The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas was yesterday urged to “show progress” in implementing its automatic tax information exchange regime, given that such initiatives will gain further “impetus” from the ‘Panama Papers’ disclosure.

Michael Paton, a former Bahamas Financial Services Board (BFSB) chairman, told Tribune Business that there was “no risk” this nation would be “singled out” as a result of the 11.5 million documents leaked from Mossack Fonseca’s Panama office.

While the Bahamas is said to be the law firm’s third most popular jurisdiction for company incorporations, Mr Paton said the country needed to “remain on course” and focus on living up to international best practices commitments.

“It’s going to give more impetus to the OECD’s automatic exchange of information initiative, and the pressure will be on the Bahamas with the Common Reporting Standard and bilateral agreements in the future,” the Lennox Paton attorney and partner said of the likely global repercussions.

“As long as the Bahamas keeps on the course it’s on, advances the commitments it has made, and shows progress with the implementation of the automatic information exchange framework, there shouldn’t be any fall-out.

“The onus is to demonstrate we are moving forward, and that we are being sincere in our commitments. We need to advance the implementation of the framework for reporting.”

The CRS has been developed by the Organisation for Economic Co-Operation and Development (OECD) as the global standard for automatic tax information exchange, and the Bahamas has to complete its regime for facilitating such transfers by end-2017.

It will start to enter negotiations for automatic tax information exchange agreements with individual countries, on a bilateral basis, come 2018.

The Government and private sector are currently creating an Implementation Task Force to develop the Bahamas’ automatic tax information exchange regime, which has been likened to a global version of the US Foreign Account Tax Compliance Agreement (FATCA).

Tanya McCartney, the BFSB’s chief executive, previously told Tribune Business that complying with the new tax information exchange regime was “the immediate priority” for the Bahamian financial services industry.

While declining to make any direct comment on the potential consequences for the Bahamas as a result of the Panama Papers leak, Ms McCartney said the industry was watching developments closely.

“At this time it would be premature for us to comment on this developing matter in any detail,” Ms McCartney told Tribune Business.

“What we can say is that the Bahamas has always been committed to complying with international best practice. We continue to monitor developments to assess any possible impact.”

Mr Paton, meanwhile, said much of the material published to-date on the Panama Papers leak had featured circumstantial evidence and innuendo.

While numerous global politicians, and their relatives, associates and colleagues, had been linked to vehicles incorporated by Mossack Fonseca, little had been produced to determine the source of funds/assets an whether these were derived from - or linked to - criminal activity.

“From the Bahamas’ perspective, if it turns out that there is a criminal involved with a Bahamian company that Mossack set up, then we have all the pieces in place to deal with it,” Mr Paton reaffirmed.

“All this just adds fuel to people like the Tax Justice Network, and keeps the pressure on governments....But in the Bahamas we’ve had public disclosure of company directors for several years, whereas other jurisdictions, I think, are just starting to do that.

“The Bahamas can demonstrate that it’s engaged with the international initiatives, has implemented reasonable, considered commitments, and the evidence shows we continue to do that,” the ex-BFSB chair added.

“I don’t see any risk of the Bahamas being singled from this. The biggest issue for us is not vacillating from our commitments moving forward, and not having a knee-jerk, political reaction to this. That would be a mistake.

“The Bahamas has set its course, and as long as we comply with what we said we were going to do, we’ll be fine.”

The Bahamas has so far been subjected to ‘mentions in dispatches’ when it comes to international reporting of the material contained in the ‘Panama Papers’.

The major revelation involves suggestions that the father of current UK prime minister, David Cameron, used a Bahamian-domiciled investment fund, Blairmore Holdings, to avoid tax in Great Britain.

A 2006 offering memorandum for the fund shows that SG Hambros Bank & Trust (Bahamas) was administrator and custodian for Blairmore Holdings, while Lennox Paton acted as its Bahamian legal adviser. Deloitte & Touche (Bahamas) was the auditor.

Betty Roberts, SG Hambros Bank & Trust (Bahamas) former managing director, is named in corporate documents as Blairmore Holdings’ president.

Another SG Hambros Bank & Trust (Bahamas) executive, James Hoar, was its vice-president, while Bahamians Katrena Mitchell, Kendall Simmons and Effie Burrows all held executive posts.

There is no suggestion that SG Hambros Bank & Trust (Bahamas), nor any of those named above as officers and directors, have done anything wrong in relation to Blairmore Holdings.

I’m not really concerned,” Mr Paton reiterated of the ‘Panama Papers’ disclosure. “I don’t think there’s anything specific to the Bahamas. When I woke up today, were things different because of the disclosure of this information? No. It doesn’t change the political landscape.”