Bahamian opposition MP Bradley Roberts last week called on the government to resign over the OECD and FATF debacle, claiming that the blacklisting of the Caribbean nation was directly related to drug issues, or more precisely the government's inability to deal with drug trafficking. In a House of Assembly debate on the Central Bank of the Bahamas Act 2000, he said Deputy Prime Minister Frank Watson had “admitted the failure” of the Tracing and Forfeiture Act because the Act had only been used in a few instances. Mr Roberts charged: 'Why hasn’t there been more cases brought under this Act? You have had one or two failures, so you give up, you throw your hands up, you do not proceed to make any amendments to close any loopholes, you just simply allow it to flourish.'

Mr Roberts said that asking the government to resign was a fair request. He stated: 'Either it resigns or risks being jailed by the very laws being enacted under the cloud of blacklisting.' He was particularly critical of the government for its handling of the growing trade in illegal drugs and quoted from a recent speech by Assistant Commissioner Reginald Ferguson on money laundering. The Assistant Commissioner had said that money laundering and the proceeds from drug trafficking had distorted the Bahamian economy with the result that the economy now appears healthier than it is.

However, the Minister of Economic Affairs, Carl Bethel, said last week that the Bahamas' blacklisting was due to the loss of control of funds placed offshore. More than one trillion dollars pass through offshore financial centres, and Mr Bethel claims that the major world economies, ie the G-7 nations, have reacted to the loss of substantial investment dollars by clamping down on offshore jurisdictions such as the Bahamas. Mr Bethel feels that the OECD initiative has more to do with the loss of control over those funds than with the tax question.

Mr Bethel, who accompanied Bahamian Prime Minister Hubert Ingraham on his recent trip around Europe to discuss the blacklisting issue, refutes the claims of Bradley Roberts. In the House of Assembly last week, he said that many other countries, including Israel, were on the blacklists, and there was no suggestion that they were included because of drug trafficking.

With regards the issue of control of offshore funds, Mr Bethel said: 'When an investor buys stock and bonds, what does he do? He pays money to the government and he receives what they call "government paper."' In the case of France, he said, if one billion dollars are siphoned off to offshore centres around the world, that means that the French government is unable to access that money. He continued: 'That’s a billion dollars they cannot borrow from their financial markets... that cannot be used to fund the development of their country. It is in some offshore centre being managed by someone who may not feel patriotic about it... and so that is a loss of the savings of these countries to the offshore markets.'
Referring to a recent report on the growth of offshore funds, Mr Bethel stated: 'Just one fund was seeded with capital in excess of US$32bn. And that is big, big money.'