Washington trip follows up on OECD white-listing
Saturday 2nd May 2009, 2:29PM BST.
CHIEF MINISTER Lyndon Trott will lead a Guernsey delegation to Washington this weekend to build on relationships with the new US administration.
Deputy Trott, States chief executive Mike Brown and external affairs adviser Jonathan Hooley have a packed schedule of meetings over four days.
They will meet key advisers to US Senators and people involved in established Senate committees.
‘We are not resting on our white-listing as part of the G20 process,’ said Deputy Trott.
‘We shall ensure that everyone we meet is made fully aware of our status as a cooperative member of the international community.’
The Obama administration has been investigating clamping down on the use of offshore tax havens, something which formed part of his campaign. Before becoming president he was the co-sponsor of a bill to stop tax haven abuse which named Guernsey.
Last month, the island was included on the Organisation for Economic Cooperation and Development’s white list of cooperative jurisdictions.
‘This visit to the US has been long-planned and we will be the first of the Crown Dependencies to visit since the G20 meeting,’ said Deputy Trott (pictured).
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How will Mr Trott be able to honestly say that Guernsey does not aid tax avoidance? Legally planning tax avoidance is a mainstay of our finance industry and employs hundreds of people here!
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In respect of the current economic downturn I would be interested to find out the following information please, Deputy Trott:
1 – Cost of flights and class of flights for this trip
2 – Class of accommodation and costs
3 – expenses paid
4 – number and length of meetings
5 – Rationale for travel as opposed to teleconferencing (using the States Video Conference facility).
Many thanks
Oh and this is public interest material so don’t hide behind any fake privacy response.
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With regards to how history can be altered to suit. may I use a little word or two, reputed to have been said by Henry v11.
“Who will rid us of this person”
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Frank
Where does the article claim that Deputy Trott will state that Guernsey is not engaged in tax avoidance, which we all know is legal ? The US is concerned about tax haven abuse, and that is about tax evasion which is of course illegal.
Darren
Spending money on vital PR to protect the sole industry which keeps Guernsey running is not wasteful, even in a recession. Its an insurance policy. Questioning more speculative trips to China would be fairer game but trying to ensure that key people in Washington understand what we do is another issue altogether and is not an exercise to be undertaken by video-conferencing ! Personal interface in such efforts is absolutely crucial.
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I wonder if anyone in Washington will ask the CM to explain his comment to Question 1477 of the House of Commons Treasury Committee published evidence on the Banking Crisis:
“I have not ever heard any informed source refer to Guernsey as a tax haven” This is at it appears in the published document.
Bit of a challenge to refer to President Obama as not being an informed source.
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Where is the justification in this trip? As usual Trott has a very inflated opinion of his own importance. Instead of letting the dust settle and plan what is the next best step he wants to travel the world as a power broker…………please! And who does he choose to take with him, the head of the CIvil Service (relevant because?) and an accountant who has spent his working life advising his clients how to avoid tax. You couldn’t make it up! My educated guess for the cost of the trip £25,000. If any deputies read this blog please for all our sakes make Trott understand.
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This is exactly what the Chief Minister should be doing.
It is quite clear that the UK is not in a position to represent us internationally on these issues and so we need to take the initiative.
Paul – yes, he is taking the chief exec as no doubt the practical implementation of regulation will be relevant, not just political soundbites. And who better than to explain the business that occurs here (and its legitimacy) than an accountant who has practised it?
Would you prefer he had taken the DCM??!
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Headline from Telegraph (and others)of this morning
“Barack Obama cracks down on tax havens and loopholes in bid to net $210bn”
Rough weather ahead.
