Archive for February 10th, 2011

Crime ‘intolerable’ says Bush

| 10/02/2011 | 82 Comments

(CNS): Following the robbery of two visitors to the Cayman Islands on a secluded beach in the district of East End on Monday lunchtime, Premier McKeeva Bush has expressed his outrage over the assault and revealed that the crime prevention strategy will be considered by Cabinet next week. He said the strategy was expected to address the “this intolerable situation” regarding crime. In an official statement released by his office, Bush, who is currently in the United Kingdom, revealed his concern about what he said was an unacceptable rise in the type crime that could do irreparable damage to the country.

"I am deeply concerned to learn that a vacationing couple have been the target of a senseless robbery earlier this week. Like the rest of the community, I am outraged by this assault and cannot begin to understand the mentality of persons who would commit such unwarranted acts against others,” Bush said in the statement released on Thursday afternoon.

“The rise in crime is unacceptable, especially since such attacks by thoughtless individuals are capable of doing irreparable damage to our tourist industry, our economy and our country. As such, this government fully supports His Excellency the Governor and the commissioner of police in whatever actions they deem are necessary to take to address criminal behaviour and restore the peaceful and harmonious way of life we rightfully expect in our beloved Cayman Islands,” the premier added.

Cabinet will be considering a Crime Prevention Strategy next week, he said, which has been developed by the National Security Council. “It is expected that this strategy will provide a comprehensive approach to reducing this intolerable situation. Further information will be released to the public from both the National Security Council and the Commissioner of Police shortly," Bush noted.

For some time now the wider public has been asking the government and the premier to directly address the question of crime, with people asking for a national policy to deal with the surge in violent crime.

The strategy, which has been formed through the National Security Council under the guidance of the governor, is believed to focus on a more long term wider approach to tackling the deeper social causes of crime rather than the day to day issues of crime as it happens, which is in the hands of the RCIPS.

Some 64 armed robberies took place last year, many of which have yet to be solved, and seven robberies have already taken place since the start of 2011 — the incident at Barefoot Beach on Mondaywas the seventh robbery. There have also been a number of reports of bag snatches taking place at the Royal Watler Terminal in George Town from visiting cruise passengers, though none of these have been confirmed by the RCIPS.

More than 135 comments were made to the CNS website in relation to the report about the visiting couple who were attacked on the beach in East End, many of which expressed concern about the negative and possible long term damage this type of crime would have on the tourism sector. The victims also related the incident themselves on their own web-blog.

Police are currently investigating the robbery, in which the three men got away with only a few dollars cash, but as they left the couple on the beach after the assault, they smashed open their rental car and stole an expensive underwater camera.

The police say one suspect was approximately 17 years old, 5 feet 7 inches in height with dark complexion. He was wearing a knuckleduster and a dark blue NBA jersey. The second was about 5 feet 10 inches in height and approximately 165 pounds, wearing short pants and carrying the baseball bat. The third was said to be about 6 feet in height, approximately 165 pounds and wearing a white shirt and short pants.

Barefoot Beach is located off the Queens Highway on the northern coast of Grand Cayman in a remote but very attractive, location. Police said it was extremely unusual for an incident such as this to take place in the area but patrols there would now be increased. 

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Mac spends $1.1m on advice

| 10/02/2011 | 111 Comments

(CNS): According to a granted freedom of information request made by a CNS reader, the country’s premier has spent $1.152,711.21 on consultants and advisors since taking up office. The money was used to buy a number of different services and advice relating to his areas of responsibility, from tourism to financial services as well as on the Miller Commission, which conducted the review of government revenue and operation, and ranged from as little as $1,500 to over $300,000. The two highest amounts went to the law firm Sidley Austin LLP, which represents Cayman’s interests in Washington, and FocusCorporate Service, a local firm which has advised the premier on financial services related matters.

According to the information revealed by the information manager from the premier’s ministry, over the first 18 months in office the premier employed Atwater Consulting Ltd, a locally based public relations firm, for consultancy on tourism related matters costing over $21,500. Legal firm Bird & Bird LLP were paid less than $3,500 for negotiations on air services agreements, while over $200,000 went to New York based lawyers Pillsbury Winthrop Shaw in connection with the Open Skies negotiations.

Innotiva Ltd, a locally based consulting firm, was paid $1,500 in connection with the young nation builder’s programme, and just over $35,000 was paid to Clyde Mascoll, the former leader of the Democratic Labour Party in Barbados, for the budget speech preparation. $160,000 was paid for the Miller Commission, which produced a report on government revenue and expenses early last year. Jannet Tomaski, a Caymanian based in Tampa, was also paid over $48,200 for what was described as “CIG liaison in Florida”.

