knows little about. Let us not make their lives more pressured by singling them out for public condemnations — especially when we are operating from a position of ignorance when it comes down to brass tacks.