As Walkers global managing partner Grant Stein says of the negative coverage being levelled at the offshore world: “It’s based on fiction.”
Yet the weight of the campaign being waged against the offshore sector is such that the top offshore firms are having to consider their response and how they deliver their message to the clients.
The urgency of this matter has become more intense since headlines are now focusing on companies that are moving away from offshore jurisdictions.
When international insurance broker Willis announced it was considering redomiciling to Dublin from Bermuda it was perceived as a blow for the offshore island. Yet lawyers on Bermuda insist that it will not trigger a wider trend of defections and that in reality it will have little impact on business on the island.
Nevertheless, they are aware of the importance of outside perceptions – after all it is what attracts new business to the jurisdiction.
Offshore countries have spent much of the year ironing out transparency agreements with their onshore counterparts.
The Cayman Isles, Bermuda and Singapore were among the major jurisdictions left off the grey list of jurisdictions that fail to comply with international financial regulations, published by the Organisation for Economic Co-operation and Development (OECD) in April (14 April 2009).
All have taken steps to get off the grey list, which is reserved for those countries that have “committed to the internationally agreed tax standard, but have not yet substantially implemented the measures”.
In August both Cayman and the British Virgin Islands entered into Tax Information Exchange Agreements (TIEAs) with New Zealand. It was the 12th such agreement signed by the jurisdictions and saw them both elevated to the white list, showing they endorse transparency of an internationally agreed standard.
Singapore, meanwhile, has signed nine of 12 TIEAs needed to get it off the grey list. This includes agreements with the UK, Netherlands, New Zealand, Australia and Denmark. It is on track to reach the white list before the end of the year.
All this signals that jurisdictions are willing to cooperate. “Why doesn’t this get reported in the British press,” asks one senior lawyer visiting the UK from Bermuda. “Is there really so much concern about what’s happening in Bermuda? Why?”
Global managing partners are well aware that the issue of tax, in particular tax avoidance, is a political hot potato. Regardless of whether these jurisdictions caused the economic collapse, they will be held jointly accountable and tax is the key issue.
This is why it is so important for those jurisdictions to make their voice heard.
In July, Stein called for greater cooperation between offshore firms to enable them to respond with one voice to the criticisms levelled at their clients.
It is understood he is currently in negotiations with a number off offshore firms, including Conyers Dill & Pearman, about putting together a coordinated PR front to beat off the rhetoric.
There is much work to do and not everybody is on board – one rival managing partner questioned whether conflicts would allow several firms to come together. Yet, with so many politicians aiming their sword of truth offshore it is about time somebody led the fightback.