Editorial
Unwarranted Scrutiny CreatesError in Judgement
The news that Swiss banking regulatorshave issued a warning to their financial institutions to be cautiousabout dealing with offshore financial centres named as "uncooperative"in the fight against money laundering should come as no surprise.
For years, Switzerland was considered the foremost financial centrein the world, because of its numbered bank accounts and legendarysecrecy surrounding its financial operations. This was immortalisedin many a Hollywood movie script and its clientele was reputedto include a veritable who's who of the world's most powerful-- from African dictators, to kings, drug kingpins, captains ofindustry and assorted tycoons.
In later years, the Bahamas and Bermuda, because of their warmclime, exotic glamour, proximity to North America and distancefrom Europe, displaced Switzerland as the preeminent tax haven.
In less than three decades, the Cayman Islands has risen to prominenceas an offshore financial centre, following capital flight fromthe Bahamas, beginning in the late 60s. Cayman today is rankedfifth among the world's financial centres.
It stands to reason that the growth of the financial sector interritories like Cayman, has eroded the dominance that the Swissonce enjoyed.
Perhaps it is Cayman's emergence as a formidable force that hasled the Swiss -- a competitor-- to issue its warning, in the likemanner that Jersey, another competing territory, did some weeksago.
With this development one is reminded of the fable of the foxand the sour grapes.
The fact is that Switzerland and other territories have no authorityto question Cayman's good name and good order of doing business,which have met with acclaim by many respected international bodiesand the over 50 of the world's 60 largest banks.
But the Swiss, Jersey and others are mimicking the bullying tacticsof the rich and powerful G-7 (now G-8 including Russia) groupof industrialised nations, who by virtue of the discontent oftheir own citizens have sought to impose their inability to enforcetheir own tax regulations, which have no jurisdiction in placeslike the Cayman Islands.
Only recently, United States House of Representative MajorityLeader, Dick Armey has urged the US to oppose the OECD's clampdown on "harmful" low tax jurisdictions (see SpecialReport, Page 9).
In addition, senator Phil Gramm (Texas) and representative RonPaul have criticised their own government's attempt to enact theInternational Counter-Money Laundering Legislation, which wouldallow federal officials access to customers' records of internationalbanks, in pursuit of suspected money launderers.
In fact, the Bill appears "virtually dead." In otherwords, it has not passed through the full legislation processof the United States government and is most unlikely to do sofor some time yet, because of a new administration which willreplace President Clinton's.
In like manner, the Cayman Islands will have a new governmentcome November and whether the new administration will allow thelaws that were enacted so hurriedly to stand as they were passed,remains to be seen. One has to remember that "Parliamentis Supreme."
It is at times like this that unrestricted information is key.The people of the Cayman Islands must know what they are up againstfrom organisations such as the G-8 and from countries that arejealous of our economic success.
It seems then, that government owes it to the people to be communicativeand transparent. With challenges from the international front,Cayman's own efforts to protect what it has worked so hard tobuild, cannot be undermined by censorship from the very leadersappointed and elected to protect the people's interest.
It is therefore quite incorrect for the Chief Secretary to statethat he determined --solely in his discretion -- that Radio Cayman'snews report in connection with the Cayman Islands would be "promotingthe economic demise of the islands' financial industry."
Withholding information critical to the Cayman Islands and itspeople, which is easily available to the rest of world is, wesubmit, far more detrimental to the island's economy, people andprospects as a serious player on the world financial's stage.
The Chief Secretary has erred in his judgment and his action hasbeen dictatorial.
He owes the people of the Cayman Islands an apology.