By Anthony Travers

The one thing that can be said with absolute certainty about the Cayman Islands and the hedge fund industry is that no one reading the Financial Times editorial of 20 January 2013 or the articles of Mr Sam Jones, Financial Times Hedge Fund correspondent, of 17 January 2013, would have the slightest idea of the true nature of the issues which arise or what may or may not be regarded as a legitimate concern in relation to hedge fund operations in the Cayman Islands.

At the risk of allowing the facts to get in the way of a rattling good headline, the following may assist those wishing to undertake a proper analysis.

The statistics are correct.  The Cayman Islands, which has a modern and appropriate regulatory regime, is the domicile of some 9,500 mutual and hedge funds with assets under management of some US$2.2 trillion.  The criticism about this state of affairs arising because of a ‘light touch’ regulatory regime remains ill-founded.  The assets under management are as to some 60 per cent placed with US fund managers and 20 per cent with fund managers in the UK and are thereby subject, as may be, to full SEC, CFTC or FSA regulation. (The percentages may be higher in the US: US States with less than 1% AUM are not collated.) No additional layer of prudential regulation is therefore required by the Cayman Islands Monetary Authority (CIMA) which has full transparency available by virtue of IOSCO regulator-to-regulator disclosure.

The suggestion that the new proposals by CIMA must increase transparency for an investor in a hedge fund is highly debatable.  The evidently excitable Mr Vincent Vandenbroucke, head of operations of due diligence at Hermes BPK is quoted as follows: "We have been screaming for more transparency for some time now". But it is hard to know what additional transparency the CIMA proposals could give to an investor in a hedge fund who ought to be capable of reading the mandatory Offering Memorandum on which his investment is based. This since 1993 has required all material information to be disclosed "as would enable an investor to make a fully informed decision".   This provision merely codifies pre-existing common law and therefore, the law in the Cayman Islands has always required full information to be disclosed in relation to every director of the fund in which the investor invests.  The investor has a choice.  He can accept the information disclosed, he can predicate his investment on further and better information concerning the directors, including the question as to how many boards each director may sit on, or decide not to invest at all.  Nothing in the CIMA proposals has any bearing on that essential dynamic and nor should it.

The statement in the Financial Times that the plans to increase transparency and corporate governance "will help investors verify that the directors ostensibly representing them have the ability and indeed time to discharge that duty" is the purest nonsense.  Those mechanics exist already not only prior to investment but at any time thereafter. If investors have determined to subscribe by taking non-voting shares legal consequences follow and nothing in the CIMA proposals will alter that standing. But they remain able to vote with their feet.   The following question posed:  "Why anyone would entrust their money to a fund whose directors they know nothing about is a puzzle" is indeed a puzzle but not as much of a puzzle as why an editor of the Financial Times in light of the legal and regulatory framework that exists in the Cayman Islands would seek to apply that question to a Cayman Islands hedge fund.  The fact that some of the most sophisticated investors in the world would have committed US$2.2 trillion on the basis the Financial Times suggests represents current Cayman Islands law and regulation is an evident mischaracterisation.  But it gets worse, "Transparent corporate governance is one thing", trumpets the editorial, "transparency and company accounts is another".  What this assertion is attempting to suggest is also something of a mystery given that the audit of every regulated Cayman Islands hedge and mutual fund (by recognised auditors) has been mandatory since the introduction of the Mutual Funds law in 1993.  Mr Madoff could not have operated in the Cayman Islands. Investors may take comfort in the fact of the audit process during which governance is necessarily reviewed. Thus we conclude that under current Cayman Islands law and regulation the investor is perfectly aware of the identity of the directors and has available full audited accounts

The traditional Financial Times mischaracterisations about ‘secretive tax havens’ abound, based either on lack of any due diligence whatsoever on the part of Mr Jones or genuine misunderstanding.  The Cayman Islands has full transparency treaties with the United States and the United Kingdom revenue authorities and furthermore, proactive automatic tax reporting with all European Union revenue departments.  References to ‘tax evasion’ are therefore, or should be, off the table.  The Cayman Islands hedge fund, whether operating in the United States or the United Kingdom, is taxed in accordance with the law of the jurisdiction where the profits are made and its assets and trading activity are regulated in accordance with the laws of that jurisdiction.

