ESTABLISHED 1965 www.caymancompass.com – 50 CENTS – Wednesday august 5, 2015 High of 90 Low of 80 Slight with wave heights of 1 to 3 feet. THIS ISSUE: INVESTMENT The move from hedge funds to private equity >>PAGE 4 CYBERSECURITY Stepped-up cyber attacks in Asia >>PAGE 5 TAXATION Expats’ quandary: Stay or go? >>PAGE 10 LABOR Workers get bene ts instead of raises >>PAGE 14 154 A UGUST 20 1 5 • WWW . CA Y JOU RNA L .C OM Oil price plunge leads to drop in imports, infl ation Tangled bankruptcy further delays Bahamas resort CHARLES DUNCAN While the Cayman Islands’ gross domestic product grew by 2.1 percent last year, the highest growth for the coun-try since 2007, separate government reports show that the consumer price index fell by almost half a percent in the fi rst quarter of 2015, and that imports declined by almost 13 percent. The 12.9 percent decline in im-ports for the quarter was mainly based on falling gas prices, but imports of construction materials, vehicles and telecommunications equipment also dropped, according to the Economics and Statistics Offi ce. The infl ation rate for the Cayman Islands fell into the negative column, with consumer price growth shrinking for the second quarter in a row. “This is the fi rst time since Septem-ber 2010 that the CPI of the Cayman Islands showed a negative movement,” Finance Minister Marco Archer said in a statement. “It parallels the 0.1 percent CPI decline in the United States dur- ing the same period. The general price movements in the two countries refl ect the impact of global oil price reductions.” Consumer prices in the fi rst quar-ter of this year fell by 0.4 percent com- pared to the same period in 2014. The ESO report states that electricity, gas and other fuel prices dropped by 13.6 percent for the quarter, leading to an overall 1.1 percent decline for the hous-ing and utilities category. “Average in- surance fees went down by 3.8 percent; in particular housing insurance premi-ums fell on average by 8.0 percent,” the quarterly report states. The category for restaurants and hotels had the sharpest total decline at 8.2 percent, according to the ESO re- port, following a more than 40 percent decrease for accommodatio n services. Catering services registered a half-per-cent increase for the quarter. Education costs rose 2.7 percent for the quarter, led by a 4.3 percent in-crease in school fees for primary and pre-primary schools. The index for food and non-alcoholic beverages rose by almost 3 percent. Prices for milk, cheese and eggs were up almost 8 per-cent. Meat and meat product prices rose 5.8 percent, and the categories for breads, cereals and seafood increased by more than 5 percent each. Imports Petroleum and related products led the way for declining imports, with the total value of those products down 45.9 percent, according to the ESO report. Gas import prices dropped 42.5 per- cent during the quarter, according to customs data in the report. Taking out the sharp 45 percent decrease in the value of petroleum- related products, all other imports de-creased by 3.6 percent to $152.7 mil-lion for the quarter. Machinery and transport equip-ment, and miscellaneous manufac- tured goods declined by more than 20 percent each. “The CI$6.4 million fall in the ma-chinery and transportation category is traced to a decrease in road vehicles, aircraft equipment and telecommunica- tions equipment,” the ESO report states.In manufactured goods, construc-tion material imports dropped by more than 30 percent. The index for beverages and tobac-co declined 6.3 percent. The United States remains, by far, Cayman’s largest trading partner, ac-counting for $161 million of the almost $177 million reported by the ESO. Im-ports from the U.S. dropped by more than 15 percent from the fi rst quarter of 2014. FRANK BENTAYOU For more than three years, the sumptuous dream of a vast new gambling resort on the northern shore of New Providence Island in the Ba- hamas has brought smiles to the faces of many residents and tourism offi cials. Also smiling have been luxury travelers the world over and super-wealthy Chinese, along with other investors who foresaw a golden fi nancial opportunity. But just in recent months, reality has interfered – in a big and globe-spanning way. Worldwide, smiles turned to frowns, the dream to a nightmare. Baha Mar, a planned $3.5 billion tropi- cal symbol of the good life, has devolved amid a tangle of international legal con- troversy, fi nancial mismanagement and broken pride. The current battle involves jurisdic- tional disputes between two national bankruptcy courts. But troubles have plagued the sprawling development just west of Nassau from the beginning, in-cluding confounding construction delays, business-model changes, huge labor dis-putes and fi nancing failures. Since earlier this year, when Baha Mar was supposed to be greeting its fi rst inter-national guests, the resort has remained about 97 percent completed, according to CEO Sarkis Izmirlian. But delay after de-lay materialized as construction and busi-ness decisions sputtered along in fi ts and starts. Then the gravest blow yet struck.In late June, the 1,000-acre super resort fi led for Chapter 11 bankruptcy under United States law in Delaware, where the only connection is that one of its many debtor companies working on the construction site is incorporated. Basically, in fi lings Baha Mar accuses its principal contractor, an arm of the giant China Construction America, of causing delays and mishandling fi nances.Izmirlian said in a statement that because of the Chinese contractor’s actions, “we have had to fi le for Chapter 11, and because of their delays, the cost of completing Baha Mar has risen by $400 million.” The principal lender to the development has been the Export-Import “This is the rst time since September 2010 that the CPI of the Cayman Islands showed a negative movement.” MARCO ARCHER, nance minister Finance Minister Marco Archer 1 2000 200120022003 20042005 2012 20132014 2006 200720082009 20102011 0.6 1.7 2 0.9 6.5 4.6 4.3 -0.2 -6.3 -2.7 1.2 1.2 1.4 2.1 Real GDP growth (%) -1 -0.5 0 0.5 1 1.5 2 2.5 3 M ar ch Ju ne Sep te m b er D ec em b er M ar ch Ju ne S ep te m b er D ec em b er M ar ch Ju ne S ep te m b er D ec em ber M ar ch Ju ne S ep te m ber D ec em b er M ar ch 2011 2012 2013 2014 2015 Inflation rate Percent Decline 12.9 BASED ON FALLING GAS PRICES Gross Domestic Product EST:2.3% Sept 2014 / Sept 2013Consumer Price Index (CPI):1.3% Dec 2014 / Dec 2013 Merchandise Imports ($):0.5% March 2014 / March 2013 Overall Current Account Balance (EST): 1.3% Dec 2013 Source: All data from the Economics and Statistics Office PLEASE TURN TO PAGE 7 » THE cAymAn ISLAnDS journAL Oil price plunge leads to drop in imports, inflation Editorial | pagE 4 Private Pensions: time to retire Cayman’s sCheme? Emergency services ignored protocol in road death, review says Charles dunCan cduncan@pinnaclemedialtd.com The first emergency medical re- sponders did not follow protocol and did not try to resuscitate a man who died in an early morning car accident two years ago, according to an independent review of the death. When 21-year-old Zak Quappe lost control of his car and crashed while racing along South Church Street early in the morning of May 18, 2013, his injuries were most likely fatal, regardless of what para- medics did when they arrived on the scene, according to the independent review by Dr. Dan Cass, the chief coroner in Ontario, Canada. The Cayman Islands Ministry of Health commissioned the report and this week Mr. Quappe’s family made it available to the media. Zak’s sister Teri Quappe, who worked as an emergency medical responder in Cayman for two-and- a-half years, said, “We’re not saying his injuries wouldn’t have killed him anyway,” but, she said, “they didn’t even try to resuscitate him.” She said she saw the EMS report soon after the accident “and it threw up all sorts of red flags.” The