Cayman is insolvent

| 04/09/2009

No, you didn’t read that incorrectly. Cayman is  insolvent, bust, broke, unable to pay its debts.This is not a rumour, this is fact. This fact is confirmed by the speaking notes used by the Hon. McKeeva Bush for a meeting held with senior Cayman civil servants, government boards and private sector business leaders last Thursday (27 Aug).

So desperate is the current crisis that the Caymans turned to the UK to cover September’s deficit, and have been politely told they may not borrow the necessary funds to pay wages and other commitments in that month. The letter saying so is here. That means just one thing: Cayman is insolvent. It cannot pay its debts. The UK has refused to let Cayman borrow because it does not believe it will cut government spending and it has seen no commitment by Cayman to raise taxes. And the UK makes it clear in no uncertain terms that is exactly what it thinks Cayman should do.

Look at what he (Chris Bryant) is saying:

  1. The US is fragile;
  2. The hedge fund business is fragile;
  3. The G20 will have an impact;
  4. The Foot Commission will have an impact;
  5. Trust fund income will fall;
  6. Cayman cannot assume it will keep tax haven status;
  7. Taxes must be imposed.

It’s hard to see how much more could have been said to make clear that Cayman’s business model is dead.

This is extraordinary. Bear in mind Cayman has the thirteenth highest GDP per head in the world, and the highest in the Caribbean. It has more multinational corporation subsidiaries than any other tax haven. It has more banks than any other tax secrecy jurisdiction, and more hedge funds too. And it is bust.

So what are they proposing to do? Unbelievably all proposed taxes are on ordinary people in Cayman:

  • Imposing taxes on money transfers from foreign workers in Cayman, – Jamaicans being the biggest group;
  • Introducing property taxes;
  • Revision to various miscellaneous fees, some of which have remained unchanged for decades;
  • Increasing customs duties;
  • Increasing alcohol and tobacco duties;
  • Increasing gasoline tax;
  • Legislate the requirement for money in dormant bank accounts to be turned over to the Government; and the
  • Introduction of a national lottery

That is grossly unfair on the poor in Cayman (the very people the UK says should be protected), shows no real broadening of the tax base but does, most of all, look like rearranging the deck chairs as the ship is sinking. Which is extraordinary by itself in two ways. First, for a place supposedly so clever this is a remarkably poor list of initiatives, and second it does of course say yet again that the vested interest of wealth is being protected.

The odd thing is that is not possible in this situation. If Cayman really is insolvent, and that seems likely, then it is very clear that law and order may fail, property rights may not be protected, and so on. Wealth, in other words, is under real threat and such is the size of Cayman activity I doubt much of it can get out in a hurry without causing massive instability.

So this really is a crisis at the heart of the whole tax haven / secrecy jurisdiction system. The totem of the offshore location is seeing its business model fail, and with it the whole edifice of offshore – including the whole hedge fund edifice that claims to be built around this small island, could fall with it.

This could be a Lehman scale failure.

And all for the sake of a few dollars. But a few dollars none the less the UK will not let them have.

Watch this unfold: if London sticks to its guns (and it should) then Cayman is over as a tax haven – as they themselves predict. The fall out will be enormous. The whole hidden economy could fall apart with it – and do not think that will not have onshore ramifications, because it will.

Richard Murphy is a founder of the Tax Justice Network and director of Tax Research LLP. An expert on tax policy, he writes a daily blog which provides regular news on his activities and opinions at www.taxresearch.org.uk/Blog/

 

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  1. Texture Like Sun says:

    Golden Brown overstates the position.  Most expats would be paid more gross onshore too.  Probably the take home here is 20% higher than the UK but with dislocation from family, the costs of relocation, the risks of hurricanes, the risks of capricious work permit rulings and the fact that Cayman is a cultural wasteland a 20% uplift is just about right to make living here worthwhile. 

    • anonymous says:

      If you are from the UK you exemplify much of what others have said already. Judging by that comment it sounds as though you are another arrogant expat with a total disdain and contempt for the country and its people. Just because the culture and history of the islands is not your own, you label it a "cultural wasteland"?

      You reveal much about yourself in very few lines. Perhaps if you took the time to involve yourself in a community as opposed to turning up your nose and holding onto such a superior attitude you would learn something and get some joy out of life and the privilege you have been granted of a chance to enjoy a different culture. Instead you prefer to demean it in a mean spirited, disrespectful and bigoted fashion. 

      You could never view it as a privilege however, because you are just another individual who is in it for nothing more than what you can get out of it in the hopefully short time you stay. I’m would hazard a guess that in your country of origin you probably resent and despise "foreigners" but cannot fathom why you encounter resentment when you are allowed to live in someone else’s country. 

      What an awful and ignorant way to go through life.

       

      • Golden Brown says:

        I’m sure "cultural wasteland" compared to my best guess is London from hispost.

        UK tends to use culture meaning access to plays, musicals, big concerts, Museums, etc.

        Cayman has a different type of cultural which are it’s people and their way of life.

        I can only assume that he ment moving from somewhere with access to a lot of entertainment, to which Cayman can’t compare to.

        As for "another individual who is in it for nothing more than what you can get out of it"

        This is one of the side effects of the roll over, if some one feels they are unwelcome at the outset, they are likely to only come here to save money to take home with them after a couple of years. Why else would they come?

         

        • Anonymous says:

          While its not a cultural Mecca in that sense it is certainly not a cultural wasteland. We have an international music festival, an annual jaz festival, plays at the Prospect playhouse, weekly jazz evenings at Grand Old  House etc.  We do very well for our size.  

          Wrong again. That is not the side-effect of rollover at all. That was always there.

          • Golden Brown says:

            The rollover may not be the cause but it has certainly worsened the situation.

            But the rollover is a can of worms as not having it would create many many more problems that Cayman has at present and understand why it is there

            Personally I get rolled over in a years time, and knew it would happen when I arrived, I view Cayman as a chapter in the journey of my life, and a very good one. 

