Another bouncing ball

The Secretary-General of the OECD (a Paris based organisation whose staff enjoy privileged tax free remuneration packages, yet roundly criticises genuine tax free jurisdictions),  Angel Gurria, lobbed another ball onto the court on Friday 28th November.

Towards the end of his speech in Doha, he stated “We must all work to strengthen anti-corruption efforts to minimize tax evasion. We can no longer turn a blind eye to the massive loss of revenue through the diversion of public and private funds to third countries.”

So now corruption and tax evasion (by no means the same thing) are neatly tied together and will become the new mantra. Just in case people were getting bored with the mantra of money laundering and tax evasion.

Now he did not actually state that he had places like Cayman in mind when he referred to “third countries”, but the inference is clear and has quickly been drawn by the international media that picked up on the code words.

Certainly, Mr Gurria could not have had the UK in mind, even though the OECD recently issued a scathing report on the UK’s commitment to anti-corruption, particularly foreign bribery. Few will have missed the irony of the UK’s recent public statements about helping the overseas territories fight international corruption in the face of the UK’s continued foot dragging over the Bae fighter aircraft sale to Saudi Arabia (and how inconvenient of the US to bring this all to light by alleging the laundering of the commissions paid to the former Saudi ambassador in Washington). A further irony is that the UK is to take on the chair of the G-20 (a group of major economies furthering their own self interests, usually at the expense of smaller and/or poorer non-member nations). And at least one newspaper in the UK is urging the UK to use its position as the chair to push for further transparency in dependencies that are offshore financial centres.

Mr Gurria’s words will tie in with another project that has not been much noticed in Cayman yet. The World Bank (another organization with a poor history of transparency and dealing with corrupt practices with respect to aid from the Bank to third world countries) in 2007 launched its STAR project (stolen asset recovery initiative) to help developing countries trace and recover assets stolen from them by corrupt leaders, politicians and civil servants.

No one could argue against the importance of this project and Cayman should enthusiastically endorse and assist its implementation. But it would be a great shame if a thoroughly worthwhile endeavour of the World Bank was hijacked by Mr Gurria’s would-be global tax police to track down citizens who in their view are not paying enough tax (but are not engaged in public corruption). That will confuse and detract from the project and make participation much less enthusiastic.   

Cayman has recently enacted the Anti-Corruption Law (ACL), but it has as yet to be brought into effect. This will be of great assistance in allowing Cayman to assist in the legitimate investigation and prosecution of foreign corruption and the tracing, freezing and recovery of relevant assets (should there unfortunately be any in Cayman).

But the ACL is manifestly defective in one key area. The Law provides for an Anti-Corruption Commission mandated to investigate local and foreign corruption. All well and good, one might conclude. But not when one looks at the composition of the governing board of the Commission: the Police Commissioner (also the chairman), the Auditor General, the Complaints Commissioner and two qualified private citizens. This does not measure up in comparison to equivalent commissions elsewhere.

Our Commission must be independent and with a strong board of qualified persons, who are entirely outside Government, the police and any other statutory agency or authority or similar and free of any conflicts of interest (real or perceived). It would stand Cayman in good stead internationally and would make the community here sleep more soundly if this could be done sooner rather than later.