Premier defends Cayman in wake of Webb arrest
As Cayman finds itself at the heart of what may be the world’s biggest ever corruption scandal, following the arrest of local football boss, Jeffrey Webb, the premier has defended the jurisdiction in a statement from his office about the FIFA probe. Alden McLaughlin said that local law enforcement agencies were cooperating with international investigating authorities and that the Cayman Islands Monetary Authority was taking appropriate action regarding the involvement of Fidelity Bank. The government, he said, “takes a zero tolerance approach” to illicit activities via Cayman.
“We do not intend to compromise the hard work we have done over the past couple of decades and the good rating and reputation we have earned,” McLaughlin said in the statement about the impact Webb’s arrest, the allegations regarding his reported part in the football bribery scandal and the use of Cayman-based financial institutions to move the alleged ill-gotten gains.
“We have a long history of cooperating with global, and in particular, US authorities and there is no doubt that we have and will continue to fully assist in the investigation and ultimate conclusion of these matters,” McLaughlin stated.
Despite the obvious damage the scandal is doing to the islands’ reputation and the clear implications for the financial sector, given the accusations made in the US indictment, the premier insisted that the Cayman Islands has a reputation for “engagement and achievement of very robust global standards in relation to the regulation of domestic and cross border financial transactions.”
He added that the jurisdiction had “excellent ratings from assessments by the Global Forum and the FATF”, which demonstrated those standards.
The robust standards have offered little protection from the onslaught of negative media coverage that the arrest of Webb and the release of the US indictment has caused for Cayman.
As the most senior of the FIFA officials arrested in the probe in Zürich last week, Webb is front and centre of the investigation. Allegations that he and others used Fidelity Bank, where he worked for many years, as well as other offshore Cayman entities, has ensured that the Cayman Islands is once again making headlines as a tax haven with a dubious reputation.
This has led to further calls, in the UK in particular, for a clampdown on the jurisdiction and offshore finance in general. The British press has described Cayman and other UK overseas tax havens as playing a key role in the “rampant, systemic and deep-rooted” corruption in FIFA. This has intensified calls for a clampdown on the offshore banking sector, which campaigners and many NGOs say allows bribery and corruption to thrive because of a lack of transparency.
Labour MP and Treasury select committee member, John Mann, has said the use of UK offshore havens made the US probe more difficult. “They are centres for money laundering in a very big way,” he told the UK media. “We are negotiating to change relations with the European Union, but we should spend just as much time renegotiating the deals with the overseas territories. They are becoming a serious problem for the world.”
Questions are being asked around the world why the banks and institutions in tax havens — the British Virgin Islands and the Turks and Caicos islands as well as Cayman — did not flag the transactions cited in the indictment, such as two wire transfers of $750,000 and $250,000 that ended up in an account at Fidelity Bank in the Cayman Islands.