That dispenses with the Financial Times' position.  But what then drives the evident excitement of Ms Roisin Cater of Carne, hedge fund director services, who is quoted as saying: "You can't underestimate how big this is".  Or that of her boss, Mr Peter Heaps, who states, apparently critically: "At the moment anywhere in the world, irrespective of knowledge or experience, you can act as a director of a Cayman entity".  Quite right too.

But evidently, there is more going on here than meets the editorial eye of the Financial Times.

The excitement of the small management company firms, like Carne, is palpable.  What they anticipate, although is the separate review to be undertaken by CIMA based on an industry wide survey for which Ernst & Young has been commissioned. This is to ask the question of whether or not there must be published in a central registry a publically available indication of the number of directorships undertaken by any one individual.  Although this information is available to any investor on enquiry of the hedge fund or the director, the practice of providing over many directorships clearly requires review.  As a result that there may well be a break up of those one or two organisations who specialised in this area, who may now be regarded as ‘too big to succeed’ with economic spin off benefit to the smaller players. The excitement generated it seems is based not on an analysis of the Cayman regulatory position but entirely on self-interest and the prospect that with a mandatory limit on directorships the smaller players may well become bigger. It would be impolite, no doubt, to ask if they were small for a reason.  However it should be said that if the CIMA proposals were directed at over many directorships per person alone they would be well founded.  It seems that a degree of sensible self-restraint has been absent in the industry.

But to describe the CIMA’s proposal as a major advance overstates the position and ignores the reality of hedge fund investment.  The hedge fund investor invariably undertakes his core due diligence on the investment manager and assumes that the hedge fund directors whose role is, in virtually every case, supervisory only, will be conducted in accordance with appropriate law and regulation.  As far as the Cayman Islands is concerned, that is a very safe assumption.  The law which regulates the fiduciary duties of directors of a Cayman Islands company and their duties of care, skill and due diligence is well-settled under English common law principles and has been applied appropriately by the Cayman Islands courts.  In fact, it can be said with certainty, that the Cayman Islands law governing director's duties is one of the more advanced of any jurisdiction.

In this respect, the CIMA’s proposals overreach; the need to reduce what are sophisticated and well-developed rules of law to a simplistic set of guidelines does nothing whatsoever to assist investor protection.  The point was well put by Mr Justice Jones in Weavering in referring to director's duties where he said "the nature and scope of the duty can only be determined by reference to the actual circumstances of the case".

So the CIMA’s case for extensive codification of director's duties is not made out.  There is reference to the regulatory initiative of others (which may have been necessary in those jurisdictions) and to the pressures bought by the alphabet soup of international regulatory bodies, so called.  Again we see the shibboleth here attributed to the ‘Senior Supervisors Group’ and presented to the ‘Financial Stability Board’ on ‘risk management lessons on the global banking crisis of 2008’ which apparently concluded that "the Global financial crisis highlighted a number of corporate failures and weaknesses, including insufficient board oversight of senior management inadequate risk management and unduly complex or opaque firm organisational structures or activities".

This statement is relied on by CIMA as the basis for increased regulation to hedge funds notwithstanding the weight of international opinion, including that of Lord Turner of the FSA, to the effect  that hedge funds did not contribute  to the financial crisis, the weight of opinion that attributes that crisis to ill-considered political initiatives in the United States and ill-founded regulation of them  and the fact that no financial institution failed in the Cayman Islands as a result of the financial crisis.  What CIMA does not do is the one thing it ought to do, which is to identify any failure in the Cayman Islands as justifying extensive regulatory revision.

We would all be pleased for clarification of the Financial Times references to “failures and shady practices”.  We are aware of only three hedge funds having been bought to Court - that of Weavering being the most relevant.  That is good authority for the proposition that directors who do nothing whatsoever to discharge their duties, as they may exist in relation to that hedge fund, will be found liable.  How quite any regulatory initiative intends to improve on the legal clarity applied in that decision is the real mystery.

Grand Cayman,
April 15, 2013

If the UK recovery is dependent on revenues from Chancellor George Osborne’s much publicised tax crackdown on Caribbean financial centres then he is in for a rude awakening according to Cayman Islands Stock Exchange Chairman, Anthony Travers, OBE.

