Letter to the Editor
Ministers' Association concernedabout White Paper
Dear Sir,
I have been directed by the CaymanMinisters' Association (CMA) to communicate to you the attachedposition paper relating to the White Paper on Overseas Territories(OTs) originally published in March 1999.
The Association has particular concerns relating to :
* The basis and theory of the partnership proposed
* Citizenship issues
* The international conventions and their implications for Cayman
* The financial implications for the community
These concerns may be summarised as follows:
The Basis and Theory of the Partnership Proposed
The CMA recognises that while the Cayman Islands continue to havemuch to be thankful for in our national life, there is a deep-seatedneed to review principles and improve practices in many areassuch as conflicts of interest, methods of appointment, immigration,enfranchisement and environmental conservation. A 'partnership'between the UK and the Cayman Islands should indeed be understoodto be a resource to be called upon in these areas.
However, the CMA has considerable misgivings about the style andfunctioning of the partnership proposed in the White Paper. Weapprove the statement that the partnership is for progress andprosperity, and that its policy requires the UK "to upholdthe right of the individual territories to determine their ownfuture and to enjoy a high degree of autonomy, while assuringtheir defence and external relations and providing governanceof high quality" (W.P Section 1.9).
But we are concerned that the immediate and very profound effectof this 'partnership' will actually be to impose changes on theCayman Islands community necessitated not at all by such rightsof self-determination and autonomy, but by the need of the UKitself to be seen to be respecting those of its internationalagreements to which the White paper refers or alludes.
In Section 1.9, respect for the UK's international obligationsis married with the right of the individual territories to determinetheir own future by the important three words: "Within thatframework ..." It is made clear that the 'partnership' requiresthe territories' rights to defer to the UK's international obligationsand not the reverse. What kind of modern partnership, indeed,can threaten to impose unwanted social legislation on the Territoriesby Orders in Council? The initial dynamic, therefore, of this'partnership', belying the nature of true partnership, is a stateof compulsion exercised upon the territories as a result of externalforces to which the Cayman Islands do not necessarily assent.The CMA, indeed, has warned that these external forces, beinghumanistic in origin, may well conflict with the longstandingprinciples that undergird the Cayman Islands community.
CITIZENSHIP ISSUES
The White Paper in general links the privileges of being an OverseasTerritory in partnership with the UK with certain obligationsthat have not been assented to by the Ots. However, in the WhitePaper, the offer of British citizenship (with right of abode inthe UK) to British Dependent Territory citizens is made withoutany conditions attached to it such as introducing British taxregimes, making it impossible for an OT to choose Independence,or demanding a reciprocal right for UK citizens to reside in theOTs.
Nevertheless, the question whether a national citizenship canor ought ever be acquired, without any obligations at all, seemsto us to be a valid one. In previous times, when persons bornin the Cayman Islands were automatically British with right ofabode in the UK, other British persons were free to come to residein the Cayman Islands.
In the context of the EU, in which "Overseas Territorieslegislation should comply with the same international obligationsto which Britain is subject, such as the European Convention onHuman Rights and the UN International Covenant on Civil and PoliticalRights" (White Paper Section 4.1), may it not be possiblethat a British, European or international court will in some futurecase determine that the freedom of movement of EU citizens mustextend to the OTs?
Or, at least, that the OTs (or equivalent) of the different EUnations must exercise reciprocity among themselves, since thecitizenship of their inhabitants is as British, French, Dutch,etc. as those of the EU nations and their own ability to residein those nations is unrestricted?
THE INTERNATIONAL CONVENTIONS AND THEIR IMPLICATIONS FOR CAYMAN
If the preceding question is a valid one, it is one instance ofwhat seems to the CMA to be the general problem that the UK'sinternational obligations will impose almost unforeseeable andindeterminable changes upon the Cayman Islands community, changesthat the UK herself, whatever may be the intention of her government,will be unable to prevent. A number of considerations supportthis scenario, including the following:
(1) The unelected judiciary throughout the UK and Europehas the ability to demand that local laws and regulations do notconflict with the provisions of the Conventions, and such mattersare no longer controlled by elected legislatures. In fact, Parliaments(within the EU and the 'partnerships' forged with the variousOTs) are now obligated to revise laws consistently with the demandsof the Courts. The historic accountability of legislatures totheir electors will in fact be (for the most part, has in factbeen) dissolved.
