High of 84 Low of 75 Seas: Rough with wave heights of 5 to 7 feet. Small craft warning is in effect. Power of the Purse Author Cheryl Strayed to talk about r walk on e ‘Wild’ Events Technology Lifestyles ■ FESTIVALS St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day Where and when to wear the green B8 Ruby Red Luncheon Cayman Heart Fund hosts crimson culinary event B3Atari’s Breakout Retro game is revived B11 FRIDAY MARCH 11, 2016 • CAYMAN COMPASS Irish to the Core STOLI FLAVOURS2 for $ 56 Until 31 July STOLI FLAVOURS 2 for $ 56 Until 31 July STOLI FLAVOURS 2 for $56 Until 31 July STOLI FLAVOURS 2 for $56 Until 31 July SAVE $ 5 BROGAN’S IRISH CREAM REG. $34.99 NOW $29.99 AVAILABLE 1–19 MARCH ONLY! Registered Merchant of CaymanGiftCertificate s.com Dom Pérignon Getting to the bottom of the bubbly B6 St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day St. Patrick’s Day CAYMAN WEEKENDER St. Patrick’s Day EDITORIAL | PAGE 4 BAD NEWS DEMANDS A SWIFT RESPONSE ESTABLISHED 1965 www.caymancompass.com – 75 CENTS – FRIDAY MARCH 11, 2016 RECYCLE YOUR OLD PHONE BOOKS TODAY! Dates for Drop Off: February 22nd through March 18th Foster’s Food Fair Locations Hurley’s Supermarket Camana Bay, Regal Cinema Camana Bay, Mail Boxes Etc. Yellow Pages Office Participating Primary Schools CONVENIENT RECYCLING BIN LOCATIONS: Cayman companies plead guilty to tax evasion conspiracy IRS: More than US$130M ‘hidden’ in Cayman BRENT FULLER AND MICHAEL KLEIN bfuller@pinnaclemedialtd.com; mklein@pinnaclemedialtd.com Cayman National Corp.’s affiliated trust and securities management businesses con- spired with American taxpayers to hide US$137 million in assets managed by those companies from the U.S. Internal Revenue Service, according to a guilty plea to tax evasion conspiracy allegations recorded Wednesday in Manhattan. Cayman National Trust Co. Ltd. and Cayman National Securities Ltd. have agreed to forfeit US$6 million as part of the deal. In addition, the companies agreed to turn over account information on the alleged tax evaders whose accounts they managed. The pleas made Wednesday represented the U.S. Department of Justice’s first crim- inal conviction of non-Swiss financial entities for tax evasion conspiracy. “The veil of secrecy has been lifted from what was once a common place for criminals to hide their money offshore,” said IRS crim- inal investigations chief Richard Weber. U.S. Attorney for the Southern District of New York Preet Bharara said the plea agreement showed the government’s com- mitment to pursue not only financial in- stitutions that assist with tax evasion, but also the individuals who use them. “We will follow them, no matter how far they go to hide their accounts,” Mr. Bharara said. No individual criminal convictions were re- corded as part of Wednesday’s plea announce- ment. However, prosecutors warned that an agreement not to prosecute Cayman National’s securities and trust businesses further in this case did not preclude the U.S. Attorney’s Office from charging individuals who had poten- tially committed a criminal offense. Cayman National Corp.’s shareholders were informed of the pending court action last year LAWSUITS ALLEGE OVERSEAS INVESTORS MISSING MILLIONS BRENT FULLER bfuller@pinnaclemedialtd.com Overseas investors from Canada to Bermuda to Central America seeking the re- turn of millions of dollars, in some cases, from a Cayman Islands-registered investment bank and its apparent successor company have been stonewalled, according to claims filed in lawsuits against the companies over the past several months. The latest action, filed in the Cayman Islands Grand Court on March 2, seeks the winding up of B&C Capital Ltd. – described as an asset management and investment bro- kerage – because the firm has been deemed by a Bermudian company to be “unable to pay its debts.” The Bermudian firm, Triathlon Ltd., which sought to withdraw US$610,000 from B&C last September, alleged B&C gave no indica- tion it was able to pay and that no money had been transferred to Triathlon’s accounts de- spite repeated requests since last fall. Cayman court documents also reveal that B&C Capital Ltd. was identified in a sepa- rate lawsuit filed last November by investors seeking to recover funds from another com- pany which, allegedly without the investors’ knowledge, had transferred the funds to B&C. The November 2015 lawsuit filed by Lawrence Heath, QC, and the Willaud Corp. Beach Bay road project under way JAMES WHITTAKER jwhittaker@pinnaclemedialtd.com Work is under way to construct a new stretch of road adjacent to the site of a planned five-star resort in Beach Bay, Bodden Town. Developer John Layton and government held a press briefing at the site Thursday to announce that phase one of the road con- struction, clearing the route of a portion of the road that the developer has agreed to build, was complete. The hotel developer will complete con- struction on the section of the road that fronts the property. Government will be responsible for com- pleting the stretch of road which will even- tually link Beach Bay Road with Manse Road. No timeline for when that portion of the project will be completed was outlined Thursday. Beach Bay Land Ltd. and the Cayman Islands government signed a devel- opment agreement late last year outlining a package of concessions for construction of the resort at St. James Point. Mr. Layton said Thursday that the devel- oper was liaising closely with government as the project continues. “We are building more than a world- class resort. We are building a country that is leading the way in tourism in the Caribbean,” he said. Premier Alden McLaughlin said gov- ernment had given considerable conces- sions, potentially worth $25 million, be- cause it believes in the importance of the project to Cayman and the eastern districts in particular. The developer has revealed concept de- signs for the project but has not yet put in a planning application to begin construction. PLEASE TURN TO PAGE 9 » Premier Alden McLaughlin and John Layton, managing director of Beach Bay Land Ltd., address the media at the site of a roadwork project related to a proposed $200 million hotel development in the Beach Bay area of Bodden Town. Phase one of the road construction is complete. - PHOTO: MATT LAMERS PLEASE TURN TO PAGE 11 »2 LOCAL NEWS FRIDAY MARCH 11, 2016 • CAYMAN COMPASS Mobile: 345-323-8573 Office: 345-943-8573 / Fax: 345-949-9753 heather.richards@remax.ky / www.remax.ky Heather Richards DREAM WITH YOUR EYES OPEN! Cayman Islands Member of CIREBA 4 bed, 3.5 bath. Well appointed 3000 sq. ft. solidly built home. Spacious, bright rooms. Modern eat-in kitchen with gas range. Great location with easy commute to GT. MLS 405438. Call today, won’t last long! CI $445,000 Savannah Meadows 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 Don’t forget Music By DJ FLEX Starting at 9:30pm Tarpon Fish Feeding 7:30pm & 9:00pm Nightly Tonight! Friday Happy Hour 5pm-7pm Drink Specials 5pm - 7pm Tonight! Friday Happy Hour 5pm-7pm Drink Specials 5pm - 7pm Friday Happy Hour 5pm-7pm NO, IT’S NOT APRIL FOOLS! Good Friday is the last Friday of the month. Boggie Nights will be moved to April 1st for this month only Friday, April 1st Old School Dance Party 70’s disco & 80’s classics “BOOGIE NIGHTS” Call 949-2231 or email: thewharf@candw.ky Salsa Free lessons with Kirk starting www.capitalrealty.com.ky Alvin Sluchinski 525.8850 alvin@capitalrealtycayman.com 2.66 acres of prime development LAND directly on South Sound Road! A unique parcel shape. MLS#405480 CI$899k 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. Supply & Install Repair & Service Hurricane Shutters Roll-Up Shutters Accordion Shutters Re-tractable Awning Screen Porch, Patio & Screen Doors Ishmeal Graham Owner/Manager 345 926- 0481 345 326 -6386 pjane59@yahoo.com PO Box 2642 KY1-1101 GT Search for boaters continues JAMES WHITTAKER jwhittaker@pinnaclemedialtd.com The search operation for five missing boaters, in- cluding two young children, is now covering an area of 350 square miles of ocean around the Cayman Islands. As the search entered its fourth day Thursday, the police helicopter and 65-foot marine vessel, the Guardian, were scouring an increasingly wide area for any sign of survivors. Gary Mullings, his nephews Nicholas Watler, Kamron Brown, 11, and Kanyi Brown, 9, and his friend Edsell Haylock were re- ported missing late Sunday after they did not return from a fishing trip to 12 Mile Bank. Their upturned vessel was located 20 miles offshore Monday. Police temporarily sus- pended the search for sur- vivors Wednesday after- noon due to bad weather and rough seas but resumed Thursday morning. The U.S. Coast Guard, which sent two C-130 planes to aid the search, concluded its air assistance Wednesday, according to a statement from the Royal Cayman Islands Police Service. The Coast Guard, which dropped a tracking beacon at the site where the 28- foot Panga boat was found Monday, continues to provide technical data and software analysis of currents and drift patterns to help determine the best search area for pos- sible survivors, police said. A shoreline search from Barkers Beach in West Bay to East End also took place Wednesday and Thursday, involving police and volun- teers aided by the police heli- copter. There were no reports of any debris or signs of the boaters uncovered following the search. The boat on which the five missing boaters had been aboard is towed back to Grand Cayman Tuesday by a marine police vessel. - PHOTO: RCIPS ‘Haven’ reunion planned for film festival Stars Orlando Bloom and Zoe Saldana could attend JAMES WHITTAKER jwhittaker@pinnaclemedialtd.com A decade after the re- lease of his debut feature film, “Haven,” writer-director Frank E. Flowers is bringing some of the cast and crew of the movie back to the island for the Cayman International Film Festival. The final lineup is not yet confirmed but could include mega-stars Orlando Bloom and Zoe Saldana. The fes- tival will feature a screening of a previously unreleased director’s cut of the movie, which was shot entirely in Grand Cayman. Mr. Flowers, currently working on a biopic of basket- ball star LeBron James, said, “The cast and crew fell in love with our beautiful island, and even though the event is still in early stages, a handful of the actors have already con- firmed their attendance.” He said he could not con- firm individual appearances at this stage, but is hopeful the key players will be involved. “For us, it’s about getting the whole gang back together. It was a privilege to work with such a talented group of people, some of whom became lifelong friends. “Everyone had such a beau- tiful experience, we want to bring them back and celebrate the 10th anniversary of the film,” he said. The director believes the film industry in Cayman has come a long way since he broke new ground, shooting the entire movie on the island in 31 days. “At the time it was a real community effort. We had a mix of Hollywood profes- sionals and people who just stepped up to help. People opened up their homes and businesses to us, that’s what made it so special.” He said events like the film festival, which will take place in July and will also feature cast and crew from the new “Star Wars” movie, show the progress that had been made. A new film industry is emerging around a commu- nity of young artists who are taking movie making to the next level in Cayman, Mr. Flowers said. Mr. Flowers, who recently co-wrote Sundance award- winning movie “Metro Manila,” would like to bring another feature film or television show to Cayman. “With the right story and the right script, I’d love to do it,” he said. “Haven,” described as a story of seemingly uncon- nected lives that intersect on a Caribbean island with vi- olent results, was produced by Academy Award nominee Robbie Brenner, who also pro- duced “Dallas Buyers Club.” Its cast includes Orlando Bloom (“Lord of the Rings,” “Pirates of the Caribbean”), Zoe Saldana (“Avatar,” “Guardians of the Galaxy,” “Star Trek”), Bill Paxton (“Titanic,” “Aliens,”) Anthony Mackie (“8-Mile,” “Captain America”) and Ky- Mani Marley (“Shottas”). Festival Director Tony Mark said, “This movie is such an important part of Cayman’s film history for many reasons. It was the first movie shot