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.