KPMG Offshore Report "Watered Down"

Roger Crombie, Royal Gazette

30 August 2000

This story is reproduced by kind permission of the Royal Gazette at http://www.accessbda.bm

THE sting has been taken out of the review of the British Overseas Territories off-shore business practices by international financial services provider KPMG, the Mid-Ocean News can report.

The release of the review, which was originally set for July 2000, will now be delayed until September at the earliest, because the first draft, which was highly damning to all six jurisdictions, including Bermuda, has been extensively rewritten to present a softer outlook, which "pulls most of its punches".

So says a high-ranking official in one of the other five jurisdictions which are covered by the report, who spoke on condition of anonymity.

Of the original draft of the report, a high-ranking official said: "You know the old saw about a glass which is either half empty or half full, depending on your point of view? The approach that KPMG took in the first draft of their review was that all the glasses were nearly empty. It caused consternation."

The uncomplimentary first draft was followed by written comments from government officials in each of the jurisdictions, which were in turn followed by visits from KPMG review staff for discussions.

Now "a much blander" version of the report has emerged, about which Financial Secretary Donald Scott spoke earlier this week.

The official said that the key difference between the KPMG initiative and those that preceded it is that KPMG has proceeded from a basis of knowledge, rather than hearsay. "It was refreshing to meet the people who were carrying out the investigation and have the opportunity to explain how we operate," the official said. "With some of the earlier reports, you had the feeling that another agenda was being pursued and that the conclusions had been reached very early into the process."

The official speculated that some of the earlier international bodies had mounted their initiatives to "stare down the jurisdictions".

Last December, when the review was announced, a Foreign Office spokesman said the review was made necessary by the "significant" offshore financial sectors developed by some of the territories, including Bermuda.

Back then, the Foreign Office spokesman added: "The review is scheduled to report by July 2000. KPMG will examine practices and legislation covering the banking, insurance and securities sectors, companies and trusts, the independence of regulatory authorities, as well as arrangements in international co-operation and anti-money laundering.

"The review will assess progress in implementing accepted international standards and good practice in the areas outlined above. It will determine whether further action is needed by any island in order to meet those standards and prioritise any recommendations"

The six Territories included in the review are the Caribbean islands of the Caymans, Anguilla, the British Virgin Islands, Montserrat and Turks and Caicos, all of which are involved in offshore finance. Bermuda and the Cayman Islands have by far the largest international sectors.

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