Bermuda makes ‘white list’
(CNS): While Leader of Government Business McKeeva Bush and other delegates are on the road to Washington, London and Paris to try and increase the number of bi-lateral Tax Information Exchange Agreements the Cayman Islands Government has with other jurisdictions, Bermuda has now made the ‘white list’, having signed its 12th agreement. Although the OECD was supposedly considering Cayman’s unilateral mechanism, so far it does not appear to have spurred the organisation to move Cayman from the ‘grey list’ yet. But CIFSA Chair Anthony Travers has said that Cayman will have enough bi-lateral treaties in place soon to finally persuade the OECD to place Cayman on the ‘white list’.
The Organisation for Economic Cooperation and Development said that it had promoted Bermuda from its ‘grey list’ to the ‘white list’ because Bermuda has today (8 June) signed another bi-lateral treaty, this time with the Netherlands, bringing its total of agreements to twelve.
The Cayman Islands has eight bi-lateral agreements, but under the previous administration it claimed a total of twenty agreements as a result of the passage of the Tax Information Authority Law introduced in 2008, which enabled the CI Government to sign agreements that were not full bi-lateral agreements — a system unique to Cayman.
However, although the OECD said it was giving consideration to that, the jurisdiction still languishes on the ‘grey list’ while Bermuda has been immediately promoted to the ‘white list’ on completing the OECD’s minimum standard of 12 bi-lateral treaties. Travers’ the Chair of the Cayman Islands Financial Services Association’ had warned former Leader of Government Business Kurt Tibbetts several weeks ago that the unilateral mechanism may not be sufficient to sway the OECD to move Cayman from the ‘grey list’.
Speaking about the latest movement with Bermuda today, he told CNS that CIFSA was disappointed but was never surprised at the application by the OECD of a double standard to the Cayman Islands.
“In addition to 8 bilateral treaties in the OECD form duly signed, Cayman has 12 perfectly satisfactory tax information exchange arrangements in place under our Unilateral Mechanism, which operate in precisely the same way, as a matter of domestic Cayman Islands law, as the bilateral arrangements,” he said.
“The Unilateral Mechanism is well recognized by OECD countries and specifically by the countries which are scheduled, including the UK, Germany, Japan, South Africa and Ireland . That, however, apparently is not sufficient for the OECD Secretariat, which has its own methodology and which continues to refuse to give credit to the Unilateral Mechanism when adopted by Cayman.”
He said that, given the circumstances, the rationale for the refusal to move Cayman “cannot be a technical objection and must therefore be political.”
However, the Cayman negotiating team, now headed up by George McCarthy, is following up on well advanced negotiations to complete bi-lateral treaties with another four jurisdictions.
“In addition, a full double tax treaty is scheduled to be signed with the UK next week in London. Cayman will therefore shortly have in excess of 12 bi-lateral tax information exchange treaties in addition to the 12 tax information exchange arrangements under the Unilateral Mechanism, which on any objective analysis will place it well ahead of any offshore jurisdiction in terms of functioning tax information arrangements and substantively ahead of most onshore jurisdictions,” Travers noted.
He explained that this was also in addition to the 27 proactive reporting treaties that Cayman has entered into under the European Union Savings Directive which, according to the OECD, do not exist at all. “However, no organization can defy gravity forever,” the chair said. “We have every reason, therefore, to anticipate that, by whichever standard that may or may not be applied by the OECD, Cayman must shortly be fully entitled to be placed on the ‘white list’ and that this odd interlude will shortly be consigned to history.”
The OECD said today that Bermuda has crossed the threshold for being considered to have substantially implemented the internationally agreed standard in this area. Welcoming the new agreement, Jeffrey Owens, Director of the OECD’s Centre for Tax Policy and Administration, said it was a significant development for Bermuda.
“As it has signed 12 agreements, Bermuda is now shown in our progress report alongside other countries that have substantially implemented the standard,” Owens stated. “When we first issued the Progress Report, Bermuda had only three agreements but it has been able to rapidly implement the standard by signing nine agreements in two months. It is nevertheless essential that countries that reach this threshold continue to be open to negotiating agreements with other countries that approach them.”
Bermuda’s Finance Minister Paula Cox said the country would continue to build upon its long standing position of transparency and cooperation which has, through the years, differentiated Bermuda from other jurisdictions. Bermuda has concluded negotiations on three more TIEAs, with Germany, Mexico and Canada, which are expected to be signed later this year.
