SEVEN MILE BEACH WATERFRONT WALKERS ROAD TOWN CENTRE PLAZA RED BAY SPICY GRILLED CRISPY SANDICHES I W CK ANDW CHICKEN ICHE E cayman compass Your most trusted news source Established 1965 75 CENTS | Funding local journalism | Monday, 4 November 2019 Pirates pillage and plunder on Cayman Brac Page 5 Triathletes triumph on sea and land Alyssa Dodson was the fastest woman, with a time of 2:34.15 in the Olympic distance. See page 16 HSA workers deny corruption charges Page 3 Conference: Create road safety council Page 4Health City also made it possible for the students to attend the event. For the competition, the robots each team designed needed to be able to remove 30 micro pollutants and 50 macro pollutants, represented by small and large foam balls, from a playing field. Before the local team departed for the competition, they showcased their robot, called ‘345’, to local leaders, including Premier Alden McLaughlin. During each match, the Cayman team was paired with teams from two other countries to form an alliance, making it a truly global challenge, according to a Dart spokesperson. The countries Team Cayman was paired with included Canada, Bahrain, Luxembourg, China, Hungary and Eswatini (also known as Swaziland). In the lead-up to the event, the team explored Dubai’s sights, cuisine and culture. The students, the Dart spokesperson said, went dune bashing and sandboarding, tasted qahwah (Arabic coffee), rode camels and sampled local food. • Matinees Daily (matinee price before 6pm) • Seniors $8.00, Mon-Fri Before 6pm • Additional charges apply per 3D/VIP tickets Cayman Cinema@cbcinema6cbcinema6 SATURDAY NIGHT: For your viewing pleasure, minors under the age of 18 will not be admitted to any film starting after 6pm, unless accompanied by their parent. - MONDAY - 640-FILM (640-3456) BLACK & BLUE (R) 1:30 | 4:15 | 7:00 | 9:35 GEMINI MAN (PG13) 12:50 | 3:45 | 9:40 HARRIET (PG13) 12:45 | 3:45 | 6:50 | 9:50 JOKER (R) 4:00 VIP | 6:45 | 10:00 VIP MALEFICENT: MISTRESS OF EVIL (PG) 12:55 | 3:40 | 6:25 MOTHERLESS BROOKLYN (R) 12:30 | 6:40 | 9:10 TERMINATOR: DARK FATE (R) 12:45 VIP | 3:40 | 7:00 VIP | 9:50 PRINTED AND PUBLISHED BY: Cayman Compass Ltd. Compass Centre, Shedden Road, George Town, Cayman Islands SEND US YOUR VIEWS OR NEWS: P.O. Box 1365 Grand Cayman, KY1-1108 Cayman Islands Telephone: (345) 815-0095 Email: newsdesk@compassmedia.ky ADVERTISE WITH US: T: (345) 949-5111 E: sales@compassmedia.ky W: caymancompass.com PUBLISHER KATHLEEN CAPETTA EDITOR CATHERINE MACGILLIVRAY NEWS PRODUCER AND OPERATIONS MANAGER KEVIN MORALES A MEMBER OF THE INTER-AMERICAN PRESS ASSOCIATION “Give light and the people will find their own way” Fair skies with a 20% chance of showers weather Forecast today Cayman Islands 90°F 78°F HIGH LOW WINDS Northeast at 10 to 15 knots SEA STATE Moderate with wave heights of 3 to 5 feet. RESHMA RAGOONATH rragoonath@compassmedia.ky Some members of the public were turned away from the Workforce Opportunities and Residency Cayman (WORC) Elgin Avenue office on Friday. “It is an inconvenience,” said one woman, who declined to give her name, as she and her husband were given a ticket to return Monday for work permit services. Air circulation issues prompted the closure of the office, according to a WORC and Customs and Border statement. A temporary tent was set up in the courtyard of the building to offer some services to the public while the problem inside the building was being addressed. “Customers can expect delays as there will be limited services offered on the outside by both agencies, such as application drop offs and extension stamps. At this time, only check transactions will be accepted,” the statement said. A WORC official told the Cayman Compass on Friday that management is hoping to have the problem sorted out for operations to resume without hinderance on Monday. However, the official said, it is unclear if that will happen. In the interim, on Friday, WORC and CBC staff collected applications and cheques for deposit, but no cash, credit card or debit transactions were conducted. This was second time in two weeks the building was affected by circulation issues. On 24 Oct., the office was closed, and no services were offered to the public. Air circulation issues impact WORC office operations RESHMA RAGOONATH rragoonath@compassmedia.ky Cayman’s national robotics team took home two awards after competing in the FIRST Global Challenge in Dubai, United Arab Emirates, held 25-27 Oct. The team of 11 students spent weeks preparing for the international meeting of minds. This year’s competition theme was ‘Ocean Opportunities’, which focussed on the global problem of ocean pollution. According to a Dart Minds Inspired statement, on Friday, 25 Oct., the Cayman team earned the Mansa Musa Award for Fundraising, due in part to the sportsmanship displayed when they donated a portion of their fundraising efforts to help South Sudan and Djibouti attend the competition. “Receiving the Mansa Musa Award for Fundraising award was a true testament to the outstanding sportsmanship and professionalism the team displayed in representing the Cayman Islands,” said Glenda McTaggart, Dart senior manager education programmes, in the statement. “This event was about more than building a robot. It was about building bridges between countries and finding a common ground to solve global problems through STEM,” she added. Dart’s Minds Inspired worked with the students to design a Cayman Islands-themed robotics T-shirt which they sold to raise money to pay for their trip to Dubai. “When the team learned about the two African teams struggling to raise enough money to travel to Dubai, the Cayman team gave US$500 to be divided by the two teams,” the statement said. The second award was the Al-Khwarizmi Award for Outstanding Support. Aureum