It’s an interesting coincidence (no more, I think) that the Guardian has published an article this morning on tax havens / secrecy jurisdictions by William Brittain-Catlin.
He argues that tax havens may be on the back foot right now as a result of the crash. But he also argues that not nearly enough is being done to highlight their role in that crisis and that as a result they’ll be back in force if concerted action is not taken now.
As he says:
[N]ew offshore centres will emerge — the bets are already on Malta, Mauritius and the Seychelles — as trailblazers for the second coming of offshore capitalism, and they will give those hungry for profit and inordinate wealth a margin of risk and reward not available in the slumbering onshore world.
The outcome we know already: offshore capitalism will destroy our economies in a repeat performance of all that we have witnessed these last few years.
But this need not happen; the economic gods have not determined our fate. With the removal of tax havens and offshore finance from the world, we can safely and securely build a new onshore polis. The responsibility is ours. We can and must determine our own fate.
We have a choice.
And we have to choose to beat tax havens.
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My feeling is that all the regulatory and political pressure means that tax havens have had their day, and that they will either have to adapt and essentially cease to be tax havens, or lose business to other jurisdictions. This is as much the case for the Seychelles as it is for the Cayman Islands (and in this I disagree with the author). The focus will then have to move on jurisdictions which are not tax havens, but facilitate tax avoidance. EU jurisdictions such as Luxembourg/Netherlands/Ireland are relatively easy problems to solve. The likes of Singapore will be more difficult.
One niggle – it is not right that tax havens were a significant factor in the causes of the credit crunch, and it is telling that the article simply asserts this without evidence. Some CDOs/etc were established in tax havens; others were not – they all fell apart regardless. That does not lessen the case for action, but it does make this particular article less credible.
@Marc Daniels
In a sense you’re right – tax havens do nothing
But the opacity they created was a factor – on and offshore
It’ll make reading the Sunday Times rich list a lot less interesting if all the wealthy people keep their money abroad to avoid tax!
May be we need the Caymen islands rich list, then issue tax notices to anyone with a registered UK address.
Secrecy jurisdictions, like the Isle of Man, where so-called “governments” allow a culture of feeble regulation to nurture gluttonous financial services industries.
All characterized by greed, arrogance, duplicity and fraud.
Burn them.
@ Marc. Don’t forget the US!
@ PSG. I’m guessing you’re still not making any progress with your case?
No no no. The major powers created the banking collapse all on their own by THEIR lax regulation. Nothing to do with the offshores. Twenty years of profligacy funded by high fliers who were just glorified gamblers with other peoples’ money has brought us to ruin. Negligent governments allowed it to carry on while the inflated taxes rolled in. The criminal players who walked away with huge bonuses should be brought to book and their assets siezed towards paying the debts they created. They were not even negligent – they knew precisely what they were doing.
It is oh so easy and quick to blame tax haven/ secrecy jurisdictions for the credit crunch/ sub prime crisis but I’m yet to see much (if any) specific evidence. What were their roles in the Freddie Mac, Fannie Mae, Northern Rock, HBoS, RBS, Lloyds TSB, Madoff, Bear Stearns, UBS, Citigroup et al problems?
It is interesting that senior FSA officials have publicly acknowledged their part in the credit crunch/ sub prime crisis. Ratings agencies are also part to blame and of coure those institutions themselves that were greedy, ignored good corporate governance etc etc. The Basel rules were also found wanting. I could go on.
@woolley
and
@JohnBuckles
See my comment to Marc above
But to close offshore had no role and this all happened onshore is only possible it you say all offshore is a charade
I’ll but that – but in that case the acse is made for entirely closing it down
Which way do you want to go?
Responsibility or closure?
@JohnBuckles
At least half the companies you list have “branches” in Jersey, Guernsey and the Isle of Man and although not directly related to the credit crunch/sub prime crisis, how about Kaupthing, Singer & Friedlander, the Icelandic bank based in the Isle of Man?
Evidence of “occurrences” often fail to come to light simply because “secrecy jurisdictions” are just that. Secret.
@Greg
Thanks (again) for your interest. Yes and no.