The two largest amounts were to local consultancy firm Focus Corporate Service, which was paid $325,303.97 for consultancy on financial related matters, and $349,601.03 was paid to Sidley Austin LLP for their representation of Cayman’s interests abroad.

See FOI request below.

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Financial cops recover high quality fake cash

| 10/02/2011 | 5 Comments

(CNS): Following the recovery of a small number of fake CI and US notes by the RCIPS Financial Crime Unit officers are asking the public and the business community to continue looking out for counterfeit cash. Police said that since the beginning of the year a small number of CI $10, CI$100, US$50 and US$100 have been found in circulation some of which are better quality than notes recovered in the past. Detective Constable Adrian Neblett of the Financial Crime Unit noted in particular that the Cayman Islands $10 looked very real.

“The quality is so good that, to the naked eye, they look real. The metallic strip in these newer notes is much shinier than we’ve seen in previous forgeries,” he said as he urged the business community and members of the public to spend a few extra seconds checking all notes – in particular the presence of the watermark – that come into their possession.

“Remember, the Cayman Islands Monetary Authority has confirmed that if you are in possession of a note that’s found to be fake you will not be compensated, so those extra few seconds spent checking the cash could prevent you losing out financially,” the officer said.

Anyone who receives a counterfeit note, or suspects one to be counterfeit is advised to observe the description of the person passing the note, as well as that of any companions. Police say the notes should not be returned to the passer if possible. Instead, initial and date the white border of the note then tag the note with a copy of the transaction receipt and call the police.

“If you have counterfeit report forms issued by the Financial Crime Unit, obtain as much information as possible from the person passing the note and write it on the form. DC Neblett said.

“There are situations where people are not sure whether a note they have is counterfeit or not, so they take it to the bank to deposit it. Unfortunately, once a counterfeit is mixed with other notes, most of the evidence that could assist the enquiry is lost. That’s why any suspect notes should be tagged with the transaction receipt, placed in a protective covering such as an envelopeand set aside for verification by the Financial Crime Unit. Please also ensure that any video footage showing the transaction is also set aside,” he explained

The RCIPS form for reporting counterfeit money can be found on the Cayman Islands Monetary Authority (CIMA) website under “Currency.”

Anyone who wants further information about how to identify counterfeit currency, or how to spot real notes from the fake one’s, should contact the RCIPS Financial Crime Unit at 949-8797. Officers will be happy to arrange relevant workshops for business managers and front line staff.


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Bush to sign commitment on public finances

| 10/02/2011 | 6 Comments

(CNS):The UK’s overseas minister, Henry Bellingham, has welcomed Premier McKeeva Bush’s commitment to signing a Framework for Fiscal Responsibility, thepremier’s press office said yesterday on the heels of the meeting between the two men at the Foreign and Commonwealth Office in London. On Tuesday, 8 February, Bellingham and Bush discussed a range of bilateral issues, including proposals to strengthen the management of public finances in the Cayman Islands. Bush was able to take good news to London, however, having turned a prospective public deficit into a surplus ahead of his third meeting with the UK government.

Another issue on the agenda was the debate which was started by Alden McLaughlin in the Legislative Assembly recently regarding the term "Governor in Cabinet". Following the changes to the Cayman Islands constitution and the balance of power between elected officials and the governor, McLaughlin believes that new legislation that relates to the areas of responsibility of electedminister should not refer to the "Governor in Cabinet".

In the press statement from the Premier’s Office, it was revealed that FCO officials are giving further consideration to the use of the term.

Following his meeting at the FCO the premier moved on to Jersey, one of the UK’s crown dependencies which also specializes in financial services and is located in the English Channel.

According to briefing papers issued by Jersey officials the premier was visiting in order to examine that jurisdictions public finance laws. 

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Bosses fined for not providing health cover

| 10/02/2011 | 21 Comments

(CNS): Over the last two months three local bosses have been fined by the courts after failing to provide health insurance cover for their workers. The cases brought by the Health Insurance Commission have all resulted in $750 fines or potential short prison sentences after the employers pleaded guilty to the charges. These cases were all started before government amended the law which deals with the mandatory provision of health cover by employers last October but in future fines for the same offence could be as much as $40,000. Superintendent of Health Insurance Mervyn Conolly said the successful prosecutions should serve as a reminder to all employers about their obligations under the law.

