CIFSA and government in conflict
(CNS): The government’s partnership with the Cayman Islands Financial Services Association may be in jeopardy asthe two have disagreed regarding the best way to address the issues surrounding the OECD’s grey list. The partnership was formed as a taskforce to co-ordinate the efforts of the public and private sector to address that and other continuing global attacks on the country’s financial services sector. However, CIFSA has written to the Leader of Government Business criticising the amendments to the TIA law and demanding immediate bi-lateral treaties as well as legislative amendments to the CRPL to address what it claims is a mounting crisis in the industry.
CNS has seen letters from both CIFSA and Kurt Tibbetts, who has written back to the organisation reaffirming the government’s commitment to the Tax Information Authority Law passed in December 2008. This law enables Cayman to enter into agreements with OECD countries and others when necessary without a bilateral treaty and has been hailed by government as a masterful stroke to deal with the OECD requirements. Tibbetts also stated in the letter that the government is still committed to the continued pursuit of bi-lateral treaties as well. He further noted that any amendments to the Confidential Relationships Preservation Law would not take place until the next session of the Legislative Assembly.
Writing in his relatively new role as chair of CIFSA, Anthony Travers has told government that members of the association are unanimous in their concern regarding the negative responses being received on a daily basis by clients and the move by institutional clients to take their business to jurisdictions on the so called OECD white list – Cayman’s competitors– and that something must be done immediately.
“We bring this to your attention because we are afeared that if not all immediately available steps are not taken to remedy the current position accelerating and irreversible damage will be done to the Cayman Islands Financial Industry." He states that statistical information regarding the first quarter of 2009 is already indicating that overall transaction flow maybe down as much as 50 per cent.
Travers asks government to take immediate action to implement four more bilateral treaties, as CIFSA places “no value at all” on the treaties signed under the unilateral exchange, and he says that mechanism is not yet fully recognised by the OECD. He suggests, if the law cannot be amended immediately as the House is not sitting, that government make an immediate statement of intent to repeal at least the criminal sanction part of the CRPL. He goes on to impress upon government the gravity of opinion in the sector that the industry is in serious trouble and states that the real time commercial implications are rendering the position of local financial professional untenable.
In his response, Tibbetts notes that it is not the first time Cayman has been blacklisted (although on this occasion it’s grey) and while the government is doing all it can to get on the white list he seems to indicate there is no need to panic. He writes that neither “under” nor “over reaction” are constructive. Standing by the unilateral mechanism, he said efforts were still being pursued to enter into bi-lateral agreements with OECD member states, but he did not react to Travers’ suggestion that to expedite matters the government send the agreements to OECD without the signatures of the involved countries. Tibbetts did, however, state that the government does proposes to repeal the CRPL and replace it with an access to information law and data protection law during the next legislative sitting, but he said announcements relating to this shouldbe carefully managed as he wouldnot want to see it “turn into a self inflicting wound".
The CRPL has thrown controversy between government and private sector before, as government does not see the law as a privacy law and it is understood there are concerns that any move to change it would be interpreted on the global stage as an admission that it actually is a secrecy law. However, the private sector has long said the criminal sanction element of that law goes against the government’s position that it is a gateway rather than a barrier, and it needs to be amended. Tibbetts also noted that government was dependent on CIFSA and the rest of the private sector to alleviate any concerns or misconceptions among the client community about moves in relation to CRPL and how they might be interpreted.
The government made much fanfare of the establishment of the joint taskforce and convened a special press conference on Friday, 13 March, to announce its creation. Tibbetts said at the conference he was happy that the private sector wanted to collaborate with government in the effort to get Cayman’s message out. “We in government welcome the opportunity to partner our existing efforts and resources with those from CIFSA to augment and diversify our voice on the international stage, particularly in relation to the strength, stability and contribution of the Cayman Islands financial services sector,” he said.
James Bergstrom, one of the Task Force Members present at the briefing, said it was established to build on the significant efforts and actions which have already been undertaken by various members of the private sector, as well as by the Cayman Islands Government. “We believe that CIFSA is the most appropriate organisation through which to co-ordinate these efforts. The make-up of the task force is truly a representative body of Cayman’s private sector and includes bankers, lawyers and accountants. It will also provide the Cayman Islands Government with a more focused contact point for co-ordinating its efforts with those of the private sector.”