Ministry of Health issued a statement in response to questions from the Cayman Compass. The statement says, “The Ministry de- cided to seek a review from a med- ical expert outside of the Cayman PLEASE TURN TO PAGE 7 » Special Olympics team home in triumph ron shillingford rshillingford@pinnaclemedialtd.com The Cayman Islands team returned from the Special Olympics World Games in Los Angeles on Tuesday afternoon clutching their 52 medals with pride. There were emotional scenes as the ath- letes reunited with their supporters and loved ones and showed off their medals in delight. The haul included 21 gold, 11 silver and 20 bronze, as well as many personal bests. On the tarmac at Owen Roberts International Airport, Governor Helen Kilpatrick, Premier Alden McLaughlin and several government ministers greeted the delegation of 55 that included 28 athletes. Governor Kilpatrick is the Special Olympics Cayman Islands patron. The Cayman medal winners were: Kanza Bodden, Kathryn Kleinworth-Whorms, Keanu McKenzie, Lois Moody, Andrew Smilley and Hamish Wood (all in aquatics); Tyrese Brown, Castillo Tyler, Jaheim Ebanks, Erick Frederick, Jharran Greenidge, Jomani Lee, Nathan Morgan, D’monte Seymour and Beaver Smith (7-a-side football); Mark PLEASE TURN TO PAGE 6 » Premier Alden McLaughlin admires Special Olympian Mark Ebanks’s medals. Members of Cayman’s Special Olympics team arrive at Owen Roberts International Airport on Tuesday. - PHOTOS: TANEOS RAMSAY2 LOCAL&REGIONAL Wednesday august 5, 2015 • Cayman Compass Boost your TV & Internet experience by signing up for any Logic Fibre Bundle starting at $99 and get one month free service including the HBO premium pack. Contact a Customer Care Representative today or visit logic.ky for promotion details. www. 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It’s a small bit of security for his family, who live as squatters on the upper floor of a building damaged in Haiti’s 2010 earthquake. Officials say most of the 1.5 million people home- less after the magnitude 7.0 quake that destroyed much of the capital and surrounding areas have now found shelter, with about 65,000 living in some 66 encampments, ac- cording to the International Organization of Migration. Yet there are thousands of homeless like Bellefleur who go uncounted in abandoned buildings or hidden tent camps. Some are people who received rent subsidies from non-governmental groups that have since run out. In downtown Port-au- Prince, there are people get- ting by the best they can in the ruins of a luxury hotel, under tarps and in a window- less trailer on the grounds of the destroyed national theater. Others are in buildings classi- fied as too dangerous to enter. The iconic Iron Market, which collapsed in the quake, was restored after the di- saster. But around it stretch avenues lined with street stalls masking abandoned, crumbled buildings. During the day, hair- dressers and manicurists work inside the garbage- strewn structures, which are missing walls and, in some cases, entire facades. At night, the shells of the more intact buildings are home to people like Bellefleur and his family. Because he is an electrician, he managed to rig up elec- tricity. But they have no water and much of the structure is exposed to the elements. Before the quake, they lived in two rented rooms in the Carrefour-Feuilles dis- trict, near downtown. But the building was destroyed, he says, and they lived on the streets for more than a year. “I don’t like the children [living] here. It’s very open. There is no security,” he says. But he has no better al- ternative. “I don’t have the means to leave,” he says. And, he notes, “There are a lot of people who live worse than we do.” His work enables him to buy food and acquire rela- tive luxuries such as a double bed and the used televisions and fans that he has brought back to life. Bellefleur’s neighbors in the building include an el- derly carpenter, a computer hardware repairman, a man earning a pittance by recy- cling bottles, and several un- employed young people. Zarmor Sendi lost her home in the quake and was later evicted from a camp. She now lives alone in a former bath- room too small to lie down in. At night, she pulls her meager bedding into one of the open front rooms to sleep. Near the airport, six fam- ilies live in the offices of a former shipping company. Johnly Clif Gaspard is there with his mother and two younger siblings. Despite his mother’s full- time job in a button fac- tory and Gaspard’s talent for making motorized toys from salvaged materials, the family can’t afford to pay rent. After the quake, they lived in a tent camp until being offered a one-year rent subsidy to leave. When that ended, they were forced to scramble again and ended up in a space that had been abandoned before the quake. Reginald Guillaume, who lives in one of the remaining camps in the capital, says he also was offered the rent subsidy, but refused. “The government offered me 20,000 gourdes ($345), but I said no. It’s not enough.” He estimates about 10 families who did take the money moved back into the ravine-side camp once the money ran out. Like other camp residents, they remain in limbo, legally not allowed to build on the land, but without the means to leave. Officials say most of the 1.5 million people homeless after the magnitude 7.0 quake that destroyed much of the capital and surrounding areas have now found shelter, with about 65,000 living in some 66 encampments, according to the International Organization of Migration. A father holds his two-year-old daughter outside their room at the earthquake-damaged Hotel Le Palace in central Port-au-Prince, Haiti. A resident of the earthquake-damaged Hotel Le Palace makes his way downstairs from the room he inhabits in central Port-au-Prince, Haiti. Though much of the hotel was destroyed, some of the guest rooms, which still have intact walls, have become homes to people displaced by the quake. - PHOTOs: AP3 LOCAL NEWS Cayman Compass • Wednesday august 5, 2015 Want To Save On Your Energy Costs? Save up to 60% Off your CUC bill with Cayman Islands Spray Foam. Save energy and enjoy the comfort of a home protected with a complete spray foam barrier. Spray Foam Advantages Include • Greatest Energy Efficiency • Improves Indoor Air Quality • Highest R-Value/Inch • Improves Structural Integrity • Mold & Mildew Resistant What Is Spray Foam Insulation? Why would someone choose traditional insulation with the endless advantages and superiority of Spray Foam? That's simple, you don’t. Spray Foam Insulation not only provides thermal comfort with its high R-Value insulating properties, but it also creates a weather tight, air-sealed protective barrier. Call now (345) 326-6767 Schedule a free consultation SPECIAL OFFER - GET A FREE CONSULTATION Save 60% off your CUC Bill Western Union: Closure ‘temporary’ Charles DunCan cduncan@pinnaclemedialtd.com Western Union is working to reopen its money transfer counters in the Cayman Islands after they were closed abruptly last month, according to a company spokeswoman. Fidelity Bank, which ran the Western Union branches in the Cayman Islands, Bahamas and Turks and Caicos, made the deci- sion on July 17 to close the money transfer counters in the three countries the fol- lowing day, surprising many regular customers. In an email, Western Union spokeswoman Paula Barifouse called the closure here a “temporary service disruption,” but would not say if the money transfer company had found a new bank. “Western Union is working to restore services as soon as practicable in line with our commitment to provide our customers with reliable and efficient services,” she said. Cash transfer companies around the world are facing stricter regulations and in- creased risk based on fears by regulators in the United MiChael Klein mklein@pinnaclemedialtd.com a crackdown on money laundering and the financing of terrorism through regula- tions