en- tirely in the Cayman Islands; it was the catalyst for the launch of the local film industry; it opened the eyes of aspiring Caymanian filmmakers and indeed the people of Cayman to the possibility of Cayman being a world-class filming destination; and most of all it was done by one of Cayman’s very own, a native son. “This is a time to celebrate ‘Haven’s’ artistic contribution to the Cayman Islands and the legacy it has created for future Caymanian actors, directors, writers, producers, and more over the past 10 years.” CayFilm takes place from July 1-4 and includes daily film screenings, question-and- answer sessions with film- makers, panel discussions, workshops and two celebrity gala events. The closing gala will feature an awards cere- mony where an award for best local filmmaker, named after Frank E. Flowers, will be pre- sented for the first time. Frank Flowers, center, on set during the filming of ‘Haven’ in Grand Cayman.The islands’ most-trusted news source 3 CAYMAN COMPASS • FRIDAY MARCH 11, 2016 discoverflow.ky/myplan Flow terms and conditions apply. Get the Samsung Galaxy S6 right now and spread the cost over 12 months. Then, in a year’s time upgrade your smartphone again – the choice is yours. $ 10 stay ahead with the samsung S6 for less than per monthThe 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. THE TELEGRAPH (LONDON) EDITORIAL BOARD One of the curiosities of the referendum campaign is that the Remainers ap- pear to believe that EU im- migration policy is a good reason to vote to stay in. Lord Rose of Britain Stronger in Europe waxes lyrical about mass migration’s downward pressure on wages. David Cameron argues that being in the EU’s “Dublin regula- tions” regime allows Britain to deport asylum seekers to the country where they first entered the EU, generally Greece or Italy. The proposed over- haul of the Dublin rules poses a problem for the Remain camp. To alle- viate the crushing pres- sure on southern states such as Greece, the European Commission is considering ending rules allowing claim- ants to be returned to the EU state they first entered, in- stead allocating claimants by quota across the union. Britain can, as Mr. Cameron says, opt out of any quota system, but that may hamper our ability to remove claim- ants who have arrived from other EU nations. Whether a deal can be done that allows Britain to reject quotas will be a test of Brussels’ willing- ness to bend the rules to keep us in the EU. And the ques- tion marks that now hang over EU asylum policy are a timely reminder that while Brexit is a road to an un- known destination, staying in the EU is also fraught with uncertainty, since the union, under intense demographic and economic pressure, is changing perilously fast. Whatever rules apply to Britain’s removal of a few thousand asylum seekers a year, of greater import are those migrants coming to re- side elsewhere in the EU, es- pecially in Germany, who are expected to number more than 3.5 million by the end of the decade. After five years living “legally and continuously” in Germany, they will gain the right to travel and work anywhere in the EU – including, under the current rules, Britain. That is the nature of the EU and its commitment to the free movement of people. Would free movement continue if Britain left the EU? Some Brexiteers suggest that maintaining access to the European single market would require Britain to accept free movement too. Others argue that we could strike a trade deal while regaining the freedom to exclude some Europeans from Britain. Again, this is one of the uncertainties that attends Brexit. Yet staying in offers certainty here, if nowhere else: remaining in the EU means Britain’s borders and labor market will remain open to more than 500 million people with EU passports. © 2016, The Associated Press Today’s front page features a one-two punch to the reputation of the Cayman Islands. For years, the general plaint heard from our country has been that we suffer from mistreatment at the hands of the international press: Cayman in reality is “squeaky clean,” but the world just doesn’t know it yet. The pair of stories that lead today’s newspaper — 1) Cayman National Corporation companies’ guilty plea to U.S. tax evasion conspiracy, and 2) a legal battle waged against Cayman financial firms by overseas investors who claim they were bilked out of millions of dollars — not only do damage to Cayman’s image as a transparent and well-regulated financial jurisdiction, but also challenge the substance of that assertion. We don’t intend to over-exaggerate the signifi- cance of this pair of particular developments. They aren’t mortal blows to Cayman’s financial sector — not even close. They do, however, add two new items to an ever-lengthening series of bad publicity for our country, including the collapse of Caledonian Bank (thanks to an overzealous SEC reaction to a relatively minor scheme involving penny stocks), Operation Tempura, the arrest of Premier McKeeva Bush (later acquitted by a jury on all counts) and, of course, the crown jewel of corruption in Cayman, the still-unfolding FIFA scandal. (That’s without hearkening back to the Enron, Eurobank, Parmalat and Guardian Bank and Trust fiascos.) Running through those disparate instances of inter- national reportage are common threads, most notably questionable activity (or absence of activity) by officials, whether it’s lawmakers, appointees, the Cayman Islands Monetary Authority, Royal Cayman Islands Police Service or even the U.K. Foreign and Commonwealth Office. Another commonality, almost to the point of becoming a rule, is that once the whiff of a scandal has reached the media’s sensitive nostrils, the inclination of Cayman’s public sector leaders is to clam up. By this time, our authorities ought to be painfully aware that we inhabit a brave new world of communications. We at the Compass consider ourselves as a timely news dis- tributor with a large reach (locally speaking). But in terms of universality and instantaneity, we don’t have anything on The New York Times, Wall Street Journal and Google, which can reach billions of people in the blink of