Re, CUC, Dart, Digicel and National Robotics team wins two awards in Dubai Some of the Cayman team in action at the FIRST Global Challenge in Dubai, United Arab Emirates last month. Caylem Hill and Jack McGregor (Cayman International School) Pierce Serrant (Cayman Islands Further Education Centre) Xaria Deosaran and Adrian Phillips-Hernáez (Cayman Prep and High School) Craig Maitland and Edmund Pileta (Clifton Hunter High School) Oscar Martinez (Grace Christian Academy) Samuel White (John Gray High School) Kieran Finch and Nilakni Jayasekera (St. Ignatius Catholic School) CAYMAN TEAM MEMBERS cayman compass 2 news N news MONDAY, 4 NOVEMBER 2019ADVENTURE AWAITS Career is an adventure. We can take you where you want to go. steppingstonesrecruitment.com ANDREL HARRIS aharris@compassmedia.ky Two Health Services Authority staff accused of claiming payment for fraudulent overtime hours denied the charges in the Grand Court on Friday, 1 Nov. Dominic Fernando Dacres, 41, pleaded not guilty to a single charge of obtaining property by deception. Between 1 Jan. and 31 Dec. 2017, Dacres is alleged to have falsified overtime forms in order to receive a ‘pecuniary advantage’ of overtime payment for work the prosecution says he never did. Co-accused Nick Romano Smith, 57, also appeared in the dock on Friday. He pleaded not guilty to two charges of false accounting and an additional charge of breach of trust. Smith, who worked in a supervisory capacity, is alleged to have knowingly signed off on false overtime claim forms and then passed them on to the HSA’s accounts department for payment. A third man who was named in the indictment has not been charged and is thought to no longer be in Cayman. While asking for stricter bail conditions for Dacres and Smith, prosecutor Greg Walcolm said, “A third man who has been named in this indictment has not been charged. Given what has happened with the suspect, who has since fled the jurisdiction, I invite the court to impose the stricter conditions.” Conditions included a residence requirement, surrendering of travel documents and no contact with witnesses, among other stipulations. Both men have been released on bail, and a two-week jury trial has been set for February 2020. HSA workers deny corruption charges ANDREL HARRIS aharris@compassmedia.ky Sylvia Felicity Lewis, 55, has been charged with five counts of animal cruelty in what is believed to be Cayman’s largest-ever seizure of abused dogs. A combined investigation by the Royal Cayman Islands Police Service and Department of Agriculture resulted in 53 dogs being taken from a Prospect home on 6 May. Three of the five charges are blanket charges, meaning they cover all 53 dogs, while one charge speaks specifically to a Shi Tzu/poodle mix and another refers to a rottweiler. After the DoA seized the animals, 11 dogs either died or were euthanised. Several of the dogs that had to be put down tested positive for the parvo virus – a deadly and highly contagious canine disease. The charges come nearly six months after the dogs were originally seized. Since then, the DoA, along with several local veterinary clinics and animal charities, have managed to place the remaining 42 dogs in new homes. Lewis remains on police bail and is expected to make her first Summary Court appearance on Tuesday, 12 Nov. Woman headed to court on animal cruelty charges These dogs were among the 53 animals seized at an address in Prospect in May this year. cayman compass 3 news N news MONDAY, 4 NOVEMBER 2019FridAY'S SOLUTiONS 123456 78 910 1112 13 141516 17 181920 21 2223 24 123456 78 910 1112 13 141516 17 181920 21 2223 24 Puzzle 16211 ACROSS: 1 Vital, 4 Plunder, 8 Rat, 9 Well-timed, 10 In error, 11 Grimy, 13 Troupe, 15 Stolid, 18 Wedge, 19 Obvious, 21 Badminton, 23 Tea, 24 Roguery, 25 Lunar. DOWN: 1 Verdict, 2 To the good, 3 Lower, 4 Paltry, 5 Uptight, 6 Dim, 7 Ruddy, 12 Ill-gotten, 14 Precise, 16 Despair, 17 Portly, 18 Weber, 20 Venal, 22 Dog. ACrOSS 1 Far-fetched (11) 9 Without a weapon (7) 10 Excuse for failure (5) 11 Destiny (4) 12 Teach (8) 14 Mourn (6) 16 To rule (6) 18 Gambling card game (8) 19 Dress (4) 22 Situated (5) 23 Toil (7) 24 Acute (11) dOWN 2 Intended (5) 3 Drooping (4) 4 Ruined (6) 5 Idleness (8) 6 Free time (7) 7 W.F. Cody (7,4) 8 Warrior Sioux chief (7,4) 13 Involve in complications (8) 15 Mechanical appliance (7) 17 Overcome (6) 20 Once more (5) 21 Treaty (4) The Compass Crossword Puzzle The Compass universal kakuro Puzzle 16213 The numbers in the black cells are clues. Numbers above the slash are across clues. Number below the slash are down clues. The goal is to enter digits 1 - 9 in the white cells to add up to the number clues. You cannot enter any digit more than once when adding up to clue. MARK MUCKENFUSS mmuckenfuss@compassmedia.ky Perhaps the most important thing that may come out of last week’s Road Safety Week conference, sponsored by the National Roads Authority, was the idea of establishing a Road Safety Council in Cayman. “I’m hoping it can have a huge impact,” said Marion Pandohie, transportation planner for the NRA. As envisioned, she said, it would be a “nice overarching council” that could help coordinate safety efforts with multiple agencies, including the police and emergency services. Road safety expert Mike Dreznes who headed the conference, said he hopes Joey Hew, minister of commerce, planning and infrastructure, would head the council as its chairman. “It would be good visually,” he said. Minister Hew did not return calls seeking comment. Dreznes said it would be important to have an acting body dedicated to improving safety on Cayman’s roads. Dreznes, executive vice president of the International Road Federation, was a featured speaker at last year’s conference, the first held on safety by the NRA. He said he was impressed by some