Archive for May, 2011
Water company still in negotiations for new franchise
(CNS): Consolidated Water, the private firm which supplies customers in the West Bay area, has reported a fall in sales in Cayman in its first quarter operating results. The firm, which operates in several other jurisdictions around the world, said that for the three months ended 31 March 2011 total revenues were around $13.9 million, compared with about $14.7 million in the first quarter of 2010. CEO Rick McTaggart also revealed that the firm had not yet come to an agreement with the Cayman government over the company’s new franchise agreement but had gained a temporary two month extension of its license.
He said that Consolidated was notified by government last week that it had extended its existing retail water franchise until 4 July this year in order to facilitate the completion of negotiations for a new franchise agreement in Grand Cayman. “This process has been more complicated, and is taking longer, than initially anticipated, but we remain optimistic that a satisfactory conclusion to the negotiations will eventually be forthcoming," the water boss said.
In its announcement the firm stated that retail water revenues of roughly $6.4 million during the most recent quarter the same as the prior year’s first quarter.
“The total volume of water sold through the Company's retail water operations in the Cayman Islands decreased by 16% when compared with the first quarter of 2010,” Consolidated said in a release. “However, all of the decrease represented water sold to Water Authority – Cayman in 2010 in order to meet WAC's needs while its Red Gate plant was under refurbishment.”
The volume of water sold by the company to its normal retail customers varied by less than one percent, the firm revealed. It also said that revenue loss relating to WAC in 2010 was offset by a 2.3 percent inflation-related adjustment to base rates because of the increase in the consumer price indices used to determine rate adjustments. Consolidated also pointed out that higher energy costs from increases in fuel and electricity prices were passed on to retail customers.
Consolidated gross profit decreased four percent to approximately $5.3 million in the three months compared with approximately $5.5 million in the first quarter of 2010, the firm said, adding that profit on retail revenues was relatively consistent with the prior-year period at $3,492,639 versus $3,531,821. Profit on bulk revenues increased to $1,564,472 from $1,360,579.
"Revenues and gross profit generated by our retail franchise operation remained consistent with the same period last year in spite of reduced sales volumes, reflecting a modest inflation-related base rate adjustment in January as well as higher energy pass-through charges,” said McTaggart.
“While government air and cruise ship arrival data clearly show more tourist visitors to Grand Cayman during the first quarter of this year when compared to 2010, this activity has yet to translate into higher retail sales volumes. The profitability of our services business segment continued to be adversely affected by a lull in new project activity during the first quarter of 2011," he added.
Liquidators reach compromise over Madoff funds
(CNS): The Joint Liquidators of the Fairfield Funds have reached a compromise with Irving H. Picard, the Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC to resolve the matters in dispute between the funds and the trustee. Kenneth Krys and Joanna Lau of KRyS Global, said the settlement resolves the parties’ claims against each other, avoiding contentious, costly and uncertain litigation. Kenneth Krys, who is based in Cayman but, a licensed insolvency practitioner of the BVI and one of the Joint Liquidators of the Fairfield Funds, said the firm was very pleased with the result.
“These negotiations were hard given the significant issues between the parties and took significant time and resources to reach a conclusion,” he said. “We are of a view that the final result is very good for the stakeholders in the three Fairfield Funds. It provides certainty to stakeholders as to how recoveries will be received and allocated to the estates and will allow the Joint Liquidators to now focus their efforts and resources on recovery efforts rather than being hindered and diverted by the impact that the claims by the BLMIS Trustee may have on the Fairfield Funds’ estates.”
The BLMIS Trustee had filed a complaint in New York against the Fairfield Funds and other entities asserting that the funds were liable to the BLMIS estate for the monies Fairfield Sentry withdrew from BLMIS in the 6 years before December 2008, totalling in excess of $3 Billion.
