On 27 May, seven days after the United Democratic Party decisively won control of the government in the Cayman Islands’ general elections, MLA McKeeva Bush become the leader of government business once again, as well as premier designate. Bush took time in August to speak with Cayman Financial Review contributor Alan Markoff about his and his party’s strategies for their first 100 days in office, and how those strategies supported their administration’s plans for the Cayman Islands.
It’s late in the afternoon the day before Bush is scheduled to fly to Washington, DC, to sign Cayman’s 12th Tax Information Exchange Agreement. He’s already had a long day; there was a press briefing in the morning and several meetings afterwards.
I’m lucky to get the interview, and I know there are appointments after me.
He greets me amiably, as he always does, and asks me to have a seat. His desk, while not cluttered, is covered with neat stacks of papers. He’s a busy man, but he doesn’t look tired; on the contrary, he looks like a man that loves what he is doing.
We start discussing his government’s strategies for the first 100 days in office. At the press conference earlier in the day, Bush said the Cayman Islands was experiencing a very serious financial crisis that is likely to get worse before it gets better.
Despite the problems on the home front, Bush has something else on his mind: the OECD, and more precisely, Cayman’s appearance on the so-called grey list. Getting Cayman to the white list has been his top priority since coming into office. He knows how important the OECD’s stamp of approval is to Cayman’s financial industry, but he also knows that getting on the OECD white list in not a panacea.
“As you know, the US and Europe both have been pushing new initiatives that will seriously affect not just Cayman, but all offshore financial centres,” he says.
Bush talks about statements coming from US Congressman Barney Frank and out of the European Union concerning the regulation of hedge funds.
“If those things happen, it will kill the industry. It will make it impossible to do business.”
Bush, who was Cayman’s leader of government business when it successfully won a 2003 court battle against the European Union regarding its Savings Tax Directive, knows now isn’t a time to fight the international forces coming to bear against offshore financial centres. He knows things have to be done differently going forward.
“Cayman will have to beef up its regulatory system,” he says. “We’ll have to work with the various international agencies through our tax team and [the Cayman Islands Monetary Authority].”
Bush says the Cayman Islands is committed to signing TIEA’s with as many OECD member countries as possible to improve international transparency and to show its cooperativeness.
“At the end of the day, what they do affects our revenues,” he says of the OECD and other international regulatory bodies.
“I don’t believe that we can stand still and not move forward in creating the kind of offshore centre that can satisfy our income needs and satisfy the international regimes.”
Bush’s ministry office at the Glass House is a beehive of activity. Civil servants walk quickly, with purpose, through the hallways. This is no place for a civil servant who just wants to go through the motions.
The young woman from the ministry who escorted me upstairs, comments on how busy things are. “But I like it that way,” she says. “It’s exciting.” Bush expects good performance from the civil servants in his ministry.
While looking through some documents to find the answer to one of my questions, he notices something. He calls in his political assistant, Richard Parchment. “I told that girl this was wrong,” he tells Parchment, handing him the document. “Tell her to fix this.” Parchment takes the document and hurries out. Bush sighs.
The government is putting in place systems and procedures for monitoring regulatory developments, Bush says. This will ensure the Cayman Islands takes a more proactive approach in meeting international standards.
Bush points to the establishment of a Ministry of Financial Services, something that has never existed before and over which he is now minister, as a sign of his commitment to the industry.
He says the creation of a financial services secretariat will provide support to the Ministry of Financial Services on policy, legal and communications issues.
But Bush also accepts that Cayman needs outside help.
“We have to have people internationally to work with us,” he says. “We know we cannot set up embassies across the world; we don’t have the money to do that.”
“What we can do is put in place lobbyists, public relations professionals and investment offices.”
As far as lobbyists are concerned, Bush thinks the previous government made a big mistake in terminating the Livingston Group.
“When anything arose, they were there, whether it was in Washington or California,” he says. “They kept us under the radar and whenever anything arose, they defended us.”
Bush sees an integrated communications structure that employs lobbyist groups and a strong double-pronged public relations effort emanating from the Cayman Islands Financial Services Association and the Cayman Islands Government.
Representatives of the Cayman Islands Government have already met with US-based firms in an effort to get the right people in the right places to assist with lobbying and public relations efforts, he says.
