US trip could be in vain

| 05/03/2009

(CNS): As the Cayman Islands government delegation headed to the US capital yesterday, UK Prime Minister Gordon Brown was asking members of Congress, "How much safer would everybody’s savings be if the whole world finally came together to outlaw shadow banking systems and offshore tax havens?" Given the circumstances, efforts by the CI government may well be in vain, and one local politician believes it was too little too late.

Rolston Anglin, the UDP’s second elected member for West Bay said that he was unaware of what exactly the delegation was doing in Washington as the government had not been open about it, and he did not know how much their efforts would help. He said that the lack of transparency over the trip was a wasted opportunity as government could have reached out to see if there were others, professionals as well as politicians, that could have been able to assist on the mission.

Given the current economic climate, however, Anglin said the jurisdiction is certainly vulnerable to the behaviour of the major onshore nations, and as Cayman is not economically independent it is always at the mercy of the decisions made by larger nations. He noted, too, the irony that it was Cayman’s own head of state that was callingto close us down.

“What people have to understand is that Cayman is no more economically independent than any other nation in the global economy. While every country in the world seeks economic independence it is impossible to achieve. We are all interlinked and Cayman is particularly vulnerable to the world’s political and economic climate,” he said.

Anglin explained that Cayman’s best line of defence would have been to push the message out on how the jurisdiction adds value to the global economy, a message that he believes should have been at centre stage all the time and not just when things appear to be reaching crisis point.

“Successful jurisdictions like Cayman are always open to attack and criticism as someone somewhere in the world is competing for the same business. We need a never-ending campaign that asserts the value that we add to the international financial system. We need to argue our relevance to the entire system,” he added, noting that the current global economic crisis had thrown up even more concerns for Cayman, and given the circumstances there was no single answer to the problem.

He said the increased role of UK and American governments in their domestic banks as a result of the bailouts could influence the behaviour of those institutions and prevent them from using offshore centres. Domestic legislation could be passed to make it increasingly difficult for people to use the jurisdiction, and ultimately governments are at liberty to make it illegal for their citizens to do business here.

He said it was impossible to know exactly what the onshore jurisdictions would do, and Cayman would have to react accordingly depending on what happens. He said this was the end result if you failed to engage the people that matter on an ongoing basis.

Former Chair of the Cayman Islands Monetary Authority Tim Ridley believes that while the onshore nations could certainly agree to pass domestic legislation that would effectively prevent or make very expensive movement of payments to and from offshore jurisdictions, he is not convinced they will. They are, however, likely to make life a lot more difficult for their taxpayers to use offshore centres. “Both the US and UK need foreign investment inwards from offshore centres and need to allow their multinationals and banks to use offshore if they are to be competitive. Sadly, the shouting classes are in the ascendancy right now,” he said.

While Brown’s speech has raised even more concern, the most pressing issue for Cayman is the upcoming G20 meeting next month in London, which Minister Alden McLaughlin said earlier this week could be a watershed for Cayman. The nations at the meeting will be pressing for a new blacklist of what was termed uncooperative havens at the G20 preparatory summit in Berlin recently.

As Cayman continues to be perceived as a tax haven, where British and US banks and corporations use subsidiaries to avoid tax, it is likely to be on the blacklist, despite any efforts to demonstrate that the jurisdiction is perfectly co-operative.

Previous lists that Cayman has found itself on generally “named and shamed”. However, this time the G20 nations propose a series of sanctions, include refusing to allow payments to a blacklisted haven to be deducted from taxable income. This would hit big corporations and banks who utilize offshore centres by paying royalties, management fees, dividends and insurance premiums to their own offshore subsidiaries.

The G20 will be considering the Tax Information Exchange Treaties with the jurisdictions in question, which will mean that Cayman’s recently passed legislation allowing it to sign such deals with countries as and when necessary could help to protect the islands.

However, the very fact that Cayman is home to subsidiaries of American and British banks and institutions may be enough to place Cayman on the blacklist. Lord Oakeshott, the UK Liberal-Democrat Treasury spokesman has called for UK government ministers to disclose exactly how much banks’ offshore activities were costing and the UK shadow chancellor George Osborne questioned Brown’s claims to deal with offshore centres while he increased the UK government’s stake in banks that, like RBS, have offshore subsidiaries. Criticisms over Lloyds Bank’s refusal to explain the purpose of other large loans, totalling £4bn, many routed through the Cayman Islands, will see the jurisdiction accused as much as the bankers. 

In his speech to Congress yesterday, Brown said, "An economic hurricane has swept the world, creating a crisis of credit and of confidence" and the whole of the worldwide banking system needed to be changed to serve our prosperity rather than risk it. “Let us agree rules and standards for accountability, transparency, and reward that will mean an end to the excesses and will apply to every bank, everywhere, and all the time,” he said.

