Articles

The Cayman Islands has introduced another piece of anti-money laundering legislation with the passage this month of the Misuse of Drugs (International Co-operation) Law 1997, which allows foreign countries to apply for legal assistance when investigating drug-related offences.

Investors in a failed Cayman-registered mutual fund have criticized the fund's liquidators, Deloitte & Touche, for going behind their backs in applying for a large increase in their liquidation fees. A group of about 20 shareholders of The Global Opportunity Fund, who claim to have lost more than $40 million in the fund, have accused the accounting firm of greed and underhandedness.

The Bahamas Appeal Court has postponed a hearing into the appeal by Swiss businessman Werner Rey against his extradition to Switzerland. Proceedings had been scheduled to begin on May 26.Rey is appealing a Bahamas Supreme Court decision in April to extradite him to his homeland, where he is wanted on charges of fraud, forgery and bankruptcy offences in connection with the Omni group, which collapsed in 1991 with losses exceeding SwFr1 billion.

Investors thinking of buying into high-tech firm NimsTec, which last month became the latest company to list on the Bermuda Stock Exchange, may want to look closely at the track record of its technology and its senior management before parting with their funds. Bermuda-based NimsTec, which manufactures and markets 3-D products, including cameras, has raised $3 million so far from investors in Bermuda, Kuwait, Saudi Arabia and Bahrain. Investors include Deloitte & Touche (Bermuda) partners Bill Jack and Roger Titterton, who have invested $40,000 between them. The company bears striking similarities to a company called Nimslo, which lost investors in the US, the UK and Bermuda tens of millions of dollars over the 1970s, 1980s and early 1990s with the same technology now owned by NimsTec.

The future of Taiwan's economic link with the Bahamas has been jeopardized after the Bahamas broke its eight-year diplomatic relationship with Taiwan in favour of China, the Nassau Guardian reported.The policy shift followed the opening of an $80 million container port in Freeport, in which Hutchison Port Property, a subsidiary of Anglo/Sino firm Hutchison Whampoa, has a 50 per cent stake, reported the Guardian.

Bermuda-based Centre Reinsurance Holdings is facing legal action following the recent provisional liquidation of UK firm Anglo American Insurance Company, which Centre Re both owned and reinsured.Inside Bermuda has been told that creditors are going to sue Centre Re, alleging that Centre Re and its parent, Swiss-based Zurich Insurance Company, have misled Anglo creditors and acted in its own interests to the detriment of creditors through a series of actions since 1992.

The offshore mutual fund industry has been dealt a potentially significant blow by changes to US tax laws proposed in the 1997 US budget.

Following last month's analysis of the telecommunications industry in Offshore Alert, the newsletter was anonymously sent a copy of the confidential monopoly agreement between Cable & Wireless and the Cayman government, which may be of interest to readers.

As one millionaire fugitive was finally forced to leave his paradise island hiding place to face the music back home, another took his place to cause further embarrassment to the Cayman Islands.Swiss businessman Peter Kruger gave up a 16 month battle to escape justice by leaving the Cayman Islands on May 15 to return to Switzerland to face charges of bankruptcy fraud involving nearly US$272 million.But his place in the public eye has already been taken by John Felderhof, the former chief geologist of Bre-X Minerals, a would-be mining firm that defrauded investors of about $4 billion through false claims of gold finds in Indonesia.

Action is being finalized by the taxation policy group of the European Commission that could have serious implications for European-based tax havens, according to a report published on May 25 in Sunday Business, a UK-based newspaper.

The authorities in Ireland were waiting anxiously this week to see if the Grand Court of the Cayman Islands will give them permission to interview Cayman bankers and auditors who may have information about alleged illegal payments to former Irish Prime Minister Charles Haughey.

In a case that has triggered investigations on both sides of the US-Canadian border, Pietro Paolo Codispoti, of Montreal, was convicted in the Cayman Islands on May 22 of three counts of money laundering.