worldwide is impacting banks and money service providers by driving up com- pliance costs. at the same time, banks have been hit with anti-money laundering probes and hefty fines. In 2012, HsBC paid $1.9 billion in fines to u.s. authorities to settle an investigation into its anti-money laundering controls and admitted that it processed drug-trafficking proceeds through Mexico and transmitted funds from sanctioned countries such as Iran. the bank later closed all money transfer business accounts, leaving money service companies with only 30 days to find a new banking provider. Money transmitters accept payments and bundle them together, but they need a bank to handle the international wire transfer. the threat of large fines and higher com- pliance costs led other banks to weigh the financial and reputational risks of operating or serving the remittance business against its profitability. In May 2013, Barclays closed about 250 accounts that did not meet its anti-money laundering criteria, a move that affected 70 percent of u.K. money transfer firms. Barclays was in fact one of the last banks in the u.K. to offer services to remittance ser- vice providers. In australia, Westpac shut down the accounts of money transfer opera- tors in november 2014 as a result of growing fears of breaching strict terrorism financing and anti-money laundering laws. Westpac’s CeO gail Kelly said regulations pose a real problem for banks that accept money transfer businesses as customers. “the regulatory requirements for anti- money laundering are you need to know your customer, and in the case of remitters, you need to know your customer’s customers. that’s quite a responsibility. you do millions of these transactions and if one goes wrong, and is connected with terrorism financing, that’s a real problem,” she said. Westpac was one of four banks in australia that withdrew from servicing re- mitters, leaving legitimate remitters without any options for clearing their fund transfers. similar developments played out in the u.s. and are now playing out in Cayman. as a result, the World Bank concluded that remittance prices are rising and com- petition is reduced. another concern is that the lack of al- ternatives will force cross-border money transfers into the informal channels of the shadow banking sector and effectively out of reach of banking regulators. Banks cutting ties to remittance service providers States and Europe that com- panies such as Western Union could be used to fi- nance terrorism and launder money. Banks that handle these transactions have to spend more time and money vetting the cash transfer customers or risk big fines from regulators. The remaining money transfer companies in Cayman, according to the Financial Services Ministry, have until the end of August to find a new bank or oth- erwise come up with a new arrangement, or they will risk being shut down. People in the Cayman Islands sent almost $180 million overseas last year as remittances through such companies as Western Union, according to data from the Cayman Islands Monetary Authority. More than $110 million of that went to Jamaica. Fidelity Bank (Cayman) CEO Brett Hill said imme- diately after the closure that the risks for services like Western Union and the cost associated with new regula- tions are increasing, while income from service fees is declining as the industry becomes more competitive. “It’s been an increasingly marginal business for us,” he said. Fidelity representatives did not respond to requests for comment by press time Tuesday on the potential for Western Union reopening. Cayman National Bank, which provides banking ser- vices for Jamaican National and MoneyGram, is in the process of pulling out of the money transfer busi- ness, possibly leaving the companies without a cor- respondent bank to handle the transactions. Cayman National now is the only bank in the country handing cash transfer services. Financial Services Minister Wayne Panton re- cently said government is working with the compa- nies to try to come up with a new agreement to keep the transfer services up and running. Mr. Panton said he does not think the companies will have to shut down their money transfer operations. A spokesman for JN Money Services, which oper- ates the money transfer busi- ness for Jamaican National, said Monday that it is still in discussions with banks in Cayman but does not have a new deal in place. Cayman National has declined to com- ment on the money transfer agreements several times in recent weeks and did not reply to requests this week.The 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. Wednesday augusT 5, 2015 • Cayman COmpass Private pensions: Time to retire Cayman’s scheme? The Cayman Islands’ system of private pensions is in crisis — and not just because so many local employers are flouting the law. Five years ago, our then–Complaints Commissioner Nicola Williams revealed that 670 local businesses were delinquent in paying their employee pensions. If that weren’t shocking enough, Ms. Williams revis- ited the topic three years later, finding that number had ballooned to 1,144 delinquent businesses, as of June 30, 2013, despite the issue having already been highlighted to the public and to the government. We have not received any further updates to that tally since Ms. Williams left her post in Cayman in January this year, following her exemplary tenure as complaints commissioner, to become ombudsman for the United Kingdom’s Armed Forces. Throughout all of this time period, Cayman’s Department of Labour and Pensions has made precious little progress on delinquent pensions, a serious problem with serious consequences. A mere handful of cases have actually made it through the court system to conclusion, with no signif- icant penalties being levied upon offending companies. Other cases have been handled “administratively” by the department, under the unambitious objec- tive of trying to persuade the businesses to pay their employees what they owe. Now, while discussing proposed changes to Cayman’s National Pensions Law during a public meeting in North Side to an audience of 12 (counting MLA Ezzard Miller and a Compass reporter), Minister Tara Rivers reiterated a warning we have all heard before — that owners who aren’t fulfilling their pensions obligations may not get their trade and business licenses renewed. We might regard Minister Rivers’s threat as sharper- toothed except that adherence to the Pensions Law (among a litany of other routinely disregarded statutes) is, of course, already a condition of license renewal, under the Trade and Business Licensing Law. If the government ever attempts to follow through on its bluff and deny a trade and business license to a company for alleged nonpayment of pensions, we imagine the legal consequences to the Public Treasury would be, in a word, depletive. Here we shall pose a rhetorical question. The Cayman Compass’s former competitor newspaper, Cayman Net News and its now-deceased publisher Desmond Seales, were notorious for not paying employees’ pensions (and, oftentimes, their salaries). What practical consequences did Net News or Mr. Seales ever face for those easily established offenses? To our knowledge, none. Trade and business licenses, not to mention work permits, just kept on a-comin‘. Which leads to this truism: Dishonest companies that don’t bother to pay for pensions or healthcare have a competitive advantage over honest companies that do. Yet, as we stated at the beginning of this editorial, the real problem with private pensions in Cayman is more fundamental than the issue of noncompliance. The unfortunate reality is that, even for those whose employers pay the full legally required amount into their pension plans, the 10 percent contribution rate is woefully inadequate. According to actuarial arithmetic, very few — if any — people in Cayman can expect to retire comfortably relying solely on their private pensions. Some might argue that having “something” saved up for retirement is better than “nothing,” but we would counter that the false illusion of security is worst of all. Considering the government’s track record — in regard to both private and public sector pensions — at what point do we admit, albeit reluctantly, that Cayman’s public officials may simply not be capable of running something as complex as a countrywide pensions scheme, starting at the bottom with legisla- tion, to execution and all the way up to enforcement? 