Archive for September 6th, 2009

Peer review will vindicate the Cayman Islands

Peer review will vindicate the Cayman Islands

| 06/09/2009 | 2 Comments

(CNS): Following the OECD meeting of financial chiefs in Mexico last week, Angel Gurria, Secretary-General of the Organization, has said there is increasingly "nowhere to hide" for tax cheats and that a peer review system would be introduced to ensure tax havens comply with international treaties. Anthony Travers, chair of CIFSA, said that far from being a problem for the Cayman Islands this would show that the jurisdiction is not the hiding place for potential tax revenue that G20 nations think it is and force the OECD to admit its real agenda of a one-size worldwide tax system.

Following the meeting, Gurria said that while much had been achieved because of the work of the OECD there was still more to be done to ensure “a sustained recovery” from the global financial crisis. When it comes to tackling global tax evasion, Gurria has said a central council will be introduced to make sure members are sticking to the rules, along with a peer review system of the level of compliance in tax issues, both of which will be discussed in detail at the next G20 meeting.

Anthony Travers, Chair of the Cayman Islands Financial Services Association, said that the proposed peer review will make the OECD face an inconvenient truth that will reveal its position as having been insupportable. “The statistical record going forward will show, as indeed it has in relation to the number of enquiries received from the US under both the 1990 MLAT and the 2001 Tax Information Exchange Agreement, that their allegations that the Cayman Islands were a tax haven and a base for tax evasion were no more than baseless propaganda,” Travers told CNS.

He explained that, while it was to be expected that the OECD would congratulate itself on thinking that its pressure on jurisdictions such as Cayman to sign specific types of treaties had changed the global position on tax revelations, it was misplaced.  “What the OECD has achieved in the past twelve months is to secure, in its particular form, a replication of transparency treaties,” he said. Travers noted that as far as Cayman is concerned all the Tax Information Exchange Agreements (TIEA) have done is create arrangements for tax transparency in another form when mechanisms already existed.

Travers said if Gurria was right that the world for tax cheats was changing, it was down to the actions of the US and German governments in jurisdictions where there is secrecy such as Switzerland and Liechtenstein. “The breakthroughs in tax transparency with the tax haven jurisdictions, which have relied on bank secrecy as the basis for their banking model….came about not from the OECD initiative but from covert operations of the German Treasury and the IRS action against UBS,” the CIFSA chair said.

More importantly, he said, the G20 countries should hold the OECD to account when the “peer review” and other compliance enforcement measures demonstrate the transparency in the Cayman Islands. He said there will be no evidence whatsoever of the ‘missing billions” and therefore no increase in tax revenues to their domestic treasuries.  Travers criticized what he said was the problem with the “Wonderland treaty world that the OECD inhabits” which he said was in sharp contrast to the real world of tax evasion given what was going on in Hong Kong, Shanghai, Macao, Panama and Singapore where nothing has changed.  

While the bilateral treaties signed by the Cayman Islands and recognized by the OECD provide precisely the same access as did the Unilateral Treaties which it did not recognise, Travers said new initiatives must now be directed at the jurisdictions which have not thus far paid even lip service to transparency. “One wishes the OECD good luck on its mission to Beijing. In circumstances where the Chinese economy is propping up the excessive borrowing of the US and Europe,” Travers said, “the OECD will need a new song sheet.”

He believes, given the revelations to come, further pressure on the Cayman Islands would be difficult to maintain. “The OECD emphasis on peer review and compliance is a cul-de-sac of blind hope and fundamental misunderstanding over reality.”  Travers stated that Cayman has a first class infrastructure for responding to all manner of regulatory, criminal and tax related enquiries with a demonstrated track record of compliance.

The CIFSA chair suggested that with the moral shame of tax evasion stripped out of what was always a deliberately conflated argument, the OECD will have to admit its agenda of global one-size-fits-all high rate of tax. “But here the weight of international economic opinion is firmly against the OECD proposition,” Travers stated. “The right to fix tax rates and the right to compete for capital flows is regarded by all sovereign countries as an inalienable right.”

With the OECD dependent for its existence of funding from the leading European and US economies its support may begin to dwindle for the advancement of what he said was its “not so hidden agenda.”


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Chamber rejects tax but backs local assets sale

Chamber rejects tax but backs local assets sale

| 06/09/2009 | 10 Comments

(CNS): Cayman’s local business body has said it does not want to see the introduction of direct taxes as a way out of the country’s current economic crisis and backs plans by the current administration to sell government assets instead. The Cayman Islands Chamber of Commerce said this week that it had had an “extremely productive” meeting with government and hoped all efforts would be made to attract business through Cayman’s long successful system of indirect taxation without the need to introduce income or property taxes. 

The Chamber said that controlling expenditure and reducing debt formed part of the discussion as well as a need for an independent review of all government services, departments and statutory authorities. To reduce government debt, the chamber recommended identifying assets that can be sold outright or offered for investment through privatization or an initial public offering (IPO).