            I never said Cayman was a cultural wasteland, since I’ve been here I have been to the Playhouse many times, see Shaggy twice, the Hip once and look forward to seeing Miss Keys soon as well.

            Cayman does very well for an island, but when you are attracting experienced financial workers, a lot will come from big cities and a lot find it had to find what they view as "culture" and as such the bars profit from it.

            • Anonymous says:

              I concede that all your points are fair. The irony is it seems you are the sort of expat we would like to keep.

              • Golden Brown says:

                Thank you for those kind words, and I still may come back, a year away is a small price to pay, and with the property market as it is there is little point selling up

                • Anonymous says:

                  I am sure you will be welcome. Why can’t we figure out something that works for both expats and Caymanians?

                  • anonymous says:

                    I would second that. Golden Brown is obviously the kind of community minded person all societies benefit from and someone who hasinvested much in the country with eyes wide open.

                    As an expat myself, this is exactly why I speak out against generalizations coming from either side of the expat/Caymanian fence. There is good and bad in every nation/creed and to tar all with the same brush based on such a criteria is a fallacy.

                    As a foreigner in someone else’s land, I personally consider it a privilege to immerse myself in life here – it is my home and the place I love. I am tied to it by family and not subject to rollover by virtue of being married to a Caymanian, but, nonetheless, I would have the same attitude as Golden Brown were I in his shoes. It is a shame that permanent residency cannot be granted/denied with attitude included in the deciding criteria 🙂

                    • Anonymous says:

                      "It is a shame that permanent residency cannot be granted/denied with attitude included in the deciding criteria"  Oh but it is.  One mustbe utterly compliant in order to be of "good standing".  Free thought, free spirits and those who might question the status quo need not apply.

                    • Anonymous says:

                      OK, I won’t try to argue with that one. Touché 🙂

                    • Anonymous says:

                      Just when we were having a Caymanian/expat lovefest you had to go and spoil it.

              • Sad but true says:

                Rollover tends to get rid of employees with roots in the community as they have been here for 7 years – much more than the average (good for the community) and, in the offshore context, with experience of Cayman that adds business value to both their employer and Cayman as a whole (good for Cayman).  It tends to replace these individuals with new entrants who are more likely be the average expats – ie here for the short term and the cash and who have no "added value" which is what drives our place in the market.

                I appreciate the perceived upside for Caymanian employment, but from my experience rollover really does not deliver anything of benefit over and above the existing work permit requirements. 

                The negatives tend to outweigh the positives, which is sad.  If rollover delivered good things for Cayman then that would be fine, but the sad fact is it is harming our future not helping it.

        • anonymous says:

          Golden Brown, I concede your points and analysis of differing measurements of "culture" , you are quite right. It does not make one less worthy than the other though.

          I just abhor the vulgar narrow mindedness that some seem insistent on holding onto that if you go to another country, in whatever capacity, you have the right to malign its people or way of life and judge it inferior because it differs from your own. That’s all.

          There are many issues on which expats have valid and compelling arguments that deserve an ear, I would be the first to admit. However, thinly disguised slights akin to "damn natives," along with superiority complexes, should be checked at the door.

          As for rollover that is a whole new can of worms but as someone else has already said, the attitudes existed before rollover was introduced and would still continue if it was abandoned tomorrow.

        • Anonymous says:

          Why else would they come?

          I took a pay cut to come here. Why — cause I was commuting 4 hours a day and didn’t get to see my family. Plus my wife and I enjoy diving so we had something to do.

          Unfortunately — it was made very clear that we weren’t welcome. We are both employed but immigration board denied our children (6 times). 18 months we lived with constant rejection without a clear reason. We make enough money to care for our family and have some fun but certainly not enough to send home thousand of dollars. In fact we had sold our house and brought the money here. But after almost 2 years into the possible 7, why buy a house here. With stamp duty and other fees — it wouldn’t even be a sound financial investment.

          So family of four — kids in private school and all the other things that go into the economy — we have been nothing but a help to this country! Help with kids sport team, help with school functions, donate time and $ to charity events, all in an effort to support the community we have called home.

          Unfortunately, with the legislation proposed, we cannot make it work financially. So after 3.5 years we’ll have to move on.

          Good luck cause I am middle class and if this is going to effect me, it’ll probably effect you in the end as well.

      • Texture Like Sun says:

        A few assumptions about me, not unusual on this board.  I have lived in many countries and embraced their culture and loved it.  I certainly do not complain about foreigners at home.  The influx of a foreign workforce has been a great thing for my country culturally and economically provided that they are not exploited as our guests which som unfortunately are.  I  know from experience that the "bloody foreigner" brigade in the UK are generally an unimpressive lot blaming someone else for their inadequacies. 

        I find the divisions in society in Cayman caused by the Caymanian/ex-pat issue deeply saddening and something which is only likely to lead to a very sorry end of the islands privileged economic position in the mid to long term.  I came here with great plans to get involved in a small community.  But once the reality of Cayman set it, the reality of the race divides, the reality of rollover etc, then it soon became clear that the best thing for me and my family would be to view our time here as a temporary visit and a good opportunity to save some capital. Yes it was callous but it was a result of how I was treated once I arrived.

        "Cultural wasteland" may be strong, and I know this is a function of the isolation of the islands, but compared to where I come from it is probably the best description of how I feel about what is on offer on the arts/history/entertainment scene or lack of one – please do not take it personally, it is just a function of geography and a small population.

        I certainly do not "despise" Cayman or Caymanians.  I have enjoyed my time here and met some wonderful people.  But you (or your government) have made it clear that you do not want me as part of your community, which is why my leaving plans are in place.

        • anonymous says:

          @Texture Like Sun

          In which case I apologize unreservedly for my statements.

          I agree that to read so much into your short post was uncharitable of me but as a Brit myself I have seen nothing but spite coming from the pens of my countrymen of late. I am also sorry that your experience has left you feeling so disillusioned.