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” Torched by the Olympics William Pesek Tokyo and Beijing are still celebrating the news that they’ll host the 2020 Summer and 2022 Winter Olympics, respectively. But it’s time to congratulate the real win- ners: all the cities that have decided to steer clear of com- peting for the honor. Last week, Boston shocked the International Olympic Committee by with- drawing its bid for the 2024 Summer Games after resi- dents balked at the soaring price tag. Similar outcries in Oslo, Munich and Stockholm led those cities to drop their 2022 bids, leaving the IOC to choose, awkwardly, between two cities (Beijing and Almaty, Kazakhstan) that lack snow- and winter-sports cultures. Winning the Olympics clearly cheered Chinese President Xi Jinping, who’s having a tough year amid slowing growth and plunging stocks. The news that Beijing will become the first city to stage both the Winter and Summer Olympics offers Xi a fresh opportunity to drum up nationalism among his 1.3 billion people and build on the soft power China amassed during the 2008 Games. Japanese Prime Minister Shinzo Abe likewise hopes to re-create some of the 1964 Olympics magic that pro- pelled Japan into the ranks of the Group of Seven na- tions. After 20 years of defla- tion and sliding geopolitical relevance, Abe sees the Tokyo 2020 Summer Games as an ideal opportunity to reintro- duce a resurgent Japan to the international community. But the leaders of Asia’s two biggest countries might be getting ahead of them- selves. There’s a good chance the Games will actually do more harm than good to the trajectories of Asia’s two big- gest economies. Take China, which offi- cially spent between US$40 and US$70 billion on the 2008 Games and got little to show for it, economically, other than debt. “Hosting the Olympic Games is generally thought to boost investment demand in the host country via the construction of facilities and additional tourism,” wrote Goldman Sachs economists Yu Song and Michael Buchanan in a July 2012 report. “But the Beijing Games do not ap- pear to have had this effect on China’s economy.” China can easily afford the 2022 Winter Olympics. After all, its official 2008 bill amounted to less than 0.5 percent of gross domestic product. And Beijing has pledged to reuse some of its stadiums and sports centers from the earlier event. But China’s spending for the 2022 event will likely come at the expense of its economic re- form efforts. Chinese officials won’t be able to closely monitor the coming explosion in public works spending. Local govern- ments that have been under pressure to curtail debt will likely find ways to piggyback on the boom. New mini-Man- hattans that nobody needs are sure to soon sprout up around Beijing, together with redundant six-lane highways, international airports, five- star hotels, riverside parks, opera houses, museums and high-speed rail projects. Whatever its impact on the Olympics, this spending will result in an increase in pollution, economic overca- pacity and, of course, debt. At about US$4 trillion, local gov- ernment IOUs already exceed Germany’s annual gross do- mestic product. Outstanding loans for companies and households hit a record 207 percent of GDP in June, up from 125 percent in 2008. A new building bonanza will support GDP in the short run, allowing Beijing to con- tinue putting off painful up- grades into the future. Yet it will mask China’s worsening debt load until it’s too late. Already, Xi’s team is dragging its feet on shifting China’s growth engines away from excessive debt and toward domestic demand. Japan seems to be falling into its own complacency trap as the Tokyo Games approach. Officials in Tokyo – from Abe to top lawmakers to Tokyo Governor Yoichi Masuzoe– are increasingly hitching their po- litical and economic hopes to the 2020 event. The govern- ment has declared it wants to show a primary budget sur- plus by that year, without of- fering specifics on how it plans to achieve it. Masuzoe, for his part, has said he wants to wrestle back Tokyo’s status as Asia’s financial hub from Singapore by 2020 (again, without saying how to ac- complish that goal). And what year are companies like Honda using as their benchmark to make English their official lan- guage? You guessed it – 2020. “Thing is, 2020 Japan is not 1964 Japan and as it be- comes increasingly apparent that Abenomics is not eco- nomic Viagra, misplaced hopes are now pinned on the Olympics,” says Jeff Kingston, director of Asian Studies at Temple University in Tokyo. “They won’t be a game changer and currently are at risk of being remembered for all the wrong reasons.” Those reasons include the spiraling costs of an event the Japanese government had sold to the public as an eco- nomical venture. Last month, Abe intervened to scrap plans for the main stadium de- signed by British-Iraqi ar- chitect Zaha Hadid as the cost approached US$2 billion. But the controversy also put a spotlight on the ways that Japan’s politically-connected construction companies pad their bills – a longstanding problem that contributes to the country’s massive public debt, the world’s largest. If economic ambition were an Olympic event, Asia would be sweeping the medals stand. But, in economics as in sports, it’s hard work that’s rewarded, not facile hopes for miracle improvements. Chances are Tokyo and Beijing will soon wish they had followed Boston in abandoning their bids to play Olympics host. William Pesek, a Bloomberg View columnist based in Tokyo, writes on economics, markets and politics in the Asia-Pacific region. © 2015, Bloomberg View5 LOCAL NEWS Cayman Compass • Wednesday august 5, 2015 Discover what’s possible †Conditions apply. Subject to credit approval. Offers subject to change without notice. Visit cayman.scotiabank.com/cashback for full Terms & Conditions. ®Registered trademark of The Bank of Nova Scotia, used under licence. American Airlines® reserves the right to change AAdvantage® program rules, regulations, travel awards and special offers at any time without notice, and to end the AAdvantage® program with six months notice. 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Scotiabank Gold MasterCard® Get a Welcome Bonus of US$40† Scotiabank / AAdvantage® MasterCard® Get a Welcome Bonus of up to 7,000 AAdvantage® miles† /ScotiabankKY #MostCashBackEver † SCHEDULE AN APPOINTMENT WITH FLORIDA PREP ADMISSIONS August 7th - 10:00am - 6:00pm August 8th - morning appointments until 11:00 am Sunshine Suites Resort 1465 Esterley Tibbetts Highway Seven Mile Beach Cayman Islands Florida Prep College Prep, Co-ed, Grades 6-12 Formerly Florida Air Academy Accepting students from the Cayman Islands since 1961 Pensions law under public spotlight Employers must keep records seven years Carol Winker cwinker@pinnaclemedialtd.com Employment Minister Tara Rivers began her round of public meetings about the National Pensions Law on Monday night in North Side. Director of Labour and Pensions Mario Ebanks, who served as moderator, told the small but attentive audience in the district civic center that the ministry’s road trip “is also a listening tour.” Everyone in the audience had access to a copy of pro- posed amendments to the pensions law plus a four-page summary. Ms. Rivers referred to both, along with text pro- jected on a large screen, ex- plaining the intended changes. She