Archive for December 16th, 2008

Coleman target of FBI probe

| 16/12/2008 | 0 Comments

(CNS): A US Senator who co-sponsored a bill in 2007 to stop offshore tax haven and tax shelter abuses is now the target of an FBI investigation into allegations that he funnelled money to pay for home renovations. Norm Coleman (R) of Minnesota introduced the Tax Haven Abuse Act with Senator Barack Obama of Illinois (now President-elect) and Senator Carl Levin (D) of Michigan. According to media reports, the FBI is now reportedly investigating allegations that Nasser Kazeminy, a multi-millionaire friend of Coleman, tried to funnel $75,000 in campaign contributions through the Senator’s wife, Laurie.

The investigation revolves around allegations in two lawsuits filed in late October against Kazeminy that in spring of 2007, he began a series of $25,000 payments to Coleman from Deep Marine Technology, an underwater services company he controlled in Texas, to Hays Companies, the Minnesota Insurance company where Laurie Coleman works. Coleman’s Senate ethics form reports no such payment.

According to the lawsuits, in March of 2007, Kazeminy said that "US Senators don’t make s—" and he was going to try to find away to get money to Coleman. During that time is when, the lawsuit alleges, Kazeminy was trying to get money to Coleman.

Coleman is currently in a tight race to retain his seat against US comedian Al Franken. Billing records of the remodeling project provided by his campaign show that original projections in 2006 estimated a cost of $328,000, but four months later, the construction cost was estimated at $414,000, over-budget by $86,000.

A release from the Senate in February 2007 stated, “For more than four years, Levin and Coleman, the Chairman and senior Republican of the Permanent Subcommittee on Investigations, have led an in-depth Subcommittee investigation into offshore tax havens, abusive tax shelters, and the professionals who design, market, and implement these tax dodges. Experts have estimated that the total loss to the Treasury from offshore tax evasion alone approaches $100 billion per year, including $40 to $70 billion from individuals and another $30 billion from corporations engaging in offshore tax evasion. Abusive tax shelters add tens of billions of dollars more.”

Coleman is quoted as saying, “It is simply unacceptable that some individuals are using offshore tax havens and secrecy jurisdictions to shelter trillions of dollars in assets from taxation. These tax schemes cause a massive revenue shortfall and, sadly, it is the honest American taxpayer who must bear a disproportionate burden of investing in areas like education and healthcare. We are introducing this bill to close these loopholes, shut down offshore tax schemes, and ensure that every American pays their fair share of taxes.”

The release described the Stop Tax Haven Abuse Act as a strengthened version of a tax reform bill that Levin, Coleman, and Obama introduced previously. The legislation was strengthened as a result of a year-long Subcommittee investigation which resulted in a hearing and report on 1 August 2006, examining “a series of case studies showing how US taxpayers are using offshore secrecy jurisdictions to dodge US taxes”.

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Cop faces court over calls

| 16/12/2008 | 14 Comments

(CNS):  An officer with the Royal Cayman Islands Police Service has been charged with nine criminal offences and is due to appear in court this morning (Tuesday, 16 December), police said. Daniel Lowe, who has been with the RCIPS for 26 years, has been charged with five counts of misuse of technology under the Information, Communication and Technology Act and four counts of insulting the modesty of a woman.

The charges which relate to phone calls Lowe made to a woman have come about following an investigation by the RCIPS Criminal Investigation Department and not the Special Police Investigation Team led by Martin Bridger who is supposed to be investigating corruption and misconduct  in the local force.

A police spokesperson said that the SPIT team had no part whatsoever in bringing these charges and added that the RCIPS continues to monitor its own officers for any hint of corruption or misconduct.

Police said that in line with RCIPS policy, the man has been suspended from duty.

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Appeal court protects fund

| 16/12/2008 | 1 Comment

(CNS): In a significant decision for the local fund industry, the Cayman Islands Court of Appeal has ruled that in a request to remove money from a fund where the redemption date had passed, a subsequent suspension was still valid. This meant the investor did not have to be paid as he was bound by the rules of the given company. Even though the court confirmed the investor became a creditor after the redemption date, the company’s regulations, which stated it could take action to protect the fund in times of volatility, took precedence over the investor’s right to his cash.

Stuarts Walker Hersant, who successfully appeared in the Court of Appeal on behalf of the investment fund, said that given the investmentclimate and the rush by investors to redeem their investments, the decision is important to directors, administrators, auditors, legal advisers and all others involved in the determination of the rights and liabilities of investment funds and their investors.