          Rollover has been mentioned elsewhere and I think it is agreed by both sides that it is something that will remain controversial and can probably never be ideally crafted to suit the needs and desires of everyone. Sad but true at least at the present time.

          I hope you will forgive me for being judgemental without knowing anything about you. A case of emotion being allowed to cloud my vision which is really no excuse.

          • Texture Like Sun says:

            Thanks – no hard feelings.  Perhaps one day the whole island can meet up at Al La Kebab and realise that no-one is quite as bad as you think once you meet them face to face.  Everyone is doing their best.

            • anonymous says:

              Well, some people are 😉

              But, seriously, Amen to that philosophy, you are quite right.

    • Anonymous says:

      Whether the gross salary in the UK is higher at all depends upon the  exchange rate from sterling to the US Dollar.

      You have confirmed what we have always known – that people like you despise Cayman and Caymanians and are simply here for a quick buck. Good reason for the rollover.

      • Air Between The Ears says:

         The Rollover Policy is one big reason people  are "simply here for a quick buck."  They are not allowed to earn another kind of buck.  By that, I mean that with no opportunities for long-term employment (in fact, laws and policies in place to prevent just that) people WILL try to get as much as they can in the time that they have here – before they are forced to leave.

        If people coming here and making a quick buck and leaving disgusts you, THEN GIVE THEM ANOTHER OPTION.

         

        • Anonymous says:

          You are wrong. That has been the case with many for a long time. Rollover came only a few years ago in recognition of that fact. It definitely did not start with rollover. And removing rollover does not remove bad attitudes. He would still despise Cayman and Caymanians regardless.   

      • Anonymous says:

        grow up, he had a good point and never implied he despised Cayman or Caymanians

  2. Golden Brown says:

    To add to Maurice’s post some figures for you

    Say in Cayman you earn CI$60,000, a nice wage.

    Transfer it to the UK is GBP44,345. ( well over the average UK wage)

    In a year income tax and NI will take GBP 11,356 of it. If you have a portion of your medical insurance paid by your E’er then this will be taxed with any bonus at 41%. (as all lower rates have been used up)

    If you went to university it is likly you are still paying back that student loan especially if your under 30. That will take around another $2,650

    Council Tax on your average 2 bed house Council tax will take another GBP1,200.

    Petrol tax, average car in the uk does  15,000 miles a year, average car gets 30mpg  and fuel tax is GBP 2.50 per gallon, is another GBP1,250 add 150 for road tax . Your F150 or Explorer will cost closer to $4,500 a year.

    So far you have lost close to GBP20,000 or 45% of your wage in taxes.

    That is not even including 40% tax when you die on the total of your assets over a value of 325K, that’s if you leave anything to your kids, etc and they can tax any gifts given out for up to 7 years before you die.

    And it’s not including the soon to be 17.5% tax on top of the value of any purchases you make, or the 40% tax on any interest you earn on savings you have struggled to get.

    So next time you look at your pay check, imagine how far it would go if you halved it, and you will see Cayman’s beautiful attraction

     

     

     

    • Maurice says:

      Thanks Golden Brown.

       

      The problem with the system is that it eventually removes the desire and incentive of the individual to try and prosper and it all becomes a vicious circle.

       

      Jobs at the bottom of the pay scale seem hardly worthwhile which is why so many people who might once have been doing those jobs elect to take welfare because they are actually financially better off by doing so! Thus the toll on the taxpayer becomes greater and resentment and social divides grow deeper.

       

      I have honestly heard teenage school girls in England discussing their aspirations in life. It’s quite simple – get pregnant and throw yourself on the mercy of the state. As a single mother they know full well that the likelihood of them being given welfare housing are magnified one hundred fold. One girl had actually involved her own mother and persuaded her to lie to the housing and benefits office in order to expedite the process of securing housing on the back of the overburdened taxpayers. She sounded very proud of how she was "working the system". It’s just one example and there are 60 million people in the UK.

       

      What happened to these people? What happened to doing a fair day’s work for a fair day’s pay? What happened to ambition, self reliance, self respect and contributing to your community and country? What happened to family values and leading by example?

       

      Simple answer – the nanny state. No incentives, no responsibility, no self respect or respect for others. What a depressing and soul destroying situation. Those who manage to carve out a successful and what should be a prosperous life for themselves resent contributing even more of their hard earned money to this wasteful and rotten system and the divides in society grow ever wider.

      • Anonymous says:

        The real drive for social mobility through work is relative earnings within the community, so taxation properly applied generally does not undermine an individual’s desire to work since his relative income is unaffected.

        The bigger problem in the UK is the concentration of capital over the last few years which has produced a gulf between the haves and the have not which cannot be bridged.  Only a sensible correction of the property market and the structured realigned of capital will sort this out – and as the UK does not really seek to tax held capital, at the moment we only have the undereffective estate duties to seek to remedy our problems.

  3. Maurice says:

    UK taxation clarification. I thought it might be interesting to post a few details about the tax regime in the UK so that people here understand a little more about why the idea of a place with no direct taxation is such a dream for many and how it can cause resentment. It will also illustrate why some wealthy ex pats look for ways to escape them if they can. I honestly don’t think you can blame them either.

    I do not claim 100% accuracy, but it’s a reasonable guide and it’s really not that far off the mark so any nitpickers who wish to score points need not waste their time as I don’t intend to argue about it.

    Income tax is straightforward enough and is all set out here. Note the 50% tax set for next year for anyone earning over 150k and allowance reductions for those earning over 100k.

    http://bit.ly/97mcd

    In addition to income tax there are National Insurance contributions that everyone earning a wage must also pay. NI is supposed to cover things like state pensions and the National Health Service and the welfare state.

    However, the pension funds have been so plundered by governments that there is no fund as such and current contributions are effectively being paid straight out to existing pensioners. Citizens cannot rely on receiving a state pension despite contributing their entire lives. Neither can they rely on the NHS which is under immense pressure and waiting lists for "non urgent" medical treatment are often very long. So, citizens are constantly encouraged to go and paythe private sector for pensions and healthcare, if they can afford it of course.