pointed out that the National Pensions Law is just 17 years old and that govern- ment wants to build on efforts to have a culture of compli- ance that will benefit both em- ployers and employees. Key changes Some of the key changes affecting employers will in- clude a requirement to keep specific records for seven years. Among the changes im- pacting employees are an in- crease in the age at which individuals are entitled to ac- cess their pension. Employers would be obli- gated to keep proper records relating to pensionable em- ployees. Required information would include name and date of employment; gross and net pay; all pension deductions; and all pension contributions. Such information would have to be retained for a minimum of seven years. The new law would permit the director of Labour and Pensions to share informa- tion with other government departments. For example, when a business applies to renew its Trade and Business License, it would require a valid up-to-date pension plan and a policy of health insur- ance for employees in order to get renewed. Where the employer is a company, of- ficers concerned in manage- ment can be held responsible. For employees, “normal retirement age” would be re- placed by “normal age of pension entitlement,” which would be increased from 60 to 65. Early retirement would still be an option. “We’re living to age 83, on average,” Ms. Rivers pointed out, and people may want or need to work past 60. For people at or near 60, the 17 years of pension contribu- tions may not have accumu- lated enough to provide suf- ficient income after leaving the work force. It is generally accepted that retired people need 60 percent to 70 percent of their pre-retirement income, the minister explained. With an increase in age and an in- crease in the amount of earn- ings on which pension contri- butions would be calculated, the pre-retirement income an employee could look forward to would be in the range of 57 percent to 78 percent. At present, Ms. Rivers noted, employees and em- ployers are required to pay pension contributions on earnings up to $60,000. That cap would be increased to $87,000, an inflation-adjust- ment figure. The definition of employee would be amended to exclude people who work fewer than 15 hours per week, meaning that these individuals would no longer be pensionable. North Side MLA Ezzard Miller expressed concern that someone could be working 14 hours per week for four different employers and not have a pension. Ms. Rivers explained that this change was meant to help individuals seeking part-time work, as employers might then be more willing to take them on. Mr. Miller also did not agree with a cap for the in- come on which pension contri- butions are based. He thought there should be no cap. Several people in the audi- ence agreed with him on this point, as well as proposed changes for the time frame in which Caymanians and non-Caymanians would start paying pension contributions. There is inequity in the current situation, since pen- sions are payable for non- Caymanians only after nine months. Ms. Rivers said the new law would remove the requirement for pension pay- ments for the first six months of a person’s employment, whether Caymanian or non- Caymanian; this time frame would be consistent with typical probation periods, Ms. Rivers noted. Mr. Miller disagreed. “Everybody should pay from day one,” he said. Other proposed changes pertain to an employee’s ability to obtain funds from his or her pension account, the issue of moving from the private sector to the public sector, and changes in cri- teria for transfer of pension benefits outside Cayman. Public meetings on the National Pensions Law continue at the Savannah Primary School, 7:30 p.m. on Thursday, Aug. 6; East End Civic Centre, 8 p.m. on Monday, Aug. 10; Sir John A. Cumber School Hall in West Bay, 7:30 p.m. Wednesday, Aug. 12; George Town Town Hall, 7:30 p.m. Thursday, Aug. 13. Employment Minister Tara Rivers responds to a comment from the audience as Amy Wolliston, former superintendent of pensions, currently seconded to the ministry for special projects dealing with pension-related matters, takes notes and Director of Labour and Pensions Mario Ebanks stands ready to assist. - Photo: Carol WinkerThe islands’ most-trusted news source 6 Wednesday august 5, 2015 • Cayman Compass Yah Weh’s Beauty Barber Salon Upstairs Little Darlings Bodden Place Contact: 323-7128/939-8716 Independence Special ½ Price on Everything Relax Shampoo Ropetwist Braid Invisible Braids Cornrow/Shampoo Sister locks/Locking French Tips Pedicure Manicure Regular Nails Facial Wednesday & Thursday 5-6 August Wednesday to Saturday 12-15 August Ebanks, Leslie Hydes, Anna Jackson and Wanda Viscount (bocce); Orden Anglin, Matthew Ebanks, Jazlyn Hydes, Jordan McLean, Devon Ebanks, Mitchell Smith, Tessa Terry and Cindy Whittaker (track and field). Antoinette “Toni” Johnson, head of the delegation, said at the airport Tuesday, “They are all super athletes, not just kids. Everybody came up to the plate and did their best. I’m so proud of them, the way they traveled, the way they worked and the way they got their competition done.” Ms. Johnson added that the competition was “very, very tough” and that the times were “no way like an amateur competition, everybody came there pushing to win.” She congratulated the coaches for preparing the athletes so well and added that the highlight of the Games for her was the suc- cessful inclusion of “unified partners” (athletes without intellectual disabilities who train and compete on the same team). “In both the football and basketball, that’s the thing I’d like to see continue,” she said. Track athlete Matthew Ebanks, who won gold in the 400 meters on his 24th birthday, said, “That was awesome and I thank ev- erybody for sending out birthday greetings.” He also came away with a 4x100m gold medal. The swimmers did par- ticularly well, winning 13 medals in total in their five- member team. Penny McDowall, coach of the aquatics team, said, “They all did very well. Kanza Bodden did brilliantly in the 800m. She was a lap ahead of everybody and she did a great finish in the 1,500m open water race. “She had a personal best and we were particularly happy because it was her first time in kind of rough open water.” Kanza won a gold medal in the 800m freestyle and a bronze medal in the 1,500m open water swim. Ms. McDowall was also delighted with the 4x50m relay team – which included Kanza – winning bronze in their first ever attempt. Andrew Smilley took silver in the open water event. Ms. McDowall said it was a “heartbreaker for him” because he was in a “cat and mouse” game with the gold medalist. “The guy was a head taller than he was and twice the arm stroke, but Andrew did his best,” she said. “It was a big personal best for him and I couldn’t ask for anything more.” The Games ended on Sunday with thousands of athletes congregating at the closing ceremony. Around 6,500 athletes took part in contests ranging from aquatics and soccer to weightlifting. Every compet- itor received a performance ribbon and a chance to take to the victory stand following their competition. An estimated 500,000 people turned out to watch at venues in and around Los Angeles throughout the Games. Special Olympics team home in triumph Government ministers Tara Rivers, Osbourne Bodden and Wayne Panton greet Hamish Wood, who won a gold and a bronze medal, and other Special Olympians at the airport. The athletes, festooned with their medals, step off the plane. - PHOTOS: TANEOS RAMSAY Governor Helen Kilpatrick greets double gold medalist Matthew Ebanks. Two thumbs up from Special Olympian Kanza Bodden, who won three medals - one gold and two bronze. - PHOTO: RON SHILLINGFORD CONTINUED FROM PAGE 1The islands’ most-trusted news source 7 Cayman Compass • Wednesday august 5, 2015 High Quality Granite, Quartz, Glass Countertops at Affordable Prices 100’s of full size slabs