Archive for May, 2009
Impact of EU regulations on Investment Managers
On 29 April the European Union published the text of a draft Directive which would, if approved, lead to the regulation of alternative investment fund managers in the EU. This sounds incredibly boring. However, the scale of Cayman’s funds industry and its importance for the local economy mean that any proposed regulation in this area will without doubt affect Cayman.
The EU’s stated motives for the draft Directive include preserving the stability and integrity of European financial markets and protecting investors. Fund managers are already regulated by the individual EU member states, but the European Commission considers that national regulation requires greater cross-border coordination to be effective.
The Directive would require the authorisation and regulation of managers who are domiciled in the EU and who manage alternative investment funds (including hedge funds, private equity funds, commodity funds and real estate funds) with a combined value exceeding €100 million.
All such managers will be required to demonstrate that they are suitably qualified to provide management services and will be required to provide detailed information on the planned activity of the manager, internal arrangements with respect to risk management and arrangements for the valuation and safe-keeping of assets and audit arrangements. Such managers will also be required to hold and retain a minimum level of capital.
At the investment level, managers will be required to report on a regular basis on the principal markets and instruments in which they trade, their principal exposures, performance data and concentrations of risk. Additional disclosure obligations will apply to managers managing leveraged funds and controlling stakes in companies.
From a Cayman perspective, the effect ofthis aspect of the regulation should be limited. It is possible that increased costs and inconvenience may deter some new managers from launching fund management businesses, but this should not be significant.
The Directive also provides that only managers established in Europe can provide their services in Europe. So for example US managers will need to establish a European presence if they are to manage Luxembourg funds. This may slightly reduce the number of investment management vehicles formed in Cayman.
More importantly for Cayman, however, the Directive provides that only funds domiciled in Europe can be marketed by EU authorized managers in Europe. As more than 9,500 of the world’s hedge funds (not to mention private equity funds etc) are domiciled in Cayman, this could have a significant impact on Cayman’s funds industry. On the face of it, managers may be faced with the choice of forming a fund in Europe and being able to operate largely as they wish, or incorporating the fund in Cayman and being unable to offer the fund’s interests in the world’s largest economic bloc.
The good news is that there are at least four reasons why the position may not be as bad as it seems.
First, for the time being and for a three year period after the Directive comes into effect, EU authorised managers will continue to be able to market Cayman funds under existing rules in the individual member states. So nothing much will change for the next few years, although when the Directive comes into force there will be a competitive advantage for fund domiciles such as Luxembourg and Ireland over Cayman as EU funds will be marketable in countries like France and Italy while under current rules Cayman funds will not.
Secondly, the draft Directive includes a passporting mechanism which will commence three years after the Directive takes effect, under which non-EU funds may be marketed in the EU provided that certain conditions are fulfilled. One of the requirements is that there must be a tax information exchange agreement between the territory where the fund is domiciled (eg. Cayman) and the EU country where the fund is to be marketed. Leaving aside the question of why it is considered appropriate to introduce a tax-related requirement into legislation regulating fund managers, this obviously increases the importance of the Cayman Islands Government’s efforts to negotiate tax information exchange agreements with EU member states. It is not clear whether Cayman’s unilateral mechanism would satisfy this condition as drafted.
Thirdly, the Directive is not expected to come into force until 2011, and even that assumes that political approval of the proposal is achieved by the end of 2009. So Cayman’s funds sector, and the international fund management industry as a whole, will have some time to adapt. It may be, for example, that the common master-feeder structure will be modified so that in addition to a US feeder fund for US investors, an EU feeder will be added for EU investors to sit alongside a Cayman feeder for non-US and non-EU investors.
The final cause for modest optimism is that almost everyone hates the draft Directive. The European Commission itself has acknowledged that "it is expected to be the object of intense political discussion and negotiation". The draft was rushed through an abbreviated consultation period and has been attacked by the French Finance Minister and others who consider that the proposed draft does not go far enough, and at the other end of the spectrum by many in the funds industry who regard it as, defective, disproportionate, inappropriately political and protectionist.
It is clear that there will be spirited debate about the draft Directive in the months to come and Cayman should once again expect to be regularly referred to with varying degrees of antipathy. Although Cayman will have little influence over the outcome, the private sector and the Islands’ political leaders need to respond and adapt effectively to seize any opportunities that may arise and to keep Cayman at the pinnacle of the global investment management industry.