    As far as dentistry goes, you will be lucky if you can find one still operating under the NHS so you will invariably have to go private for that too. Tough if you cannot afford it.

    For employees these taxes are invariably collected through PAYE (Pay As You Earn) and are deducted from wages at source. You get what is left in your pay packet. Self employed people will usually employ an accountant to look after their affairs and can benefit from their expertise in creative accounting so they at least have a chance to take advantage of allowances and the like.

    You are far from done with taxation however. You will pay 15% (soon to revert to 17.5%) on virtually everything you buy. VAT is a sales tax from which few things are exempt.

    If you drive a car, you will be furthered hammered with both the aforementioned VAT and a fuel tax.  The cost of a gallon of fuel in the UK is changing constantly but around CI$6.31 I believe, but don’t quote me on that with fluctuating exchange rates and oil prices it changes on a whim.

    Add to that your car tax – an annual fee like our own licencing charge, but more expensive if you wish to drive a nicer/larger vehicle, the logic being that if you can afford a bigger car you can afford to contribute more. Claims about encouraging "green" and all that is a bunch of nonsense if you ask me, but in politically correct Britain be careful what you think or say. Road Tax is supposedly to raise money for, you guessed it roads, but only a fraction of it ever makes it there). These are so convoluted nowadays dependent on emissions and all kinds of other tripe but anything up to four hundred pounds a year. Here is the price list if you can be bothered

    http://bit.ly/4b6J63

    Now, you’d think that with all this revenue a government would be content, but oh no, there is yet more to come.

    Naturally if you buy a home you will pay Stamp Duty, a one off tax based on a percentage of the price you pay. You are liable for this again if you move house – each new home = stamp duty. This is separate from ongoing property taxes mentioned later.

    You will be taxed on any vices/pleasures you have left to console you in your misery – alcohol and tobacco duties for example are extreme.

    You will be taxed on your savings if you have any.(unsurprisingly many ordinary people don’t)

    You will pay tax on your utility bills.

    You will pay tax on your insurance premiums – home motor etc.

    You will be taxed if you wish to own and watch a television. If you don’t pay you can be fined thousands of pounds. (This is to pay for the BBC apparently although how much they see of it is anybody’s guess).

    Surely you are thinking, there is no more. Don’t be silly, we haven’t even touched local government yet. All property owners must pay a property tax calculated on the value of their property to cover local services such as street lighting, libraries, police and emergency services, garbage collection etc. As the tax is based on the supposed current market value of your home, it does not matter if you paid a few thousand for it forty years ago, if it’s worth half a million now, you are liable for tax based on that estimate. Nice huh, think of the elderly who have nothing but their home that they worked all their lives to pay for and can barely afford to pay the taxes required to let them stay in it.

    Not that it matters, because when they die, thinking they are least leaving something behind for their families, the treasury wants a slice of that action in inheritance taxes and the family have to sell the place to pay the tax bill.

    I could go on for hours. All of this might make some sense if all the money rolling in was being carefully accounted for and the taxpayer was getting value for their tax pounds. The problem is that unimaginable amounts are being lost through corruption, incompetence and mismanagement by those who hold the purse strings. Britain is still drowning in debt.

    Money is leaking out faster than it can be put back. How? Why?There are so many reasons. Benefit scroungers and benefit fraud. There are Nigerian gangs relieving the state of billions each year through benefit fraud and this is just one operation. There are countless others. The authorities seem content to let this go on rather than employing anyone to tackle the problem and clean it up for good.

    In modern Britain every year there are so many legal actions involving everyone from terrorists to the judiciary. Most run into bills of millions as lawyers and human rights activists pollute the machinations of justice and drag out ridiculous legal battles to get fat on the back of the country’s people.

    Immigration laws are circumvented, and if they do round up a few offenders they are kept at the taxpayer’s expense until after months and months they get their day in court (or often weeks) once again at the taxpayer’s expense and of course the lawyers want their pound of flesh. Whatever the outcome, the waste of public money is always excessive.

    Political correctness has reached such ridiculous levels that criminals walk free and often are treated better than victims. It’s their human rights you see, can’t punish them just because they are scum and break laws. You have to be kind to them too. Oh and the overflowing prisons mean that most sentences are cut short if indeed many criminals ever get a sniff of a jail. 

    Society has become more and more litigious as people see opportunities to make a fast buck and many actively look for ways to defraud government and insurance companies. Compensation is demanded for even the most frivolous issues and is often granted despite public outcry.

    As a beleagured citizen in Labour’s modern Britain it is easier to just go to work, go home and keep quiet, just hoping that you won’t have too much month left at the end of your money and the price of petrol won’t go up this week. If you can afford to clothe yourself and your family and put food on the table what have you got to complain about?

    And so it goes, on and on, round and round. Amazingly the people suffer these injustices year in and year out. I have only scratched the surface here, but I hope it will be an eye opener for many on these islands. No doubt it will make you feel a little better and somewhat relieved.

  4. Anonymous says:

    Maurice’s post is a triumph of style over substance. CNN’s evening style sensationalism without any factual content whatsoever.  It was both vacuous and pathetic.

    Now the Brits that use our services are "greedy"?  No one uses offshore services for particularly altruistic purposes.  Cayman needs it links to the UK to maintain its GDP and to maintain all that it has.  To attack the UK without any examples is risking cutting off our nose to spite our face.

    When Cayman is the next Kingston or Nassau it will be too late for anything but regrets.

    • Anonymous says:

      "It was both vacuous and pathetic".

      Funny, that is what I thought when I read your little retort. Apparently you think using high-sounding catch phrases gives your post substance.

      Unlike yours, Maurice’s post is laden with substance and meaning. He is clearly giving a heartfelt and insightful commentary from a certain vantagepoint which you do not have.    