Travers, who is also Managing Partner at law firm Travers Thorp Alberga, is acknowledged as one of the world’s leading experts on offshore law. Speaking from George Town, Grand Cayman today, Travers delivered a withering critique of the British Chancellor as well as demolishing the Austrian Finance Minister Maria Fekter.

Travers said, “I am deeply troubled that the meritless attacks on the Overseas Territories by Ms Fekter appear to be gaining traction.  Furthermore there seems to be no contrary assertion from the UK Government and the Chancellor as to the true position.  This is in neither of our interests as in turn it seems to me to leave the City open to further Franco-German attack by association.  But this is an attack based on mischaracterisation.

Travers said, “A cursory review of the publically available statistics under the European Saving Directive which established fully transparent proactive tax reporting shows bank deposits in Cayman of EU residents of a statistically irrelevant US$25m.

“The correct answer to Ms Fekter should have been that the Overseas Territories already demonstrate full tax transparency.  Given that HMRC already has full  treaty access to Cayman accounts for UK tax purposes the provisions of FATCA are simply duplicative , wholly unnecessary and will raise no additional revenue.

“I can speak with authority on the Cayman situation but it has not escaped my notice that Chancellor Osborne has also attacked our friends in BVI  which has similar  tax transparency with the UK and the USA.

“He should know that the BVI has an extensive network of some twenty one tax information exchange agreements providing for complete tax transparency notably to HMRC and the IRS; that they are concluding the FATCA negotiation with the UK, and  the US and that they are considering moving to proactive reporting with the EU under the Directive.

Cayman (and BVI and Bermuda) regard tax evasion as firmly off the table and yet we are continually labeled tax havens, a term that has become synonymous with illegality and wrongdoing.

Travers concluded “Our measures in Cayman far exceed the tax transparency available in Austria (and many other places including the US) and yet we find no rebuttal from Chancellor Osborne, rather the contrary.

“One can only  gaze in awe at the  misinformation being promoted by a UK chancellor and wonder why he appears willing to assist  the French and Germans in their avowed quest to irretrievably damage The City of London’s global dominance.”

Issued on behalf of the Cayman Islands Stock Exchange

Mr Financial Secretary, Distinguished Colleagues

Good evening and thank you all for coming to this event to celebrate what I hope will be a historic partnership with the Deutsche Bourse and a milestone in the development of the Cayman Islands Stock Exchange.

It is some 17 years since the passage of the law which founded this Exchange and during which time under the excellent guidance of Financial Secretary and his board members on the Stock Exchange Authority the total number of listings on the Exchange has grown to exceed 1,200 in number with US$160 billion of market capitalization.

These are creditable numbers but they have been obtained whilst maintaining a low risk environment.  The Council of the Exchange has to date steered listings towards investment funds and debt products, formed in our own financial services industry.

Throughout that period stability and integrity have been the key objectives of the Exchange and I am proud to say that those objectives have been met.  But it is now my view and that of the Council, that without losing sight of those objectives, the time is right to expand the horizons of the Exchange and to include now the listing and trading of international equities.  To do so, we needed to find a partner whose philosophy with respect to stability and integrity matched our own and furthermore a partner who could provide us with state of the art technology on which to base the essential trading system that is at the heart of our expansionist programme.  I would therefore like to say how fortunate we have been to form a partnership with Deutsche Bourse whose reputation and standing in international circles is second to none.  And it is from Deutsche Bourse that we have received the benefit of the technology now operating the Xetra trading platform.

This trading platform will enable the Cayman Islands Stock Exchange to provide a broad range of trading for international equities and enable reciprocal trading rights amongst the Deutsche Bourse broker dealer network and for Cayman Islands broker dealers all of whom have the ability to access the trading platform.  Furthermore, in good time, this facility provides the basis of a system which may be expanded to include derivatives and commodities trading.

I would therefore like to thank all those from the Deutsche Bourse who have with typical German efficiency facilitated the implementation of this project and precisely as projected not only on time but in these trying financial times, remarkably, on budget.  This is a project entirely funded from the resources of the Exchange without the need for Government funding or subsidy.

I would also like to thank our excellent Chief Executive Officer, Ms Valia Theodoraki, our head of listings, Mr Nick Small and our technological guru, Mr Jack Stouffer, and last but by no means least the indefatigable, Miss Sandy MacFarlane, for all their dedicated work in bringing this project to successful completion.  Thanks must also be extended to my colleagues on the Stock Exchange Council both past and present for their constant support and vision.