to choose from Tiles Wall & Floor* Seamless shower enclosures kitchen & Bath Cabinets * Customers own Material fabricated & Installed 947-7767 email: info@stonepros.ky Visit our Showroom 985 Crewe Road (IMP Bldg) before the Cayman Contractors Store Running From: 1st August to 22nd August Help kick off the school year by donating School supplies to area youths Running From: Help kick off the Foster’s Food Fair, Hurley’s Supermarket, Offi ce Supply, Lee’s Offi ce Supply, and Caribbean Alliance Offi ce. Donations will go to: • Department Of Children And Families • Special Needs Foundation • Cayman Islands Cancer Society And special thank you to Barnes Transportation. For more information on how you can get involved, please call 949-9744. Barne’s Islands jurisdiction so that there could be no questions about having our own med- ical and emergency staffs re- viewing themselves.” Barrie Quappe, Teri and Zak’s mother, also works in the medical field. She was a cardiovascular nurse and now works as the sole med- ical facilities inspector for the Cayman Islands government. On the day of the crash, Zak and a friend, Igor Domladis, were racing on South Church Street, exceeding 60 miles per hour on the narrow, winding stretch of road. Just after 3 a.m., according to the report, both cars lost control as they headed out of central George Town, and Zak’s car hit a wall. The other car hit another wall and a parked car. A bystander called 911 and the closest ambulance, at the Cayman Islands Hospital, was dispatched to the scene. The first responder, a po- lice officer, said Zak Quappe was “trapped in the car and losing consciousness fast … still breathing,” the review quoted from an event log. About a minute-and-a-half later, the first medic arrived. The EMS patient treatment report from the first para- medic on the scene, cited in the independent review, notes the serious damage to the car and “significant trauma” to Zak Quappe, including a head injury with major blood loss, possible spine fracture and broken legs and arm. The re- port does not note any at- tempts to resuscitate Zak, to open an airway, or to remove him from the car. The paramedic reported that Zak was “DOA” (dead on arrival) when she got to the scene, according to the notes examined by the coroner. Dr. Cass, in his report, said there were “a number of de- viations from existing proto- cols,” including failing to open an airway, assess the heart- beat and eyes, and initiate CPR. “The rationale for these deviations is not documented; nor is there evidence of con- tact with the medical com- mand physician regarding these deviations,” he writes. In the report, he notes, “There is no evidence that this deviation was sanctioned or directed by the medical con- trol physician.” In an interview this week, Barrie Quappe thought back to her time as a nurse working with heart pa- tients. “You know how many people I’ve brought back from asystole?” she asked, using the technical term for no measurable heartbeat. “If only I had been there with the right equipment. “Two young men made a stupid decision,” she said of the road racing in which her son and his friend took part, which led to Zak’s death and Domladis’s subsequent con- viction and imprisonment. By pushing the min- istry for this review, she hopes health authorities will make changes to how the EMS works. Barrie Quappe said after her family received the re- port they asked the Health Services Authority and the ministry for a response by the end of July but never received one. The report makes six rec- ommendations: equip police and fire officers with auto- mated external defibrillators, known commonly as AEDs, in case officers come across a victim with no pulse; develop protocols for when para- medics respond to patients with traumatic cardiac arrest, such as in this case; more training on protocols for de- ciding how to treat patients and when to give or withhold resuscitation; develop new re- sponse time standards; re- mind paramedics to docu- ment observations, not make conclusions or diagnoses; synchronize event recorders so police, fire and EMS can all track response times together in one system. The ministry, in a state- ment, notes that is has im- plemented some of Dr. Cass’s suggestions. “For instance, the Department of Public Safety Communications, which falls under the remit of the Ministry of Home Affairs, is coordinating with stake- holders on modifying dis- patch protocols and pro- cedures with the intent of reducing emergency response times. Work is also under way to synchronize event recorders throughout the system,” the ministry notes in a written statement. Company ordered to pay severance No threat of imprisonment for director in lieu of payment Carol Winker cwinker@pinnaclemedialtd.com Aralco Cayman Ltd. has been sentenced for failure to comply with an order of the Labour Tribunal to pay an employee $11,970 as severance pay. The money is to be paid in monthly installments of $665, to be completed by Dec. 31, 2016. The tribunal’s order was made in August 2013 and the matter was first in court on April 1, 2014. Winston Salmon, a director of the company, appeared on its behalf and, after five more court appearances, entered a plea of not guilty. The basis for the plea was apparently a belief that notice of appeal against the Labour Tribunal’s order had been filed within the 14 days allowed by the Labour Law. This turned out to be not true, and in December 2014 a guilty plea was entered. By this time the com- pany was represented by an attorney, who proposed a schedule of payments. Three months later, however, no pay- ments had been made. The attorney cited a conflict of interest and was given permis- sion to come off record. On June 30, 2015, Magistrate Philippa McFarlane passed sentence of 30 days’ imprisonment, suspended for 18 months. Failure to pay the compensation would result in a term of imprisonment, she warned. Last week the matter was rescheduled for a clarifica- tion of sentence. The magis- trate advised the company di- rector that after the Crown had withdrawn some of the charges, the only charge that remained “live” was the one against the company, not against any person. “That means I was un- able to impose any custo- dial sentence,” she explained. On that basis, any period of imprisonment was voided. Compensation is still due, she pointed out, and it is to be paid through the court funds office in monthly installments. Emergency services ignored protocol in road death, review says CONTINUED FROM PAGE 18 WORLD&REGIONAL Wednesday august 5, 2015 • Cayman Compass We Buy Gold!We Buy Gold! Cash For Gold Silver, Coins and Broken Jewelry Cash Paid on the Spot! Call 927-8565 Cash For Gold • Shedden Road Migrants in Calais a small part of France’s larger immigration PARIS – Mohammed Habbib left Darfur three years ago, reaching France in early June and requesting political asylum. The 28-year- old says he has no interest in going to Britain. That’s the case with about 200 other migrants from 10 countries who July 31 occu- pied an empty former high school in northeast Paris. Another 300 have been living for the past year under a bridge near the French cap- ital’s Gare d’Austerlitz train station. “It’s simply not true that all migrants dream of reaching England,” said Valerie Osouf, a documen- tary filmmaker who is part of a group helping migrants at what used to be the Jean Quarre school. “They’ll stay where they can find a roof, a chance to work, and people willing to help them.” While nightly images of several thousand migrants in Calais attempting to force their way onto trains and trucks to England have dom- inated television images and British media this summer, they are but a small part of a larger picture. In the first three months of this year, 185,000 people applied for political asylum in the 28-member European Union. Britain accounted for 4 per- cent of that total. Germany, Sweden, Italy, Hungary and