The Bank of N. T. Butterfield & Son Ltd., which is headquartered in Bermuda and has regional offices in several overseas jurisdictions, including a large presence in the Cayman Islands, has appointed John Tugwell as president and chief executive officer, effective May 5.

Bermuda has gained a significant competitive edge over rival offshore domiciles in the Caribbean by ending the telecommunications monopoly of Cable & Wireless and introducing a second long-distance carrier.International rates from Bermuda were already the lowest of rivals such as the Cayman Islands, the Bahamas and Barbados, according to a survey conducted by Offshore Business News & Research, which publishes Offshore Alert.But, since Bermuda's government granted a second international licence in January to TeleBermuda International - which has yet to begin offering a service, Cable & Wireless has answered the threat of competition by lowering rates to many countries, some by almost a third.

It is unclear whether the upheaval in Bermuda's telecommunications industry will have any effect on monopolies Cable & Wireless has in the Cayman Islands and other Caribbean countries.Cayman is Bermuda's greatest offshore competitor and its government may not want to fall further behind Bermuda in the area of telecommunications.Bermuda's peak rate of $1.10 per minute to the key countries of the U. S. and Canada is 66 per cent cheaper than the US$1.70 rate in Cayman and Bermuda's peak rate of $1.45 per minute to the U. K. is 43 per cent cheaper than Cayman's rate of US$2.07.

Telephone and fax rates in Bermuda, already the lowest of its rival offshore domiciles in the Caribbean, are set to come down even further now that government has introduced competition for both local and overseas services.UK-based Cable & Wireless has long held a monopoly on overseas telephone voice calls and the locally-owned Bermuda Telephone Company (Telco) has had a monopoly on local calls.But TeleBermuda International, which is backed by Canadian interests, was in January of this year given a licence to compete with C&W for overseas calls and local businessman Ken DeFontes has been granted a licence to compete with Telco.

Brian O' Hara, chairman and chief executive officer of both excess liability carrier Exel Ltd. and its main operating subsidiary X. L., was by far the best paid officer in 1996 of all the executives of Bermuda-based insurers that are publicly-listed in the United States, according to a salaries survey conducted by Offshore Business News & Research.The review shows that O'Hara took home a financial package worth $5.52 million for fiscal 1996, more than $2 million greater than the next highest-paid officer, Michael Butt, president and CEO of property catastrophe reinsurer Mid Ocean Ltd.

Reactions from various members of the offshore business community following the publication of the first ever edition of OffshoreAlert.

NimsTec Limited, a hi-tech firm which produces 3-D cameras and printers for the medical and photographic industries, has begun listing its ordinary shares on the Bermuda Stock Exchange, where they will be traded in minimum blocks of $100,000.

A British television programme claiming that a "mysterious Irishman" called Steven Baker was being sought in connection with the worldwide insurance fraud that goes by the name of Dai Ichi Kyoto Re caused a lot of interest in Bermuda. One of Dai Ichi's sister companies, North American Fidelity & Guarantee, had a brief but extremely profitable and very fraudulent one-year trading spell in Bermuda in 1992/1993. The company began life as a shelf company set up in October, 1989, by ambitious Bermuda lawyer Lynda Milligan-Whyte.

A trial date has finally been set for what will be one of the most eagerly-awaited business-related civil trials in the history of Bermuda.Bermuda Supreme Court has provisionally set aside a date in the spring of 1998 to begin hearing allegations that some of the island's most influential businessmen stripped Bermuda Fire & Marine Insurance of assets valued at over $40 million even though they allegedly knew the firm was insolvent.

Featrure on State of Bahamas Telecommunications IndustryIf you like hissing noises, line echoes, unreadable faxes, disconnected conversations and high rates, the Bahamas is the place for you.E-mail has been known to take three days to arrive, telephone lines can take several months to be installed and you may well be restricted in the number of lines you can have, even in the business centre of New Providence.

Reclusive billionaire Ken Dart has held secret talks with realtors, lawyers and bankers in the Cayman Islands with a view to a US$500 million that would involve dredging the North Sound Lagoon - and could signal the death of the world-renowned Stingray City tourist attraction.