In closing, I would like to observe that, at a time when there is a good deal of negative comment emanating from Europe about offshore financial centers, this display of co-operation represents something of a milestone in that it further cements the Cayman Islands into the global financial architecture.

I have every belief that the success of this venture will repay the good faith that our colleagues on the Deutsche Bourse have extended to us on the Cayman Islands Stock Exchange and we look forward to many years of continued co-operation.

We have now a short video presentation from our colleagues in Germany.  Thank you again for attending and please enjoy the rest of the evening.

The CIMA paper on proposed corporate governance expresses the intention that it will “enhance and clarify corporate governance standards and provide greater transparency in the financial services market”.  The expression “transparency” carries no particular meaning and so the question of what is available to an investor under current law must first be answered.  What must be ignored are the pleadings of irrelevant third parties, including journalists who seek to erode the legitimate right to confidentiality between commercial parties.  On the subject of greater transparency, certain benefits of the immediate CIMA proposals appear helpful if of marginal benefit, but with respect to corporate governance standards it neither enhances nor clarifies the existing position.  It seeks to provide a “governance lite” set of guidelines useful only to those who are not aware of the current applicable legal principles and which in several notable areas conflict with those principles.  There appears no recognition of the argument that governance of an institutional fund may be a matter best left to discussion between investors and the board prior to investment.

Furthermore, CIMA is required in Section 6(3) of the Monetary Authority Law (“MAL”) to implement standards that are proportionate to the anticipated benefits.  At no point does CIMA establish that the proposed regulation relates to a regulatory failure in the Cayman Islands.  Rather at paragraph 6, CIMA relies entirely on commentary for increased regulation by international regulatory bodies, without recognizing that it was the failure of pre-existing regulation suggested by those bodies or their sponsors that led to the financial crisis.  Only the most extreme of blame deflecting Eurocrats asserts that hedge or mutual funds or offshore insurance companies were implicated in the causes of the financial crisis.  CIMA should have given no credence to that suggestion.  Lord Turner of the FSA did not.  However CIMA repeats the convenient heresy of certain international regulatory bodies that “deficiencies in corporate governance practice” led to the financial crisis.  There is no evidence for this in the Cayman Islands financial services industry.  It should be noted that during the financial crisis no Cayman Islands financial institution failed and no evidence is presented that Cayman Islands’ governance, or its absence thereof, was in any way a cause of the crisis. It is disappointing that CIMA assumes a contrary position.  And not merely disappointing, possibly a position without capacity.  By Section 6(3)(c) of the MAL, CIMA may only apply internationally applied standards in so far as they are “relevant and appropriate to the circumstances of the Islands”.

CIMA also leans heavily on the fact that in other jurisdictions regulatory authorities have been persuaded to amend corporate governance codes and/or regulations, and assumes that these will modernize the corporate governance standards in the Cayman Islands.  But CIMA undertakes no independent analysis of the position in the Cayman Islands, and relies entirely on an erroneous assumption that the Cayman Islands governance standards require modernizing.  In fact, what is proposed would create an alternative governance regime, which neither improves nor corresponds in all respects with current law and best practice.

1                     Transparency

1.1                 There is no analysis by CIMA of the current obligations with respect to a Cayman Islands mutual or hedge fund in relation to transparency.  The Mutual Funds Law (“MFL”) when introduced in 1993, codified common law, in that it required an offering document to contain all such material information in relation to the offering as would enable an investor to make a fully informed decision.  Furthermore, any change in that information requires a revised offering memorandum to be filed with CIMA.  There is no doubt that such obligation, as a matter of law, requires full information to be disclosed in connection with the directors and all service providers, and indeed, that is the practice.  Furthermore, the offering memorandum in question will have to comply with stringent disclosure requirements imposed by United Kingdom, United States, Japanese or Hong Kong law if circulated in those jurisdictions.

1.2                 It may thus be concluded that under current law all investors have available to them full information in relation to:

1.2.1            their share rights,

1.2.2            the identity of the directors and their history,

1.2.3            the investment objectives of the fund, risk parameters and investment restrictions, and

1.2.4            conflicts of interest and fees.