"With at least 9,500 of the world’s investment funds being registered in the Cayman Islands, the importance of the Cayman Island’s Court of Appeal’s judgment cannot be overstated," the lawyers stated in a release.

Stuarts Walker Hersant explained that in this case the Court of Appeal settled the questions of the meaning of redemption in an Investment Fund context and at what point a Member is actually redeemed from an Investment Fund. It also dealt with the issue of when a Member becomes a creditor of an Investment Fund following service of a redemption notice and whether a Member continues in his capacity as a Member after a redemption date has passed and finally whether an Investment Fund is able to validly suspend the payment of redemption proceeds even after the applicable redemption date has passed and the Member has become a creditor of the Fund.

The lawyers said that though the investor with an existing redemption request was properly classified as a creditor of the Investment Fund after the expiry of the redemption date, his right to receive the proceeds of redemption was subject to the fact that even after the redemption date the Investor remained a Member of the Investment Fund.

As such, the investor was bound by the terms and powers stipulated by the Articles of Association (or rules of the fund) and, the Offering Document stated that the Directors could suspend redemptions in times of extreme volatility and market uncertainty and could do so even in light of  a pre-existing redemption request even after the applicable redemption date had passed.

“Although a creditor of the Investment Fund, the Investor was unable (based simply on the non-payment of redemption proceeds) to issue a petition for the winding up of the Investment Fund on the grounds that the Investment Fund was unable to pay its debts and was thereby insolvent,” the lawyers said in the release. “In the Court of Appeal’s judgment, the liability to pay the redemption proceeds was, by virtue of the suspension of redemptions, a future or prospective debt which did not entitle the Investor to seek to wind up the Investment Fund on the grounds of insolvency pursuant to section 94 of the Companies Law (2007 Revision). In order to succeed, the Investor would have to prove that the debt was absolutely due, which, in the particular circumstances of a valid exercise, by the Investment Fund, of its power to suspend redemptions, the Investor would not be able to establish. “

Stuarts Walker Hersant explained the importance of the Court of Appeal’s affirmation of the principle: in the absence of clear evidence to the contrary, that the exercise by the Investment Fund of its powers was presumed to be bona fide and in the Investment Fund’s interests as a whole and added  that if Investors are to avoid winding up proceedings being struck out as an abuse of process, they and their legal advisers will need to take special care when analysing their strategy in response to an exercise by an Investment Fund of its power to suspend redemptions.

Anthony Akiwumi (Head of Litigation) and Richard Annette (Senior Associate) successfully appeared on behalf of the Investment Fund.

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CAL says not at fault over Honduran airline dispute

| 16/12/2008 | 5 Comments

(CNS): The dispute regarding passengers stranded in both Cayman and Honduras as a result of Atlantic Airways’ failure to operate its scheduled flights has escalated to involve charter airline Rollins Air, and now the National Flag Carrier, Cayman Airways, has denied allegations that it had reneged on promises. "It is unfortunate that Rollins Air has sought to misrepresent the facts for their own benefit at the expense of CAL’s reputation,” Cayman Airways CEO Designate Olson Anderson  has said.

Refuting allegations made by Rollins Air representative Romellia Welcome in relation to alleged promises made by CAL, Anderson said the allegations had caused great distress to CAL staff who were working to assist the charter firm in moving passengers. “However, before we can commit, Rollins Air has to show some responsibility and provide the proper documentation," Anderson noted.

The problem appears to revolve around the fact that a handling contract was received by Cayman Airways from Rollins Air by email on Saturday evening, 13 December, but the request for a charter was only received after 8:00 am yesterday morning (Monday 15 December).  Since receipt of this necessary paperwork, however, CAL said that it has been doing everything within its operational allowances to accommodate the passengers who had been inconvenienced .

Rollins Air reportedly was attempting on Friday night to fly out some of the more than 200 Honduran passengers who have been stranded both here and in Honduras for nearly three weeks following the failure of  Atlantic Airways to operate its scheduled flights because of legal issues in Honduras that are preventing it from operating.

Many of these passengers turned up at the Legislative Assembly on Friday morning demand help to return home. Tourism Minister Charles Clifford had reportedly told them that a contract could be signed that would enable them to fly out on Rollins Air using Cayman Airways staff to check in the passengers, but it did not happen as hoped on Friday night as a result of a incorrect documentation.

Romellia Welcome, representative of Rollins Air, said that  following discussions on Friday with Leader of Government Business Kurt Tibbetts and Clifford at the Legislative Assembly, a flight could take off that night once an International Air Transport Association contract was signed with Cayman Airways. However, Welcome said on Friday evening that she had been told  by Cayman Airways that no contract could be signed by Rollins Air and the airlift would not be able to happen. “They are running me around and around. All these people were at the airport today. They were told to come back Sunday at 10:00 pm,” she said at the time.