Tibbetts stated that he would be holding an industry meeting on Wednesday of this week and hoped a representative from CIFSA would be there. However, the two letters indicate that government and CIFSA are not now necessarily coming from the same position in regards to how they feel the current crisis should be addressed, leaving the effectiveness of this taskforce in question.
Category: Headline News
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who questioned when Kurt made his statements I have attached the below links for ease of reference. I also included a few additional links to show the constant positive language used and the constant repeated warningss by the UDP members. I was actually getting very annoyed and depressed by reading the constant warnings by the UDP and the constant arrogant denials by the PPM government. It was actually pretty sickening to re-read the articles.
Please note the global crisis really kicked into high gear from around 3rd quarter 2007. I work in the financial services industry and I remember worrying about the long term viability of my job because our company was constantly re-forecasting and adjusting our budgets and planning estimates because of the obvious decline in the world economy. Then I would read the newspaper and be absolutely dumbfounded by the constant positively glowing reports from our LOGB and FS.. As usual asleep at the wheel and blaming everyone else for their lack of planning and foresight. I believe they finally caught on and had to admit to the OBVIOUS major decline by around 4th quarter 2008!!!!!!
http://www.caycompass.com/cgi-bin/CFPnews.cgi?ID=1033766
Devil in the Details,
I read through each of the articles which you kindly linked. There was a great deal of criticism of government spending by the Opposition and suugestions by the Leader of the Oppostion that the LOGB was disconnected from the reality. However, none of these articles showed the LOGB had stated that the economic crisis would not affect Cayman. The only statement which remotely resembles that is the following: “First and foremost, it is important to say that all our consultations indicate that there will not be an impact on the viability of any of our local retail banks in the Cayman Islands”. That is a correct statement; the viability of our local retail banks has not been impacted. Did you misunderstand this to mean he was saying that the economic crisis would not affect Cayman? There are other statements of the LOGB (already quoted) that suggests how the crisis would impact on our financial industry. Do you understand that you can actually create a crisis if you incite a sense of panic? Being a leader isn’t about scaring up votes.
Without the financial services industry this island would be what it was in the 30s – a nation of merchant seamen whose wives made rope. Don’t be short sighted – either initiate very stringent KYC (know your client) requirements on the attorneys who set up the funds and enforce them along with an FRA which has more than 1 person working at it otherwise the goose that laid that egg will end up on another island that does and then there will be no work permits at 19,500 dollars for partners to help pay for the Caymanian schoolkids.
If Caymanians were given fair opportunity in the financial services industry they could pay for their own schoolkids.
Your comments disgust me…and that is a rather strong term for me to use so publicly. Cayman’s economic "miracle" (to borrow Ms. Lucille’s phrase, before someone says am her – I assure you I am not), is built on many interalated and connected conscious decisions and realities for the Caymanian people. Lest, I let you get away with degrading the life experiences of our fore-fathers, let it reflect taht hard work and harder times took or takes nothing from the intrinsic loving, caring, hard-working visionaries that they were and conversely we are now as a people. Our humble beginnings are not frowned upon, no they are celebrated by Caymanians – mosquitoes and all. Yes, I know we would find it hard to re-adjust (if we had to…God forbid), but know that we wouldbe just as resilent and visionary and will build some new invention, that would have the likes of "drift-wood" Johnny come lately types like yourself here looking for a better life. Yes we understand the fiancial services industry’s GDP contribution but make no mistake: caymanians were the pioneers and foundation setters for this Industry…we worked in partnership with those who may have had some resources but the laws that governs and regulates our industry were piloted through our honourable parliament by Caymanians. Now, know this, my response was not meant to insult or degrade the good and hard working expats in this industry who is respectful of my country and its people and our past….but THAT drift-wood made me Wex….Vex for you driftwood…we call our ws Vs…..cha-man.
What can they do for us these are the same people who are involved with getting us on these list in the wonder years when cash money was king now they comeback as saviors Yakoff Smirnoff said it best "What a Country" Most depressing for Cayman I do applaud all attempts to remedy this situation its too late however.
I don’t agree with a lot of things that this government and its predecessor’s have done, but I take it as a very good sign that this government disagrees with CIFSA from time to time. We have all seen over the past months what happens when governments allow people working in banking and finance to pursue short term profit at the expense of the rest of us. Perhaps the same warnings should be given in relation to people retired from the financial services sector and looking for relevance to keep their money company.