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Lyndon didn’t wake up the other morning and just decide to go to Washington, the trip was decided on after a great deal of discussion at the External Relations Group meetings. We have an odd relationship with the US on the one hand we have been congratulated by the US treasury and their drug enforcement agency for our continued cooperation in tracking down money belonging to drug cartels, a few years ago the US treasury gave Guernsey 1 million dollars as part of its share of a multi million dollar seizure from an attempt to deposit it in a Guernsey bank. However our relationship with other sectors of the United States government needs some work, like many countries there seems to be a complete misunderstanding as to what business Guernsey does amongst many influential people around the globe and anything we can do as a government to correct some of these misunderstandings we should. If any US policy is going to based on a false assumption that may effect the kind of global business we do, then we have to put that right and you can’t do that from sitting behind a desk in Frossard House, we have to do everything we can to protect our major source of income from actions taken elsewhere based on misinformation, if the island is not going to see its economy collapse. I can just hear our critics now saying why wasn’t something done to show the Americans that their policies which have helped to wreck our finance industry were based on a lie, why did we allow that to happen?
As to the cost of this trip compared to doing nothing it will be very cheap indeed, neither the CM or senior staff travel in anything other than economy class, nor I can assure you will the accommodation be particularly lavish, the only expenses will be food and travel costs within the US and theses expenses simply cannot be avoided unless of course you want Deputy Trott to pay for all of these expenses himself. Lyndon has given up his bank holiday to do this visit and he knows as we all do, that is part of the job but for those of you who think that spending 20 hours on a plane in economy there and back, with a lot of rushing around getting to meetings in between is a jolly, then you don’t know much about political life in modern Guernsey.
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Acting as an ambassador is part of the job. I have no problem with this and don’t envy him having to do this.
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Guernsey cannot play the ostrich and bury it’s head in the sand. I completely support this visit by CM Trott – when dealing with large nations like the USA, nothing less than a personal visit by the head of government will do.
As David rightly pointed out face to face dialogue in these matters is crucial. In fact I’d go as far as to say that to invite serious discussions with the US government via tele-conferencing would be perceived as an insult to the rather sensitive USA.
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Stephen
Those measures referred to in the US are aimed entirely at addressing tax evasion and also tax avoidance by US corporations and individuals. Guernsey does next to no business with US corporations or individuals and so its impact on us will be minimal.
Cayman, Bermuda and Ireland will be far more concerned.
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David
You have rightly pointed out the small amount of US business carried out in Guernsey.
IF so, Paul might well have a point in questioning the reason for the trip.
Dave Jones
20 hours London to Washington and back? Who have they flown with, Aurigny?!!!!!!!!
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I am presently surprised to see the number of people supporting this trip. It is essential to the economy of Guernsey that the likes of Lyndon Trott as CM are out there representing Guernsey. Guernsey may not rely on American business in the way it does the UK however generally where America goes the UK follows. We must as an island fight the false propoganda that is being spread as a way of detracting from their own failings.
Just to clarify for those who are confused -
Tax Evasion is illegal.
Tax Avoidance (or Mitigation) is legal and everyone (who pays tax) to a greater or lesser degree does it. (Using personal allowance, Pension deductions, tax effecient savings and hundreds of other ways to pay less tax).
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Stephen the last time I flew to the US it was about a 10 hour flight, mind you that was to
Miami so I suppose to Washington it’s probably closer to 8 hours, However with the bits in between it is still a long day by the time you have left on the red eye, anyway you are probably right. The fact that we don’t do a huge amount of business directly with the US is missing the point of this trip; we need to convince those in Washington that we are not some sort of disreputable jurisdiction that accepts suitcases full of dodgy money from even dodgier customers. In fact we need to show them that our regulatory framework is superior to most other models which brought the about a large part of the global financial collapse. We also have to remember that the United States is extremely influential in the Global economy and has quite a large voice in the OECD and the IMF, although they seem to care little for Europe so it is not all bad news (joke Eric)
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Stephen
The reason for the trip is surely about keeping onside with the US in view of their massive influence over G20. Even if we don’t do any US-related business, we still don’t want to appear on any US-driven blacklists, and we also of course would surely still like to be able to transact in US Dollars for clients who use the Dollar as their base currency (i.e. clients from the Middle East and Far East). Ultimately, jurisdictions on any US blacklist may be effectively frozen out of the US Dollar correspondent banking network. There is therefore a somewhat bigger picture in existence.
As we have also signed a TIEA with the US several years ago it is also important to satisfy Washington that we are meeting our obligations under it.