of the changes that have taken place in the interim, particularly when it comes to considering issues involving bicyclists and pedestrians. “There’s a long way to go,” he said, “but there seems to be an effort.” During the four-day conference, Dreznes talked about such topics as guardrail design, engineering strategies, public education and enforcement of safety laws. The latter of these seemed of special concern to him. He said “more visible agency enforcement” by police is needed. During a roundtable discussion that ended the conference, such enforcement was brought up several times. Panelists and those in attendance said Cayman drivers don’t take traffic laws seriously because they have little fear of the consequences of breaking them. Dreznes suggested not only stricter enforcement but greater penalties. “Triple the fines,” he said, adding that such a move would get the attention of drivers. He also proposed establishing a point system for traffic violations, something common in other countries, where each traffic ticket or accident adds points to a driver’s record. At a certain threshold, the driver’s licence is restricted or taken away. Dreznes said Cayman’s DUI laws are too liberal. The current blood alcohol limit is 0.1% (100mg of alcohol for 100ml of blood), which, he said, “is way too high”. Cutting that number in half might wake people up, he said. “You’ve got to get it into people’s heads: You can’t even think about drinking and driving in Cayman,” he said. More than anything, he said, a better focus on safety is needed. “You need to have a person whose full-time job is road safety,” Dreznes told the conference attendees. “That’s really critical.” Other topics covered at the conference included safety issues for public transportation and for trucks, strategies for accommodating emergency vehicles, safety as it relates to cycling on the island and the unregulated import of vehicles, primarily from Mexico, that lack safety features such as anti-lock brake systems and airbags. NRA acting managing director Edward Howard said it was good to get the views of those in other agencies who attended the conference, including police and fire officials It is important, he said, to have “everybody coming together and really sharing. I learned a lot from hearing the different perspectives”. Conference: Create road safety council RESHMA RAGOONATH rragoonath@compassmedia.ky The Pirates Week Office has pulled the plug on the North Side District Heritage Day events planned for 14 Nov. as part of this year’s national festival. “We regret that we have had to arrive at such a decision, but this was done after consultation with the relevant stakeholders,” said Pirates Week Executive Director, Melanie McField, in a statement late Thursday. The announcement comes mere days before the formal kick- off of the Grand Cayman leg of the annual festival on Thursday. According to the Pirates Week Office statement, the district will not be represented in the float parades or the District Heritage Ambassador Heritage Costume Competition. “The North Side District Heritage Committee, which is responsible for making the necessary arrangements, has become inactive,” McField said. “As such, we have decided to adjust our calendar rather than hurriedly attempting a haphazard event at this late stage that does not meet the standards that have become associated with the … event,” she said. North Side MLA Ezzard Miller agreed with the decision to cancel. “I am understandably disappointed that there will be no Pirates Week events to attract people to the wonderful district of North Side this year. However, having been briefed on the situation, I appreciate that a call had to be made,” Miller said in the statement. He said he is hopeful that the current situation will elicit some change within the North Side community. “I am hoping that coming out of this situation, we will be able to attract people with a genuine love of our Caymanian heritage from our district to stand up and be counted to ensure that North Side is represented in all aspects of the national festival going forward,” Miller added. The remaining events on the Pirates Week calendar remain unchanged. All district days will be held between 11am and 10pm, the statement said. “The Pirates Week Office, assisted by dedicated volunteers, continues to work with all interested parties to ensure District Days are successful in highlighting Caymanian heritage and bringing enjoyment to those who attend,” McField added. For the full list of events go to www.piratesweekfestival.com. North Side Pirates Week Heritage Day cancelled Road safety expert Mike Dreznes led a four-day conference for the National Roads Authority. District Days schedule Tuesday, 12 Nov. - East End Wednesday, 13 Nov. - West Bay Friday, 15 Nov. - Bodden Town Saturday, 16 Nov. - George Town Pirates arrive at an earlier North Side Heritage Day. There will be no Heritage Day in the district this year. cayman compass 4 news N news MONDAY, 4 NOVEMBER 2019Pirates pillage and plunder on Cayman Brac Annual national festival kicks off RESHMA RAGOONATH rragoonath@compassmedia.ky “The pirates are coming.” It’s a phrase that may strike fear into the hearts of those traversing the high seas, but on Cayman Brac, the red carpet was rolled out for the swashbuckling buccaneers over the weekend. The national Pirates Week festival kicked off with the Las Tortugas pirates pillaging Cayman Brac and igniting a festive fever with residents there. The festivities on Grand Cayman are set to begin Thursday evening. The weekend of activities on the Brac started Friday night with events at Captain’s Table and La Esperanza Bar and Restaurant, which saw the pirates party the night away. On Saturday, Cayman Brac held its Heritage Day activities at Heritage House in North