Caymans Exposed: Tax Havens Lucrative for Big Finance, Leave Only Crumbs for Locals

Yves here. Being a tax haven isn’t all it is cracked up to be.

Originally published at Tax Justice Network

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 Locals begin to believe the relentless spin, and dismiss criticism by outsiders as ill-informed and outdated.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.

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  1. Paul Tioxon

    The peculiarities of the British Crown in holding onto even tiniest morsel of geo-political power, of faded glory and dead and buried empire, is seen in the America’s from The Malvinas Islands to the last sandbars of the Carribean still flying the Union Jack. There is always a crying need for territorial control, of at least enough for a small set of laws to enable some feature of capitalism to flourish beyond the reach of national jurisdictions. The Caymans is an oversea territory of the UK. So, in the absence of war to break away from the mother country, these colonials have no nationality to claim as a basis to shield them from their miserable treatment as 2nd class citizens. It’s history indicates no inhabitants until various Europeans landed there for one reason or another.

    It is not surprising that far away and out of sight, illegal, dubious, shady and quasi-demonic goings on can be given the patina of sunny beaches, clear blue waters and sky to go with. And of course the clean services industry. The terrible reputation as an off shore tax haven and proposals to curtail from the the US Government , is more of a problem for the bankers than the current citizens could ever muster, considering their powerless to govern, enact laws or overturn tax policies which enable the transnational capital flows freedom from any nations laws. Their powerlessness is magnified during the threats of retaliation against local newspapers that dare to report on or take an editorial stand against the world banking elite that have set up shop in their home island. If anything, the destruction of the island during devastating hurricanes may the only relief from exploitation. In order to be saved, it may have to be destroyed, by nature. And thanks to the greed of modern energy consumption this may come to pass. The power of Carribean storms have only gotten worse and will continue on that trend for the unfortunate islanders of the Cayman who only wish to live out their lives without having to live in the shadow of a banking industry that uses their haven position to damage the lives of so many other people around the world.

  2. steelhead23

    If you paddle past the disgust, you will find an island of irony. At one time, these islands were inhabited by marine crocodiles (caymana), but apparently they were tasty and were hunted to extinction by the Brits. Same for the turtles. Today, the Cayman government is the caymana, devouring freedom in the name of Fleet Street. A little later in its history, the island was a hiding place for pirates and privateers that menaced merchants (undoubtedly including slavers). There’s a bit of irony there as well as Grand Cayman privateers continue to rob the globe’s citizens of taxes. Let us all remember that the boot on our throats is weighted by lucre – lucre secreted away by the kings of finance and unavailable to improve our lives and economy. The government of Grand Cayman Island is such an obvious criminal enterprise that it is remarkable that the globe’s governments continue to allow their citizens to do business with it.

    Hey, what about that Monroe Doctrine?

    The Monroe Doctrine was a U.S. foreign policy regarding European countries in 1823. It stated that further efforts by European nations to colonize land or interfere with states in North or South America would be viewed as acts of aggression, requiring U.S. intervention.(Wiki).

    Isn’t conspiring to defraud the U.S. and its member states of revenue “interference”? It sure is. Forget Iraq, Iran, Pakistan, Syria, let’s liberate Grand Cayman Island!

  3. Oregoncharles

    The Caymans were originally settled by pirates. This might be why they still fly the Union Jack.

    Beautiful beaches and reefs – I’ve been there, and not for banking purposes. A regular Miami Beach at one end.

    1. ambrit

      “A regular Miami Beach at one end.”
      Having ‘grown up’ in the American Miami Beach, I can state with certitude that there is nothing “regular” about the place. If that’s the ‘civilization’ the Grand Caymans are ‘blessed’ with, the rest is very understandable.

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