Cayman has formally requested to be included in the OECD Model
Convention — quite an old document that has regained momentum
in recent months given the financial difficulties in which most
countries find themselves.
From a Cayman perspective there would be little benefit to
attempt to engage in a debate on the merits of this
initiative. The fact is over 50 countries, including most of
the jurisdictions from where our business comes, have already
subscribed to it. Refusing to participate in
globally-accepted standards can quickly isolate us, jeopardizing
our ability to participate in the global capital markets in which
we continue to facilitate international capital flows. We
have seen the consequences of falling behind and being included in
certain lists, and for that fact alone, we support Government's
The Convention's key point is the expansion of an automatic
exchange of information system much like the one imposed by the US
through FATCA. This system will mean the financial
information of accounts held in Cayman will be shared with the
appropriate countries. While this system will be very
expensive, it won't be more expensive for Cayman than for other
countries; and therefore, it won't damage our competitive
position. However, it will provide an invaluable benefit to
Cayman. It should be a very powerful tool to respond to the
accusations represented by misinformed Hollywood productions.
A system that will put behind the impression of Cayman providing a
hiding place for tax evasion and, as our industry continues to
succeed, will allow us to demonstrate the value and legitimacy of
our business model.
Signing the convention and the future implementation of
the core and relevant points in it through future bilateral tax
treaties, is a step in the right direction; however, it is unlikely
in itself to eliminate the hypocrisy with which many individuals
and organizations refer to places like Cayman. It will take
continued work to promote our story, and the effective
implementation of these systems will be a key tool in our box.
Examples of this hypocrisy are found way too often. We are
going to cite just a few in case the reader remains in doubt.
The World Bank's private sector arm invested about Ł2B
through centres such as the Cayman Islands, Mauritius, Guernsey,
and Jersey, saying many projects would not be sufficiently
economically viable to attract capital investment without the use
of these intermediaries.
Jason Sharman, a PhD from Australia, has conducted an empirical
study attempting to create secret companies and transfer funds
anonymously. The results: in general, industrialized
countries provide a higher level of corporate secrecy than is
available in offshore centres, and Cayman, in particular, received
According to a recent analysis by the World Bank, the US,
Switzerland, and Britain topped the rankings of corporate bank
accounts involved in corruption cases; nevertheless, Britain's
offshore centres are under pressure to become more transparent
And of course this post cannot be finished without mentioning
the biggest hypocrisy of all — Delaware. While the
President of the US continues to try to divert attention and finds
himself repeatedly surrounded by appointees who had or have
investments in Cayman in a legal and transparent manner, Delaware
continues to provide probably the best option to set up a
corporation without proper disclosure of beneficial ownership
— something that is a long established requirement in
1209 North Orange Street, a 2-story building that says nothing
from the outside, is the legal address for 285,000 separate
companies, dwarfing any of the examples the President choses to use
on his political diversion strategies. These buildings house
companies owned by Ponzi scheme runners and international convicted
smugglers as well as 60% of the S&P 500 corporations.
Even the Tax Justice network, with whom we tend to disagree,
ranked the US number one as a secrecy jurisdiction, with London
placed on the top five before later changing their methodology in a
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