Archive for May 6th, 2009
Travers tells Obama how it is
(CNS): Stating that efforts to explain Cayman’s position in the world of global finance have so far been less than effective, the new Chair of CIFSA Anthony Travers says he has written to President Barack Obama to tell him that Cayman’s continued success is important to the success of the US as well. In an open letter to the US leader, Travers tells him that Cayman is gravely concerned about his remarks erroneously suggesting that US corporations in Cayman are “engaging in tax fraud.”
Travers told CNS that given the misperceptions that characterize the debate on international funding of United States financialinstitutions, a letter to the president explaining Cayman’s position could help clarify the situation.
“Evidently, efforts to date to draw the correct distinctions have been less than fully effective. It is understandable, given the manner in which tax optimization and tax evasion have been conflated and the Cayman Islands and Monaco have been conflated, that onshore policy makers do not appear to fully recognize that Cayman is a fully transparent offshore financial centre that is responsible for funding trillions of dollars into the United States markets,” Travers said.
He added that while it was in Cayman’s interest that the flow of international finance continues, it was also in interest of the US.
“We want to emphasize to the president that there is crucial element to the Cayman Islands story that does not appear to be on the policy makers’ radar,” he added. “We also wanted to make it clear that the financial industry in Cayman remains willing and able to cooperate fully so that any continuing United States concerns may be met.”
Since taking up the chairmanship of the Cayman Islands Financial Services Association (CIFSA), Travers has been considerably more outspoken than any of his predecessors and has also taken on a new PR firm to tackle the continued problem of negative perceptions of Cayman overseas. Since the announcement earlier this year that government and CIFSA would be working together to tackle the fall-out from G20, Cayman’s appearance on the ‘grey list’ the jurisdiction’s relationship with the OECD and other international pressures, there has been considerably more evidence of the two parties working separately.
In a recent letter to the leader of government business on behalf of CIFSA, Travers made it clear he was at odds with the government’s potion on how to address the problem and demanded immediate changes to local legislation. Travers has now confirmed that he will be taking his own trip to Washington in the next few days to engage directly with the players on Capitol Hill.
However, government told CNS this morning (Wednesday 6 May) it supports CIFSA’s attempts to reach US. political decision-makers. "Part of that involves acknowledging the differing — but complementary — approaches that governments and private sector organisations employ," said Minister Alden McLaughlin adding that CIFSA had informed government of the letter and offered the chance to be a part of it.
"While the messages in CIFSA’s letter are similar to what we have conveyed in Washington, we had to consider their approach based on the fact that governments communicate with each other differently than a private sector approach to government. Governments rely on diplomatic channels and direct discussions with political and government leaders, as well as those who influence them," he added. McLaughlin described CIFSA’s decision to place ads with open letters to the US president as "another channel," better suited to a private sector lobby but the goal was the same.
In his letter to Obama, the CIFSA chair states that merely because US subsidiaries are registered to do business in Cayman they are not engaging in tax fraud.
“We believe that Cayman-based corporate subsidiaries operate legally and transparently and are aware of no information to the contrary. The Cayman Islands has a low tax rate, just as do Ireland and other jurisdictions.That is not a bad thing; it certainly is not the basis upon which to suggest illegality in the form of tax evasion,” Travers writes, adding that the system provides a competitive advantage in global trade, but not fraud, evasion or artificial avoidance.
He states that CIFSA recognizes that the tax deferral policy is a matter for the US Government to determine, but that it was important to note that for over 20 years the Cayman Islands has been a model of cooperation with the United States. “We have worked cooperatively on every international initiative from the United States, the IMF, the OECD and the FATF to create a financial regulatory structure that is robust, accountable, transparent and fair,” Travers tells the president.
“Notably, there has not been a single bank failure in the Cayman Islands during this financial crisis and none of the financial recklessness that has brought about much of the current global crisis occurred in or involved the Cayman Islands. Rather, to the contrary, the investments which flow from the 12,000 companies involved with the United States have provided trillions of dollars of international investment to US financial institutions at a critical period, and have done so in a fully transparent manner.”
He cites Cayman’s tax information exchange arrangement under the European Union Savings Directive (EUSD) with all 27 European countries, the Mutual Legal Assistance Treaty with the US and the US Tax Information Exchange Agreement and the plans to secure additional information sharing agreements. “We are eager to work with your Administration to take further steps as necessary to promote transparency and tax law compliance, “ he writes. “We hope you will provide us the opportunity to provide you and your Administration a fuller description of the efforts the Cayman financial industry has taken to promote transparency and accountability.”