Court house divide emerges
(CNS): Both Stanley Brodie QC and Anthony Akiwumi kept up the pressure on court staff today, the fourth day of Justice Priya Levers’ tribunal, as they sought to raise doubts about the full truth ofthe statements they had made against the Judge. Offering possible alternative motivations and exposing inconsistency in the statements of court house witnesses, her legal representatives also revealed divisions among the court staff as they presented contrary statements from other members of the judicial administration.
The day’s proceedings (11 May) began with Elizabeth Webb, who returned to the stand and faced further questions and challenges from Brodie. He questioned Webb again over details and dates regarding the Leticia Barton letter to Cayman Net News and various inconsistencies and differences across the statements she had given on the issue at different times. Brodie also raised the issue that Levers had begun to have concerns with her work. He asked how it made her feel and she admitted she had been upset. Brodie then suggested that she may have had an ulterior motive for making accusations against Levers.
Brodie then challenged Webb’s statement that Levers had made her send a copy of Justice Dale Sanderson’s expenses to an attorney outside the court via email. He pointed to the fact that the attorney in question had denied ever receiving such an email and that Webb herself was unable to produce the original email but, instead, one that she had forwarded to herself. “This is how it looks now but it wasn’t like that,” Webb said, adding that she had forwarded it to herself from an old address but there had been an original one which she insisted was sent to the attorney despite the denial.
He than moved on to the accusations that she had seen a marshall in the court, Eric Geenidge, hand Justice Levers a copy of a petition going round the court house from some members of the staff dissatisfied with the way the chief justice was managing things. Webb said she had seen the petition later in the day in the justice’s garbage. Brodie, however, pointed out that Geenidge had testified that he had handed Levers a document that day but the envelop contained his pay slips as he had some queries over his pension, which Levers had addressed for him with the people in pay-roll.
“I saw the petition in the garbage and I saw him give her a document, so when I saw the marshalls’ envelop and the petition in the garbage I thought he had given her it,” Webb said. Brodie then noted there was a statement submitted to the tribunal signed by 13 witnesses that Levers had nothing to do with the petition and suggested that her evidence was both untruthful and unreliable.
As the morning moved on, Brodie questioned more staff from the courts and it became apparent that there were certainly differing views among those in the court over Levers’ responsibility for the series of critical letters in Net News, criticisms of other judges and her behaviour in the court room. He cited contrary witness statements from some court staff countering the allegations and began to reveal divisions among the staff itself across the court house.
Questioning Patricia Palmer, the chief justice’s secretary, who had also told him she suspected Justice Levers was the author of the Net News letters, Brodie asked if her view on that was speculative and she said it was. However, she said the reason she suspected that Levers could be the author was because the content of the Leticia Barton letter appeared to be very similar to opinions Justice Levers had shared with her during a conversation in her chambers. She also noted, however, that the chief justice had dismissed her suspicions when she shared them with him as he believed the author was someone else.
Lorraine Hennie, who became Levers’ secretary after Webb moved to another part of the judicial administration, who was the third witness of the day, recalled incidences where Levers had spoken ill of other members of the judiciary. She told the tribunal that the judge had tried to draw her into critical conversations about Justices Alex Henderson and Sanderson as well as the chief justice and accused her of being involved with the petition.
Hennie related an incident during her interview for the post as secretary to Levers where, she said, the judge had inferred a critical issue of the CJ without directly naming him. However, the other staff members from the court house on the interview panel at the time had submitted statements contrary to Hennie’s position, which Akiwumi probed her on. Hennie remained adamant that the justice had asked her awkward questions regarding the CJ, whom she had worked for in the past.
Hennie had also accused Levers of hosting favoured attorneys in her chambers without the opposing counsel present to discuss cases, despite the fact that the door was closed and the accusations was denied by the attorney she said was involved. Hennie then became angry when Akiwumi quizzed her about why she left the chief justice’s employ, as he suggested that she had told people she was unhappy. Hennie accused Akiwumi of being rude to her and said she left for personal reasons following Hurricane Ivan. It was also revealed that in her role as Levers’ secretary she too had breached the justice’s confidentiality.