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Comments (16)

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  1. Anonymous says:

    I saw this ¨great wall of fire¨ coming upon us from about 8 months ago and many people I spoke to, dismissed it as rubbish. I paid off all my debts and even though I don´t have any money left, I at least have a roof over my head and a car to drive that no one can take from me. I guess if job´s go out of the door, I can always go on the ironshore and catch a few squabbs to eat and take a few odd jobs here and there to pay my electric bill. 

    If you think it´s started to get bad now in our economy, just you wait until about September 2009 when the full force will hit us all.

    Caymanians and residents alike will suffer because we are accustom of driving fancy cars, living in fancy houses, going on shopping sprees every month and going on expensive vacations 3-4 times per year, only incurring debt beyond our means.

    Just you wait until the mortages and loans can´t be paid montly and then you will see Caymanians and residents alike, experience foreclosures left right and centre.

    A bit of advice, consider opening a REPO BUSINESS it is sure to do well in these tough economic times. Sorry for all the Real Estates Brokers, it´s no more getting rich overnight !!!!!!

     

  2. Anonymous says:

    Has anyone checked thatthere was an actual meeting??

    I can’t find anything on the House of Representative’s schedule indicating a meeting. Nor did I see anything on the Senate’s. These should be publically documented, even down to the level of subcommittees!

    I also saw nothing in the US National publications about a meeting.

    Be interesting to see what the results were. Has the delegation come back yet? Since the trip was for Caymanians, paid by Caymians, when do the Caymanians get some feedback!?

  3. Anonymous says:

    If Britain’s interests are protected by reform of the laws of its territories, it is the UK government’s obligation to do what is in the best interests of Britain.  The wishes of 25,000 or of its citizens can’t and shouldn’t outweigh the interests of the other 55million.

    • Anonymous says:

      "If Britain’s interests are protected by reform of the laws of its territories, it is the UK government’s obligation to do what is in the best interests of Britain.  The wishes of 25,000 or of its citizens can’t and shouldn’t outweigh the interests of the other 55million".

      That is a very shortsighted comment. We have complied with everything Britain, the EU, the OECD and the FATF has required of us. A UK Govt. inspector is reviewing our regulatory system this month. For Brown to go to a foreign country, before he has the inspector’s report and invite them to join forces with them to close down the economies of Britain’s own overseas territories is an appalling show of bad faith and confirms that the UK is actively hostile to our interests.

      We are simply being scapegoated in the midst of the economic turmoil which has its causes in the poor onshore regulatory systems. We are a convenient whipping boy.   

      However, even if they do proceed to close us down it does not mean that the money will come flowing back into the US and Britain. Instead, it will go into places which are less well-regulated than Cayman. No doubt Russian and Middle Eastern states (whom they dare not trouble) will take advantage of this.    

       

  4. anonymous says:

    I’m confused, why doesn’t the Cayman Islands government negotiating team include any pastors or radio talkshow hosts? Don’t we want our brightest minds in on this important matter?

    Seriously, I thought it was our government’s policy to include our weirdest and most unqualified people in all crucial international negotiations.

    Have we changed tactics or what?

  5. Dennie Warren Jr. (PFR) says:

    The British Government: Stealing a Nation, a Special Report by John Pilger; a true story of a British Overseas Territory. You have to see for yourself what the British Government is will do to “their own” subjects.

    Let Them Return Website.

  6. TAG says:

    this is pretty funny:

    Here we are faced with a crisis that can seize the Cayman economy. This govt has sat on its hands for the last 4 years, just worried about making it difficult for business and paving roads to nowhere. Nothing new here – since hurricane Ivan there has been a steady stream of fund admin firms and other financial firms re or co locating to other jurisdictions. Why have they never said a word about it before? Why are they worried now? This really is a case of too little too late. This Govt never cared before, and was happy to sit quietly by as they have watched the parade of jobs go out the door. They have let us Caymanians down badly. 

    But wait – Chuckie has an idea – our last leg to stand on is tourism, and the Chukster can fix it!! Cayman can be "Anytown, USA". What a great way to promote a ‘high end’ destination. Market us as just like anytown in the US. All we got to do is add in a little crime and drugs, make it really expensive to get to, and wow, the people will come. Wait till they hear about our mountains and rainforests, or maybe it will be the views that will bring them in. From the Michael Vick escapade to the Anytown USA expenditures and decisions, Chuckie has show the decision making capabilities of my goldfish. 