In turn, Fairfield Sentry had filed customer claims against the BLMIS estate pursuant to the Securities Investor Protection Act, which, based on the method for calculating such claims as employed by the BLMIS Trustee and as approved by the U.S. Bankruptcy Court, total approximately $1.2 billion. The BLMIS Trustee asserted, under applicable provisions of the U.S. Bankruptcy Code, that Fairfield Sentry’s claims should be disallowed unless and until it satisfies its entire liability to the BLMIS estate.
However the settlement resolves these issues and provides a structure that enables the Joint Liquidators and the BLMIS Trustee to work jointly and cooperatively recover assets to enhance their respective estates for the benefit of the stakeholders.
In a statement about the compromise officials said the general terms of the settlement are such that certain pools of litigation recoveries that are pursued by the Joint Liquidators of the Fairfield Funds and the BLMIS Trustee will be shared depending on the nature of those pools and other factors.
“In addition to the agreement to share these assets, the Joint Liquidators of the Fairfield Funds and the BLMIS Trustee will work together to cooperatively maximize the assets that are recovered for the benefit of their respective estates,” it said.
Pursuant to the agreement, the Joint Liquidators will pay $70 million from Fairfield Sentry’s account to the BLMIS Trustee, and in exchange the Trustee of BLMIS will allow a customer claim of Fairfield Sentry in the amount of $230 million. The Joint Liquidators will receive the principal benefit of litigation recoveries from third party service providers of the Fairfield Funds, with the exception of a smaller share of recoveries from claims against their former investment manager and affiliates thereof – the Fairfield Greenwich Group and certain affiliates – which claims will be assigned to the BLMIS Trustee.
With respect to the recoveries of redemptions from the Fairfield Funds which are being pursued by the Joint Liquidators and the BLMIS Trustee, the Joint Liquidators will receive from 85% to 40% of such recoveries for the benefit of the Fairfield Funds’ estates, depending on the nature of the claim.
The agreement is subject to approval of the U.S. Bankruptcy Court for the Southern District of New York and the Eastern Caribbean Supreme Court in the British Virgin Islands.
The Liquidators acknowledged the efforts of the BLMIS Trustee, Irving Picard, and those of his counsel at Baker Hostetler LLP — particularly Thomas Long and Mark Kornfeld — in reaching this important settlement.
Cayman to face Mexico but players back in school
(CRFU): The NACRA Caribbean Championship round 1 away game vs. Mexico will be played in Mexico City on 15 May. And with a significant number of the team unavailable for the next major match, Cayman Rugby Football Union’s National Coach, Brad Cowdroy (left) answers a few questions ahead of the clash vs. Mexico about how the team will make it through. Hot on the heels of the victory over Jamaica, Cowdroy reveals there are no injuries but there are a few other sticky issues.
Q. After the win against Jamaica has the Cayman Squad suffered any big injuries or otherwise lost any key players?
A. We haven’t suffered any injuries but unfortunately we have lost 1/3 of our starting team due to unavailability. These guys have had to return to University and complete their exams as it is the end of the semester. School comes first so there is not much we can do about this and have had to include some guys that were in the wider training squad to fill their places.
Q. How has the team been preparing to play at 8,000 ft above sea level?
A. On a flat Island it is almost impossible to prepare for altitude, so we had to get creative and think outside the box. We have had the guys do a few runs up to the highest point on the Island, Mt Trashmore. Not only is this the best altitude training we have available, but it also helps get them used to the smell of the smog that hangs over Mexico City.
Q. What are you expecting from the Mexican team compared to the Jamaican side?
A. We believe the Mexicans will play a lot more structured game than Jamaica did, and will probably play a similar style of game that we hope to. We are confident in our set piece work at scrum and lineout time so hopefully we can gain the upper hand in these areas to allow our backs the time and space they need to score tries.
Q. With that in mind have you been focussing on anything specific?
A. We have continued to focus on our set piece but have also discussed at length the time to work during the game and perhaps more importantly, the time to rest. At 8,000 feet we don’t want to be over working unnecessarily, so we have stressed to the guys not to play ata frantic pace but to keep the game as much as possible to our tempo. Our kicking game will need to be precise in order to allow the guys, in particular our forwards, the time they need to recover.
