A suggestion by British Prime Minister David Cameron that the City of London becomes a Cayman Islands-style jurisdiction, exempt from European financial regulation, was rejected yesterday as “toxic”.
“We think this is a totally toxic idea, a terrible idea, and it’s damaging to UK interests, to European interests and to the rest of the world,” John Christensen, director of the International Secretariat of the Tax Justice Network (TJN) told iNews Cayman yesterday in a telephone interview from London.
“The prime minister needs to go back to the drawing board. We would say that the City of London has time and time again demonstrated total incompetence and very poor regulation,” he said.
The remarks came in the wake of Mr Cameron’s 8-9 December move to exempt the City of London from increasing European Union regulation; extend the reach of the Euro, the union’s single currency;  and impose a loose budgetary discipline on the 17 EU members.
Speaking at the EU’s Brussels headquarters, Mr Cameron told members that he wanted the City of London to become “a kind of Cayman Islands” within the EU: enjoying the benefits of a single market for financial services, but not subject to EU oversight or regulation.

Mr Christensen rejected the proposal, saying it would worsen global tax avoidance — long a TJN criticism of the Cayman Islands.
“The City of London has used the Cayman Islands and the Channel Islands for decades to do its dirty business,” he said, “and this would just deepen, just exacerbate, the situation.”
The Belgium-based TJN is an association of researchers and activists campaigning against tax havens, tax avoidance and tax competition, which, the group says, “corrupt national tax regimes and onshore regulation, and distort markets by rewarding economic free-riders and misdirecting investment.”

A recent TJN study put Cayman No. 2 in the world in regard to “secrecy jurisdictions”, lamenting lack of transparency in the local financial system. In January, author Nicholas Shaxson boosted TJN’s claims with his “Treasure Islands”, a critical survey of offshore jurisdictions including a chapter on the Cayman Islands.

“I have worked closely with Mr Shaxson,” Mr Christensen said yesterday, observing that Cayman was responsible for global tax avoidance of hundreds of millions of pounds sterling.

The City of London, he said, “needs more regulation, not less,” and accused Mr Cameron of ”trying to protect the City from European regulation,“ when, by contrast, “the world needs to be protected from the City of London.”

Efforts to isolate it from European regulation, creating a sort of Cayman islands within the EU, he said, were, “very bad for the British public and for people elsewhere.”
Rejecting the remarks, however, Cayman Finance Chairman Richard Coles said yesterday that Mr Cameron’s suggestion deserved attention.
“We should be very flattered that the City of London would wish to emulate the Cayman Islands,” he said.

“The City of London is one of the biggest financial centres in the world, and it’s notable to think they would like to imitate Cayman,” Mr Coles said.
He was reluctant to predict, however, if re-creating the City of London in the image of Cayman presented a threat to George Town’s financial-
services industry.

“Whatever London does, I am sure will benefit everyone,” he said.