First, the information in the Paradise Papers — aimed in title at demeaning small Caribbean jurisdictions — is stolen.
In an age of cyberwarfare, when Russia is on the prowl using cyberattacks, I find it troubling that global media outlets are using stolen, constitutionally protected information, and in their dissonance, speaking with evangelical moral fervour concerning the contents.
Second, the aim and impression of The Guardian and the BBC’s coverage is to imply that merely having an “offshore” account is criminal. I note that Bono has shown himself a coward, flailing about perfectly legal arrangements. I am pleased that Lewis Hamilton has stood by his perfectly sensible and legal arrangements in avoiding taxes to purchase his plane.
I find the coverage by British media not only criminally collusive but it is a strange thing, since London every year celebrates its dominance over New York as the world’s financial centre. Note also that between Bermuda and Jersey, they generate more than 1.5 million jobs in London.
It might be well to remember as well, it was Gordon Brown’s “light touch” regulations that together with regulatory and banking corruption in the United States that nearly destroyed the global banking system between 2008 and 2010.
Third, in recent years, governments seem to have attacked attempting to police and prevent legal tax avoidance and treating the mere usage of “offshore” as criminal, which it is not.
Note also that the US borrows 80 per cent of global savings or $150 million per hour. More than 70 per cent of those savings are processed by Caribbean financial centres. This shows the lie pushed constantly by papers such as The Guardian and, at times, by The Economist that funds are soaking away in these Caribbean centres.
These funds are reinvested in London and New York. They are funding investments and supporting government debt and household borrowings. They pay out student loans and acquire US treasury bonds; so much so that Cayman is the world’s second-largest holder of such bonds, with $1.6 trillion.
How can the British media ignore such facts that show clearly that there is substance to financial centres?
I do not dismiss the foolish policies of some financial centres; for instance, one in particular in the Caribbean that absorbed Cypriot funds once banks collapsed there. But on the whole, Caribbean financial centres have less proven corruption than G20 nations and are better regulated.
In 2009, when global demand dried up, 60 per cent of all companies investing in China were Cayman Funds and British Virgin Islands companies. They held the global economy together by aggregating funds to support demand in China. The Singapore Arbitration Centre supports this, since more than 70 per cent of the arbitration cases before them are Chinese investments underscored by BVI and Cayman structures.
So what is Bermuda’s error?
As the Hamilton lecturer for the Society of Trust and Estate Practitioners in 2011, I argued that Bermuda’s habit of isolation rather than joining and leading other jurisdictions to join in an Organisation of International Financial Centres is a critical error.
The truth is that even though the Paradise Papers shows no criminal activity, and shows Bermuda as a serious player, still it could be used against the island because there are those in the G20 who do not care about truth. They want small-island financial centres eliminated.
Cosying up to G20 members, as Bermuda has done, does not generate an alternative likelihood. Caribbean jurisdictions lack the confidence to be financial centres because rather than see strength in setting standards by developing institutions, they each go crawling before those whose aim is to destroy them.
The issues I am concerned with are not reactionary defences of Caribbean centres. I care about the rule of law. And Jeremy Corbyn’s idiotic screed concerning the Queen aims at putting her to the question based on spurious facts and for tax avoidance that is perfectly legal; all without denouncing the stolen material upon which his bilious claims rest.
If we have come to a stage where media houses can steal private papers and cast a pall of criminality over innocent people, stoking populism — or G20 nations can listen to bogus numbers from the OECD or Gabriel Zucman in “The Hidden Wealth of Nations” — we risk failing to focus on co-operation based on the rule of law to strengthen the global financial system.
Financial centres will not die. They will move to Turkey, Russia and China, and the power to regulate them will die
•Gilbert N.M.O. Morris is a legal scholar, economist, government adviser, professor, author and publisher. He is also the chairman of the Turks and Caicos Resorts Economic Council, was selected twice as the Hamilton Distinguished Lecturer for the Society of Trust and Estate Practitioners in Bermuda, and four times as Lecturer on the Global Financial System at the Annual Symposium on Economic Crime at Jesus College, Cambridge University