EDITORIAL: Barbados is not a tax haven
The Press, both internationally and locally, is often maligned when it deals with matters of national importance in an aggressive way, even though, in the majority of instances, careful research of the facts often support the questions posed or views espoused. Even in the most reputable of newspapers, however, there are times when such criticism is deserved; when bias creeps in, and half-truths are insinuated while the critical facts are ignored, sacrificed at the altar of profitability; when selling more newspapers becomes more important than telling the whole story, lest truth might destroy a chance to break a story on a hot topic. This lapse in good journalism is no more evident than in times where seemingly sensational news has broken, and the temptation to get ahead of a story can go even beyond the imperative of selling more papers to corrupt journalistic mores. Such is the case, we believe, with two articles appearing over the last weekend in the Canadian Press, both of them fuelled by the recent “Panama Papers” imbroglio, and both attempting to label Barbados as a tax haven allowing Canadian companies to evade taxation in Canada, as a result of Canada’s Double Taxation Treaty with Barbados, and their exempt surplus programme. Both articles erroneously suggest that money can be “parked” in Barbados away from Canadian or American tax authorities – nothing could be further from the truth – and that the result of this is, and will continue to be, higher taxation for Canadian residents, clearly appealing to a sore spot in the psyche of a population who already see themselves as heavily taxed, and to the Canadian ethos of fair play and doing the right thing. For those in possession of all of the facts, the subtle deception of an experienced journalist can easily be detected, but for the millions of uninformed readers in this Internet age, they can do little else but follow the carefully manipulated pseudo-facts and open-ended questions which will lead them, inevitably we fear, to the wrong conclusions. In hard economic times, those conclusions can coalesce and bring pressure to bear on already economically beleaguered Governments to make changes that are inimical to the greater good of their countries. Successive Governments of Canada have clearly recognised, on the one hand, the increasingly competitive nature of conducting international business, and on the other hand, the import of the considerable research conducted by their own University of Toronto (Professor Hejazi, 2007, 2015), as well as by US Universities Harvard (Professors Desai and Foley, 2008) and Michigan (Professor Hines, 2008, 2009). That is, the use of a reputable, well-regulated, treaty-based international financial centre conduit, like Barbados, by Canadian companies investing abroad, is net positive for the Canadian economy in the long run, and that the benefits outweigh the more immediate loss of taxation in the home country, typically seen in the use of a double taxation treaty. Interestingly, none of this sizable body of research was mentioned in either article. Our purpose today, though, in highlighting these articles, is not to address the shortcomings of the Canadian press, who are but following what has become an unfortunate trend in sensationalist journalism almost everywhere else in the world. Rather, it is to call on the Barbados Government to recognise that the 300-plus years of Canada/Barbados trade and international business relationship could be at risk, and that urgent action is required on their part to spearhead a determined effort to ensure that the new Liberal Government of Canada is in full possession of all of the facts, and fully appreciates the value of the Barbados/Canada international business connection. This matter needs to be addressed at the highest level, and with the highest priority, before uninformed opinion is allowed to fester and misdirect electoral pressure, resulting in considerable damage to both our own and Canada’s economic future. Article compliments the Publisher of the Barbados Advocate
Antiguan businesses hit by cybercriminals
The Office of National Drug and Money Laundering Control Policy (ONDCP) is warning Antiguan businesses to guard themselves against scammers who are re-directing payments from customers to other bank accounts. The ONDCP has received reports from local businesses that their customer invoices have been intercepted and emailed to their clients with substituted bank account information, allowing the funds to be directed into accounts set up by the fraudsters. “It would appear that businesses affected have had their computers or email accounts hacked, enabling the interception to occur and the fake invoices to be sent in place of the real ones,” the ONDCP said, noting that the fraud is not usually detected until the customer is alerted by complaints from suppliers that payments were not received. It explained that scammers were hacking into vendors’/suppliers’ email accounts and obtaining information such as customer lists, bank details and previous invoices. Then, purporting to be a business’ supplier, the scammer sends invoices to businesses and requests a change to usual billing arrangements and asks for the money to be transferred to a different account, usually by wire transfer. “The email may look to be from a genuine supplier and often copies a business’s logo and message format. It may also contain links to websites that are convincing fakes of the real company’s homepage or links to the real homepage itself,” the ONDCP warned. It therefore urged businesses to be vigilant It said it was best for businesses to establish anti-fraud measures that independently double check if a regular supplier provides different bank account details for the payment of invoices. Vendors and suppliers who send billing instructions via email are also encouraged to establish verification protocols with customers for any changes to email and payment details. Article compliments Caribbean360.com