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David
Agreed on all you say, but having done all the spade work last year, as well as gaining acceptance as good guys; is it necessary to put these poor politicians and civil servants through the ordeal of economy travel to the USA.
All to say we are still being good boys and girls and also,the TIEA we have had for years is still working well.
I see where Deputy Jones is coming from but if it is really necessary to show “we are not some sort of disreputable jurisdiction that accepts suitcases full of dodgy money from even dodgier customers” then it begs the question what were the delegates doing in the USA last year, and was the outcome not nearly as positive as they led us to believe?
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I take the point about the global influence of the USA in this matter, however I still think we would be better off talking to Brussels rather than Washington.
It is the UK that has the potential to do the most damage to our legitimate business operations. In real economic terms I suspect the UK would be more likely to be influenced by pressure from their French and German European partners rather than the Americans.
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CD
I’m totally convinced that we have to be speaking to both Washington and Brussels. If the anti-offshore initiatives are to succeed then it will only be because the US and the EU are on the same wavelength as each other. They need each other in order to achieve their objectives. We have to maintain our lobbying on both sides of the Atlantic.
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Looking again at Dave Jones’s post the comment “However our relationship with other sectors of the United States government needs some work, like many countries there seems to be a complete misunderstanding as to what business Guernsey does amongst many influential people around the globe and anything we can do as a government to correct some of these misunderstandings we should” is worrying.
We have had visits to the US, visits and pronouncements from Guernsey Finance and yet we still have misunderstandings, not just with commentators but now, apparently with governments.
What has gone wrong?
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We need a foreign affairs department, with a minister devoted to the task so that we can talk to the US and to the EU and to anyone else that we need to. It is clear that the UK has other interests, which do not include ensuring that the rest of the world understands what we do. Time to press the fast forward button following on from the Internationl Identity Framework Agreement.
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Stephen
Nothing has gone wrong except that there is an unwillingness to listen from those who need to hear. It makes their task far more difficult to achieve if they are forced to consider the relative merits of each offshore jurisdiction. Far easier for them to try to lump us all together and treat us all the same even though we know that the reality is very different. That’s what we are up against, and that’s why individual country lobbying becomes even more crucial.
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David
I take your point. However, the question remains why is the message not getting through.
After all there were visits last year to the USA. There were the most encouraging messages that they were getting through to the US authorities.
In addition we have Guernsey Finance going to China to explain the difference between the white and grey lists.
Perhaps Guernsey would have benn better plac ed if the original Levin bill to stop tax haven abuse was still the prominent attack.
The way the Levin bill was presented gave every opportunity for Guernsey to present itself as a “clean” offshore centre.
It would have stopped the lumping of all tax havens in one basket.
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Stephen
Having to explain things several times to different groups of people in the same country is nothing unusual, we have for instance one parliamentary group of MP’s who are great supporters of our position and visit the island frequently, while at the same time we have other groups of English MP’s who believe we should be closed down or as Vince Cable suggested on radio 4 one morning, that we should be “taken over” which also shows a complete lack of understanding, even about our constitutional position. There have not been a lot of visits to the US over the years, as has previously been stated the island doesn’t do a huge amount of business with the US.
The financial landscape across the globe has changed dramatically over the last year or so and some of those countries who are hurting at the moment are looking around for someone to blame and when that happens you can guarantee that the so called tax havens will be offered up as the culprits for all the worlds financial ills.
Therefore we have to make sure that the powerful, influential countries know that we are better regulated than most of them and we have had this financial turmoil exported to us, not the other way round, that will involve repeating the message time and time again to those who are trying to give a completely erroneous view of these islands and the business we do. We also have someone permanently in Brussels and we get regular updates on issues that may have a bearing on Guernsey,
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Dave Jones
As always I take your point but it does seem straange that after so much representation the message is still not sinking in with world governments.
That is why I suggested the more draconian Levin proposals would have been preferential for Guernsey but to the detriment of the Isle of Man and Jersey.
The Levin proposals would have allowed Guernsey plenty of scope to prove its case.
