A recent post of mine (Lunching with the Stars) harked back to The Good Old Days of the tax-haven in Nassau, Bahamas, and my youthful part in its goings-on in the late 1960s. We lived in Nassau from April 1967 to September 1970, and they were the happiest days of our lives. Plenty of things to do and places to visit, and money to burn.
Paradise on earth.
Linda taught Home Economics at the JFK Secondary School, until the kids fell under the influence of the local Black Power movement and began harassing the white teachers. Then, she took the Sylvia Gill secretarial course and worked in a law firm. I spent the whole of our time in Nassau with a major trust-company owned by a consortium of British and Canadian banks.
Early on, we invested 90% of our Canadian savings in a little sports-car – the only new car we have ever owned. We flew off the Island every ten weeks on average, during our whole time; that was a more sensible use of our wages than wasting the money at restaurants and bars. We were so scandalously overpaid that we quit work and headed for the caves of Crete, via Perth, Australia. (My Zorba the Greek post of January 2012 reported how that dream ended.)
The tax-haven began collapsing soon after we left. The long-existing tensions between the black and white native-Bahamian communities were one major factor, the drive for political independence from Britain another. Young white expats tended to be sympathetic to the civil-rights cause of the local blacks, and indeed many of them (the expats) had helped the all-black PLP political party to a wafer-thin victory in the watershed elections of January 1967.
Unfortunately, it suited the strategy of the PLP of the time to foster the notion that the white expats could not be trusted to maintain their support. The Party was probably right in that belief. We all reckoned that the drive for independence would cost the Islands their prosperity. And so it proved.
Expats in the tax-haven sector were pushed out of their comfort zone, and packed up and left. The banks and trust companies set up subsidiaries in the Cayman Islands. Some of their Offshore clients followed, one by one, and new clients were diverted to Cayman by their domestic tax-advisors. Public Revenue dropped alarmingly, and government finances found themselves in a downward spiral. The country’s loss was Cayman’s gain, down to the last penny.
In view of our Caymanian politicians’ increasingly vocal loss of confidence in our British connection, more and more of us expats here fear that our tax-haven may be sacrificed on the same altar of populist foolishness that killed Nassau’s. The omens are very much the same. We don’t have the black-white racism, but the perpetual fostering of native Caymanians’ resentment and mistrust of expats exactly mirrors the Bahamian experience of forty-odd years ago.
If Britain were to pull the plug on Cayman (read Trouble in Paradise, December), where would the clients go? To the new and revitalised Nassau? Or to the BVI – that long-patient bridesmaid-in-waiting? Offshore types have been sniffing around BVI for years now, and don’t like what they see. It’s not developed enough! It doesn’t have the infrastructure! But most of the sniffers are too young to know how woefully undeveloped Cayman was, at the time of the Nassau exodus in the 1970s.
Linda and I spent a weekend here in 1968, a bit before the Bahamian banks started shifting their business here. Unpaved roads, mosquitoes, four or five scruffy tax-haven professionals, and more mosquitoes. BVI today is infinitely better prepared to take our business than Cayman was to take Nassau’s back then. It would be stupid to dismiss it as a suitable successor.
I wish I could say that neither the FCO nor the C I Government were stupid enough to shrug off the danger. Regrettably, I can’t. I know they are.