Update: this post is now on Naked Capitalism.
Update 2: cop a couple of interesting comments under this blog, including further reading.
Not long after a newspaper editor critical of local financial sector corruption fled the Cayman Islands, followed by apparent “tombstones” death threats, another brave journalist with the Cayman Reporter has published a fiery editorial, which rings true to many of the things we have said in the past:
“The financial industry including the regulators in the Cayman Islands has a parallel universe of their own standards and beliefs. One where it does not matter what the facts are, they say and believe is the surreal reality.”
This always tends to be the case in the goldfish-bowl politics of small tax havens. Local media gets captured, dissenting voices retreat, and the voice of the offshore financial sector becomes all-encompassing (read The Life Offshore chapter here for more details.) Locals begin to believe the relentless spin, and dismiss criticism by outsiders as ill-informed and outdated. It’s a far more comfortable position to be in, than a position where one realises that so much of what’s around you is crooked, and so many of your friends are up to their necks in it. What is more, finance requires the suppression of bolshy democracy, for fear that easily-relocated “business” flees to other shores. But as these recent news articles in Cayman show, refreshing exceptions do appear.
Generally, however, a Theatre of Probity is acted out, and the same message is repeated ad nauseam: ‘we are a clean, co-operative, transparent international financial centre, and the people who attack us are motivated by the politics of envy.’
The Cayman Reporter denounces the Theatre:
“The Cayman Islands Monetary Authority and the Cayman Islands Financial Services needs to take another look at their strongly worded statements in the local media about their seriousness related to anti-laundering regime etc. etc.”
And the article provides a whole smorgasbord of stories about rotten practices run out of Cayman. We have not seen this level of frankness from Cayman media for a long time. And there’s more to this blistering article, which is worth quoting at length:
“Since the 1960’s to date, the financial industry that exists in the Cayman Islands is a choice made by the UK for the people of the Cayman Islands. The laws that govern it are the UK laws, the leadership that runs the Cayman Islands financial industry is the UKs, and the proceeds most definitely benefit the UK banking system the most. Which part of this factual statement is not known to the powers that be and their mouth piece media? Just like the $1 a day salary workers of the DRC, the majority of Caymanians are in the same category. Victims of the dark choices made for them by the FCO and the UK and supported by selected few from local population who get some crumbs from the pie.
This is so reminiscent of what we wrote in our original Finance Curse paper, in a section that questions the extent to which per-capita wealth rankings (which tend to put tax havens quite high up) reflect benefits actually flowing to locals:
“Consider a small finance-dependent jurisdiction such as the Cayman Islands. A very large share of the value added being measured is generated by the activities of skilled (typically white, male) expatriates imported from overseas. . . . Whether importing foreigners who are denied full citizenship constitutes ‘national development’ is a matter for debate. The benefits for established indigenous people are typically obtained substantially through trickle-down effects and “indigenisation” policies for foreign businesses, which are invariably contentious.”
Back to the Cayman Reporter:
The so-called Cayman financial industry mess that is factually proven and believed to be true is created, managed, enjoyed and protected by the UK and the FCO alone. Caymanians are as much a victim of it as any other nation in the world. Dishing out a few crumbs in the shape of some low and mid-level jobs, feel good financial donations and puffed up false pride with hollow-slogans of, ‘fifth largest’ financial centre does not mitigate the injustice perpetrated in the shape of identity disgrace as a corrupt jurisdiction, tax haven.
The constant bashing of Caymanians by the local main stream media in biased editorials and the local political leaders who are rattling out the script of the financial industry lobbyist constantly confuse and mix the two very different words in the English language, ‘entitled’ and ‘entitlement’.
The FCO and its cronies are reminded that the people of these islands are waking up to the reality that has been kept masked under many shrouds for decades.
The indigenous people of these Islands are ‘entitled’ to their freedom, their right of self-determination to choose an honorable socioeconomic system that brings laurels and social-justice to Caymanians and not the colonial puppet master who now hides behind the title of the British Common Wealth.
The forced colonial ‘entitlement’ of the colonial master and their cronies in the Cayman Islands must end.”
We couldn’t have said it better ourselves. And well done, that brave reporter.