Transparency Of Cayman Government Called Into Question?

by Amanda Banks, Tax-News.com, London

16 October 2001

The transparency of the Cayman Islands government has been called into question by a leading offshore due diligence newsletter, following revelations that a mysterious $2.5 million payment was made for a banking licence which should only have cost $150,000.

The size of the payment has been widely acknowledged as irregular, and lawyers representing the Euro Bank Corporation are reportedly suing the government for 'repayment by the Crown of the sum of $2.5 million paid to the Crown under a mistake or otherwise,'

Details of the 'mistake' came to light when the bank was forced into voluntary liquidation following a regulatory crackdown, and liquidators, Deloitte and Touche issued a legal challenge to the Cayman Islands government last month. However, there are those who believe that there was more to the exorbitant payment than meets the eye.

David Marchant, publisher of the Offshore Alert newsletter, believes that this latest development presents a challenge to the government's new policy of transparency and openness following the jurisdiction's removal from the FATF blacklist.

Speaking to the Independent on Sunday, he observed: 'The litigation suggests that Euro Bank Corporation was supposed to receive an unspecified benefit from the Cayman government as consideration for this payment. What was this benefit?...If the Cayman Islands truly wants to become a more transparent jurisdiction, as it has indicated, this secretive payment to the government would be as good a place as any to start.'

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