East Bay. Residents and visitors were treated to live entertainment from Musical Crew members Irving Hernandez and Johnny Johnson. A variety of traditional Caymanian dishes including turtle stew and conch stew were on the menu, as well as a selection of handmade crafts. Cayman Islands Fire Service personnel and Public Works joined forces to demonstrate the traditional method of thatch-rope laying. Saskia Edwards, programme manager for Cayman Brac Heritage House, said the thatch strands were twisted by Annelee Ebanks ahead of Saturday’s event. Edwards said she was pleased by the reception of those in attendance, as rope making has been an important part of Brac history and culture from as early as 1910. “Thatch rope laying was a part of or history and culture. From the sale of thatch rope, a lot of people would have been able to buy their necessities like flour, sugar and kerosene oil. So, it shows how it’s a strong part of our heritage,” she said. The Heritage Day fun was followed by a parade of floats. The centrepiece, a ship called Brac Pearl, was created in a collaboration between the Public Works Department and District Administration. The lead volunteer of Cayman Brac Pirates Week Committee, Amber Tatum, said she was happy with the overall response from the craft and food vendors, participants and supporters. “Now that we have completed this year’s event, we are looking forward to even greater support from the community as we plan for 2020’s festivities,” Tatum said. Pirate girls, from left, Peyton Tiofilo, Charlotte Tibbetts, Lyndsie Martin, Haylie Tibbetts and Olivia Walton. From left, Leroy Brown, Keino Daly, Nicolas Watson, Phillip Smith and Kirk Watson show off their rope tying skills. Pirates took over the streets of Cayman Brac over the weekend for the Cayman Brac leg of the national festival. Not all pirates arrived on ships. The national Pirates Week festival kicked off with the Las Tortugas pirates pillaging Cayman Brac and igniting a festive fever with residents there . 5 newsnewsPROUDLY PRESENTED BY COMICS & HOROSCOPE Daily Horoscope THE LOCKHORNS By Bunny Hoest & John Reiner ARIES (MARCH 21 TO APRIL 19) A heart-to-heart conversation, quite likely with a female friend, will be important to you today. Alternatively, you might estab- lish a strong connection with a member of a group or profes- sional association. TAURUS (APRIL 20 TO MAY 20) You are high-viz today. For some reason, personal details about your private life seem to be made public. Be aware of this. GEMINI (MAY 21 TO JUNE 20) Do something different to satisfy your urge for a bit of adventure. Take a day trip. Better yet, travel somewhere if it’s possible. Learn something new. CANCER (JUNE 21 TO JULY 22) This is an appropriate day to do banking and stay on top of red-tape details about inheri- tances, taxes, debt and shared property. LEO (JULY 23 TO AUG. 22) Because the Moon today is in a sign that is 180 degrees opposite from your sign, you have to go more than halfway when dealing with others. This requires patience and coopera- tion. VIRGO (AUG. 23 TO SEPT. 22) Be expected to do a service for someone today. Don’t worry, because you will feel gratified and rewarded for your efforts. LIBRA (SEPT. 23 TO OCT. 22) You need to have a little fun today. Do something to treat yourself, even if it’s just a dessert, a matinee or a drink with a friend. Why not reward yourself? SCORPIO (OCT. 23 TO NOV. 21) You might prefer to cocoon at home today and relax among familiar surroundings. It’s Monday, but it’s hard to drag yourself to work, isn’t it? SAGITTARIUS (NOV. 22 TO DEC. 21) You’re curious about news in the neighborhood. Perhaps you’ve heard some gossip? You want to know what’s going on around you, which is perfectly normal. CAPRICORN (DEC. 22 TO JAN. 19) Today you’re thinking about your values as well as your assets and your wealth. It’s as if you’re giving yourself a report card. Well, what really matters to you? What is important? AQUARIUS (JAN. 20 TO FEB. 18) You might feel more emotional than usual today because the Moon is in your sign. However, it can make you a bit luckier than all the other signs. Bonus! PISCES (FEB. 19 TO MARCH 20) You want some peace and quiet today. You’re not ready for the busy hubbub of life around you. Take it easy if you can. Do something to pamper yourself. Shop for shoes. BY FRANCES DRAKE MONday, NOvEMbER 4, 2019 CURTIS By Ray Billingsley bLONdIE By Y. Marshall PEaNUTS By Charles M. Shulz HägaR THE HORRIbLE By Chris Browne THE aMaZINg SPIdERMaN By Stan Lee and Alex Saviuk 6The National Trust for the Cayman Islands is following closely ongoing discussions regarding the proposed cruise ship berthing facility. The National Trust issued statements in October 2015 and October 2018 expressing its concerns with the project’s impacts on sites of environmental and historical significance. With the new designs now released, the National Trust met with representatives of Verdant Isle Port Partners, the preferred bidder consortium for the project, to learn more about the revised project plans. The National Trust appreciates the time and information that they have provided to date. Nevertheless, the National Trust remains concerned about the potential damage to our unique marine environment by the proposed facility, as well as the potential loss of two historical shipwrecks which have themselves become artificial reefs. The National Trust is disappointed that its recommendation that an independent environmental impact assessment be carried out based on the new plans, is being ignored. Baird, although a reputable company, is now part of the consortium and is therefore not independent and thus cannot address questions of conflict. The 2015 Environmental Statement concluded that the coral-relocation programme would not achieve “no net