    • Anonymous says:

      Anon at 14:44:

      You enjoyed posting that stuff about Maurice’s post being both "vacuous and pathetic" didn’t you?. Made you feel good to grind down these friggin Caymanians and foreigners who have "gone native" and actually mix with them and stand up for them. There are more of us than you think-we just don’t usually get involved in the blog wars. Enjoy your satisfaction that Cayman is struggling-I suggest you write the Guardian. Keep standing up for the dear old UK which never follows unethical political or economic policies-like selling arms to warring nations (RIP Robin Cook for your "ethical foreign policy" which when you took office you realised was a total non-starter,) or the Saudi Arms deal worth billions (oops Serious Farce-er Fraud Office prevented from further investigation by ‘national interest" cough cough).

      And of course such a pity about these damned Chago/Diego Garcia islanders not being allowed to go home because the US needs Diego Garcia for "strategic friendly purposes" like twisting the nuts of suspects. Can’t allow a bunch of fuzzy-wuzzies or smart lawyers and bankers to stand in the way of Her Majesty’s own smart lawyers and bankers in the City of London or her Blairite/Brownite diplomats in Whitehall.

      Pip Pip! Top Hole!

      George Smiley.

      • Maurice says:

        Good points George Smiley.

        Clarification on Diego Garcia in the Chagos Islands can be found here in this hour long film called "Stealing A Nation"

        http://video.google.com/videoplay?docid=-3667764379758632511#

        Not suggesting that this would happen to Cayman of course but George is right to point out that Britain has a long history of taking what it wants, by force if necessary. To say it’s all in the distant past is wishful thinking. Ask the people of Northern Ireland, a section of whom, as recently as the 1970’s, were denied basic civil rights in their own lands.

        Don’t want to take this any further off topic but hope the clarification is interesting to some observers.

    • Maurice says:

      Anonymous at 14.44. says of me "style over substance, vacuous and pathetic".

      The value of ties to the UK are bound to be a hot topic in light of the things being written in their press and by countless left wing goblins who get all moist about the mere thought of destroying a "tax haven". These are the sort of fools who need to be called out for their views and statements, not just here but in the UK too.

      It may be hard for you to believe, but my words were motivated by what I regard as issues of humanity, ethics, morals and character as opposed to politics.

      In response to your accusation of sensationalism, I most certainly did not cast the first stone in that regard. Fire with fire is sometimes the only way.

      I responded to what I perceive to be attacks on these islands and their people by uninformed and arrogant individuals who lack decency, and, as it turns out in most cases, the cajones to stand behind their poison pens. Why should that go unanswered? If taunts and bullying are unacceptable in schools, they are equally unacceptable everywhere else. The importance of the relationships between our two governments notwithstanding, stinking attitudes are stinking attitudes whether from government or individuals. If it looks like a duck and sounds like a duck it probably is a duck, sir. I would say the same to those who mindlessly tar all expats here with the same brush.

      Anger is understandable in all this mess, but we should all stand up to bullying and threats from wherever they originate or we play into the hands of the "rent a mob" mentality.

      What the UK government’s intentions or position will ultimately turn out to be as far as Cayman is concerned only time will tell. There has, I believe, now been a statement from the FCO that Cayman is most definitely not bankrupt. There will doubtless be tears with coffee at the Guardian offices following that admission.

      I highlighted the shortcomings of the UK government of the past couple of decades, and the abject failure of so many of their domestic and foreign policies for good reason. As a nation, hardly have the right to bask in the glory of their achievements and neither can they claim the moral high ground that some seem to think is theirs by default simply because they are the UK.

      If you think that my defence of Cayman and allegations regarding the UK lack substance, perhaps you should go and talk to a few people over there who are having to live in modern British society. I listed plenty of facts regarding the state of the nation and whether people wish to deny them or not, none is difficult to verify.

      I am only suggesting that to think you have the support of the British population is probably a little naive. Most have never heard of us and have little idea about the relationship between our two countries. They have far more immediate things to occupy them, many of which I have already vacuously and pathetically detailed.

      If you prefer to fall for anything and stand for nothing it is of course your choice. Apathy is rarely a good one though. Dylan Thomas, in his powerful plea for defiance even at the inevitability of death said it all…..

      "Do not go gentle into that good night. Rage, rage against the dying of the light".

    • Maurice says:

      I should have conceded in my response to the "vacuous" posting that my statement regarding "greedy Brits" was not very well written and not absolutley clear and he/she is right to call me on that.

      What I was trying to suggest was governmental greed, not that of wealthy individuals. I feel that if things with regard to Cayman’s banking and tax position were truly as rotten as some insist on claiming, I am sure that the UK administration would have soon stepped in to lay down the law. The fact that they never have (as far as I am aware) indicates that they have had no good reasons for doing so.

      If there are real ground for suspicion as a lot of people insist there are, then their inaction indicates something else entirely, perhaps that they have interests of their own to protect by preserving the status quo. As my detractor says, altruism is an unlikely motivator and I suspect it is rarer than hen’s teeth in the arena international politics.

      I am not a lizard person (conspiracy theorist), I just have an inquiring mind and a reluctance to adopt dumb acceptance. As you can also tell, I am not an expert in areas of high finance and have freely admitted this on more than one occasion.

  5. Anonymous says:

    Absolutely brilliant "Maurice". I hope many readers of CNS will see it. I wish it could get more prominent exposure as no one in official circles seems to have a clue how to respond.

    From another long term UK/Status holder married to a Caymanian, happily living her and not wealthy.

  6. Maurice says:

    I did post a very long response on Mr Murphy’s blog and although no response was forthcoming he did have the decency to publish it as opposed to deleting it as many bloggers might have done. Credit where credit is due.

    I have reproduced it below in its entirety for readers of CNS. Rant or not, at the time of writing, very few seemed to be answering the attacks on our country at all.