“By introducing this approach, local residents and businesses will be able to become direct shareholders of several important national assets and government would reduce its direct operational costs,” the Chamber said. 

It urged government to control costs, reduce the national debt and raise revenue from areas that would have minimal impact on business development and residents.  The Chamber proposed a number of possible new revenue sources including – — returning stamp duty on property to original rates of 6% and 7.5% effective 1st December; Introducing a national lottery; allowing Sunday Trading which will increase the collection of customs duties and will provide greater convenience for visitors and residents; introducing a fee on individual money transfers out of the country; legislation to access dormant accounts from retail banks; and reviewing miscellaneous fees and fines.

The Chamber said it had expressed its opposition to any additional revenue measures without a definitive plan to cut costs and reduce debt, any additional general corporate or any form of taxes on income, interbank transactions, payroll or property.  It also said it backed the development of cruise berthing and a mega yacht facility, relocation of the cargo facilities, medical tourism development, convention facilities, waterfront redevelopment in George Town and attracting the reinsurance sector and additional private trust business.

The pro-business body also said itwanted to work with government to develop investment policies that would create a red carpet approach to attracting new investment to the Islands and a revision of immigration policies.

The Leader of Government Business McKeeva Bush said that the Chamber represents hundreds of local businesses so it is important for the government to seek its views over the fiscal situation.  “The government intends to meet with the Chamber regularly to discuss issues candidly, to share ideas and to develop strategies to improve the economy, create new jobs and business opportunities for the Caymanian people,” Bush stated.

The chamber said it welcomed this level of cooperation and pledged its full support to work with government to develop solutions to the current economic challenges that face the Islands. President Stuart Bostock said members were experiencing challenging economic times, but he said with the challenge came opportunity. “This is an ideal time to introduce novel approaches to new business development and to reform the way in which the public sector operates,” Bostock urged. “We must all accept that in order to address some of the challenges that are facing us we must work in partnership and accept that there will have to be some sacrifices by businesses and residents. The Chamber is committed to working with the Government to bring about these changes.”

Government and the Chamber leaders said they were confident that the strength and resilience which has contributed to “Cayman’s significant growth over the past 40 years will continue well into the future.”

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UK cops fixed on ‘burglary’

UK cops fixed on ‘burglary’

| 06/09/2009 | 28 Comments

(CNS): One of the original members of the undercover Operation Tempura team revealed how the limited remit of a scoping study had been widened into a full scale investigation based on their interpretation of the entry into Cayman Net News by John Evans in September 2007. Detective Inspector Simon Ashwin of Scotland Yard, who was SIO Martin Bridger’s deputy, hesitantly admitted during the trial of Lyndon Martin on Friday that he and Bridger had overall responsibility from the beginning of Operation Tempura and all that flowed from it.

Giving his witness testimony via video-link from the UK, Ashwin acknowledged that what they considered a “burglary” led them to move the investigation on. He told the court that he and Bridger had what he described as “some consternation” regarding the entry into Cayman Net News because they said it could have had implications for the evidence on any future investigation that went to court about Ennis and Seales. He admitted, however, that the full circumstances regarding the entry had never been concealed from him or Bridger and that they were aware that no evidence had been recovered during the entry.

Asked by Martin’s attorney, Trevor Burke QC, what the problems were given that no evidence was recovered for their investigation, Ashwin was unclear and repeated several times that “it caused us difficulties”, although he did not describe exactly how those difficulties would affect a future case. Ashwin conceded that they had discovered early in the investigation that the accusations against Ennis were false.

Ashwin also evaded answering the direct questions about when the attention of the two UK officers had shifted from the scoping mission to see if Deputy Commissioner Anthony Ennis was leaking sensitive information to the publisher of Cayman Net News, to a full blown criminal investigation against former commissioner Stuart Kernohan and CS John Jones for burglary.

He admitted that the Tempura team had sought to get search warrants for the senior police officers’  homes but had been turned down twice by Chief Justice Anthony Smellie, who gave them a definitive ruling that there were no grounds to suspect the entry into the Net News offices was a burglary.

Burke then probed Ashwin why it was that he and Bridger had decided to arrest Martin for burglary on the day that the three senior police officers were all suspended, but had not arrested John Evans. Ashwin said that they still needed to do more research. Burke asked what “burglary” Martin had been arrested for and Ashwin said theentry into Cayman Net News on 3 September 2007. Burke asked again why, as that entry was also made by Evans, why he was not arrested. Ashwin said that they had been advised not to arrest Evans by special legal counsel to Operation Tempura, Andre Mon Desir.

Ashwin explained that this was before lawyer Martin Polaine, a former associate of Bridger’s, was engaged as legal adviser to the investigation

Burke then suggested to Ashwin that even though the chief justice had told him and Bridger that there had been no offence of burglary, they went ahead and arrested Martin for burglary anyway and the whole investigation went forward on that basis. Ashwin agreed and said that was correct. He confirmed that the arrest was made based on advice given by Mon Desir, special legal counsel, who Ashwin said had indicated that there were grounds for a burglary.

