Corruption:A global problem requiring global solutions

Official corruption is a global problem and impacts offshore financial centres, both internationally and domestically.

The role of reputable centres is frequently exaggerated by the media, politicians, onshore regulators and law enforcement, international agencies and (not least) religious/charitable organisations, sometimes with misconceived, misguided or misdirected agendas and numbers picked off a dart board. But that does not mean offshore financial centres can sensibly dismiss the problem as irrelevant to them. It is not. All jurisdictions should join to deter, detect and punish the offenders and those who knowingly assist them.

The relevant international aspect of corruption typically involves bribery of foreign officials using offshore vehicles to make or receive the payments. Connected money laundering, fraud and tax evasion will also often occur. The domestic impact typically involves local government contracts and may extend to ‘soft’ as well as ‘hard’ corruption, eg influencing public appointments.

There is now a welcome increase in the level of international focus and action on corruption that have become part and parcel of many international initiatives, eg by the UN, OECD and World Bank. And major countries, such as the UK (the Bribery Act is likely to come into force in 2010) and France, are belatedly starting to show a real commitment to implement their international treaty obligations and to prosecute offenders. It is to be hoped that the BRIC countries (Brazil, Russia, India and China) show a similar commitment as part of their reach for global recognition as equal partners at the economic and financial head table. The current perception is that companies from these jurisdictions may be some of the most corrupt in their international dealings.

January 2010 represents an important milestone in the history of Cayman Islands’ achievements. The Anti Corruption Law (AC Law) goes live and the Anti Corruption Commission (ACC) comes into being. Cayman is the first small offshore financial services centre (with respectful recognition of Hong Kong’s ICAC) to take such a bold step. It is a highly commendable move and is as a key part of Cayman’s commitment to implement improved good governance, regulation, transparency and cross border assistance and enforcement. The AC Law compliments the Complaints Commissioner Law (now five years in operation), the Freedom of Information Law (that became effective in January 2009), the new Constitution that came into force in early November 2009 and various enhancements to local legislation such as the Monetary Authority Law and the Proceeds of Crime Law.

We analysed the UNODC/World Bank StAR initiative, the AC Law and the ACC in some detail in the July 2009 issue of the CFR /wordpress/Cayman%E2%80%99s-new-Anti-Corruption-Commission-another-milestone-in-good-governance-and-transparency. There are some deficiencies in the Cayman regime that hopefully will be remedied sooner rather than later. But what is important now is to recognise the achievement and next to put flesh on the bones of the Law by getting the ACC up and running effectively under the chairmanship of the Police Commissioner. Critical will be the needed protocols with the Police Service, the Financial Reporting Authority and the Monetary Authority and the staffing and operations of the Commission itself. These we await with interest. And it is equally essential that the public and private sector entities now focus on ensuring they (and their staff) understand the AC Law and have in place the necessary policies, procedures and training.

This issue of the CFR includes an impressive array of articles from around the world dealing with the various facets of corruption. We are delighted to have the macro picture in articles from The Basel Institute on Governance, the OECD, Transparency International, Mark Vlasic (formerly of the World Bank); country analyses for Canada, the UK and the USA. The collection is a very worthwhile contribution to the knowledge bank of all those interested in the subject.

This is my last contribution as the chairman of the editorial advisory board of the CFR. But it is unlikely to be my last submission as a private citizen! It has been a great pleasure and honour to serve as a member of the team and to hear how well the CFR is being received both locally and internationally. I look forward to seeing the publication go from strength to strength in the future under the leadership of the board, the publisher and his team. 

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Timothy Ridley
Timothy Ridley qualified as a solicitor in England and is an attorney-at-law in the Cayman Islands. He provides legal consulting and advisory services and acts as an expert witness in Cayman Islands legal and regulatory matters. He holds directorships in various private companies engaged in a broad range of activities, including fund administration. Prior thereto, he was for many years a senior partner of the leading Cayman Islands law firm and from 1995 until 2000 led the Asia practice in Hong Kong. He specialized in a broad range of international financial transactions.

Tim has wide regulatory and governance experience. Currently he is a member of the Disciplinary Tribunal Committee of the Cayman Islands Society of Professional Accountants (CISPA) and a member of the Board of Advisors of the Foundation for Fund Governance. He served on the Boards of the Cayman Islands Health Services Authority (2002-2005) and the Cayman Islands Monetary Authority (2002-2008, Chairman 2004-2008). He has also served on various consultative committees that advise the Cayman Islands Government on matters relating to the financial services and local industries.

Tim has taught law at the University of Southampton and at Trinity College, Cambridge and writes and speaks widely on Cayman Islands legal, financial and regulatory issues. He is a member of numerous international professional associations and has served on the editorial boards of leading publications, including the Harvard International Law Journal. Most recently he was chairman of the editorial advisory board of the Cayman Financial Review.

He is a graduate of Cambridge University (BA, Senior Scholar, Trinity College) and Harvard Law School (LL.M, Kennedy Memorial Scholar).

In recognition of his services to the financial services industry and the local community in the Cayman Islands, he was appointed an Officer of the British Empire (OBE) in 1996.

Timothy Ridley
E. [email protected]