Treasure Islands - Nicholas Shaxson [61]
Although the official archives paint this picture of divisions between Britain’s various departments over their sponsorship of the growth of the British offshore zone, veterans in the Cayman Islands saw things from a very different angle. Under Britain’s benign, hands-off approach to government, offshore lawyers were constructing the new offshore system.
One of the very earliest practitioners was Casey Gill, an ethnic Indian lawyer, author of a book about the Cayman Islands’ offshore attractions, and one of the first to arrive at the start of the boom times.19 “It was a slow, sleepy fishing village,” Gill remembered. “The town ended just a half mile up there,” he said, gesturing toward a window. “No buildings, just wooden shacks—apart from the Barclays building.” In those early years, he reminisced, tax and accounting experts would arrive from around the world to give seminars, helping the Caymans to shape their laws accordingly. “They would come and say, ‘These are the loopholes in our system.’ Someone would say, ‘We are competing with, say, Liechtenstein.’ Or in those days the Bahamas was still trying to come through. Panama was there, and Switzerland.” With each new piece of information from outside, the Cayman-based lawyers, bankers, and accountants got to work targeting the gaps and addressing the competitive threats from elsewhere.
“There was also the Red Threat: the Russians,” continued Gill. “Investors were seeing shadows and ghosts everywhere. We had Castro clauses: If any government tries to expropriate assets, it would turn out they were simultaneously domiciled somewhere else.” Many of these assets came out of Latin America. William Walker, a veteran father of the Cayman financial sector, described how the assets were handled in an interview to a visiting journalist in 1982. Most of the fourteen hundred registered companies whose names festooned the walls outside his office, Walker said, “don’t require too much work—just signing occasional documents and perhaps holding two meetings a year. We funnel a lot of money from Central and South America…. Most of the money coming out of Latin America, of course, is in breach of their governments’ exchange control regulations.”
Gill said he was a founder member of a body called the Private Sector Consultative Committee—an association representing every branch of the burgeoning financial sector: trust practitioners, accountants, bankers, lawyers, and so on. Any government legislation that impacted on the Caymans’ role as a tax haven would go through this committee. “The government has a legal draftsman. We would meet them—he would go and prepare a draft and circulate it back to us. We would come back with suggestions, it would be redrafted and circulated to the PCSS, it would get the OK, then the government would pass it into law. The governor would send it to the Foreign and Commonwealth Office (FCO)—and they would say ‘no problem.’ Usually business would say ‘this is what we want’ and the FCO would let you do what you want to do.”
I asked Gill if Britain ever said no or raised objections to the new legislation. “No. Not ever. Never.” He then qualified those last words a little: There had been a case, “eight or nine years” before, when the legislation had been delayed somewhat. But his basic point was clear. While the gentlemen in London buzzed around like irritable wasps, arguing with each other and writing reports on the offshore phenomenon, the wizards of global finance—not to mention half the world’s criminals—were forging their own private Caribbean domains, almost entirely free from outside interference, and under Britain’s protection. And so the offshore industry grew.
As an aside, it is worth noting what happens when, for example, the Caymans hatches up a new and ingenious offshore loophole targeting U.S. tax laws or financial regulations. The United States will learn about it sooner