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Offshore
Refuge
By
D.Gonzeles
People here in Grand Cayman had always made their livelihoods
offshore. Generations ago,
Caymanian men were renowned as sailors aboard ships headed
for the United States and Europe.
Now residents of those old ports of call venture here to make
or protect their fortunes in offshore
banks and businesses. In less than four decades, this territory
of the United Kingdom has gone from being a mosquito-infested
island to being the world’s fifth-largest financial centre.
The growth has brought opportunities, providing good jobs
and fuelling the local economy. But it has also brought opportunities
who have taken advantage of the island’s lack of income
taxes and its booming banking sector to
evade taxes or launder money.
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Government officials insist that
those episodes are in the past and that they have strict financial
regulations and procedures to exchange information with law
enforcement agencies in different countries.
But old perceptions linger, and not just those in John Grisham’s
legal thrillers, where a Cayman Islands bank account is derigeur.
The recent disclosure that the Enron Corp, used nearly 700 partnerships
registered in the Cayman Islands to avoid paying federal taxes
has revived suspicions. A recently signed treaty to exchange
tax information with American authorities has been derided by
some American prosecutors as a sham because it would not take
effect for a few years, which they said would give tax cheats
ample time to find another haven.
Executives and officials on Grand Cayman are used to the skepticism,
even as they insist they are not the impenetrable tax haven
of old. They want to prove that the notion of someone sauntering
into a local bank with sacks of money or setting up free-wheeling
deals is myth in an age when international monitors keep close
watch. “The fact that the Cayman Islands are tax-free doesn’t
equate with this being some kind of black hole,” says Deborah
Drummond, the government’s assistant financial secretary.
“We provide a very necessary service to global capital
markets, and when requested, we have the ability to fully cooperate
with international authorities. The concept of stashing money
in a tax haven and dropping off the face of the earth is not
an appropriate way to look at what the Cayman Islands are about.”
With tens of thousands of business partnerships listed in the
Cayman Islands, though, and with hundreds of banks here, there
is no doubt that the financial sector has driven the island’s
new prosperity and a high-some say too expensive – standard
of living.
Although the popular image many be that of a Caribbean vivants
with a penchant of fast cars and faster cash, the streets of
downtown George Town, on Grand Cayman, are mostly full of gawking
tourists from the cruise ships anchored nearby. Most of the
cars are the sedans and sport utility vehicles found in American
suburbs, as are the homes, although there are some spectacular
oceanfront estates. Oddly enough for a Caribbean island that
has been plagued by accusations of financial shenanigans, there
are no casinos nor even a lottery, because religious-minded
locals resist gambling as an evil. The transformation into a
financial centre began in the mid-1960s, when officials capitalized
on the island’s no-tax policies to pass banking laws that
became the foundation of the financial sector.
The 1980s brought problems to this and other offshore centers,
as money launderers relied on banks that were unprepared or
unwilling to ask too many questions of their customers. “I
don’t think anybody in the United States was focused on
it until then, says Thomas Jefferson, a former financial secretary.
“It caused all of us to look inside and look at what were
our policies.” Since 1990, when the island entered into
a mutual legal assistance treaty with the United States, banking
regulators say they have provided information to investigators
in 180 criminal cases.
Nevertheless, concern over some practices led international
monitors to label the Cayman Islands in June 2000 as uncooperative
in fighting money laundering. They were taken off the blacklist
last June, after codifying what banking regulators said were
already common practices. Still, all players in the financial
sector from banks to lawyers now have to review every single
one of their clients in order to ensure their identity and sources
of income. “You either get over it, deal with it, or whine
and become more marginalized,” Drummond says. “We
got the whining out of our system a while ago.”
Today, there are more than 400 banks and 47,000 partnerships
registered or licensed in the Cayman Island in the Cayman Islands.
The government, which prefers to allow the private sector to
market the island’s services, has moved away from the notion
of being a tax haven and prefers to focus on the range of professional
services offered by the 6,000 people who work in the financial
sector.
The banks include about a dozen full-service institutions, with
the rest being offshore banks that by law must be affiliated
with either a local or overseas bank. Although the Cayman Islands
started the decade with about 62 shell banks that were essentially
conduits for cash, recent changes in the law require all banks
to have a physical presence, records and books in the islands.
