Cayman Leader Attacks 'Politically Motivated' US Offshore Probe

by Mike Godfrey, Tax-News.com, Washington

15 June 2007

Cayman Islands Leader Kurt Tibbets has launched into a stout defence of his jurisdiction's reputation, dismissing accusations from US Senators that the Cayman Islands is a facilitator of international tax evasion as nothing more than 'political manoeuvring.'

At last Friday's post-Cabinet briefing, Leader of Government Business Tibbetts said that the Cayman Islands has “absolutely nothing to hide,” and accused the Senators leading the attack against the Cayman Islands as “needing a platform to be seen and heard."

Tibbetts' remarks came in response to a recent request by the US Senate Finance Committee for the Government Accountability Office (GAO) to investigate the Ugland House building in the Cayman Islands, which, as the Cayman headquarters of international law firm Maples & Calder, acts as the registered office for thousands of companies, US and otherwise.

At the forefront of this campaign is Senator Max Baucus (D-Mont), Chairman of the Finance Committee, who said on announcing the request that: "I want the GAO to go looking in one of the most likely places shady tax transactions could be sheltered, and that’s this building in the Caymans.” He went on to add that: "If American companies are setting up shop at the beach just to avoid their tax obligations, we can’t keep our heads in the sand."

However, according to Tibbetts, claims by US anti-tax haven campaigners about the amount of income that "goes missing" in the Cayman Islands are largely unsubstantiated. He added that Washington insiders admitted to a Cayman delegation on a recent trip to the US that politicians there use such campaigns to gather votes. This led Cayman Cabinet Minister Arden McLean to observe that: “Every time America has an election… politicians try to appease people about tax evasion."

“When we met with the head of the Ways and Means Committee, it was very clear to us that the technocrats on Capital Hill are quite aware of how business is conducted in Cayman,” Tibbetts said. Moreover, he added, they are "totally satisfied with the bona fide financial services that we operate.”

“When it comes to trade, without the existence of jurisdictions such as ours, in many instances these corporations would not be able to compete worldwide successfully,” Tibbetts argued.

In its official response to the Senators' announcement, the Cayman Portfolio of Finance & Economics noted in a statement that: "The Cayman Islands financial services industry operates on the principle that the presence – not the absence – of effective laws and regulations has contributed to our growth as an institutionally-focused, specialised financial services centre over the past 40 years. The law enforcement, regulatory and tax information exchange channels between the Cayman Islands and US– some dating back more than 20 years – offer no protection for Americans who are seeking to evade their tax obligations."

Tibbetts said that representatives of the US Congress or government are welcome to the Cayman Islands to discuss the issue, but insisted that his government will not be dictated to.

“All they have to do is accept the invitation and come down here,” he stated. "But if they think they can just hop a flight and come down and do what they wish… it ain’t gonna happen. They have to go through the proper channels.”

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