Ugland House in UK press

(CNS): Following the revelations that Scotland’s First Minister Alex Salmond’s top economic adviser, Sir George Mathewson, uses the Cayman Islands for business interests, Ugland House has found itself once again making negative headlines in the British press. Mathewson, who heads the SNP government’s council of economic advisers (CEA), is now at the centre of a tax avoidance row after it emerged that his investment group’s hedge fund is running businesses through Cayman.

Mathewson is chairman of London-based Old Oak Holdings, the holding company for Toscafund Asset Management LLP, which has several of its "mutual funds" registered in Ugland House with Maples and Calder. Following US President Barack Obama’s description of the office as "the biggest tax scam in the world", the revelations that Mathewson is using Cayman for his firms has caused considerable controversy. According to the Cayman Islands Monetary Authority (CIMA), Tosca Focus, Tosca Infrastructure, Tosca Metriks and Tosca Small Cap, were registered after Mathewson was appointed as Salmond’s chief economic adviser.

Four of the funds were registered in Cayman after Mathewson, a former RBS chairman, took up his post with the government. With the UK government spreading the message that tax havens are estimated to cost the UK Treasury up to £33 billion a year in lost revenues and the support of the SNP for the clamp down on so-called tax havens, the economic advisor’s position is now looking questionable despite there being no accusations of wrongdoing against him.

Asked by the Scottish media why his business interests were registered in Cayman, Mathewson said, "There are all sorts of tactical reasons for that."

Given the current campaign against the use of offshore financial centres by G7 countries, the choice of domicile for Mathewson’s business interests is raising concern.  A strong supporter of the SNP, Mathewson was appointed chair of the council of economic advisers in 2007. The team which he leads was created to advise Scotland’s first minister on the best way to improve the country’s economy. Questions are now being asked if in fact Mathewson’s business interests are causing damage to the economy he was appointed to help.

This weekend Ugland House was described in the UK media as the main hub of business activity in Cayman, which is still called a tax haven. With pressure mounting, a crackdown on what G7 countries have termed ‘tax havens’, including the Cayman Islands, now appears inevitable. President Obama – praised by Salmond last week when the first minister visited Washington – and British Prime Minister Gordon Brown have both promised action.

"We want the whole of the world to take action. That will mean action against regulatory and tax havens in parts of the world which have escaped the regulatory attention they need," the prime minister said.