Former Bahamas Attorney General Says Blacklisting Was Orchestrated

Robert Lee, Tax-news.com, London

24 August 2000

In June the Financial Action Task Force (FATF) published its list of 15 nations deemed to be uncooperative in the fight against money laundering, and for those offshore jurisdictions included on the blacklist, the action still rankles. The Bahamas was one of the offshore financial centres featured, and now its former Attorney General Paul L Adderley has weighed in with his views on the now infamous list. His line is that the blacklisting of the Bahamas was one hundred per cent orchestrated, and driven not by enemies but by friends.

Since the publication of the list, the Bahamian Prime Minister Hubert Ingraham and Finance Minster Sir William Allen have taken the helm of a large-scale drive to restore the reputation of the Bahamas in the financial services sector and, ultimately, to get the Bahamas taken off the list. In recent weeks, the two have travelled to the United States and Canada to meet with government and bank officials in order to convince them that the Bahamas is not a haven for "hot money" and that the US Treasury's advisory warning American financial institutions to exercise caution when dealing with the Bahamas is unfounded.

The blacklisting of the Bahamas has naturally featured high on the political agenda since June, and now Mr Adderley has voiced his views at at the first in a series of public fora on the matter. Mr Adderley declared that the US Treasury advisory 'is full of factual and legal mistakes and misrepresentations which I assume the Bahamian government has taken up with our friends in Washington. But that is a full subject in its own right.'

Mr Adderley clearly believes that the Bahamas should reject the idea that the jurisdiction is featured on a 'blacklist'. He said 'The word "blacklist" originates in the foreign press and we pick it up - it is an emotive word and intimidating. Because that is what this matter is all about - intimidating of the weak by the strong. Now no one has been a fiercer defender of Bahamian sovereignty than I since independence. But I have also recognized that all animals are equal but some more equal than others. The sentiment of many that we ought to tell the OECD and FATF and the US. to go to hell is strong, but I do not agree with it. When the hand is in the lion's mouth, take it out slowly. But never panic."

The strongest charge from Mr Adderley is that the whole FATF initiative was orchestrated: 'Eight months at least ago our friends the United States, Canada and Great Britain ought to have told us that as a matter of global international policy they wished to eliminate the concept of the tax haven and its companion bank confidentiality,' said Mr Adderley. 'They ought to have told us that they wanted the cooperation of the Bahamas; we will give you time to make the necessary political and economic adjustments to protect the jobs of Bahamians in the banking sector and we will help you develop a legitimate financial services regime with which we can all agree.' He added that might have happened: 'that is not for me to say but there are people in the Bahamas who know.'

According to Mr Adderley, the Bahamas was "strongly advised" by the FATF to adopt measures to improve their rules and practices as expeditiously as possible in order to remedy the deficiencies identified. He said the FATF, in the meantime, recommended that 'financial institutions should give special attention to business relations and transactions with persons, including companies and financial institutions, from the 'non-cooperative countries.' Mr Adderley said that at this stage both the OECD and the FATF had decided that the Bahamas was an uncooperative country.

Mr Adderley concludes that the actions of the FATF were bad enough, but 'weeks later the US Treasury adds fuel to the fire by issuing an advisory that there were serious deficiencies in the counter money laundering systems of the Bahamas. Nowhere in this advisory which goes to great length to identify these deficiencies does the U.S. Treasury mention Exchange of Information with the U.S. in tax matters which was the main thrust of the OECD and FATF reports.'

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