     
    September 2nd, 2009
     

    Sir, I have to say a few things here because I am amazed at the number of UK commentators who come out of the woodwork and feel it is appropriate to gloat over the problems being experienced by Cayman. For the record, I am an English expat and an ordinary citizen, husband and father. I am married to a Caymanian and consider this my home. I am not wealthy, very far from it in fact

    .

    I am honestly sickened by the attitude of many citizens who come crawling out from under their rocks in the UK. It saddens me thatin this day of “copy and paste journalism” there are those who sit behind a keyboard, blindly republishing everything and anything that takes their fancy. Forget investigation of facts, forget the many and varied reasons why this is happening, don’t mention the UK’s whole dirty part in it all. Forget responsible and balanced reporting. A “writer” for the Guardian who made the completely uninformed, ignorant and offensive remark that most native Caymanians live in breeze block houses surrounded by scrub land, goats and chickens is a perfect illustration. I can only assume that the mind behind the remarkable penmanship is the product of a graduate from the hallowed halls of Britain’s rapidly sinking educational establishment, and I have plenty of personal experience of their type. I doubt he even passed high school geography.

     

    I am honestly shamed by the actions and attitudes of both my homeland’s government and many of my countrymen. It is little wonder that Britain and its administration are loathed and reviled in so many parts of the world. The once loyal Caymanian people can probably be added to that list very soon and shame on Britain for their high handedness. The persistent arrogant and colonial attitudes that are displayed by so many is staggering; as if the UK still has any rightful claim to any moral high ground or can claim to be anything other than a nation floundering very seriously in its own right. The “Great” in Britain disappeared a long time ago, and maybe past sins are slowly coming back to haunt them.

     

    Let’s be brutally honest about a few things here and stop beating around the bush with regard to what is really going on. If there is anyone who honestly believes that the Cayman financial services industry could have operated without the collusion of those in Westminster you are deluded. I am no financial or tax expert I freely admit and I cannot argue with authority with those who are but I am certain that if it had been in Britain’s interests to do so we would long ago have had a swarm of “experts” over on a taxpayer funded junket to expose it all a long time ago and close the doors once and for all. It never happened though did it? The vested interests of wealthy and greedy Brits were doubtless also being well served by a sweet little offshore operation and yet now this little island nation is the criminal? Have you seen the hearsay and nonsense being thrown around on the web that include allegations that Cayman aids and abets every criminal concern under the sun – drug dealers, terrorists, blah blah blah. Of course, nothing related to the UK could be remotely considered anything more than “sailing a little close to the wind, old chap!” I would suggest that when it comes to aiding and abetting terrorists and grooming them for future active duty, the UK should be looking much closer to home – in it’s own backyard seems the place to start. I suppose that in a nation where the indigenous population are taxed to death and beyond and are afraid to speak out because of the oppressive blanket of political correctness demanded of them, it’s hardly any surprise is it?

     

    Ironically, a lot of the commentators from Britain are involved in the tax business, and we all know what big business that is. These are the companies and individuals who make a living telling others how to find loopholes to avoid paying taxes. Of course, it’s all legal old boy, we’re just smarter than the people who make the laws!

     

    The spineless socialists who were handed the reins and those who elected them can hardly complain or point fingers. You make a comment elsewhere that “Cayman is bankrupt, in more ways than one..” You also mention corruption, another nice meaty word to associate with Caribbean nations, and yet fail to mention that much of said corruption involves those imported from where? Of course,the jolly old UK. Look it up and you will see that the meddling and colonialism I accuse Britain of is alive and well, at least in the very few isolated outposts where the government still feel they can bully and puff out there pathetic chest. And for what? It is no more than an attempt to placate the current POTUS in his Hollywoodesque vision of a TV reality show where he is the star and loved by everyone. All I can say to your thoughtless and pompous remark is “people in glass houses, sir”

     

    Accusations like this from a resident of a country that could hardly be more socially and morally bankrupt ,serves once again to prove only the arrogance of those who persist in living in cloud cuckoo land. Britain in the 21st century has little to be proud of, having dismantled everything that once was great and proud about the nation. Look at the crumbling institutions: practically non existent military and navy, racial tensions and hatred, crime, homelessness, unemployment, the NHS, taxation, interference in practically every aspect of the lives of citizens. Add to this the shameful neglect of the elderly, the collapse of family values, social responsibility and total abandonment of self reliance in favor of a culture of blame and whining. Bottom feeding “human rights” lawyers and ambulance chasing lowlife practice with glee and milk the people and the nation. Let’s not forget the huge leakage of public money through benefit fraud on a massive scale – to the tune of billions every year, and the ongoing blatant mismanagement of the public purse. Labour’s methods have not changed in decades and they never will – overspending and corruption – tax the people more to pay for our incompetence and ineptitude. Pot, Kettle, Black, sir.

     

    Let’s finish with a few more home truths as this is getting rather long.

     

    Cayman has never before in its history gone cap in hand to the UK government. A lot of this can be directly attributed to the cowardly public servants roaming the halls of Westminster who are desperately clinging to the the coat tails of the US, hoping to appease a misguided man, ill equipped for leadership, struggling to divert attention from far more important domestic issues by apportioning blame for their current chaotic and failing economy to outside forces. It reminds you how someone once rose to power by convincing a nation that they had only lost an attempt to conquer an entire continent because they had been “stabbed in the back……” It makes for great rhetoric and offers the illusion that those in power have some answers. Patently leaders on both sides of the Atlantic have no real suggestions or ideas other than the old standby, let’s throw more money into this bottomless pit. That’s socialist thinking at work for you.

