During Monday night’s debate at the Legislative Assembly the Premier Hon Alden McLaughlin appeared to have let the cat out of the bag on the fragile state of the financial services industry.
The debate that occurred was around a private members motion brought to the House by backbencher MLA Winston Connolly, pertaining to removing exemptions from the Trade and Business Law and the Local Companies (Control) Law to remove restrictions to employment, training, development and ownership opportunities for Caymanians.
At a late hour, Premier McLaughlin rose to contribute to the debate, “I could not sit quietly and have people listening to this debate and who may read what is reported believe that this is what I as Premier subscribe to, that anti-expat, anti-business sentiment that I have heard from some speakers in this house because I do not and I will not have the government, that I have the honour and privilege to lead, to be branded with that because that is not what we stand for,” he declared.
The Premier continued, “Do we all understand where the world is? Where this economic recovery is, where the economic survival is still very fragile? Do we understand the challenges, particular the financial services are facing? Do we understand how vulnerable a place like Cayman is? The last thing that we want as members of this house is to send the signal that foreign business and foreigners and anyone who was not born in this place and of Caymanian parents are unwelcome and that is the clear message that I got from a number of speakers in here throughout the day,” the Premier lamented.
These comments coming from the Premier are very profound and troubling as the financial services industry accounts for near 60 per cent of the Cayman Islands gross domestic product. While we understand quite well that the country has its challenges going forward, the government has always expressed that the economy is in a “sweet spot”. Why now has the Premier chastened fellow MLAs for appearing to be anti-expat and anti-business when they are standing up for their constituents?
This prior stance was a bit contrary to the Premier’s Strategic Policy Statement delivered on Wednesday, 25 November 2015 whereby the Premier states, “As I said recently at the Chamber of Commerce’s Legislative luncheon, if you stop to consider how different a place, indeed how much better a place, Cayman is today then you will begin to appreciate the importance of this stability to each and every Caymanian and to each and every business in Cayman. You will also appreciate how hard we have worked to restore confidence in Government, and in the future of Cayman. This renewed stability and confidence can be measured in our better relationship with the UK and the improved partnership between Government and business.”
If this is the case, why did the Premier make the comments he did two nights before in the LA?
These comments about the financial services industry also point to what we have been questioning about: the fate of the Cayman Islands as it relates to a public registry of beneficial ownership of registered companies – the true 800 pound gorilla in the room. The Cayman Islands as an offshore financial centre has thrived due to its banking privacy laws. However international pressure to implement a public registry identifying the true beneficiaries of all legal entities is becoming a reality for offshore banking jurisdictions.
In 2014, the Cayman Islands rejected the idea of implementing a central public registry through a public consultation.
Former CIMA Board Chair, Mr Timothy Ridley, expressed in 2013 that a public registry of beneficial ownership would remove the Cayman Islands competitive advantage as a financial jurisdiction.
In an interview with The Cayman Reporter in November 2015 Premier McLaughlin said, “Our position is the same. We will not agree to a centralised public registry of beneficial ownership of legal entities”.
These comments from the Premier come on the heels of statements made by UK Prime Minister David Cameron on his trip to Jamaica in September 2015. The prime minister stated, “Some of the British crown dependences and overseas territories are making progress in this direction. Others, frankly, are not moving anywhere near fast enough.”
It appears that our Premier, along with other leaders from overseas territories, is at odds with the UK Prime Minister when it comes to a public register for beneficial ownership.
The Premier is off next week to the fourth Overseas Territories Joint Ministerial Council 2015. It is anticipated that the public registry of beneficial ownership will be one of the topics to be discussed at the meeting.
As far as we see it, the Premier has revealed that our financial services industry is in a tenuous position making the Cayman Islands economy fragile. And our hunch is that the public register of beneficial ownership issue is at the heart of it. Apparently, elected MLAs fighting for Caymanians to have more of an equity stake and more opportunities in their own country only compounds the already fragile state of affairs.