Welcome had reportedly asked Cayman Airways for help in checking in passengers to enable them to fly on the Rollins Air special charter but she was told the airline would not help. And she said she was told her she could not sign a contract with CAL. Aside from a desire by some passengers simply to be home for Christmas it is reported that some of the passengers are now passed their legal right to stay in the Cayman Islands.

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Experts to address flood areas

| 16/12/2008 | 3 Comments

(CNS): There are no easy solutions to the persistent flooding problem in the Cumber Avenue area in Bodden Town, according to the Director of the National Roads Authority (NRA), who has confirmed that experts are being engaged to look at the problem there and come up with a viable solution. He said that other areas around the island that suffer severe flooding as a result of development would also be assessed to try and come up with ways of permanently addressing these ongoing problems.

Following Hurricane Paloma, the residents in Cumber Avenue suffered extensive flooding, something which now occurs on a more frequent basis following severe weather conditions.  NRA Director Brian Tomlinson explained that the combination of local geography and more recent development in the area has created a basin from which water cannot escape and the area has become a serious technical challenge.

“At the junction of Cumber Avenue on Bodden Town Road the elevation is around 17 feet above sea level, likewise at the junction on Gun Square Road it reaches 22 feet. However if you go travel down either of those roads into the area prone to flooding you arrive at land that is a mere three feet above sea level. With the new development in that area, the water that once found its own way to the wetlands is now trapped,” Tomlinson explained. “We have considered many solutions and there is no easy answer to this issue.  We have however, engaged the services of an expert engineering firm to take a look at this problem area and one or two others that are emerging as the island develops more and more.”

At a recent government press briefing Kurt Tibbetts, the Leader of Government Business, said that if there was a simple answer it would have been found a long time ago and that a proper assessment was required. “We can speculate and try mitigation measures but when you have a situation like Hurricane Paloma where you have several days of continuous rain before the actual event, it exacerbates the situation.”He said it did not happen very often but was happening enough and causing severe inconvenience and disruption to residents in the area.

One or two local experts and those with an interest have suggested that the area is no longer suitable for residential occupation and the only solution maybe to compensate the home owners and relocate the residents because there is no real long term solution. However he said it was important to try.

Tomlinson said the NRA has considered pumping the water but the question then would be where to put what would effectively be polluted and dirty water. “We certainly wouldn’t want to pump that into the pristine ocean around that area,” he said. Tomlinson reiterated the fact that this was a job that needed technical expertise to try and properly quantify it and similar problems areas around the island and then come up with a properly costed, rational solution.

The most recent flooding in the wake of Paloma has not only raised controversy from the position of a civil engineering but this time residents were outraged by what they considered to be so little help from government. While government insisted that they had given clean up supplies to the area and were helping replace damaged furniture, residents in the area persistently denied receiving any government assistance for the damage they received following the hurricane.

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Employers get access to fast track permits

| 16/12/2008 | 0 Comments

(CNS): A new express service for processing temporary permits and an entirely new work permit category to deal with the issues surrounding seasonal workers have come into effect under the recent changes to the Immigration Law. The new permit for temporary employees in the tourism sector is designed to cover the fact that the tourist season lasts for longer than six months which was the previous term given for a temporary permit.


“Tourism operators indicated that the traditional six-month temporary permit was not adequate to cover their staffing needs for the entire high tourist season which runs from about November to June each year,” said Chief Immigration Officer Franz Manderson.

“We did not think it was fair for a company to pay for a temporary work permit, and then have to seek another because the first did not cover the entire period for which they needed a particular employee.”

He added that these permits usually relate to wait staff and other ancillary employees who are not available on island in sufficient numbers to meet local demand during the high season. The seasonal permits will be issued for a period not exceeding eight months at 66 per cent of the cost of an annual work permit in a specified category. 

Manderson explained that seasonal permit holders willthen have to leave the island for at least three months before another application can be made. Offering these permits on an express service Manderson said that employers can pay an extra fee to have a decision on a temporary permit within 48 hours of an application. 

 “The express service does not guarantee an approval however we will provide a decision within 48 hours” the CIO added. “We see the express service meeting the needs of our customers whether they are a large business or personal employers.”