France between them ac- counted for 80 percent. The case of displaced people is even more dra- matic in other countries. Turkey is home to 1.7 mil- lion refugees from Syria, with another 2.2 million spread around Lebanon, Jordan, Iraq and Egypt, according to the United Nations. In the EU, governments remain at odds over what to do with refugees who reach European shores, with most countries opposing proposed national quotas for sheltering them and weighing their cases for political asylum. “Europe is facing an un- precedented migratory crisis,” Paris Deputy Mayor Bruno Julliard said at a press conference Monday. While France has rein- forced its police presence in Calais to break up migrant camps in towns near the Channel Tunnel, it is trying to deal with the plight of mi- grants in the capital. “Paris must give protec- tion to those who are fleeing violence and wars,” Julliard said. Charities say Paris isn’t doing enough to house the migrants roaming the French capital. Julliard said the 10,000 emergency beds run by the city are full, and the city is working on iden- tifying empty buildings that could be converted into tem- porary shelters. The Jean Quarre school in a former immigrant neigh- borhood could become one of those buildings, after some needed work is done. Named after a local member of the Resistance executed by the Nazis, it ceased oper- ating as a high school four years ago, and now only one of its four floors is used for extra-school activities during the school year. On a recent day, Sudanese immigrants played soccer in the courtyard while Afghans played basketball. Volunteers recently re-activated four showers, and a grill had been set up in the corner of the courtyard to cook meals. Ali Hussein, an Afghan, said he deposited his asylum request in September 2013 and hasn’t heard back yet. Volunteers say other mi- grants at the school come from Eritrea, Yemen, Libya, Egypt, Algeria, Tunisia, Mali and Guinea. Julliard said the school needs to be evacuated so that repairs can be done, but he promised that police wouldn’t force the migrants to leave the school. In early June, police dis- lodged about 470 migrants from a bridge behind Gare du Nord, the train terminus for the Eurostar high-speed ser- vice to London. That led local inhabit- ants to create “La Chapelle en Lutte,” a charity group that helped the migrants take over the school and has been pro- viding them with food and metro tickets. About 7,000 euros ($7,600) raised through crowd-funding is nearly spent and another fund- raising round is planned, the filmmaker Osouf said. Julliard said city officials asked volunteers to come up with a list of the migrants at the school, and to allow an inspection team to re- view health and hygiene conditions. Both requests were refused. The volunteers say they want the city to find housing for all migrants, without dis- tinguishing between nation- alities. They suspected the visit was intended to plan an eventual evacuation. Under EU rules, migrants must apply for asylum in the first member state they reach. In reality, most don’t stay in Italy or Greece, the most common entry points where jobs are few and the language unfamiliar. Instead, they make their way north before applying. Nationality is big deter- minant of success. EU coun- tries handed down 121,600 decisions on asylum in the first quarter, of which 46 per- cent were positive. The ac- ceptance rate varied from 94 percent for Syrians, 90 per- cent for Eritreans, 88 per- cent for Iraqis, 53 percent for Sudanese and just 1 percent for Kosovars and Serbians, who are generally deemed to be economic migrants. Under a bridge near the Gare d’Austerlitz, local vol- unteers provide French lan- guage lessons every evening at the migrant camp. “They have a real deter- mination to learn,” said Marc Naelten, 62, a retired ad- ministrator from the state school system. Akramohammed, a 27-year-old from Darfur who said he was fished out of the Mediterranean earlier this year by the Italian navy after taking a boat from Libya, reached France in June. He said he planned to request asylum in France and had no interest in going to Britain. © 2015, Bloomberg News In the first three months of this year, 185,000 people applied for political asylum in the 28-member European Union. Far-right group’s poster campaign in Stockholm stirs outrage LONDON (AP) – A poster campaign by the anti-immi- grant Sweden Democrats at a subway station in central Stockholm has stirred out- rage in the Nordic country. The posters plastered above the escalators at Ostermalmstorg subway sta- tion are directed to tourists visiting the Swedish cap- ital and apologize for “the mess” in Sweden, saying the country has a problem with “forced begging” organized by “international gangs.” Critics say the message spreads racist misconcep- tions about Roma people from eastern Europe who are begging in Sweden. Anger has also been directed at Stockholm’s public transport provider SL, which is owned by the city council and is profiting from the ads. More than 13,000 people signed up to join a dem- onstration in downtown Stockholm later Tuesday against “SL’s spread of racism and the normaliza- tion of racism in Sweden.” Protesters also used so- cial media to express their dismay at the ad campaign, posting counter messages like: “Sorry about the mess here in Sweden. We have neo- fascists in the parliament.” SL spokesman Jesper Pettersson said Tuesday its policy allows advertising by all political parties as long as it is not illegal. He said SL officials had reviewed the ads and concluded that they were legal. However, the office of Sweden’s Chancellor of Justice said it has received more than 50 complaints and will investigate whether the publishers are inciting racial hatred. Sweden’s left-leaning government in June put forward a proposal to in- crease its cooperation with Romania and Bulgaria to help people who travel from those countries to Sweden to beg. The oppo- sition Sweden Democrats, the third-biggest party in Sweden’s parliament, say that is not enough and have called for visas for people traveling from the two EU countries to Sweden. rights group: 2,000 migrants dead at sea this year MILAN (AP) – A human rights group says nearly 2,000 migrants are known to have died so far this year crossing the Mediterranean, outpacing last year’s death toll. The International Organization for Migration said in a release on Tuesday that about 1,930 perished trying to reach Italy in un- seaworthy boats mostly departing from Libya. Another 60 died trying to reach Greece. The latest deaths were recorded last week when 19 people perished, most from heat exhaustion and thirst after drinking water was used to cool a boat’s engine. Critics say the message spreads racist misconceptions about Roma people from eastern Europe who are begging in Sweden. Migrants line up Tuesday as they wait for food rations distributed at a camp near Calais, northern France. - photo: apThe islands’ most-trusted news source 9 Business Cayman Compass • Wednesday august 5, 2015 US auto sales strong in July Luxury vehicles like Audis and Volvos drove off dealer lots at a furious pace in July and, combined with sizzling demand for SUVs, helped the auto industry roll on toward its best annual sales since before the recession. July sales rose 5 percent to more than 1.5 million. Tailor-Made Professional Real Estate Services; But without any of the restrictions. . . INTRODUCING www.thpm.ky Tel: 345 949 5134 Minister: Cayman funds ready to compete in European Union BrEnt FUllEr bfuller@pinnaclemedialtd.com The Cayman Islands is readying its regulatory status to enable Cayman-based in- vestment funds and fund managers to qualify for a “third country passport,” al- lowing them to more easily compete in the European Union market, Financial Services Minister Wayne Panton said last week. Mr. Panton said the Legislative Assembly, during its Aug. 12 meeting, is ex- pected