(2) The White Paper itself only alludes to, but does notdefine the European and UN International Conventions that theUK has (or will have) agreed to, that are relevant to the CaymanIslands. There has been no public discussion on this point, whichwe find most disturbing. It is unreasonable to be asked to entera partnership whose provisions are unknowable.
The CMA considers that it is absolutely essential that the U.K.government states clearly a full list of its international obligations,and what are the provisions of each and every one of these. Wewill then need to ask our Attorney-General to provide an accurateoverview of how the international, European and now British courtshave determined changes to national laws on the basis of theseprovisions.
The CMA is compelled to warn the people of the Cayman Islandsthat they should demand of their representatives a full and accurateknowledge of the provisions of the partnership, which at presentare not public knowledge in the Cayman Islands, and to make plainto them that they will not assent to a partnership whose provisionsare mostly unknown and have not been discussed. In the short termin particular there should be a moratorium on any further changesin social legislation based on the provisions of the presumedpartnership until these matters are fully addressed.
THE FINANCIAL IMPLICATIONS FOR THE COMMUNITY
We would like to express our support for the financial industryhere in the Cayman Islands, particularly in its efforts on behalfof our people to raise the local economy from a "3rd world"to a "1st world" level. We commend the diligence ofthe recent negotiators in international forums from our governmentand private sectors. It appears as if this is one White Paperissue that is being adequately addressed by our community.
We would simply add our voice by saying that with Cayman's reputationand standing as the 5th Financial Centre on the world stage, weshould be negotiating from a position of not only economic butalso moral strength. The world's banking community has not cometo our shores to do business because of any lack of laws or safetymeasures. On the contrary, we have created an environment thatcompetes with the best, in which international business feelssecure, in a stable community that upholds good law and orderand respects the privacy of individuals.
Yours sincerely,
(The Rev'd) Nicholas
JG Sykes Secretary,
Cayman Ministers' Association
Not being on the blacklistis a real coup?
Frank Banks
Dear Sir,
As a candidate in the upcoming elections,I would be grateful if you would help me share the following thoughtsthrough your fine publication.
Just a few weeks ago, I watched a televised political meetingheld by Minister Thomas Jefferson and his running mates. As MinisterJefferson was part of the 'Negotiating Team' which has dealt withthe Organisation for Economic Cooperation and Development (OECD)and Financial Action Task Force (FATF), I listened intently asI was genuinely eager to hear what he had to say.
As someone who was an active participant in the unfolding of eventsin respect of this critical issue which faces our country, I assumedthat he would give a thorough explanation of what happened, whyit happened, what it means to the Cayman Islands, and his analysisof the way forward.
I also assumed that (since this was a political meeting and heis running for re-election) he would put a favourable spin onthe events and his influence thereon. Regrettably, he delivereda message that was sadly lacking.
The following is a verbatim extract of the message which Mr. Jeffersondelivered:
"The forum and the Committee for Fiscal Affairs prepareda list of 35 tax havens for June 2000 which was approved by thehighest body in the OECD, which is the Council of Ministers.
You probably heard that with the work of your Negotiating Teamfor the Cayman Islands, we did not appear on that black list ofthe OECD. This, I think , would increase Cayman's InternationalFinancial Business by about 80% and it may affect to some extentsome of the smaller private banking.
Overall, I must tell you in confidence that not being on the blacklistis a real coup for the Cayman Islands and the world is enviousof us. Because being on the black list is not a very good placefor your country to be. Because these OECD countries intend toapply coordinated, they are going to co-ordinate this among themselves,counter measures, that is, sanctions against those countries onthe black list.
These sanctions are more serious and can be damaging to the countrieswhich they are applied against. What I understand they will dois, they will move legislation within the individual countriesto cause all transactions from their banking system in their countryto the Cayman Islands to have withheld from that transaction,withholding tax to name one particular issue.
So we have escaped that possibility and the business in the CaymanIslands continues to flourish."
Minister Jefferson then went on to talk about the attributes ofhis team and other issues.
I was astonished that he made no substantive mention of the factthat Cayman is on FATF's money laundering blacklist, a state ofaffairs which is wholly detrimental to the future of the financialindustry in Cayman.