Being defeated is often a temporary condition.
Giving up is what makes it permanent. Marlene vos Savant…
@Richard Murphy
I am saying there was little or no offshore involvement because there was little or none…if you have real proof, not theory, then let’s see it, I am very interested.
@JohnBuckles
Offshore conduits created massive opacity
That was offshore’s contribution
And I agree that beyond that the role was relatively small – but as I say – that’s because it is all a sham
A tax fraud sham (fraud in the sense of deceit and not illegality maybe in the case of banks but fraud still)
I don’t think opacity was a significant cause of the credit crunch either, Richard. Most (all?) of the deals that went so badly wrong were public deals, and a public deal (even in a tax haven jurisdiction) has offering documentation that provides significantly more detail than public accounts ever will.
@JohnBuckles
“Offering documentation” produced by a financial institution based on the Isle of Man can be totally dishonest and not subject to any form of regulation or control allowing “financial companies” to obtain bank transfers by publishing false claims.
Meanwhile the island’s government sits back doing nothing as it plays by its own indefensible rules that the lax FSA would never, ever allow.
Public accounts? Even island based auditors attempt to cover-up fraud.
Put simply; The governments of tax haven jurisdictions are institutionally corrupt in a way that defies belief.
The PSG has a 50 page dossier of evidence to support all above allegations.
“how about Kaupthing, Singer & Friedlander, the Icelandic bank based in the Isle of Man”
Without wishing to be a pedant, they were based in Iceland: they had branches in IOM. You may as well say that Woolworths was based in Milford Haven high street before it went bankrupt.
@ PSG, please could you let us know where we can access this 50 page dossier.
@madfoetus
Many banks have so-called “subsidiaries” in Jersey, Guernsey and the Isle of Man, trading under names which suggest that they are exactly the same as their “high street” kindred. This is misleading as in most instances the shareholding of these off-shore banks (and other financial companies) is structured in such a way to distance them from what is termed (misleadingly) the “parent” company.
The “parent” will always deny responsibility for the actions of their “subsidiaries” by claiming that they are unrelated companies. As depositors in KSF(IOM) were to discover when they complained to Iceland.
The KSF based in the Isle of Man traded as KSF(IOM) a separate company to KSF in Iceland – unlike Woolworths in Milford Haven who were simple a branch of a UK registered company.
Before parading your pedantry in future perhaps you should familiarize yourself with the duplicity and opacity of “offshore secrecy jurisdictions”, the first lesson being:- “what you see is NEVER what you get.
On the subject of never;
Never invest or deposit a single cent on Jersey, Guernsey and the Isle of Man.
@Greg
You refer to yourself in the plural.
Do you represent an interest group. If so which/who?
There is no secrecy, or restricted availability, regarding the PSG dossier of evidence.
Some content is not (yet) in the public domain as it includes letters from the Chief Minister of the Isle of Man government, the head of the Financial Supervision Commission, and the head of the Office of Fair Trading, the company’s auditors and various others who/which actively support conduct which is subject to PSG complaint.
Included are sales brochures claiming “low risk” for “high risk” and “capital security and guarantees” associating investing in the company with depositing money in a building society. Together with copies of FSA rulings (which challenge Isle of Man FSC rulings) and High Court adjudications.
In fact there is now considerably more than fifty pages of prima facie evidence in support of PSG allegations that hundreds of vulnerable pensioners were misled into transferring their life savings to an Isle of Man based “Experienced Investor Fund”.
If you have faith in the Isle of Man government publicity hype regarding transparency and legitimacy you will be able to access this dossier from it.
Speak to the Chief Minister — he has a copy and his number is in the book..
The PSG hides nothing.
@ PSG I don’t represent anyone. The use of the term “us” was meaning to include other posters.
Your allegations are fairly strong, and one would expect to see fairly robust evidence to support these allegations. I may be missing something from your post above, but I don’t see a link to your dossier or instructions on how to obtain it?
@Greg
You write “the use of the term “us” was meaning to include other posters”. Have you formed some sort of club?
Please do not include the PSG in your definition of “us”.
