One-sided rules will ultimately ruin Bermuda
June 12, 2014
Readers in Bermuda and those taking an interest in Bermuda's affairs, know well that Bermuda cannot be reduced to the description ascribed to it by Mr Bill Maher last Friday night on his HBO show: “Real Time”.
Mr Maher's exact words were: “I read this week the paper Citizens for Tax Justice pointed out that American companies have $94 billion in profits in Bermuda, which is interesting because the Gross Domestic Product (GDP) of Bermuda is $6 billion, which means the people of Bermuda have spent 15 times more than they make on American products.”
Mr Maher then delivered his punchline describing Bermuda, cryptically and comically as: “a tax loophole masquerading as a country”.
Officials in Bermuda have responded — as evidenced in an article by Raymond Hainey — to dismiss Mr Maher's comments, alternatively as a ‘rant' and as proof of a failure by Mr Maher to be or be made aware of Bermuda's insurance industry's contribution to the well-being of Americans.
Having worked in the nexus between Caribbean Financial Centres and the international (alphabet soup) of organisations, which have forced their rules upon small post-colonial financial centres — even after onshore centres nearly destroyed the global economy for the 10th time in less than 100 years — I understand the frustration of Bermudian officials, who must watch (or listen) to their hard work, not to mention hard cash, being undone by uninformed comments from someone with a global media platform.
I hasten to add, however, that merely taking the responses at face value, there is a thinking — which I have cautioned against — which seems to drive them. First, Mr Maher has no responsibility, nor need to anticipate any which Bermuda or any Caribbean financial centre can impose on him to be responsible. Second, he can make Bermuda's reputational destruction a project, each show attacking Bermuda — the home of my maternal ancestors (Halls, via Turks and Caicos) — without fear of a response equal to the breath or dissemination of his accusations.
Mr David Cash of Bermuda's Business Development Agency (BDA) gave some wonderful facts, all accurate, concerning Bermuda's proactive and progressive history of cooperation with the United States. Lovely. But it is meaningless and reveals a misconception of what we are up against.
I was honoured to have been selected twice as the Hamilton Lecturer at STEP conferences in Bermuda, 2001 and 2011. During the first lecture, I explained that the onslaught against the financial centres was not about taxes, but rather, “ ... these are the first eddies of the economic and political philosophy of the future”.
I explained that “the commitment of Caribbean financial centres to their constitutions and their understanding of international affairs would be tested”.
At the second lecture, sponsored kindly by HSBC, I explained that “if after 10 years of capitulation masquerading as compliance, financial centres found themselves subjected, still, to lists of various and increasing colours (black, white, grey), then either we are the best most well-regulated financial centres in the world, or the rules we have adopted are feckless, nebulous and utterly bogus”.
When I speak in this way, Caribbean governments have tended to agree privately, then say but we have to comply or face the wrath of larger nations. Bermuda's governments have met with G8 governments, signed agreements, set up committees and changed their laws; permitting deep intrusions into the constitutional privacy of persons resident in or associated with Bermuda.
This makes my own point: If these rules were legally legitimate, they would not require force. If they were fair between the nations imposing them and those upon whom they are imposed, it would not take nearly every single ID you have ever owned to open a bank account in Bermuda, yet a single ID and 15 minutes to open an account in the United States.
Bermuda's officials — as have officials across the Caribbean — have opted to comply, to meet with the OECD, FATF, IMF, EU etc, each demanding different and at times conflicting levels of compliance. And even after such compliances, even unconstitutional ones, and in the midst of a financial crisis owing to corruption in the G8 nations, they gather together to say the problem is financial centres and the goal should be to eliminate the very financial centres which have capitulated to their one- sided rules.
As such, the comments of Mr Maher will continue and grow more ominous ... and the fact that Bermuda has complied over and again, will mean nothing if those comments by media personalities strike a chord. The truth, which Mr Cash enlists to Bermuda's defence, will become meaningless.
What is necessary is that Bermuda must lead by organising with its fellow Caribbean financial centres, together with Singapore, the UAE financial Centres and China (Macau, Hong Kong and Shanghai), to establish — as I also advised in my second Hamilton Lecture — an Organisation of International Financial Centres (OIFC).
The objective of such an organisation, which should be a registered organisation with the United Nations, would be to raise the profile and defend the purpose and importance of financial centres and their role in the global financial system.
Without this, Bermuda — sweet Bermuda — will spend its time hitting out left and right, wasting its limited dollars trying to defend itself, complying with rules, which are a temporary step on the road to the elimination of its economic model as a financial centre.
God Bless Bermuda
Professor Gilbert NMO Morris, FSWGC
Two-time Hamilton Lecturer
Financial Centre Expert