Category: Headline News
The OECD should be held accountable for their contribution to racism worldwide. Why is it that a”blacklist” should be something bad and a “whitelist” a good thing? Disgraceful!
Not sure what the other poster was thinking about but how about this hypothetical scenario. Take one non-issue, use your position and contacts to whip it into a crisis, and then sell yourself as a post-retirement solution. There couldn’t possibly be a conflict there could there?
Yes, I suppose there could be a conflict there in your hypothetical example but it would probably be very obvious and we would all holler and scream about it!
I’m pretty sure I know I know who and what the original poster is referring to. If I’m correct-and it’s not a huge secret-most people who are aware of it think it’s an excellent idea. But let’s hope the poster returns to the fray with more information and we can check out whether there is or could be a problem.
Does anyone know if it Is true that a very senior civil servant can retire from government one day and then the next day take up a big fat consulting contract with government on top of their civil service pension? Just wondering about good governance and all that seems to have been going on pre- election. Remember the song with the words money money money – money. Lets see what happens in a couple of weeks. Remember you heard about it hear first.
Yes it’s true a civil servant-senior or otherwise- can do that. Why not? What is your "governance" problem?
Appeasement. History shows that it is not often a good idea. Does anyone else remember the news clips of the British Prime Minister Neville Chamberlin returning from Berlin with his "negotiating team" waving a piece of paper and declaring "We will have peace in our time"? That was of course just before much of Britain was devastated by the people who had told Chamberlain something to the effect that "if you will just do as we say everything will be fine.
I suspect that we may see something like this from our well intentioned leader and his strangely named "negotiating team" in a few days time when they return from meeting with the enemy. Ït has been said that those who do not study history are condemned to repeat it.
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Negotiating Team???
Walking into a room and announcing that you will sign anything they put in front of you irrespective of how bad it is for Cayman is not really negotiation and hardly requires a team. What do the people apart from Mr. McCarthy do – take turns carrying the pen?
Being a "Sir" is decidely middle class and out of the question. However I suspect that Gordon Brown might gladly make a "Lord" out of anyone willing to lead Cayman to its destruction.
"Ready – fire – aim" is not the right sequence, although it might provide a sense that "at least something is being done". The head line might better read – Bermuda passes Cayman in head long rush to extinction. That might be a better reflection of what is actually happening.
What long-term strategy is Cayman pursuing in relation to the shifting goal posts of the OECD states? It is not clear that there is one. Complying ourselves out of existence seems not well conceived as a strategy but that is allthat we are hearing in relation to the current head long rush to get 12 agreements at whatever cost. Hopefully it is not the intension of this government to chase after the OECD’s moving goal posts until the financial sector is beyond recovery, giving ever greater credibility to the OECD with each compliant step we take?
The long term strategy for the OECD states is clear. It is to drive any financial centre that is not one of their members out of business. The OECD states are implementing their strategy in a very logical fashion, thinking before they act. The double standards that Mr. Travers speaks of provide one example of how they are implementing their strategy. The toxic and highly biased drip feed of media coverage supplied by OECD governments led by the UK and the US regarding Cayman is another example. Much of what the OECD seeks to do is to bring the stability of our business environment which clients rely upon into question. The OECD also seeks to destroy our reputation in order to ensure that clients go to their service providers instead of ours.
The use of "black lists" and "white lists" is too easy for the OECD. They can make up lists and put Cayman on lists all day long while our government wastes resources on the fool’s errand of trying to get off one list while the OECD can and will create ten others at the stroke of a pen.
It is already clear that the OECD goal posts will move again this fall with 12 becoming 20 or more and new OECD/FATF/FSF lists are already being drafted related to the relative size of our financial services centre as a percentage of our entire economy. By this fall we will be hearing from the OECD states that Cayman needs much more costly and client alienating regulation than the OECD states impose on themselves because our economy is not as diversified as theirs are.
Meanwhile it is not at all clear that our new government, which has to be commended for being willing to make an effort to secure the financial services sector, has any idea of the direction it should be going in order to come to grips with the underlying issues. Listening to CIFSA and getting onto the white list is simply not a credible strategy in and of itself. Businesses are moving to Switzerland and Luxembourg from Cayman and Bermuda even though Switzerland and Luxembourg have fewer OECD style tax agreements than Cayman and Bermuda do.
It has to be said that the strategy adopted by Mr. Bush’s previous government which involved being proactive in challenging the unacceptable elements in the EU savings tax as indicated by the tactic of taking the UK to the the EU court rather than meekly complying clearly had a positive result which actually led to more business for Cayman. Where is that carefully crafted element in the current strategy?