1.3                 Any prospective investor can make full enquiry of the fund as to the number of directorships held by any director and determine to invest, to invest subject to conditions, or not to invest at all.  Invariably Cayman Islands investors are institutional or high net worth, and undertake their own sophisticated due diligence as part of the investment process.  Even in circumstances where the investor decides to take non-voting shares he can determine to redeem at any time, thereby voting with his feet.  The real question which remains unanswered save in one respect (see below at paragraph 4) is: “How are the current proposals intended to improve on that position?”

1.4                 The database suggested at paragraph E2 does nothing to enhance the quality or extent of the information contained in the offering memorandum, revised from time to time as it may be, but may offend a legitimate commercial right to privacy.  In any event it should be noted that the information contained in the database is to be provided by the same directors who approve the offering document.  But no good reason is suggested for making this database public.  It should be limited to investors only.

2                     Companies Management Law

2.1                 The extension of the Companies Management Law provisions at paragraph E3 to individuals acting as a director in the manner suggested is sound and overdue.

3                     E4 Directors registration

3.1                 One of the fundamental attractions of the MFL has been the ability to locate directors in the most convenient or time zone attractive jurisdiction, in relation to the operations of the fund.  Furthermore, promoters will necessarily favour the appointment of directors with specialist knowledge not available in the Cayman Islands.  There has been no previous requirement to pre-approve directors, and that has facilitated the immediate registration of a fund pursuant to section 4(3).  Any suggestion that clients may not have freedom of choice with regard to directors, or that a pre-approval process will delay the establishment of a fund pursuant to Section 4(3) procedure, would cut across one of the fundamental attractions of the Cayman Islands fund regime, on which its success was built and will therefore fail the test laid down in Section 6(3)(c) of the MAL, which requires CIMA to recognize “the necessity of maintaining the competitive position of the Islands”.  It will also cut across Section 6(3)(e) of the MAL, in that it will contradict the “innovation in financial services business” established by Section 4(3) of the MFL.

4                     E5 corporate governance survey

4.1                 The most essential, and perhaps only area, where concern has been legitimately expressed in relation to the corporate governance in the Cayman Islands is deferred for further consideration pending a survey to be undertaken by Ernst & Young.  However, there is little doubt that the lack of self-restraint shown by certain corporate director services providers in the private sector in terms of the number of directorships accepted per person is giving rise to genuine governance concerns.  There seems little doubt, notwithstanding the illogicality of the numerical limitation now suggested by CIMA, that some mandatory restraint must now be imposed.  Possibly this may be higher than the 25 per person cap imposed by some jurisdictions, but certainly lower than 75 per person which common sense dictates is a maximum.  (Relief could be given for group companies where the issues that arise may correspond.)  This may be a crude solution, but in the absence of any evidence of reasonable restraint in the private sector, no other alternative appears available.  Without wishing to predict the outcome of the Ernst and Young survey, the publication of the number of directorships per person in a public register, would be one of the few positive moves available to establish greater meaningful transparency, in an area where legitimate concern has been expressed.

5                     Statement of guidance corporate governance

5.1                 In Appendix B, CIMA proposes guidelines on corporate governance which are designed to establish the principles by which a board of directors should operate.  This poses the following immediate questions:

5.1.1            What is the effect of these guidelines and how is CIMA to monitor them, and with what sanction?

5.1.2            To the extent the guidelines establish a separate regime for corporate governance distinct from current law - to what extent is the distinct regime intended to interact with current law?

5.1.3            What is the effect of the fact that the guidelines do not, as currently drafted, correspond with current law?

5.2                 It is recognized that any endeavor to précis the law must necessarily provide an incomplete analysis, but the guidelines do not simply précis the law, they deviate from it.  Thus:

5.2.1            Paragraph 3.1 requires the board to have the “ultimate responsibility for effectively managing the affairs of the regulated entity”. This mis-states the position as a matter of law, and that which, as a matter of practice, applies to the great majority of Cayman Islands hedge and mutual funds in which the role of the board of directors by way of permitted delegation is supervisory only.  Weavering refers.  Thus, the ultimate responsibility of the board as a matter of law, and therefore the scope of each director’s duty, may be limited, not to effective management, but to mere supervision.

