donvilleinniss

The Business Blog – Offshore Sector Sends Mixed Signal Post Panama Papers Scandal

We often blame poor communication by stakeholders in society and a lack of investigative reporting by local media houses. The result is that the people are left to ponder where is the truth the whole truth and nothing but the truth.

On the 15 April 2016 the Panama Papers scandal was born. In the week thereafter countries like Barbados which depend on the Offshore Sector to butter its daily bread have had to react to the fallout. Already prominent persons across the world have taken a hit to careers and reputations as a result of the veil of secrecy being striped away by the breach at Mossack Fonseca.

Barbados like Panama is a tax haven (oops, tax compliant  jurisdiction) and many International Business Companies (IBCs) have taken advantage of Double Taxation Treaties  and supporting Tax Information Exchange Agreements (TIEAs) to establish domiciles. Given the commitment of successive governments to building a service sector with tourism and offshore business driving GDP numbers, the Panama Papers scandal must be a worry for Barbados. The offshore sector represents a volatile business segment at the best of times and encounters with the OECD over whitelist and blacklist classifications are a matter of record.

We should take careful note of feedback from key players from Barbados in the aftermath of the Panama Papers scandal.

Minister of International Business Donville Inniss sees the opportunity for Barbados to raise its profile. As minister responsible for the portfolio his unbridled optimism is to be expected. He has no choice but to see the glass as half full as the leading voice of the sector and policymaker.

Following the minister’s assurance, a couple weeks ago at the launch of J&T’s 20th anniversary celebrations here is what an actor in the sector surmised:

Jacqueline Inniss, head of the company’s trust and corporate department, said the Panama Papers could be an opportunity for Barbados to attract more international business – Country ‘can benefit from scandal’

It is noteworthy the evergreen Executive Director of the Barbados International Business Association was in attendance and appears to have concurred with Jacqueline’s decision. However in another report in the media President of BIBA share his feedback as follows;

Adding his voice to the discussion BIBA President Andrew Alleyne agreed that the Panama Papers leak was “likely to reduce the use of international financial centres overall around the world” –Expect Panama Papers backlash

The feedback from Director of Cidel Bank & Trust Ben Arrindell however has only served to send mixed signals. Here is an extract from a media report:

“I think we are going to see a slowdown in terms of new activity using international financial centres, for a little while. I don’t think it is going to last for too long, but I think we will see a slowdown. So I think it is going to be an uphill battle for a few years to separate using an offshore entity for tax minimization purposes from illegal activities,” he added. However, Arrindell said the Panama Papers scandal also brought to light the need for companies to up their game when it came to knowing about their customers and their customers’ clients – Expect Panama Papers backlash.

Expect some fudging of information from those with agendas. BU’s perspective is that like 911 the Panama Papers scandal has shifted the foundation upon which the offshore business is built. We will have to allow for some more time to accurately assess the ramifications for offshore jurisdictions like Barbados.

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23 Comments on “The Business Blog – Offshore Sector Sends Mixed Signal Post Panama Papers Scandal”

  1. Well Well & Consequences May 23, 2016 at 5:37 AM #

    The offshore sector players clearly see that the fine line between the use of a low tax jurisdiction, tax evavion and criminalty is blurred, overlapping and the criminuals using shell companies have to be separated and exposed from the entities who use those facilities for low tax purposes only.

    Good news for Clico policyholders in Trinidad.

    http://www.barbadostoday.bb/2016/05/22/duprey-offers-to-repay-all-of-clicos-debts/

    Unlike Barbados’ Donville Inniss and his yardfowl Alvin Cummins, no minister of government in Trinidad thinks the policyholders are greedy for being robbed of their life savings by Clico executives.

    Like

  2. Well Well & Consequences May 23, 2016 at 6:44 AM #

    “First, however, Duprey said, “We need to get control of the company, and we need to know exactly how much is owed to the Government. We have not been able to get something in writing from them as yet.”

    Unfortunately, in the Clico article, the commenters missed the part where thiefing Duprey wanted back the company FIRST….only then would the taxpayers get back their 24 billion…oh hell no….pay the 24 billion first, but no company to get back..he obviously got cssh flow problems, let him die broke….many clico policyholders did, he could too

    Trinidad government already has control of Clico and can get back the 24 billion through that control…..give it back to Duprey to do what, steal more.