In the face of considerable concern in the community that unemployment is growing among Caymanians while even more permits are being issued to foreign workers Manderson said the moves are all part of a new strategic thrust to implement business-friendly immigration policies to support the growth of critical industries such as tourism and ensure Cayman’s continued prosperity. “I wantto re-emphasise that this is not about issuing more temporary permits,” he said adding that the Leader of Government Business, Kurt Tibbetts’ strategic policy statement in the legislative assembly last week expressed government’s commitment to provide an enabling environment for businesses to thrive.

Fees for Express Work Permits are as follows:

$300 for permits valued between $5,000 and $17,000

$250 for permits valued between $2750 and $4999

$200 for permits valued between $1,100 and $2479 

$100 for permits valued between $100 and $1099


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Appeal court at full strength

| 16/12/2008 | 1 Comment

(CNS): For the first time the Cayman Islands Court of Appeal can boast a five man line up of justices following the oaths of office taken by the last two members yesterday morning (Thursday, 11 December). The new president of the Court of Appeal, the Rt. Hon. Sir John Chadwick, and Justice of Appeal, Dr the Hon. Abdulai Conteh, took their oaths in the presence of the Acting Governor, the Hon. George McCarthy and Cheif Justice Anthony Smellie.

 Judge Chadwick, QC, was formerly a Lord Justice of Appeal of England and Wales (1997-2007) and a Judge of the Courts of Appeal of Jersey and Guernsey (1986 – 1992). He was appointed a Judge of the High Court of England and Wales, Chancery Division in 1991. He currently holds judicial office as a Lieutenant Bailiff in Guernsey and a Judge of the Court of the Dubai International Financial Centre.

Dr Conteh has been Chief Justice of Belize since 2000. He is a trustee of the Caribbean Court of Justice and has served as Attorney General and in several ministerial positions including Minister of Justice in his home country of Sierra Leone. Dr Conteh has served in other capacities as an international jurist, including as the UN consultant for the restoration of the judicial administration of East Timor

Welcoming the new judges, the Acting Governor said he hoped that Cayman would benefit from their wide and varied expertise while they in turn would find their stint in the Islands fruitful. The CJ Smellie congratulated and welcomed the incoming President and Justice of Appeal and said that he looked forward to working with them for the improvement of the administration of justice in the Islands.

The two new judges join the court’s other new appointee, the Hon. Geoffrey Vos, QC. Vos was sworn in on 24 November and joined the Hon. Justice Ian Forte, who was Acting President, and the Hon. Justice Elliott Mottley, QC, for the November-December session of the court.


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Law firm blazes Zurich trail

| 16/12/2008 | 0 Comments

(CNS): The first major offshore legal firm to take the plunge in Switzerland, Appleby confirmed yesterday that its latest office has opened in Zurich. Located in Bahnhofstrasse 52, the expansion into the Swiss jurisdiction will enable the firm to extend the services it offers and provide clients and contacts in Switzerland with greater access to the range of jurisdictions in which Appleby operates, said  Huw Moses (left), Appleby’s Cayman office Managing Partner. 

“Our driving strategy is to be the leading provider of legal, fiduciary andadministration services in the offshore world. We see significant opportunities to expand our private wealth and corporate business in the Swiss market. The new office will provide our corporate, institutional and private clients with greater resources and a broader choice across the key offshore jurisdictions to suit their needs. We believe that the move will reinforce Appleby’s position as the first choice for clients investing in or through the offshore sector,” added Moses.

Appleby is one of the very few offshore firms to open in Switzerland and is the first of the major offshore firms to do so. Appleby’s expansion strategy has included a focus on establishing in major financial centres with significant institutions and private wealth. The new offices will provide clients with direct access to most of the world’s leading offshore jurisdictions, including Bermuda, the British Virgin Islands, the Cayman Islands, Jersey and Mauritius.

The new Swiss office will be led by Jonathan Vanderkar, a Partner in the firm, who has been a member of the Banking and Asset Finance Team in the firm’s Corporate Commercial Practice Group. Jonathan has extensive experience in corporate lending, project finance, asset based lending, acquisition finance and securitization. His clients include HSBC, Barclays, Bank of America, Miramax, The Walt Disney Company and Paramount Pictures. He joined Appleby in 2006 from Olswang in London where he specialised in banking and structured film financing.

he Zurich office will continue Appleby’s focus in high growth international corporate and private wealth markets, providing private banks, wealth management and other institutions, as well as European, Middle Eastern and Asian based clients whose funds are managed in Switzerland, with direct access to high level offshore services. On the corporate side the office will focus on the insurance and funds sectors to provide direct access to the firm’s specialist expertise in the Bermuda, Cayman, Mauritius, Jersey and B.V.I. markets.


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