In a Thursday meeting with top officials and newly elected Ministers, financial services representatives sought an end to the rollover policy,while the Leader of Government Business promised quarterly gatherings of a new finance committee.
Convened by new Leader of Government Business and Minister of Finance, Hon. McKeeva Bush, and attended by Financial Secretary, Hon. Kenneth Jefferson, Chief Secretary, Hon. George McCarthy, and a cross-section of industry representatives, the Ritz-Carlton meeting produced promises of renewed government efforts to secure the interests of the financial industry, although fewer commitments regarding immigration.
Chairman of the Cayman Islands Financial Services Association (CIFSA) Anthony Travers called for “immediate [re]consideration” of the government’s “rollover” immigration policy, by which expatriates are forced to leave the Cayman Islands after seven years.
“Whilst there are clear and good reasons to maintain a rollover policy,” Mr Travers said, “it is unrealistic to expect that talented professionals in the financial industry would be attracted to the Cayman Islands with the uncertainty of the seven-year term.”
He said that while fund managers and other financial professionals were leaving G-20 countries because of the global economic downturn, they were avoiding Cayman in favour of its less-restrictive competitors.
“There is no concern that justifies the application of the rollover policy to highly talented professionals with qualifications,” Mr Travers said. “Indeed, by doing so, there is clear evidence that fund administration business has moved out of the Cayman Islands and that job opportunities for young Caymanians have, as a result, been significantly reduced.”
Meanwhile, Mr Bush said he would chair a new financial services panel, comprising participants at the Thursday meeting, in efforts to renew industry-government relationships and the Private Sector Consultative Committee established by the previous People’s Progressive Movement administration.
He also proposed sending a delegation to London to discuss new bilateral agreements on the exchange of tax information, aiding Cayman’s efforts to escape the international “greylist” of offshore financial centres.
Mr McCarthy promised to spearhead a similar approach to the Paris-based Organisation for Economic Cooperation and Development (OECD), originator of the “greylist” and its sister “white” and “black” lists.
Mr Travers, while describing Mr McCarthy’s remarks as “absolutely the correct approach”, was sceptical of OECD intentions, referring to politicised efforts “to impose monopolistic control over all international financial services” and the organisation’s surprise 14 May move delaying approval of Cayman’s “unilateral mechanism”, designed to gain rapid tax information exchange agreements.
“It would be naïve to believe that the OECD would not shift the goal posts once again in pursuit of their ultimate objective,” he said.
Reflecting widespread calls for greater innovation in the financial services industry, the CIFSA chairman asked Mr Bush for quicker Cayman Islands Monetary Authority approval of new products.
Because of the global downturn, Mr Travers said, “It is a necessary conclusion that the volume of transactional flows that had been based on highly leveraged transactions would now decline from the peaks achieved in 2007 due to the de-leveraging process,” meaning “the public and private sectors would have to derive greater revenue from fewer transactions.”
“The 2007 volume levels represented the peak of the bubble,” he said, and few “alternative strategies“ had been created.
Offering a counterpoint, however, to official promises and private hopes, one dissenting voice remained sceptical, citing similar pledges by previous governments.
“The meeting was full of promises from government to do better on all the obvious subjects of interest to the industry,” the observer said, asking anonymity. “When we discussed immigration, the officials stopped making notes and started checking their emails.”
“The inescapable conclusion,” Mr Travers told Cayman Net News, “was that higher quality infrastructure had to be attracted to the Islands and the issue of immigration and the speed of the licensing process were central to the success” of the private sector.
The physical presence in Cayman of international financial institutions was vital to dispel suspicions in Washington, London and Paris, he said, referring to the now-notorious observation that nameplates and registration documents were the only local representation for thousands of international companies, undermining local claims of benign intentions and international compliance.
“Failure to attract a genuine financial infrastructure to Cayman,” he said, “would play into the ‘lack of substantial activity’ argument.”
“Without introducing a radically revised approach to attracting fully staffed financial service companies, the ‘18,000 companies in one building’ point, which has regrettably been allowed to gain traction, will translate into a major and unanswerable plank of OECD anti-offshore financial-centre policy,” Mr Travers said.