The UK government on Tuesday announced the appointment of Michael Foot, former inspector of banks and trust companies in The Bahamas, to head an inquiry into British offshore financial centres, reaching initial conclusions next spring.
Mr Foot, former managing director of the UK’s Financial Services Authority, a 29-year veteran of the Bank of England and Chairman of the UK office of the Promontory Financial Group, will lead an inquiry into financial-service industries in, among others, the Cayman Islands, the British Virgin Islands, Anguilla, Bermuda and the Turks and Caicos Islands. Other subject dependencies comprise Jersey, Guernsey, the Isle of Man and Gibraltar.
In Monday’s announcement, UK Treasury officials said Mr Foot would examine “the immediate and long-term challenges facing British offshore financial centres in the current economic climate,” listing a four-point agenda: “financial supervision and transparency; taxation in relation to financial stability, sustainability and future competitiveness; financial-crisis management and resolution arrangements; [and] international cooperation”.
The Financial Secretary Hon Kenneth Jefferson and the Portfolio of Finance pledged cooperation with Mr Foot.
“The Cayman Islands Government announced today that it will take an active role in HM Treasury’s independent review of UK Crown Dependencies and Overseas Territories, which will analyse the long-term opportunities and challenges facing each as an international financial centre,” said a statement from the Portfolio.
Leader of Government Business (LoGB) Hon Kurt Tibbetts said he looked forward to the inquiry.
“We have had an opportunity to engage in discussions with HMT directly and review the details provided to date regarding this review,” Mr Tibbetts said. “As a result of this due diligence, which indicated the review will be serious and constructive, the Cayman Islands Government is happy to participate and support HMT in its efforts.
“It is Cayman’s experience that objective, independent reviews are valuable to all parties involved and we look forward to working with Mr Foot.”
Hon Alden McLaughlin, Minister responsible for financial services, said, however, that he and the LoGB had questioned UK Financial Services Secretary Lord Paul Myners, but “he didn’t tell us much”.
“We quizzed him on the real purpose of the review and we asked various questions,” he told Cayman Net News.
“We got nothing of consequence and no new information,” Mr McLaughlin said, but added he expected to learn more once the reviewer was appointed.
“This is all a response to the global financial chaos out there, and part of a much bigger picture,” he said. “I am hoping to meet with Lord Myners and talk about this, about the Cayman Islands-UK and Cayman Islands-European Commission relationship as regards taxes and financial issues. He indicated a willingness to give an audience.”
The review was announced by the Treasury last week as part of a package of measures in the run-up to the UK’s 2009/10 budget, saying it was assessing “the medium-term economic and budgetary position”, including tax and spending plans “in the context of its overall approach to social, economic and environmental objectives”.
While London was careful to say Mr Foot would respect “the variety of existing constitutional arrangements” in the territories he visited, “including their independence in fiscal matters and the setting of their own rates of taxation,” doubts nonetheless lingered, particularly in the wake of the US Congress springtime probe into the local financial industry and the autumn onset of worldwide financial and industrial crises.
“We had a round of talks with the UK on double taxation,” Mr McLaughlin said, “and it did not yield the fruit that we had expected. The UK has changed its positions; it had said that it would not discriminate against us and we are hopeful that we’ll get there.
“What Cayman must not do is rush about and sign premature agreements just for the sake of signing, and that allows the country to discriminate against us.”
Gillian Merron, Minister for the Overseas Territories, said she had been impressed by recent discussions with Britain’s overseas territories.
“I am impressed by the positive discussions I have had with the Overseas Territories on financial-services regulation,” she said, “and hope that the review may be helpful to those overseas territories, with significant financial-services industries, to prepare for the challenges of the future.”
The Treasury statement also quoted Mr Foot:
“After working as a financial regulator in the UK and overseas, I have direct experience of the achievements of the Crown Dependencies and Overseas Territories. I am looking forward to working with them to see how best the important contribution of their financial sectors can be underpinned and strengthened for the future in these challenging economic times.”