High of 89 Low of 78 Moderate with wave heights of 3 to 5 feet. Travel Sweet Cashew Cashew is slightly bewildered by having been dropped at the shelter and desperately needs a loving forever home B8 ART & CULTURE traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts traditional arts ‘Jurassic World’ Blockbuster movie, now showing, offers dinosaurs and more B5 Movies & TV Keeping the islands’ unique heritage alive. B10 Atlantic paradise The Azores is an extraordinary destination B9 Cool activities How to entertain the little ones this summer B12 Leisure Sweet Cashew is slightly bewildered by having been dropped at the shelter and desperately needs a loving forever home FRIDAY JUNE 19, 2015 • CAYMAN COMPASS cayman weekender Cayman’s traditional arts Editorial | pagE 4 GT landfill: STill no ‘on-SiTe’ SoluTion in SiGhT eSTaBLISHed 1965 www.caymancompass.com – 75 CENTS – friday June 19, 2015 Finance coMMittee debate School access and the Bill of rights JameS WhiTTaker jwhittaker@pinnaclemedialtd.com Questions were raised during a Finance Committee hearing on the country’s education budget about whether policies that prevent the children of foreign workers from accessing free schooling in the public education system were incompatible with the Bill of Rights. “We need to look into this. I don’t know if we are not walking close to the line,” said East End legislator Arden McLean. Education Minister Tara Rivers said it was a “fallacy” that expat children were not al- lowed to attend government schools. She said there was a limited amount of space available in the public school system and places were allocated to Caymanian children first. “There is no policy that disallows non-Cay- manian children. There is a hierarchy in terms of who can access spaces first.” She acknowledged that there were few spaces available for expat children, but said the policy was in line with the Bill of Rights. The Constitution states: “Government shall seek reasonably to achieve the pro- gressive realization within available re- sources of providing every child with pri- mary and secondary education which shall, subject to sub section (3), be free.” Ms. Rivers said, “Our resources are the number of schools currently in place, so it was a policy decision taken to ensure that the resources are allocated according to some for- mula that meets the needs of the community.” The Human Rights Commission, in re- sponse to questions from the Cayman Compass on the same issue in 2014, said there was “no evidence to support the claim Cayman named on new eU blaCklist michael klein mklein@pinnaclemedialtd.com The Cayman Islands is on a list the European Commission has published of the top 30 noncooperative jurisdictions that are blacklisted by at least 10 European Union member states. Others on the list include Bermuda, the British Virgin Islands, Hong Kong, Guernsey, Liechtenstein and Monaco, as well as other offshore financial centers. To determine noncooperation, the EU member states used a mishmash of individual methodologies ranging from compliance with transparency and exchange of information standards to the absence of harmful tax mea- sures and other criteria. The list, published on the website of the EU Tax and Customs Union, reflects how countries and territories around the world apply standards of tax governance, including “transparency, exchange of information and fair tax competition.” The analysis was based on work done by the Platform for Tax Good Governance and in- formation provided by EU member states. The platform was formed by the European Commission to assist in developing initia- tives to promote good governance in tax matters in third countries, to tackle aggres- sive tax planning and to identify and ad- dress double taxation. It brings together tax authorities from EU member states and 15 representatives from businesses, tax professionals and civil society organizations and thus unites unlikely bedfel- lows such as the Tax Justice Network, Oxfam, the International Chamber of Commerce, the Dutch Association of Tax Advisers and the BDI, a lobby organization for German indus- trial companies. Swarms make beeline for new homes JeWel levy jlevy@pinnaclemedialtd.com This is the season for hon- eybee swarms, and if you’ve ever seen one, it can be an impressive sight. Bee expert Otto Watler said there is no need for residents to panic, as swarming is a natural phenomenon for honeybees and is part of the natural process. But for some, the sight of the swarms can be alarming. “I am 50-something and I have never seen a swarm of bees like that before,” said Northward resident John David Ebanks, who observed a bee swarm with wife Ruth. “We heard a noise like a passing Jet Ski and when we looked up in the sky, there was this swarm of bees gathered together in a 5-foot-tall cone- shaped whirlwind hovering above the top of a neem tree next to our property near the prison. We believe they were killer bees,” Mr. Ebanks said. The bees were moving in a northerly direction off Regina Avenue toward the Northward main road, he said. Mr. Watler said Cayman is red carpet rolls out for film festival Several events and movie showings are lined up this weekend for Cayman’s first international film festival. Garfield Ellis from Celebrations laid out the red carpet thursday afternoon in preparation for the festival launch and local premiere of ‘Serena,’ starring Jennifer Lawrence and bradley cooper. For more, see page 8. – photo: taneos Ramsay PLEASE TURN TO PAGE 8 » PLEASE TURN TO PAGE 8 » PLEASE TURN TO PAGE 8 »2 LOCAL NEWS Friday June 19, 2015 • Cayman Compass Shabbat Candle Lighting time on Friday, June 19 6:48pm Chabad Jewish Center of the Cayman Islands jewishcayman.com-345.516.4474 PICCADILLY CENTRE FOR LEASE Over 18,000s/f rentable Secure multi storey parking Fully refurbished l l l Competitive lease rates Member CIREBA 345-945-4411 info@cirealty.ky caymanislandsrealty.com Eugenio Leon Harpist Extraordinaire, serenades tableside tonight and every Friday night! Salsa Tuesdays with DJ Flex Free lessons with Kirk starting 9.30pm Every Tuesday TOMORROW Saturday, June 20th Barefoot Man and Sea N’B Starting live at 8:00pm Come for dinner Stay for Dancing No Cover Call 949-2231 or email: thewharf@candw.ky Tuesdays Salsa Free lessons with Kirk starting “BOOGIE NIGHTS” Don’t forget Next Week Last Friday of EVERY