As most people are only too painfully aware, notwithstanding thepanicked introduction of the legislation which was rammed throughthe House on 14 July, FATF still has not removed the Cayman Islandsfrom its blacklist and the negative repercussions of being onthe FATF blacklist continue. As an Attorney-at-Law, I deal everyday with the Attorneys, Bankers, Trust Officers, and Mutual FundAdministrators etc., who make up the financial industry in theCayman Islands, and I have yet to hear one person in the financialindustry describe the OECD situation as being a "real coupfor the Cayman Islands", nor have any of them indicated tome that they felt we are in an "enviable position".
Instead, the universal sentiment appears to be that there is adeep concern over the present situation and how the Cayman IslandsGovernment has thus far dealt with the challenges of the OECDand FATF. I have personally witnessed several examples of businesswhich Cayman has lost because of being on the FATF black listand its negative impact will continue to effect Cayman until suchtime as we are able to get off this list.
Despite what Mr. Jefferson said in the above quote, one immediateand far- reaching issue which is rapidly coming to a head, isCayman's ability to gain the approval of the United States' InternalRevenue Service (IRS) as an approved jurisdiction which will allowCayman Islands' financial institutions to apply for 'QualifiedIntermediary' status under IRS rules.
If Cayman Islands' financial institutions are not able to becomeQualified Intermediaries, the IRS intends to impose withholdingtaxes on certain transactions. If this happens, Cayman Islands'financial institutions will be at a distinct disadvantage to someof its competitors in this regard, as several of them such asGuernsey, Isle of Man and Jersey, have met IRS approval.
IRS approval in respect of this matter is based upon anti-moneylaunderingprocedures, and Cayman's letter of commitment to the OECD takesus nowhere on this issue, while the FATF blacklist puts us atrisk of not passing IRS muster. In other words, the type of sanctionswhich were threatened by the OECD have not been avoided by our`Negotiating Team', and we are at risk that the type of sanctionsMinister Jefferson spoke of our having avoided, will be imposedon January 1, 2001.
By contrast, it should be remembered that the countries on theOECD blacklist do not face OECD sanctions until July 2001. Theblacklisted countries are better off than we are!!
The cold hard facts are that from a practical stand-point, thecomplete surrender to the OECD, which our 'Negotiating Team' proudlypoints to as being such a "coup", really doesn't helpus very much. It is my conclusion, and the conclusion of manyin the financial industry, that our Government missed the boatby focusing almost exclusively on negotiating with the OECD whileleaving FATF concerns on the back burner.
One only has to look at the White Paper itself to find expressreferences to the FATF and the need to comply with internationalregulatory standards, in order to protect the integrity of theworld's financial system. Although it has now been all but forgotten,it should be remembered that the first 'blacklist' which Caymanfound itself on, was that of the Financial Stability Forum (FSF),which came out in May.
Your readers may recall that just two years ago, the Cayman Islands-basedhedge fund, known as Long Term Capital Management, was the subjectof a massive rescue organised by American regulators. There wasa real fear that the world's financial system might collapse.In fact, Time magazine had a cover-story on this matter entitled'The Committee to Save the World', with the cover photograph includingthen Treasury Secretary, Mr. Robert Rubin, along with the presentTreasury Secretary, Mr. Lawrence Summers.
Since taking over as Treasury Secretary, Mr. Summers has playedan integral role in the involvement of the United States withrespect to FATF and the OECD. It was his Treasury Department thatissued the FINCEN advisory which resulted in the panic legislationpassed on July 14 with what has been described as 'indecent haste'by the Caymanian Bar Association.
Our Government spends nearly CI$25M a year promoting the tourismindustry, yet I wonder whether a single penny was spent tryingto inform and educate Mr. Summers and the other finance ministersof the world as to the true state of affairs of the Cayman Islands'financial industry. It is a fact that Cayman's financial industryis, by and large, conducted in an exemplary manner by responsibleprofessionals who would never knowingly become involved in moneylaundering, tax evasion or other disreputable practices.
