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BEHIND THE HEADLINES: Changing the goalposts on financial services


Tony Best

BEHIND THE HEADLINES: Changing the goalposts on financial services

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“Changing the goalpost” is a sports metaphor routinely used in business, government and everyday life, to hint at bad faith.

Like “bait and switch” and “raising the bar”, the term suggests a constant changing of the rules of the game to prevent a competitor from scoring a goal.

So, when Evelyn Greaves, a former Minister of Trade, Tourism, Commerce and Industry, who recently stepped down as Barbados’ top diplomat in Canada complained, quite correctly, that when it comes to the offshore financial services sector Barbados, The Bahamas, Bermuda, the Cayman Islands and their neighbours can expect the Organisation for Economic Cooperation and Development (OECD) to change the goalpost.

“As a small country we have to recognise our size. We are in a situation where the OECD every year comes up with something on financial services and when a country like Barbados complies with what the organisation wants, the next year the OECD comes up with something else,” was the way the retired High Commissioner put it. “The goalpost keeps moving. It makes it really difficult for us to compete and to really get a foothold in the international arena as a small country.

“I think that in the end it comes down to building trust with partners in the developed countries,” he added.

For Barbados and other English-speaking Caribbean nations, one such key trustworthy partner is Canada, which keeps more than a watching brief for the region at the World Bank and the International Monetary Fund.

“Because Caribbean states don’t have enough shares to qualify for a seat on the board of directors of the World Bank, the director for Canada also represents the Caribbean,” explained Charlie Skeete, a former Barbados ambassador in Washington, who once served on the Inter-American Development Bank’s executive board. “Canada has enough shares to get its own seat on the World Bank’s board. The same is true in the International Monetary Fund.  As part of the arrangement with the Caribbean, the Canadian appoints a Caribbean official to the position of alternate executive director at the World Bank. On the other hand, though, in the IMF the Canadian always appoints someone from Ireland to be the alternate director. In essence, in the IMF we don’t have a director or an alternate.

“What also happens when it comes to the World Bank and its board is that the Caribbean countries decide among themselves which nation gets the alternate position,” Skeete pointed out.

That IMF/World Bank scenario explains Greaves’ reference to Canada as the Caribbean’s partner. However, Canada and the Caribbean don’t have a similar arrangement at the OECD, where Canada is also an influential member but the Caribbean doesn’t have a presence.

The OECD, a handmaiden of the rich countries, Canada, the United States (US), Britain included, is the vehicle they drive to get their way against small states that are trying to secure a toe-hold in the financial services arena.

Back in the 1990s, for instance, the OECD tried and failed to drive the island-nations and coastal states out of the offshore business by accusing them of being drug money laundering centres.

Yes, some small states had allowed themselves to be sucked into the money laundering game but what the OECD ignored was that some of its rich members – the United States, Britain and others in Europe – were the world’s leading launderers.  

After the Caribbean and the Pacific cleaned up their offshore act, the goalpost was shifted to include terrorist financing and tax evasion.

That’s where the OECD gray list comes in. Six years ago, 17 countries, France and Germany among them agreed to compile a Blacklist of “tax havens”. The organization was empowered to investigate dozens of so-called tax havens which allegedly allowed people to hide billions of dollars in unregulated hedge funds and other investment avenues.

The OECD gray list zeroes in on the way dozens of jurisdictions, including Australia, The Bahamas, Barbados, South Korea, Finland, France, Germany, the UK, Canada, Ireland, Japan, Dominica and Panama implement international tax standards.

A major problem with that list and the Financial Action Task Force’ (FAFT) list of “non-cooperating countries” in the battle against money laundering is that  far too often the authors ignore the fact that many of the jurisdictions don’t have the infrastructure or the money to monitor the actions of sophisticated tax evaders or financial criminals.

Although the FATF and the G-20 states recognized the challenge facing small states and have tried to do something about it, the headache remains and the shifting of the goalposts continues.  

Hence, Greaves’ complaint.

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