Treasure Islands - Nicholas Shaxson [59]
The gesture toward elected representation given to Cayman voters, plus all the money, keeps the locals happy, and Caymanians solidly support the link with Britain today. Roy Bodden, a former minister and author of a history of the Cayman Islands, remembers the Falklands War between Britain and Argentina in 1982, when influential Caymanians, not content with having helped Argentinian generals and their wealthy friends loot their country, launched a “Mother Needs Your Help” fund. Collection tins were rattled in the street, and a million dollars raised, he said, then simply handed over to Britain for the war effort.16
Crucially, this remarkable degree of local support for the British connection reassures international finance that locals will not rock the boat and disturb the business of making money. But the true bedrock of this financial center is Britain’s controlling role. If the islands became fully independent and were handed fully over to dark-skinned Caymanians, most of the money would flee.
Something else turned up in the archives too. Dated February 23, 1969, it is a cutting from the Sunday Times, written by its financial editor Charles Raw. While it is not unusual to find newspaper clippings in archive files, the presence of this particular one—closing the file, and with no attendant commentary—is intriguing. Might it have been left as a marker for historians? Something that couldn’t make it into official documentation or be stated explicitly? The name of the clipping is at the least suggestive: “Why Not Turn the City into a Tax Haven?”
Raw’s article, written amid one of the great boom phases of the offshore Eurodollar markets in London, is a piece of unashamed cheerleading for the City. It derides a “notorious” section of the UK tax code that gives tax collectors useful powers to curb offshore leakage, and it says London should let nonresidents get tax-free treatment for certain kinds of funds. “Most of the authorities’ energies over the past few years have been devoted to stopping money going out,” Raw wrote. “But perhaps it would be more rewarding to pay greater attention to money coming in.” As we will see in the next chapter, similar lines of thinking were emerging in the United States.
The same Times article contains another oddity. It begins by praising a Geneva-based mutual fund group called Investors Overseas Services (IOS), which Raw says “has done wonders for the U.S. balance of payments by pumping the world’s savings into U.S. shares.” The article goes on to tout a new Bermuda-based fund that would “like to do the same for the UK balance of payments.”
IOS, however, was no ordinary company. Raw went on to write a book about it, the title of which, Do You Sincerely Want to Be Rich?, was the line that IOS salesmen pitched around Europe, door-to-door, as they vacuumed up retail investments to channel into offshore funds. The company’s founder, Bernie Cornfeld, called it “people’s capitalism,” and for a short time he made IOS into one of the largest foreign institutional investors on the U.S. stock exchange. His board of directors included a former governor of California, Pat Brown, and FDR’s son James Roosevelt, and many of his advisers came from the Bank of England.17 Cornfeld bought castles in France, sailed a forty-two-foot Corsair, and drove a Lancia Flaminia convertible. He dated the Dallas soap opera star Victoria Principal and the Hollywood madam Heidi Fleiss, and his company bought banks in the Bahamas, Luxembourg, and Switzerland. “I had mansions all over the world. I threw extravagant parties,” he said. “And I lived with ten or twelve girls at a time.”18
Cornfeld had originally left the United States “looking for a less competitive market,” as one obituary put it, and his company’s fragmented national identity—it was incorporated in Panama and headquartered