EDITORIAL – Britain vs. Cayman: A lack of transparency on financial transparency

This weekend, U.K. National Crime Agency Director Donald Toon dropped on the Cayman Islands a bombshell that was both explosive and unexpected.

Mr. Toon complained to the BBC that his agency (equivalent to the American FBI) is “having a difficulty with Cayman” in terms of obtaining beneficial ownership information on Cayman companies linked to U.K. anti-money laundering and criminal investigations.

Pardon? For years Cayman officials have waved the banner of financial services transparency, claiming that our country sets the standard for sharing relevant company information with law enforcement entities and tax authorities. Specifically in regard to the U.K., Cayman had signed an agreement, known as an “exchange of notes,” to respond to British law enforcement requests within 24 hours and in urgent cases within one hour.

The contrary tune sung very publicly by Mr. Toon revealed a very private feud being waged between U.K. and Cayman officials on a subject crucial to Cayman’s political and economic standing. The stage was set for an unavoidable showdown, conducted via dueling press releases.

First, from Cayman’s Office of the Premier: “There is absolutely no merit to Mr. Toon’s allegation. His complaint is a gross misrepresentation of a single situation and is no basis on which to accuse the Cayman Islands of being uncooperative. … The fact that the UK Parliament in May 2018 imposed an unjustifiable and inequitable requirement on the British Overseas Territories and not the Crown Dependencies is bad enough. Now it appears that in furtherance of that agenda the NCA has entered the political arena against what it has previously described as one of its most cooperative and excellent supporters.”

Then, from a U.K. Foreign and Commonwealth Office spokesperson: “The Cayman Islands withdrew from the Exchange of Notes after the UK’s Sanctions and Anti-Money Laundering Act was passed in May. Recently, the Cayman Islands Government has also stopped the Royal Cayman Islands Police Service (RCIPS) from being the competent authority for dealing with Beneficial Ownership requests. Both of these steps make our cooperation on serious organised crime more difficult.”

And now (as reported on today’s front page), a retort from Premier Alden McLaughlin: “At the core of the current dispute with the FCO are fundamental issues of data security and human rights, specifically the right to privacy. … The Cayman Islands stands by its commitment to cooperation with all international law enforcement, including the NCA, but will not be bullied into the violation of fundamental principles of human rights or to cooperating in a way that runs counter to internationally accepted standards.”

So … Who did what, and when?

What was Mr. Toon doing using the U.K. media to call out Cayman in front of the world? Surely the decision to single out Cayman by name was not incidental. In the absence of further explanation, it certainly resembles a political smear job.

How did we get to the point that there was even a bombshell to be dropped – particularly by a key law enforcement figure such as Mr. Toon? Why was not the Cayman public kept informed, either by local or U.K. officials, about significant changes to the “exchange of notes” regime? Instead of an important but somewhat abstruse policy discussion, the news arrived in the form of reputation-damaging international headlines.

Mr. Toon and Premier McLaughlin have affixed their names to their statements. How about others? Does “an FCO spokesperson” mean Head of the Governor’s Office Matthew Forbes? Acting Governor Franz Manderson? Where does Financial Services Minister Tara Rivers fit in? Chief Officer Dax Basdeo? If they’re not talking on record to the press, are they talking to each other? Remember, they work in the same Government Administration Building. And they all work for us.

The secretive row is indicative of – potentially an eroding relationship between country and colony – at minimum an absolute breakdown of communications … between the FCO and our government, and between Mr. Toon’s agency and our officials.

The situation illustrates why Cayman needs a governor, and not a “local” or “acting” governor or faceless “Office of the Governor,” but an individual with authority who unequivocally represents the interests of the U.K. in Cayman, someone who can act as mediator, negotiator and, when required, decision-maker.

It is not irrelevant that we are marking 14 weeks since Governor Anwar Choudhury was “temporarily withdrawn” from his Cayman post, based on what are still officially unspecified allegations, for what initially was estimated to be a 4-6 week investigation. Even in light of the above editorial, the very first question our country needs answered remains:

What happened to Governor Choudhury?