Pushing further on how their scoping mission had resulted in a full blown investigation, despite the allegations against Ennis being revealed to be untrue very early on, Burke asked why the UK officers had not just handed in that report and gone home. Ashwin said again that Bridger and he had problems and “difficulties” over what they had called the “burglary” and they thought there needed to be more investigation.

Ashwin also admitted that he knew that the Royal Cayman Islands Police Service was paying for himself and Bridger to be here in the Cayman Islands and not the UK. He said that it was understood that it would be his and Bridger’s decision, in liaison with Scotland Yard’s John Yates in London, if and when the scoping study was to move to a full blown investigation. Ashwin said that payment for their time and work was being done “on a full recovery basis” from Cayman.

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Kernohan accused of betrayal

Kernohan accused of betrayal

| 06/09/2009 | 0 Comments

(CNS): Deputy Commissioner of Police Anthony Ennis said on Friday that he had been betrayed by the former commissioner of police, Stuart Kernohan, over the Operation Tempura investigation, which he said had been very stressful for him. Calling most of the allegations against him ludicrous, Ennis indicated that he believed that it was all about destroying his career as there were attempts to set him up. He said the former commissioner was behind a lot of the things that happened to him.

Appearing in court as a prosecution witness during the trial of Lyndon Martin, the deputy commissioner explained that he could not understand how things got to the stage they did as just basic policing would have revealed very quickly that the allegations against him were ridiculous. Ennis stated that Kernohan knew full well that he had a very poor opinion of both the paper published by Desmond Seales, Cayman Net News, and the man himself, to whom Ennis was accused of leaking sensitive information.

Ennis explained that he had known Seales by reputation for the 28 years he had been in the Cayman Islands but had not met him until after Seales came out of prison and began attending the same church. He said other than on a few occasions when they were in the same place or through the normal official communication with the press, Ennis said he had very limited contact with him. He said many years ago Seales interviewed him and revealed information about a certain specialist police course he had been on in the story after Ennis had specifically asked him not to. He also said that Seales had called him on his cell-phone once with regards to an operation he was involved with to recapture escaped prisoners.

Ennis told the court that Kernohan was well aware of the animosity that existed between Ennis and Seales, as he had at one point instigated legal proceedings against him because of stories, which Ennis believed were defamatory, published in Cayman Net News. Ennis said that although he had started the legal action in his professional role, he did not feel he was supported by his chief (Kernohan). He said when he applied for reimbursement of the $3,500 he spent on legal fees, he was told by Kernohan, in writing, that he would not get the money.

When the prosecuting attorney, Andrew Radcliffe QC, presented Ennis with the list of allegations, Ennis emotionally denied every one of them stating that the idea that anyone could have believed them was absurd. “It was so clear that this was about destroying my career,” he told the court. Raising his voice on occasion and veering off into explanations illustrating why the accusations were ludicrous, Ennis was clearly still very disturbed by the entire episode.

Recalling his interview with the officers from Operation Tempura, Ennis said he could not believe that they had come all this way based on the allegations as he said that if Kernohan had made just the basic background checks it would have found it was all nonsense. “I was absolutely betrayed by that gentleman,” Ennis added. Despite the fact that the allegations that Ennis was leaking sensitive information to Desmond Seales, the publisher at Net News, were made by Lyndon Martin, Ennis gave the impression that he was reserving his animosity for others and said he have never really understood why Martin had made the allegations as there was no bad blood between him and Martin.

Although he said he did not know Martin very well, he acknowledged knowing some members of his family. Martin’s QC, Trevor Burke, then indicated that Martin had made the allegations because Desmond Seales had told him that the information had come from Ennis.

Burke asked Ennis if he forwarded internal e-mails, such as parts of Gold Command minutes to other officers and individuals inside the RCIPS. Ennis said he did and he sent lots of emails to other officers every day that contained all sorts of information. Burke asked Ennis if it was possible that other people in the RCIPS could then in turn forward Ennis’ e-mails on to other people, and Ennis agreed they could.

“Do you see what could’ve happened here?” Burke asked Ennis, who nodded and acknowledged how it was that Martin could have got sight of emails from his e-mail address that Ennis himself had not in fact sent. Ennis also revealed to the court that he had never been informed that Evans had testified that Seales had also told him that Ennis was the source regarding the helicopter.

During Burke’s questioning Ennis admitted that he had believed that he was not liked by everyone in the service and even said some people despised him because of his country of origin. He acknowledged a level of professional distrust between himself and the other Ddeputy commissioner, Rudolph Dixon, as Ennis said that, despite his reassurances, Dixon perceived him as a threat to job of commissioner, which Dixon hoped he would get one day.

Ennis told the court that when Kernohan had instructed him to remove officers from the RCIPS that were underperforming, he said he knew full well that those officers would run to Dixon and complain about him. Ennis said in those circumstances when he looked to Kernohan for support he felt that the former commissioner had let him down. Ennis also acknowledged that disgruntled officers had regularly run to the media with their grievances and that Seales had been a willing recipient of those complaints.

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