an electronic eye, and each of which delivered news about Cayman National’s guilty plea almost as soon as it happened. Yet, Cayman’s government continues to spend inor- dinate amounts of time, manpower and tax dollars on attempts to influence or dictate the behavior of local news media. (Need we remind you of government’s embargo last year against doing business with the Compass, over the content of an editorial column?) Then, when a major piece of international news breaks that actually does threaten our country, necessitating urgent “damage control,” our authorities simply haven’t prepared themselves to react effectively when the situa- tion requires it. That’s true even in benign matters of purely local interest, such as the hiring of a high school principal. The Compass finally received the government’s long-promised press release on the matter yesterday, a full week after our news story appeared — and more than two weeks after he started on the job. We appreciate the statement, but at this point, it’s no longer “news”; it’s history. We are frequently asked by government officials to hold off on publishing stories because they’re not yet ready to issue an “on the record” response. Sorry, but the news waits for no one. As soon as we have enough infor- mation to publish a story, we publish it. Several weeks ago, we launched a new CaymanCompass.com website with the view toward disseminating breaking news faster and to a greater audience than ever before. We suggest the government take similar strides to adapt to new technology and consumption habits. Officials would be well advised to create a new communications policy for the government — not fashioned by the usual candidates in the Legislative Assembly or Government Administration Building — but by qualified experts who know something about this area, and this era. Bad news demands a swift response FRIDAY MARCH 11, 2016 • CAYMAN COMPASS Brexit and EU asylum seekers Do falling profits point to a recession? BARRY RITHOLTZ One of the big concerns for investors is the health of cor- porate profits, which have de- clined in the three of the past four quarters. The natural question is whether falling earnings point to a recession. I put that question and a few others to James Bianco, president of Bianco Research, an institutional research firm servicing many of the world’s largest mutual funds, hedge funds and sovereign-wealth funds. Below is our exchange: BR: A recent research re- port by JPMorgan found that when markets see consecutive quarters of earnings declines, the economy slips into a re- cession 81 percent of the time. What do you make of this? JB: The last time earnings went negative without a reces- sion was September 1998. The Federal Reserve was easing in the wake of the Long-Term Capital Management collapse and the Asian financial crisis. Earnings also turned lower in the absence of a recession in December 1985. The Volcker Fed was aggressively easing at the time. Earnings turned down in December 1982 after the “twin recessions” between 1979 and 1981. During this pe- riod the budget deficit was ex- ploding, a phase of rapid fiscal expansion. Earnings turned down in December 1967 with no recession in sight. Again, fiscal expansion, the “guns- and-butter” idea promoted by President Lyndon Johnson, was the order of the day. Hence, the last time earn- ings turned lower without a recession, Fed easing or fiscal expansion was in 1952. So if we are going to be in a pe- riod of negative earnings in the absence of any of these, it would be the first time in more than 63 years. BR: How important are earnings to forecasting eco- nomic cycles? Everyone else seems to be looking at the yield curve. JB: Company reports (aka earnings) are the raw ma- terial of economic reports. Where do retail sales, prices, jobs, durables and other data come from? Company re- ports. The same ones that earnings come from. BR: What does all this mean in the context of strong payrolls data? JB: I think you’re asking why hiring is so strong, yet earnings so weak. The an- swer is productivity. ... We add workers but it’s not increasing gross domestic product, so productivity wanes. 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. © 2016, 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 MARCH 11, 2016 CAMANA BAY WELCOMES THE BROOKLYN PIZZA + PASTA Discover the Town Centre’s liveliest new eatery. Experience Italian-inspired American favourites with a twist at The Brooklyn. This waterfront restaurant transports diners into a laidback, urban setting where the industrial-chic décor matches the edgy and flavour-packed menu. Versatile in its appeal, The Brooklyn is the ideal spot for a family meal, business lunch or date night. The tempting menu features globally inspired brick-oven pizzas, contemporary Italian-American comfort food and an extensive wine list. Located on The Crescent / Open Mon-Sun from 11:30am 345.640.0005 / TheBrooklynCayman.com Follow on #thebrooklyncayman CAMANABAY.COM6 LOCAL NEWS FRIDAY MARCH 11, 2016 • CAYMAN COMPASS PwC 2016 Scholarship Who? Are you a bright young Caymanian who is… ■ academically sound and wanting to pursue a career in public accounting ■ well rounded, as evidenced by community involvement, sporting or extra - curricular activities ■ of good character and integrity ■ ambitious and committed to your pursuits What? PwC will award up to a total of: ■ CI$5,000 per year for a local Associate’s degree, ■ CI$8,500 per year for a local Bachelor of Accountancy, or ■ US$30,000 per year of a Bachelor of Accountancy overseas. When? Your application should be received at our offices by Wednesday, March 30th, 2016. We will review all application packages and interview potential candidates in late April. How? Look for our full scholarship application online at www.pwc.com/ky/careers Select “Scholarships” to find the link to the application. If you have any further questions, please contact Human Resources at: E-mail: caymanrecruiting@ky.pwc.com Grow with us www.pwc.com/ky/careers © 2016 PricewaterhouseCoopers, a Cayman Islands partnership. All rights reserved. Security concerns persist amid recent Cuban migrant