I had occasion to respond to an article published 14 September by the Guardian in the UK, titled Britain may be forced to bail out offshore tax havens. In particular, the very first paragraph caught my attention. It read: “Britain could be forced to bail out one or more of its offshore tax havens at huge cost, according to early drafts of a Treasury report, because the economic crisis has wrecked their finances.” This was certainly news to me.
The article went on to speak directly about Cayman’s finances although it was clear the writer did no direct research into the facts surrounding the matter. He certainly was not aware that the Cayman Government has several banks willing to lend them £278 million pounds due to our recently confirmed triple A credit rating. And in describing the size of that borrowing as ‘huge’ and possibly leading to ‘economic failure’ the writer somehow overlooked the fact that our short term funding issue is hardly on a par with the financial misadventures of the UK or US. Indeed the borrowing Cayman is seeking is equivalent to less than half a day’s current overspend by HM government.
The full text of my response can be found here http://www.guardian.co.uk/business/2009/sep/16/tax-havens-cayman-guernsey
Not coincidentally CIFSA and the CIG received a request for an interview from a German reporter about the ‘potential bankruptcy of Cayman’. What we are witnessing seems to be a third stage in an organized effort to damage the reputations of all Offshore Financial Centres.
The first stage was the attempt to lay blame for the financial crisis and stock market meltdown of 2008 at the feet of OFC’s. That effort failed miserably under the weight of factual evidence to the contrary but it took many weeks and months to undue the damage done by the initial headlines and speeches.
The second stage was the lost taxation argument which saw the creation of the OECD White List and had politicians quoting ridiculous sums of revenue they could collect if given information on secret accounts in Cayman and elsewhere. Once the Obama administration had to actually produce a budget they finally had to admit that there is no windfall tax revenue to go after and no secret bank accounts in the Cayman Islands. Again, the initial story received much greater coverage.
So now we have entered this third stage in the propaganda war. This latest effort seems intent on disparaging the financial viability of many OFC’s, Cayman included, despite the recent validation of our triple A credit and ignoring our ability to raise revenues from a variety of sources (which stands in stark contrast to the severely overtaxed populations in the US and UK and many other onshore jurisdictions).
As with the previous efforts this one will ultimately fail as well once more attention is drawn to the issues and more responsible news outlets and individuals delve into the facts. CIFSA will continue to work diligently on behalf of the jurisdiction to ensure the truth is not overwhelmed by political rhetoric aimed at harming our key industries.
As always the truth is our strongest ally. Our financial services industry will continue to offer services that are valuable and necessary for the efficient operation of the global economy. Efficiencies that just so happen to help create jobs in the very countries that are most critical of us.