“A sunny place for shady people”. It’s a statement that has been used to describe the beachfront locales across the globe that the public has come to associate with crime: places like Bermuda, Monaco, and the Cayman Islands. It’s a moniker assigned by ill-informed journalists and movie makers that should usually be ignored, but after reading a 14-month old piece in Highbrow Magazine I felt that it was time to jump to the belated rescue of the Cayman Islands.
It has to be said, with as much respect to the journalist as is possible, that this article is at best an incredible exaggeration of the Cayman Islands and the current difficulties faced by the territory. What it is true is that, as mentioned, Cayman remains one of the world’s most utilized financial centres. In fact, the jurisdiction handles trillions of dollars of transactions and safely conducts investments globally – including investing trillions of dollars in the economies of the United States, Canada, the United Kingdom and elsewhere in the developed world. The United States Treasury discloses that almost US $2 trillion is pumped into the US economy alone via the Cayman Islands on an annual basis.
That isn’t an angle most journalists wish to take, unfortunately, and we see a steady stream of writing that belittles the contributions of the Cayman Islands and other offshore financial centres to the global economy. The article referred to above also seems to take offence to the fact that Caymanians live comfortably because of the rise of the financial services industry and chooses to belittle the culture and history of which Caymanians should be fiercely proud.
The article’s characterisation of our government is equally offensive. Cayman may not levy exorbitant taxes on money, its generators, or its functions, but that hardly means we turn a blind eye to the industry. It has been proven time and again that Cayman remains a trusted financial centre because of robust regulation that is flexible enough to meet the needs of fast changing markets. His reference to our “secretive banking regulations” directly contradicts the reality of incredibly strict ‘Know Your Client’ regulations which no on shore jurisdiction could comply with and a series of Tax Information Exchange Agreements that allow countries to access the information they need to find those citizens who seek to evade their tax obligations. He continues by lamenting the bankruptcy of large international firms with Cayman connections, but completely ignored the thousands of Cayman-regulated banks, firms, and funds that have survived the financial crises as a result of standards imposed by local legislation.
References to job losses and falling property values are laughable. These market adjustments take place in every nation in line with global economic realities. Certainly they have taken place in Cayman, but they aren’t out of line with global trends. I might add that since the publication of his article in 2011, property prices have returned to normal, tourist arrivals have returned to normal levels, and the rate of job creation is outpacing the United States and Western Europe.
Mr. Knipp seems to have jumped on the bandwagon of hatred for wealth and wealth creation. Perhaps in his mind, nothing in the Cayman Islands can be above board or as good as we claim. He makes mention of Transocean, the company whose oil rig responsible for the environmental disaster in the Gulf of Mexico, was formerly a Cayman client. I take it he feels that it reflects negligence on the part of Caymanians, and none on the part of the parties in Switzerland (where the company is headquartered) or the Marshall Islands (where the company is registered) or in South Korea (where the equipment is built) or in the United States (where the rig was operated). Surely he sees the one-sidedness that Caymanians know exists in reporting?
The fact is that Cayman is an important and well regulated part of a global system that allows investment to take place efficiently and to the benefit of millions of people around the world. The fact is that Cayman is dealing with our social and reputational problems, and that we have made significant strides in improving our society and the business environment – though we recognise that there is still a long way to go. The fact is also that journalists like Mr. Knipp capitalise on misinformed perceptions of sunny places to make a quick dollar, and in so doing deny their readers access to the truth.
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