influx JAMES WHITTAKER jwhittaker@pinnaclemedialtd.com Cuban migrants arriving on Cayman’s shores in the highest numbers experi- enced in the past decade are creating a security head- ache for immigration en- forcement officials. Civic Centers in Bodden Town and East End continue to be used as overflow deten- tion centers, with 109 Cubans still held on island despite the fact that 84 migrants have been sent home since Jan. 1. Bruce Smith, acting chief immigration officer, said the civic centers lacked even minimum containment ca- pacity and warned that offi- cials have security concerns over the growing number of makeshift migrant boats landing in Cayman. Following a number of es- capes last month, he acknowl- edged officials have concerns for the general safety of the Cayman community. “The experience is that these persons are becoming more volatile, desperate and unpredictable,” he told the Cayman Compass. Mr. Smith added, “We must not assume that these are all Cuban nationals and that they are all going to be passive or submissive in their dealing with authori- ties when they are informed that they will not be allowed to continue on their tack to the U.S. “There are also great con- cerns when immigration of- ficers respond to these sit- uations not having any knowledge of what they are facing or whom they are dealing with.” Though not yet compa- rable to the crisis in the ‘90s, when hundreds of mi- grants camped in tents on land where the Immigration Detention Centre is now situated, the recent influx is putting a strain on the island’s infrastructure. Mr. Smith said the arrivals in December and January represented the highest num- bers experienced in almost 10 years. He said the arrival of two vessels carrying 40 migrants on a single day in January had been particu- larly challenging. “The more recent trends confirm single rustic crafts usually arriving particularly in Cayman Brac with be- tween eight and 20 souls or slightly more onboard,” he said. The latest Cuban craft to arrive washed up on the Brac on Tuesday with seven people on board. Mr. Smith said the level of future boat activity was difficult to forecast, but of- ficials expect such boats to continue arriving. He said, “We do expect that persons will continue to embark on these dangerous open water journeys. We will maintain our position of not encouraging or assisting in illegal migration and will say to the public that when you assist migrants who ar- rive onboard unseaworthy or rustic crafts, you may actu- ally be assisting these per- sons to their deaths.” It is likely that civic cen- ters will need to be used for the foreseeable future, with capacity at the Immigration Detention Centre limited to around 60. Asked what the long-term plan was, Mr. Smith said, “Immigration, prison, po- lice, other Cayman Islands Government departments/ authorities, particularly min- istries and private sector entities, are involved with migrant activity and mat- ters of mass migration man- agement generally. It must be understood within the region and beyond that, while these situations are emotionally sensitive and pulls on human nature to get involved, the Cayman Islands cannot be seen by our neighbors and the world to be encouraging or otherwise facilitating il- legal migration. The matter of this continuing activity will be managed consistently and deliberately.” He urged people to alert authorities rather than at- tempting to assist mi- grant vessels. “We ask the public to not encourage persons in these situations by lending any form of assistance or sup- port and report any and all activity by calling 911 if they are ever approached, observe strange vessel ac- tivity or with information generally,” he said. “The experience is that these persons are becoming more volatile, desperate and unpredictable.” BRUCE SMITH, acting chief immigration officer A ramshackle boat carrying Cuban migrants in George Town harbor in March 2015. – PHOTO: TANEOS RAMSAYThe islands’ most-trusted news source 7 CAYMAN COMPASS • FRIDAY MARCH 11, 2016 8 LOCAL NEWS FRIDAY MARCH 11, 2016 • CAYMAN COMPASS We regret to announce the passing of Caleb Vaughn Samuel Orrett Who departed this life on Thursday, 25th February 2016. Condolences can be registered at boddenfuneralservices.com & Bodden Funeral Service Facebook page. A funeral service will be held 3:00 p.m. on Saturday, 12th March, 2016, at the Wesleyan Holiness Church, West Bay. Viewing will be from 2:00-2:45 p.m. prior to the service. Interment will follow in Northwest point Cemetery. We regret to announce the passing of Winson “Mr. Vincent” Miller Who departed this life on Thursday, 25th February 2016. Condolences can be registered at boddenfuneralservices.com & Bodden Funeral Service Facebook page. A funeral service will be held 2:00 p.m. on Saturday, 12th March, 2016, at the William Pouchie Presbyterian Church, Northside. Viewing will be prior to the service from 1:30 p.m. Interment will follow in Miller Cemetery, Northside. The family of the late Dorothy (Dodie) Ebanks regrets to announce her passing on February 28, 2016. Memorial Service to celebrate her life at the Church of God Chapel - Walker's Road Friday, March 11, 2016 at 10:30 a.m. Those attending are encouraged to wear something red which was Dodie's favorite color. In lieu of flowers, donations of any amount received in Dodie's memory at the service will be given to the Cayman Islands Cancer Society and Cayman HospiceCare. Condolences can be registered at boddenfuneralservices.com & Bodden Funeral Service Facebook page. Planning authority chairman agrees in principle to open meetings Public Accounts Committee addresses auditor general’s report CHARLES DUNCAN cduncan@pinnaclemedialtd.com Central Planning Authority Chairman A. L. Thompson, responding to criticisms from a 2015 au- ditor general’s report on land use planning, said he would not oppose opening planning meetings to the public and even televising the proceedings. He said he thought the board members would be less open to filling out a register of interests, docu- menting which companies and properties they have a fi- nancial stake in. Auditor general’s report The