    I hope that those with interests in Clico Barbados are watching this in case Leroy Parris and his gang of politicians gets it in their big heads to pull such a sick and nasty stunt….the money owed to the policyholders who are still alive, depends on their vigilance.

    Like

  3. Hants May 23, 2016 at 8:45 PM #

    @ David,

    “The changes have compelled some to seek out low- or no-fee alternatives to the banks, such as PC Financial, Tangerine or products offered by credit unions.”

    Do Bajans have similar alternatives ?

    Like

  4. David May 23, 2016 at 8:55 PM #

    @Hants

    Only the credit unions but they don’t offer the services to compare.

    Like

  5. Well Well & Consequences May 24, 2016 at 12:17 PM #

    It must be nice getting away with not paying taxes, everyone should try it and watch all the governments collapse…then the leaders will finally understand who keeps them functioning.

    Like

  6. Well Well & Consequences May 24, 2016 at 3:22 PM #

    For all you tax dodgers….

    U.S Embassy Bridgetown

    Routine Message for U.S. Citizens

    24 May 2016

    “Have questions on filing your taxes? The Internal Revenue Service (IRS) will host a webinar on “Overseas Filing for U.S. Taxpayers” on May 25, 2016, from 1:00 p.m. – 3:00 p.m. EDT. To register and attend this webinar, use the Overseas Filing for U.S. Taxpayerswebinar link. Attendees should log in 10 minutes prior to the start time. ”

    “Can’t attend for the live session? Not to worry! The session will be recorded and made available at a later time on IRSvideos.gov”

    Like

  7. Crusoe May 24, 2016 at 5:23 PM #

    The international tax issue boils down to one thing.

    The large developed countries are having economic issues and want more taxes.

    Life is about to get very hard for small countries that rely on international tax structures for income.

    This, despite the large countries having their own little ‘nest eggs’, such as Vermont, on their own shores.

    However, that is the stark reality. We can gloss over the issue, talk away, but there is no avoiding (sic) the truth.

    Like

  8. David May 24, 2016 at 7:07 PM #

    @Crusoe

    You have summed it up in a nutshell.

    Like

  9. David May 25, 2016 at 6:44 AM #

    Interesting link, after 8 years business facilitation is still a no show. This is another KPI the performance of this government should be measured.

    http://www.barbadostoday.bb/2016/05/25/more-power-to-senator-boyce/

    Like

  10. Exclaimer May 25, 2016 at 7:29 AM #

    Was it not Pachamana who said that something is very wrong with our society.

    http://www.theguardian.com/society/2016/may/24/revealed-foreign-buyers-own-two-thirds-of-tower-st-george-wharf-london

    Like

  11. Well Well & Consequences May 25, 2016 at 11:43 AM #

    Fruendel Stuart just keeps adding to and facilitating the corruption….Bizzy et al must be dizzy with the possibilities of the crap they can now do with an idiot like Boyce.

    Like

  12. Well Well & Consequences May 25, 2016 at 12:41 PM #

    http://www.barbadostoday.bb/2016/05/25/more-power-to-senator-boyce/

    Like

  13. Crusoe May 25, 2016 at 3:13 PM #

    @Exclaimer,

    This is the issue, the problem with international tax structures, secrecy laws and laundering is not related solely to ‘international tax havens’ or ‘international business centres’.

    The issue is worldwide. And the housing issue is to me, fundamental to the weak economies of today.

    Over-ownership (if I may grab at a phrase) and inflated housing prices are causing havoc in economies from UK, USA to Barbados et al.

    It puts the average earner into severe issues in buying property in employment desirable locations.

    The solution may not be an easy one, but the study and assessment of these international ownership structures may be a valid start, especially as some of these structures, not all, may be a front for money laundering.

    I do not have an issue with assessment of these structures, in fact, such assessment needs to be supported.

    We need to understand that just as for everyday jobs, some structures are within the law and moral, some within the law and immoral and some outside of the law and immoral.

    For those that are within the law but immoral, change in legislation is the only solution.

    For those that are outside of the law and immoral, legal action and criminal prosecution is the avenue.