to consider amending local legislation that will fa- cilitate the extension of the EU Alternative Investment Fund Managers Directive passport to non-EU countries. The European Securities and Markets Authority has already assessed six non-EU countries in relation to the passport extension, including the competing jurisdictions of Guernsey and Jersey, to which the passport has been extended. A total of 40 coun- tries, including Cayman, will be evaluated in the process. The European authority will assess Cayman’s regu- latory regime and its super- visory cooperation with EU regulators to provide advice to the European Commission on which jurisdictions should be considered for the “third country passport.” Obtaining the passport would allow Cayman funds to be marketed to profes- sional investors across the EU, rather than through pri- vate placement in each EU member state individually. Those private placement regimes, called NPPRs, are ex- pected to expire by 2018, when they will be replaced by the third country passport regime. Mr. Panton said it is cru- cial for Cayman’s finan- cial services industry to strengthen and expand its EU presence, and obtaining the third country passport is a key step in doing so. “We are a global leader in investment funds and we in- tend to build on our market dominance with our new Alternative Investment Fund Managers Directive regime as the platform upon which Cayman will pursue fur- ther growth in our share of the EU’s investment funds sector,” Mr. Panton said. In a July 10 advisory, Cayman’s government out- lined two amendment bills aimed at establishing an “opt-in” regime for the regu- lation of Cayman-domiciled investment funds and fund managers who are connected to the EU. The bills, if passed, will enable Cayman-based funds and managers con- nected with the European Union to elect a regime of prudential regulation consistent with the EU Alternative Investment Fund Managers Directive. The proposed amend- ments of the Mutual Funds Law introduce the con- cept of a “regulated EU con- nected fund,” which is either managed from or marketed in a member state of the European Economic Area and elects to fall within the Cayman Islands Monetary Authority’s regulated EU con- nected fund regime. The bill amending the Securities Investment Business Law creates the “EU connected manager” designa- tion for individuals who fall within the existing scope of the law, who conduct man- agement, marketing or depos- itary activities as defined by the EU directive and who vol- untarily decide to fall within CIMA’s new EU connected manager regime. “Cayman Finance is fully supportive of the Cayman Islands government and the Cayman Islands Monetary Authority in their develop- ment of Cayman’s Alternative Investment Fund Managers Directive regimes,” said Cayman Finance Chief Executive Jude Scott. “We all recognize Cayman’s important role in the global investment funds market, and these new re- gimes are the latest example of the jurisdiction continuing to carefully evolve its legisla- tion and regulation in a bal- anced and robust manner to meet the needs of inves- tors and managers around the world, without any disruption to our world- class services.” Puerto Rico defaults on a bond payment for the first time Debt-plagued Puerto Rico defaulted on a bond payment for the first time on Monday, triggering what is likely to be a long battle with credi- tors as it seeks to restructure about $73 billion in loans. The U.S. territory, whose governor has declared its debts “unpayable” and is seeking the largest restruc- turing ever in the country’s municipal bond market, paid just $628,000 of a $58 mil- lion payment owed by its Public Finance Corp. because the legislature didn’t provide enough money, according to the island’s Government Development Bank. “Due to the lack of ap- propriated funds for this fiscal year the entirety of the PFC payment was not made today,” bank president Melba Acosta Febo said in a state- ment. “This was a decision that reflects the serious con- cerns about the common- wealth’s liquidity in combi- nation with the balance of obligations to our creditors and the equally important obligations to the people of Puerto Rico to ensure the es- sential services they deserve are maintained.” The default marks an es- calation of the financial crisis on the island, which has been caught in a nearly de- cade-long recession that has crimped government reve- nues and triggered an exodus to the U.S. mainland. Moody’s Investor Services, which tracks the bond market, said the default is likely the first of many to come. “This event is consistent with our belief that Puerto Rico does not have the resources to make its forthcoming debt payments,” Emily Raimes, a Moody’s vice president, said in a statement. “This is the first of what we believe will be broad defaults on com- monwealth debt.” In late June, Puerto Rico Gov. Alejandro García Padilla declared the is- land’s debts “unpayable” and called on creditors to come to the table to renegotiate repayment terms. Puerto Rico – unlike cities such as Detroit or Vallejo, California – cannot seek protection under Chapter 9 of the U.S. Bankruptcy Code. García Padilla has called on U.S. law- makers to grant Puerto Rico’s state-run corporations, which are highly indebted and pro- vide vital services from elec- tricity to water, the right to file for bankruptcy. That would allow those corpora- tions an orderly process to restructure their obligations. The Obama administra- tion has voiced support for al- lowing the island’s corpora- tions bankruptcy protection, but it has continuously em- phasized that there will be no federal bailout for Puerto Rico. In a letter last week, Treasury Secretary Jacob Lew told Sen. Orrin G. Hatch, R-Utah, chairman of the Senate Finance Committee, that Puerto Rico’s financial situation was “urgent” and said Congress should con- sider some orderly process to restructure the island’s debt. Lew also voiced support for ongoing efforts on the is- land to devise a long-term fiscal plan that points to how the island would fix its fiscal problems and reignite the economy if some form of debt relief is extended. A group of policymakers is expected to present the restructuring plan by the end of this month. Although some policy- makers have embraced the idea of financial restruc- turing for Puerto Rico, many investors are opposed. They believe the island could con- tinue to raise taxes, fees or utility rates, to pay what it owes. Moreover, they say, one reason they decided to loan money to the economically distressed commonwealth is precisely because it could not declare bankruptcy. Public Finance Corp., a fiscal arm of Puerto Rico’s government, recently notified investors who hold appropri- ation bonds, typically those backed by funds set aside by the legislature, that it had not transferred money to a trustee to pay the debt due at the beginning of this month. The corporation said the leg- islature never actually appro- priated the funds. David Fernandez, a public finance attorney in New York, said he hopes that the default shifts the conversation about Puerto Rico’s debt away from the overall size of its obliga- tions, to one that focuses on the level of debt – and ability to pay – exhibited by the in- dividual issuers of bonds on the island. While the is- land’s electric utility has one set of problems, he said, per- haps other debt issuers are in better shape to pay. They might also face greater legal mandates to pay as well. For example, the island’s consti- tution says that general ob- ligation bond holders should be paid even before govern- ment workers. “It is the individual en- tities that have issued this debt. That is where the focus should be,” Fernandez said. © 2015, The Washington Post Mr. Panton The U.S. flag flies in front of Puerto Rico’s Capitol in San Juan. The territory’s governor has declared its debts ‘unpayable.’ - Photo: APNext >