Cayman plays ball on review

| 03/12/2008

(CNS): The UK government announced yesterday (2 December) that it has appointed the former Financial Services Authority managing director Michael Foot to run the reviews of its territories and dependencies with offshore financial service centres. The Cayman Islands Government said it would take "an active role" in the review following discussions with Paul Myners the Financial Services Secretary for HM Treasury and the announcement of the terms of reference and the review leader.

 “We have had an opportunity to engage in discussions with HMT directly and review the details provided to date regarding this review,” said Kurt Tibbetts, Leader of Government Business. “As a result of this due diligence, which indicated the review will be serious and constructive, the Cayman Islands Government is happy to participate and support HMT in its efforts. It is Cayman’s experience that objective, independent reviews are valuable to all parties involved and we look forward to working with Mr Foot.”

The review was announced by the UK chancellor Alistair Darling in his pre-Budget speech last month will look into financial supervision, transparency and the ability of the islands’ regulators to manage a crisis. Foot is expected to examine the tax situation in what are described in the UK as tax havens but the UK government has promised not compromise the independence of the dependencies and territories. An interim report is expected before the Budget but Foot’s full conclusions will be released later in 2009. 

“Offshore financial centres must play a responsible role in the global financial system,” Myners said. “‘This review will take a serious and constructive look at the challenges these centres face in the current economic climate, and how they can best respond to these.”

Following last Thursday’s telephone discussion with Myners, Minster Alden McLaughlin noted that the review is more concerned with the Crown dependencies than with the overseas territories but that Cayman will also be a target in the long run as the UK government remains under pressure give the economic crisis the fundamentally causes of which are, ironically firmly rooted onshore.

“Whatever the real reason, given the global economic crisis, it is to be expected,” McLaughlin told CNS.” “This is not driven by local circumstances but we have no difficulty with it and we expect as ever that the Cayman Islands will score highly.”  

No date has yet been given as to when Foot will visit Cayman but McLaughlin said he hoped to learn more when he visits the UK in January.

Last week the Bermudian President Ewart Brown call it an affront to every Bermudian and said they have every reason to be offended and insulted by the news of the review. “What we have is reason for all to take note of the downside of being a British colony,” he said in the countries parliament. “They are a supreme power, who does not contribute one penny to our livelihood, who just announced that they have determined we, and some of their other territories, need a review. They have the authority,by grant of our colonial relationship, to simply announce that they want to come, and we are obliged to receive them.”

The former managing director at the UK’s Financial Services Authority between 1998 and 2004, Michael Foot, is now the chairman of consulting firm Promontory Financial Group. Foot has held a series of posts at the Bank of England during his nearly30 years there and has also worked at the Central Bank of The Bahamas.

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  1. Tim Ridley says:

    Whatever maybe the real long term reasons for the review by the UK (and a healthy scepticism is wise), Cayman should welcome the opportunity to present  the facts of  its case yet again. This is particularly important as Cayman’s financial services industry has shown remakable resilience during the recent global financial crisis. Others could learn a few lessons from us! After all, no local banks or insurance companies have failed; no depositors or insureds have been left with empty pockets. Hedge funds and structured vehicles come and go, but that is the nature of the industry.

    The devil of course  is now in the details of the review ,  how it is carried out  and what the UK Treasury does with it. I met Mr Foot, the team leader, a few years ago when he was working in the Bahamas with the Central Bank. He appears to be knowledgeable and professional, and I am sure his leadership will be likewise. But I hope that the young foot soldiers in the review team (and they are actually the people who write the report)  are of the same calibre and will report facts, not preconceived perceptions. To this end, it is vital that the Government and the private sector in Cayman engage with and inform the review team fully and at the earliest opportunity. It is also critical that the Government move expeditiously to enact local legislation improving transparency  generally  and  to expand cross border assistance and exchange of  information, particularly in tax and securities matters, through negotiated bilateral agreements with foreign countries (including the UK) and through amendments to local legislation. The difficult balance is to do this while protecting legitimate privacy interests.

  2. Anonymous says:

    Minister McLaughlin is right. The UK (amongst others) is looking for ascapegoat for the financial crisis. Note the quote: "Offshore financial centres must play a responsible role in the global financial system." In other words it is being suggested that offshore financial centres are not currently being responsible.

    Incidentally, you need to fact check your articles more thoroughly.  Dr. the Hon. Ewart Brown is the Premier (not the President) of Bermuda. An overseas territory is not a sovereign power and may not have a president.