In the afternoon, the tribunal heard video evidence from a former Canadian plaintiff who had been unhappy with a Levers ruling in family court but had also said that the justice was disparaging towards her. What disparaging remarks were made were not stated, but the witness said she had discussed the complaint with Sanderson. She acknowledged that a judge in Canada had upheld Levers’ ruling and she had never followed through with an appeal for reasons of cost. The question over whether the witness was upset with the justice’s behaviour towards her or the result of the ruling remained.
Lorna Allen, a clerk in Levers’ court on a daily basis, then took the stand and presented a very different picture of her court. She disputed the description of it as a bullying and traumatizing experience offered in earlier statements by Carol Rouse and Karen Myren. She said Levers had been kind to her on many occasions and counselled her when she suffered from bouts of depression.
Allen said the laughter Rouse had referred to in Levers’ court was because of a juror falling asleep and snorting, which was rather unusual for the court room, but she had never seen Justice Levers laughing at witnesses. She also related an occasion when she said Levers had “uncharacteristically snapped” at her in court but she had apologised in front of the court and later privately. As a result of that she confirmed that Rouse had asked her to make a complaint but she said she did not. Allen said she had not heard Levers criticize other judges or make any of the accusations contained in the Leticia Barton letter.
Yasmin Ebanks, the listings officer, however did refer to Levers speaking ill of her judicial colleagues and said she too suspected Levers of writing the letters to Net News as a result of the information she received from Webb, including the incident relating to the suspected Leticia Barton letter. Although when questioned Ebanks could not define how she was convinced by Webb given the limited information, but she said she had no reason to doubt her friend. Going through her statements she also recalled a time when the judge had called her when she was out shopping. Levers asked her if she wassitting down because she had something shocking to reveal, “She told me that Henderson and his wife were …..” at which point Ebanks was silenced by Otty.
The afternoon concluded with a number of housekeeping matters which concerned the possible appearance of Justice Sanderson before the tribunal. Exchanges between the attorneys alluding to statements before the tribunal judges made it evident that the legal teams representing the tribunal itself and those representing the judicial administration would not be happy to see him appear and even less happy for him to be questioned on the issues Brodie had raised. However, Brodie pushed for Sanderson’s appearance as he said it was necessary for him to question him as the accusations of rumour made against Levers involved Sanderson.
Sir Andrew Leggatt, the tribunal chair, said that he would confer with tribunal members Sir Philip Otton and Sir David Simmons and offer his ruling tomorrow (Tuesday 12 May).
Alicia Keys to perform at Jazz Fest
(CNS): This year’s Jazz Fest has received a boost with the confirmation of international R&B superstar and nine-time Grammy award winner, Alicia Keys, as the headlining performer. Tourism Minister Charles Clifford announced today (Monday 11 May) that Keys will be performing her extremely popular signature style of singing and jazz piano on 5 December, the final night of the 3-day festival. Additional performers at the sixth annual Cayman Jazz Fest, to be held December 3-5, include two-time Oscar and Grammy award winner Peabo Bryson, jazz saxophonist and singer Kirk Whalum and popular R&B and soul singer Keith Sweat.
Minister Clifford said, “The signing of Ms. Keys, who is at the top of her game and launching a new album this year, along with the other seasoned international performers, takes Cayman jazz fest to the next level and should prove to be a big draw for visitors and local residents. This, coupled with the fact that we are only just in May and our travel packages are already in place, will enable us to get an early start on promoting the festival in order to maximise visitation. Local artists will also be confirmed in June giving them greater time to prepare their performances for what is shaping up as Cayman’s best jazz fest ever. I can assure everyone that jazz fest this year will be an amazing event.”
Acting Director of Tourism Shomari Scott added that the Department of Tourism is finalising the rest of the line-up and will provide additional updates in the weeks ahead.
Cayman jazz fest is a partnership between the Department of Tourism and BET Event Productions. Paxton Baker of BET commented, “This is a big year for BET and Cayman. BET is launching a new network in October called Centric, which will be distributed in 45 million homes, and with Alicia Keys as headliner for this year’s event, the Cayman Islands and Alicia will be a prominent part of our Channel launch. Our television campaign will be extensive including a partnership with Alicia’s record label to promote the Cayman Islands, the festival and Alicia’s 2009 CD release.”