Follow the game in Mexico with live updates on Twitter by following @caymanrugbytv
Kick off is scheduled for 12:00pm, Mexico City and Cayman are in the same time zone.
India to go after travelling tax dodgers
(Taxation): Indian tax authorities are using a new data matching project to detect taxpayers who attempt to hide their assets and incomes in offshore tax havens. The Air Intelligence Unit (AIU), a department within the Income Tax Department (ITD) of India, is cooperating with the airlines, the Central Board of Excise and Customs, and even with travel agencies across the country to build a comprehensive database of Indian taxpayers traveling to countries considered by tax authorities to be tax havens. The collected data will be matched against the information provided by the taxpayer in their annual income tax returns, in order to find discrepancies and information mismatches.
In instances where the investigation leads to suspicion of illicit activity, the AIU has been granted powers to summon the taxpayer and request further details.Initially the AIU will comb their database to see if taxpayers have declared any expenses arising from their travels.
American States go after complex finance business
(NYTImes): Companies looking to do business in secret once had to travel to places like the Cayman Islands or Bermuda. Today, all it takes is a trip to Vermont. Vermont, and a handful of other states including Utah, South Carolina, Delaware and Hawaii, are aggressively remaking themselves as destinations of choice for the kind of complex private insurance transactions once done almost exclusively offshore. Roughly 30 states have passed some type of law to allow companies to set up special insurance subsidiaries called captives, which can conduct Bermuda-style financial wizardry right in a policyholder’s own backyard.
Captives provide insurance to their parent companies, and the term originally referred to subsidiaries set up by any large company to insure the company’s own risks. Oil companies, for example, used them for years to gird for environmental claims related to infrequent but potentially high-cost events. They did so in overseas locations that offered light regulation amid little concern since the parent company was the only one at risk.
Bank expands mobile phone services
(CNS): For the first time anywhere in the Caribbean some bank customers will be able to use their mobile to pay bills and transfer money from one mobile banking customer to another. The services are being offered exclusively through FirstCaribbean’s Mobile Banking Bill Pay and Third Party Payment services. The bank said its customers can register an unlimited number of third parties to their mobile banking account as long as they are listed on FirstCaribbean’s Internet Banking service allowing them to meet monthly bills, “any time, any where”, using any type of mobile phone.
In a publicity release the bank said the services are available immediately in addition to the original capabilities of mobile banking, including the ability to make balance inquiries, transfer funds between accounts and set alerts to inform users when their accounts have reached minimum or maximum cash balances.
“We are truly excited about these two new additional features to our Mobile Banking service,” said Chief Administrative Officer, Mahes Wickramasinghe. “We believe that we have an excellent product that will help our customers save time by enabling them to “bank on the go”.
Country Head, Tom Crawford, Managing Director – Retail, Wealth and Small Business, also expressed confidence that customers would appreciate these new mobile banking options and anticipated that the added value would lead to an increase in the adoption rates for the mobile banking product.
“These new payment features will be a boon for our customers in the Cayman Islands. One of the key benefits of our Mobile Banking service is that you don’t need to have a smart phone to use it as it is text message-based. We expect that a number of persons keen on this added convenience of banking on the go will gravitate to FirstCaribbean’s mobile banking as the leader in the market,” he added.
The bank said that itsmobile banking service is safe with stringent security measures in place to protect customers’ financial information and details from third parties. Text messages will only be sent to the mobile phone number that is registered with the bank by the customer, who must verify their identity at the time of registration. Moreover, account numbers are never sent to the mobile phone.
FirstCaribbean’s Mobile Banking service is free, however, SMS charges will be the same as what any customer would pay their cellular service provider for text messages via long and/ or short codes. For further information visit www.firstcaribbeanbank.com or contact 1-800-744-3249.
