In a lengthy article on Saturday, under the headline “Clouds gather over tax havens”, Britain’s Daily Telegraph newspaper asked the question, as Gordon Brown urges global action, will the offshore industry survive the fall-out from the Stanford fraud charges?

The point being that the already heady rhetoric over the culpability of offshore financial centres for the global economic meltdown has been given new weight by the emergence of an alleged “massive and on-going fraud” at the Stanford Financial Group, the banking empire of Sir Allen Stanford, financier and cricket supporter.

A civil complaint filed by the US Securities & Exchange Commission (SEC) last week accused Mr Stanford and two of his associates of defrauding 50,000 investors of $9.2 billion and exposed a financial empire built on deception.

Emerging just three months after the discovery of Bernie Madoff $50 billion ‘Penza’ scheme, this new and even more blatant case has led to bewilderment at the apparent ineptitude of the financial regulatory framework.

One regulatory lawyer quoted by the Daily Telegraph said: “Stanford has proved that massive holes in regulation can allow offshore entities to avoid almost all supervision. Rather than overlap there is huge ‘underlay’ in the system – for all their various powers, none of the government bodies had any authority.”

The Stanford case therefore seems destined to add impetus to the call to bring sweeping changes to the offshore financial centres, including the Cayman Islands, long accused of being a haven not just for tax avoidance but for shady dealings in general.

As is well-known, and is inevitably repeated in the context of “cleaning up” offshore financial centres, US President Barack Obama is a well-known opponent of offshore havens. He once said: “There is a building in the Cayman Islands that houses supposedly 12,000 US-based corporations. That’s either the biggest building in the world or the biggest tax scam in the world, and we know which one it is.”

As we reported yesterday, British Prime Minister Gordon Brown has threatened a “worldwide crackdown on tax havens” in advance of the G20 summit in London in April. He argued that the world had to act as one to supervise banks, including ending the practice of firms and financial institutions setting up registered offices in islands and small countries that offer lower tax rates than the countries in which they are based. “We want the whole of the world to take action. That will mean action against regulatory and tax havens in parts of the world which have escaped the regulatory attention they need,” he is quoted as saying.

Critics of the attack on the offshore industry say that it is simply a convenient way of diverting criticism of the established regulators and their political masters and an underhand way of raising more taxes.

There might have been some justification for this position prior to the Stanford debacle but it seems that the company largely avoided international scrutiny because of its Caribbean domicile in Antigua, a country that has admittedly been on financial regulators’ radars for more than a decade, apparently to little or no practical effect.

Even though the Cayman Islands is no doubt far better regulated than Antigua and probably many other offshore centres, it is by no means certain that will prevent us from being tarred with the same brush.

The Daily Telegraph was therefore quite justified in speculating that the Stanford-Antigua axis of fraud could very well lead to the effective dismantling of the entire offshore financial industry.

One would like to think that Britain would come to our support in this hour of need in just the same way that the Cayman Islands, in the shape of then Legislative Assembly Sergeant at Arms Bert Walter, conceived the “Mother Needs Our Help Fund”, which raised $500,000 from the private sector for Britain during the 1982 Falklands war with Argentina, an idea that was subsequently adopted by other British territories. The Cayman government matched this sum and the late Chief Secretary of the Cayman Islands, Dennis Foster traveled to London and hand delivered this directly to Her Majesty the Queen.

On this occasion – if we are to understand what Mr. Brown is saying, however, “Mother” seems to be intent on joining forces with “Uncle Sam” to kill the same economic well being that enabled us to contribute a not insubstantial sum of money per capita when Britain was in need of tangible support and encouragement in the face of much international condemnation.

Perhaps it is time for the British people living here and in England to be reminded of this event over 25 years ago when the Cayman Islands needed no urging to stand by Britain.