“I believe that if we stay abreast of legislative developments in the US, which is the main source market for our financial services business, we will be in a better position to carry out lobbying efforts,” Bush says, adding that educating overseas governments about the Cayman Islands is also key to the effort.
Bush says Cayman will also engage various overseas law firms to address specific legal issues that might arise.
“They will all represent Cayman and they have to work together,” he says, adding that although more resources will be allocated toward the US, he sees a similar, but smaller, structure in the UK to deal with European matters.
“They’ll all be paid by us to protect our interests and to keep us alerted to anything coming down the pike.”
While talking about Cayman’s international communications strategies, Bush looks for some correspondence with a law firm. He shuffles through one of the many neat stacks of paper on his desk. We continue talking, but Bush becomes distracted when he can’t find the paper.
He calls Parchment back into his office.
“Someone has taken something off me desk,” he says, explaining what it is he’s looking for.“Oh, I have that right now,” says Parchment.
“I knew someone had it,” says Bush, as Parchment goes to get the document.
Bush realises that hedge funds – a key to Cayman’s economic success since they exploded onto the scene in the mid-to-late 1990s – are in the crosshairs of the international community. He knows what it would mean to the Cayman Islands if people like Barney Frank and others get their way when it comes to regulating hedge funds.
“It means we have to create the kind of financial industry that’s not depending on just hedge funds,” he says. “We want to bring more businesses here, and it can’t be just a name plate. That’s something we have to get away from.”
Bush says he wants to attract businesses that will establish their headquarters here, and he uses JP Morgan as an example.
“I’m talking about businesses that bring their top man down here; that bring their top staff here; businesses that have a presence on the ground.”
He sees the physical presence issue as a key battle line in the future. He knows what US President Barack Obama said on the campaign trail about Ugland House in early 2008, when he called the home to the Maples law firm “either the biggest building or the biggest tax scam on record.”
Bush says physical presence is what he expects the OECD to focus on next.
“Presence; that’s what they’re going to come down on,” he says. “They’re going to want to see presence.
“We need to create the kind of environment that will attract business that will come here build a building and establish a presence here.”
If businesses set up a full physical presence here, they will in turn have a greater contribution to Cayman’s economy in the form of jobs, government revenues and spending, Bush says.
Our conversation drifts to some news of the day, the lawsuit filed in Cayman’s Grand Court against Saudi billionaire Maan al Sanea, Saad Investments Company Limited and some 40 other related companies.
I tell Bush that information is hard to come by in the case. “I think they have an office here,” he says. He’s not certain, so he makes a call in front of me. He nods to me when he gets confirmation.
After the call, he tells me where to find Saad’s offices. He then recalls a story he heard about how former Leader of Government Business Kurt Tibbetts attended a dinner function with al Sanea and ended up with a turban on his head.
“I wish I had a picture of that,” he says, laughing.
Attracting businesses to set up a physical presence in Cayman is easier said than done. Bush knows that Cayman’s immigration laws would have to be amended to facilitate businesses before they would entertain the idea of relocating here.
“We need a modern immigration law; one that is not built on protectionism, but one that is realistic and inviting,” he says.
Bush says the Immigration Law must provide for the financial industry in different ways that it does other industries.
“It’s a completely different business than construction or even the tourism industry,” he said. “Different policies must apply.”
One thing Bush is adamant about is the belief Cayman needs more people. He says complaints about population growth are short-sighted.
“We’re not giving away the country here,” he says. “But we can’t build a country in isolation. We can’t build a country without people. Caymanians are going to have to accept that.
“I can assure Caymanians that protectionism isn’t going to benefit your children,” he says. “It’s not going to benefit your business if you can’t get business that can only be brought here by outside people.”
Bush believes the more variety in companies Cayman can attract here, the better off Caymanians will be because they will have continual opportunities in diverse kinds of international businesses. If the Cayman Islands lets them, the businesses will come, Bush says.
“Cayman is not short of investors wanting to come here,” he says. “Immigration is going to be the key.
“Caymanians are going to have to decide; they can keep the disgruntled attitude or they can prepare to make money.”
A protectionist immigration policy has already chased jobs away from the Cayman Islands to the Channel Islands and to Nova Scotia, Bush asserts, adding that if there isn’t a change in the Immigration policies, more will follow.
Bush says all the complaining about foreign workers is taking the focus away from the real challenges facing the Cayman Islands.
“We are fighting fire ants while elephants are trampling us,” he says.