Unfortunately, our Government has failed in getting this messageacross to the powers-that-be, and we are now suffering from this.In fact, Cayman's public relations in the financial industry hasbeen described as "the worst of any of the major offshorejurisdictions." I firmly believe that had our Governmenttaken a proactive stance, by dedicating a meaningful level ofresources to public relations and lobbying the powers-that-be,we would not be in the predicament we are today where we findourselves rated as a third-rate, bottom- tier jurisdiction bythe FSF, and tarred with the moneylaundering stigma of the FATFblacklist.
While our present 'Negotiating Team' members who are running forre-election seek to play-up the importance of their dealings withthe OECD, it is interesting to note that the OECD itself is underfierce attack from many quarters.
The Washington Times, in an article dated August 20 describedthe OECD tax initiative as a "display of imperialism notseen since the collapse of the Soviet empire." Most notably,sharp criticism recenlty came from the Congress of the UnitedStates of America.
On September 7, 2000 the House Majority Leader, Mr. Dick Armey,a Texan Congressman, wrote to the above-mentioned Lawrence Summers,Treasury Secretary, taking him to task over the US Government'ssupport of the OECD initiative. In his letter, Mr. Armey sharplyattacked the OECD initiative and Mr. Summers' actions in supportingit, ending his letter by stating: "I urge you to summarilyand immediately reject this policy and I look forward to learningthe actions you plan to take to stop the OECD from moving forward."
Without the support of the United States, the OECD will be haltedin its tracks and it will be forced to greatly moderate the demandswhich it can make against the 35 countries which are presentlyon the OECD blacklist. It should be noted that the Treasury Secretaryof the United States is part of the Executive Branch of Government,and therefore falls under the jurisdiction of the President ofthe United States.
The Clinton/Gore Administration strongly supports the OECD initiative,and undoubtedly, Mr. Gore will continue that support if electedPresident. However, the powers of the Treasury Department andthe President are subject to the scrutiny of the US Congress,and so long as the Republicans control the House of Representativesand/or the Senate, US support of the OECD is unlikely to be given.
Indeed, Mr. Armey, in his letter to Lawrence Summers, expresslyconfirms this by stating: "Mr. Secretary, I hope that youare not committing the United States to actions that are unlikelyto receive the approval of Congress."
We, therefore, need to keep a close eye on the results of theUnited States elections on November 7, as the balance betweenthe Republicans and Democrats will be critical in how the OECDand other initiatives play out, and whoever makes up the new 'NegotiatingTeam' after our elections on November 8 will need to be guidedaccordingly.
They will also need to reach out and seek the assistance of thosepowerful and influential individuals and organisations which havephilosophical viewpoints which are in harmony with the long-termfuture of the Cayman Islands as a financial centre. They mustalso be willing to seek and obtain counsel from the wisest mindsavailable in order to guide us through the difficult years whichlie ahead.
Regrettably, our present government and 'Negotiating Team' havedemonstrated time and time again that they prefer to act in secret,taking counsel, if at all, from unidentified sources whose motivationand bona fides are not known.
Frank Banks
West Bay Team for Positive Change
Vocational/Technical Traininga Sensible Alternative
Dear Sir:
As a parent of a child ina Government Primary School who is struggling in school, I wouldlike to express my concerns about my child's and I am sure otherchildren's future. My child has repeated a grade and still isstruggling despite the efforts of myself and her teachers. I amconcerned that she will be pushed through the school system withoutgrasping the basic skills in order to get a decent job and successfullykeep it.
My question to the powers that be is why is there not a technical/vocationalschool on the island? There are many other children like my childwho are struggling in primary school. Caymanians need to realizeand accept that not every child can be a doctor, lawyer or accountant.There is no shame whatsoever in being a carpenter, tailor, practicalnurse or any other trade. These people earn a decent living andin some cases make more money than so-called "white-collar"jobs because they have a skill that is needed in any community.
At the primary school level the teachers can identify the childrenwho are not coping academically. Why then are we sending themon to the High Schools to keep on failing? When they get out theycan't get a job because they have no skills. We are only leavingthem with no other choice but to engage in a life of crime anddrugs.
My suggestion is to build a technical/vocational/hospitality schoolfor children who are not succeeding in Primary school to go toas an alternative to the High Schools. At such a school they canlearn a trade such as carpentry, masonry, practical nursing, sewing,office practice, tourism and hospitality etc.