MONTH! is almost here Friday, June 26th Old School Dance Party 70’s disco & 80’s classics Music By DJ FLEX Starting at 9:30pm Tarpon Fish Feeding 7:30pm & 9:00pm Nightly Tonight! Friday Happy Hour 5pm-7pm with FREE Hors d’oeuvres + Drink Specials Tonight! Friday Happy Hour 5pm-7pm with FREE Hors d’oeuvres + Drink Specials Friday Happy Hour 5pm-7pm 345.623.1400 • SALES & RENTALS • MEMBER OF CIREBA • COMMERCIAL LEASES • capitalrealty.com.ky “We Do The Homework” Call Us Today 623.1400 CANAL POINT HOME MLS 404390 US$1,899,000 5 beds/4 bath 2 car garage, pool. Fabulous Canal views and dock! Open oor plan with views of canal. CALL ALVIN SLUCHINSKI, 525.8850 SOUTH SOUND HOME MLS 401908 US$1,995,000 Understated Elegance, Family Home 4 bedrooms with 3 large o ces! 5.5 baths Pool. Fabulous designer kitchen CALL HEIDI KISS, 525.1126 945-2290 • West Shore Center, Seven Mile Beach • 10am to 10pm Fresh, Healthy & Delicious! Cayman Cookin’ Over a Wood Fire! Taste why we’re voted “Best”! If you’re Hungry! Hungry! Come to Chicken Chicken! International Award-Winning Caribbean Chicken! Eat-in!Take-out! Indulge on a feast for 2 to 4 or 6 or more! With an awesome selection of sides to choose from. Charles DunCan cduncan@pinnaclemedialtd.com The Cayman Islands Financial Reporting Authority, charged with tracking and analyzing sus- picious financial transac- tions, has a growing backlog of cases as the number of re- ports from financial institu- tions grows, according to the authority’s recently released 2013-2014 annual report. Between the 2012-2013 and the 2013-2014 fiscal years, according to the report, cases jumped from 392 to 558. In that time, the backlog increased at about the same rate from 173 to 239, with some cases dating back two years. With the increased numbers, more cases have been referred to police and overseas authorities. Authority Director Lindsey Cacho, in a letter at the beginning of the annual report, states, “The year has seen a significant increase in the number of suspicious ac- tivity reports ... admittedly, such large numbers posed an uphill challenge to the analytical staff.” Suspicious activity reports are used by many govern- ment and financial institu- tions to try to identify money laundering, terrorist funding, drug trafficking and other fi- nancial crimes. This week, authorities in Switzerland announced they were inves- tigating, among other leads in the FIFA corruption case, 53 suspicious activity re- ports on FIFA-related ac- counts in Swiss banks. Senior Crown Counsel Adam Roberts, who serves as legal advisor to Cayman’s Financial Reporting Authority and answered questions on the authority’s behalf, de- clined to give updated num- bers on the case backlog. He refused to speculate on why the backlog is growing, but wrote in an email to the Cayman Compass, “Reasons for delay and backlog are myriad and diverse.” In the budget for the upcoming fiscal year, the Legislative Assembly in- creases the FRA budget by 10 percent, from about $700,000 to more than $770,000. Financial institutions that see questionable transactions, like a large, unusual deposit, are required to submit a sus- picious activity report to the Financial Reporting Authority. The authority can then refer cases to the Royal Cayman Islands Police Service or other law enforcement agencies in Cayman or abroad. The FRA sent 120 cases to RCIPS in the 2013-2014 fiscal year. In the year before, the FRA sent 58 cases to po- lice. Police did not respond to questions about those cases by press time. The FRA is also the point of contact for other countries to request information about financial crimes that may have involved companies in the Cayman Islands. The report states the FRA sent information overseas on 88 cases in the last fiscal year. The authority shared information based on 47 re- quests from foreign law en- forcement agencies and vol- untarily sent out information on another 41 cases. Most of those voluntary disclosures, 37, went to the United States. Mr. Roberts declined to say if the FRA is assisting U.S. or Swiss authorities in the ongoing FIFA investigations. Court records filed in the U.S. FIFA cases indicate that au- thorities in Cayman provided information to investigators as they built cases against CONCACAF president Jeffrey Webb and others, including details about wire transfers to and from an account held by Costas Takkas at Fidelity Bank (Cayman) Limited. Most cases at the FRA come from banks, with 200 last year. The authority also received cases from securi- ties brokers, trust compa- nies, service providers and overseas financial authorities. Last year, the FRA received 69 cases from overseas fi- nancial intelligence units, ac- cording to the annual report. Half of the reports filed with the ERA in the last fiscal year relate generally to suspicious activity. More than 20 percent had to do with suspected fraud, and almost 10 percent related to possible money laundering. The rest of the reports came from a combination of suspi- cions of corruption, tax eva- sion, drug trafficking and similar crimes. Growing case backlog for financial regulator Carol Winker cwinker@pinnaclemedialtd.com Florin Roata, a Romanian citizen who came to Cayman as a visitor in December 2014, was sentenced to three years for his role in a conspiracy to defraud local banks through the use of cloned credit cards. Justice Michael Mettyear handed down the term of three years last week, the same sentence he gave Roland Pop and Ianacu Vlismas in May after all three men pleaded guilty. Roata’s sentencing had been adjourned because there was a question about whether he had previous convictions in another jurisdiction. Defense attorney Amelia Fosuhene said she had a doc- ument that seemed to sug- gest Roata had received a fine or 14 days’ imprison- ment and it appeared there was a record. However, Roata had told her it was not a conviction because he never went to court and never en- tered a plea, and that it was dealt with administratively. Justice Mettyear said his problem was that he hadn’t believed Roata when he gave evidence under oath in the trial of his fiancée, so he wasn’t going to accept his word now. Since he does not preside in Cayman on a per- manent basis, he decided he would impose the term of three years and if another court were satisfied that Roata did not have a previous conviction, three months