Last month's story about amendments to The Companies Act in Bermuda that effectively severely hinders the ability of creditors and disgruntled shareholders to sue auditors, officers and directors for acts of negligence caused uproar on the island among those who penned the law.John Campbell, a senior lawyer in Bermuda, was quoted in an article in The Royal Gazette daily newspaper as saying: "The whole article is so far wide of the mark that it would be a pointless exercise to dignify it with a response.

Companies associated with John W. Henry, a futures fund manager with $1.9 billion under management, according to its own figures, is suing its former business partner, the Bank of Bermuda, for $300,000 at Bermuda Supreme Court.

Bermuda was in shock last week following the sudden resignation of David Saul as Premier after just 19 months in office.Saul caught everyone by surprise by giving only a week's notice that he was stepping down as leader and announcing that he was also quitting as an MP a few days after that.His resignation has caused concern among international businessmen, who fear a leadership battle could affect the economy.

Sir Lynden Pindling has announced he is stepping down as leader of the opposition Progressive Liberal Party after 32 years, including 25 as Prime Minister, and is also quitting politics following his party's comprehensive defeat in the Bahamas General Election on March 14.Pindling was one of only six PLP MPs to keep hold of their seats as Hubert Ingraham's Free National Movement party won a record 34 of the 40 seats available. The PLP will meet soon to elect a replacement.

Since Offshore Business News & Research was formed in November, 1996, several clients have asked why the company is based in Miami and not in one of the offshore domiciles it covers, such as Bermuda, the Bahamas or the Cayman Islands. The reason is that OBNR's founder has already been thrown off one island for writing investigative articles about powerful people and there is little doubt in his mind that he would be thrown off others for publishing similar stories. Such a scenario is not a consideration in the United States, where there is genuine freedom of the press and that is why OBNR is located in Miami, which also happens to be a gateway to the Caribbean. Below, Mr. Marchant goes into the circumstances of his forced removal from Bermuda, where he lived and worked from 1990 to 1996. He believes that what happened to him illustrates that, while Bermuda is generally a sophisticated society, occasionally it lives up to the ‘tinpot island' image that it has tried so hard and successfully in recent years to overcome.

Bermuda's lawyers, a firm of whom recently charged a client $400 for obtaining a $5 copy of someone's will, have surpassed themselves in the area self-preservation through the passage of amendments to The Companies Act 1981.Following the introduction of The Companies Amendment Act 1996, which became law last year, it has become more difficult, if not impossible, for creditors of failed Bermuda-registered companies to sue those who are partly responsible for the failures.

The Mexican government has amended the country's tax laws to try to curb the massive outflow of capital being lost to the world's tax havens.

Swiss national Peter M. Kruger, who cost Credit Suisse, Swiss Bank and others millions of dollars, has been re-arrested in the Cayman Islands on an extradition warrant from Switzerland just six months after his original extradition arrest had been thrown out by the Cayman courts.

Swiss national Peter Kruger, who is wanted in Switzerland on charges of filing a false bankruptcy of US$270 million, has given up his long fight against extradition from the Cayman Islands and has said he will voluntarily return to his homeland in the "very near future".

A Bahamas-based mutual fund was used by one of Ecuador's best-known business families to defraud investors and the Central Bank of Ecuador out of approximately $160 million, it has been claimed.And the scandal has extended to the United States where the Federal Reserve Board has taken steps to safeguard the financial position of the Pan American Bank, in Miami.Both the Bahamian mutual fund - the Interamerican Asset Management Fund Limited - and the Pan American Bank were set up by the powerful Ortega family of Ecuador.

The hearing to decertify the November 1996 election of Cayman Island Member of Parliament Linford Pierson was today adjourned until April by Grand Court Justice George Harre to allow Pierson to take his place at the opening 1997 session of parliament.

A Colorado couple on the run from the Internal Revenue Service and a possible prison sentence in the United States have been celebrating a major court victory in the Cayman Islands, whose government has welcomed them with open arms.The Appeals Court of the Cayman Islands reversed an earlier US$721,000 judgment made against Thomas and Sandra Quintin by a lower Cayman court in a case brought by energy giant Philips Petroleum of Oklahoma.

