More on the Stanford saga here in Antigua and around the Caribbean.

First i would just like anyone interested in the Stanford saga to read something which many of us have been saying for some time. In fact much of the article seems like it was pulled from my blog :) but the rest of it is just stuff we have been saying here on the island for some time. It's a New York Times piece.

A more more enlightening and interesting article reprinted in the Trinidad Express from the Jamaica Observer is as follows. Ron Saunders used to be our island's representative in the UK.
This article came out long before the Stanford Meltdown here in Antigua, and while today the Levin - Coleman - Obama Stop Tax Haven Abuse Act is being emailed all around the Caribbean it does make the title of the article a bit more poignant. If you would like to see a copy of the act i can email it to you. IT is a clear attack on one of the last things that is holding the weak economies of the Caribbean afloat. Bananas, sugar, off shore gaming, and now banking have all come under attack from foreign policy. This is all very scary for the future of the Eastern Caribbean. (just a side note Allen Stanford never permitted any Internet gaming money to enter his banks and he was very strict about this).

Is the Caribbean financial services sector asleep?

Ronald sanders

Tuesday, February 10th 2009

THE threat to the financial services sector of the Caribbean is growing every day and is becoming more evident in reports by media who have swallowed hook, line and sinker that so-called "tax havens" are helping US, European and Japanese nationals, both persons and companies, to evade taxation in their home countries.There is no hard evidence to support this allegation about Caribbean jurisdictions. Yet it persists from governments of the Organisation for Economic Co-operation and Development (OECD).
A recent BBC report claims that the British government "is broke-a record £44b in the red-and yet one estimate is that the taxman loses £18.5b a year thanks to tax haven abuse''.
The reports specifically identify British protectorates which are described in derogatory terms.
Dramatically, the report also states that "one man has targeted tax haven abuse in the Caymans-and his name is Barack Obama. So change for the world's tax havens seems on the way-whether the leaders of the micro-states like it or not''.
When the OECD first raised its so-called "Harmful Tax Competition Initiative'' aimed at closing down the financial services sector of 41 small jurisdictions around the world which were giving serious competition to the financial institutions of the OECD countries, Caribbean countries were slow to move on the issue.
It was not until it was raised by Antigua and Barbuda at the 21st meeting of the Conference of Heads of Government of the Caribbean Community at Canouan in St Vincent and the Grenadines, in July 2000, that Caricom countries began to take the issue seriously.
A committee was established headed by then Barbados Prime Minister Owen Arthur and present Barbados Chief Justice, Sir David Simmons, and of which I was a part, to engage the OECD in a serious dialogue on this issue. Eventually, the OECD dropped a blacklist of countries that they had produced but only after coercing almost all of the jurisdictions to adopt many of the rules that the OECD had set unilaterally. A so-called "Global Tax Forum'' was also established to set rules for a level playing field for all jurisdictions. But, a report two years ago showed that the main culprits ignoring these rules are the big players in the OECD countries themselves. Poor regulation and supervision in the US and UK, which contributed to the present financial crisis in both countries, is ample evidence of that fact.
President Obama, when he was the senator from Illinois, joined two other senators in introducing the "Stop Tax Havens Abuse Act'' in the US Congress. Fortunately, the Act never became law. But it names 34 jurisdictions as "secrecy'' jurisdictions and among them are all the British Overseas Territories in the Caribbean, all the members of the Organisation of Eastern Caribbean States, The Bahamas and Barbados.
The fact that the Bill did not become law does not mean it has been dropped from the Obama administration's agenda. Every indication is that the legislation will be enacted this year, and while the blacklist will be removed, it will be replaced by broad empowerment of the US Treasury Secretary to impose sanctions. The belief persists that "the total loss to the US Treasury from offshore tax evasion alone approaches US$100 billion per year, including US$40 to US$70 billion from individuals and another US$30 billion from corporations engaging in offshore tax evasion''.
Caribbean jurisdictions are regularly examined by the Caribbean Financial Action Task Force and the International Monetary Fund to ensure that they are compliant with the requirements set by the OECD. Many, if not all of them, have Tax Information Exchange Agreements with the US. Banks are required by law, and on pain of the toughest penalties, to make suspicious activity reports and to follow "know your customer'' procedures. Persons trying either to open a second account with a bank they have dealt with for years or transfer money anywhere are well aware of the scrutiny to which they are subjected, the paper they have to sign and the identification they have to provide.
Now, some of the OECD jurisdictions are luring customers away from Caribbean countries on the basis that they will give them better tax breaks and, of course, they are "safe'' jurisdictions. One of the latest companies to shift is the giant engineering and construction company Foster Wheeler Ltd, which is moving its place of incorporation to Switzerland from Bermuda for "tax and other reasons''.
So far there has been no public indication that Caribbean governments are ready to jointly engage the OECD and the US government in particular on these new threats to their financial services sector. Yet they are all at risk, including Guyana, Jamaica and Trinidad and Tobago-all of whom have passed legislation to offer international financial services.
Similarly, the Caribbean private sector which provides financial services and are in the best position to marshal the arguments and evidence to refute the charges of OECD governments are saying nothing.
When the crunch comes, therefore, those in the private sector, who seem to be sleeping instead of lobbying their governments for joint action should wake up and start pressing the issue fast. The wolf is already at the door.
Sir Ronald Sanders is a business consultant and former Caribbean diplomat.
- Courtesy Jamaica Observer