AS Bermuda prepares to lobby the US Congress to protect our tax status, three of the island's foremost business leaders have called on the PLP leadership to address their "Jekyll and Hyde" attitude to our international business sector.

Grant Gibbons, Bob Richards and Peter Everson all spoke to the Mid-Ocean News this week, explaining that the Premier's meetings with business leaders are merely "salve on the wound", and that in order to save Bermuda from a mass exodus of international companies, the Government must obey the old adage: "The customer is always right".

They spoke on the heels of news this week that Dr. Brown has convened a summit of business leaders to create a strategy for lobbying Washington in the face of threats to close our 'tax loophole'. Participants include Association of Bermuda International Companies chairman David Ezekiel, Bank of Bermuda CEO Phillip Butterfield and a host of local and US-based executives, grouped together for the first time in hopes of advancing the island's business agenda.

Dr. Gibbons, one-time Minister of Finance and current deputy chairman of the Colonial Group, believes that while such meetings are better than the alternative, Government must first address its term limit policies if it truly wishes to protect our international business sector.

"We can't take international business for granted," he said.

"It's not just putting a couple of people together for meetings. Government has had a Jekyll and Hyde approach. A couple of meetings are better than nothing, but it is not making up for the uncertainty we're facing, or for their unwelcoming stance."

Shadow Finance Minister Mr. Richards agreed, adding that the Government has "fostered a dangerous 'us' and 'them' perception of Bermudians versus foreign workers".

Mr. Richards believes ACE Ltd.'s recent decision to redomicile in Switzerland should have sounded alarm bells for the Government long before US President-elect Barack Obama's tax threats caused them to act in Bermuda's defense.

"If the leading company in an industry makes such a move, it's a statement of no confidence in Bermuda and I have no doubt we should look at it that way," he said.

"People put salve on the wound, but in the cold light of day we have to see it that way. We have to salvage what's left – 'we' being the Bermuda Government. It's very simple. The main bone of contention is the term limit policy, because term limits strike at the heart of intellectual capital. You cannot shuttle these people in and out like pawns on a chessboard.

"You are saying to the world that intellectual capital doesn't matter, and if it doesn't matter, why come to Bermuda? The Government's term limits policy works against the efforts of the Bermuda Monetary Authority and Paula Cox, which have been good. But if intellectual capital doesn't count, the whole structure comes tumbling down and we become some dot on the map using brass plates to dodge taxes."

Mr. Everson, former Chamber of Commerce president and consultant at investment house Schroders Bermuda, told the Mid-Ocean News that the Government's negative rhetoric against foreign workers has caused "an erosion of the attraction of Bermuda as a domicile".

"To some extent, over previous years, some politicians have tried to cast international business in a bad light to appeal to certain voters," Mr. Everson said.

"Politics is politics; this happens globally. The fact is, people working in international business are regular people like everyone else – they are Bermudians, spouses of Bermudians, and foreign workers. They're not machines; they have feelings. If there is a continuous background of negative comment, it has impact.

"Leadership in international business is generally non-Bermudian, so they feel obliged to keep out of domestic politics. Therefore, anything said largely goes unchallenged. Opposition politicians may voice counterviews, but it is not counteracted directly. The Government therefore has people believing it is true, as it is not rebutted. All of this combined has led to an erosion of the attraction of Bermuda as a domicile to locate to."

Dr. Gibbons agreed, elaborating on comments he made in the Houses of Parliament last Friday, urging Bermuda to heed the warnings of two formerly thriving international business domiciles: the Bahamas and Hong Kong.

"There have been a number of different events over time that should be lessons for Bermuda," he said, citing the widespread exodus of companies and capital from the Bahamas in the 1970s as a warning sign.

In the Bahamas, in his now infamous 'bend or break' speech in 1969, former leader Lynden Pindling claimed an influx of international business had caused an "unbending social order, which, if it now refused to bend, must be broken".

"Capital is so sensitive," Dr. Gibbons explained.

"Companies in the Bahamas sensed they were unwelcome, so there was a huge exodus. This should be a lesson for Bermuda. The irony is that at the time, it was us – and the Caymans – that benefited from that uncertainty and unwelcomeness in the Bahamas! You've got to remember the past and remember how we got business, and why these companies left other places."

Indeed, in an opinion piece in the Bahamian newspaper Freeport News as recently as September 2008, the Pindling speech is blamed for bringing the islands' growth to "a virtual halt" as companies fled the unwelcoming Progressive Liberal Party's policies, resulting in "economic stagnation".

Dr. Gibbons also described the 1997 flight of international companies from Hong Kong as a sign that capital is highly mobile.

"In Hong Kong, the business community was concerned about reverting to Chinese rule in the 1990s," he said.

"Financial services giant Jardine Matheson looked everywhere to move its holding companies, and chose Bermuda on the basis of British law, stability and an attractive environment.

"After Jardine Matheson, Bermuda was considered smart money. There was a general exodus of companies redomiciling from Hong Kong to Bermuda – about 50 per cent of companies on the Hong Kong stock exchange. This goes to show that capital is very mobile. There is usually a flight to safety. There are some issues that are out of our control, like our tax issues under the Obama administration, but other issues are definitely in our control, like how welcome international business feels in Bermuda."

Mr. Richards also cited Jardine Matheson's flight from Hong Kong as a lesson to Bermuda, adding that the recent decisions of ACE Ltd., Foster Wheeler, Tyco International and Weatherford International to relocate lend credence to a "herd instinct" in the international business sector.

"Companies, markets and people very often have a herd instinct," he said.

"If the 'alpha', the leader of the pack, jumps overboard, the rest will follow. Jardine Matheson was the 'alpha' in Hong Kong, and when they came, an avalanche of Hong Kong companies followed suit. In Bermuda, the 'alpha' is ACE. They've jumped ship. When that happened, it was a very worrying thing. I've heard anecdotally from lawyers that once that happened, other companies sought advice on how to follow that course, in Switzerland in particular."

Dr. Gibbons urged Bermudians to remember economist Professor Brian Archer's early 2000s report on the disproportionately huge influence of a tiny number of companies on our economy.

"The issue we must keep in mind is that the physical presence of just 3 per cent of companies here makes an 80 per cent contribution to our economy," said Dr. Gibbons.

"These are companies like XL, ACE, Renaissance Re, Partners Re – they're the most sensitive to the issue of welcomeness, tax changes and our environment. While clearly some of our international companies have made the move to Switzerland in terms of domicile, they still have a physical presence. But they're halfway out the door. Whether they maintain a physical presence here or shift out depends on internal factors: work permits, term limits, social fabric, crime, education and welcomeness."

Mr. Richards believes the Government should reconsider its outdated term limits policy, created over a decade ago to counter an influx of foreign workers to the island.

"It was a different world in 1998," he said.

"They didn't take intellectual capital into account. These policies are also based on assumptions that the world was clamoring to come to Bermuda - a narcissistic assumption. Perhaps it seemed that way at the time, but not now! Dr. Brown has not treated international business people like clients or customers.

"The customer is always right! If they're complaining, you better pay attention! The Government has fostered a dangerous 'us and them' perception – Bermudians versus foreign executives. These foreign business leaders create jobs for Bermudians! Bermudians don't seem to get that. They're not taking away jobs, business and income from Bermudians.

"The whole notion of 'getting rid of foreign workers' is wrong. Government uses this rhetoric for political purposes more than anything. International workers can't vote? They can vote with their feet! Many of these people are creating wealth for the island.

"If we send people packing, Bermudians working for those companies – not to mention businesses supported by the big companies, and the service industries – will be out of luck."