This letter was in the Guardian today:
The charged rhetoric described in your article (Obama vows to close loopholes after public anger, 14 March) overlooks decades of cooperation that have made the Cayman Islands a critical partner of regulators worldwide in maintaining the integrity and stability of global financial markets. The narrow focus on my firm's corporate headquarters, Ugland House, and the numerous businesses registered there, ignores the role that the Cayman Islands and many other offshore financial centres play in directing private capital flows from private investors worldwide into economically productive means, often in Europe and the US, but also in numerous developing countries. This source of capital is critically important as governments worldwide scramble to inject liquidity into the financial system.
Unfortunately this story gets lost in heated political speeches and blanket accusations of bank secrecy that paint all offshore centres with the same brush without regard for differences in regulatory, legal and political regimes, as well as their level integration into the global economy. One might almost think that politicians, and publications like yours, are searching for a scapegoat for the economic crisis - which of course arose onshore.
Joint managing partner, Maples and Calder, Grand Cayman, Cayman Islands
This is complete misinformation.
The tax news in the UK is currently dominated by the Barclays Bank story. Barclays is the biggest UK user of the Cayman Islands. It is the biggest user of offshore companies in the UK. These associations are not coincidental.
Barclays needed the tax free, regulation light, flexible legal structure of Cayman to undertake its tax abuse. Cayman deliberately structures its laws, under the guidance of firms like Maples and Calder to facilitate that abuse.
The reality is that the current world economic crisis, created by banks, did not start onshore or offshore. Those banks located their transactions wherever it suited their purpose, and in the case of Barclays we know that at least 30% of its subsidiary companies are offshore to ensure that it could locate transactions at cost to society at large.
The second reality is that, as the Barclays documentation shows, nothing really happens offshore. All that places like Cayman do is to provide a ‚Äòlegal space’ which they claim is not in the Cayman Islands, because they consider the transactions undertaken are offshore to their, but which is not anywhere else, where regulation is lax or non-existent. That is the ‚Äòsecrecy space’ that a secrecy jurisdiction creates. Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction and that, in addition, create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.
Maples and Calder cannot deny responsibility for this. They are key players in the provision of the secrecy services that have undermined the credibility of the world's financial system. We are not scapegoating them: we are charging them with financial abuse.
They cannot avoid the charge by saying they are well regulated. We all know that the regulation with which they complied was inappropriate. Ticking boxes on a piece of paper which gave rise to no meaningful control is not good regulation. It is a sham. And that is precisely what the Cayman Islands’ financial services sector is, and that is that precise definition of the service it supplies.
Barclays was a willing customer.
They and Maples and Calder provide the evidence for closing down secrecy jurisdictions.