    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx What a laughable contingent. They should add in a couple of Pastors to speak tell senate our position on how "Discrimination is Necessary" and how evil gay people are. Maybe THEN, the senate would give us an ear and understand that we are not a bunch of jokers. What a disappointment. The PPM is guilty of ignoring our financial sector for their whole term whilst appealing to the lowest common denominator.

    MacKeevas biggest mistake was teh granting of 3000 status’. Of those probably about 500 were a mistake. Maybe when the PPM get tossed out on their a$$es in May, MacKeeva can look at revoking the ‘status’ of all the PPMers. That can be his way of giving back for at least some of the 500 people that shouldnt have gotten status.

    CNS: Things are going to get very heated during election season. We really want to encourage everyone to voice their opinions but I’m going to delete comments or parts of comments that contain name-calling.

     

     

  7. Anonymous says:

    It might be in vain, but at least it will be in First Class!  Some people may have trouble paying their light bill, but this government sure knows how to waste money like 650K on Heroes day.  I think the visit to Washington is simply an election tactic to fool us into thinking they have our interest at heart.  As another poster put it, if they are going to send a delegation then at least take someone along who has sound financial knowledge!

  8. Twyla M Vargas says:

    SLEEPING WITH THE ENEMY.

    That is what it is,  Brown and Obama is just badminding the Cayman Islands, and showing us how much they really envy us, along with the enemies we sleep with.    Obama thinks he is GOD and can sav e the World, and as for Brown all he needs is two horns in his forehead.  But just like I heard a gentleman expressing himself on the talk show.  USA andENGLAND are cursed.  Get a US One dollar bill and question what you see on it.  It is the most sought after money in the world.  When we get it we do not even want to spend it, only to keep it in our wallets and increas on  it.   Its cursed.

    A SUGGESTION:       Find the Books titled.

    1)   The Terror Conspiracy

    2)   Rule by Secrecy

    Both Written by  Jim Marrs.

    Matrix of Power, written by Jordan  Maxwell.

    Read these three books and gain knowledge.

    One thing with Cayman Islands and the few that we have left, we have some Churches here that are genuine, and they can pray your socks off your feet when they start.  So I say leave those two world powers to one who is greater.  

    Whether we want to believe it or not THIS IS THE BEGINNING OF THE END. There is absolutely nothing we can do about what is comming to pass.  This is GODS word, NATIONS AGAINST NATIONS, CHILDREN AGAINST PARENTS, parents against children,  and the list goes on.  Let us pray for each other.  Let the people of this Island especially the Governement have a Revival.  Because we have all fallen short of the glory of GOD.  Our Big house, expensive cars, Business friends and families will disappear one day, to an unknown land. 

    Let USA and ENGLAND do what they want.   I say do not exchange any talks with them.  Let them come to us on our soil.  What are they going to do put  Fifty five thousad people in prison?  To those persons who have came to cayman and made Cayman a better place to live, I say stand firm.  Do not be bullied or frightened.  If you believe in GOD put prayer where your money is.  Blessed.

  9. Anonymous says:

    Given the mess in the world’s financial markets Obama & Brown are looking for targets of which to vent their wrath and unfortunately it seems that Cayman has come into their cross hairs.

     

  10. Obamamaniac says:

    This one is dedicated to all those supporters who thought this was such a wonderful idea dont worry be happy! To all those fans out there who listen to the Doors and to those who are too young to know who they are The Sound is This is END Becareful what u wish for you just might get it one day.

  11. Anonymous says:

    One person who should have been on this delegation was Mr. Tim Ridley former Chairman of the Cayman Islands Monetary Authority.

    He has the legal mind and knows the Cayman Islands Financial Services inside, out.

    I don´t  think the Cayman Islands delegation will achieve anything in the US. The US and the UK are both ¨Hell Bent¨on ruining the Cayman Islands and similar offshore financial jurisdictions. 

    So much for UK motherland !!!! As far as I´m concerned, they can shove their given British Passports to Overseas Territories citizens, up their _ _ _  !!!!!!!

    I guess we as Caymanians should soon be prepared to seek job´s in Dubai, many practicing attorneys and accountants from the Cayman Islands are already heading there.   

    Get ready Cayman Islands, ¨It´s one hell of a rough and bumpy road ahead of us, for the next couple of years¨

    Almighty God Help Us All !!!!!! 

  12. Anonymous says:

    I think they were misled…

  13. Redbayer says:

    The worrying thing is the representation that Cayman will have in Washington. I really think that Alden and Kurt have messed up – shouldn’t Pastor Al, Nicholas Sykes et al be going along as well?

    • Anonymous says:

      Don’t forget Ellio and lets throw in a few consultants whose reports we will never see as well….

    • Anonymous says:

      Thanks PPM! You made sure you got the $700M for your friends before it all ends.