The full letter is available at: http://news.prnewswire.com
Brac independent called UDP
(CNS): A PPM minister at a political rally on Cayman Brac assured the crowd that independent candidate for the district, Lyndon Martin, was in fact a member of the opposition party. Calling the UDP liars and McKeeva Bush “a deadly man”, Arden McLean said, “They will do anything to get their two candidates elected up here…Don’t you be fooled by them, it’s not only one.” In front of a noisy crowd outside Kirkconnell’s Market to support PPM incumbent Moses Kirkconnell (left), McLean also promised to pave the main roads, provide piped water throughout the island,and sort out the dump if he returned as Minister for Works.
The only speaker among three ministers and three backbenchers to talk about the UDP, the “Action Man”, who had been all but invited to join the UDP at an opposition rally on the island a few weeks earlier, said the UDP “will do anything to get power… One thing you have not heard is that there was any corruption with anyone here. And I can stand in front of everybody and don’t have to worry which of them is taking 10% behind me.”
On the other hand, there was a note of praise for UDP incumbent Juliana O’Connor–Connolly for her role in the post-Paloma recovery. McLean said Kirkconnell had been very supportive of his clean-up efforts, but added, “I must say the other one has been, too.”
As Minister of Works and Infrastructure, McLean suspended post-Paloma clean-up operations on the Brac after a fire mid-December destroyed a tub grinder being used to grind debris from the hurricane. Immediately referring to the incident as “a senseless act of vandalism”, though the fire appears to have been an accident, he recalled around 30 Department of Environmental Health staff back to Grand Cayman.
Talking to Brackers at the election rally, McLean claimed there was much work to be done on the dump, and much debris to be processed. He said “the clean-up guys” would be back by Wednesday (today), and said how proud he was of Cayman Brackers and that they were as resilient as the people of East End.
“I am going to commit to you,” he told the people to much applause, “that when I become the Minister for Works again, two things is going to happen in this community: One, water is going to be put throughout this island, and number two, I am going to pave every main road in this island.”
He said he was committed to resolving the disposal of municipal waste in this country and to finding alternative method of disposal. He had been prevented from returning to the Brac to discuss the environmental impact study on the new landfill on the Bluff because of Paloma in November, he explained, but said the island would either have its own mini-processing plant for waste or it would be shipped to Grand Cayman to be processed there. Waste-to-energy was the key, he said. (Right: Mini Mt Trashmore – the view from the road at Public Beach)
Minister for Tourism, Environment, Investment and Commerce, Charles Clifford, noted the work of the Cayman Islands Investment Bureau on the island in nurturing small business, which was tied to the work of the CI Development Bank – both initiatives that had been implemented on the island during his ministry at the urging of Kirkconnell.
He said that while the CIDB had a regular presence here over here on monthly basis, Kirkconnell had been pushing for a dedicated office properly staffed on Cayman Brac, and announced that this was, in fact, the next step. Since it had been established on the Brac, the bank had approved and granted 11 mortgages, six debt consolidation loans, ten small business loans and three students loans – a total disbursement of CI$2.2million, the minister said. It had also put a moratorium in place on loan payments after Paloma to help people get back on their feet.
Highlighting help given to Brackers since the hurricane, Leader of Government Business Kurt Tibbetts said government had funded three teams of Atlantic Star Construction crews, which had complete some 57 project and had around 12 more projects to do. The committee set up to assess applications for rebuilds and repairs has already processed 287 applications, for which $3.6 million was committed, and they were now looking at another 145 application.
The three ministers and two PPM back benchers, Lucille Seymour and Osbourne Bodden,repeatedly referred to MLA Moses Kirkconnell’s persistence in lobbying for Cayman Brac. And though there is no practical difference between being first and second elected member for the district, there was a constant encouragement to make the PPM representative the former. Tibbetts urged supporters to use only one of their two votes on election day and to vote ‘yes’ for the Constitution in the referendum.
London could benefit from US crackdown on havens
(The Guardian): President Obama’s announcement of a US crackdown on corporate tax avoidance is just the beginning, according to Washington insiders who believe further measures will be outlined this year… There are suggestions London could benefit from Obama’s crackdown as US companies may choose to relocate after Obama’s reforms, which will be debated in Congress. John Whiting, tax partner at PricewaterhouseCooper’s, said: "This is Obama carrying through his campaign promises. It sounds broad and tougher and shows an intent to raise an awful lot of money from overseas. If the US is indicating that it will tighten up tax rules, it may give an opportunity for the UK as a competitive environment for international businesses."