Having a few people in the financial services sector make a lot of money in the months leading up to Cayman going over the cliff to which we are being lead by the OECD is not what we should be trying to achieve, despite the urgings of some of the people in CIFSA who are likely to make that money. How exactly is securing 12 tax agreements as we race with Bermuda towards the cliff securing the long term future of Caymanians?
Mr Travers is clearly smart enough to know that the grey list and white list have virtually nothing to do with tax evasion in OECD states or being good global citizens. So where exacly is he leading Mr. Bush and why?
Kudos to the person that posted ["Ready-Fire-Aim" is Not] for setting out another view as there seems to be a general feeling locally that we should "get off the gray list" at all costs. With 8 or so signed bilaterals and a unilateral mechanism that is "technically accepted" by the OECD (and by several of it leading members) there should be no illusion that this exercise (for Cayman) is driven by the politics and economics of the other side (primarily US, UK and France). Given the current composition of the negotiating team, "getting off the grey list" will not take that long but the question is: what will be left, after? Walk safe Cayman….
Good point Mr Ridley: the CRPL will be a further sticking point for the OECD to pretend Cayman is not compliant:
Cayman needs a sensible data protection law (same as the UK and other common law jurisdictions) which protect banking confidentiality without criminal sanction or penalty that allow the rest of the world to claim it a Secrecy Law.
Most other jurisdictions are able to maintain banking confidentiality without the "kiss of death" of criminal penalty – Cayman will only continue to draw unnecessary fire by keeping the CRPL on its books.
To better understand the OECD, it is necessary to revisit history a little. There is no doubt the OECD (and its political masters, the G20) are playing a multi-dimensional game here. But it seems that what has really stuck in the OECD craw, and gives them a stick to beat Cayman more than others, is the non-perfomance of a critical part of the May 2000 written commitment to the OECD from the Cayman Islands. That is the commitment to repeal the Confidential Relationships (Preservation) Law and to replace it with appropriate information disclosure legislation which protects legitimate confidential information and maintains the soundness of the financial system.
Cayman must deal with this issue expeditiously. Until we do so, the OECD will try to fob us off as failing in effective implementation of our commitment.
All of this while the PPM was ‘asleep at the wheel’.
Thankfully we have people like Mr. Travers in our corner (a national hero?).
With the strong show of Leadership in their ‘New’ Govt., let us hope that the UDP and ‘Not-so-big-anymore’ Mac continue on this positive path, redeem themselves of ‘Old Ghosts’, and build the confidence and Unity that this small country needs in order to not only survive, but prosper for future generations.
The time has come for UNITY Cayman ….. divided we fall !!
"All of this while the PPM was ‘asleep at the wheel’".
Richard Wadd, the election campaign is over. The UDP won. There really is no need to continue to beat the partisan drum since we are all in this together.
According the OECD the Advance Commitment Letter that Cayman gave in 2000 committed us to entering into all the required Tax Information Exchange Agreements by 2005. If you will recall the UDP was in government from November, 2001 until May, 2005. Therefore the failure equally lies with the UDP. Let’s call that one even and leave it at that.
"Thankfully we have people like Mr. Travers in our corner (a national hero?)".
I doubt that Mr. Travers is even remotely interested in being a Cayman National Hero, but I suspect Sir Tony has its attractions.
OECD is so anti-Cayman it ridiculously one-sided in all its decisions and actions. In the meantime our competitors: Bermuda, Jersey, Guerney, Isle of Man are gaining the benefit. The longer the OECD drags its feet, it still continues to damage Cayman – which is the objetcive it wants.
It is very clear that Cayman – unfairly – is the international scapegoat for this financial crisis.
The US is openly hostile, the UK has abandoned Cayman to keep its relationship with the US and also because Cayman is a main competitor to London’s financial industry. The rest of the world will not care.
However long the OECD continues to play its game – and moving the goal posts – Cayman will suffer either way.
And the PPM’s misguided reliance on the unilateral "own goal" mechanism just gave the OECD more ammunition to continue to ostracise Cayman.
All the people who spend time commenting on CNS had better start writing to FT> but that would be too much, since we all know Caymanians love to murmur amongst themselves but otherwise have nothing to say to the actual parties directly.
Where has the voice of the Chairman of the Monetary Authority been in all of this?
Thank you PPM.
How long will the Cayman Islands suffer because of the failure of the PPM?