To be associated with someone who cannot, or cannot be bothered to,read is not in the interest of anyone… accepting those involved in remedial training for the disadvantaged.
To obtain a copy of the dossier please contact one or all of the following:-
The Chief Minister of the Isle of Man government.
The Chief Officer of the Financial Supervision Commission
The Chief Officer of the Office of Fair Trading
These people are in possession of a copy of the PSG dossier containing “robust evidence” to substantiate all of the PSG’s “strong allegations” that bank transfers were obtained from pensioners by deception.
And all of their telephone numbers are in the book.
Or perhaps you would prefer that a delegation of PSG representatives book a flight to Guernsey to deliver these documents personally?
In the meantime this office is closed until later in the week.
@Premier Shareholders Group
Can I remind PSG you too are subject to moderation rules and some comments are pushing them to the limit?
@ PSG. I would expect that parties making strong allegations have evidence to hand that would support such allegations. It is pretty obvious you do not.
Whilst it is obvious that I disagree with Richard on a great many points, it is rare to find him making points that are not backed by evidence. That is how one becomes a credible voice.
@Premier Shareholders Group
I am trying to understand the situation and have done a little research. Did investors in the Premier product go direct to Premier or via independent financial advisors? If via IFAs, were they licensed and where were they based? If via IFAs did they accurately assess the requirements and investment parameters of the investors? If via IFAs did they provide investment advice based on their assessment of the investors circumstances and did they communicate this to the investors? I may have some good info/ advice that could be helpful but I would like to understand a little more before considering if it applies etc.
As for mentioning Kaupthing I guess it was similar to the Northern Rock situation whereby they were paying higher interest rates than most other banks. This is going to sound cold and callous but there is usually a reason why banks offer better rates than others and that is usually associated to them needing the cash more than others and therefore comes with additional risk. I have sympathy with bank account holders who lose money when their bank collapses but usually when you start chasing better interest rates and start dealing with lesser rated banks etc you carry alot more risk and sometimes those banks do go under. I know someone who chased an etc 1/32 of a percent placing money with BCCI…they still haven’t got all their money back.
Mr. Murphy
To know the acute trauma caused to elderly persons by the unnecessary loss of their life savings is deeply disturbing …
Suicide, stress related serious illness, depression and a feeling of total helplessness among vulnerable people who became the target of an unscrupulous financial services industry simply because of their prudence to accrue modest savings to ease uncertainty in the sunset of their lives.
This is preventable and every decent person must act to stop it.
@JohnBuckles
JB. Did investors in the Premier product go direct to Premier or via independent financial advisors?
PSG. Via unqualified “introducers” who Premier described as “professional” investment advisors.
JB. If via IFAs did they accurately assess the requirements and investment parameters of the investors?
PSG. The “introducers” were not “IFAs” in the strict sense and were not qualified to make accurate assessment of pensioner’s financial circumstances. Some later admitted that they did not fully understand the Premier product.
JB. If via IFAs did they provide investment advice based on their assessment of the investors circumstances and did they communicate this to the investors?
PSG. In the cases known to the PSG no written assessment (Fact Find — Know Your Client etc) was supplied. Any “advice” was simply copied from (misleading) claims published in Premier’s sales promotion literature and Scheme Particulars.
JB. I may have some good info/ advice that could be helpful …
At last something positive! (As opposed to bickering from a Guernsey resident).
PSG. The PSG would be more than grateful to receive any information you may have.
Perhaps Mr. Murphy would act as an “intermediary”? This to facilitate the exchange of the Group’s telephone numbers. The PSG will then provide you with a large amount of convincing written evidence to substantiate all complaints.
The PSG will be away until Tuesday 5th October.
@Premier Shareholders Group
I’m not sure you understand what is meant by offering documentation. Disclosure requirements are governed by the listing rules of the stock exchange where the securities are listed, and the regulatory law of the countries into which the securities are being sold. The country in which the issuer is based is of little significance. So the point is that offering documentation of CDOs, mortgage-backed securities etc had the same level of disclosure whether the issuer was in the Isle of Man (which it rarely was), Ireland, Luxembourg, the UK etc. The disclosure may have been insufficient (although this is arguable), but this was nothing to do with tax havens.
