Bermuda has been cast in the political spotlight through no fault of its own, according to a leading political economist.

Dr. Daniel Mitchell, an expert on tax policy and the McKenna senior fellow in political economy at Washington-area think tank The Heritage Foundation, said the Island had attracted attention - specifically in the corporate inversion debate - for its success as an international business jurisdiction.

But the political economist also warned that the Island needed to have its voice heard in political arenas if it was to protect itself against regulations and laws that would adversely affect the Island's business prospects.

Beyond the heated corporate inversion issue, Dr. Mitchell said there was also mounting pressure to limit offshore hedge fund activity.

Dr. Mitchell was on the Island this week along with Andrew Quinlan, president and CEO of citizens' lobby the Center for Freedom and Prosperity (CFP). The two were in Bermuda as guest speakers for the Bermuda International Business Association's (BIBA) annual general meeting yesterday.

Mr. Quinlan said CFP, founded two years ago as a citizens' lobby, now had some 4,000 supporters and was funded by concerned citizens across the world.

Dr. Mitchell and Mr. Quinlan, as staunch proponents of market liberalisation, have been actively lobbying against anti-inversion legislation on Capitol Hill. And while in Bermuda both took time out to meet with members of the business community on the corporate inversion issue and more.

The corporate inversion issue - the process in which a corporation moves offshore to cut its tax level, especially in relation to foreign-earned income - has been a hot topic in Washington this year. And Bermuda has been tied to that debate as the jurisdiction of choice for a wave of corporate inversion companies.

Of the business leaders they had met with on the Island, Dr. Mitchell said: "There has been a definite consensus that Bermuda has done nothing wrong and that the Island is getting attacked through no fault of its own.

"Instead it is US tax law driving companies to invert," he said.

Dr. Mitchell continued: "Bermuda has nothing to be ashamed of.

"Stand up and be proud and say companies are coming here because of our tax policy and your bad policy," he said.

But he added that, based on his discussions while on the Island, there were diverging views on how Bermuda could best deal with the unwelcome attention it was getting in the corporate inversion debate.

"There is probably no good answer: How are you to deal with people who are merely trying to score political points," he said, in reference to a handful of American lawmakers that filed numerous drafts of legislation this year designed to close down the corporate inversion process for US companies.

But Dr. Mitchell said Bermuda should look at the ways it could help influence policy. "You need to get into the arena," he said.

He added that a large CFP-led coalition was working to protect free market competition. And he cited the work of the coalition as being crucial as some of the supporters of anti-inversion legislation this year, were sure "to come back with more force" on the issue in the new year.

"There is no question that we were surprisingly successful on the inversion issue (this year). But for the most part we were playing defence - but the left is going to fan the flames and keep the issue alive," he said.

And Dr. Mitchell said the locals they had met - whom he cited as knowledgeable and not needing much briefing on the issues - were concerned with more than the corporate inversion issue, but had also asked questions on broader tax issues such as OECD initiatives, hedge fund legislation, insurance industry-specific developments and the appointment of new economic powers - the secretary of the treasury and new SEC head.

Although Dr. Mitchell and Mr. Quinlan said their policies were designed to be in the best interest of America and Americans, that jurisdictional tax competition could also be in the best interest of the Island. "If the US wins its (tax) battles...countries like Bahamas and Bermuda win," he said.

Dr. Mitchell said that beyond the threat of anti-inversion legislation, if OECD and EU initiatives - which he said favoured "explicit harmonisation" - were to succeed it would be the "kiss of death" for Bermuda's economy.

And another concern for the Island he said was the recent push to put greater limits on hedge fund investing.

Dr. Mitchell added that the fact that regulations could be put in place by the US Securities and Exchange Commission (SEC), which does not require Congressional approval, should be of concern to the Island.

Dr. Mitchell and Mr. Quinlan spoke to an audience of about 120 business people at yesterday's BIBA meeting. Afterwards BIBA chair Jeff Conyers told The Royal Gazette he liked what Dr. Mitchell and Andrew Quinlan had said: "It was good to hear someone who thinks vaguely along the same lines that we seem to think...," he said.

But Mr. Conyers recognised that Dr. Mitchell and Mr. Quinlan's views would not be held by all in Washington. "Despite the good points they made it would not appear that they are the majority in Washington, but more a fringe group," he said.

It is understood that Dr. Mitchell and Mr. Quinlan's attempts to meet with Bermuda Government officials were not successful. But both Finance Minister Eugene Cox and financial secretary Donald Scott were present at the BIBA AGM yesterday.

Opposition Leader Dr. Grant Gibbons was also in attendance and said it was important to have active groups like the Center for Freedom and Prosperity as it brought some balance to the issues.

But he stressed that Bermuda should not fall into the trap of thinking its success on the international business front could be solely attributed to its tax structure. "We are not here (doing well) just because of tax competition. Many international companies - and especially insurance - have come here because of our legislative and supervisory framework.

"Bermuda is not purely in business for tax reasons. And if we were, over time that would not be sustainable," he said.