The Future of the Caribbean

Rose-Marie-UWI-Photo-with-Pink-blouse

The Caribbean offshore financial services revolution is a bold futuristic initiative requiring brave leadership, says Professor Rose-Marie Belle Antoine.

Offshore Centres indicative of a broader issue.

My topic, while focusing on Offshore Financial Centres (OFCs), highlights an area where law intersects with economic and social policy. Moreover, it is representative of a much wider issue that confronts the Caribbean’s socio-economic landscape, having deep implications for our future. On the one hand, the development of OFCs in the Caribbean is a remarkable example of Caribbean talent, dedication, creativity and brilliance. On the other, the OFC phenomenon is a tragic reminder of a region handicapped by a world view that has defined our political and economic policy; and even the way in which we define ourselves, or rather, fail to define ourselves and our place in the world.

This is an opportune time to be considering such policy issues – at a time when the very existence of the sector, particularly in developing countries such as ours, is being threatened by an aggressive onslaught by onshore nations under the umbrella of regulation and respectability – much of it orchestrated by the Organisation for Economic Cooperation and Development (OECD) and Financial Action Task Force (FATF).

I will demonstrate that while legitimate concerns may be raised about the sector, as with any financial sector, many of the allegations, though posed as valid legal objections, are coloured by political and economic overtones, and are without legal justification. In fact, from a legal and economic policy perspective, offshore structures and policies are inherently legitimate.

We need to mount an appropriate defence for this mode of industry – chosen by so many Caribbean nations as a legitimate path to development. In fact, this is a billion dollar sector, responsible for the high GDP and standards of living for several of our neighbours such as the BVI, Cayman, Nevis, the Bahamas and Bermuda.

Many of the allegations, though posed as valid legal objections, are coloured by political and economic overtones and are without legal justification.

However, to do so, we must first understand the legal issues involved, since it is through legal policy that such financial centres have been attacked. In fact, offshore finance is an area where law has been used as an important tool for economic policy, to usher in a new era of development. Law was also the weapon used against the region by onshore developed countries afraid of losing revenue to offshore developing countries. I believe that we must analyse this socio-legal construct if we are to chart a suitable course for the future.

A rare and genuine example of indigenous thought and action.

Few people recognise that in terms of economic and legal policy, the creation and development of the OFC is a rare and genuine example of indigenous thought and action – a shining example in fact, that has been emulated the world over, on every continent. Did we know, for example, that the international business company was created right here in the Caribbean, in the BVI, by our own professionals? This is the model IBC that has been exported across the world. Similarly, unique and innovative legal norms and products such as the offshore trust, which I have described as a ‘hybrid financial product,’ have been born on our shores in various transmutations: i.e. the purpose trust; the anti-Bartlett trust, which challenges archaic, unresponsive, common law rules and orthodox principles, for example, about the liability of trustees considered to be unfair and onerous. We have been the prime movers and initiators – not mimic men – guided by the needs of the market.

We don’t know these facts because our vision is obstructed by the far more pervasive ‘bad press’ on the offshore sector. Very few have taken the time to examine carefully the reality behind the sector, and what it represents. The offshore/international sector has been, especially in recent years, repeatedly held up as a negative phenomenon, involving shady deals and criminal activity – the bogeyman. Nothing is said though about the wholesale export of these more modern legal commercial principles involving, banking, trust, company, commercial law in the offshore environment, to the shores of these very same nations that criticise offshore financial centres and the laws that support them. So, while some of us may realise that the Jersey, Isle of Man, Guernsey, Cayman and BVI offshore financial centres are in fact all British territories. Few of us understand and appreciate that several states in the USA, perhaps the most strident critic of Caribbean offshore financial centres, have copied our offshore laws and policy lock, stock and barrel. I am referring here to Delaware, Atlanta, Colorado, Alaska and the like.

We need to mount an appropriate defence for this mode of industry.

I have examined this in detail, and the picture is telling. Few industries, however, have attracted the kind of hypocrisy allowed to permeate and distort the legal and economic framework of this sector; even well-established principles in economics, trade, domestic law and international law.

My conclusion has been that once again, it is a tale of one set of standards for them, and another, far less advantageous for us. Indeed, so successful has been the anti-offshore lobby, we have even persuaded ourselves that the term ‘offshore’ is tainted somehow. Some of us have tried to change the name to ‘international’. Since we are being ‘disruptive’, let us acknowledge that this is the name Trinidad and Tobago preferred, for example, based on the so called ‘Kuwait model’ which ironically, has borrowed from the region’s offshore laws. I have refused to do this and make no apology. I do not think that we should allow ourselves to be defined and redefined. There is nothing inherently wrong about the term ‘offshore’ and in any event, whether we call ourselves international or anything else, everyone knows what we are speaking about.

I concede that it is undeniable that there are credible regulatory and even ethical issues in the OFC, as in any financial sector. There are rules and products that, though not abusive in or of themselves, can be susceptible to abuse. However, the approach to international regulation of the sector has been self-serving and cynical, to say the least. When we examine the case law, it is clear that where these issues are concerned, the outcome for onshore developed countries has been different, that is, more advantageous than where offshore jurisdictions are concerned. Attempts by onshore countries to bully offshore nations to abandon or compromise such developmental policies are without foundation. Today, the OFC is in retreat mode. Time will tell…

But what does this have to do with forging a future for the Caribbean? The ‘how we got here’ is instructive.

Very few have taken the time to examine carefully the reality behind the sector.

The perception that the aggression aimed at OFCs was as a result of errors, or wrong directions in terms of the management of the sector, or its laws is misplaced. On the contrary, the economic and legal policy that sustained OFCs can be seen to have legitimacy in terms of legal principle. Rather, the crisis facing the sector is as a result of the Caribbean being unwilling or unable to stand up to assert our sovereignty and our right to a slice of the pie, even in the face of the kinds of double standards the industry is continually being faced with.

There is a kind of déjà vu in this and in practically every sector and the lesson here is wide-ranging. It strikes me, as I have just assumed the Chair of the Regional Commission on Decriminalizing Marijuana, that we have been here before. For years, some persons, such as Rastafarians, were pressing, even before the Courts, for the decriminalisation of marijuana. This was met with harsh criticism, derision and a heavy-handed criminalisation policy, which, if anything fuelled crime. Yet, almost overnight, when certain US states announced legalisation of marijuana, it was as if a magic wand had been waved and it suddenly became okay for us!

In the OFC as in other sectors, often, we do not need more work, nor more talent or even more research – what we really need is courageous leadership to stand our ground.

This is an extract from the presentation, “The Caribbean Offshore Financial Services Revolution – A Bold, Futuristic Initiative Requiring Brave Leadership,” made by Professor Rose-Marie Belle Antoine, Dean of the Faculty of Law, The UWI St. Augustine on the first day of the Forum on the Future of the Caribbean, May 5-7, 2015.