Mother England: What can She be thinking?

There’s nothing quite like an external threat to unite a country.

Today, the Cayman Islands faces such a threat, not from any enemy but from our maternal relation, the United Kingdom.

We refer, of course, to England’s insistence that Cayman and our British Overseas Territories brethren implement a public, centralized ownership registry for beneficial owners of locally registered offshore businesses and also — which is more extreme — trusts.

This is a measure that has not been enacted by a single one of Cayman’s offshore competitors or any of the G-20 countries, and hasn’t been seriously contemplated by any major country except the U.K.

Before the Legislative Assembly on Monday, Premier Alden McLaughlin declared unequivocally and correctly that this is a potentially disastrous plan that Cayman will resist — and certainly will not spearhead.

“Unless such registers become the new global standard…neither we, nor any other overseas territory or Crown dependency intend to go first and have our economies experimented with and potentially damaged,” he said.

Exactly right. That’s the “HARDTalk” we like to hear from our Premier.

From our perspective, we see the public register proposal as yet another example of the U.K.’s being unduly influenced by its relationship with the European Union and the motley assemblage of high-tax, high-spend bureaucrats who have led Europe to the fiscal abyss.

The U.K.’s prime minister, David Cameron, who is pushing this public registry scheme, should know better. He has become increasingly critical of the increasingly political European Union, and his current position on the public registry appears to be incongruent with his overall capitalistic conservative views.

While England shows little restraint in instructing Cayman on how to run its affairs, it might be productive for our so-called Mother Country to engage in a reflective inward look.
What She would find is a rapidly growing national debt of about $1.88 trillion, or 90 percent of the country’s gross domestic product — a ratio horrifyingly similar to that of France and Spain, and several multiples greater than Cayman’s.

In regard to immigration, She would find an absolute mess. England’s failure to regulate the flood of inbound foreigners, or to steward the integration and assimilation of new residents, has engendered communities of “strangers,” who, although they happen to live in the U.K., do not identify themselves as British — or even wish to relate to the British.

In fact, many are not the least bit reluctant to state publicly that they hate the British. Isolated enclaves and ghettos serve as incubators for radical “homegrown” terrorists eager to praise ISIS, while at the same time condemning the U.K. and Her allies.

The list of England’s social and economic deficiencies could go on to include the government’s warping influence on the British press, the paranoiac British security apparatus, and any number of restrictions or transgressions of individual liberties.

In this instance, Premier McLaughlin, his government and those of the other British Overseas Territories are acting astutely by presenting a united front against the U.K.’s misguided dictate regarding public registries.

It’s one thing for Britain to flirt with, or appease, the European Union’s bureaucratic bullies in Brussels, but it is quite another to attempt to export their toxic economic orthodoxy 4,800 miles west to their territories in the Caribbean.

1 COMMENT

  1. Yes Mr Premier it is time for Hard Talk and stand tall, and every one in the House need to step in line behind you on this, because it will definitely be to their advantage. A divided house will fall, and it is time David Cameron be handed a kite.

  2. Is it news to anyone that our mother wants to eat us alive?

    The U.K. has been sending signals for some time now indicating that they have no desire to continue with the relationship but we just don’t seem to be getting the message.

  3. Time for Alden to show if the pants really fit. Will he stand up to Mother as hard a Bush did when they insisted that direct taxation be implemented. Or will he kneel to those that orchestrated the fiasco that led to him winning the premiers seat.

  4. Mr Editor, it may be that much of what you say about the Mother Country and it’s financial situation is true, but you actually illustrate how, eventually, the larger countries that produce the wealth, and have a right to collect taxes on it are being unfairly leeched upon by those jurisdictions that allow their shores to be used by the leeches!
    First, is that a fair description? Well, they have infrastructures to maintain, that costs money. to Pretend that this is no concern of dependant territories is to be blind to the word dependant. Are those using Cayman/Jersey/Luxembourg and others leeches? Again yes, and if their activities were above board and legal, anonymity would not be an issue, if they are doing nothing wrong they have nothing to hide.
    At this point, there will be concerns raised about right to privacy, and yes thats reasonable, however, the various havens of secrecy cannot use that as a right to avoid the issue, which is simple. Whilst the irritant was small, it could be ignored, but these jurisdictions have become greedy (a Cayman lawyer greedy! Heaven forfend!) Think about it, Cayman became the 5th biggest banking centre in the world, since it doesn’t share much in common with the other 4, it has to be artificial and it is, it happened originally when a tiny deposit levy was made in New York to provide a fund to insure those deposits, result, flick of a switch transfers to Cayman each night and back in the morning. Result, no levy, and…. no fund. So, will the Cayman Islands make good if there is a default?
    Next, corporate creative accounting to avoid tax, well IF you get honest you will admit thats fraud, do we want to be a part of fraud?
    Then there is the hedge fund industry, we are at its centre, and well done to us, but if those funds are hiding stuff, then that could include fraud, but far worse, its size has become such that lack of control of those units could threaten the worlds financial stability. Do our authorities exercise control? You cannot be serious! When the banks melted in 2008, guess where many of the structured products that had hid the instability were set up? Yes it was here!
    So, when the fleas and leeches become too big, expect retaliation, or, alternatively, nurture the industry that has grown here, but keep it above criticism, and for that you must have transparency, it may reduce the size of the potential customer base, but who wants leeches anyway?

  5. A major problem with any such disclosure law is the use that criminals can make of it.

    How nice for them to know who is worth kidnapping, where their money is and how much ransom they can afford to pay.

    Database of shareholders? Try going to the public records of any USA state and finding out the shareholders of a company.
    Not just notorious states like Nevada and Delaware, where most Fortune 500 companies are based. Even the open government state of Florida draws the line at requiring disclosure of company ownership.

    Time to tell David Cameron to take a hike.

  6. Reply to Arthur Rank. No idea about the other stuff that you write, but FDIC insurance is payable on customer balances only, and never covered institutional cash, so a process in which interbank cash is stripped out of balances that are due the insurance is only good practice. It is also a way for US banks to pay interest on ‘demand’ accounts, as this was banned after the great depression (reg Q). This (reg Q) was repealed in 2011 but banks still use the same process to move money to offshore entities and pay interest. So your angst against Cayman being a leech by facilitating the payment of interest to customers might be off target. Also the assumption that moving the money to Cayman somehow adds risk to the base customer doesn’t hold water. FDIC insurance only has about 55bn in cash covering 4 trillion in deposits, the shortfall is covered by the US Government, the fund is never going to cover the depositor unless it’s a small bank that fails.

  7. Mr King, I could have been a little clearer, the comments I made regarding the banking industry relate to its origins in or about 1963, the principals however are timeless.
    My main point is that whatever the origins, and those origins were to hide money for one reason or another, it could be ignored when small, but once it grows to this sort of size, then a whole new set of rules must apply. The good fortune is that now well established, our industry can survive proper regulation, and should welcome it, for to do otherwise is to set ourselves up for illicit business which will not be tolerated by the bigger jurisdictions!
    To Mr Linton, yes, you are right about the biggest zones of secrecy! I well recall the first Obama inauguration speech when he referred to a building in the Caymans with xx,000 companies. It must be the biggest building in the world or the companies are shams. Maybe he never visited Delaware!

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