Offshore law firms Appleby Spurling Hunter and Bailhache Labesse have announced that they will unite business operations on 1st September 2006.

The announcement claims that this merger will create the only offshore provider of legal, fiduciary and administrative services with a major foothold in four of the world’s leading offshore business centres - Bermuda, the British Virgin Islands, the Cayman Islands and Jersey - as well as a presence in the major financial centres of London and Hong Kong.

The combined group will be known as Appleby Hunter Bailhache and will have a projected staff worldwide of nearly 600 employees, including 44 partners.

The Financial Services Commission in the BVI has made a consolidation of the BVI Business Companies Act, 2004, which incorporates the amendment passed in December, 2005, available for download on its website at www.bvifsc.vg.

Additionally, the Segregated Portfolio Companies Regulations, 2005, which is a subsidiary legislation of the BVI Business Companies Act, 2004, is also available from the Commission’s legislation library at www.bvifsc.vg.

The Financial Services Commission (FSC) in the BVI has published an expanded list of countries and jurisdictions recognised for the purposes of the BVI’s Mutual Funds Act, 1996.

The new countries are Australia, The Federal Government and all the provices of Canada, Germany, Italy, Japan, Sweden, the Bahamas and the Cayman Islands. The existing list includes: Bermuda, Gibraltar, Hong Kong, France, Luxembourg, the Isle of Man, Belgium, Spain, Ireland, Malta, Singapore, Guernsey, Jersey, Switzerland, the UK and the US.

In evaluating countries and jurisdictions for inclusion, the FSC considers whether the country’s regulatory environment is regarded as reputable, and whether recognition of the jurisdiction for the purposes of the Act would enhance the development of the BVI’s mutual fund industry. Aditors, investment managers and fund administrators obtain certain benefits (e.g. exemption from additonal licensing in the BVI) if they are already licensed in a recognised jurisdiction.

EXTENDED RANGE FORECAST OF ATLANTIC SEASONAL HURRICANE ACTIVITY AND U.S. LANDFALL STRIKE PROBABILITY FOR 2006

By Philip J. Klotzbach and William M. Gray

"Information obtained through May 2006 continues to indicate that the 2006 Atlantic hurricane season will be much more active than the average 1950-2000 season.  We estimate that 2006 will have about 9 hurricanes (average is 5.9), 17 named storms (average is 9.6), 85 named storm days (average is 49.1), 45 hurricane days (average is 24.5), 5 intense (Category 3-4-5) hurricanes (average is 2.3) and 13 intense hurricane days (average is 5.0).  The probability of U.S. major hurricane landfall is estimated to be about 60 percent above the long-period average."

The order of the authorship of this year's forecast has been reversed from Gray and Klotzbach to Klotzbach and Gray. After 22 years of making these forecasts, Dr Gray is stepping back and letting Phil Klotzbach assume the primary responsibility for the seasonal, monthly and landfall probability forecasts.  According to this year's report, Klotzbach is now devoting more time to the improvement of the forecasts than Dr. Gray, who is now devoting more of his time to the global warming issue.

"They've been brainwashing us for 20 years," Gray says. "Starting with the nuclear winter and now with the global warming. This scare will also run its course. In 15-20 years, we'll look back and see what a hoax this was."

Dr. Gray is perhaps the world's foremost hurricane expert. His Tropical Storm Forecast sets the standard. Yet, his criticism of the global warming "hoax" makes him an outcast.

Gray acknowledges that we've had some warming the past 30 years. "I don't question that," he explains. "And humans might have caused a very slight amount of this warming. Very slight. But this warming trend is not going to keep on going. My belief is that three, four years from now, the globe will start to cool again, as it did from the middle '40s to the middle '70s."

Of course one of the metrics that proponents of the meme "global warming is a big man made catastrophe" keep citing is the increase in the number and intensity of Atlantic hurricanes in the last fews years. According to Al Gore, storms like last year's Katrina are the direct result of human activity and are indicative of a long term trend that will destroy the earth as we know it. Cooler heads, and more scientifically sound minds, like Dr Gray's, believe that the recent increase in Atlantic storm activity is part of a much shorter term and quite natural cycle (and a cycle that has occurred many times before).