should come off that sentence. Details of the charge of conspiracy to defraud were that Pop, Vlismas and Roata conspired with persons un- known, between Dec. 10 and Dec. 17, to defraud local re- tail banks by dishonestly withdrawing cash from ATM machines with the use of cloned credit cards. Police recovered US$101,698 from the room of Pop and Vlismas on Dec. 17. Approximately US$19,511 was recovered from the room Roata shared with his fiancee Mariana Oprinoiu. The three men had ad- mitted their roles in the con- spiracy, but she had pleaded not guilty. During her trial, Roata gave evidence that Oprinoiu did not know anything about what the men were doing. He said he was the one who hid money in her jeans and memory cards in her bra. Police found 23 gift cards, 20 of which had mag- netic strips with genuine credit card information im- ported into them; Roata said he had placed these cards in Oprinoiu’s bag of underwear. Justice Mettyear had re- jected this evidence. “It is difficult to think of a worse place to hide things from a woman than her own jeans, her bra and a mesh bag holding her used underwear,” he commented. He said the items were placed where they would be less likely to be observed by someone ti- dying the room. He concluded that Oprinoiu either put the items where they were found or else knew that Roata put them there and was content with the situation. He found her not guilty of the conspiracy, but guilty of money laundering – pos- session of approximately US$19,511 that was criminal property – and sentenced her to 15 months’ imprisonment. Roata’s sentence for money laundering was 10 months, to be served concurrently. The judge also recommended him for deportation after he com- pletes his sentence. Fourth person sentenced for credit card fraudThe islands’ most-trusted news source 3 Cayman Compass • Friday June 19, 2015 4937 - LIME - NEW iPhone 6 Offer - Full Page Ad - CMYK - 10.33 x 15.97 - 13 May 2015 UPGRADE TO iPhone 6 $ 299 iPhone 6 isn’t just bigger _ it’s better in every way. Larger, yet thinner. More powerful, yet power efficient. It’s a new generation of iPhone. BUY NOW | LIME.COMThe islands’ most-trusted news source 4 – EDITORIAL – Opinion&Letters The Cayman Compass welcomes comments, opinions and viewpoints from readers. Letters to the editor can be emailed to editor@pinnaclemedialtd.com, submitted via www.caymancompass.com, sent by post or hand-delivered to the Compass office. Friday June 19, 2015 • Cayman COmpass In use for some 50 years now, the George Town landfill has long been a breeding ground for vermin, pests, pollution, toxins, smoke – and more recently, for consultants’ reports. The latest such document, by U.K. firm Amec Foster Wheeler, isn’t a bad report. In fact, it’s a pretty good one. We know this because it principally repeats the observations and conclusions arrived at by other capable consultants in previous years. Here are some key points: • The George Town landfill is rapidly running out of space • The unlined landfill needs to be capped and remediated • The government should promote policies that encourage the diversion of as much garbage from the landfill as possible (i.e., “reduce, reuse, recycle”) • Waste-to-energy options should be explored, but this technology will not eliminate completely the need to landfill materials, for example the ash left over from the incineration process. Most people in the Cayman Islands already know this. Every single one of our policymakers and elected officials do, too … At least, they should. Yet, here we are. More than two years after the Progressives government gained power, largely through politicians’ promises on the campaign trail that they had an on-site solution for the George Town landfill menace, and two years since the Progres- sives spurned the Dart Group’s $60 million proposal to fix Mount Trashmore for good and to create a new landfill on the eastern half of Grand Cayman (Voters should never forget: “No dump in Bodden Town”) – the Cayman public is being presented, not with practical solutions, but with more consultants’ reports. The way things are going, Grand Cayman is going to need a new landfill just to contain the reams of paper being produced in regard to the existing landfill. The manner in which Cayman leaders are purport- edly pursuing a “National Solid Waste Management Policy” is the way people behave when they don’t have any money. Instead of putting up the cash to fix the George Town landfill, this government is continu- ally rehearsing all the ways in which the landfill could be fixed, if it were financially feasible. All the while, the George Town landfill continues to grow, abated only by sporadic dump fires and occa- sional off-island shipments of scrap metal. According to the Amec Foster Wheeler report, Cayman as a country produces roughly 65,000 tons of solid waste per year, more than 95 percent of it gener- ated in Grand Cayman, and with the vast majority of that material ending up at the George Town dump. While the landfills on the Sister Islands are cer- tainly inadequate, and Cayman Brac’s landfill is equally as odious, proportionate to the population, as Grand Cayman’s – any “National Solid Waste Management Policy,” as a matter of magnitude, begins and ends with what to do about the George Town landfill. Along with the publication of the Amec Foster Wheeler report, the Ministry of Health and Culture (led by Premier Alden McLaughlin since last December when he took over some ministerial responsibilities with Bodden Town MLA Osbourne Bodden) released a document containing answers to “Frequently Asked Questions” about the govern- ment’s solid waste endeavors. The ministry’s first response begins, “There is an urgent need to research and develop a formal, nation- ally agreed policy to address the Islands’ long term goals for an Integrated Solid Waste Management System (ISWMS).” We disagree. Cayman’s true “urgent need” is this: Fix the dump. GT landfill: Still no ‘on-site’ solution in sight Wrong but honest forecasts Barry ritholtz Sometimes the gains from a new regulatory regime are obvious. The creation of the Federal Deposit Insurance Corp. is a perfect example. Your bank deposits are guar- anteed by the government up to some stated amount, no matter the recklessness or ir- responsibility of the bankers running the place. It wasn’t always this way. Before