Local and overseas observers have rejected a highly critical Tax Justice Network (TJN) report that charges the Cayman Islands as the second-worst place in the world for financial secrecy.

Ranking only behind Switzerland, Cayman, the report says, “facilitates a huge number of opaque offshore companies and trusts which can be used to hide all manner of illegitimate activities.”

In its Financial Secrecy Index, TJN scores Cayman at 1,646 out of 2,000, just behind Basel at 1,879, and followed by Luxembourg, Hong Kong and the US.

Calling the Cayman Islands a top “secrecy jurisdiction”, John Christensen, director of the TJN’s International Secretariat said Cayman “provides facilities that enable people or entities [to] escape or undermine the laws, rules and regulations of other jurisdictions elsewhere, using secrecy as a prime tool.”

TJN has pegged at $250 billion global annual tax losses to governments, and observes that Cayman hosts “over 10,000 mutual funds, almost 300 banks and over 90,000 companies”.

The organisation cites Cayman’s Confidential Relationships (Preservation) Law as “enshrining financial secrecy”, although “light-touch financial regulation and Cayman’s ‘flexibility’ in designing legislation quickly and with little democratic accountability” are other “key attractions.”

Chairman of Cayman Finance, Richard Coles, said the report “beggars belief.”

“We have never been more transparent and we have never had so many tax treaties with other jurisdictions,” Mr Coles said, alluding to Cayman’s 26 Tax Information Exchange Agreements, the most recent of which was signed with China just last week.

He worried, however, that the media might take TJN and Mr Christenson seriously. “They see nothing immoral in governments taking half or more of a man’s salary,” he said. “Perhaps they have failed to notice that the great harmonisation experiment we call the European Union has been a fiscal disaster and that the individuality of Cayman in taxation matters should be applauded not vilified.”

Former Chairman of Cayman Finance and outspoken, long-time defender of Cayman’s financial-services industry Anthony Travers called Mr Christensen and other TJN principals, including Nicholas Shaxson, author of “Treasure Islands”, an early 2011 survey of tax havens, “an extreme left-wing group of high-tax radicals”.

“So tedious is their propaganda that it is not surprising that it gains no traction whatsoever,” Mr Travers told iNews.

“What is surprising, though, is that their mantra continues in the face of the excellent reports undertaken by the Organisation for Economic Cooperation and Development, the Financial Action Task Force and the US General Accountability Office on the supremely high standards of tax transparency and tax neutrality demonstrated in the Cayman Islands.

“This so-called Tax Justice Network are incapable of distinguishing between legitimate business confidentiality and tax evasion and tax fraud. Until they do so, it is highly unlikely that anyone in the financial world will take them seriously.” Mr Travers said.

Jack Irvine, Cayman Finance’s London-based adviser, and liaison with government and the media, lamented, “the same old tired song Tax Justice Network have been turning out for years.”

He pointed to ”a few facts” about TJN, saying it operated from “a modest house in the English countryside” and was taken seriously by “almost no one”.

The organisation was “forever claiming that tax-neutral administrations such as Cayman, BVI or Jersey are responsible for the deaths of children in the developing world, in particular Africa.

“However as one who has worked in the very worst areas of Africa I can tell you that the reason these desperately poor families are deprived of aid is that no sooner does money pour into the country but it is stolen by corrupt dictators. Please explain where Cayman or other tax-neutral countries can be blamed for this theft.”

Cayman, he said, “should be comforted by the fact that the UK government takes no notice” of TJN and “indeed, the current UK regime and the House of Commons All Party Parliamentary Group have repeatedly signalled their support of Cayman and its robust financial and legal systems.”