BBC PANORAMA TV feature takes aim on Caribbean finance centres
About the article
This is a digitised version of an article from The Cayman Compass's print archive. Occasionally, the digitisation process introduces transcription errors, or other problems.
See the article in its original context from October 1994.
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The Cayman government response, on page 9 of the 3 October 1994 issue of the Caymanian Compass, found the programme "disappointing," and "very misleading," said the statement. The response was issued by Financial Secretary George McCarthy.
But the statement did not spell out exactly what was so objectionable about the programme and government officials declined to be interviewed about the programme content. Also, government officials refused to give the Caymanian Compass a copy of the transcript of the show, which aired on 20 September 1994.
Likewise, many in the private sector declined to provide a copy of the transcripts to the Compass for public consumption. However, copies were available from the BBC Information Service at a cost of 10 pounds sterling (US$15). The show's producer, Gavin Hewitt, opens the programme talking with Jack Blum, a lawyer and fraud investigator. The show says Mr. Blum used to work as special counsel to the US Senate Foreign Relations Committee and learned about Cayman while investigating BCCI.
The premise of the show, according to Hewitt, is that "more and more of the world's money is placed offshore...where taxation is minimal and secrecy guaranteed. Many of these offshore centres are islands in the Caribbean and are the responsibility of Britain. To financialinvestigators, these are havens where the paper trail disappears."
Blum states that "the most successful of these offshore centres is the Cayman Islands." He also claims that the most important holiday is the Queen's Birthday. Blum claims the Caymans are used by "Americans who want to evade taxes," and by "drug people who find this a convenient place to move their money after they've managed to get it into the banking system."
Blum said it's not possible to run a serious financialfraud such as BCCI did, and get away with it, unless you use offshore accounts, secret bank accounts, shell corporations and places where "the culture of secrecy is the partner of financial crime." The programme fails to mention that BCCI did not, in fact, get away with it,' and was closed worldwide in July 1991 after a joint UK-Cayman-Switzerland investigating team discovered "massive fraud," at the bank.
The programme also has Mr. Tony Baldry whom the show says is a Minister of State, Foreign Office. Mr. Baldry talks about illegal money coming into the islands. Mr. Baldry claims that "during the 1980s the five Caribbean islands that Britain had responsibility for became centres for criminal money." Mr. Baldry, however, offered no proof of this statement or where his knowledge of the territories came from. Mr. Baldry is now Parliamentary Undersecretary of State for Caribbean Affairs at the Foreign and Commonwealth Office (FCO).
Mr. Baldry also says that money laundering and drugs is not the exclusive province of just the Caribbean territories but "the whole world, throughout the 1980s...you would have found it equally in New York just as you've found it in London."
He also said that the territories have taken many steps to ensure tough regulations to "deal with any perceived and real weakness within the system."
Hewitt says the "Islands" acquired a reputation and that many of the world's dictators, he claims, including Noriega and Marcos, "held accounts here." Hewitt, however, makes no distinction between any of the British Caribbean island territories, using the term "Islands."
The programme produced a man called Kenneth Rijock who said he was a former banking lawyer who laundered millions "through the British dependent territories in the East Caribbean." The show does not point out that the Cayman Islands are in the western Caribbean, some 1000 miles from Eastern Caribbean British territories, and that Rijock's money laundering took place in the British Virgin Islands.
Jack Blum claims that the Reagan Administration "put tremendous pressure on the British government to shut down the Cayman Islands as a place for the intake of criminal cash."
Blum claims that "Planes were coming in here every day loaded with cash," but does not offer specific examples. He does note that the Mutual Legal Assistance Treaty to stop drug money and laundering was signed between the US and the Caymans, but fails to mention this treaty was signed in 1988, more than six years before the BBC programme aired. Hewitt also says that "In the last Olympics, the Cayman Islands fielded a small team. The secretary of their Olympic Team would reveal unwittingly why banking continues to attract criminals."
"The secretary of the team was an important figure in the Islands. His name was Ernest Foster," said Hewitt. The programme fails to mention that Foster was the Secretary to the 1988 Olympic Team, not the 1992 team that went to Barcelona. By 1992, he was no longer in the Cayman Islands, having been arrested and convicted in Miami, Florida in January 1992 on charges of attempted money laundering. Foster is currently serving his 10-year sentence.
Hewitt also claims that "A few months ago, the (US) State Department described the Cayman Islands as a haven for moneylaunderers," but offered no source or date for the statement. US State Department spokesperson Ms. Hazel Reitz denied any such statement was ever issued by the State Department Public Relations Office or by anyone in the State Department speaking for the record.
In the BBC programme, Hewitt spoke with Mrs. Jennifer Dilbert, the Inspector of Financial Services for the Cayman Islands. Hewitt talked about a foreign investor named Najim Kidwai who, allegedly, tried to raise venture capital through a Florida company. Hewitt said that Kidwai's bank was referred offshore to the Guardian Bank in the Cayman Islands with president Mr. John Matthewson. Hewett said there was a problem with getting information from Cayman banking authorities and Mr. Matthewson. Kidwai claims he eventually lost money through the Florida company (Turnbury) that had referred him to Guardian Bank for a reference.
Mr. Kidwai claimed in the programme that he was offered US$100,000 "not to go public with the story (that) if Turnbury were not to give you your money back, the Cayman Islands banking authorities would." Mr. Kidwai never stated who offered him the US$100,000.
The programme also interviewed a Mr. Shaun Murphy who talked about laundering money through "the Islands." The show, however, fails to mention that the "Islands" in question were not the Caymans, but the British Virgin Islands.
The show also talked about massive phony insurance scams and fraud, and minimal government supervision, again using the term "Islands," with no distinction made between Cayman and the Virgin Islands. Only late in the programme is it stated that these phony offshore insurance companies were "in the British Virgin Islands."
To his credit, Hewitt closes the programme by saying "For the Caymans, offshore finance has been a success story. They don't want to attract dirty money, but on the other hand they are wary of the level of regulation their critics demand."
Efforts to reach Gavin Hewitt for comment on the accuracy of the programme have, so far, been unsuccessful.
