BIBA Seeks To Restore Bermuda's Business Reputation

by Leroy Baker, Tax-News.com, New York

10 March 2003

As shareholders met for the Tyco annual general meeting (AGM) last week, the international business community of Bermuda attempted to defend its reputation as a respected financial centre.

In a statement released to the press, the Bermuda International Business Association (BIBA) sought to refute claims that the island was nothing more than a haven for multinational firms trying to dodge tax and carry on dubious business practices made illegal elswhere, The Royal Gazette reported.

Looking to clarify Bermuda's role in the reincorporation of the recently scandal-hit Tyco corp., BIBA chairman Jeff Conyers said in the statement: "It is critical to note that Tyco did not in fact reincorporate to Bermuda as it has been reported, but rather the location of the company's headquarters in Bermuda was the result of an acquisition made several years ago." Conyers also refuted allegations that Bermuda enthusiastically sought companies to reincorporate on the island.

"In the case of Tyco and other companies that establish their headquarters on-island, we want to stress that Bermuda does not actively recruit companies to reincorporate in Bermuda. Instead Bermuda has always taken a conservative approach to incorporating companies. This can be seen in the modest number of international companies on our register (approximately 13,000) when compared with other offshore jurisdictions that have hundreds of thousands of companies."

Highlighting this conservative approach taken in Bermuda on issues of incorporation, Conyers compared the country's policy with other offshore centres which he claimed have a much more relaxed regulatory environment. He cited the island's stringent "know your customer review that all applications are subject to" which he said had been practice in Bermuda for many years, whereas elsewhere it is "only now being put in place in several other offshore jurisdictions and is still noticeably absent in others."

"To be clear, Bermuda has always focused on quality over quantity. Bermuda's broader standing and attractiveness in the international business world is driven in part by a business-friendly environment and a stable and growing economy" the statement continued, claiming that Bermuda was highly respected by a number of regulatory bodies and international governments of high standing around the world. "Bermuda has a history of maintaining and implementing legislative and regulatory provisions that encourage innovation from business while maintaining the highest standards of conduct." This ensured that "only legitimate and substantive business is conducted on the Island."

Meanwhile, at the Tyco AGM in Hamilton, shareholders rejected a motion that would see the company reincorporate in the United States, despite the fact that a significant 26% of shareholders supported the move, according to ABC news. The pension fund of the American Federation of State, County and Municipal Employees proposed the action believing that Bermuda's laws limit shareholder rights. However, a spokesman said the vote "sent a clear message to Tyco" that many shareholders were not happy with the current status of incorporation.

The meeting also saw the election of a new board of directors which met for the first time last Friday. This met with approval from 94% of the voters. Perhaps more significantly, shareholders also won the right to vote on severance packages for company executives, approved by 58% of voters. Moves such as this are rarely seen in the corporate world, though was perhaps inevitable given the recent history of the firm which according to ABC news saw two executives walk away with $600 million of the company's money last year.

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