CNS introduces optional log in for users
(CNS): Cayman News Service now has an optional registration process in order to increase the options available to our users and make the site even more interactive. While we have no intention of making log-ins a requirement for people making anonymous comments, one advantage of registering will be to protect a commenter’s real name or pseudonym from being used by an imposter and we are also working on ideas to give registered users more privileges. Over the past two years there have been over 100,000 comments posted on CNS under more than 10,000 different names (including “Anonymous”), and since we introduced the thumbs up and thumbs down on comments in November 2009 there have been well over a million thumb or LOL votes.
“Based on these statistics, we believe that the comment section on CNS has provided an important way for people in the Cayman community to present their points of view, especially with the fear, constantly expressed to us, that people still have of being victimised for voicing dissenting opinion,” said CNS owner Nicky Watson.
Unfortunately, there will always be those who abuse the system and following several incidents of people “borrowing” the real name of a local person for apparently mischievous purposes, it is now a requirement that commenters who use a real name of an individual or organisation in the “submitted by” tagline must register with a valid email address and a phone number that can be used for verification.
“Several people have been particular targets of malicious imposters, including local lawyer Alan de Saram, and we would like to make it clear that comments made under his name were in fact written by a malicious unknown person,” Watson said. “While we have put several measures in place to prevent this sort of thing happening again, we would like to offer sincere apologies to Mr de Saram. However, we also want to encourage people to use their real names if possible, and the log-in process seems to be the most practical way to try and determine the genuine from the fraudsters.”
Over the past few years, several regular commenters have created a distinctive ‘voice’ on the CNS site but on several occasions someone has assumed their online identity. Now they can register their username, so that only they can use it on CNS, while retaining their anonymity.
“Because we are a small company with limited resources, alongside the great news coverage we try to develop the various interactive functions of the site according to what our readers respond to,” Watson said. “If the interest is there we will also allow registered users to publish their profiles on the site and give them more editing options. In addition, some commenters are just more interesting or entertaining than others, so we are also considering a function that will enable registered users to find more commentsby a particular commenter, but this will depend largely on the response and feedback we get to the log-in process.”
Following the introduction of strong anti-spam software to the system, we were able to reduce the amount of times CNS users have to reproduce the CAPTCHA code and some users will not see it at all. If it does appear, it means the software has identified a comment as potential spam – use of upper case letters for odd words is one possible flag. This means that CNS readers who are concerned about remaining anonymous can still add a comment without leaving any contact details and in most cases this can be as easy as writing in the comment box and clicking “save”.
Much of the work done on the site in the past few months has been to improve its functionality and readers should have found, for example, that the pages load faster. Another recent change to the site is a redesigned menu bar to make it easier to navigate around CNS and quickly find the various sections.
“With all these changes we do our best to eliminate all anomalies and glitches before they come on line. However, Cayman News Service is always a work in progress and we really appreciate all feedback from our readers about any issues that you come across while using the site,” said Watson.
If you have problem, please email our support team at support@support.caymannewsservice.com with as much detail as possible, including the operating system and browser you use, as this helps us enormously. A screen shot can also be very useful. If you have any suggestions as to how we can improve the site, just comment below or email nickywatson@caymannewsservice.com.
Travers makes another call for immigration change
(CNS): Although no longer officially leading the charge for the country’s financial services sector, Anthony Travers is still going out to bat for the future prosperity of the industry. The Stock Exchange chair has again made an appeal to the Cayman Islands government to “dramatically change its immigration policies” to provide security for finance industry professionals. Speaking at the recent GAIM conference in Grand Cayman, Travers said the changes to local immigration law should form part of a four point plan to bolster the sector alongside the battle to counter attacks from the onshore world and high tax supporters against offshore finance centres.
Travers said implementing changes to immigration policy would provide long term security of tenure for financial professionals and provide employment for locals.
The chair of the stock exchange and former chair of Cayman Finance, who spent the last two years taking on the Cayman Islands global critics on the media stages, said that the country and the industry must continue to refute “the nonsensical suggestions of the truth deniers concerning tax evasion and tax haven status or indeed money laundering,” he said. "What we do in Cayman is lawful and proper and we must continue to say so.”