What seems most important right now is that we enter into a proper, well informed debate about what is really going on - free from the politically motivated scaremongering of the left and the environmentalist lobby. Actually debating the issue before we set public policy may be inconvenient for Al Gore and his private jet chaterer, but it is crucial for the rest of the world.

Appleby Spurling Hunter has been recognised as a leading offshore law firm in a number of recently released international publications.

Chambers and Partners Global Directory awarded Appleby Spurling Hunter a number one ranking in Bermuda. Appleby was the only firm to receive rankings in all three of the key offshore jurisdictions of Bermuda, the Cayman Islands and the British Virgin Islands.

The BVI has announced that 57,000 new International Business Companies (IBCs) registered in the British Virgin Islands in 2005. That is more than in any other OFC and the third highest number of new incorporations in the BVI in the last 20 years.

In addition the new Companies Act 2006 is due to come into effect shortly.

Over 130 representatives of 55 governments, the Commonwealth Secretariat and the European Commission met on 15-16 November 2005 in Melbourne, Australia to review progress towards the OECD’s stated objective of transparency and effective exchange of information for tax purposes (the so called “level playing field based on high standards”). And what an extraordinary gathering it was, with tiny islands like Vanuatu and Niue sitting down at the same table as the US, the EU member states, and Canada!

The two day discussions, which were based upon the review of the legal and administrative frameworks on transparency and exchange of information in tax matters currently in place in over 80 countries, showed that a global level playing field in the areas of transparency and effective exchange of information in tax matters is gradually developing. However, the Forum’s discussions identified a number of areas where further progress needs to be made. The Forum’s review will be published as a formal report in 2006.

For a fuller article on the Forum and its outcome click here

With the European Union Savings Tax Directive ("EUSD") due to come into force across much of Europe on 1st July 2005, the government of the BVI has published a Guide outlining how the EUSD is to be implemented in that OFC.

BVI is not a member of the European Union but along with other overseas territories and dependencies of EU member states (such as the Cayman Islands and the Netherlands Antilles) and certain other third countries (in particular, Switzerland) the BVI has agreed to implement measures to comply with the substance of the EUSD.

The US and Bermuda, alone among the UK's Overseas Territories, have not so far agreed to implement the directive.

Offshore jurisdictions have come under attack in the last few years from various quarters, but particularly from a group of multi-national organizations, such as the Organization for Economic Co-operation and Development (OECD) and the Financial Action Task Force on Money Laundering (FATF).

I recently penned an article for a publication called "The Square Mile", which steps back and tries to evaluate what has happened over the last 5 years. In this slightly revised version entitled "The OECD versus the OFCs: A Score Card" I attempt to provide an overview on the current state of the leading offshore financial centres, discuss some of the changes that have occurred in these jurisdictions over the last 5 years, and consider how they have weathered the storm.

I conclude that the changes implemented by the leading offshore jurisdictions as a result of the attacks have actually made them stronger and more relevant, not weaker. In particular, the leading offshore financial centres have:

1. established new or entrenched their existing zero/low tax regimes;
2. substantially enhanced their reputations with better regulations and strengthened regulators;
3. extracted benefits in return for imposing greater regulation (e.g. international recognition for their stock exchanges, acceptance of banking secrecy laws, and treaty exemptions); and
4. been given a seat at the table on global tax forums going forward - with equal negotiating status under the "level-playing field" concept.

Technically the expression "offshore" means "moving or directed away from the shore" as in the term "an offshore wind". In finance the expression is used to describe an arrangement that is located or based in a foreign country and therefore not subject to the laws of the jurisdiction in which you or your business is domiciled. (E.g., offshore bank account; offshore investment).

The concept of an "offshore jurisdiction" is commonly used in connection with financial transactions to describe the use of jurisdictions which are predominantly financial centres and which have enacted special legislation and/or tax regimes in order to attract financial services from other, mainly larger, countries. Generally these offshore financial centres are characterized by low or zero taxes on international business, liberal laws for the incorporation of international business corporations or other legal structures, and a lighter burden of regulation and supervision.