To receive updates on Cayman jazz fest, visit www.CaymanIslands.ky/jazzfest
Senior beaten in his home
(CNS): UPDATED 12:30pm — A 67-year-old man suffered serious injuries on Sunday after he was allegedly beaten in his East End home by two robbers armed with a baseball bat. The victim was taken to hospital and has been admitted to the Surgical Unit suffering from serious head injuries and injuries to both arms. In a separate incident, West Bay police have charged 27-year-old, Jonathan Mellard, of Willie Farrington Road, with one count of robbery after an incident in which a man said a robber put a razor blade to his throat and demanded he hand over the alcohol he was carrying. Mellard will appear before magistrates today, Monday 11 May.
Detectives in Bodden Town are investigating the East End robbery, which was reported to police at 10:30pm Sunday, 10 May. The 911 Emergency Communications Centre receiveda call from a member of the public reporting that a man had been assaulted in Sea View Road. Officers responded to the scene and found that a 67-year-old man had suffered some serious injuries. He told officers he had returned home and found two men in his house. He says the men assaulted him with a baseball bat, took his wallet and ran from the location.
Scenes of Crime Officers processed the scene and some items were recovered, including the suspected weapon involved. Detectives would like to hear from anyone who was in the Sea View Road area who may have seen the two offenders. Anyone who can help should contact Bodden Town CID on 947-2220.
In West Bay, police arrested a 27-year-old man on suspicion of robbery following an incident at the Batabano Plaza on West Church Street. At around 8:30pm on Friday, 8 May, the victim called police and stated that he had been approached by a man outside the plaza who had put a razor blade to his throat and demanded he had over the alcohol he was carrying. The man, was not seriously hurt in the incident, said he gave the offender some bottles of beer. Shortly afterwards, police arrested the suspect on suspicion of robbery and recovered the suspected weapon used. He remains in police custody at this time.
Anyone with information about crime taking place in the Cayman Islands should contact their local police station or Crime Stoppers on 800-8477 (TIPS). All persons calling Crime Stoppers remain anonymous, and are eligible for a reward of up to $1000, should their information lead to an arrest or recovery of property/drugs.
Garden snails are evolving slower metabolisms.
(BBC): Natural selection is favouring snails with reduced metabolic rates, researchers in Chile have discovered. It is the first time that evolution has been shown to select for this trait in individuals of any species. Snails with lower metabolisms are at an advantage because they havemore energy to spend on other activities such as growth or reproduction, the researchers say in the journal Evolution. Roberto Nespolo and Paulina Artacho of the Southern University of Chile in Valdivia examined a long standing biological hypothesis known as the "energetic definition of fitness".
Foster’s takes green steps
(CNS): In an attempt to reduce its environmental impact on the local landfill, Foster’s Food Fair IGA has secured a contract with a US-based Cox Sales And Service Inc to recycle its used shopping carts. On 17 May, with the support and assistance of Seaboard Marine and Cayman Island Port Authority, the company will be shipping a 40-foot container of used shopping carts to be refurbished and reused in the United States.vTypically the life span of a shopping cart is approximately 4 years, after which the shopping carts are generally destined for the local landfill.
A release from Foster’s Food Fair, says it is the first major supermarket on island to initiate this type of environmentally progressive program.
Upon arrival in the United States, the shopping carts will be cleaned and stripped down, dipped in duplex Nickel coating to prevent corrosion, plated in Chrome or Zinc then finished and restored to be resold to smaller stores at a reduced price.
“We are excited about this new initiative. We recognize we can adopt new practices to make our company more environmentally friendly and this is another step. This is one more way we can show “We Care” and we are looking at alternative measures to help” stated Woody Foster, the Managing Director of Foster’s Food Fair IGA.
Rotary Central Annual Science Fair
(CNS): A range of projects covering all aspects of science including life sciences, food/health, physics/chemistry and earth sciences was on display at the annual Rotary Central Science Fair, held on 2 May in the auditorium of the Cayman Prep and High School. There were 16 competitors representing 5 schools. The overall winner for presenting the best project was Brandon Johnson, aged 13, from Leading Edge High School, who received a cash prize (held in trust towards his future college education) of $3000 and a laptop computer.
Kelly Sun from St Ignatius, Diarra Hoyte from Leading Edge, Evan Forth from Cayman International School, and Michael Sun from St Ignatius were all also awarded first prizes of $3000 in trust, according to a Rotary release.