He told the hedge fund industry audience that it was important to resist the suggestion from the G20 jurisdictions that Cayman introduce direct taxation. “It can hardly be said that their economies are a ringing endorsement of the concept,” he said, adding that maintaining appropriate regulation was also important.
Travers questioned the motives of leading American and British politicians in their attacks on the Cayman Islands and other offshore jurisdictions. Taking a swipe again at people he has referred to in the past as the “Tax Taliban”, Travers said these individuals were wedded to the notion that one high global rate of taxation is a solution to world poverty. These individuals, bloggers and tiny outfits, he said, were usually funded by charities such as Oxfam and Christian Aid as well as British trade unions.
“These people all share the common belief in large government, a large public sector, high levels of social welfare spending and therefore very high taxation. These groups are in fact the philosophical opposite of the Tea Party. We can call them members of the Kool Aid Party,” Travers said, giving them a new handle.
However, the well organized and powerful public relations campaigns driven by onshore treasury, supranational and domestic regulatory bodies were, he said, more troubling as these were driven by populist politicians, some of whom were anxious to suggest that the solution to mismanaged domestic fiscal and monetary policy lies in some mystical offshore pot of gold.
“These blame-deflecting politicians and regulators are anxious to obfuscate the failures of their domestic regulatory systems in the G20 jurisdictions by suggesting that in some way it is the tax or regulatory system of the offshore financial centre that is at fault,” the stock chair told the conference.
“This is the reason why we see hedge funds rather than Freddie Mac and Fanny Mae now described as the root cause of the recent financial crisis in the same way that the Enron collapse was supposed to have its cause in the Cayman islands and not Delaware, and the missing Bonlat monies were supposed to have disappeared in the Cayman Islands rather than in Parmalat's head office in Italy.”
Drivers injured in head on road smash
(CNS):Two people were taken to the Cayman Islands hospital in the early hours of Tuesday morning following a head on collision in George Town. The incident which took place around 1:40 am (10 May) occurred on Crewe Road and one of the drivers is suspected of being under the influence of alcohol though no arrests were said to have been made at the scene. It is unclear the extent of the injuries suffered by the two female drivers and police are reportedly investigating the incident.
(Photo Dennie Warren Jr)
New CS savings under wraps
(CNS): The official arm of government said that it has identified more savings for the public coffers with the completion of the second phase of a civil service review. However, how much those saving are has not yet been revealed to the people of Cayman. According to officials, part two of this public spending assessment examined the police, education, Children and Family Services, the Cayman Islands Airport Authority, the Ports Authority, Fire Service, Customs and Computer Services, which together account for more than $200 million of public expenditure and was completed in January.
Following questions submitted by CNS about where government was with the review of the public sector and what further savings had been identified, officials from the Deputy Governor’s Office released a statement Monday afternoon saying it was anticipated that it would be discussed by Cabinet shortly.
The review was part of an agreement with the Cayman Islands government and the Foreign and Commonwealth Office made in September 2009, as part of the conditions of the UK’s approval for the local government to extend public borrowing beyond the parameters of the Public Management and Finance Law. The teams were formed in October 2009 made up of senior civil servants andone representative from the private sector, who were then trained by an external team from the US, UK and Singapore “in business process reengineering and other review techniques”, government officials stated.
The focus was on improving the efficiency, effectiveness and economy of the public service and reducing the costs, and the review of the first four agencies identified around $17 million of potential savings across CINICO, tourism, the Prison Service and public works. These four entities were selected as the first group as between them they represented around $72 million of the government’s wider expenditure.
The report was completed and made public last year and the results of the second phase were expected before the end of 2010. However, so far no further information has been given to the public about the savings revealed in this phase. The Deputy Governor’s Office has revealed that the third phase of the review began last month and includes Planning, Immigration, Lands and Survey, DVES, National Roads Authority and the Health Services Authority. These agencies represent $126 million worth of expenditure and the reviews are scheduled to finish by mid June 2011.
Officials also revealed that government has now engaged expert advisors from the Institute of Public Administration of Canada s to assist the review teams but did not say how much that would cost the public purse.