     

    In 2004 these small islands were completely devastated by Hurricane Ivan. This is devastation on a scale not witnessed on UK shores since WWII and the Blitz. Feel free to look it up on the web, there are plenty of great pictures. Did the island turn to their supposedly benign protectors and allies across the sea? Did they ask for handouts? No, they did not. They got up and began rebuilding their shattered country that had been all but obliterated by damage running into billions of dollars. The UK’s contribution amounted to roughly a couple of hundred thousand dollars, 500 cots, 500 tarpaulins, some bottled water and water purification tablets sufficient for 7000 people for a month. UK charities probably made contributions, but I’d say the UK got off more than lightly on that one. They lose more than that in a day to foreign nationals scamming the welfare state and benefits system by using dead people’s social security numbers. Yet in the hour of a small and loyal nation’s need, the door is slammed firmly in their faces. Some of it may well have been brought upon their own heads, I do not dispute this, but the ramifications of global recession are hitting nations large and small. Surely Britain’s interests would be better served by offering, or at least allowing, short term assistance in the hope the mess can be reversed. The alternatives are bleak and will definitely have ramifications on Britain’s hallowed shores will they not?

     

    Cayman is being thrown to the wolves by an uncaring bullying and toothless country whose glory days are as faded as the relics in its many stately homes. I do sorely hope that some of my writing will explain why the ordinary people on these islands are feeling the way they do and why the poisonous and spiteful writings of others are so hurtful to them as a nation. The truth is that most people in the UK don’t even know where the Cayman Islands are, if they have even heard of them at all. Those who know of our existence probably only know the name through some one liner in a movie about drug dealers and money laundering, or some rich character in a soap opera who invariably has dirty money “tucked away in the Caymans”. If the UK really wants to see the breakdown of social order and the fabric of society in one of their dependent territories for the sake of political wrangling and favours, I sincerely hope that the people of these islands will prove that engineering the advent of a banana republic is not going to happen to them, at least not without a fight.

     

    Eventually Britain will reach its last “hurrah” make no mistake, and when they do it will be ugly and the people will finally have to face the consequences of allowing the lunatics to run the asylum. It will be a case of “Never has so much been owed by so few to so many!” What a great epitaph, you can all be very proud.

     

    Cayman is not purer than pure, there is no nation in the world than can lay claim to that, but it is sickening to see my own homeland sink to such levels for their own selfish and greed laden agendas. Then again, past history should tell everyone that it should not really come as any great surprise. This may not address or solve any of the issues and I do not have any answers, but let the record show that this browbeating and bullying goes far deeper than those in power have the courage or the integrity to admit.

     

    • Concerned Caymanian says:

      Wow. Now that’s telling ’em like it is! Thank you, sir. If most Brits here like we would have a perfectly harmonious relationship.  

      • Maurice says:

        I have to add that this was written with a heavy heart. It is a sad day when one is forced to face the sorrowful attitiudes of one’s place of birth. However, defending the country that gives me shelter and sustenance and which I define as home seems to me to be the only decent position to take, no matter how difficult or uncomfortable on a personal level.  

        • Maurice says:

          Thanks to everyone for the messages of support and also to those who have offered views that are counter to or oppose my own.

          I fully expected  to be lambasted by some and they have as much right to their opinions as I do. At least those who enter the debate with constructive comments have some passion and care about something enough to want to be heard.

    • Anonymous says:

      Well said, well done! Brilliant!

    • Mozzie Fodder says:

      I’m from England and I cannot think of one argument to counter anything Maurice writes. Our Government is rotten to the core and to add insult to injury the cretin in charge of the UK wasn’t even elected by the people.

       

  7. Illegal taxes says:

    Cayman better vet its existing taxation system for compatibility with the new constitution if it wants to avoid a massive compensation bill for recovery of illegal taxes and punitive damages.  Discrimination in stamp duty amongst residents based on nationality will have to go.  So will many other charges.  A law suit clawing back these fees could destroy Cayman if urgent reforms are not put in place.

  8. Anonymous says:

    The timing of this Posting from Mr. Murphy is great!  After the announcement by the LGB yesterday which highlights a clear and sensible plan forward to deal with the problem faced and indicates that the Cayman Islands will be fine in the short to medium term – this gets published!  Astonishing!  It is a clear indication that we cannot and should not believe what these self professed experts write. I can start a "Tax Expert Network" and name myself as founder and director too, what does that mean? Nothing.  

    Mr. Murphy, your list of what the Cayman Islands propose to do to resolve the situation has never been cited by any member of the Cayman Islands government.  These proposals have been made by various members of the public but we have over 50,000 people resident here, why would you chose to include a handful of the controversial proposals and then insult our country about it?  It can only be one of two reason (1) you are desperate to have your submission and blog read, or (2) you dont know the real facts.  If its reason (2) then I submit to you sir that you are no expert.

    Have you actually read the proposals from Government? 

    I am actually disappointed in myself that I read the post and wasted the time I did.  "A Lehman scale failure"?? Are you really serious?  As someone has pointed out above, the Cayman Islands economy is in a much better position to the US economy and most other economies worldwide.  It can balance its book easily in the next few months – without borrowing!  Can your country say that?   

  9. Anonymous says:

    Mr. Murphy’s rant in this forum and on his own blog is further evidence, if any was needed, of why our fearless (?clueless) leader’s public meeting last week was not a good idea. Whatever the original intention, whoever thought of having such a public meeting in which an incomplete and inaccurate picture of Cayman’s finances was presented was completely inept and ought to be fired. 

     It is worthy of note however that while this forum allows the publication of divergent views to the extent that it permits Mr. Murphy to promote his personal agenda, Mr Murphy has no stomach for dissenting views on his own blog – particularly when they are accurate in taking apart his half-arguments.

  10. Concerned Caymanian says:

    Richard Murphy,

    Cayman is engaging in deficit spending by borrowing. In that respect it is no different from the U.S. The U.S. budget deficit for 2009 is predicted to be near $2 trillion and, like Cayman, the faltering economy (together with the stimulus packages and bailouts) is a major reason. If Cayman is insolvent so is the U.S.

    I realize that you (and the UK Govt.) wish to blow this trumpet for the simple reason that you feel it will hasten our demise as an offshore financial centre. Rumours of our death are greatly exaggerated.

