Veteran observers of Cayman Islands politics will recall that local lawmakers deliberated for the better part of a decade before finally agreeing to make the most elementary of government decisions – changing the speed limit on West Bay Road, from 40 mph to 25 mph.
This is the same parliamentary body that has allotted roughly two weeks for consideration of extremely significant legislation governing our country’s most significant sector of the economy – financial services.
A year ago the European Union demanded that Cayman and other jurisdictions enact reforms to our financial services sector by the end of 2018 or risk being placed on a “blacklist” for noncompliance. Officials, led by Financial Services Minister Tara Rivers, participated in a series of overseas meetings on the topic. (We were sent a diet of “postcard” press releases, little more than images of Ms. Rivers in the company of various European bigwigs, but never containing details of discussions.)
Last Thursday, the government published three pieces of legislation – The Companies (Amendment) (No. 2) Bill, 2018; The Local Companies (Control) (Amendment) Bill, 2018; and The International Tax Co-Operation (Economic Substance) Bill, 2018.
Not only was it the first time the public was informed of the language of the legislation – but also that government shared its “promises to Europe” with the local population, on whose behalf the promises were made. The Legislative Assembly is set to convene Monday, and officials have stated their intention to pass the bills before the end of the year.
Time is so short, and the legislative language so abstruse, that we do not feel comfortable right now committing to print our thoughts on the content of the legislation. (We will address the substance – and potential consequences of this legislation – in an upcoming editorial.)
Similarly, given the minuscule time frame, it is unlikely that legislators have been able to read carefully the bills, unlikelier that they have a full understanding of the proposed changes, and seemingly impossible that they have pondered the potential ramifications to the financial services sector, wider economy and future of the country.
We draw no comfort from the ministry’s claims that the bills have been subjected to in-depth consultation with Cayman’s financial services industry, local regulators, the EU and OECD. Assuming those discussions took place, they took place behind closed doors – out of sight, and earshot, from either Cayman’s public or stakeholders who were not selected by the government for consultation.
Who was consulted? What was discussed? What concerns were raised? How do the bills address those concerns (or not)?
Even during this ephemeral moment of public disclosure before the parliamentary proceedings, the intent seems to be to set aside meaningful debate in favor of government’s objectives.
Cayman Finance, which nominally represents the country’s financial services industry, urged its members to parrot an official statement that Cayman Finance had coordinated with the ministry.
Quoting from an advisory sent last Thursday, “Cayman Finance Members and Industry Associations may well wish to hold back on updating clients until both the draft legislation and draft guidance notes are in the public domain.”
Cayman Finance said this wagon-circling will present “a unified jurisdictional message as we continue the process with both the EU Code of Conduct Group and the OECD’s [Forum on Harmful Tax Practices].”
The question cannot be ignored: When Cayman Finance agreed to accept financial contributions from government, did it from that moment forward forfeit its claims to independence?
Of course, if lawmakers have already made their decision on the legislation, why bother debating it – or even reading it? With not nearly enough time to delve into the specific reforms and changes in the three bills, it seems the table is being set in the Legislative Assembly for a simple thumbs-up or thumbs-down on a single question: “Is it the intent of Cayman’s government to attempt to appease Europe … at any cost?”