Bermuda's Progressive Labour Party has written to the island's international companies asking for contributions towards their campaign fund for the next General Election.

A scheme of arrangement has been selected as a way to liquidate the assets of Bermuda Fire & Marine Insurance Company, which is estimated to have liabilities of $500 million to $700 million. Details of the scheme are expected later this year but the process is expected to last at least 20 years.

Cayman Islands resident Syed Bilal Ahmed, the vice-president of Cayman-based Gulf Union Bank Ltd. and First Cayman Bank Ltd. is still listed as missing in the Bahamas after he disappeared from the Radisson Cable Beach Resort in Nassau on September 5, 1996.

Bahamian opposition leader Sir Lynden Pindling, who all but destroyed his country's international business sector when he was Prime Minister from 1967 to 1992, has been accused of inciting gang members to murder a member of the government in the run up to a General Election on March 14.Housing Minister Chuck Virgill was shot to death just one day after Pindling appeared to incite members of drugs gangs who support him to take violent action against the government.

The Carnival, Royal Caribbean, Norwegian, Dolphin and Majesty cruise lines, which call on the Bahamas, and Celebrity, which does not, have agreed to end the practice of advertising one fare, then billing customers significantly more by adding port charges.

At a time when the Cayman Islands government is said to be still contemplating bringing charges against Seattle-based Holland America Cruise Lines one year after one of the firm's ships dragged its anchor off Grand Cayman in January, 1996, severely damaging a popular scuba and snorkelling site, the company has donated US$125,000 to develop and preserve a bird sanctuary on little Cayman.

One of Bermuda's most influential businessmen, lawyer Charles Collis, has been accused of doctoring the minutes of a crucial committee meeting to hide evidence that directors of Bermuda Fire & Marine Insurance knew the firm was in financial trouble before they stripped it of $40 million in assets.

Bermuda-based Mutual Risk Management, which sells itself to investors as being risk-free and to its ultimate insureds as being a carrier of risk, is currently subject to an examination by the US Internal Revenue Service.

The Things People Say.

Is the Cayman Islands new ‘Proceeds of Criminal Conduct Law' a smoke and mirrors act - as some in rival jurisdictions have indicated - or is it a genuine attempt at deterring money laundering? The answer will only be known the first few times that the Cayman authorities receive requests for assistance from law enforcement agencies in the U. S. and the U. K.

Cable & Wireless is suing the Bermuda government for breaking its monopoly on international calls by granting a licence to newly-formed rival TeleBermuda International. TeleBermuda plans to begin operating next month and is threatening to slash overseas rates by up to 17 per cent for calls to some countries. Sources in Bermuda say Cable & Wireless have not ruled out the possibility of applying for an injunction to prevent TeleBermuda from offering their service until the legal dispute has been determined by Bermuda Supreme Court.

The management of Bermuda Fire & Marine Insurance may have underestimated the costs of running off the failed insurer's international business by as much as $23 million, according to liquidator Ernst & Young. When breaking up the company in 1991 in order to protect its profitable domestic business from the debts of its international arm, only $1.7 million was left behind to pay Bermuda Fire's run off costs.

Statement regarding businessman Keith Leslie King that was made by Catherine Turner to the Isle of Man Financial Supervision Commission on October 26, 1995.

Bermuda-based Mutual Risk Management, whose shares are traded on the New York Stock Exchange, has dismissed its auditor of 18 years, KPMG Peat Marwick, and replaced it with Ernst & Young - but will not officially say why.

Norman Rosenthal, a senior securities analyst with Wall Street investment firm Morgan Stanley, heaped praise on the Bermuda insurance and reinsurance market yesterday.Mr. Rosenthal, whom the press had been notified in advance was a hard-hitting talker, didn't have a bad word to say about the island's industry during an address yesterday at a lunch organised by Bermuda Insurance Institute.