loss” if they removed 15 acres of coral reef habitat and that indirect impacts such as elevated turbidity and sedimentation levels would potentially affect an additional 15-20 acres of coral reefs. It went on to state that a further 650 feet either side of the original footprint could be affected. The new proposal estimates that 12 acres of our coral reef area will be impacted, of which Verdant Isle Partners will attempt to relocate approximately 10 acres. Of significance is the fact that the area in question is presently alive and thriving. There are 60 species of corals, some rare and endangered, which are currently protected under the National Conservation Law. Over 400 species of fish, and hundreds of species of marine organisms that produce shells and skeletons (for sand) have been recorded. This incredible biodiversity in the reefs and surrounding areas will be impacted. Cayman’s coral cover has reduced from 21% to 15% over the last 20 years owing to stress from rising sea temperatures and ocean acidification associated with climate change, coastal development and overuse. Adding a further human-made stressor to the equation makes our reefs less resilient to natural changes beyond our control. There is much debate surrounding the efficacy of coral relocation. Coral relocation and coral restoration are vastly different concepts with varying success rates, and attempts at relocation are not guaranteed. Displaced coral will be trying to recover and thrive in an unfamiliar area and mortality rates of relocated versus reattached coral, based on recent studies in the Caribbean, are high. Even Verdant Isle does not dispute that relocation and cultivation will not fully mitigate the amount of coral and biodiversity that will be lost. The coral reefs in our harbour have taken thousands of years to form and cannot be so easily replicated. It is therefore misleading to suggest otherwise. It is impossible to fully identify the effects of the sediment that will, once displaced, be continually resuspended by vessels using the facility, and by the maintenance dredging that will possibly be required over the years. How far and in what direction will this sediment travel on our currents, and how will coral and other marine life be impacted in its wake, remain grave concerns. What will be the consequences of major storms on Hog Sty Bay during construction or afterwards? With the change in design and further modelling, we have been informed that there is potential for lesser overall impact which is positive The National Trust understands that further analysis needs to be carried out to wholly assess the potential ramifications and determine what is truly at risk in the long term. Most of the data collection for such analysis will not commence before March 2020. Two historical shipwrecks – the Balboa and the Cali – will be impacted by the port project. The National Trust understands from Verdant Isle Partners that the intent is to relocate the Balboa to an unconfirmed site 1km away from its current location. Relocating the Wreck of the Cali was not previously considered and remains uncertain, so the effects of the project on this site are as yet unknown. While relocation may preserve certain aspects of these shipwrecks, the cultural and historic significance of the Balboa and Cali are inherently linked with their physical locations. Moving either wreck will result in the loss of this historical significance, in addition to the loss of marine life which has reclaimed these ships as artificial reefs over the years. As with the relocation of substantive coral reefs, successful relocation of shipwrecks is dependent upon the integrity of the structure and the feasibility to move and reposition sections relatively intact. Local and international media are following this situation closely and the National Trust, as a non-governmental organisation mandated under the National Trust Law to help preserve the historical, natural and maritime heritage of the Cayman Islands, seeks to do its part for the benefit of its membership and for the entire community of the Cayman Islands. As a sign of good faith, the National Trust calls on Verdant Isle Partners to release pertinent information as the new studies become available. These reports will regretfully not be published in time for the referendum so the people of the Cayman Islands will have to make their decision without having all the facts. The National Trust remains fully committed to preserving all that makes the Cayman Islands unique. Position statement, National Trust for the Cayman Islands Historic wrecks can’t simply be moved The Cali is one of two historic shipwrecks in George Town Harbour that would be impacted by port development plans. Nadia Hardie, executive director, National Trust cayman compass 7 I issues MONDAY, 4 NOVEMBER 2019MICHAEL KLEIN mklein@compassmedia.ky The Cayman Islands is caught in a maelstrom of international regulatory activity. The flurry of new laws and legislative amendments coming out of the Ministry of Financial Services can at times give the impression that government is being pulled into every conceivable direction by international standard setters. Economic substance, beneficial ownership registers, harmful tax practices, anti-money laundering, the financing of terrorism and the proliferation of nuclear weapons, anti-corruption and tax information exchange, both automatic and on request, are only some of the buzzwords connected to an alphabet soup of international organisations, forums and initiatives. It is difficult to untangle the various demands made of international financial centres like Cayman by the European Union, the G-20, the Organisation for Economic Co-operation and Development (OECD) or the Financial Action Task Force (FATF), as well as individual