The Science Fair will be back next year to encourage secondary school pupils to take a personal interest in science and the world of work that science supports.
Rotary Central would like to thank all those who contributed to the success of this event including all their sponsors and their project mentors. Special thanks to Rotarians Walt Mustin and April Lewis who organized the event.
Preparing for hurricanes
(CNS): The Public Works Department (PWD) and National Roads Authority (NRA) will be carrying out their annual hurricane preparedness drill on Wednesday, 13 May, in preparation for the 2009 hurricane season, which will include putting up hurricane shutters going up on numerous Government buildings and hurricane shelters in Grand Cayman. “This exercise duplicates the activities that will take place in the event of a real hurricane,” PWD Director Max Jones explained. “Most statutory authorities are also participating in the exercise by securing their own facilities.”
All PWD employees and several NRA staff members will take part in the exercise. Organised into teams, they will shutter and protect more than 100 government complexes, buildings and shelters. Standby generators at shelters and key government buildings will also be evaluated and started. Cistern water levels will be checked and topped up where needed.
On completion, inspectors will assess the shelters and buildings to ensure that the facilities are adequately secured.
“Bring back the Brac” clean-up
(CNS): Around 100 people on Cayman Brac gave up their Saturday morning this weekend to take part in the Chamber of Commerce annual clean-up on the island most affected by Hurricane Paloma in November, called “Bring Back the Brac”. The volunteers tackled some of the mess left by the storm, on land and sea, as well as discarded beer bottles, cans and trash along the roadside. James Moses, Project Coordinator for Phoenix Construction, who organised the Brac clean-up, said this was a community effort, with volunteers aged between 7 and 70.
An anonymous expat donor pledged $1000 to the Cayman Brac High School (CBHS), to be used at the discretion of the student volunteers, if 30 or more high school students participated in the “Bring back the Brac” project, and at least 35 showed up for work Saturday. Each of them will receive a certificate of good citizenship and appreciation.
Also participating were members of the Rotary Club of Cayman Brac and two political candidates – Moses Kirkconnell and Lyndon Martin. Volunteers came from all walks of life and from many nationalities that live and work on the Brac with the common goal of improving the community they live in.
“I believe every person involved not only worked hard, but they also enjoyed the work they were doing and in the end were also proud of the effort,” said James Moses. “We cleaned up the island, promoted community responsibility, and everyone relearned the value of not polluting.”
Volunteers from local dive operations removed garbage from the sea, while others got busy on land, from east of the Coral Isle Club all the way to the western end of the island on the south side, and from Cotton Tree Bay to the Old Airport on the north side.
After the clean up, Moses Kirkconnell provided lunch for the younger volunteers at Scott’s Dock, while Captain’s Table Restaurant and several individuals laid on a mid-afternoon lunch for the adults. Other sponsors include Fosters Group, Caybrew, Scott Development, All Pro Engineering, Reef Divers, Indepth Watersports, Department of Environmental Health, Kirkconnell’s Market, Billy’s Supermarket and The Market Place.
Secretary says Levers wrote “Net News” letters
(CNS): During the third day’s hearing of Justice Priya Levers’ tribunal her personal secretary accused the judge of not only being the author of letters to the local press which contained serious criticisms of senior members of the local judiciary under a pseudonym, but of speaking ill of her judicial colleagues and of coveting the role of the Chief Justice. When quizzed, Elizabeth Webb told the tribunal she had reached her conclusions for a number of reasons including the content of the judge’s private correspondence that she had read and copied, and because she saw a fake signature on a hand written letter on the judge’s desk.
On Saturday morning, Timothy Otty QC (above), representing the tribunal, took Webb through the various statements she had submitted accusing the judge of being the author of letters to Cayman Net News but in particular the one signed by a Leticia Barton, which appeared in an edition of the paper in July 2007. Otty also asked Webb, who has been an employee of the courts for some 14 years and was previously a secretary to Justice Sanderson, to explain what she meant when she stated that Justice Levers had spoken badly of her judicial colleagues.