I am not PPM or UDP but I have heard from my knowledgeable friends in the Financial Industry that this government has been really unhelpful and inward looking about the financial industry. Our top Caymanians in the industry are saying the PPM has been too obssessed with the local Caymanian "cant get a job" thing (because they’re just not up to it) and has neglected the overseas situation. The former UDP lot don’t get much credit either tho Mac seems to understand the need for these hated foreigners better than Kut, Alden the Terrible, Arden the Horrible and co.
what cns has got wrong is this…there was never a joint task force by govt anbd cifsa in the first place.
In fact the PPM used this as a media opportunity. the cifsa special commitee was setup and funded by private sector efforts only. it was only at the last minute before making the announcment that the idea was conjured up for there to be this joint announcmenet. this joint announcmenet is yet another sign of the insistence by some to hold on to that "public private sector" partnership facade despite the fact that this has not worked at all for years…
this article also shows that PPM is disconnected from the financial services industry
The PPM fell asleep at the wheel; there was no need for Cayman to end up on a gray list. If they had been paying attention and executing the relevant agreements over the years we would be on the envious white list.
The Leader of Gov Business further demonstrated his lack of foresight and knowledge of the local and global economy when he announced that the global recession would not affect the Cayman Islands. My gosh, what was he thinking? Even I could tell that we would be in some serious trouble. Then to make matters worse, he went on to wrongly calculate down the very dollar the significance of one of the failed US institutions (can’t right now recall the correct one).
The PPM is totally disconnected and demonstrates that they don’t have a clue about global affairs and what will impact these isalnds.
"The PPM fell asleep at the wheel; there was no need for Cayman to end up on a gray list. If they had been paying attention and executing the relevant agreements over the years we would be on the envious white list".
1. All British Overseas Territories are on the grey list (note the spelling). Does that mean every OT was "asleep at the wheel"?
2. The commitment to enter into these agreements was made in 2000. Please list the agreements that the UDP Govt entered into. Answer: NONE. Does this also mean that the UDP were "asleep at the wheel"?
Don’t be naive. There are geopolitical factors at play in this. Russia after all is on the white list.
"The (LOGB) announced that the global recession would not affect the Cayman Islands".
That is an oft-repeated UDP charge but sounds very unlikely. When and where did he announce this exactly? Can you cite an article? news release? Or is Mr. Tibbetts being deliberately misquoted. I do see a quote from 9th October 2008 commenting on the global economic crisis:
"It is well understood by everybody that Cayman’s economy does not operate in isolation and that we are not immune from the global volatility and uncertainty…. In relation to the rest of the financial services sector, the areas that are expected to suffer most are those connected with hedge funds and structured finance. Current global market conditions in the hedge fund arena are characterized by heavy redemptions, suspensions and re-structurings coupled with much-reduced (although not zero) new fund formations. In the structured finance arena there has been severe drop-off in deal flows as a result of the freezing of the global capital markets. This situation is not expected to significantly improve until 2010. We are already seeing an impact on the public sector side, with new company registrations Jan-Sept down 10% over the same period in 2007. By some expert estimates, the number of hedge funds globally could contract by 20-30%, which will obviously affect Cayman’s book of business."
PPM – Negotiations
Here is an example of how PPM Negotiates with its partner (CIFSA):
Tibbetts stated that he would be holding an industry meeting on Wednesday of this week and hoped a representative from CIFSA would be there.
We are so heading for Chapter 11 with PPM.
Mr. Travers is clearly aware that with the House dissolved and the General Election 23 days away any commitment by the Government to repeal the Confidentiality Law would have no value whatsoever. He is also aware that in the time given and the election campaign begun in earnest the Govt. would be in no position to negotiate any further bilateral treaties. He will also know that key OECD members such as Germany have given the unilateral mechanism their approval and the mechanism is currently under review by the OECD. In other words, the timing and tone of the letter is very odd and appears to be little more than a political ploy designed to embarrass the Govt. on the eve of the election. Sounds like "payback" for keeping him out of the limelight for the past few years.
PPM – Doom!
What does the Cayman Islands and Hampstead have in common if Kurt Tibbetts remains the LOGB?
Well, while you ponder that read the below caption taken from CNS article above:
"Writing in his relatively new role as chair of CIFSA Anthony Travers has told government that members of the association are unanimous in their concern regarding the negative responses being received on a daily basis by clients and the move by institutional clients to take their business to jurisdictions on the so called OECD white list – Cayman’s competitors– and that something must be done immediately."
PPM – Another failure!
Another failure of the PPM.