5.2.2            In paragraph 3.2.1 the board is required by the guideline to undertake “effective, prudent and ethical oversight of the regulated entity.”  The word “ethical” is without certain meaning, and whilst it may appear attractive to some, does not correspond with any requirement of law, save to the extent that the directors by the fiduciary duties are required by law to act honestly and in good faith in the interests of the Company.  That well understood term of law, however, does not in all cases connote a course of action would correspond in everyone’s eyes with the word “ethical”.

5.2.3            In paragraph 3.5 the requirement that service directors must attend at board meetings where necessary, is impractical, due to the multi-national nature of funds’ structuring.  It should be clear that attendance may be by telephonic or other means.

5.2.4            In paragraph 4.1 the legal obligations of a director with regard to the duties of skill, care and diligence are correctly stated.  However, in paragraph 4.2 the fiduciary duties are incorrectly stated in that the word “openly” is introduced.  This has no certain legal meaning, and furthermore may well imply a contradiction in that the duties of the directors are to the company, as a matter of law, and that investors have limited or no rights in the normal course of matters to enquire as to the conduct at directors’ meetings.

5.2.5            Paragraph 4.4 confuses the strict legal position, which is that the duty to act in what the director believes to the best interests of the company is owed to the company, and not to the shareholders or investors as suggested.

5.2.6            In paragraph 4.7 it is not clear that the duty may be reduced as matter of law to a supervisory function of the delegated function only.

5.2.7            Paragraph 4.8 is unclear and may contradict long-established law, which indicates that a director need not have specific knowledge in relation to the conduct of the business affairs of the company, which may be attended to by way of delegation, and indeed contradicts the more recent statement of the subjective and objective nature laid down in recent English case law and as described in paragraph 4.8.1.

5.2.8            In paragraphs 6.1 and 6.2 (whilst an admirable aspiration of a Regulator) the duties of the board of directors to the Company, may in certain circumstances, supervene obligations owed to CIMA and the extent of disclosure to a regulator may well be a matter for specific legal advice on the facts, particularly in the event of prospective litigation.

5.2.9            Paragraph 7.2 does not put sufficient weight on the fact that the risk profile will be disclosed in the relevant offering document, which will govern risk management procedures. It will be the role of the directors to supervise the application of the risk principles by the Investment Manager.

5.2.10         Paragraph 7.3.3 suggests a distinction between executive and non-executive directors, which does not exist as a matter of Cayman Islands corporate law, although it may arise on the basis of the specific provisions of the constitutional documents of the regulated entity.

5.2.11         Paragraph 7.3.5 would contradict the customary practice of delegating executive decision making to a sole director as a matter of expediency.

Conclusion

The foregoing points require consideration in light of the intention (as yet unexpressed) of the effect of any such corporate governance guidelines and their relationship to any relevant legal proceedings and the sanctions that CIMA may intend to impose for their breach.  The answers to these questions are still as yet unresolved and it is hoped will form the basis of further consideration during the consultative process.

Leading offshore lawyer Anthony Travers,  who recently returned to legal practice as Senior Partner of Travers Thorp Alberga,  has analysed and debunked  recent statements and allegations made by The Financial Times regarding The Cayman Islands and the vexed issue of transparency.

Travers has extensive experience in all aspects of Cayman Islands law and has worked closely with the Government in the development of Cayman Islands legislation particularly the Mutual funds and Private Equity legislation and legislation relating to the establishment of Private Trusts. He is also Chairman of the Cayman Islands Stock Exchange.

Travers said, “ It never ceases to amaze me that the media, and the UK media in particular, repeat these canards about transparency in The Cayman Islands and other offshore jurisdictions. There is no excuse for a publication with the Financial Times’ reputation to get things so badly wrong. It leads me to ask whether their reporting on other issues is so badly researched.”

Fact vs Fiction:

(This is an excerpt of an interview with Cayman Islands Premier, W. McKeeva Bush.  View the original article here.)

...

“I was there when Tony Travers brought the Mutual Funds Law. Also, the new Insurance Law and agreements signed with the Italian Ambassador are developments I feel will continue to move this country forward. I also take pride in what I did in the eighties to move our three mile fishing boundary to 12 miles. The tree, the flower and the bird, which are now our national symbols were all as a result of my motions. The creation of national heroes, Cayfest, modern labour legislation, the Children’s Law and protection of the Nassau Grouper were all as a result of my time in office,” he said.

...

Reactions to Mr. Bush’s arrest were widely varied.

