Bahamas Signs Up With The OECD

Tax-News.com, New York

19 March 2002

The Bahamas' Minister of Finance, Sir William Allen, yesterday issued a statement describing the terms of the islands' commitment to the OECD:

'The OECD has signaled its acceptance of The Bahamas' form of commitment on transparency and effective exchange of information on Friday, 15th March,
bringing to an end months of intense negotiations on a mutually acceptable form of undertaking which fully recognises The Bahamas' right to protect its economic interest by conditioning The Bahamas' commitment to the application of a level playing field in relation to all jurisdictions with which The Bahamas is materially in competition in the provision of cross-border financial services.

'I have today therefore formally submitted the Bahamas' commitment to the OECD in the form now agreed as acceptable. This commitment represents a framework within which bilateral treaty negotiations may take place, provided that all OECD member and non-member countries and jurisdictions with which The Bahamas is materially in competition have, likewise, assumed obligations equivalent to those assumed by The Bahamas.

'The Government of The Bahamas believes strongly that the success of this OECD initiative rests on the adherence to the principle of parity in the obligations assumed by all jurisdictions, OECD and non-OECD member countries in relation to standards and timelines in the move to greater transparency and information exchange. Clearly, if this principle is not observed, financial services business will migrate from one financial services centre to another and the stated objectives of the OECD initiative will, thereby be defeated.

'On that basis and with that understanding The Bahamas is participating in the process and is pleased to have concluded with the OECD a form of Commitment which meets our mutual interests. This also brings to a close speculation regarding the possible inclusion of The Bahamas on a list of non-cooperating tax havens.'

As recently as last week the Bahamas' government had been explaining why it had not come to terms with the OECD, and Dr Gilbert Morris, Executive Director of the Nassau Institute in the Bahamas was quick to criticise the administration for its volte-face:

"It must be met with some alarm that only days ago, fresh from travels in Australia, the government trumpeted its having won Australia - and even Britain - to its position, only to discover that its position has been to draw its own words into question.

"I am given to understand that the language used was to that of a subjunctive conditional.that is, the undertaking will come into force at a designated time if OECD members adopted the measures they demand of others for themselves. This appears clever, but is it ?

"The fact is that we said to the world that we would not sign unless the OECD members undertook so to do. They have not. Moreover, to have signed at all gives credence to the notion that the OECD is an authoritative body in international law. It is in fact a "think tank" with no recognizable authority in law. To have signed at all is to subject of constitutional sovereign state and its moral obligation to defend the content and quality of the rights of its citizens to an ad hoc body, for reasons which the members of that body do not apply to themselves."

Dr. Morris suggested that this is unprecedented in law: "The nation-state has been the foundation of the international community for more that 170 years now. Are we to accept that there has been a unilateral alteration of this principle for the perceived benefit of a few states, at the expense of all others ? At the Nassau Institute, we have little qualms in saying that these initiatives of international bodies, insofar as they turn on threats and impositions must be rejected without ceremony. This is consistent with the Vienna Convention on Treaties 1965".

Professor Morris reiterated a comment made earlier in the year. He said: "At the Institute we need not speak apologetically concerning our position. We believe in the cultivation of enterprise cultures, individual liberty, fiscal sovereignty and the rule of law. We have been animated on the questions whilst others gave them wavered apparently. We defend principles which are enshrined in Article 1 of the OECD's Convention, which calls for non-discrimination. And we insist that the projection of illegal authority by non-state actors will lead to a corruption of the international legal system.extending the influence of some states.without the force of law".

Asked about what the agreement means on the national front in the Bahamas, Dr. Morris replied: "Curiously, the administration seems to have little pause even for the symbolism of nationhood. I cannot think of another respected nation that would have preferred this commitment lettre in the midst of a national election campaign. In diplomatic terms it is unfortunately a demonstrative willingness to submit characteristic of the naïve, who labour under the delusion that there will be nothing more to sign.

"Secondly, the Rt. Honourable Prime Minister - to the extent of his involvement in this constitutionally hideous act - has been poorly advised as to his authority and the authority of his administration now enthralled in an election cycle. He resigned as party leader, and so is only a defacto Prime Minister; for which cause we may discover that his authority, and that of his government to make such undertakings now in discussion is non-existent".

"You see", Dr. Morris continued, "the signage sends a message to the world that we are devoid of ceremony. It implies that our constitution offers no protection, when the next OECD initiative comes down the pike. And it is surly ungoverned foolishness to suggest that a new model of financial services are ripe for the Bahamas, when we have so clearly been amateurish in respect of the riot of recent signings.

"We encourage Panama and other states to stand firm on the principles of law. It is not merely a national question. Smaller sates must begin to take responsibility for maintaining the international rule of law, or sue for passports and governors from larger states".

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