the FDIC, bank runs were common and depositors could and did lose all their money. The changes were an enormous improvement, al- lowing people to safely de- posit their cash without fear of a run on the bank in times of trouble. Savings increased, stress over bank accounts fell, bank lending rose. The en- tire economy benefited. It was pretty hard to misconstrue the impact: a win-win-win. In the late 1990s and early 2000s, a series of scandals led to major regulatory changes in how Wall Street analysts did their jobs. A brief litany of re- lated outrages would have to include: the WorldCom and Enron accounting scandals; manipulation of initial public offering pricing; private calls to larger investors that gave them an unfair advantage on the timing of analyst upgrades and downgrades; and slanted analyst reports on companies in order to win investment banking business. A series of investigations by the Securities and Exchange Commission led to improved corporate disclosure under Regulation Fair Disclosure in 2000 and Congress passed the Sarbanes- Oxley Act in 2002, laying out rules on financial reporting, corporate governance and au- diting. On top of that, in 2003 the state of New York forced Wall Street to clean up the way their analysts did busi- ness, clamping down on the conflicts that led to biased re- search and forecasts. The net result of these reg- ulatory changes? Analysts are now honestly wrong, instead of being dishonestly wrong. You may shrug that off as no big improvement – wrong is wrong, after all. But it means that individual in- vestors are no longer being duped by analysts and in- vestment banks. When it comes to market confidence, fairness is a big improvement. I was reminded of this issue recently by a new study accepted for publication by the CFA Institute’s Financial Analysts Journal titled, “Did Analyst Forecast Accuracy and Dispersion Improve Following the Increase in Regulation Post 2002?” by Hassan Espahbodi, Pouran Espahbodi and Reza Espahbodi. As Bloomberg News re- ported: “More than a decade after a government crackdown on conflicts of interest on Wall Street, a new study says stock analysts are no better now than they used to be at predicting corporate earn- ings. Actually, they’re worse, according to the paper, which reviewed how close profit es- timates came to what compa- nies ended up reporting from fiscal year 1994 to 2013.” Perhaps you forgot what it was like in the 1990s. It was a time of madness, an era of dizzying market gains and a full-on technology bubble. As is their wont, unsophisticated individual investors decided to jump in with both feet late in the cycle. I look at the 1995 Netscape IPO as the turning point where the public seemed to have lost its head over equity trading. This was after prices had already risen a lot and price-to-earnings ratio were looking rich. Investment bankers saw a market hungry for new is- sues. They fulfilled that de- mand. There is nothing wrong with selling IPOs to those who want them; all of the basic securities laws still applied. But there were enor- mous loopholes that allowed all sorts of inappropriate be- havior and misleading mar- keting. To restore public con- fidence in financial markets and to increase a sense of fairness, those new rules and laws were passed. Reza Espahbodi, one of the authors of the aforemen- tioned report, and a professor at Washburn University, states the obvious: “Even though con- flicts of interest are being re- duced because of rules, we’re still back to square one be- cause we don’t have accurate forecasts,” he told Bloomberg reporters in a phone interview. To draw that conclusion is to miss the point. You can’t regulate accuracy in forecasts. After all, that is what ana- lysts do – they make educated guesses about how a com- pany, industry or the economy might perform in the future. That nobody does this consistently well isn’t a failure of regulation; rather the matter represents a fun- damental misunderstanding of human capabilities. People are terrible at making predic- tions. That they keep trying is a testament to both persis- tence (a good trait) and fool- ishness (a not so good trait). Regardless, there have been enormous changes forced on research departments every- where. The results are some- what mixed. Research is a much less profitable business than it once was, a result of numerous factors, including (but by no means exclusively) the new regulations. However, the research departments of investment banks are no longer selling one group of clients down the river for the benefit of another group of cli- ents. That was more or less the earlier state of affairs. More than 10 years after the big Wall Street analyst set- tlement, the analyst commu- nity isn’t any better. And when forecasts are wrong, it prob- ably isn’t because analysts are corrupt or cheating or favoring one group of clients over an- other. It is because of the pre- posterous job requirement that they say what will happen in the future. It would be great if an- alysts were correct. If they can’t achieve that – and they can’t – at least they’re hon- estly wrong now. Barry Ritholtz, a Bloomberg View columnist, is the founder of Ritholtz Wealth Management. He is a consultant at and former CEO for FusionIQ, a quantitative research firm. © 2015, Bloomberg View Printed and Published by: Caymanian Compass Limited (a subsidiary of Pinnacle Media Ltd) Compass Centre Shedden Road, George Town send us yOur VieWs Or neWs: P.O. Box 1365 Grand Cayman KY1-1108, Cayman Islands Telephone: (345) 815-0095 Email: newsdesk@pinnaclemedialtd.com adVertise With us: Telephone: (345) 949-5111 Email: sales@pinnaclemedialtd.com Website: www.caymancompass.com PUBLISHERS daVid r. legge and Vicki l. legge EdITOR-In-CHIEf daVid r. legge A MEMBER OF THE INTER-AMERICAN PRESS ASSOCIATION “Give light and the people will find their own way”The islands’ most-trusted news source 5 Cayman Compass • Friday June 19, 2015 Changing the way we do things. It's time for us all to say, You've got two ears, but one mouth, so talk less, and listen more. That's what we've been doing. You've got two ears, but one mouth, so talk less, and listen more. That's what we've been doing. And the world we all live in. treatment and first-class service. Changing the way we do things. And the world we all live in. You deserve DON'T SETTLE