  11. Anonymous says:

    I will start by saying that Iam an educated Canadain and not some "ignorant Caymanian" as will be suggested after some read my posting.

    The bile and hatred pouring out from the UK right now is astonishing. I don’t even have words to express how…flaberghasted?… I am at the reaction that London and the UK are expressing. Even (some) ex-pats from the UK living here are spitting with disdain!

    When there was talk about independence last year, I thought it was a bad idea. After seeing how London has treated the Cayman Islands, I think it is the only choice.

    The Cayman Islands has every right to conduct business as they see fit and, contrary to what Mr. Murphy has expressed (of course, with absolutely NO proof whatever) Mutual Funds and other investment vehicles are alive and well. There is less investment than last year because there is less liquidity than there was last year. It’s as simple as that. When liquidity returns to the market, stocks will start to rise again and you will see a new breed of funds come along that will take advantage of the GREAT invesment opportunities that come about after a recession.

    Mr. Murphay and Mr. Bryant should do Cayman a favour and keep their opinions about the money markets, and the way that Cayman does business, to themselves because they don’t know what they are talking about.

    Mr. Bryant XXXXX should stop acting like an overbearing mother and release the funds that the government needs because, quite honestly, it’s none of his business how the Caymans go about re-paying the loan. The banks are MORE than happy to lend the funds, which means that people whose job it is to vet potential borrowers think that the Cayman Islands Government is able to repay the loan. Done deal.

    • Anonymous says:

      your posting is sensible, so i see no reason that anyone would think that you’re an "ignorant" anything.  as for being educated, i’d leave that out.  there are many "uneducated" people in this world who have more common sense than many of the so-called educated ones.  education provides people with an opportunity, but it certainly does not guarantee anything.  at any rate, as far as your argument is concerned, the UK is well within its rights to make the demands made (cut down on costs; find a way to increase revenue; no more loans; etc.)  the cayman islands can either comply or seek independence.  can’t have your cake and eat it too.  remember what your mommy and daddy used to say when you lived at home – if you’re going to live under our roof, you live by our rules.  simple as that.

  12. Caymaniam says:

    Mr Murphy states;

    "Cayman is insolvent, bust, broke, unable to pay its debts. This is not a rumour, this is fact"

    but later seems to doubt his own assertion;

    "If Cayman really is insolvent, and that seems likely,………"

    Which is it Mr Murphy, a “fact” as you first state, or your own “seems likely” opinion?

  13. Anon says:

    This article on the demise of Cayman is outdated the second it was posted. In case you are a little slow, events have moved on substantially, Mr. Murpy.

    Many governments are engaged in deficit spending right now, and it appears your very own country (The USA) is the biggest spender by far, with no limits being imposed on you. I would be more concerned about your own countrys deficit before being worried about ours.

    I just can’t believe how many people are out there rubbing their hands together in glee at the prospect of Caymans demise. One thing I know for certain, it will make us even more determined to not only survive, but prosper and grow.

  14. Murphy says:

    The author is a one trick pony with an axe to grind.  He is incapable of objectivity and has added virtually nothing to the sensible global debate other than been a rent a quote for sensationalist healines as part of his quest for self-publicity.

    I don’t know why he is so angry, but maybe a few weeks chilling on the beach in Cayman might help.

  15. Anonymous says:

    Mr murphy,

    Your predications are sensationalist, grossly incorrect and a little too euphoric (albeit you are a known advocacy fpor the demise of offshore centers).

    But don’t pull the trigger too quickly. and here is why:

    Despite many global initiatives focused on improving regulation and transparency over the past decade, the Cayman Islands has continued to be commercially sucessful while adhering to those standards in either the same or more stringent manner than many OECD countries.

    The current situation (in case you have conveniently forgot) is due to the global economic recession which has impacted government everywhere. This has meant a significant increase in their deficits/borrowing, most of which has been facilitated by printing money (new bond/t-bill placements etc).

    Can you name a country anywhere in the world which is forbidden by law to to run a deficit?  where your operational revenues must always be sufficient to meet your annual expenses? or where you cannot have a net debt to revenue ratio above 80%. Yes…. there are a very few and the cayman islands is one of them.

    For the first time in its history and directly as a result of a drop in indirect tax revenues (and an ambitious capital program), the country ran a deficit at the end of its last financial year in June and has gone over its debt to revenue ratio. This is one of the main reasons the UK’s permission is required to borrow.

    Clearly the country can easily meet its needs in the short term by doing what virtually every other country in the world is doing: borrowing the required funds. But in order to do so it needs the UK permission. But that does not mean the country is bankrupt or insolvent.

    The way that the cayman islands has reacted, in identifying increased indirect taxes, is of course not the most convenient response for the UK (or any other anti offshore groups out there), but this response from cayman is in fact exactky how the country has managed to maintained it current tax system, while providing opportunities for its people. when these changes are imlemented, there will be no need to borrow to meet short term needs. there will still be a need to borrow to complete the already started capital expenditure program.

    The agenda here (of the Uk and others) is to see to it that the cayman Islands is "forced" to introduce direct income and property taxes.

    Mr Bryant’s allussion (and your comments) on the eminent demise of the offshore world and its unsustainablity as a model are not founded in any evidence on the way that these centers have flourished over the past 5 decades despite a variety of global developments.

    The Cayman Islands will come out of this stronger as an economy. its model of indirect taxation is sustainable.

    Why don’t you wait and see what happens over the next 12 months to 5 years or so before popping the champaigne.

     

    • Concerned Reader says:

      One should have a read of Richard Murphy’s own site, and one can see that he is no expert himself, based on the divergent views from obviously more informed readers who challenge his views and more accurately state that : 

      " Cayman is in no state of involvency i.e. debt is only twice that of GDP compared to the UK’s 60 times. And Cayman will probably have to bail the UK out and not the other way around. Plus the cash crunch was caused by the capital project spending "

      In fact when Murphy cannot grasp the facts, he gets personal – the usual sign of one who is at a loss for argument with the facts.