The Prime Minister says he's encouraged by the growing efforts of the Non-OECD jurisdictions to rally together and contend with the constraints they face in having to negotiate with the 29-member Organisation for Economic Cooperation and Development (OECD) on international taxation matters. However, Dr. Maoate is also concerned that the overseas media is promoting a confused understanding of the issues.

While the Non-OECD jurisdictions are moving quickly to consolidate their positions under a newly established International Tax and Investment Association (ITIA), the Prime Minister lashed out at news reports, which he says revealed ignorance and confusion over money-laundering and legitimate, international tax competition issues. "The media is clearly getting it wrong," says Dr. Maoate, "which is a deep concern for the Cook Islands and other small island states."

"Not only are the reports showing a limited understanding by mixing two separate issues but they are damaging the development objectives of offshore finance jurisdictions to improve their limited, narrow-based economies." The Prime Minister pointed to a recent report in The Weekend Herald, which talked about the failures of jurisdictions like Nauru and Niue to combat money laundering and then in the same context, raised issues related to international taxation and the 'harmful tax practices initiative' by the Organisation for Economic Cooperation and Development (OECD).

Dr. Maoate said he was not commenting on behalf of those countries but was concerned that the Cook Islands and other jurisdictions receive the benefit of better-informed reporting about their actions and comments. The recent news report chopped and changed between the two issues and took many statements out of context, he said. For example, no efforts were made by the media to differentiate between the blacklist issued by the Financial Action Task Force (FATF) on anti money laundering measures, and those connected to sanctions, which have been threatened by the OECD against 'uncooperative tax havens' for 'harmful tax practices'.

In addition, The Weekend Herald referred to Commonwealth Secretary General Don McKinnon as being critical of the OECD. But the criticism from McKinnon was directed at OECD tactics in dealing with the jurisdictions on the 'harmful tax practices' initiative, not anti money laundering efforts as reported in the newspaper. The Secretary General spoke out against the OECD when it became apparent to him that the Paris-based organisation was not interested in conducting meaningful dialogue with the jurisdictions in good faith. His comments came after a Joint Working Group had met in Paris earlier this month to continue negotiating that process. Little has been achieved to move beyond hardened positions.

The Cook Islands is maintaining active participation in the process with Offshore Financial Services Commissioner Mathilda Uhrle attending meetings in Paris and London The Non-OECD jurisdictions have now set up the ITIA group to promote cohesion and assistance with technical and financial constraints in dealing with the complex taxation issues. The Commissioner was scheduled to leave for the United Kingdom at the weekend to participate in the first technical meeting of the ITIA.

The Prime Minister said limited media understanding about the enormous efforts it took to cooperate and be involved in this process was discouraging because the Cook Islands and other jurisdictions had real cause to argue a case against what the OECD was trying to do in terms of taxation matter. As far as money laundering and financial crime was concerned, Dr. Maoate said he was not aware of any jurisdiction in the world that was opposed to establishing more stringent measures. "The Cook Islands showed real commitment to fighting money laundering by responding immediately to international concerns, and enacting new legislation," he said. "There's genuine consensus among jurisdictions to cooperate and do all they can to combat financial crime."

Government wanted to cooperate as much as possible with the FATF and be removed from blacklisting by the OECD-based organisation. Anti money laundering law was enacted last August, allowing for further development and strengthening of a monitoring framework. The issues related to international taxation standards was a separate matter that is subject to ongoing negotiation given the widespread support for global tax competition, he said.

In this regard, the OECD has been perceived as a 'bully' in forcing Offshore Finance jurisdictions to comply with regulations, which the jurisdictions had no part in determining. "What these jurisdictions are saying to the OECD, and to the world, is that international taxation standards require a process of multilateral negotiation at the highest political level." The OECD should come to the negotiation table in good faith and discuss these issues in a global forum, the Prime Minister says, not take unilateral action on criteria and standards that are defined and acceptable only to them. This is the argument that jurisdictions have with the OECD, not on the efforts to combat financial crime, he adds.