Last month, Treva McIntosh of Archie’s Disco, Bar & Restaurant was fined $750 on four charges totalling $3000 total to be paid in two months or four months imprisonment and Lisa Kandler of Crewe Road Esso was fined $750 to be paid in two months or two months imprisonment by Magistrate Nova Hall in the summary court after the bosses pleaded guilty to the charge of “failure to effect and continue standard health insurance coverage for employees”.

This month Magistrate Margaret Ramsey-Hale fined Jerrilyn Rankine-Gordon of The Party Mart Ltd $750 also to be paid in two months or two months imprisonment.

Conolly said he was satisfied with the outcome of these cases but the department was working behind the scenes to improve health insurance coverage for all workers.

“With the recent amendments to the law the future fines that can be applied to these violations were significantly increased from $5,000 to $30,000 on summary conviction and fines of $40,000 on conviction on indictment – up from $10,000,” he explained. “I therefore hope that the recent rulings by the Magistrates will serve as a reminder to all employers that it is important to make sure they adhere to the requirements of the health insurance legislation.”

As a result of The Health Insurance (Amendment) Bill, 2010 fines have substantially increased so any legal cases started after 15 September will face significantly higher penalties which government hopes will act as a real deterrent.

Mark Scotland the health minister who brought the amendments to the law stated in the Legislative Assembly that the Health Insurance Commission had recorded numerous complaints by employees that their employers were deducting health insurance contributions from their salaries but failing to maintain the policies. The increase in fines he said would “send a firm message to make it more clear that it is unlawful to make these deductions from an employee’s salary,” he added.


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Former execs buy Butterfield’s fund administrator

| 10/02/2011 | 0 Comments

(FinAlternatives): A private equity firm has bought hedge fund administrator Butterfield Fulcrum Group. The new owners, Glenn Henderson and Tim Calveley, former BFG executives plan to house BFG and their existing family office administrative service firm, FORS Ltd., under a single parent company while leaving the two units to operate independently. The deal is expected to close in the first quarter though terms were not disclosed. Henderson and Calveley areintimately familiar with BFG, having helped create the firm two-and-a-half years ago.

Henderson was CEO of Fulcrum Group, which merged with Butterfield Fund Services in the summer of 2008. Calveley served as CFO and chief risk officer, first for Fulcrum and then for BFG. Both left later that year.

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Taxpayers with hidden cash get chance to come clean

| 10/02/2011 | 0 Comments

(CNS): Taxpayers in the US are being given another chance to come clean about money in offshore accounts without running the risk of being prosecuted. The Internal Revenue Service said yesterday that under a special voluntary disclosure initiative designed to bring offshore money back into the country’s tax system people with undisclosed income from hidden offshore accounts were being offered a fair opportunity to get current with their taxes. The new voluntary disclosure initiative will be available until the end of August this year. The first disclosure programme closed with 15,000 people coming forward in 2009 the US tax office stated but since then some 3,000 taxpayers have come forward with bank accounts from around the world.

These taxpayers will also be eligible to take advantage of the special provisions of the new initiative.
“As we continue to amass more information and pursue more people internationally, the risk to individuals hiding assets offshore is increasing,” said IRS Commissioner Doug Shulman. “This new effort gives those hiding money in foreign accounts a tough, fair way to resolve their tax problems once and for all. And it gives people a chance to come in before we find them.”

He added that the goal is to get people back into the US tax system and that combating international tax evasion was a priority for the IRS.

“We have additional cases and banks under review. The situation will just get worse in the months ahead for those hiding assets and income offshore. This new disclosure initiative is the last, best chance for people to get back into the system,” the commissioner said in an official government release.

The 2011 Offshore Voluntary Disclosure Initiative (OVDI) includes several changes from the 2009 programme. The overall penalty structure for 2011 is higher which means people who did not come in through the 2009 voluntary disclosure program will not be rewarded for waiting.

There is a new penalty framework thatrequires individuals to pay 25 percent of the amount in the foreign bank accounts in the year with the highest aggregate account balance covering the 2003 to 2010 time period.

Some taxpayers will be eligible for 5 or 12.5 percent penalties. Participants also must pay back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.
Taxpayers participating in the new initiative must file all original and amended tax returns and include payment for taxes, interest and accuracy-related penalties by the 31 August deadline.

The IRS is also making other modifications to the 2011 disclosure initiative. Participants face a 25 percent penalty, but taxpayers in limited situations can qualify for a 5 percent penalty.
The IRS also created a new penalty category of 12.5 percent for treating smaller offshore accounts. People whose offshore accounts or assets did not surpass $75,000 in any calendar year covered by the 2011 initiative will qualify for this lower rate.
The 2011 initiative offers benefits to encourage taxpayers to come in now rather than risk IRS detection. Taxpayers hiding assets offshore who do not come forward will face far higher penalty scenarios as well as the possibility of criminal prosecution.

