'Absolutely wrong' – Cayman Islands' response to its critics

The head of the Cayman Islands' main finance organisation has said that critics of the offshore centre are "absolutely wrong".

Jude Scott, the head of Cayman Finance which is part funded by the islands' government, said that publication of the ultimate beneficial owners of businesses in offshore centres would not be effective.

His comments come ahead of David Cameron's anti-corruption summit today where the Prime Minister will announce new rules on revealing foreign owners of property in Britain and a crackdown on businesses that fail to tackle fraud.

Mr Scott's comments appear to put paid to Mr Cameron's pledge in 2013 to "tear aside the cloak of secrecy" surrounding offshore tax jurisdictions by creating a publicly available register of beneficial owners.

No push

Sources close to the British Virgin Islands government I have spoken to also said there was no push from the UK government for such a register in Britain's overseas territories as there was no international agreement for other countries to follow suit.

Both the Cayman Islands and the BVI have agreed to sharing details of any business owners with tax authorities and law enforcement bodies to tackle tax evasion and money laundering.

"When we look at moving to standards like those [public registers] they would really only be effective if they are applied to all financial centres whether they be G20 countries or in other international financial centres," Mr Scott told me.

"We are very confident that our model in the Cayman Islands will stand up to transparency at whatever level is implemented as a global standard.

"Where the problem comes in is when there is picking and choosing which jurisdictions need to live up to a higher standard.

"That creates problems."

Fully public

The lack of movement on public registers of beneficial owners is likely to be criticised by campaigners for transparency.

Earlier this week, Mark Goldring, the chief executive of Oxfam in Britain, said the Prime Minister needed to "stand-up" to the UK's overseas territories.

"It's not good enough for information about company owners in UK-linked tax havens to be available only to HMRC [the UK's tax authority] - it needs to be fully public to ensure that governments and people around the world can claim the money they are owed and hold tax dodgers to account."

But Mr Scott said that critics of the Cayman Islands and other overseas territories were mistaken.

"There's an element of privacy that we should expect when we are doing legitimate transactions - much as if we go to our bank and we do a transaction," he said.

"There is an expectation that won't be made public and I think those are reasonable expectations.

"If we do breach laws then of course we should expect that our information is going to be provided to appropriate authorities."

'Tax friction'

He said that although the Cayman Islands allows investors to reduce what he described as "tax friction" it was not a way of avoiding tax as taxes were still paid in an investors home country and in the country investments were made.

I asked Mr Scott if critics who said that all offshore tax free jurisdictions should be closed down and had no economic purpose were wrong.

"Absolutely they are wrong and we would love to have the opportunity for them to be exposed to what is the proper and accurate and very positive story of how the Cayman Islands contributes in many different ways working with tremendous clients around the world to provide benefits in the global market place.