@Premier Shareholders Group
Bickering? I would respectfully suggest (as Richard has already said) that you consider your comments and the moderation rules. I understand that you are clearly aggrieved at the situation you find yourself in but having a dig at someone who is interested and may be of some help is probably not the best way to go about things. That aside…
It would appear that those at fault are the unqualified introducers that were used. I presume they are or were unlicensed as well as unqualified?
I am aware of a case (from a few years ago and which predates the credit crisis) of a group of investors successfully suing qualified IFAs who did fact finds and still determined that a geared product (similar to the one you used) was applicable when they were not. To cut a long story short…those investors settled with the IFAs insurers just before the case got to court. As a consequence, the IFAs are no longer in existence/ licensed by the regulator and the investors got their money back plus damages/ lost interest etc. Where that case appears to differ to yours is the fact that the shareholders/ investors used qualified and licensed intermediaries.
I do have sympathy and guess that approaching the regulator etc is the best way forward but I guess there is no chance of redress against those that advised you to get into these products?
Did you or others do any background checks on the advisors used or indeed the product? I don’t know when you bought it but I found this article from 2004 (found within seconds of searching google) and it appears that there were people out there who could smell a problem even back then.
As for suggesting that I am resident in Guernsey, I don’t think I know you and certainly don’t recall having listed my personal details on this site.
Here is the link from 2004 I was referring to http://www.thinkspain.com/news-spain/6011/experienced-investor-funds-buyers-beware
John
That article from 2004 is startling, but of course many oe even most investors in the fund will not have seen it or, if they did, by then it was too late.
However, the article quotes directly from the scheme particulars, which is the official offering document, and which constitutes the “contract” between the fund promoter and the investor.
The scheme particulars are crystal clear – the fund was not subject to regulation in the Isle of Man and therefore was not the responsibility of the Isle of Man regulators. So it is surely 100% correct that the Isle of Man government is not taking responsibility. Each and every investor should have read the scheme particulars and, if they had done so, they would have been fully aware of the risks before parting with their money. Clearly they didn’t do so.
The investors appear to have used unregulated and unqualified financial advisors. Why? Would you buy a house without getting it surveyed? If you had it surveyed wouldn’t you want or expect your surveyor to be suitably qualified? As we have seen with depositors in the failed Icelandic banks, investors opted not to bother seeking proper and regulated advice from licensed financial advisors, and so have nobody to sue under their professional indemnity insurance policies. That would have been the obvious route for the investors who lost out. But if you don’t take advice, or don’t check the regulatory status or PI arrangements of the advisoor, then you may as well not take advice at all as its absolutely worthless.
This does not look like anything for which the IoM government is liable. The promoters and unregulated advisors should be sued but its probably pointless to do so. The regulator is not a judge. There is a legal system for this type of situation, but if there is nobody to sue then the regulator cannot be the last resort to pay out when the scheme documents made it crystal clear that they were not regulating the fund.
The big lesson here is that the Isle of Man should cease allowing funds to operate from there unless they are being regulated, even if the documents do spell out the unregulated situation.
Zero 10 is killing the ordinary taxpayer in Jersey (C.I.) because someone has to pay to fill the “black hole” it has caused. Is there anyone in UK Government who will take on board our plight? Obviously our own so-called government don’t want to consider it as Finance is their God.
Rupert October 1st, 2010 at 23:23 |
No one has ever denied that the opening page of the Premier Fund Scheme Particulars contains the statement: – “The Fund is not subject to any form of regulation or approval on the Isle of Man ….
You appear to suggest that any fund (or financial product) can be set-up on the Isle of Man, produce misleading sales brochures and then supply these brochures to unqualified entities (who the fund describe as “professional” investment advisors) to assist in the fund’s promotion, resulting in the fund obtaining bank transfers from pensioners. And then pay these “introducers” undisclosed “commissions” via secretive Caribbean shell companies.
And the Isle of Man government has no responsibility in this matter?
Come on!
