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Major countries such as the United States and the United Kingdom are simply "passing the buck" by blaming Offshore Financial Centers for the global economic crisis and taking steps to close them down.
That is the view of Sir Ronald Sanders, a former High Commissioner to the UK for Antigua and Barbuda and currently a business consultant, specializing in the Caribbean.
"It a curious kind of international democracy that allows rules and punishment to be created by a few – and imposed on the many – simply because the few have the power to do so."
"Lax regulation" by OECD member countries is to blame for the economic mess, yet it is OFCs who are being made to suffer as new legislation targeting them is prepared by the world's biggest countries, Sanders told OffshoreAlert.
"Britain's Prime Minister, Gordon Brown, and the US Senate and Congress have both now shown their intention to close down offshore financial services which they call "tax havens"," he said.
"Speaking on March 4th to the US Congress, Brown asked: "But how much safer would everybody's savings be if the whole world finally came together to outlaw shadow banking systems and outlaw offshore tax havens?"
Implicit in what he said is that so-called "tax havens" are a threat to people's savings even though it is poor banking and investment practices and inefficient regulation in the US and UK in particular that led to the present global financial crisis.
"So, Mr. Brown has passed the buck and has fingered jurisdictions that offer offshore financial services as the culprits.
"Equally, as I predicted some weeks ago, the "Stop the Tax Havens Abuse Act" introduced in the US Senate two years ago by then Senator Barack Obama and Senator Carl Levin, was reintroduced in the US Congress the day before Brown made his statement.
"I had hoped that the re-introduced Act would have removed the names of countries that were listed as "tax havens". No such luck. Not only did the Act retain all the countries, it added three new very onerous sections for liability. The intention is clear – if banks and other financial institutions in these jurisdictions are going to continue to operate, they will do so only at great expense. Few will be able to afford the additional costs of compliance."
The Caribbean jurisdictions named in the US Act are Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Dominica, Grenada, St Kitts & Nevis, St. Lucia, St Vincent & The Grenadines and Turks and Caicos Islands.
It appeared "irrelevant" to Congress that some of these countries have passed Tax Information Exchange Agreements under which the U. S. can request and obtain information for tax investigations, stated Sanders.
If the Stop Tax Haven abuse Act is passed in its present form, the U. S. Treasury Secretary will be given "extreme powers" to act against jurisdictions that he deems to have "ineffective information exchange practices", explained Sanders.
Sanders also criticized the fact that, when the G20 countries meet in London on April 2 to discuss so-called "tax havens", the "discussion and its conclusions will take place without the benefit of any of the affected jurisdictions at the table".
"It a curious kind of international democracy that allows rules and punishment to be created by a few – and imposed on the many – simply because the few have the power to do so," said Sanders.
"It is even worse that the few are yet to admit that it is lax supervision and regulation in their own jurisdictions that has caused the present global financial crisis. They are also yet to demonstrate that they are taking effective action within their own systems to correct and improve their deficiencies."
Sanders acknowledged that, in the light of recent financial collapses such as the CLICO insurance and financial services group in Trinidad and Tobago and the empire of Allen Stanford in Antigua, there was clearly a need to "tighten up rules for banks" in the Caribbean. However, the regulatory systems in the U. S. and the UK were also "sorely in need of improvement".
Sanders criticized Caribbean jurisdictions for "making no attempt to meet to devise an appropriate response" to what will take place when the G20 meets in April to discuss OFCs.
"The countries of the Caribbean Community and Common Market have no excuse for not doing so, and if there any among them who feel that they are capable of stopping this juggernaut alone, they should think again," he stated. "Caribbean countries should act on this now and together or see their offshore financial services wither."
Sanders will outline his vision of the role that Offshore Financial Centers can play in the modern global economy in a speech at the 7th Annual OffshoreAlert Financial Due Diligence Conference in Miami Beach on April 27.
In a special session on 'The Politics of Offshore', Sanders will speak immediately after an address by Jeffrey Owens, who is the Director of the Center for Tax Policy and Administration at the OECD in France.
Sir Ronald Sanders (pictured left), a former Caribbean diplomat, now corporate executive, is generally considered to be an expert on the role of small states in the global community. At the 7th Annual OffshoreAlert Financial Due Diligence Conference in Miami Beach, Sanders will outline his vision of the role that Offshore Financial Centers can play in the modern global economy during a special Keynote Address on 'The Politics of Offshore'.
Sanders will speak immediately after an address by Jeffrey Owens, who is the Director of the Center for Tax Policy and Administration at the OECD in France.
Attend this and 27 other unique sessions presented by industry experts from the world's top organizations at the 7th Annual OffshoreAlert Financial Due Diligence Conference, where new practitioners and experienced professionals will find opportunities to enhance their knowledge, expand capabilities and learn new skills.
