Peer review will vindicate the Cayman Islands

| 06/09/2009

(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 relatedenquiries 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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  1. Anonymous says:

    If we can be so confident, then Mr Travers, lets get behind the OECD on this issue and publicly endorse and promote the peer review system.  All the people pointing fingers will then have cause to stop and wonder why money laundering scumbags such as ourselves (their label for us, not ours) would support such an initiative.  It would show we do indeed have nothing to hide and everything to gain from such proposals.

  2. Anonymous says:

    Travers continues to be incredibly naive if he actually believes that the "peer review" process will be anything close to objective. The main reason that the FATF and its sister organisation the OECD move away from objective criteria in relation to so-called international standards and seek to impose vague subjective ones in which a big country can unilaterally claim non-cooperation and impose restrictions on competition is to ensure that the competitors of the major players do not have to comply with standards they seek to impose on others. Clearly there is a significant risk that those of MAC’s advisors who do not learn from history will condemn the rest of us to the consequences of their lack of understanding. 

    It would have been far more prudent for Travers and government to publicly adopt a "we will wait and see if this thing is biased" stance rather than confer it sight unseen with credibility it does not deserve. Perhaps the "Fire Ready Aim"  mental disorder is contagious?