At such a school children can learn a trade that interests themwhile learning basic skills in literacy and numeracy. The emphasisshould be on practical subjects and skills that these childrenwould need when they enter the work-force. Upon leaving this schoolthe students would receive a diploma in a specific trade(s) equivalentto the High School diploma.
Such a school would alleviate many social problems. The most obviousis the Immigration/Labour problem. We would be training Caymaniansto do trades that are currently being filled by expatriates. Next,we would alleviate the overcrowding and discipline problems inthe High Schools.
Also, we would be preparing children to get a job after they completetheir training thereby enabling them to be productive citizens.This should combat the crime and drug problem because people areable to work because they have useful skills. I believe that itcan also reduce the number of teenage pregnancies. Young peoplenow have a future they can look forward to so hopefully they willact responsibly and make the proper choices.
This school would require a huge investment of money but it wouldbe money well spent because no other investment is more importantto our country than Education. This is an extremely urgent matterand many candidates for the Elections have suggested such a school.I hope the new government will act quickly and start the preparationsas soon as possible.
All of our children deserve the best education to meet their individualneeds. I know the teachers are doing the best they possibly cando with their limited resources. But the powers that be need tochange the system to cater to all abilities not just the above-averageand average abilities. It is not necessary for every child toknow the same academic content. Certainly Reading, Writing, andMath but beyond those we need to differentiate for different abilities.
I trust that this letter will open up the eyes of those in a positionto correct this problem. Thank you for allowing me space in yournewspaper.
A concerned mother
C. Annie Smith (Miss)
George Town
Tribal rule creates hostilitytowards immigrants
Dear Sir:
How depressing it is, to watch all the candidates (so far) paradingtheir anti-immigrant prejudices. "Attention all foreigners!We will continue to deny your right to free employment, and wewill NEVER grant you full civil rights."
What sort of leadership can one expect from people like that?Yet a lot of Cayman's voters seem to accept without blinking,immigration policies that are plain illegal in more civilizedcountries. No wonder they fear the coming of a Human-Rights law!
I came to Cayman in the 1970s, when it was a tiny nation witha wonderfully attractive self-confidence, and a genuine welcomefor immigrants. The attitude was "Join us, and help buildour little nation." And we did. There was no hatred of immigrantsthen, and we all got on well.
Somewhere along the line, the self-confidence evaporated. It wasreplaced, in many people and at the urging of certain politicians,with arrogance and paranoia. Not in all Caymanians, of course;not even in the majority, I'm glad to say. But in far too many,that's for sure.
Let's face the awkward truth. How many politicians today daretell the voters: "You are strong, and you are capable enoughto look after yourselves?" Very, very few. What do they sayinstead? "You are weak and pathetic, but I will protect you- from all competition, forever."
Excuse me, but that is not how to build a nation. A nation isan INCLUSIVE community, that welcomes its immigrants and grantsthem full and normal civil rights, including voting rights. Acommunity that limits full civil rights to those of its own kind,qualified by blood and heritage, is not a nation and never willbe. What it is, in fact, is a tribe.
In this year 2000, only a quarter of the adult population of Caymanare eligible to vote. Our candidates (mostly) cater to the prejudicesof that fraction alone. In those circumstances, next month's electionsare not for a national parliament, but merely for a tribal council.
Where does that leave the rest of the population, the ones outsidethe ruling tribe? Should we ask Britain to give us our own separateparliament? Should we ask the Commonwealth Secretariat to condemntribalism in this British colony, and to press for a wider democracy?
Tribal rule leaves outsiders with no hope of advancement, andno incentive. How can outsiders help any tribe to do its thing?What would be the point? Whenever or wherever "democracy"is limited to members of a ruling tribe, the country finds itselfin a cul-de-sac. South Africa under apartheid, Serbia, Fiji...It's a fact of life all over the world.. There's no secret toit.
Progress to nationhood (actually it would be a return to nationhood)is in the hands of the intelligent half of the native Caymanianpopulation. Let the anti-immigrants indulge in their tribal rhetoricall they want. It is the anti-tribalists who hold the key. Ifthey don't stand up for their future as a nation, and soon, thenwe can all forget the whole idea.
Gordon Barlow
South Sound