“This is a fair offer for people with offshore accounts who want to get right with the nation’s taxpayers,” Shulman said. “This initiative offers them the chance to get certainty about how their case will be handled. Just as importantly, those who truly come in voluntarily can avoid criminal prosecution as well.”
The IRS will also launch a new section on that includes the full terms and conditions on the 2011 Offshore Voluntary Disclosure Initiative, including an extensive set of questions and answers to help taxpayers and tax professionals. The web site also includes details on how people can make a voluntary disclosure.

Shulman said IRS efforts in the international arena will only increase as time goes on.

“Tax secrecy continues to erode,” Shulman said. “We are not letting up on international tax issues, and more is in the works. For those hiding cash or assets offshore, the time to come in is now. The risk of being caught will only increase.”


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Careers expo hosts over 600 students

| 10/02/2011 | 0 Comments

(CNS): More than 600 young people passed through the Careers, Education, Training & Jobs Expo 2011 last Friday looking for information on future careers and opportunities for work. With local businesses, educational institutions and government departments exhibiting students about to graduate from high school were able to examine the options for their next step be it work or in many cases further education. The Chamber’s President Elect David Kirkaldy talked about the need to change mindsets regarding education when he opened the expo as he said education was no longer just about going to school college but education was a way of life and a state of mind.

“We need to think of education as something we continue through our life – not just as a stepping stone to a career. With technology advancing at its current rate many of the skills we learnt whilst at school or university will soon be surpassed by new practices and information. If we don’t continue to retrain we will struggle as a society to fill the necessary positions available to us that will sustain our economy and our way of life.” Kirkaldy said adding that the Chamber would continue to champion the benefits of education, training and career advancement.

Kirkaldy noted the dilemma of how to train young people for jobs that don’t exist yet are just around the corner as he pointed out that just a decade ago posts such as Social Media or Online-Community Manager, telework Manager or Coordinator, Sustainability Manager and Elder-Care Services Coordinatorsimply didn’t exist.

“These are exciting times and we need to make sure that we not only have the correct infrastructure in place to support them but also that our workforce has the educational opportunities and the right mindset for this transformation. It makes sense that the more current your education the more value you have to offer to an employer,” he pointed out to the young people seeking opportunities at the event.

Kirkaldy pointed out that education, for most people, will always be one of the best investments of time, money, and effort. “Regardless of age or career interests, furthering your education has real value. This is true on many levels: personal growth and satisfaction, enhancing your contribution to society and community, serving as a role model for children, and increasing your employability and earnings,” he said.


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Chamber eyes new labour law

| 10/02/2011 | 0 Comments

(CNS): Almost a decade after it last reviewed proposed amendments to the Labour and Pension Laws, the Chamber of Commerce says it is re-establishing an Employment Legislation Review Committee to look at the latest proposed revision and lobby government. The most recent review of proposed employment legislation took place in 2002-2003 and was led by Past Chamber President Angelyn Hernandez, who, the Chamber says, will be heading up the review team once again. The goal is to look at the latest draft law and ensure it meets the interests of the business body’s members.

“The Chamber’s role is to ensure that our members’ current interests and opinions are represented accurately in regards to any proposed legislation by government,” Chamber President, James O’Neill said. “We are therefore pleased to announce the re-establishment of this committee. In addition to re-examining the findings of the Chamber’s 2002/2003 Employment Relations Report, a survey will be distributed to the Chamber membership to make certain that its content still reflects the view of our members today.”

A final report will be submitted to the Chamber Council by April 13, 2011.

The last review included a comprehensive membership survey and a careful analysis of the impact of the past proposals on both Cayman’s workers and employers. The final report was approved by the Chamber Council, released to the membership and submitted to the government.

The Chamber was successful in expressing the membership’s strong opposition to many of the proposals, which were considered inflationary, unfair to workers and onerous for employers.
Based on the Chamber’s report, the minister withdrew or amended some of the proposals.
The committee will now review the latest proposals and determine whether the Chamber’s previous position remains or requires modification.

Alongside Hernandez on the committee will be deputy chair and be Chamber Councilor Colin Reid and representatives from the Cayman Islands Society of Human Resources Professionals, Cayman Contractors Association, Cayman Islands Bankers Association, Cayman Islands Tourism Association, Cayman Finance, Fosters Food Fair, CUC Ltd., Island Companies, and Appleby will be invited to participate on the committee.

