SUNDAY 7TH JUNE, 2015 – UWI TODAY
13
Too Unsure about
Offshore Finance
B y P r o f e s s o r R o s e - M a r i e B e l l e A n t o i n e
My topic, while focusing on
Offshore Financial Centres
(OFCs), highlights an area where law intersects with
economic and social policy. Moreover, it is representative
of a much wider issue that confronts the Caribbean’s socio-
economic landscape, having deep implications for our
future. On the one hand, the development of OFCs in the
Caribbean is a remarkable example of Caribbean talent,
dedication, creativity and brilliance. On the other, the OFC
phenomenon is a tragic reminder of a region handicapped
by a world view that has defined our political and economic
policy; and even the way in which we define ourselves, or
rather, fail to define ourselves and our place in the world.
This is an opportune time to be considering such
policy issues – at a time when the very existence of the
sector, particularly in developing countries such as ours,
is being threatened by an aggressive onslaught by onshore
nations under the umbrella of regulation and respectability
– much of it orchestrated by the Organisation of Economic
Cooperation and Development (OECD) and Financial
Action Task Force (FATF).
I will demonstrate that while legitimate concerns may
be raised about the sector, as with any financial sector, many
of the allegations, though posed as valid legal objections,
are coloured by political and economic overtones and are
without legal justification. In fact, froma legal and economic
policy perspective, offshore structures and policies are
inherently legitimate.
We need to mount an appropriate defence for this
mode of industry – chosen by so many Caribbean nations
as a legitimate path to development. In fact, this is a billion-
dollar sector, responsible for the high GDP and standards
of living for several of our neighbours such as the BVI,
Cayman, Nevis, the Bahamas and Bermuda.
However, to do so, we must first understand the legal
issues involved, since it is through legal policy that such
financial centres have been attacked. In fact, offshore finance
is an area where law has been used as an important tool for
economic policy, to usher in a new era of development. Law
was also the weapon used against the region by onshore
developed countries afraid of losing revenue to offshore
developing countries.
I believe that we must analyse this socio-legal construct
if we are to chart a suitable course for the future.
Few people recognize that in terms of economic and
legal policy, the creation and development of the OFC is a
rare and genuine example of indigenous thought and action
– a shining example in fact, that has been emulated the world
over, on every continent. Did we know, for example, that the
international business company was created right here in
the Caribbean, in the BVI, by our own professionals? This
is the model IBC that has been exported across the world.
Similarly, unique and innovative legal norms and products
such as the offshore trust, which I have described as a ‘hybrid
financial product,’ have been born on our shores in various
transmutations: i.e. the purpose trust; the anti-Bartlett trust,
which challenges archaic, unresponsive, common law rules
and orthodox principles, for example, about the liability of
trustees considered to be unfair and onerous. We have been
the prime movers and initiators - not mimic men – guided
by the needs of the market.
We don’t know these facts because our vision is
obstructed by the far more pervasive ‘bad press’ on the
offshore sector. Very few have taken the time to examine
carefully the reality behind the sector, and what it represents.
The offshore/international sector has been, especially in
recent years, repeatedly held up as a negative phenomenon,
involving shady deals and criminal activity – the bogeyman.
Nothing is said though about the wholesale export of
these more modern legal commercial principles involving,
banking, trust, company, commercial law in the offshore
environment, to the shores of these very same nations that
criticize offshore financial centres and the laws that support
them. So, while some of us may realize that Jersey, Isle of
Man and Guernsey – Cayman, BVI; important offshore
financial centres are in fact all British territories. Few of us
understand and appreciate that several states in the USA,
perhaps the most strident critic of Caribbean offshore
financial centres, have copied our offshore laws and policy
lock, stock and barrel. I am referring her to Delaware,
Atlanta, Colorado, and Alaska and the like.
I have examined this in detail and the picture is telling.
Few industries, however, have attracted the kind of hypocrisy
allowed to permeate and distort the legal and economic
framework of this sector, even well-established principles
in economics, trade, domestic law and international law.
My conclusion has been that once again, it is a tale
of one set of standards for them, and another, far less
This is an excerpt from the presentation,
“The Caribbean Offshore Financial Services Revolution – A Bold, Futuristic Initiative Requiring Brave Leadership,”
made by
Professor Rose-Marie Belle Antoine
, Dean of the Faculty of Law, The UWI St. Augustine at the Forum on the Future of the Caribbean on May 5, 2015.
The full text of her presentation can be read at
advantageous for us. Indeed, so successful has been the
anti-offshore lobby, we have even persuaded ourselves that
the term ‘offshore’ is tainted somehow. Some of us have tried
to change the name to ‘international’. Since we are being
‘disruptive’, let us acknowledge that this is the name Trinidad
and Tobago preferred, for example, based on the so-called
‘Kuwait model’ which ironically, has borrowed from the
region’s offshore laws. I have refused to do this and make
no apology. I do not think that we should allow ourselves
to be defined and redefined. There is nothing inherently
wrong about the term ‘offshore’ and in any event, whether
we call ourselves international or anything else, everyone
knows what we are speaking about.
I concede that it is undeniable that there are credible
regulatory and even ethical issues in the OFC, as in any
financial sector. There are rules and products that though
not abusive in or of themselves can be susceptible to abuse.
However, the approach to international regulation of the
sector has been self-serving and cynical, to say the least.
When we examine the case law, it is clear that where these
issues are concerned, the outcome for onshore developed
countries has been different, that is, more advantageous
than where offshore jurisdictions are concerned. Attempts
by onshore countries to bully offshore nations to abandon
or compromise such developmental policies are without
foundation. Today, the OFC is in retreat mode. Time will
tell…
We need to mount an
appropriate defence for
this mode of industry
– chosen by so many
Caribbean nations as
a legitimate path to
development.
THE FUTURE OF THE CARIBBEAN