Many offshore jurisdictions are small islands in the Atlantic, Indian or Pacific oceans. Given the extent of the British Empire in its hay day it is not surprising to find that many of these islands where once owned by the U.K.  Perhaps more surprising is the fact that most of the U.K.’s last remaining colonies - or "Overseas Territories" as we should now call them - are leading offshore financial centres, namely: Bermuda, BVI, Cayman Islands and Gibraltar.  Throw in the Crown Dependencies of Jersey, Guernsey and the Isle of Man, which are also all offshore financial centres, and we could claim that the City of London’s finest export to the world is "Offshore Financial Centres". LOL

This post provides an overview of the UK’s Review Of Financial Regulation In The Caribbean Overseas Territories And Bermuda conducted by KPMG (the “KPMG Review”).

In 1999, the UK required its Overseas Territories in the Caribbean, namely Anguilla, British Virgin Islands, Cayman Islands, Montserrat and the Turks and Caicos Islands, and Bermuda to jointly commission an in-depth review by KPMG into the Overseas Territories’ compliance with international standards and best practice of financial regulation, including in the field of anti-money laundering.

The KPMG Review reports were published on 27 October 2000, and the relevant Overseas Territories then made a commitment to implement three priority measures by the end of September 2001.  These were the establishment of independent regulatory authorities; the introduction of investigative powers to assist enquiries by overseas regulators; and the establishment of comprehensive anti-money laundering frameworks.  In addition the Overseas Territories each published their responses to the KPMG report on 8 February 2001 explaining how they planned to respond to KPMG's other recommendations.

Further details of the KPMG review and of the commitments made by the Overseas Territories to implement KPMG's recommendations are set out in a Treasury press notice of 27 October 2000 entitled “Review Of Financial Regulation In The Caribbean Overseas Territories And Bermuda”

http://www.hm-treasury.gov.uk./newsroom_and_speeches/press/2000/press_122_00.cfm

Further details of the Overseas Territories’ responses to the KPMG review are set out in Treasury press notice 11/01 of 8 February 2001 entitled “Review Of Financial Regulation In The Caribbean Overseas Territories And Bermuda: Implementing Recommendations”.

http://www.hm-treasury.gov.uk./Newsroom_and_Speeches/Press/2001/press_11_01.cfm

See also press notice of December 2001 entitled “Review Of Financial Regulation In The Caribbean Overseas Territories And Bermuda: Implementation Of Priority Recommendations”

http://www.hm-treasury.gov.uk./newsroom_and_speeches/press/2001/press_135_01.cfm

and a press notice of 23 May 2002 entitled “Further Progress On Financial Regulation In The Caribbean Overseas Territories And Bermuda”

http://www.hm-treasury.gov.uk./newsroom_and_speeches/press/2002/press_49_02.cfm

You can buy copies of the KPMG reports here:

http://www.archive.official-documents.co.uk/document/cm48/4855/4855.htm

The Chrisitian Science Monitor has an posted an article entitled "Secretly, tiny nations hold much wealth" by David R. Francis from the April 25, 2005 edition.

Here's the BIG distortion:

"Corrupt officials in poor nations, illegally, and multinational corporations, mostly legally, siphon huge amounts of money into bank accounts and shell companies in 70 tax havens, such as the Cayman Islands, Bermuda, and Jersey."

What a load of rubbish.  OFCs like Bermuda, the Caymans and Jersey, now have "Know Your Customer" rules that far exceed those of London and New York and which specifically prevent "politically sensitive" persons (like corrupt thrid world dictators) from opening accounts in those centres.  Corrupt officials in poor nations do NOT and cannot salt away illegal monies in the OFCs that the article names.  The only exception to this rule is possibly Switzerland, but Bermuda, the Caymans and Jersey are definitely NOT in that business anymore......but that does not stop the MSM from trotting out this old canard! Why doesn't David Francis name even one such corrupt official who has been shown to have siphoned illegal monies to one of the three OFCs that he names? Because he cannot, that's why!

Other ridiculous assertions from the article:

"Although they have only 1 percent of the world's inhabitants, they hold a quarter of United States stocks and nearly a third of all the globe's assets.

