UK opposition slams Cayman for beneficial ownership ‘victory’

Speaking in the United Kingdom’s House of Commons, opposition leader Jeremy Corbyn Wednesday again criticized Prime Minister David Cameron and the new beneficial ownership agreement with Cayman announced this week.

Leader of Britain’s opposition Labour Party Jeremy Corbyn
Leader of Britain’s opposition Labour Party Jeremy Corbyn

“It is quite interesting that the premier of the Cayman Islands, Alden McLaughlin, is today apparently celebrating his victory over the Prime Minister, because he is saying that the information, ‘certainly will not be available publicly or available directly by any U.K. or non-Cayman Islands agency,” Mr. Corbyn said.

He continued, “The prime minister is supposed to be chasing down tax evasion and tax avoidance; he is supposed to be bringing it all into the open. If he cannot even persuade the premiers of the Cayman Islands or Jersey to open up their books, where is the tough talk bringing the information we need to collect the taxes that should pay for the services that people need?”

This week, the premier announced the new deal with the U.K. to create not a central register but what’s being called a “centralized platform” to access beneficial ownership information that will be kept with the financial services company. The agreement gives Cayman until July 2017 to set up the platform to access that information, and requires that the financial service companies or their clients don’t know what authorities are looking at.

The deal means that only Cayman authorities will have access to the data and will be able to search the information based on requests from overseas law enforcement and tax agencies. Jude Scott, CEO of Cayman Finance, in an interview responded to the criticism he’s heard from reports out of the U.K. Parliament: “They haven’t invested the time to understand the system we do have.”

He said the comments from Mr. Corbyn and British Members of Parliament come down to politics. He called the beneficial ownership issue “a political football, adding, “Those who don’t quite understand it, don’t want to.”

Labour’s John McDonnell later in the debate on the Panama Papers repeated Mr. Corbyn’s line, saying Mr. McLaughlin “celebrated victory over the U.K.”

Mr. McDonnell said, “We must ensure that Crown dependencies and overseas territories enforce far stricter minimum standards of transparency for company and trust ownership. The government’s current program for reform is being laughed at by the tax havens.”

He added, “The truth is that the government are playing into the hands of those who want to abuse the tax system.”

Later in the discussion, Stewart Hosie, with the Scottish National Party, said, “It is worth reminding ourselves that at a single address in the Cayman Islands, Ugland House, there are 19,000 registered businesses. I am certain that some of them will be legal, but many will not be. Many will be companies whose beneficial owners remain hidden from the tax authorities there, here or elsewhere.”

He added, “We have, in essence, an international system of finance that enables tax avoidance on an industrial scale, a system that hides from scrutiny the owners of vast wealth while the ordinary man, woman or business in the street does not have, and does not want, that luxury.”

Cayman’s Panama Papers PR problem

Cayman Finance’s Mr. Scott said that representatives should be “spending more time with folks in the U.K. Parliament and the NGOs” who criticize Cayman’s beneficial ownership regime. But that is, as he said earlier, dependent on whether they want to understand.

The massive leak of documents from Panamanian law firm Mossack Fonseca detailing the offshore business dealings of people and companies around the world has brought offshore finance to the front pages of newspapers and leading news programs from the United States to Germany to Australia.

Two of Cayman’s biggest trading partners and patrons, the U.S. and the U.K., have had debates among lawmakers and legal moves to shore up tax avoidance and push for transparency in offshore centers like the Cayman Islands.

Leaders in Cayman have been quick to try to distinguish businesses here from the sometimes illegal dealings seen with the Panama Papers leak.

“Cayman is not Panama,” Premier McLaughlin said to more than 100 people gathered for the Internet Marketing Association conference just days after the leak hit the headlines.

In several public appearances since the early April revelations of the Panama Papers, the premier has hammered away on the message that Cayman’s financial services sector, the islands’ biggest industry, is for legitimate business.

“We don’t want customers looking to break the law,” he said at a press conference earlier this week announcing the new deal to share beneficial ownership information with overseas authorities.

“If there is bad business here, they would be well advised to migrate somewhere else,” the premier said in response to questions at the press conference.

The Panama Papers is a collection of millions of records, documents and other data going back more than 40 years from Mossack Fonseca. An anonymous source leaked the trove to a German newspaper a year ago, and since then a consortium of hundreds of journalists from around the world have been digging into the information.

The news organizations released their first stories April 3, and since then the revelations have led to the resignation of Iceland’s prime minister, a new resignation at FIFA, and pushes for more transparency around the globe.

Police in Panama raided the law firm this week, and the leaks sparked fresh raids by Swiss police targeting officials with FIFA. This week 28 countries sent tax officials to Paris to coordinate a strategy to investigate possible tax evasion documented in the Panama Papers.

The International Consortium of Investigative Journalists, which has been the central hub for the reporting, wrote in a recent story, “A spokeswoman for Ireland’s tax authority said revenue officials will ‘explore possibilities of cooperation and information-sharing, identify tax compliance risks and agree on collaborative action, in light of the Panama Papers revelations.’”

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    As far as I am concerned, we are among the best, and we have Best of the Best. Yes let us celebrate with Mr. Alden McLaughlin on this, he should have been standing up to these people three years ago. Now the important thing is that all those with interest in Cayman and who have something worthy to share, please do not sit down and fold hands on this. Do what you have to do. We got ye back.

  2. Twyla you are absolutely right. Although it might have been more tactful not to have described the agreement as a victory.

    Of course near Communists like Corbyn hate all success. He even pilloried David Cameron over a stock sale of just £30,000 on which he paid his taxes. Of course he would seize on anything we say as a reason to attack us.

    There is the old question about how to build the tallest building in town.
    The first way is to build the tallest building.
    The other is to knock down all the other buildings.
    And Corbyn already has a sledgehammer in his hand ready to start swinging.
    I don’t think he will be happy until everyone in the UK is poor and the Cayman Islands has gone back to weaving rope out of silver thatch.