The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has dismissed as “hearsay” allegations that public and private sector officials have been suggesting the Bahamas will hold back on automatic tax information exchange, making this nation more attractive to “undeclared” funds.

The assertion was contained in the Ministry of Financial Services’ response to questions from The Economist magazine, prior to its publication of an article alleging that the Bahamas is single-handedly undermining the “war on global tax dodgers”.

Quoting “more than one” unnamed source, The Economist put it to the Ministry that Bahamian government officials, together with private sector executives, “have been telling people at international conferences and in meetings that the Bahamas will not exchange information widely, or at least will be slow to do so”.

The Ministry, in its September 6, 2016, response, said: “While we are not minded to respond to hearsay, the position of the Bahamas Government is that we will engage in good faith negotiations with appropriate partners that approach the Bahamas to enter into bilateral negotiations, as is required by the OECD Global Forum.

“We are also committed to meeting our 2018 commitment [to implement the Common Reporting Standard for automatic tax information exchange] and we have consistently conveyed this message in all fora.”

The Economist then suggested that “sources” had informed it that the same Bahamian public and private sector officials were promoting the Common Reporting Standard (CRS) ‘go slow’ to suggest “undeclared money will be safer in the Bahamas than elsewhere”.

This question implies that the Bahamas is open to accepting client funds that represent the proceeds of crime (money laundering) and/or tax evasion.

It provoked a sharp response from the Ministry, which said: “We are cognisant of the damage that such representations could have, particularly in light of the contribution that the financial services sector makes to our economy - providing employment, foreign exchange earnings and contributing more than 15 per cent to our GDP.

“The Bahamas is a responsible, compliant international financial centre. We are committed to maintaining the very highest levels of conduct, complying with the international standards, to prevent the abuse of our financial system by money launderers and criminal elements, including the use of our jurisdiction for undeclared money.”

Little of this made The Economist’s final article, which portrayed the Bahamas as a non-cooperative, non-compliant jurisdiction when it came to the global fight against tax evasion and avoidance, and other forms of financial crime.

It also ignored the fact that the Organisation for Economic Co-Operation and Development (OECD), the world’s tax overseer, has approved the Bahamas’ chosen bilateral approach for Common Reporting Standard implementation.

The Economist piece largely repeated the allegations contained in its questions, saying: “The Bahamas Financial Services Board (BFSB), which promotes the islands’ financial centre, has stressed at international industry events that it will move very cautiously on information exchange.

“Some interpret this as a veiled invitation to park undeclared money there. Others say the Bahamas’ talk of its strategy being key to its finance industry’s ‘survivability’ shows it believes it can carry on only by accepting undeclared funds.

“Tax dodgers may also be attracted by the fact that the Bahamas is one of the few places where tax evasion does not count as a ‘predicate’ (underlying) offence for money laundering charges.”

It later acknowledged that the BFSB denied promoting the Bahamas as a safe location for ‘undeclared funds’, and that the Government recognised the damage doing so could cause.

The Economist’s two principal sources were Pascal Saint-Amans, the OECD’s tax policy head, and Mark Morris, who was described as an ‘independent tax expert’.

A website for what appears to be Mr Morris’s Swiss-based business, Mark Morris consulting, describes him as a specialist on the CRS, and as having “regular interaction and input with the OECD Global Transparency Forum board members”.

He also labels himself as an adviser to the European Parliament on tax matters, and the editor of automatic tax information exchange ‘technical paper’s for the Tax Justice Network - an organisation that has shown itself to be no friend of the Bahamas.

Given Mr Morris’s OECD links, and the quoting of Mr Saint-Amans, it is reasonable to ask whether The Economist article was an ‘OECD plant’ designed to pressure the Bahamas into adopting the multilateral approach to CRS implementation.

And given the two sources, another question is whether the article represents the ‘official’ OECD position, and if more trouble is brewing for the Bahamas and its international financial centre (IFC).