You say “The investors appear to have used unregulated and unqualified advisors”.
Wrong! It was the Premier Fund who entered into an agreement with these so-called “advisors” — not the pensioners!
Premier described these people as “professionals” why should pensioners doubt them? When did you last ask your doctor/dentist to see written evidence of their qualifications before allowing them to examine you?
How can the pensioners successfully sue the unqualified entities who distributed Premier’s misleading sales brochures?
Their defence is quite simple: – We were misled by Premier as well!
You say: – “The regulator is not a judge”.
But there is nothing to stop the regulator bringing this case before a judge.
For example the Royal Court in Jersey ruled in favour of the Jersey Financial Services Commission when it brought a case against a company in the belief that members of the public were “recklessly misled” when they were sold a high-risk investment (geared traded endowment policies) believing that they were low-risk.
Similarly the UK FSA have imposed fines on companies for failing to act with due care and diligence by not explaining the high-risk associated with investing in GEARED traded endowment policies.
The Premier Low Risk Fund plc can borrow up to 50% of the Fund’s net asset value to buy traded endowment policies.
It is NOT a low-risk fund.
What has so far been discussed on this blog is only the tip of a very large iceberg.
Is the Isle of Man government liable? Yes 100%. Bet your farm on it.
First a sincere apology for the incautious “typo” that attributed the following to you.
“At last something positive! (As opposed to bickering from a Guernsey resident)”.
The first sentence was heart felt. The second a reference to another blogger (not you)!
The Premier Low Risk Fund plc is an “Experienced Investor Fund” only open to experienced investors and not inexperienced pensioners – unless they are misled into believing otherwise.
The fund “is a portfolio of traded endowment policies using bank loans to a value of up to 50% of the net asset worth of the Fund to purchase policies. Using loans to invest in unpredictable assets is generally (but not on the Isle of Man) considered to be a very high-risk investment strategy.
In the first instance Premier had a duty-of-care to ensure that the Fund’s (misleading) brochures were only made available to licensed financial advisors capable of providing regulated advice.
In the second instance the pensioners had a duty-of-care to ensure that the “introducers” (given access by Premier to the Fund’s brochures) were properly qualified.
However the pensioner’s duty was annulled after Premier referred to the unqualified/unregulated “introducers” as “professional” investment advisors.
The “introducers” distributed Premier’s misleading sales brochures in the belief that they were accurate (they were not qualified to know any better) and hunted pensioners by placing these claims in newspapers. Believing the claims to be true some pensioners made contact with the “introducers” and were persuaded to contract with the Fund.
Law of Contract degrees that any contract entered into under duress, deception or fraud is immediately void.
A complex, unregulated fund designed for high net worth professional investors only was hawked to unsuspecting pensioners by unregulated “introducers” using the fund’s misleading sales documents.
All contracts relating to these “sales” are now required to be cancelled.
The information contained at http://www.thinkspain.com/news-spain/6011/experienced-investor-funds-buyers-beware is only a fraction of the information available regarding the “risk rating” of geared traded endowment policy portfolios and the peccadilloes of experienced investor funds.
The PSG would dearly like the opportunity to clarify to you every aspect of the involvement of the Isle of Man government in this matter. Alas this will probably never happen.
The last PSG posting is (or should be) addressed to JohnBuckles.
Thanks.
John Buckles, I have read with interest the debates with regards to the E.I.F. product sold in Spain the general consensuses of opinion I would say is one of that the promoters were not qualified as such Premier are to blame as they employed them, and it would seem they may well have not been to dissimilar to ex time share touts (the promoters)Just out of academic interest I have been an I.O.M. resident for 5 years and was recommended and sold an E.I.F.(Premier Diversified Property which has lost over 52% to date)and has been suspended for over 2 years now. The I.F.A. who sold me this is a licensed I.O.M. I.F.A who deliberately withheld information,in that he did not produce the Scheme particulars at any time nor did he inform me of the implications with an E.I.F.This is a long and complicated story and I would be grateful for any assistance or advice from any one, as I have been battling with the relevant I.O.M authorities now for some 3 years,and I am no further forward, than I was At the start.