FOR LESS. JOIN US CHANGING. So we know you're... Bored with ordinary. Listening to you. THAT'S WHY WE'RE It's time for us all to say, Fed up with average. And tired of ok.6 LOCAL NEWS Friday June 19, 2015 • Cayman Compass SEC amends Caledonian complaint Michael Klein mklein@pinnaclemedialtd.com The U.S. Securities and Exchange Commission has amended its complaint against Caledonian and three other de- fendants, stating for the first time that the brokerages traded on behalf of clients in their al- leged securities violations. The lawsuit claims that re- stricted securities “were passed off” as free trading stock held by shareholders unaffiliated with the issuers, and that the stock certificates were subsequently transferred, without restrictive legends, to Caledonian Bank and Caledonian Securities in Cayman, Clear Water Securities and Legacy Global Markets in Belize, and Verdmont Capital in Panama or brokerage accoun- tants held by these firms. The companies then sold the stock from those accounts to the public and violated U.S. securi- ties laws, the SEC alleges. “Verdmont sold the stock for the account of one or more of three customers – Lomex Financial Ltd., Nautilus Growth Fund, Inc. or Bartlett Trading Inc. – and, on information and belief, received $239,965 in commissions for those sales. Caledonian’s counsel has repre- sented that it also sold the stock for the account of customers,” the amended complaint states. The stock sold involved four practically worthless penny stock shell companies – Swingplane Ventures, Goff Corp., Norstra Energy Inc. and Xumanii, Inc. The companies saw their share price spike as a result of heavy promotional ac- tivity and then collapse to zero within months. Sales of the shares in the four companies through the de- fendants generated about $75 million in proceeds for the per- petrators of the penny stock pump-and-dump schemes, ac- cording to the complaint. The SEC filed the amended complaint after District Judge William Pauley III lambasted the SEC for its handling of the case in a hearing on May 21. During the hearing, the de- fense counsel for Verdmont said he was going to push for a judg- ment on the pleadings, arguing that on the current evidence presented in the case the SEC had no chance of succeeding. “If they are going to have a case here, your Honor, I re- ally don’t care what the com- plaint says, what is their case? How are they going to prove it? Who is going to take that stand and testify? What documents are going to come into evidence and how are they going to au- thenticate those documents?” attorney Robert Zito said. The judge said if the SEC “could get around to figuring out the court’s individual rules” and amend its complaint, a judgment on the pleadings would not be necessary. “You are going to get going on this case. We are going to have a hearing in this case. I’m going to direct the SEC to file a motion to amend their complaint,” Judge Pauley said, adding that the defense had raised some troubling concerns. The amended complaint now outlines that Verdmont customers – Nevis-based Lornex Financial, Cayman- registered Nautilus Growth Fund and Samoa company Bartlett Trading [later re- named to Bamfield Equities] – deposited the stock certifi- cates into accounts they main- tained at Verdmont, which transferred the stocks into an omnibus custodial account at BNY Mellon in New York. From there the stock certificates were moved to the Depository Trust Corporation and con- verted into stock that is trans- ferable by book entry rather than physically. Verdmont then sold the stock through various accounts the firm maintained with bro- kerages in the U.S. The sales proceeds were subsequently repatriated to Panama and deposited into the client ac- counts of Lornex, Nautilus and Bartlett/Bamfield. Caledonian has asserted through counsel that the se- curities in question were sold for customer accounts, but the bank and its securities arm have not identified their clients. Caledonian stated only that the accounts have been closed. Verdmont clients are connected The evidence submitted to the court by Verdmont and research by the Cayman Compass show that the three Verdmont clients, even though they are registered in Nevis, Cayman and Samoa, use the same person in the Dominican Republic, Virgilio Santana Ripoll, as either company secre- tary or director. Lornex Financial principal Clifford Wilkins and Bamfield Equities director Christopher Smith previously worked to- gether at First Nevisian Stockbrokers Ltd. in Nevis. Mr. Wilkins was a director and indi- rect shareholder and Mr. Smith was a financial controller of FN Stockbrokers Ltd. The company was later moved from Nevis to the Dominican Republic. SEC filings for a separate company show Mr. Wilkins and Mr. Smith also work or worked together at HE Capital S.A. in the Dominican Republic. The owner of Nautilus Growth Fund is Belize- registered Keyse Management Ltd., whose beneficial owner is Swiss national Francois Lambercy, according to Verdmont’s records. However, the contact person for Nautilus, Lornex and Bamfield/Bartlett is Mr. Ripoll in the Dominican Republic. His contact email address for Nautilus Growth Fund, given in the KYC ques- tionnaire to Verdmont, is vsan- tamaripoll@hecapital.com, the same HE Capital that Mr. Wilkins and Mr. Smith are, or were, directors of. Mr. Wilkins and Mr. Lambercy also show up as joint directors of U.K. companies Law Formations Limited and Law Consultants Limited. According to Verdmont’s trading records submitted to the court, Lornex Financial sold 14 million shares in Goff for $2.08 million, bought 50,000 shares of Norstra Energy for $18,400 and sold 1.89 mil- lion shares in the same com- pany for $1.52 million. Lornex also bought 150,100 shares in Xumanii for $39,980 and sold 17.2 million shares in Xumanii for $4.38 million. Bamfield/Bartlett sold 3.7 million shares in Norstra Energy for $3.31 million. And Nautilus Growth Fund bought 519,800 shares in Norstra for $440,000 and sold 4.67 million shares in the same company for $3.42 million, Verdmont trading records show. In total, the three com- panies traded $15.22 million worth of shares through the Panamanian broker. All three shares turned out to be worth- less and subsequently their share price collapsed. When asked by Judge Pauley in the May 21 hearing why the Verdmont clients were