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If, as Stephen John and Dave Jones say, Guernsey does little business with the USA, why exactly is Obama getting exercised about us?
And is our dear Lyndon Trott saying in Washington that he knows exactly what business each Bank and each Trust Company in Guernsey has that originates in the USA? Yeah, really?
Tell us about it, Lyndon.
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Stephen
You are missing the point. It’s not about facts, its about politics ! The US and the EU are aligning their anti-offshore interests. If the US tells the EU that actually they are happy that Guernsey are “good guys” then it undermines the whole political process. It might also potentially cause Guernsey to be treated differently by the EU than Jersey or the Isle of Man and that’s not what Europe wants either. That’s exactly the “problem” with the Levin proposals !
David Cranch
Look at the bigger picture. Obama is getting extremely “exercised” about Cayman in particular. If Washington views Guernsey as being fine, effectively endorsing us, where do you think US tax evaders will be attracted to if they remove their undeclared funds from Cayman ? We certainly don’t want those funds here and its absolutely right for Guernsey to be assuring Washington that we don’t have much US business and are not going looking for it. Having got ourselves “onside” across the pond, we have to make certain that we stay there, and that will require ongoing dialogue with Washington.
Personally I would invite the IRS to open a “branch office” here and give them appropriate powers to be able to satisfy for themselves on an ongoing basis that we don’t have undeclared US business here. He/she could cover Guernsey and Jersey together and as long as its done within appropriate agreed parameters we should have nothing to fear.
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Phew! That was a marathon session, David and Stephen John…
Deputy Dave Jones
Have you seen proof that CM Trott and entourage travel transatlantic in economy? I very much doubt that this is so – maybe to London but not transatlantic – but if you can provide proof, then it would be very unbecoming for a head of state (albeit a small Crown Dependency) to travel in economy.
I know that, unlike the Isle of Man and tiny Faroes, the Guernsey Government says it cannot afford to help stricken Cheshire / LG savers in the slightest – but surely it is not as poor as for the CM to have to travel in economy?
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David
So we are going to see Uncle Sam to tell him we don’t want US business here!!!
I doubt the US Cayman Island tax avoider is daft enough to want to move money to Guernsey. Surely, the advisers will know the status of the island even if the politicians don’t.
I would have thought a well prepared letter telling the US we don’t want their tax avoiders, would have saved the CM and his entourage the discomfort of an economy class ride back and forE to Washington.
David you say Europe wants to lump Guernsey with the rest of the delinquents. Can you point us to the evidence for this?
How does this sit with the much publicised securing of white status? Didn’t that separate the good from the bad?
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MJA – careful, HM Elizabeth II, Duke of Normandy, will have you up for treason for suggesting that the CM is the Head of State!
frankly, if Dave Jones is saying that they are travelling economy, I believe that to be the case.
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David C
Lyndon has Jonathan Hooley with him who has a vast knowledge of the type of business the Guernsey Finance sector does and with what countries, He is the Policy Council adviser on external threats and has been one of the main players in putting together the TIEA’s with those countries we have already signed with, when you meet him, Jonathan is hugely impressive and his knowledge of our finance base I would say is unmatched by anyone, Guernsey is extremely fortunate to have him and he will advise Lyndon on all aspects of the Americans future policy on offshore centres.
MJA
Lyndon and PC staff do travel economy, in fact he reinforced that by stating the fact on Radio Guernsey last week, everybody is conscious of the costs at a time when the island as a whole is having to tighten its belt, I am at a loss to understand why you are surprised they would travel economy.
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Stephen
I’m not sure whether you are doing it intentionally but you seem to be mixing up tax avoidance and tax evasion again.
The “Cayman problem” that Washington has is mainly about tax evasion, not tax avoidance. We don’t want that business here. But what would be wrong with us taking US business which is fully disclosed in the US and therefore 100% tax-compliant ? It doesn’t matter that the US knows about that type of business because the structures would already be disclosed to the IRS ! That’s totally different to what Washington believes Cayman to be doing for US taxpayers and upon which its original finance industry was built. Those sort of tax evaders tend not to have tax advisors because in their view the less people who know about their offshore affairs, the better. That’s precisely the business that Guernsey neither wants nor needs.