    The thing is, this is a huge Pandora’s box. Mossack Fonseca is but one firm. There are surely more, not only legal firms, but accounting firms, store front businesses etc, that are implicated in structures that are undesirable.

    When the lid is peeled back, it will probably be a whole nest egg of money across the globe and will probably include ownership of properties in large cities.

    Those are funds that are over-inflating your mortgage price and rent.

    That is not good for the economy of whichever country it is. It causes unnecessary inflation and stagnates assets.

    How many store front business in large cities are also owned by such structures?

    How much is founded on ‘legitimate’ money and how much on money laundering?

    This is not only a tax haven problem, this is an international issue.

    And the countries that are chasing their tax dollars, via chasing the tax havens, may just have opened a deep Pandora’s box, leading right back to their own cities.

    Like

  14. are-we-there-yet May 25, 2016 at 4:03 PM #

    David

    The Barbados Today article you linked to earlier seems to partially explain the current MM situation.

    The most important aspects of that article stated:

    ….“I took the decision that I’m going to have a minister assigned to drive these processes at Immigration and Town Planning departments and make sure that the concerns of businesses, whenever raised are pursued with singlemindedness so that wherever the bottlenecks are, they can be identified and removed as swiftly as possible without compromising the standard of either the Immigration Department or the Town Planning Department,” the Prime Minister said.

    ….Senator Boyce’s new designation would broaden the base of his remit, adding to his responsibility for Energy, Immigration, Telecommunications and Invest Barbados….. Boyce would be required to identify blockages in the system AND HAVE THEM REMOVED or clarified where possible, or brought to the Prime Minister’s attention,”

    The PM has apparently handed over responsibilities in the stated areas to Senator Boyce thereby confirming him as a super-Minister. Senator Boyce has accordingly taken on these enhanced responsibilities with all the energy now required that was apparently formerly lacking. The first result seems to be the creation of a disgruntled MM who appears to be somewhat less than satisfied with the first fruits of the new Business facilitation Czar.

    The PM is therefore not directly responsible for any fallout resulting from the energetic Boyce fulfilling his remit.

    Very Interesting times!

    Like

  15. Well Well & Consequences May 25, 2016 at 4:40 PM #

    Sure Crusoe. .that is until we hear about some multi-million dollar scam that the taxpayers have to pay Maloney, or Bizzy, or Cow, or Bjerkham or Tempro or any of the other parasites for another 30 years….of course Fruendel will say he did not sign anything….read Cahill scam …with Bjerkham et al involved and benefiting.

    Like

  16. David May 25, 2016 at 6:07 PM #

    Interesting to listen to public debate on the enforcement order from ordinary Bajans. Did we hear some say leave the man alone he is creating jobs for Barbadians? Is this the issue already?

    JAs

    Like

  17. Crusoe May 29, 2016 at 4:13 PM #

    ah, interesting, so we have FATCA, the US wanting taxes from all citizens who are based abroad or have assets abroad, but now the EU pushing to get its own share of profits from US companies that are operating in the EU and allegedly paying less than what they should.

    What comes around, goes around.

    http://abcnews.go.com/International/wireStory/tax-fraud-police-search-mcdonalds-french-headquarters-39405295

    Like

  18. Exclaimer May 29, 2016 at 4:40 PM #

    @ Crusoe,

    Here is what the Guardian printed:

    Asked if tax authorities could strike a deal with the tech giant, Sapin said: “We don’t do deals like Britain, we apply the law.”

    http://www.theguardian.com/world/2016/may/29/france-multinationals-pay-taxes-michel-sapin-google-mcdonalds

    Like

  19. Exclaimer June 5, 2016 at 2:08 PM #

    Here is a very Interesting but short investigative documentary entitled: ” How to Rob Africa ”

    “Why does the Western world feed Africa with one hand while taking from it with the other?”

    http://www.aljazeera.com/programmes/peopleandpower/2012/11/201211714649852604.html

    Like

  20. Exclaimer June 5, 2016 at 6:20 PM #

    @ David,

    I am very surprised with the limited response for this post.

    Like

  21. David June 5, 2016 at 6:27 PM #

    @Exclaimer

    Most Barbadians are not financially literate.

    Like

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