not named as defendants in the case, an SEC lawyer re- sponded that the SEC had only learned of their identity at the end of February. When the judge pressed on and asked what the SEC had done since then to “[bring] the customers into this case,” SEC counsel said the Commission had focused on litigating against Verdmont, discovery requests and a pre- liminary injunction hearing with Caledonian. “So you focused on all the wrong things,” the judge con- cluded. The Verdmont clients are not named as defendants in the amended complaint.The islands’ most-trusted news source 7 Cayman Compass • Friday June 19, 2015 The islands’ most-trusted news source 8 Friday June 19, 2015 • Cayman Compass Happy Father’s Day in Heaven 8 sad years From your wife, children and grandchildren James Lucas Bernard September 19th, 1924 -June 22nd, 2007 Gone but not forgotten We have been asked to announce the passing of Ms. Ariel Victorine Forbes who passed away on Saturday, June 6th, 2015. A Service of Thanksgiving will be held on Saturday, June 20, 2015 at East End United Church at 2:00 p.m. Viewing will be from 1:00-1:45 p.m. Interment to follow at East End Cemetery Condolences can be registered at: www.churchillsfuneralhome.com We have been asked to announce the passing of Ms. Ariel Victorine Forbes who passed away on Saturday, June 6th, 2015. A Service of Thanksgiving will be held on Saturday, June 20, 2015 at East End United Church at 2:00 p.m. Viewing will be from 1:00-1:45 p.m. Interment to follow at East End Cemetery Condolences can be registered at:Condolences can be registered at:Condolences can be registered at www.churchillsfuneralhome.com: www.churchillsfuneralhome.com: We have been asked to announce the passing of We have been asked to announce the passing of that the Cayman Islands Government exercises a policy of not allowing chil- dren of expatriates to go to government schools.” The commission based its decision on informa- tion from education offi- cials stating that 10 percent of children in government schools were non-Cayma- nian and that government made a grant of around $550 per student to private schools in the country. Legislators on Friday voted to maintain a $1.53 million subsidy to support private schools. Mr. McLean said he ac- cepted that the Ministry of Education had the right to refuse places in schools based on availability. But he said he believed a policy of requiring foreign workers to register their child with a private school before a work permit would be granted amounted to a denial of right to free education, con- trary to the Bill of Rights. “It sends the message at immigration that a de- pendent child of someone on work permit must go to private school and that, I submit, is wrong,” he said. Ms. Rivers acknowl- edged that government needs to look into the future provision of school places across the islands as the country’s population con- tinues to grow. “I think, as a country, we need to make sure we have available resources to meet the needs of our chil- dren and whether we do so through public schools, through private schools, through partnerships be- tween public and private schools – these are the types of conversations we need to consider.” The issue of a de-facto segregation of expat and local students was raised by former Chamber of Commerce president Johann Moxam at the Cayman Economic Outlook forum in 2014. Mr. Moxam said, “I think the country has suf- fered as a result of that. “It starts when you en- courage the segregation of the local kid from the ex- patriate kid and then you intend to build the country up as ‘we’re one, we’re Caymanians, we’re together.’ It’s silly.” not getting any more bees or Africanized honey bees, also known as killer bees. “When bees are swarming, there is nothing that can be done with them. People just have to leave them alone and wait until they settle down,” he said. Mr. Watler said the day Cayman gets Africanized bees, everyone will know because they can be very aggressive. Explaining the recent bee swarming, Mr. Watler said bee colonies create new queens and then split up and look for a new home. The swarm of bees that leaves with the old queen can number in the hundreds or even the thousands.“It is their way of multiplying,” he said. Honey bees usually de- part their old home between 10 a.m. and 2 p.m. They make loud humming sounds with their wings; occasionally they may stop over a treetop, but not all the time; they are un- predictable and can make transitory stops on fences, the side of a house or anywhere that makes for a “safe” resting spot. If they do not like the place, they will send scouts out to seek another spot. “The reason people are seeing so many bees swarming is because the bees have no habitats,” Mr. Watler said, adding that before Hurricane Ivan, bee swarms often went to the mangroves because they were dried out and hollow; this and a lot of development means the bees have nowhere to go. Despite the beekeeper’s assurance of the bees not being aggressive, there are recorded incidents involving bees in Cayman. In 2008, 78-year-old Shirley Whittaker was killed in a bee attack, and in 2010 in West Bay a swarm of bees attacked a woman, killed her dog and left her with multiple stings over her body. Last year, resi- dents near Walkers Road had to remain in their homes after a beehive was disturbed and a swarm of bees took over the area. Those bees stung at least two people, attacked a dog and forced residents in the neighborhood to remain in their homes on Moxam Road for several hours. Anyone who sees a swarm on a tree limb, preparing to move from one hive to an- other, should report it to the Department of Environment or the Department of Agriculture, and Mr. Watler’s team will come out to extract the bees. To keep bees from making a home in houses, people should caulk seams in their houses. Bees can find an en- trance to a home through a hole as small as the blunt end of a pencil, Mr. Watler warned. It is not clear what the purpose of the list is, but the European Commission said it would be updated once a year to reflect changes to the indi- vidual blacklists of member states. Cayman was blacklisted by Belgium, Bulgaria, Croatia, Estonia, Greece, Italy, Latvia, Lithuania, Poland, Portugal and Spain. The Cayman Islands government said it is aware that the list is based on individual blacklists