Nick Shaxson ■ “Squeaky clean” Cayman caught in the act – again
From the U.S. Department of Justice:
“Cayman National Securities Ltd. (CNS) and Cayman National Trust Co. Ltd. (CNT), two Cayman Island affiliates of Cayman National Corporation . . . pleaded guilty to a criminal Information charging them with conspiring with many of their U.S. taxpayer-clients to hide more than $130 million in offshore accounts from the U.S. Internal Revenue Service (IRS) and to evade U.S. taxes on the income earned in those accounts.”
This story is notable for a couple of reasons. First:
“The guilty pleas of these two Cayman Island companies today represent the first convictions of financial institutions outside Switzerland for conspiring with U.S. taxpayers to evade their lawful and legitimate taxes,” said U.S. Attorney Bharara. “The plea agreements require these Cayman entities to provide this office with the client files, because we are committed to finding and prosecuting not only banks that help U.S. taxpayers evade taxes, but also individual taxpayers who find criminal ways not to pay their fair share. We will follow them no matter how far they go to hide their accounts, whether it is Switzerland, the Cayman Islands, or some other tax haven.”
The U.S. IRS has managed to (partially) crack open Switzerland, the world’s biggest hard nut of financial secrecy, through prosecuting Swiss financial institutions, and it’s very welcome to see that this approach is being widened to include other jurisdictions. How about having a go next at – let’s say – Panama? (We have often highlighted the U.S.’ own hypocrisy in being a tax haven itself while cracking down on others — but that’s another story.)
However John Christensen, TJN’s Director, had some strong words for the U.S. Department of Justice.
“This DoJ story cannot be right. In January 2014 I spoke at a public event in Cayman and I was personally assured by senior Cayman officials that this kind of thing could not possibly happen in the Cayman Islands, and that our Financial Secrecy Index was completely wrong. These revelations have shaken me to my core. I am shocked. Shocked.”
On a less flippant note, our history of the Cayman tax haven shows a constant pattern. First, Cayman denies being a tax haven and calls itself a responsible, clean, well regulated international financial centre. Then a scandal is discovered, usually by the U.S., and Cayman grudgingly agrees to clean up that particular part of that particular sector. The rest carries on. The ‘we are not a tax haven’ meme gets wheeled out. Britain could have stopped this, as we’ve often demonstrated. But it chose not to.
What is more, Cayman is keen to avoid the ire of the all-powerful United States, so it will probably make some changes in response to this. But will it afford the same courtesy to more vulnerable, weaker countries? On past form, it won’t.
More justice for richer and more powerful countries; less justice for the weaker and poorer. ‘Twas ever the tax haven way.
And, if you haven’t seen it already, take a look at this.
DoJ hat tip: Clark Gascoigne, FACT coalition.
October 2021 Spanish language podcast, Justicia ImPositiva: Los Pandora Papers, el Bitcoin en El Salvador y crisis de la inmobiliaria en China #64
Pandora Papers shows transparency failure is an accountability failure
Isle of Man banking data leak reveals how sharing data can identify offshore strategies and improve beneficial ownership
Isle of Man banking leak: Analysing banking data to reveal offshore strategies
29 September 2021