Cayman Islands Governor Duncan Taylor released the following statement Tuesday afternoon:

“I am aware that the Honourable Premier, McKeeva Bush, has been arrested this morning in connection with a number of ongoing police investigations. The reasons for the arrest have been set out in the statement issued by the Royal Cayman Islands Police Service.
“The conduct of criminal investigations in the Cayman Islands is a matter for the Police Commissioner. If evidence is brought to his attention which leads him to suspect that an offence or offences may have been committed, I expect him to carry out a robust, fair and comprehensive investigation, regardless of the individual concerned. I am confident that the Police Commissioner will ensure that this applies to the ongoing investigations involving the Premier.
“I would like to reassure the people of the Cayman Islands of my commitment and that of the whole of the Cayman Islands Government to ensure the continued effective functioning of the government and the continued efficient delivery of services to the public.”

The opposition People’s Progressive Movement called the premier’s arrest “a grave situation” for the Cayman Islands in a statement released around noon Tuesday.
“The arrest of the Premier is a hugely damaging body blow to the reputation of these islands and to confidence in our government. It will do immense harm to our credibility as an international business centre and a place to work and do business.
“The social and economic interests of these Islands depend on Mr. Bush’s colleagues in the Cabinet and on the Government Backbench acting swiftly and resolutely in this matter to return normalcy to the operations of Government and to prevent the further hemorrhaging of the country’s image and reputation.
“Accepted international best practice and the conventions of the Westminster system of government provide clear guidance as to the course of action that ought now to be followed by Mr. Bush and his Cabinet and supporting backbench MLAs.”

“I’m truly sorry for what is happening to our premier,” said Ed Solomon. “I totally respect him. I know that he’s a commendable leader and a good person. The allegations against him I don’t know, so I can’t make any comment. But I will truly keep him in my prayers and God bless him and keep him.”

“Being a supporter for years, it’s a pity,” said Ted Gray. “He’s one of the most decisive, go ahead people there is.”

“This isn’t the first time a leader of a country has been accused and you’ve got to be careful,” Sarah Clarke said. “It’s like Lance Armstrong, who did a lot of good and he had to step down because of what he did was wrong.”

The Cayman Islands Chamber of Commerce released a statement about the arrest: “The arrest of the Premier on alleged breach of trust, abuse of office and theft [allegations] demonstrates Cayman’s robust law enforcement and anti-corruption systems and the Islands’ intolerance with any alleged unethical behaviour or corruption even at the highest level of political office. The Royal Cayman Islands Police Service’s Financial Crime Unit’s investigation leading up to today’s arrest has been ongoing for several months and the economy has continued to perform robustly providing quality services and products to the world’s financial markets, international visitors and investors.

“We are wholly confident that that same level of integrity and service will continue as the case works its way through the judicial system. The Chamber of Commerce unequivocally supports all actions by law enforcement officials to root out any unethical behaviour that may damage the reputation of the Cayman Islands as a leading international financial centre and as a quality jurisdiction to conduct business and  invest.”

The Cayman Islands financial services sector also responded to questions about the arrest.

Anthony Travers, senior partner at Travers, Thorp, Alberga, commented on the arrest:  “It is too early to comment on the substance of these matters .The timing given the recent arrest of Mr Misick, the former Premier of the Turks and Caicos Islands, however does not appear coincidental and if these charges are found by the Court to be ill-founded, then that aspect will need to be considered. Under the Constitution, the financial services industry operates quite independently of the political arm of the Legislature under the regulatory regime of the Cayman Islands Monetary Authority and is unaffected by any change in government leadership.”

David Marchant, the publisher of Offshore Alert, actually took a more positive view on matters: “Strange though this might seem, I believe it will have a positive effect on Cayman’s reputation internationally because it demonstrates the jurisdiction is prepared to take action against individuals regardless of status. The measure of any country or jurisdiction is not that scandals occur but what it does about them when they surface. The worst thing any jurisdiction can do is bury its head in the sand. This has been the traditional approach in Cayman and the jurisdiction’s reputation overseas has suffered because of it. With one action today, that has changed for the better."

View the original article here.

Former Maples and Calder managing partner Anthony Travers has joined Thorp Alberga after a six-year break from practising law.