They're tax havens: 70 mostly tiny nations that offer no-tax or low-tax status to the wealthy so they can stash their money. Usually, the process is so secret that it draws little attention. But the sums - and lost tax revenues - are growing so large that the havens are getting new and unaccustomed scrutiny.
 
For example: When London's Tax Justice Network (TJN) reported a month ago that rich individuals worldwide had stashed $11.5 trillion of their assets in tax havens, it caused a fuss in Europe. "Super-rich hide trillions offshore," blazed a British newspaper headline.

Although that report received little notice outside Europe, there are rumblings of concern in the United States. That's not surprising. Nations lose an estimated $255 billion in tax revenues a year because of the havens, according to TJN. The US alone probably loses $60 billion a year, a tax expert estimates."

and

"There are about 3 million shell companies (set up largely to duck taxes) in offshore tax havens, Komisar reckons. These tiny tax havens hold 31 percent of total world assets and 26 percent of the stock of US multinationals."

3 million, hey? Now lets see. The BVI has about 300,000 companies registered, Bermuda has less than 30,000, about the same as Cayman and Jersey. So where exactly are these 3 million companies incorporated that Komisar "reckons" exist for no other reason than "to duck taxes"???

The TJN, by the way is a very left wing, socialist organisation - which is curiuosly not mentioned in the article. Of course their real agenda is to introduce global taxation and remove any tax competition between nation states. This hidden agenda is alluded to by TJN:

"As our economies have globalized, our tax systems remain nationally based and measures that should have been put in place decades ago to improve international tax cooperation have not been put in place," says John Christensen, international coordinator in London of TJN."

According to the article, we are in for another big fight to defend OFCs!

""It's going to be the next major issue," forecasts Lucy Komisar, a New York journalist writing a book on offshore banking. She compares the drive against tax havens with the civil rights movement of the 1960s, in which she participated, and the feminist and environmental movements of more recent decades.

Ms. Komisar helped organize a meeting on Capitol Hill April 7 to get an American branch of the TJN going. Representatives of several members of Congress, the AFL-CIO and a few other unions, several prominent tax research groups, and the United Church of Christ attended. About a dozen well-known activist groups were also present, including Public Citizen, Greenpeace, and the National Council of La Raza."

And of course we know that all those great organizations are really looking out for us, right!

I am saddened, but no longer shocked, that the Christian Science Monitor would publish such a poor piece of journalism, in which bold assertions are made which have no basis in fact and which clearly have not been fact checked by any editor.

Update: To read more of Komisar's mis-guided criticisms of OFCs see her article entitled "Profit Laundering and Tax Evasion -The Dirty Little Secret of Financial Globalization" posted here.

Update 2: John Christensen, one of the co-founders of the TJN has denied reports that the organisation is linked to the Fabians (a socialist society) and espouses communist ideals - see story here. One source of the reports is this article in the Washington Times by Richard Rahn. Mr Christensen was a former assistant adviser to the States of Jersey but resigned from his post in 1998. He now lives in the UK and actively campaigns against OFCs.

William M. Gray and Philip J. Klotzbach have recently revised their annual forecast for likely hurricane activity in the Atlantic basin. They foresee an above-average hurricane season for the Atlantic in 2005. They also anticipate an above-average probability of US major hurricane landfall. They have adjusted their forecast upward from an early December forecast and state that they may further raise their prediction in later updates if they can be sure El Niño conditions will not develop this year. Grenada and the Cayman Islands were particularly badly hit in september last year by Hurricane Ivan. Bermuda was hit by Hurricane Fabian in 2003. By the numbers from their report:

"Information obtained through March 2005 indicates that the 2005 Atlantic hurricane season will be an active one. We estimate that 2005 will have about 7 hurricanes (average is 5.9), 13 named storms (average is 9.6), 65 named storm days (average is 49), 35 hurricane days (average is 24.5), 3 intense (category 3-4-5) hurricanes (average is 2.3) and 7 intense hurricane days (average is 5.0). We expect Atlantic basin Net Tropical Cyclone (NTC) activity in 2005 to be about 135 percent of the long-term average. The probability of U.S. major hurricane landfall is estimated to be 140 percent of the long-period average. We expect this year to continue the past-decade trend of above-average hurricane seasons."