countries like the US or the UK. Alex Cobham, chief executive of campaign group Tax Justice Network, recently described the developments as “potentially existential” for Cayman’s financial services industry. In an article in the New York Times in October, he was quoted as saying: “I think it does start to look like it could be a perfect storm for Cayman.” Ask Dax Basdeo, the chief officer in the Ministry of Financial Services, what is government’s priority for responding to international regulatory demands and he replies: “All of it.” So far this year, the ministry has released about two dozen draft bills and legal amendments, following an equally busy 2018. It is the part of government that generates by far the most legislation. This pace of draft bills and legal amendments will continue unabated through the end of this year, Basdeo says. Anti-money laundering Most laws and amendments passed by the Legislative Assembly this year relate to anti-money laundering and the countering of terrorism financing. The Caribbean Financial Action Task Force found gaps in Cayman’s AML/CTF regime, according to its analysis released in March, based on an evaluation conducted in December 2017. The CFATF is a regional affiliate of FATF, the global standard-setting body in the anti- money laundering sphere. The CFATF determined that, at the time of its evaluation, Cayman needed to develop a better understanding of all its anti- money laundering and terrorist financing risks. Businesses that carry out certain financial activities had to implement more robust countermeasures. The task force called for non-financial businesses and professions like accountants, lawyers, jewellers, realtors and property developers to face stricter rules and supervision. And public sector bodies, including the Royal Cayman Islands Police Service, Customs and Border Control, the Financial Reporting Authority and the Cayman Islands Monetary Authority, had to make amendments to their processes and procedures to ensure better coordination and cooperation, in response to the CFATF recommendations. Basdeo says his ministry has finished most of the heavy lifting on the issue, with only two or three technical matters left to be resolved. The emphasis is shifting now to implementing changes at the relevant authorities. All this must happen quickly because Cayman was given only 12 months, until February 2020, to respond to the evaluation. Failure to take the correct measures and adapt its laws, regulations and practices is not really an option as it could see Cayman blacklisted, with the FATF imposing a remediation plan – a situation that would hamper most financial transactions involving the jurisdiction. Overregulation? For many businesses, the changes mean an additional burden and sometimes costs. Cayman funds, for instance, now need to have dedicated anti-money laundering compliance and reporting officers. And exempted persons, such as investment managers who act solely on behalf of a handful of sophisticated investors, are subject to a different registration arrangement, with a more stringent anti-money laundering regime. With all the legal amendments and new requirements, questions about overregulation are sometimes raised by the private sector. But Basdeo says there is a real issue. “Gone are the days where we have 100,000 companies and we don’t know what is going on.” Not only did government not know enough, the private sector did not know either, he says. The level of regulation was the price to pay for not having an income tax system. The right balance must be struck, Basdeo adds, but that was the reason why there is so much industry consultation and why Cayman follows a risk-based approach, which simply means that the regulatory scrutiny increases with the level of risk. Tax transparency Traditionally, the dominant topic in connection with international financial centres has been transparency around tax issues. Since the OECD released its first study of harmful tax competition in 1998, it has aimed to identify and eliminate harmful preferential tax regimes in OECD-member countries and get ‘tax havens’ to commit to tax transparency and the exchange of tax information. Leaders from the G-20 largest economies referenced the OECD’s work when they released a tax transparency blacklist in 2009 that included Cayman and forced the jurisdiction to ultimately sign three dozen tax information exchange agreements. These bilateral agreements formed the basis for the cross-border exchange of tax information on request through regulated channels in narrowly defined circumstances. Then, in 2013, the US Foreign Account Tax Compliance Act (FATCA), came into force, which dictated that foreign financial institutions globally must identify the account holdings of US citizens to the US Internal Revenue Service. Institutions that do not report the information face a 30% withholding tax on certain transactions involving the US. The initiative showed for the first time that tax information exchange could be automatic, rather than be limited to isolated cases. In 2014, the OECD approved its Common Reporting Standard (CRS) and the signing, by almost 100 jurisdictions, of the Multilateral Competent Authority Agreement that connects the CRS to the Multilateral Convention on Mutual Economic Assistance in Tax Matters. As a result, taxpayers who maintain bank accounts abroad have to provide information on where they are tax resident to their banks and other financial services providers, so that these can report regularly and automatically financial details to the tax authorities in their clients’ home countries. This ensures that tax authorities have a broader view of their taxpayers’ assets, significantly limiting the ability to evade tax by not declaring income earned or assets held abroad. Arrangements