auditor general’s re- port criticized the planning boards for Grand Cayman and the Sister Islands for not always being transparent. Auditors said the Central Planning Authority has a high risk for conflicts of in- terest, real or in appearance, since members do not have to make declarations of income, assets and liabilities. The Legislative Assembly’s Public Accounts Committee called Mr. Thompson to tes- tify on Wednesday, just a few weeks after committee mem- bers heard testimony from others associated with the planning department, in- cluding planning director Haroon Pandohie. “I have no problem with the Central Planning Authority hearings being public,” Mr. Thompson said. The reason for the closed meetings, he added, is be- cause “the history of the CPA is that it was always held be- hind closed doors.” Mr. Thompson said the board would not be ame- nable to filling out registers of interest. “I don’t know of any situation where someone has participated in the de- bate while having a conflict of interest,” he said. “We’ve never had an issue before.” Committee chairman and North Side MLA Ezzard Miller said, “I’m a bit concerned.” He said Mr. Thompson’s re- sponse amounted to, “Nobody else is doing the right thing, so you don’t have to do the right thing.” Mr. Miller added, “A register of interests is appropriate.” Member reappointments This week’s public ac- counts meeting comes shortly after a similar ses- sion when committee mem- bers criticized the planning boards for reappointing all members just weeks after the audit was released. Martin Ruben, with the Auditor General’s Office, said, “Almost all of those prac- tices that we would expect to see in good governance were missing from the CPA.” At the last Public Accounts Committee meeting, planning director Mr. Pandohie said that it was up to the board to decide whether to make the meetings public. But board chairman Mr. Thompson, tes- tifying Wednesday, said he did not think the decision to open the meetings rested with the board. “We don’t feel we have the authority,” he said. “We feel a directive should come from government.” Despite the closed meet- ings, Mr. Thompson, owner of A. L. Thompson’s hardware store, said, “The CPA is one of the most open boards on the island.” The Central Planning Authority makes its meeting agendas and minutes avail- able to the public on its website. Most boards do not make that information public without a Freedom of Information request. Mr. Thompson said there were several questions to answer about public meet- ings, including where and how to hold meetings that could occasionally attract major public attention for new developments. CIREBA reelects first female president The Cayman Islands Real Estate Brokers Association has reelected Jeanette Totten as its president. This will be Ms. Totten’s third term as president of the association. Ms. Totten, an American- Caymanian who moved to the Cayman Islands in 1982, was the first female president of CIREBA when she was first elected in 2012. She was again elected in 2013. She takes over from immediate past president Michael Day. “It’s a great honor to be reelected president. The past president did a fantastic job and it will be an easy transition for me to con- tinue his good work,” she said in a press release from the association. Ms. Totten started Cayman Luxury Property Group with her husband in 2004. She held numerous ex- ecutive roles in CIREBA prior to being president. According to the press release, one focus of Ms. Totten in her role as presi- dent will be to ensure that the CIREBA website repre- sents association members in a group effort rather than representing a single com- pany. In the coming year, she plans to continue moving forward with the newly re- structured Multiple Listing Services (MLS) website that was launched to its member- ship last year. She said she will also focus on attracting more bro- kers and individual agents to become involved in CIREBA. Ms. Totten said she plans on formulating committees, each comprised of brokers and agents under the leadership of a board member. For in- stance, there will be a com- mittee to deal with the web- site, signage and marketing, to name a few. IT scholarship available at Northern Caribbean University The Cayman Chapter of the Northern Caribbean University Alumni Association is accepting applications for the Matthew Thompson Memorial Scholarship from those who wish to pursue their tertiary education in in- formation technology. The scholarship was set up in memory of Matthew Thompson, who died from injuries sustained in a car accident in 2002 at age 17. He had planned to study IT at tertiary level. “In a sense,” said Patricia Ebanks, president of the local NCU alumni chapter, “we are fulfilling his dream through another deserving Caymanian.” The recipient of this grant will pursue his/her IT studies at Northern Caribbean University, in Mandeville, Jamaica. “NCU has success- fully retained the best and brightest of its IT gradu- ates to design, roll-out and maintain software solu- tions,” Ms. Ebanks said. On March 16-22, NCU admissions officers will be available for consulta- tions by appointment, at the Cayman Academy school, from 11:30 a.m. to 6 p.m. Those holding AA/ASc qualifications with an in- terest in IT are encour- aged to apply. The Alumni Association hopes to offer another scholarship this year for study in other fields at NCU. The deadline for this scholarship is on Friday, April 29. Careers fair The NCU Alumni Association Cayman Chapter is also hosting a careers fair on Monday, March 21. University representatives as well as several profes- sionals and business people will be on hand to advise students on career and study options. The alumni associa- tion can also advise students on scholarship details. The fair will be open from 11:30 a.m. to 6 p.m., at Cayman Academy. To make an appointment with NCU’s admissions officers, email NCU.KyAlumni@gmail.com. For more information on the Matthew Thompson Memorial Scholarship or other scholarship grants, visit www.NCUCaymanAlumni.com. “I have no problem with the Central Planning Authority hearings being public.” A.L. THOMPSON, chairman