Several weeks earlier, Bush announced a special team would carry out a review of immigration policies and procedures and make recommendations for changes to the Immigration Law. One of the goals of an amended law would be to ensure an adequate degree of certainty for employers in relation to future staffing needs, while at the same time safeguarding employment, training and upward mobility of Caymanians.
Bush says there is also a joint effort by the Ministry of Education and the Ministry of Financial Services to work directly with industry stakeholders to develop specific school courses in the area of financial services in effort to improve the level of participation of Caymanians.
Looking at him, it’s hard to believe Bush had gastric by-pass surgery less than a year earlier.
The loss of weight in his face makes him look a little older, but he looks healthier. And he seems to have a never-ending supply of energy.
Each stack of paper on his desk apparently represents another initiative on which he or his ministries are working.
Bush is a big picture manager, but he is well informed on the finer details of his projects.
I figure it would take me several working days just to read every document on his desk.
Bush believes the Cayman Islands must go out and chase new business, especially in the current difficult economic climate.
He has already announced plans to establish an office of the Cayman Islands Investment Bureau in Dubai, which he hopes to officially open in mid-December.
But he is also looking at Asia and he confides – knowing my article won’t come out until October – that he has been invited to China to speak at a conference about what Cayman’s financial services industry has to offer.
“They’re interested in moving in this direction,” he says. “We just have to set the right environment for them.”
Bush says Cayman is going to look into reopening the Investment Bureau office in Hong Kong – something the previous People‘s Progressive Movement administration closed shortly after assuming office in 2005. He also says Cayman could open an Investment Bureau office in China.
“The synergies are there to draw businesses from those places,” he says. “We cannot sit down and let other places like Trinidad and Jamaica get ahead of us in attracting business from there.”
Having Cayman-based law firms in Hong Kong and Dubai will assist in setting up Investment Bureau offices there, he says.
“We will be working closely with firms that are doing business there to better determine how our official presence on the ground can be of service to their efforts to attract business to the Cayman Islands.”
Bush says Cayman is also proactively going to attempt to lure niche business to Cayman.
Bush talks about streamlining planning, business licensing and company register processes, all in an effort to improve efficiency and service levels to make Cayman a more attractive domicile for companies.
Reinsurance is one industry he would like to see expand, and Bush says the government has already met with Cayman’s only re-insurer, Greenlight Re, to inquire about the best ways of doing that.
“We have dusted off the old files on this initiative, which stalled under the previous administration,” Bush says. “Key to this effort and to others will be getting the changes made to improve both efficiency as well as the ability of firms to attract the required professionals if they are not available locally.”
Bush also talks about amending the Patents and Trade Marks Law to create a new industry.
“The way it is set up now, Cayman is not getting a thing out of it,” he says. “It won’t mean huge amounts of revenue, but it will create some jobs.”
Another focus of Bush’s strategy is to attract development, particularly for high-end tourism.
In addition to already having The Ritz-Carlton, Grand Cayman, Bush says getting five-star brands like Mandarin Oriental, St. Regis, Raffles and Four Seasons would put Cayman at the pinnacle of Caribbean tourism.
Bush says Cayman should consider privatising the Pedro St. James Castle for a possible luxury hotel site. He believes it’s time to cut the losses at the tourist attraction. “We’re fooling ourselves and whistling in the wind if we think we can save the investment we have made there,” he says. “Instead we can make it into a boutique hotel and world-class spa.”
The investors are there, Cayman just needs to welcome them, Bush says.
“The idea is that once developers have met a certain criteria, based on their economic impact, they will receive the red carpet treatment,” he says, adding that there might be several tiers of treatment based on the size and potential economic impact of a development.
I still have more questions, but Parchment comes into the office.
“You next appointment has been waiting for 20 minutes,” he said.
“OK,” says Bush. But he doesn’t tell me it’s the end of our interview.
Parchment, however, has a look of urgency on his face, and for all I know, it’s the governor who’s been waiting for 20 minutes.
“That’s enough for now,” I say. “I can always call you if I need anything else.”
After Bush travels to Washington, he is meeting other family members, including his grandchildren, somewhere abroad for a vacation.
“Just call me if you need anything more,” he says.
As I make my way out of the office, Bush zeroes in on a stack of documents on the right side of his desk. He’s moved on to the agenda of his next meeting.