in EU member states, but empha- sized that Europe’s major econ- omies, which have been rated similar to the Cayman Islands on upholding international standards on transparency, do not list Cayman. “The national blacklists that have resulted in this overall blacklisting are primarily gen- erated by European coun- tries that are not major eco- nomic trading partners of the Cayman Islands. These coun- tries therefore may not be aware of Cayman’s adherence to standards, both in terms of our bilateral and multilat- eral agreements for exchange of information,” said Cayman’s Minister of Financial Services Wayne Panton. “It is unfortunate that the EU blacklist unfairly down- plays the significant strides made by Cayman, as well as the significant global accomplish- ments in the area of transpar- ency,” he said. Cayman Finance noted that while Cayman has few business relationships with the countries that blacklisted it, Cayman has established tax information ex- change mechanisms with all of them except Bulgaria. “It is [therefore] not clear what standards have been used by these 11 countries to come to such a conclusion,” the orga- nization said in a statement. Instead, Cayman Finance pointed to the evolution of Cayman’s international tax co- operation practices, which meet international standards applied across G20 nations and all in- ternational financial centers. These are confirmed by FATF and OECD Global Forum as- sessments, Cayman’s commit- ment to be an early adopter of the OECD common reporting standard and its participation in U.S. and U.K. FATCA initia- tives. “We are confident that if these 11 EU countries transpar- ently and objectively evaluate the Cayman Islands robust in- ternational tax cooperation re- gime against global standards that the Cayman Islands will be promptly removed from this non-compliant list,” Cayman Finance said. James Whittaker jwhittaker@pinnaclemedialtd.com The Cayman Islands is rolling out the red carpet this weekend with a host of screen stars in town for the territory’s first film festival. More than 200 films from 50 countries will be shown during the three-day event, which kicked off Thursday night with a launch party and movie premiere at Camana Bay. The event will feature vet- eran actor Brian Cox, who starred as a devious CIA of- ficial in the Bourne trilogy, and rising stars like Nicky Whelan of the “Wedding Ringer” and Alexa PenaVega, who starred in “Sin City 2.” Workshops, panels and question-and-answer sessions with award-winning writers, producers, photographers and directors are also planned. Among the highlights for movie buffs will be a ses- sion with Paul Schrader, the award winning writer of American classics “Raging Bull” and “Taxi Driver,” and a screenwriting workshop with sometime Cayman resident James V. Hart, the writer of “Contact” and “Hook.” There will also be an acting workshop with Wes Studi, who starred in “Dances with Wolves” and “Avatar.” Loren Carpenter, co- founder of Pixar, the anima- tion studio that produced “Toy Story,” will host a ques- tion-and-answer session, and John Chu, who directed “GI Joe 2” and “Step Up,” will be showing some of his student films. On Friday night, Harquail Theatre will host a red carpet premiere for the Cayman National Cultural Foundation’s Young Image Makers film competition. Movies made by Cayman youngsters and an awards ceremony will be featured. The Cayman Islands Tourism Association’s Underwater Film Festival will take place at the National Gallery, also on Friday. Both events are free. There will be daily movies at multiple screens at four venues: Regal Cinemas, The Ritz-Carlton, Grand Cayman, the Harquail Theatre and the National Gallery. The movies include a mix of feature films, animation, shorts and docu- mentaries. Two tipped by fes- tival director Tony Mark to be crowd favorites are “Frame by Frame,” which follows the efforts of four photojournal- ists to establish a free press in Afghanistan after the ini- tial fall of the Taliban, and “And Then We Swam,” which charts the exploits of two Englishmen who attempted to row across the Indian Ocean to make good on a drunken bet. Key dates and times ■■ Friday, 6 p.m. Young Image Makers pre- miere, Harquail Theatre ■■ Friday, 6:30 p.m. Underwater Film Festival, National Gallery ■■ Friday, 2 p.m. “Frame by Frame” documentary screening, Ritz-Carlton ■■ Friday, 2 p.m. James V. Hart, screenwriting work- shop, Ritz-Carlton ■■ Saturday noon. Q&A with Paul Schrader, screen- writer of “Raging Bull” ■■ Saturday 2 p.m. Acting talk with Wes Studi, Ritz-Carlton ■■ Saturday 2 p.m. “And Then We Swam” documentary screening, Ritz-Carlton ■■ Saturday 3 p.m. Q&A with Pixar co-founder Loren Carpenter, Ritz-Carlton ■■ Saturday 6:30 p.m. Gala closing party and awards ceremony, Ritz-Carlton. For full schedule and ticket information, go to www.cayfilm.com. Lights, camera, action for Cayman film fest Swarms make beeline for new homes CONTINUED FROM PAGE 1 Cayman named on new EU blacklist CONTINUED FROM PAGE 1 School access and the Bill of Rights CONTINUED FROM PAGE 1 Cement truck tips over A cement truck toppled over Thursday afternoon along the Esterley Tibbetts Highway. The accident happened at the roundabout near Public Beach. An ambulance was called to the scene, but no one was transported to hospital. A representative from SuperMix Concrete said the driver had not been injured. It was not immediately clear how the crash happened. – Photo: taneos ramsay9 LOCAL NEWS Cayman Compass • Friday June 19, 2015 Brent Fuller bfuller@pinnaclemedialtd.com The Cayman Islands gov- ernment’s proposed merger of two, or perhaps even three independent oversight of- fices would forever end their independence and might be considered unconstitutional, Arden McLean said last week. The East End MLA so far is the only elected member to publicly oppose government’s stated plan to merge the of- fice of the complaints com- missioner with the informa- tion commissioner’s office. It has also been suggested that government’s data pro- tection regime and an inde- pendent police complaints function, if those are ever es- tablished, could be added to the independent offices under a “super ombudsman.” “I will never, ever support [this],” Mr. McLean said. “If we amalgamate a number of these bodies, then we compromise that indepen- dence by having one person [as] the head of