The scholarship was set up in memory of Matthew Thompson, who died from injuries sustained in a car accident in 2002 at age 17. Ms. Totten, an American-Caymanian who moved to the Cayman Islands in 1982, was the first female president of CIREBA when she was first elected in 2012. A. L. Thompson Jeanette TottenThe islands’ most-trusted news source 9 CAYMAN COMPASS • FRIDAY MARCH 11, 2016 Condolences can be registered at churchillsfuneralhome.com We have been asked to announce the passing of Mr. Charles Leonard Walton, Sr. affectionately known as “Nicky”, who passed away suddenly on Wednesday, March 2, 2016. A Service of Thanksgiving will be held on Saturday, March 19, 2016 at the Church of God Chapel, Walkers Road at 2:00p.m. Viewing will be from 1:00-1:45p.m. Interment to follow at Prospect Cemetery. Condolences can be registered at churchillsfuneralhome.com We have been asked to announce the passing of Mr. David Constantine Thompson who passed away after a long illness on Sunday, March 6, 2016. A Service of Thanksgiving will be held on Saturday, March 19, 2016 at the Aston Rutty Civic Centre, Cayman Brac at 2:00p.m. Viewing will be from 1:00-1:45p.m. Interment to follow at Spot Bay Cemetery. Condolences can be registered at churchillsfuneralhome.com We have been asked to announce the passing of Mrs. June Virginia Walton nee Terry who passed away on Friday, March 4, 2016. A Service of Thanksgiving will be held on Saturday, March 19, 2016 at the Elmslie Memorial United Church, Harbour Drive, George Town at 10:00a.m. Viewing will be from 9:00-9:45a.m. Interment to follow at Prospect Cemetery. in the company’s 2014/2015 fourth quarter financial state- ments ending Sept. 30, which identified the US$6 million set- tlement. Those statements were released in December 2015. Cayman National Corp. is the parent company of Cayman National Bank, as well as the trust and securities businesses. A statement released Thursday by the Cayman Islands Monetary Authority in- dicated the authority has been “assured” that the guilty pleas by Cayman National Trust Co. Ltd. and Cayman National Securities Ltd. should have “no adverse impact on the solvency of Cayman National Bank.” Stuart Dack, chief execu- tive officer of Cayman National Corp., said in a press statement, “We are pleased finally to reach a conclusion to this matter. Many financial institutions around the world, including others in the Caribbean, have been under investigation for their roles in U.S. tax compli- ance matters.” He added, “Upon learning of the investigation relating to [Cayman National Securities] and [Cayman National Trust], we fully cooperated with the U.S. authorities to the ex- tent possible, including ap- proaching the authorities be- fore they approached us.” The admitted conduct of Cayman National Securities and Cayman National Trust “is generally a historic issue,” Mr. Dack said. “We deeply regret that the conduct occurred, and the con- duct does not continue today. We have policies, procedures, and staff now to ensure that this conduct, which assisted U.S. taxpayers in evading their own tax obligations, does not occur again.” Sham trusts and companies Federal prosecutors said Cayman National Trust and Cayman National Securities helped U.S. taxpayers evade in- come tax bills during a period of “at least” 10 years between 2001 and 2011. The companies continued to do so, prosecutors alleged, even though they learned in 2008 that Switzerland-based bank UBS AG was being investigated for the same course of conduct. The scheme essentially con- sisted of Cayman National’s companies opening undeclared accounts in the name of sham Cayman Islands businesses and trusts which were created to hide the identities of the ac- counts’ true beneficial owners, prosecutors said. The bogus companies were treated as the account-holders by the compa- nies, allowing the real benefi- cial owners to trade in U.S. se- curities without paying taxes on any profits they might make. Cayman National Securities admitted to doing this while failing to disclose the identi- ties of the beneficial owners of those accounts, which it was required to do under formal legal agreements with the U.S. Internal Revenue Service. “[Cayman National Securities and Cayman National Trust Co.] agreed to maintain these structures for U.S. taxpayer-clients after many of them expressed con- cern that their accounts would be detected by the IRS,” infor- mation from the U.S. federal charges reveals. The plea agreement sug- gests that the Cayman National Securities board of directors was informed in March 2001 about IRS reporting require- ments, but that the company’s president told the board “most U.S. persons were unwilling to complete the [tax reporting form, known as a W-9].” By mid-2011, new manage- ment had been appointed at Cayman National Trust Co. and a full review of the trust com- pany’s files was completed. “Not a single file was found to be complete and without tax or other issues,” pros- ecutors reported. “[Cayman National Trust’s] files con- tained little, if any, evidence of tax compliance.” At its peak in 2009, Cayman National Securities and Cayman National Trust had approximately $137 million in assets under management re- lating to undeclared accounts held by U.S. clients. “At least half of those assets … were undeclared,” according to the plea agreement. The total amount of assets held by Cayman National Corp. companies during the period totaled between US$700 million and US$900 million, according to the U.S. plea agreement. Between 2001 and 2011, prosecutors said, the two Cayman companies earned US$3.4 million in “gross reve- nues” from the undeclared U.S. accounts they managed. Files turned over The two Cayman companies have already made substantial efforts to cooperate with the U.S. federal investigation, pros- ecutors acknowledged. The companies have facili- tated interviews of company employees regarding the U.S. taxpayer accounts and volun- tarily produced financial re- cords prior to Wednesday’s plea agreement. Unredacted client files were provided for about 20 percent of the U.S. account holders by the companies, as is