Wednesday, December 05, 2007

The UK – leading the fight against anti-corruption

The latest edition of the Distressed Debt Report (DDR), has been prying into the failure of two Bear Stearns hedge funds domiciled in the Caymans – where more than 80% of the world’s 8,000 hedge funds are registered. Regulators in the U.S. state of Massachusets say that Bear Sterns has been using Cayman to shield the directors of the two funds from their duties to investors. The directors refused to respond to subpoenas, claiming that the U.S. regulators have no jurisdiction in Cayman. Cayman insists, of course, that all is above board.
Whatever the truth, the DDR’s reporter Reg Crowder describes something else. He discovered, after rooting through internal UK Home Office and Foreign & Commonwealth Office documents, that when the British government ratified the UN Convention against Corruption (UNCAC) in February 2006 (why so late?), it exempted Cayman and all the other overseas territories and crown dependencies like it! “In effect,” he writes, “the British government exempted most of the world’s offshore money centers.”

The UK claims to be in the forefront of the international fight against corruption. But in light of this, and other ghastly scandals such as the BAE affair, It might be more accurate to say this: Britain is at the forefront of the fight against the fight against corruption.


Anonymous Anonymous said...

A couple of points on the writer's interpretation of the DDR story. First, the corruption convention is irrelevant to the Bear Stearns matter as it is a bankruptcy proceeding. Second, extension of the convention is also irrelevant where there is, in any event, domestic legislation. Official corruption is already covered under the penal code of the Cayman Islands. Third, legislation has been tabled in the Cayman Islands legislative assembly linking to the OECD and UN conventions, which we will be able to be passed whether or not the UK extends these conventions.

10:47 am  

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