Mr. Tavers, the chairman of the Cayman Islands Stock Exchange, became senior partner on 1 December at Cayman Islands and British Virgin Islands firm. The 10-partner firm, renamed Travers Thorp Alberga, has offices in Grand Cayman and Hong Kong and specialises in investment funds, financial services, government relations and private clients.

Michael Alberga, a close friend of Mr. Travers, will move to managing partner. After retiring from Maples and Calder in 2006, Mr. Travers had a non-compete clause for a period of six years.

“My six year non-compete with my old firm has now expired and a number of my former clients have asked me to step back in,” Mr. Travers said. “Given macroeconomic and onshore regulatory changes, it is time for some fresh thinking in the provision of offshore legal services.

“I was attracted to the firm because a number of my highly experienced former colleagues are already partners and their expertise in financial services and regulation is second to none,” Mr. Travers said. “In a fast changing regulatory environment the firm’s emphasis on government relations is now a very necessary part of a comprehensive client service.”

Mr. Travers added that the firm has a unique philosophy on fees, which is highly relevant to the current financial climate. “There have been recent criticisms of the old offshore law firm model which is clearly no longer as appropriate in changing circumstances and is obviously not working as well as it once did.”

Mr. Travers was previously the senior partner of Maples and Calder and instrumental in the establishment of the firm’s global network of foreign offices. In the early 1990s, he prepared the legislation which established the Cayman Islands investment fund and private equity industries and later the legislation on asset protection. He is former president of the Cayman Islands Law Society and high profile advocate of offshore financial centres. From 2009 to 2011, Mr. Travers was also the chairman of Cayman Finance.

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LONDON: The lawyer who built the most successful offshore law firm in the world has announced his return to the profession after a six year break from practice.

Anthony Travers, OBE, currently Chairman of the Cayman Islands Stock Exchange, became Senior Partner on December 1 with boutique Cayman Islands and BVI law firm Thorp Alberga.

The ten-partner firm, renamed Travers Thorp Alberga, has offices in Grand Cayman and Hong Kong and specializes in investment funds, financial services, government relations, and private clients.

Travers’ close friend, 30-year veteran Michael Alberga, has moved to Managing Partner.

Travers was previously the Senior Partner of Maples and Calder and led that Cayman Islands firm to its earlier position of dominance over a 30-year period culminating in the establishment of a global network of foreign offices.

He was former President of the Cayman Islands Law Society and high profile advocate of offshore financial centers. After retiring from Maples and Calder in 2006, Travers had a non-compete clause which lasted all of six years.

Apart from various global business interests he was asked to head up and raise the global profile of Cayman Finance, the private sector representative body, and he served from 2009 to 2011 on a pro bono basis. He will continue in his role as Chairman of the Cayman Islands Stock Exchange.

Travers said: “My six year non-compete with my old firm has now expired and a number of my former clients have asked me to step back in. Given macroeconomic and onshore regulatory changes, it is time for some fresh thinking in the provision of offshore legal services.

“I was attracted to the firm because a number of my highly experienced former colleagues are already partners and their expertise in financial services and regulation is second to none. In a fast changing regulatory environment the firm’s emphasis on Government relations is now a very necessary part of a comprehensive client service.

“The firm also has a unique philosophy on fees which is highly relevant to the current financial climate and compelling. There have been recent criticisms of the old offshore law firm model which is clearly no longer as appropriate in changing circumstances and is obviously not working as well as it once did.”

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From The Lawyer
3 December, 2012

Maples and Calder’s former managing and senior partner Anthony Travers is returning to legal practice after a six-year break, joining offshore boutique Thorp Alberga.

Travers retired from Maples in 2006 after over 30 years with the firm, including a long stint as senior and managing partner.

He joins Thorp Alberga as senior partner. Current senior partner Michael Alberga is becoming managing partner, and the firm is rebranding as Travers Thorp Alberga.

During his retirement from the law, Travers has served as chair of representative body Cayman Finance. He is also currently chair of the Cayman Islands Stock Exchange.

In a statement Travers said: “My six-year non-compete with my old firm has now expired and a number of my former clients have asked me to step back in. Given macroeconomic and onshore regulatory changes, it is time for some fresh thinking in the provision of offshore legal services.”

He added that he was attracted to Thorp Alberga due to its emphasis on regulatory and financial services and also its partner-led model.

A majority of the partners at Travers Thorp Alberga have worked at Maples at some point in their career.

View the original article here.