required by the IRS treaty. Up to 95 percent of the un- redacted client files are ex- pected to be provided to the IRS by the end of the Cayman investigation, prosecutors said. Approximately 20 percent of clients’ files have already been made available under treaty requests, according to the plea agreements. ‘Most unfortunate’ Cayman’s political leader- ship acknowledged Thursday that it had been aware of the Cayman National issues for some time. Premier Alden McLaughlin stressed that the current position of the Progressives-led adminis- tration is one of “zero tol- erance” for tax evasion and tax fraud. “Government is very con- cerned about the reputa- tional issue this has created … despite our best efforts,” Mr. McLaughlin said. “It’s most unfortunate.” Former Cayman Islands Monetary Authority Chairman Tim Ridley called the situation a “most unfor- tunate turn of events.” “It is some small com- fort to learn that the is- sues have been settled with the U.S. authorities, but the shareholders and board of Cayman National Corporation should ask themselves how and why se- nior management allowed these clearly unacceptable businesses practices to go on for so long,” Mr. Ridley said. Cayman National entities knowingly helped clients evade taxes MICHAEL KLEIN mklein@pinnaclemedialtd.com In their guilty plea in a U.S. court on Wednesday, Cayman National Trust and Cayman National Securities admitted to encouraging U.S. taxpayer clients to open ac- counts in the name of sham trusts and sham companies in the Cayman Islands to conceal their beneficial ownership of these accounts. The sham trusts were nom- inally directed by Cayman National trust officers, but were controlled by the U.S. clients. The managed com- panies, for which the trust company provided manage- ment services, were shell companies with the sole pur- pose of holding the assets of U.S. clients, the Department of Justice said. Cayman National Securities treated the entities as the ac- count holders. For instance, in some cases Cayman National Securities’ account files included a photocopy of the passport of a Cayman National trust officer or third- party service provider in- stead of the U.S. client and beneficial owner. This allowed the U.S. cli- ents to trade in U.S. securi- ties without Cayman National requiring them to submit the necessary tax forms. Completing the forms would have alerted the U.S. Internal Revenue Service to the ex- istence of the accounts at Cayman National Securities and would have prevented the clients from evading taxes on the money and any trading profits in those accounts. “Similar sham structures were set up for certain U.S. taxpayer-clients by third-party service providers, including Caymanian law firms, some of whom received referrals from Cayman National Securities,” a statement of fact attached to the plea agreement stated. “In addition, Cayman National Trust acquired sham trusts when it acquired the as- sets of trust companies with preexisting clients who had created similar sham trusts for the purpose of evading U.S. tax obligations,” the document said. The court records state that at all relevant times Cayman National Trust and Cayman National Securities knew that certain U.S. clients were main- taining undeclared accounts to evade U.S. tax obligations and that the trust company and the brokerage knew they had a legal duty to report the in- come in the accounts to U.S. authorities under a qualified intermediary (QI) agreement with the IRS. “In fact, in reports dated May 15, 2009 and August of 2009, the then-president of [Cayman National Securities] suggested that certain U.S. tax- payer-clients could be placed outside the purview of the up- coming QI audit, even while keeping their assets at [Cayman National Securities], by al- lowing them ‘to create Complex Trusts’ even though doing so may ‘put the firm at risk,’” the statement of fact stated. Internal reviews In 2009, Cayman National Trust hired a law firm to review the tax status of 50 trusts maintained by Cayman National that had U.S. beneficial owners. The trust company also provided managed company services for about 105 enti- ties owned by U.S. beneficial owners but did not ask for a review of the tax status of these entities. An internal report in 2011 noted that the company structures remained under active review and “where rel- evant, required corrective ac- tions will be taken to ensure that there is no reputational or focused spotlight risks to [Cayman National Trust],” ac- cording to a statement of fact in the plea agreement. In June 2011, Cayman National Trust hired a new president, who in his first re- port in August 2011, observed that he had “never seen a business in quite the same ‘challenging’ state in the 30 years of my working life.” The report highlighted that because of the 50 trusts and 105 compa- nies connected to U.S. cli- ents, Cayman National Trust had “too much concentra- tion on U.S. connected busi- ness.” The Cayman National Trust president stated that the U.S. clients would re- quire “additional effort, com- pliance and indeed worry” and expressed surprise that Cayman National Trust had only started to request legal and tax opinions five years after most of its competitors in Cayman had done so, the statement of fact said. An internal review by the new president revealed that Cayman National’s trust of- ficers had not conducted sufficient due diligence on their clients, that there was missing know-your-cus- tomer documentation and missing information about the beneficial owners of the structures. “Indeed not a single file was found to be complete and without tax or other issues,” the statement of fact said. In September 2014, Cayman National Trust made four staff redundant. Cayman National Trust President Michael Hodgson explained at the time that “Over the past three years, our client base has re- duced for various reasons; for example, some clients no longer fit our target market, some were unprofitable and some U.S. connected clients closed.” Cayman National Trust has had losses in each financial year since 2010. Cayman companies plead guilty to tax evasion conspiracy CONTINUED FROM PAGE 1Next >