The terms of reference are: to review any proposed legislation to amend the Labour Law and Regulations and the National Pensions Law and Regulations; to re-examine the findings of the Chamber’s 2002/2003 Employment RelationsReport; to develop, release and compile the findings of a membership survey on the proposed amendments; to meet with Government officials to discuss the proposals; to communicate thefindings of any research and studies to the Council; to develop a final report for presentation to the Council; to present the findings of the approved report to the Minister of Education, Training and Employment.

The Chamber of Commerce said that it supports and promotes fair and equitable workplace practices and policies that attempt to maintain social harmony, provide decent employment, and ensure profitability for all businesses. The Chamber Council has established committees and task forces since the organisation’s founding in 1965 to review proposed employment legislation and has submitted its findings so that the views of the membership are clearly communicated to legislators.

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CIMA reviewing corporate governance

| 10/02/2011 | 5 Comments

(CNS): According to a report in the fund industry magazine HFMWeek, the Cayman Islands Monetary Authority (CIMA) has been conducting a review of the corporate governance framework for all regulated sectors, including hedge funds. The magazine states that the review is believed to be the result of a letter-writing campaign on behalf of institutional investors and asset allocators, started in June by US-based Mesirow Advanced Strategies, a fund of hedge funds (FoHF) firm. Although detail on the process is currently hard to come by, HFM said the review shows corporate governance is an issue with which the hedge fund industry still has unfinished business.

“Issues being examined include, but are not limited to, composition of boards, fitness and propriety, and transparency,” a CIMA spokesperson told HFMWeek. “As part of this process, we have been in dialogue with stakeholders on various aspects of the issue. This dialogue will continue.”

Gary Linford, managing director at HighWater, a Cayman-based company specialising in governance services,told the industry magazine that while the Cayman industry talks about this transparency initiative, certain fiduciary investors are not as patient “with the lack of progress” and are asking more intrusive questions on corporate governance. “There is definitely a more activist approach taking hold and I would suggest this will continue, and will be significantly aided if CIMA proceeds with the transparency initiative,” Linford added.

Greg Robbins, general counsel at Mesirow Advanced Strategies, is the author of the original letter to CIMA which is credited with prompting the review.

“Our focus is on two forms – MF1 and the Far (Fund Annual Return) form,” he explained. “These two forms contain a lot of information about funds and in particular fund service providers, and if CIMA talks to the manager community and the manager community agrees there’s no harm in providing that service provider information then we think it would be valuable to be shared with the hedge fund community as a whole.”

Having informed a number of investors and asset allocators of his intentions, the letter has been followed by a steady flow of follow-ups to CIMA, the magazine reported. Linford, who is also a director of one of Mesirow’s vehicles, said there had been at least eight follow-ups from large fiduciary investors, each backing the same calls for greater transparency but the total number of follow-ups is rumoured to be much higher.

A professional independent director, Linford currently has 46 relationships as a director, 27 of which are with hedge funds. He considers himself at or very near full capacity. As for the Cayman average, he estimates that the typical range for a Cayman director is 25-75 directorships, but admits the overall range is “huge”.

“It’s a monkey on CIMA’s back,” Linford said. “The industry is growing and with certain hedge funds having had run-ins with other regulators or with disgruntled investors, CIMA will continue to be criticised for not addressing the issue of excessive directorships with that section of the industry that equates a high number with problem issues.

“I think the issue of excessive directorships is overplayed and in my opinion the term ‘excessive’ will eventually only apply to small number of individuals, perhaps less than five,” he adds. “That said, the term ‘excessive’ is subjective and if someone deems the right number to be ten, then you will find many people fall within the definition.”

Don Seymour is the managing director at DMS Management, a Cayman-based director services firm. He admits that following the finical crisis of 2008, “questions are now being raised about director capacity,” but believes those queries have been answered by the event itself. “If Cayman directors were truly over-capacity from serving on hundreds of funds, their failures would have been exposed during the crisis,” Seymour told HFMWeek.

Two local directors had actively solicited support from a few FoHFs to advocate for the implementation of a public hedge fund database in Cayman, but, according to Seymour, faced a muted response. “It was widely accepted that disclosing private fund or personal information to the public served no value and merely exposed the fund and its associated individuals to unnecessary risks such as fraud.”

Linford believes that the topic of transparency still divides the Islands. In July 2009, he recalls, the industry within Cayman could not find consensus on a policy initiative on transparency as it related to disclosing the number of directorships. “While there now seems to be a growing agreement that more transparency is needed, there is no agreement on the level of such transparency.”

According to the magazine, Cayman is rumoured to be readying a solution which will be ready for publication by the end of the year.

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