Offshore Havens Fear Enron Backlash

by Mike Godfrey, Tax-News.com, Washington

05 February 2002

Angry howls from US pressure groups such as Citizens for Tax Justice and Public Citizen in the wake of Enron's spectacular implosion have sparked fears that the offshore world is about to suffer yet another backlash.

Although it is widely agreed that the sheer number of offshore subsidiaries established by Enron in various offshore jurisdictions - 900 according to Citizens for Tax Justice - is unusual, offshore advocates are concerned that the baby may be thrown out with the bath water if jurisdictions are forced to introduce tough new laws, and that legitmate business practice may be jeopardised.

Following the September 11 attacks, despite the fact that very little significant evidence was found to link terrorist assets with the majority of offshore havens, enhanced legislation and increased scrutiny of the countries' financial sectors was demanded by multilateral organisations such as the FATF and the OECD.

Supporters of offshore financial centres, such as Andrew Quinlan of the Centre for Freedom and Prosperity, believe that the Enron scandal may provide the US and other high tax countries with just the excuse it needs to attack them again: 'They are going to use anything they can,' he warned, 'and right now Enron is the scandal of the month.'

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