IFCs need unified voice’
International financial centres will not survive unless they join forces to create a united body to articulate the benefits they provide the global economy.
That is the view of Professor Gilbert Norris, who gave an outspoken and entertaining speech on the first day of the Society of Trust and Estates Practitioners (STEP) Caribbean Conference at the Fairmont Southampton yesterday.
Mr Norris, the chief economist of the Caribbean Basin Review in Sao Paulo and author of the book ‘Shifting Ground: The G20 Pogrom against International Financial Centres’, told delegates that smaller countries were not being treated equally in international law.
IFCs had made a great contribution to global financial stability, but this message was not getting across to larger countries because there was no organisation giving IFCs a unified voice, he said.
“It’s time for IFCs to grow up and really be part of the global financial system,” Mr Norris said.”What international organisations can we influence? You can’t play in this game at this level and have no institutional and tactical ground beneath you. If we don’t have that, we cannot survive. What I believe IFCs need is an international body, founded in law.”
As Business Development and Tourism Minister Patrice Minors looked on, Mr Norris said that the tax information exchange agreements (TIEAs) that Bermuda and other IFCs had been signing at a rapid rate at the behest of the Organisation for Economic Cooperation and Development (OECD) were unconstitutional.
“If you are a common law jurisdiction, then you have constitutional confidentiality that can’t be lightly disapplied,” Mr Norris said.
TIEAs trampled on fundamental confidentiality rights including legal and professional privilege and privacy, he added.
“I believe that organisations like the OECD, the IRS and EU are not only behaving inappropriately, but also illegally,” Mr Norris told delegates. “They have effectively forced a few small jurisdictions to obey a number of large jurisdictions.”
The measures they had imposed on IFCs were not being enforced in larger countries, he said, even though international law was supposed to view all countries equally.
He made the point that neither the OECD, nor the IRS (US tax authority the Internal Revenue Service) had lawmaking powers and that the EU (European Union) had no lawmaking authority outside the EU.
While larger countries had frequently made the case that the rule of law was the key to fairness and prosperity, adherence to the law should mean everyone being treated equally, he argued.
IFCs effectively helped to finance US household and credit card debit and supported the viability of the American economy, he said.
“In China, ten years ago, 85 percent of people were below the poverty line,” Mr Norris said. “Today it’s just 15 percent. The largest facilitator of investment in China is the Cayman Islands, followed the British Virgin Islands.”
By helping to open up investment in China, IFCs had supported Chinese growth and thereby contributed to international financial stability.
Over the coming years, Mr Norris expects economic powers to develop preferences for certain IFCs. “I can see Brazil using Panama, India using Mauritius, China using Macau and the US using whoever they want,” he said. “The UK will destroy their financial centres and then discover that they were the engines that kept things going.”
IFCs not aligned to any major power would likely disappear, he added.
The second speaker was American attorney Richard Horowitz, who concentrates in corporate, international, and security matters and is a recognised expert in the areas of fraud, corporate intelligence, and international investigations.
Talking on the US attitude toward IFCs, he said there were two major issues corporate loopholes and money laundering.
His presentation included evidence that US corporations avoiding taxes through transfer pricing and not repatriating profits earned overseas was not a new occurrence. Government reports had been describing the self-same phenomena as far back as the 1920s. “The loopholes are all about politics,” Mr Horowitz said. “Transfer pricing has been going on for decades. Why does the US allow it? Because the politicians allow it. Law is the highest form of politics.”
Transfer pricing allows companies to establish ownership of a patent in a low-tax jurisdiction, so that the profits generated by the product are channelled there, rather than where the profits are earned.
This is a common practice of drug companies and others, including General Electric. Mr Horowitz said this was not illegal and transfer-pricing arrangements were routinely pre-approved by the IRS.
He showed video clips from news programmes that illustrated American attitudes to IFCs, including US President Barack Obama attacking the Cayman Islands and in particular the “tax scam” of 18,000 companies being based in one building, Ugland House in George Town. However, Cayman’s detractors had struggled to find examples of those companies acting illegally, he added.
The conference, which has attracted hundreds of lawyers and investment professionals from around the Caribbean region, continues today.
Richardson takes on Corbishley over comments
Police officer suspended
Departing Symonds marks 40 years at BHB
Elbow Beach to stay shut until 2021
Hospital in good shape for virus second wave
Charity launches campaign to protect girls
A guiding light for children
Covid-19 testing an issue in US
Argus buy-up a ‘huge conflict’
Body found at industrial site
‘Filthy beast’ recalls unusual childhood
Offers made for parts of AS Cooper
Man accused of 2018 unlawful killing
Stabbed man dropped off at hospital
Take Our Poll