Britain’s financial sector reels after Brexit bombshell
Britain’s 2.2 million financial industry workers face years of uncertainty and the risk of thousands of job cuts after the country voted to quit the European Union, leaving question marks over London’s status as Europe’s premier financial centre, reports Reuters. The ‘Vote Leave’ campaign fronted by a slew of Conservative lawmakers and financial industry veterans claimed victory over its ‘Britain Stronger in Europe’ rival, after 52 per cent of Britons voted to support their plan to leave the 28-nation club. Bankers’ early confidence that Britain would remain within the European Union quickly evaporated after early vote counts suggested the “leave” camp had the upper hand, sending sterling plummeting to a thirty-year low and heart-rates racing on trading floors from London to Hong Kong. A leave vote means the future of Britain’s financial services industry is now hanging in the balance. All depends on the divorce between Europe and Britain, the latter’s ability to retain access to the European free market, and cope with the volatility that has seen sterling nosedive against major global currencies. Mood in the restaurants and coffee shops in the high-rise banking hub of Canary Wharf, home to JPMorgan JPM.L, Citi (C.N), HSBC (HSBA.L) and Barclays (BARC.L), was sober and contemplative, with job security fears rising to levels unseen since the 2008 financial crisis. Investment banks have already warned they could move thousands of jobs if Britain opts out of the EU, while the European Central Bank has signalled it could force euro trading out of London, the world’s largest foreign exchange market. Wall Street bank Morgan Stanley (MS.N) could move around 1,000 of its roughly 6,000 employees currently in Britain on to the Continent if the country votes to leave the EU, a person familiar with the matter has told Reuters. Jamie Dimon, CEO of rival JPMorgan told staffers his bank “may have no choice” but to overhaul its UK business model, casting a pall over its 16,000 strong workforce. However the City of London Corporation, which oversees the capital’s financial district said the leave vote should not lead to a major exodus. “There will be no mass exit of banks and financial institutions from the Square Mile,” Mark Boleat, policy chairman for the City of London Corporation said in statement. “The general view of the City is that the government should push for the UK to retain our access to the single market,” Boleat said. Sources at banks said memos emailed internally to rattled employees advised them to think about clients first. “I’ve convened a big team meeting at 0800GMT as the juniors are freaking out. I will tell them to focus on their job and wait for the volatility to pass but the reality is much, much starker, we’ll have a crash and big layoffs,” a senior investment banker at a US bank told Reuters. “It’s an act of national self-harm,” he added. CARNAGE ON MARKETS Months of bitter campaigning has left the industry – which earned the nation 190 billion pounds in 2014 – deeply divided, with investment banks and insurers pitted against many fund managers and brokers who wanted a Brexit. Property investor Richard Tice, a co-founder of Leave.eu, a British Out campaign, and one of the few prominent City figures in favour of leaving, told Reuters he cried tears of joy after the vote. “There is huge joy, delight and pride. We have changed the course of history in the UK. It is very simple, everyone needs to calm down and do what we do well which is working and playing hard.” Reflecting the uncertainty that will hit the financial services sector, Hong Kong-listed shares of HSBC (HSBA.L) and Standard Chartered (STAN.L) fell more than 10 percent, while other UK banks are expected to post sharp declines when they start trading in London. Sterling fell to its lowest level since 1985, the year before Britain’s deregulation of financial markets that helped propel the City of London into one of the world’s major financial centres in the so-called ‘Big Bang’. All the major international and British banks in London had traders either working through the night or on call. Bankers in New York were also burning the midnight oil with special numbers laid out for clients to call, foreign exchange desks fully staffed and senior management keeping a fretful eye on screens. “Leave’s victory has delivered one of the biggest market shocks of all time … Panic may not be too strong a word,” Joe Rundle, Head of Trading at ETX Capital said. Many financial firms rely on the EU’s ‘passporting’ regime to sell their services across all of the bloc while basing the majority of their staff and operations in London. European government officials said UK-based firms could lose these privileges in the event of a Brexit, a move that would force them to shift some of their operations to the likes of Frankfurt, Paris or Dublin if they wanted to serve EU clients. Article compliments IFC Review.