Mr. Ridley is among those on the islands who argue that if Cayman does not move with the times, it risks damaging its status as a financial centre. “Going back to growing thatch palm and catching turtles is no way to make a living,” he warns. “There are residual areas of Luddite behaviour which do not serve the industry well,” says Mr. Ridley, but adds Cima is aware of the need to modernize and adds that critics need more patience.
“Cayman has been wrestling with the issue of transparency for years,” he says. “There has been and will be much discussion, but what matters is that Cima is sensibly making haste slowly. There are lobbying groups both on and off the islands, and Cima needs to reach a balanced decision.” He observes that clamouring for transparency is healthy but it is like “being in favour of motherhood.”
Others are skeptical. In a community of just 50,000, the delineations of authority can sometimes appear blurred. Linburgh Martin, Cima’s deputy director, for example, is listed as a director of dozens of Cayman entities in U.S. regulatory filings. Cima says it protects against conflicts of interest in the small community with a strict code of conduct for its members.
Yet despite such guidelines, some argue the islands have a clannish culture. “When I opened up the chamber of commerce, that was a revolutionary act,” says Gordon Barlow, a resident of the islands for 35 years. He says that Cayman, for all its modernization efforts, remains a small community dominated by special interests. “One thing you have to bear in mind is that there is a fairly strict unwritten prohibition on free speech here,” he says. “Any expat who is out of line can be thrown off the islands … or any resident can get an expat thrown off the islands. You write an anonymous letter to immigration, or you whisper to your cousin’s cousin and boom, they’re off the islands.”
Financial authorities on Cayman reject such depictions as outmoded but doubts persist.
“It is a total whitewash,” says one hedge fund director, in reference to Cima’s proposals. He declined to be named because he is worried about Cima refusing him permission to operate as a director. “I think what they’ve proposed is a smokescreen. It has no meat. Funds will be listed on this database, but directors themselves won’t be searchable. There will be no requirement to disclose their total positions, past or present,” he says. “When it comes down to it, it all stays hidden. Cayman doesn’t want to open up because if it did, no one would be mad enough to invest with these guys as their directors.”
Another big investor agreed that Cayman would only make token changes. “I think the measures Cima comes out with later this year will probably end up being enough to shut most of us up. So that will be fine for them. But if Luxembourg or Ireland, or even the U.K. got serious about crafting a proper onshore, transparent but low-tax fund law, then that would be it for them. They’ve just got to hope that never happens.”