Although Enron’s multitude of partnerships have raised
suspicions, officials and executives here said such companies
are legitimately used by major corporations to defer taxes,
maximize profits or provide a tax neutral setting for deals
involving businesses in two countries with different tax rates.
Aircraft deals have become popular here, for example, because
the island’s stability is acceptable to manufacturers and
insurers who worry about the political climate or legal protections
of some Third World clients. “These are real deals, not
paper transactions designed to deceive,” says Tony Travels,
the senior partner at Maples and Calder, a law firms on Grand
Cayman. “This is not brass-plate stuff. We have real people
here and we know we add value, for the simple reasons that clients
would not pay us if we did not.”
By some estimates, Cayman banks hold $800 billion in American
money – a figure that last year led Robert M. Morgenthau,
the district attorney in Manhattan, and others investigating
tax cases to question how much of it was there to keep it from
the reach of tax collectors. But Cayman bankers and officials,
long accustomed to these criticisms, says that most of that
figure represents money from major American banks that has been
booked in Cayman accounts in order to gain interest, among other
advantages. “Those $800 billion are not physically in the
Cayman Islands, it is all in New York,” says Conor O’Dea,
managing director of Bank of Butterfield. “It is booked
with banks in the Cayman Islands. It is not a wire transfer.
We would love to have $800 billion in deposits.”
Still, the islands enjoy perhaps the highest standard of living
in the Caribbean. Many people who were born here and remember
the days when the only jobs for young men were aboard ships.
At the same time, some lament the loss of an easy going pace
and sense of trust, especially when expatriates out-number native-born
Caymanians. “Some of the expats don’t have a feeling
of unity,” says William Ebanks, a farmer who grows pineapples
and raises hogs on the northeast part of Grand Cayman. “It’s
more a feeling of the’re here to get what they can and
go.”
That philosophy has also been adopted by some native-born acquaintances
of one local woman who works in law firm. She said that while
it has taken here more than 10 years to finish building her
house, some of her co-workers have man-aged to build two homes.
“I know how I got my house,” says the woman. “We
get the same pay. How could they get so far in life?”
But keeping up with the neighbors here can become expensive
because of a hefty 20 per cent duty on imported goods, an indirect
tax that adds up quickly because almost everything here has
to be imported from the United States. “When I grew up,
I could go fish and that was good enough to eat,” says
Rudy Manderson, who runs a construction company. “Now,
if you don’t have a t-bone steak, you’re not in the
groove. The tourists and foreigners eat these, so people figure
they have to eat the same thing.”
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Crows
Cool birds a lot like us
By
Carolee Caffrey
I have been studying about crows for over 17
years. By marking them so that I can tell individuals
apart,
I have been able to peer into their world. They are
one of the most civilized animals I know of.
Sons and daughters stay home for up to four years and
help their parents raise younger
brothers and sisters.
When some kids finally leave home, they take one of
their younger siblings with them. They
often move in next door to their parents, and continue
to associate with them, in extended family groups of
three generations. If kids move further away from their
parents than next door, they sometimes come home and
visit. Some of the individuals that stay home visit
their siblings in their new families. Not many other
animals do anything like this. They make and use tools.
They play a lot as kids, and hey play tricks on each
other. They have a huge vocal repertoire. Up to eight
individuals in a family may feed the nestlings in a
single nest; it's really fun to watch. Mates sit side-by-
side and preen each other all year long; it's really
pretty to see. Pairs stay together for years, maybe
forever. Crows are a lot like us. They're loud and they're
opportunistic.
They have strong, long- term family bonds. They appear
to be affected behaviorally if their nestlings die.
Apparently they like some of the same foods we do, but
they also like things that we don't.
According to a published study of the gut contents of
crows killed at a winter roost in Dempsey, OK, about
half of the food eaten by crows was grain sorghums and
corn, but the other half was weed seeds and insects
deleterious to crop plants.
I don't know what the answer is regarding crop damage.
But crows are not "pestilent;" they're not
deadly and they're not evil. They're one of the many
other species sharing the planet with us, one whose
interests sometimes conflict with our own. They're smart
and they can occur in large numbers, and they're tough
to dissuade from something they want.
But they warrant more respect than being the targets
for target practice.
Dr. Caffrey is in the zoology department at Oklahoma
State University in Stillwater
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