The Tribune

By FAY SIMMONS

Tribune Business Writer

fsimmons@tribunemedia.net

The Attorney General yesterday warned that European reinsurers could withhold up to 25 percent of claims payouts for hurricane victims unless The Bahamas escapes the continent’s tax blacklist.

Ryan Pinder KC, addressing the Senate, voiced optimism that this nation will sufficiently address the European Union’s (EU) economic substance reporting concerns in time to be removed from the blacklist this November, but nevertheless disclosed that failure could undermine The Bahamas’ efforts to rebuild in the aftermath of a Dorian-type disaster given the reliance on European reinsurers to pay a substantial portion of insurance claims.

He explained that European reinsurers apply a 25 percent withholding on claims payouts to blacklisted jurisdictions. Should this take effect, it could prevent Bahamians from adequately rebuilding in the aftermath of future catastrophic climate-related events.

Referring to Prime Minister Philip Davis’ address this week to a conference of EU, Caribbean and Latin American nations, Mr Pinder said: “He spoke about, with the EU blacklist against our country, that the insurance industry that is vital to the rebuilding efforts of natural disasters is adversely affected, which in turn adversely affects each and every one of us in this country.

“We can speak specifically to the reinsurance market. Because the EU has indiscriminately blacklisted our country, any remittances paid on claims from European reinsurers, there is a 25 percent withholding. We cannot recover and rebuild in the face of the climate crisis if the financial services penalties put on us by the European Union affect the basic tenants of reinsurance and insurance in this country. Things have to change.”

Echoing the Prime Minister, Mr Pinder called out the 27-nation EU for “inequitable determinations” in including The Bahamas on its ‘tax blacklist’, arguing that this nation has a stronger compliance regime than many developed nations while debating amendments to the Exempted Limited Partnership Act and International Business Companies Act.

He said: “As we know, the financial services industry is an industry that is highly competitive, where our competitors are always looking for an advantage over us, where the goalposts move on a continual basis. It’s an industry where we have the big behemoths to our east and across the pond, who look to themselves being financial centres at the detriment of us.

“It is an industry where we have foreign governments and multilateral institutions doing what they can to discredit our jurisdiction, and to cause for what I call inequitable determinations, blacklists and other opinions that they may have about us even though we are a country who achieves greater things than them, who have better compliance regimes than them, and who have better innovation than them.”

Mr Pinder said Mr Davis made a “convincing argument” on the difficulties that confront blacklisted small nations, adding: “Our prime minister has recently given to the European Union.... my good colleague, Mr Halkitis, was in Brussels with the Prime Minister, championing the country and what I would call a hostile environment in front of the EU, European Commission and its technical bodies.

“The Prime Minister spoke with respect to the effects of climate change on small island developing states. But the Prime Minister also was able to give a convincing argument on how the activities of countries and multilateral organisations like the European Union, through their discriminatory treatment of countries like The Bahamas in financial services matters, have a direct adverse implication on the climate crisis effects on small island developing states.

“The Prime Minister told the European Union to get their foot off the necks of countries like The Bahamas by utilising discriminatory blacklisting activities in the financial services industry. And he described how, with those blacklisting activities and impositions on countries like ours, it affects our ability to recover from natural disasters that those countries themselves have created,” the Attorney General said

“There has to be a holistic view on how this treatment by big economies, who cause climate crises and discriminate against us in the financial services industry, affect us small countries. It’s unfair. And one thing that this government will do, in the face of the big boys in the room, we will punch above our weight.”

“We will make our case known at the highest levels. And we will solicit the support of our colleagues both in the region and worldwide. To demonstrate that we are equal to them, and we should be treated as such.”

Mr Pinder revealed that the Commercial Enterprises Act will be debated in the Senate next week, while the new economic substance reporting portal will be launched in September. He said: “We have a new piece of legislation, a redraft of the Commercial Enterprises Act that deals with economic substance that we will find in this place next week which will address all the deficiencies of the prior legislation.

“We will also address what has evolved into best practices in economic substance reporting. We will have a new and functional portal up and running by September for the reporting on an economic substance basis.”

Mr Pinder said the changes to the portal and the Commercial Enterprises Act will better position the country to be removed from the EU blacklist when he 27-nation bloc meets again to assess the listings in November.

He said: ”We will be in a position to demonstrate to the European Union, OECD and others that we have the capability to enforce our laws, to enforce those who do not abide by our laws, and to impose the adequate remedies and penalties that are necessary. And we will be in a position to be doing that in November when they come to rewrite this country; to be compliant with the best practices and requirements imposed upon us by the large colonial masters of the past.

“They will likely have something else they want us to do when they come. As a small island developing state, leaders in the international financial centre marketplace, we must punch above our weight. And the fact of the matter is we must do better than they do. We must continue to innovate, we must continue to lead from the front. This is vital to our survivability, vital to our middle class, vital to our social sustainability in this country.”