BERMUDA'S name should not be tainted by "the wrong-doings of rogue companies and cavalier executives", according to Finance Minister Paula Cox.

And the Wall Street Journal was unfair to pin the blame on the island for the Refco collapse and the loss of billions of dollars of investors' money, the Minister added.

The Finance Ministry also revealed that earlier this year it appointed an inspector to investigate the affairs of Refco's Bermuda unit, Refco Capital Markets.

Last week, the Journal embarrassed the island with a front-page story headlined: "Behind Big Wall Street Failure: An Unregulated Bermuda Unit".

The paper claimed that "unusual business practices" in the "unregulated" Bermuda-domiciled Refco Capital Markets, were behind the futures dealing giant's rapid growth and sudden collapse.

When Refco and 23 affiliates filed for bankruptcy on October 17 last year, it became the 15th-biggest bankruptcy in US history.

The rise and fall of Refco happened in the space of two months after the group had gone public on the New York Stock Exchange (NYSE).

In response to our questions on the Journal story, the Finance Ministry issued a statement suggesting that the international business press frequently treated offshore financial centres differently from others.

"It is very seldom that mainstream business media are fair to international financial centres in their reporting," Ms Cox's statement said.

"A number of their reporters are quick to associate the wrong-doings of rogue companies and cavalier executives with the name of the jurisdiction.

"This is seldom the case with similar revelations of wrongdoing by companies in onshore locales; for example the Vienna bank that assisted Refco in hiding losses of $1.3 billion was not held out as a negative reflection on Vienna or Austria."

That Austrian bank was Bagwag and details of how the bank worked with Refco in a scheme to hide hundreds of millions of dollars of debt have been emerging in recent months in federal bankruptcy court hearings in Manhattan.

Refco went public on August 11 last year at $22 a share. When the firm disclosed transactions that could have been used to hide debt on October 10, its share price plummeted by 45 per cent. The next day US federal authorities arrested Refco chief executive officer Phillip R. Bennett (pictured)on fraud charges. Within days, client accounts were frozen and Refco sought bankruptcy protection.

Mr. Bennett pleaded not guilty to federal fraud charges in November and is awaiting trial.

It was one of the largest and swiftest failures in recent Wall Street history.

The Ministry of Finance stressed that the Refco Group was listed on the NYSE.

"It is instructive to note that the entire Refco Group was listed on the New York Stock Exchange but the WSJ seems to have omitted this key point in its story," the Ministry's statement said.

"In Bermuda, companies that intend to list on the Bermuda Stock Exchange (BSX) must meet strict disclosure requirements regarding the nature of their business and any other matters which could have a material impact on the operations before they can be approved for listing.

"In addition, in order to become a trading member of the BSX, an applicant must satisfy a fit and proper test. This test includes but is not limited to a review of the knowledge and skill and experience of the senior executives and other staff a prospective applicant.

"In addition, members are required to comply with a Code of Conduct and other trading regulations. We would expect that other exchanges are regulated to an equivalent standard."

The Journal claimed many of Refco's problems occurred because of unusual business practices at the "unregulated Bermuda unit", which was run entirely by Refco's New York-based staff. The Ministry of Finance outlined why Refco Capital Markets was permitted to an exemption from licensing under Bermuda law.

"The Investment Business (Exemptions) Order 2004 provides for a number of exemptions from licensing depending on investment activities and the general makeup of an entity's clients," the statement read. "The grounds for exemption from regulation are based on the principle that the business only relates to qualified investors.

"This kind of business is often exempted from regulation in other jurisdictions based on the fact that the investors are sophisticated institutions, well informed about investment practices and can make their own judgments, and Bermuda adopted a similar approach. Refco would be entitled to an exemption under the Investment Business Act 2003.

"As well, the principals of Refco were vetted by the Bermuda Monetary Authority (BMA) as part of the incorporation process before the company could operate in Bermuda. In this regard, the company's principals were vetted to ensure that they are fit and proper. As part of this process, the BMA verifies the background, the experience and the history of the individuals who seek to own the company."

The statement added that Minister Cox had the right to appoint an inspector to investigate the affairs of any Bermuda company and this had been done earlier this year in Refco's case.

Refco applied for Chapter 11 bankruptcy in October last year and court hearings have revealed how the company tried to hide hundreds of millions of dollars worth of debt before its collapse.

The Journal is one of the world's most influential business publications and we asked whether its scathing assessment of Bermuda's involvement in the Refco collapse was seen as a threat to the island's international business future.

"The Ministry of Finance keeps under review any apparent threat to our financial services sector and any threat to Bermuda's reputation as a well-regulated jurisdiction," the Ministry replied.

"In addition, our regulatory structure is kept under constant review to ensure that it stays abreast of trends both in the financial services industry itself and in the development of regulatory processes."

With hundreds of international companies having incorporated in Bermuda, we asked whether the BMA had sufficient resources to deal with its burgeoning regulatory workload.

The Ministry replied: "As a member of the International Organisation of Securities Commissioners (IOSCO) and its related regional body, the Council of Securities Regulators of the Americas (COSRA), the BMA meets international standards in the regulation of investment business.

"The Ministry of Finance is aware that the BMA continually monitors and adjusts its resource endowment in accordance with international best practice and the requirements of Bermuda's financial services sector."