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.

The owner and Managing Director of Dominion Investments (Nassau) Ltd, Martin Tremblay, was indicted in US federal court in January 06, accused of laundering $1 billion for others. Tremblay apparently transferred the cash to bank accounts in the Bahamas, the US, Canada and elsewhere, according to US federal prosecutors

The Securities Commission of the Bahamas (the "Commission") has issued a statement regarding Dominion, which states in part, as follows:

"[Dominion] was registered as a Broker Dealer II by the Securities Commission on December 11, 2001. Mr. Martin Tremblay, Managing Director and 100 % beneficial owner of Dominion, was licensed as a principal at the same time. Mr. Tremblay resigned as Managing Director and surrendered his Principal license on March 4, 2005, but remains the sole beneficial owner of the company. Mrs. Esther Weir was appointed Managing Director on March 15, 2005 replacing Mr. Tremblay. An on–site inspection of Dominion by the Commission was conducted from February 7-10, 2005. While the Commission’s inspection revealed various operational deficiencies these matters were being addressed by Dominion.

Immediately after the US authorities acted against Mr Tremblay, the FIU moved swiftly to freeze a large number of bank and securities accounts in The Bahamas associated with Mr. Tremblay and Dominion.

The Securities Commission, with the assistance of the Royal Bahamas Police Force, acted quickly to ensure that the books and records of the company were secured and to prevent any further business being transacted. The Commission, and the Police, further acted quickly in conducting a search of the premises of Dominion and obtained search warrants for other locations. A team of inspectors from the Commission was dispatched to Dominion to conduct an on-site inspection on the same day the information appeared in the local press. Further, Dominion’s office is being continuously monitored by the Commission. The Commission is also very concerned to ensure that the assets of legitimate investors of Dominion are secured and protected, and that the competing interests of parties related either to Dominion or Mr. Tremblay are addressed in an appropriate manner. To this end, the Commission is presently dealing with this matter through its statutory disciplinary process.

The Commission has and will continue to liaise closely with other domestic and overseas regulators and take every available action to protect the assets of investors."

The Central Bank of the Bahamas has announced the relaxation of exchange controls relating to real estate investments, foreign currency transfers, mortgages, and debt and equity instruments all of which have taken place with immediate effect.

The Bank states that this latest action is in line with its commitment to achieving a gradual yet meaningful liberalization of exchange controls, and the measures follow earlier adjustments introduced in May 1995 and September 2002, both of which provided for an increased delegation of authority to commercial banks over a broad range of current account transactions such as payments for imports, travel and services.

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

The Nassau Guardian reports that offshore legal expert, Marshall J. Langer JD, recently made a presentation to the Bahamas Financial Services Board on how it can fight back against the OECD and FATF's attacks on small offshore financial centres. Mr. Langer pointed out that it is critical for offshore centres to take the initiative and to approach countries within the OECD in order to seek to establish information sharing agreements that are more equitable than the models pushed by the high tax member states (principally France and Germany). The model, which Langer calls a Limited Revenue-Sharing Tax Arrangement (LRSTA) is, he claims, a win-win proposition.

The arrangement apparently differs from the "typical [OECD] comprehensive income tax treaty" in many significant ways. Firstly, it would only apply to residents of the OECD member state that are using the offshore centre - amd would not apply to residents of the offshore centre who are not also residents of the OECD member. The offshore centre commits itself to preventing its facilities from being used by high-tax country residents who intend to cheat on taxes, through the exchange of information for criminal and civil cases, but the arrangement prevents "fishing expeditions". Unlike current arrangements, under an LRSTA, the country requesting the information would foot the bill.

"You don't want to wait for France and Germany to come telling you what they want," he reportedly said, describing the current status quo. "You have to go and negotiate agreements with OECD countries like Austria and Iceland." Hear, hear!

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

The Central Bank of the Bahamas has announced the release for industry consultation of new Guidelines on the Prevention and Detection of Money Laundering for Licensees.

The new draft Guidelines seek to address customer due diligence issues arising in respect of, inter alia, foundations, investment funds, segregated accounts companies, financial and corporate service providers, as well as the treatment of accounts in existence prior to 29th December, 2000.

The stated objective of these Guidelines is to provide assistance to licensees in determining appropriate measures for verifying customer identity. The Guidelines set out those procedures and practices which the Central Bank considers to be "best practice" for verifying customer identity.

The deadline for submitting comments or questions on the draft guidelines has been extended from Friday 3rd June to the close of business on Monday 6th June, 2005.

Lines Overseas Management Ltd. (LOM), a Bermuda-based brokerage with offices in the Cayman Islands and the Bahamas, is being investigated by US regulators over allegations of fraud and market manipulation and by the British Columbia Securities Commission (BCSC) over allegations that LOM had been trading on behalf of undisclosed clients through a number of B.C. brokerages. In the most recent development the BCSC has ruled that there is no evidence on which to issue a cease-trade order against LOM.

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."