The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The massive document leak from a Panamanian law firm should serve as a wake-up call for the Bahamas to alter its “dead wrong” financial services model, a Bahamian executive charged last night.

Paul Moss, president of Dominion Management Services, told Tribune Business that the data/confidentiality breach at Mossack Fonseca had again exposed the need for the Bahamas to shed the international perception of it as a so-called ‘tax haven’.

He argued that this nation needed to shift from its traditional client confidentiality/tax minimisation platform to one that was based on transparency and a low income/corporate tax rate - something he believes would help attract legitimate business to the Bahamas.

And Mr Moss said the data leak, which occurred at Mossack Fonseca’s Panamanian office, raised concerns about the Government’s drive - led by Prime Minister Perry Christie and Hope Strachan, minister of financial services - to ‘liberalise’ and open up the bar to foreign attorneys and law firms.

He warned that such a breach, if it occurred in the Bahamas, would deal a potentially shattering blow to this nation’s financial services industry.

Expressing concern that the Bahamas was “behind the ‘8 ball’ “ in transforming its financial services business model, Mr Moss said the so-called ‘Panama Papers’ would inevitably result in this nation - and all international financial centres - incurring “more scrutiny” from international watchdogs and industrialised countries.

“This is an opportunity for the Bahamas to look at the model we are pushing on. It’s the wrong model,” Mr Moss told Tribune Business.

“This [scrutiny] will never stop until such time as we decide to take this kind of initiative. This is huge.”

Mr Moss has consistently argued that the Bahamas should switch its financial services model from being a ‘no tax’ jurisdiction to one that makes it a ‘low tax’ jurisdiction, on the grounds that this is what today’s international investors are looking for.

One such ‘low tax’ nation is Barbados, which has successfully attracted much Canadian corporate and personal business via the ‘double tax’ treaty between the nations - which ensures profits and other revenue streams repatriated to the latter are taxed only at the lower Barbadian rate.

A long-time advocate for the Bahamas to also enter the ‘double tax agreement’ business, Mr Moss said becoming a ‘low tax’ nation would also provide some protection against the constant barrage of regulatory initiatives flowing from the G-20 and its forums, such as the Organisation for Economic Co-Operation and Development (OECD).

Returning to this theme yesterday, Mr Moss told Tribune Business: “The Bahamas needs to get out in front of this with what we are doing. The model we are using is so dead wrong.

“The promotions by the Bahamas are not having the effect they could have if we had the right model. Yet we continue to fight in the pack of being a ‘tax haven’.

“We ought to move post haste to change our image. We ought to take the lead before some other Caribbean jurisdiction does, and then we find ourselves behind and playing catch up,” he added.

“We are behind the ‘8 ball’, and I fear the jurisdiction is going to suffer the consequences.”

Mr Moss also called for more Bahamian ownership in the international segment of the financial services industry, and said foreign-owned practitioners ought not to be admitted if they were coming here merely to incorporate companies.

He argued that the ‘Panama Papers’ episode ought to give the Government pause for thought before pushing the Bar Association to ‘open up’ to foreign attorneys.

“They ought to be very careful in the manner in which they grow the industry,” Mr Moss told Tribune Business. “They cannot grow it by liberalising the Bar. They cannot grow it by being a ‘tax haven’.

The 11.5 million Mossack Fonseca documents, obtained by the International Consortium of Investigative Journalists (ICIJ), listed the Bahamas as the firm’s third most-popular jurisdiction for companies incorporations - 15,915, behind Panama and the British Virgin Islands.

That is unsurprising, given that Mossack Fonseca has a physical presence in the Bahamas via its financial and corporate services provider subsidiary.

One world leader with alleged ties to the Bahamas is Maurico Marci, president of Argentina. He is listed as being a former director of Fleg Trading Ltd, a company incorporated in the Bahamas in 1998 that was dissolved in January 2009.