Mauled by a dead sheep – from Cayman

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Remember Dennis Healey once said debating with Geoffrey Howe was 'like being savaged by a dead sheep'? It's a bit like my reaction to this, in the Guardian:

Richard Murphy and John Christensen (The threat lying offshore, October 10) blame the global financial crisis on offshore financial centres, but their ritualistic sticking of pins in the voodoo doll they have fashioned to represent these centres is a triumph of superstition over reality. While inconvenient to Murphy and Christiansen, it is a matter of public record that reputable international financial centres such as the Cayman Islands uphold global standards on regulation, transparency and cross-border cooperation, and are able and reliable partners in the fight against financial crime.

The repeated allegations of secrecy and lax regulation contribute nothing to the objective analysis of the root causes of, and solutions to, the current global financial turmoil. It is particularly odious for Murphy and Christiansen to suggest that "tax havens" revel in global instability and uncertainty, and are intent on thwarting and sabotaging efforts to restore order and confidence in the financial markets.

The global community is rightly engaged in a review of the regulatory underpinnings of the financial markets, to ensure sound support for sustainable economic prosperity, security and stability. Reputable offshore financial centres, such as the Cayman Islands, have contributed to those objectives in the past and will do so for the future, in whatever shape that takes.
Alden M McLaughlin
Minister for international financial services policy, Cayman Islands government

I'll be candid: the Minister is perpetuating a myth. He might be guilty of allowing his eyes to glaze over in the face of the abuse that his administration deliberately fosters, and which is extensively documented. So well documented in fact that when Bear Sterns subsidiaries in Cayman had to be liquidated a New York court would not allow that to happen in Cayman because there was no evidence that the companies had any connection with the place, bar the presence of nominee directors who it doubted knew what business the companies undertook, but he can continue living in his fantasy.

That fantasy extends to the claims he makes, about which he would know more if he bothered to read our material. We do not dispute that the actions of tax haven companies are well regulated within those domains. The point is that they do nothing within those domains, a fact people like the minister well knows. They are intended to, and do have, impact elsewhere, and Cayman neither asks where that other place might be, or require that the company declare its activities in that place and it most certainly does not try to regulate it there. Cayman knows that, but denies it, hiding behind a charade of local regulation that can tick the IMF's boxes. The challenge now is to change to boxed on the IMF tick list: then the fraud that these places permit will be revealed.

In the meantime, unlike the minister, I'll live in the real world, in which I see the daily evidence that places like the Cayman Islands deliberately set out to create legislation to undermine the regulation and taxation systems of other states with the intent of undermining democracy, an action in which they are joined by those professional people who are living there. And recently they nearly succeeded. But not quite. Thankfully.

What more evidence do we need?