to provide tax information to authorities overseas have become part of Cayman’s framework for international cooperation. Cayman had to introduce legislation and establish portals for the exchange of tax information. It is also a member of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes, and Cayman’s tax-exchange regime has been subject to international reviews. Engagement Basdeo notes that about five years ago, government started to seek a different form of engagement with standard setters that involved dropping the hitherto defensive mindset and taking a confident stance on the international stage through participation in the relevant bodies, mainly on tax issues with the OECD. “After two or three years, we could see just how much it had changed, because we engage through the OECD Forum [and] because we have built stronger relationships,” Basdeo says. “We know what we stand for, we know what we are doing, and we add to an intelligent conversation. It has had an impact.” The biggest challenge is that Cayman’s economic model is not well understood by foreign lawmakers who have a difficult time accepting that offshore financial centres can add value. “A large part of the conversation when we are discussing these issues internationally is trying to explain why the things we do are the way they are and why it is beneficial,” Basdeo adds. Beneficial ownership transparency The lack of visibility of who the real owners of offshore businesses are also has been a persistent criticism of financial centres like Cayman. While offshore centres defended the status quo with references to privacy rights, campaign groups and onshore legislators used it to label them ‘secrecy jurisdictions’. Identifying companies’ beneficial owners is a requirement of the FATF anti-money laundering standards, albeit one of the most poorly implemented ones. In the wake of the Panama Papers, the UK pushed hard for making public the owners of companies in its overseas territories and Crown dependencies. The territories to agreed a mechanism to give law enforcement and tax authorities in the UK access to this information, and Cayman created a centralised register. But UK lawmakers ignored both the agreements and the sovereignty of the overseas territories over devolved matters by inserting a clause last year into the UK Sanctions and Anti-Money Laundering Act, which called for public beneficial ownership registers in the UK’s territories. The move strained relations between Cayman and the UK. Government and industry defended their existing regime of service providers ensuring that beneficial ownership information is collected and verified. They argued they would make beneficial ownership public only if it were to become a public standard. In a surprise announcement last month, Premier Alden McLaughlin said that time had arrived, and Cayman would set up a public register of company owners as soon as European Union countries establish their own public registers. Corresponding legislation is expected in 2022. BEPS - from tax evasion to tax avoidance With global tax transparency becoming the norm, the attention of governments and standard-setting Under pressure: Responding to the global push to regulate offshore cayman compass 8 B business MONDAY, 4 NOVEMBER 2019bodies like the OECD has moved on to other measures that have historically reduced tax revenues raised around the world. Namely: tax avoidance by multinational corporations. The OECD, with support from the G20, started a project to deal with the erosion of tax bases and the ability of multinationals to shift profits to low- or no-tax jurisdictions to reduce their tax bill. The Base erosion and profit shifting (BEPS) initiative targets tax planning techniques that exploit gaps and mismatches in national tax rules to make profits ‘disappear’ for tax purposes or to shift profits to locations where there is little or no real activity but taxes are low, so that little or no corporate tax is paid. In contrast to tax evasion, these tax avoidance techniques are technically not illegal, but violate the spirit of the law by exploiting loopholes in the interaction between national tax systems or by artificially separating taxable income from the activities that generate it. The BEPS initiative covers 15 action points. For the time being, country-by-country reporting, which provides a template for multinationals to report annually for each tax jurisdiction they do business in, is one of the few standards that concerned this jurisdiction. The country-by-country reporting measure addresses the lack of corporate tax data that makes it difficult for tax authorities to determine the extent of tax avoidance and correctly price transactions between entities that form part of a group. Again, Cayman had to pass the underlying legislation and develop a mechanism for reporting. EU tax blacklist In 2016, the EU combined a number of initiatives for its list of uncooperative countries in tax matters, aiming to replace its member states’ national tax blacklists with a unified EU-wide approach. EU members agreed that non-EU countries would be assessed by the EU’s Code of Conduct Group on Business Taxation. In December 2017, the EU published its first blacklist based on criteria around tax transparency, tax fairness and anti-BEPS measures. Cayman was not included on the list, because it had no issues meeting the tax-transparency criteria and BEPS standards. However, Cayman fell afoul of the hitherto unknown tax-fairness criterion, aimed at tax regimes that facilitate offshore structures which attract profits without real economic activity. In response, Cayman had to implement economic substance legislation by the end of 2018, to avoid being blacklisted at a later stage. Economic substance Because the EU did not specify what