Webb told the tribunal that Justice Levers would criticize Justices Sanderson and Henderson for smoking and drinking coffee on the street, that she complained about the expense of bringing a judge to the jurisdiction from Canada, and that Magistrate Margaret Ramsey-Hale would sometimes go out drinking and have to be taken home by one of the court marshals. When asked where the exchanges took place she said they were between the two of them in the Justice’s chambers.
Moving on to the question of the letters, Otty asked why Webb had concluded that Justice Levers was the mystery author. Webb said that Justice Levers had asked her to make a folder and keep a copy of the letters that were being published and that she began taking a greater interest in Net News when the letters started to appear. She then explained why she believed Justice Levers had written the particularly damning letter by Leticia Barton.
“It was about 2:30 and she was talking to her son on the phone and asking him to type a letter while handing it to me as though she wanted me to scan it,” she said, explaining that afterwards the judge had put the letter back on her desk, saying that each time she asked children to do something they did not want to do it and went to bathroom, and she then asked Webb to call someone.
Webb said that while making the call she saw the letter in the justice’s handwriting addressed to "the editor" and at the bottom it was signed Leticia Barton. “I was nervous when I saw it as I couldn’t believe what I saw, I couldn’t believe she would be publishing that in the newspapers,” Webb said she then began thinking how to get a copy. Otty asked if Webb had seen the content and she said no, so he questioned how she was able to form the view that it was about the judiciary. Webb explained that she suspected that it was because of the previous letters and that it had a fake name.
Otty then asked how when the letter was published she was certain it was the letter she had seen on Justice Levers’ desk and how she had seen it, as according to other witness statements very few copies of that paper ever made it to the news stand because the issue was pulled. “I am sure I saw it,” she said.
When questioned by Stanley Brodie, QC representing Justice Levers, Webb revealed that after this event with the letter she began copying the judge’s private correspondence whenever it contained information about the judiciary to give to the chief justice, including the contents of Justice Levers’ last wishes.
Brodie asked if Webb felt it was a breech of confidence for her to copy a confidential letter written by Justice Levers to her colleagues about arrangements for her funeral and in the event of her dying. “Did you not regard this as very private in nature?” Brodie asked. In response Webb said: “But there was stuff in it about certain people in the judiciary, so I had a right to copy it.”
Brodie continued: “She was saying there were certain people she did not want at her funeral, do you accept that was a breach of confidence?” Webb appeared to indicate that maybe it was. Brodie also questioned why she had taken photos with a mobile phone of notes made in a small pad which Webb said she had found in Levers’ car. Webb said she believed the notes were made by Justice Levers as a result of a psychic reading making predictions about her future.
“When I first started working with her she told me she believed in card readers and she showed me a note that she was going to work with someone named Webb,” she said. She also revealed that Justice Levers had told her the psychic had predicted she would get a kidney from someone in a red car and Webb said she believed the note to be another revelation. “When I saw this note it had CJ on it so I copied it.”
Brodie explained that the note was not a recording of a psychic reading but merely reminders tothe judge to do certain things — one of which was to inform the Chief Justice (CJ) that she needed to take leave to visit her husband in Jamaica as he was unwell. He asked Webb if she copied the note because she believed Justice Levers was after the chief justice’s job and Webb said she had. “Yes, I still think that,” she added.
Moving to the letters written to Net News and in particular the one supposedly penned by Leticia Barton, Brodie questioned how Webb had reached the conclusion she had given because at the time the name would mean nothing to her, only gaining significance in hindsight. He also produced sample letters on several pages which Justice Levers had written on the same size paper as Webb had said the letter she had seen had been written on. The sample letters showed it would not have been possible for the judge to have written the same letter as published in Net News on one sheet in the manner Webb had described in her statement. Webb however, insisted she had seen a single page letter signed as Leticia Barton.
He said that given her admission she had only seen the words ‘the Editor’ and ‘Leticia Barton’ and not the content he failed to see how she, at the time, could know what it was and then to relate to her colleague Yasmin Ebanks that the next letter to appear in the newspaper saying bad things about the judiciary would be signed this way. He said it was more likely that she concocted the story after the publication of the letter in the newspaper. “It is a complete fabrication,” said Brodie. “None of your evidence makes any kind of sense.”
As the proceedings concluded for the Saturday session Brodie informed the tribunal that he would continue questioning Webb on Monday morning.
More on the tribunal:
Court staff behind allegations
Tribunal hears prosecutor’s complaints of Levers