Re. the EU its obvious from their regular statements what Sarkozy and Merkel want. What more evidence is required ? They are not interested in white lists and grey lists. I’m afraid that the French and German view of Guernsey and Jersey is, through ignorance and an unwillingness to listen to the facts, completely ingrained. How much French and German money is in the islands ? Very little. Try Luxembourg, Switzerland, Austria, Liechtenstein, the Bahamas, Cayman and Singapore. Why there ? Because they have very strict bank secrecy rules making it a serious criminal offence to disclose information about a customer’s affairs. But we don’t have any such secrecy rules here and so we don’t attract that sort of customers, thank goodness.
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David
I was giving the US user of places like the Cayman Islands the befnefit of the doubt in seeing initially tax avoidance that could become tax evasion.
As an example let me refer to you something you have said previously. Your comment on the LG depositors using the withholding route could be avoidance in that due taxes would eventually be paid to countries where the beneficiaries were liable for tax.
If, however a depositor chose the withholding route and did not declare the interest to his or her tax authority, then that would be evasion.
So. in a tiny manner, Guernsey is in the same boat as the Caymans.
I trust that some of those in the Caymans fall into the avoidance which might or not end in evasion category. It is the responsibility of the tax payer to declare the proceeds.
So far as the comments of Sarkozy and Merkel are concerned it depends on whether their view represents the feeling of the EU as an institution.
If you are right about Sarkozy and Merkel and you might well be, then what all of this is leading to is that the white list is of little practical importance. It certainly seems like it given all the effort of Guernsey Finance to explain to the chinese what is the difference between a white and grey list.
Oh and I wonder if Guernsey Finance went economy class to China?
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I work for a global Finance company with offices in most offshore jurisdictions and have to travel to US, Curacao, BVI, Malaysia, HK on a reqular basis so having someone promote our island correctly is essential as leaders of other nations can be mis-informed by press and other sources. This trip is PR that is justifiable.
Travelling economy can be a “false” economy and you should weigh up if the CM is working as soon as he lands or not. If so then the additional comfort, ability to work in flight should be considered. Leaving Guernsey the night before (family time) to catch an early flight to the Americas is a massive commitment and I wish LT all the success. Get behind our politicians, lets help them as our future is in all our hands.
When is he going as will this determine when the firemen are next off sick???
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PC
Good points but surely the industry can afford to pay for and do its own PR.
Your point about the false economy of the CM travelling steerage class is well made. After all, if the task is so onerous as it seems we want the Guernsey reps up to the task and not knackered by jet lag.
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Deputy Dave and TL
Guernsey spends a small fortune marketing its finance centre worldwide and then its Chief Minister cannot afford to travel in First – or at least business class? Simply doesn’t make sense.
See today’s Guernsey Press headline:
“GuernseyFinance’s budget for 2009 was upped to £1.145m. following a Commerce and Employment board decision to increase its funding by £245,000 earlier in the year in light of the current economic climate.”
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I did not say that it was right for him to travel economy, just that I have no reason to doubt that Dave Jones is telling the truth.
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The debate here is whether the CM should, or should not, travel in economy i.e. is it dignified for the premier of a state / country, however small, to travel in economy?
If Dep Dave heard him say so on the radio then it must be true (that CM Trott said so), although I suspect that what CM was trying to explain was that he was travelling transatlantic in economy just on this occasion (or maybe on the Gatwick leg only) or for the time being – until Gsy gets its head above water in terms of its public finance.
Surely the CM has not always travelled in economy on transatlantic flights as that would not conform with the image of an affluent international finance centre that his Govt and Guernsey Finance try to portray.
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It wa perfectly acceptable for Guernsey plc to create and fund Guernsey Finance. It showed the island was committed to its largest industry. However post zero/10 the contribution by the FI has diminished – it’s time the FI put its own money into the GF. This assumes it has confidence in the GF.
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The leader of the island should not travel cattle class. The head of Guerseny Finance could though
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