exactly Cayman should do until June 2018, legislators had to rush through new economic substance legislation before the end of 2018. The EU ultimately based its requirements for ‘tax fairness’ on the work of the OECD Forum on Harmful Tax Practices, which seeks to eliminate harmful preferential tax regimes. These are regimes that apply tax incentives or concessions to taxpayers who are engaged in operations that are purely tax-driven and involve no substantial activity. Even though Cayman’s tax regime does not fulfil the OECD definition of ‘preferential’, because the same income tax rate of zero is applied universally, the OECD, in May 2018, began to apply the economic substance rules designed under BEPS Action 5 to tackle ‘harmful preferential tax regimes’ to all zero- or low-tax countries. The EU seized on this to tell Cayman to use the rules as a template for its own economic substance legislation. The economic substance law today requires companies and limited liability partnerships, which are registered and managed locally and generate income in one of nine defined activities, to demonstrate that they have enough economic activity on island to justify the profits they make. To ensure that profits are taxed where they are generated and economic activity is taking place, the legislation imposes a substance test on banking, insurance, fund management and shipping companies, as well as entities functioning as headquarters or distribution and service centres, and businesses engaged in financing and leasing or holding intellectual property. Resident companies that generate core income in these fields must pass an economic substance test. They will pass if they conduct core income-generating activities on island; incur an adequate amount of operating expenditure in Cayman; have a physical presence locally; and have an adequate number of full-time staff. In addition, the company must be directed and managed from Cayman with regular board meetings held and minutes of strategic decisions kept on island. How many Cayman companies fall under the new rules will become clearer before the end of this year as they will have to file declarations specifying if they conduct relevant operations in Cayman. Collective investment vehicles So far, Cayman’s economic substance rules have passed muster. The OECD Forum on Harmful Tax Practices determined Cayman’s tax regime was “not harmful” after a review in June. The EU also accepted that Cayman’s legislative changes fulfilled the commitment to fair taxation. But it expressed concerns related to economic substance in the area of collective investment vehicles which Cayman should address before the end of this year. The technical guidance on what those concerns are and what the EU expects from Cayman arrived once again late – in May. It stated that the EU Code of Conduct Group will scrutinise the legislation for funds in Cayman against four pillars: the authorisation and registration of funds; supervision and enforcement; valuation, accounting and auditing of funds; and depositary rules. In response, government in October circulated draft bills for consultation in the financial services industry that would require non-mutual funds to be authorised by the Cayman Islands Monetary Authority. As part of the authorisation process, investment funds would have to provide CIMA with basic information about the nature of the fund and the types of assets it will invest in. The legislation will also prescribe requirements for annual audited accounts, custody arrangements, valuation procedures and fund administration. The bills will be redrafted based on the industry feedback received before the end of this year. Source: Ministry of Financial Services Tax Transparency and Cooperation Regulatory Compliance and Cooperation Anti-Corruption AML/CFT (Bene cial Ownership) Cayman commits to public beneficial ownership register Forum on Harmful Tax Practices rates Cayman’s tax regime ‘not harmful’ Global Forum rating: Largely compliant MOUs with ESMA members FSB: Cayman strongly adheres to International Standards 1st OT to support UK’s G-8 agenda on Tax & Transparency 1st OT to sign UK FATCA Mutual Administrative Assistance Convention extended to Cayman 1st OT to announce Model 1 IGAs for US, UK FATCA 31 Tax agreements Global Forum Phase 2 Report Joined BEPS Inclusive Framework BEPS Country-by-Country reporting 112 Exchange of tax information partners Global Forum rating: Largely Compliant First CRS exchanges Enhanced Beneficial Ownership legislation commences Revamped AML regulations Non-profit Organisations Law Cayman avoids EU blacklisting, commits to economic substance rules MMOU signed with IOSCO Global Forum Supplementary Report UK Bribery Act extended to Cayman 1st Bilateral AEOI, US FATCA CRS Regulations in place Cayman Automatic Exchange of Information (AEOI) portal opens Amended guidance notes on AML/CTF Implemented International Agreed Tax Standards Restructured Global Forum Steering Group & PRG membership IMF Report Grand Court opens Financial Services Division CFATF Mutual Evaluation Report released OECD Forum on Harmful Tax Practices applied to Cayman BEPS Country-by-country reporting commences Cooperation with the EU on fair taxation - economic substance legislation Auditor Oversight Authority Revamped Accountants Law 36 Tax Information Exchange Agreements 2nd Bilateral AEOI, UK IGA Bearer shares abolished First Phase of Basel II completed Global Forum Phase 1 report Mutual Administrative Assistance Convention in force Common Reporting Standard early adopter Multilateral Competent Authority Agreement signed Vice Chair, Global Forum Peer Review Group OECD Ant-Bribery Convention Anti-Corruption Law 2008 2010 2009 2011 20122014201620182013201520172019 cayman compass 9 B business MONDAY, 4 NOVEMBER 2019Next >