them all,” Mr. McLean said. “It is a serious matter and I want to go on record ... to say that I am not supporting the amalgamation of these offices. “What are we going to do, put two, three hats on one indi- vidual? And then you get some members in one authority knowing what the others [are] doing? And then the tenets of secrecy [are] eroded.” While both the complaints commissioner and infor- mation commissioner have public reporting functions, any appeals handled under the Freedom of Information Law and any private individ- ual’s complaint about a gov- ernmental body are always kept under wraps. Freedom of Information and the complaints commis- sion functions are protected to a certain extent under the Cayman Islands Constitution Order, 2009, but there is no specific provision that re- quires both a complaints commission and an informa- tion commissioner. Deputy Governor Franz Manderson said the govern- ment was putting together a business case for the merger, including how much money – if any – would be saved from such a move. “The idea at a very high level is to merge these offices to where they’ll be in one loca- tion, hopefully cross-training staff to where we can have a more efficient service,” Mr. Manderson said. “Certainly, we will not go down this road if we felt the independence of these offices will be compro- mised. On the contrary, we feel that it could be enhanced.” Government’s level of sup- port for both offices has been called into question in the past year. The complaints commission has not had a full-time leader since Nicola Williams departed last year. Meanwhile, recent state- ments made by Premier Alden McLaughlin seemed to indicate government’s support for the Freedom of Information Law is no longer as strong as when the law was first passed in 2007. “The sheer number of Mickey Mouse FOI requests that are being submitted cre- ates such a burden on the system and on the people who have to [respond to them], what I call legitimate FOI requests are often not dealt with as expeditiously as they should be,” Premier McLaughlin said earlier this month during a meeting of the Legislative Assembly’s Finance Committee. “When the sheer volume of work and expense that is involved in answering questions gets too great ... the system starts to grind more slowly and more slowly. “There’s only so much in terms of resources that can be devoted in terms of dealing with FOI which, quite frankly and realistically from a country standpoint, is an unproductive use of time,” Premier McLaughlin said. “It’s part of the transpar- ency process, but it doesn’t achieve anything as far as the government, as delivery of services is concerned.” Acting Information Commissioner Jan Liebaers, who has publicly opposed the merger of the indepen- dent offices, said he was caught completely off-guard by the premier’s statements. “I am surprised that the premier has never shared these concerns with the infor- mation commissioner’s office,” Mr. Liebaers said. “I suppose government would like to be able to determine which re- quest is legitimate and which isn’t. Fortunately, that is not the system the FOI Law pro- vides for and it would not be a system worthy of any demo- cratic country. “There are adequate pro- tections against unreason- able requests already in place and any trained informa- tion manager should know about them. If this is truly the opinion of the premier towards the people’s right to open and transparent govern- ment that was voted unan- imously by the Legislative Assembly in 2007, then that is very disappointing.” Jewel levy jlevy@pinnaclemedialtd.com The Cayman Islands Red Cross’s Nepal Emergency Appeal has raised almost $50,000 to assist people af- fected by earthquakes that shook the Himalayan nation earlier this year. Two earthquakes, on April 25 and May 12, killed more than 8,700 people in Nepal, triggered landslides and de- stroyed half a million homes, leaving thousands without shelter just weeks ahead of monsoon rains. The relief effort continues, with a focus on improved san- itation and truckloads of clean water for those still living in temporary accommodations. However, the Red Cross’s fun- draising efforts in Cayman come to an end on June 29. “As always, the generosity of the people of the islands never ceases to amaze us, and there is still time to sup- port this incredibly worthy cause,” said Jondo Obi, Red Cross director. Frederic Morineau, execu- tive chef at The Ritz-Carlton, Grand Cayman, said he was proud of the amount raised, despite the bad weather on island and numerous other events that were taking place on the same weekend. “Special thanks go to Westin Casuarina Resort Chef Sandy who came up with the idea for the fund- raiser after seeing how upset his cooks from Nepal were on the day of the first earth- quake, and to Marc Langevin for letting us use the Grand Ballroom at the Ritz,” he said. The two most recent “Cayman 4 Nepal” events, held at The Ritz-Carlton and across the Foster’s Food Fair IGA island locations, were well attended and raised more than $31,000. During the days after the earthquake, the Red Cross re- sponse concentrated on the dis- tribution of tarpaulins needed for temporary shelter, which was particularly important with the onset of the monsoon season. The heavy rains are now causing further problems, including threats from land- slides and limited access to al- ready hard-to-reach areas due to debris and infrastructure damage caused by the earth- quakes. Other essential items distributed included water pu- rification tablets, rehydration salts, blankets and soap. Red Cross teams in Nepal were also able to set up emer- gency medical centers, and 4,500 Red Cross first aid vol- unteers have been mobilized. Anyone wishing to assist with donations can make their contributions to Cayman Red Cross Nepal emergency account at Butterfield Bank, account number 136035054-00-60, before June 29. “As always, the generosity of the people of the islands never ceases to amaze us, and there is still time to support this incredibly worthy cause.” Jondo obi, Red Cross director MLA McLean blasts merger of gov’t oversight offices Cayman Red Cross Nepal appeal raises almost $50,000 Mr. McLean “It is a serious matter and I want to go on record ... to say that I am not supporting the amalgamation of these offices.” Arden McLeAn, East End MLANext >