Last week I used my column to support Brian Duperreault's call for tougher entry requirements for companies wishing to incorporate in Bermuda. The feedback was most interesting, some supporting my column while others were vehemently against it. Whenever I get feedback like that, I am grateful because it means that people are not only reading my column but they are also taking the time to discuss it and that's what writing a column is all about - provoking debate that may not have happened otherwise.

I was about to send in my column when I opened the Business section of The Royal Gazette on Thursday, September 19, 2002. Much to my delight there was a two-page spread of dialogue between a cross section of our business community voicing their opinions on corporate inversions. If nothing else, Duperreault's comments have forced us to publicly debate this delicate subject.

A topic as sensitive as taxation is one that should provoke debate because it is one aspect of the business world that could fundamentally change the way business is done offshore. A slight change in tax reporting or scrutiny could make or break offshore jurisdictions overnight. Bermuda is particularly vulnerable to the way we are perceived overseas because the major contributor to our GNP is International Business. And the country where most of the companies come from that help to make up international business is the US. And that's why I chose to enter the foray.

I do agree with several people who say that corporate inversions are legal. They are legal but they are not in the best interests of Bermuda and for that matter any offshore jurisdiction at the present moment. And because the sentiment has changed about corporate inversions, Bermuda must be seen to be doing something to minimise the damaging effects corporate inversions could have in the long term on our economy.

What's interesting about the current tax debate in the US is that Bermuda is innocently being swept up in the political agendas of some very powerful US politicians because of the looming November elections there, the threat of war, corporate scandals, bankruptcies, patriotism, and the delicate state of the economy. Against all these factors besieging the US, Bermuda appears to be too successful and when you are successful, everyone wants to crush you because that makes them feel better when they are not doing as well as you are.

Both Jeff Conyers and Robert Calderon are correct in saying that in the long term putting restrictions on companies looking to incorporate here are not in the best interests of the business community as a whole. The question that the business community and the government of our country need to start debating right now is how do we deal with the shadow that has been cast over Bermuda as a result of the highly publicised Stanley Works debacle?

I don't believe standing by and letting our name be dragged through the mud will help us in the long run. We must be seen to be working with the US government or at least establishing good working relationships with those in the US who can help us make it through this tough time.

A large proportion of our corporate infrastructure is built on the foundation of the numerous large US corporations that have selected Bermuda as their favoured domicile. Arguing that corporate inversions are legal is legitimate but at the end of the day where does that leave us if no other large corporations want to set up here for fear they will be labelled as tax dodgers and unpatriotic.

The world's media has jumped on the Bermuda bashing bandwagon. And if we are doing nothing to change the way companies are allowed to incorporate on the island, does that then give other jurisdictions the right to continue to label us a tax haven? Whether we are willing to accept it or not, by allowing corporate inversions to continue on the island, we are still considered to be a tax haven.

We need to do something that will help take the heat off of us. I had high hopes that when Stanley Works decided not to incorporate here, the media and the US politicians would lose interest in us. Unfortunately, they have not. The press is constantly printing stories about the "tax haven Bermuda". There is no mention of other offshore jurisdictions for the simple reason that Bermuda is perceived as doing exceedingly well despite the devastating effects of 9-11. And recently, the US passed a law, which states that any company that incorporates in an offshore domicile stands the risk of losing government contracts.

Several large insurance companies incorporated here after 9-11. When Tyco International, Global Crossing and Enron fell, all three of these companies had shell companies here. While Bermuda has managed to attract a lot of capital because of our progressive regulatory environment and accessibility, our image is being tainted by huge corporate scandals. When the scandals hit our shores we say the US cannot point their finger at us because the entities truly did not operate here. They were just a post office box.

How much longer will we be able to use this argument instead of taking steps now to protect our image against the bad press coming from shell companies? Despite their minimal presence here, we are criticised when they fail. As recently as September 17, 2002, Forbes magazine ran an article called Tyco and The Bermuda Triangle.

My opinion through this whole debate is that Bermuda needs to accept the goal posts have been moved once again. Whereas corporate inversions are legal and the US is probably guilty of using the same tactics elsewhere, they are the big superpower and have many resources, we on the other hand do not. So we have to do something. And the something rests somewhere between the following two questions. Are we willing to sit back and wonder what happened to the large corporations that used to incorporate here who suddenly stopped because that they did not want their names tainted with the Bermuda tax haven brush? Or are we going to start working on a strategy now to minimise the impact of this negative press on our economy?

What I am most concerned about is the future of our economy. I have a vested interest because this is my home and the home of my family. I don't think knee jerk reactions or burying our heads in the sand or saying it's the big bad US bullying us again will benefit any of us. We need to get the powers that be in our country together to work on a solution to improving our image worldwide.

Bermuda is playing a much larger role in the global marketplace and we must make sure we protect our image if we want to continue.

Cathy Duffy is a Chartered Property Casualty Underwriter (CPCU) and is now a freelance writer. She is a former executive of Zurich Global Energy and has 15 years experience in the insurance industry. She writes on insurance issues in The Royal Gazette every Monday. Feedback crduffy@cwbda.bm