Offshore Financial Centers

Link to paper in Simon Fraser University repository: http://summit.sfu.ca/item/15419

The Cayman Islands facilitate some of the largest international financial flows. Despite international pressures, they continue to service international networks of corporations and wealthy elites unperturbed. Few ethnographic studies of offshore financial centers exist because of the private nature of their professionals who uphold strict codes of confidentiality. This thesis describes the sub-elite professional operators of the Cayman Islands and explains the Island’s transition from a modest maritime economy to one of the most powerful finance-based economies in the world. In exchange for material success, the Cayman Islands has sequestered its indigenous populations’ identity in favour of a stronger, prestigious and more unified identity as an international offshore financial center. Through ethnography, I delineate how sub-elites have carefully orchestrated the Islands’ development to their interests and manipulated its political economy, in part by de-legitimizing Caymanian political assertions, therefore silencing their voices, undermining their citizenship, and de-legitimizing their claim to their Island’s own self-governance.
Keywords: Caribbean elites; Durable inequality; Sub-elites; Offshore financial center; Caribbean; Cayman Islands

Taxation in general and tax evasion in particular are inherently geographical in nature but only a small number of geographers have focused on them. In this progress report I present geographers' research on offshore financial centres alongside the work of researchers from other disciplines to present an overview of what we know about the geographies of tax evasion and avoidance. It is argued that not only much regulatory work but also much research remains to be done on tax havens.
Keywords: offshore financial centre, taxation, tax avoidance, tax evasion, tax haven, economic geography, political geography

The Cayman Islands is a key node in contemporary global finance, yet it is severely under-researched. This paper compiles the first 'anatomy' of the Cayman offshore financial center (OFC), utilizing all sources of publicly available data about the three main segments: banking, direct investment, and portfolio investment. The analysis is performed both diachronically to see when large inflows occurred and geographically to determine what role certain countries play in different segments. This dissection of the Cayman OFC shows that the United States is the largest counterparty in all segments with Japan playing an important role too. In fact, when excluding long-term Treasuries, Cayman is the largest holder of US securities in the world. Hedge funds are the main factor for this strong Cayman-US link. About 60 percent of global hedge fund assets are legally domiciled in Cayman – an extraordinary spatial concentration in such a tiny jurisdiction. A novel contribution to the analysis of the Cayman OFC is the introduction of the Anglo-America/Anglosphere approach. This approach provides one plausible explanation for the unparalleled rise of the Cayman OFC by seeing this jurisdiction as one node in an Anglo-American triangle together with the US and the UK, Cayman's sovereign power.

Since the global financial crisis offshore finance centres (OFCs) have been faced with unprecedented and unremitting pressure from leading states, international organisations and civil society organisations to enhance the transparency of their tax regimes. Superficially the age of austerity, characterised by large and sustained public deficits and popular revulsion against multinational corporations and rich individuals abusing the tax system, appear to have vaporised the obstacles that previously stood in the way of attempts to deliver a robust global tax transparency regime. The G20s pledge to ‘end the era of banking secrecy’ and the OECD’s boast of orchestrating a ‘revolution’ a global tax transparency prompted excited talk of the ‘end of offshore’. Unfortunately this is considerably at odds with the empirical evidence which has seen OFCs continue to thrive in the era of austerity. This paper will seek to argue that the origins of the offshore financial system lie in demands by leading states, international financial institutions and corporate actors for instruments to manage the instabilities and contradictions intrinsic to the neo-liberal economic project. The resilience of offshore financial centres and tax havens reflects responses to the financial crisis, of which austerity is an integral part, that have perpetuated the neo-liberal model. Although many leading actors have made a rhetorical commitment to a clampdown the reality is that offshore financial instruments are central to the delivery of the austerity policies to which they are likewise pledged. The paper therefore predicts that offshore finance will continue to flourish in the age of austerity.

This paper presents the Offshore-Intensity Ratio – a simple and straightforward way to identify which countries and jurisdictions could be seen as offshore financial centres (OFCs). By setting the aggregated amount of external capital booked in a jurisdiction in relation to the size of its domestic economy, we get a ratio that expresses the strength with which the particular jurisdiction has acted as a magnet for foreign capital. Sixteen jurisdictions are identified as probable OFCs, including the Cayman Islands, the British Virgin Islands, Bermuda and Luxembourg, but also Ireland and the Netherlands. A novel visualization shows the role of the largest offshore centres in contemporary global finance.

ABSTRACT
Turkey is well behind the many countries according to socio-
economic development criteria. Activities aim to make Istanbul a financial center seem paradoxical due to less developed and risky characteristics of national economy and financial system. It seems that these activities have both economic and political rationales. Economic rationale of the Istanbul Financial Center (IFC) project suggests that Turkish economy has transformed to a safe harbor. Political rationale of this project may imply that evolving economy politics of post 9/11 environment may create economic advantages for Turkey. It has observed that the tool of regulation is of central role for the idea of the development of a financial center in Istanbul. In this paper, by using literature and data analysis, we examine the chance of the success of the regulatory/bureaucratic approach for IFC project.

We conclude that IFC project has weak internal dynamics and it occurred due to both its political attractiveness and also cyclical local/global economic/political conditions. But, it is not realistic to expect strong positive outcomes from the IFC project, if the project would focus only regulatory/bureaucratic approach.

ÖZET
Kalkınmışlık ölçütleri açısından ülkemiz çoğu ülkenin gerisindedir. Ulusal ekonominin ve finansal sistemin birçok açıdan az gelişmişliği/riskliliği veri iken İstanbul’un finans merkezi olmasına ilişkin çalışmalar paradoksal görünmektedir. Bu amaçla ortaya konulan yaklaşımın ekonomik ve siyasi olmak üzere iki önemli dayanağının bulunduğu düşünülmektedir. Ekonomik bağlamda Türk ekonomisinin artık “güvenli liman” haline geldiği üzerinde durulurken, politik yaklaşımda ise 11 Eylül sonrasında değişen siyasi iklim çerçevesinde gelişen yeni ekonomi politiğin ülkemiz lehine ekonomik avantaja dönüştürülebileceği gündeme getirilmektedir. Söz konusu avantajlardan finansal merkez olunması şeklinde bir değerin ortaya çıkmasında ise; kamu yönetiminin düzenleme işlevine merkezi bir rol verildiği görülmektedir. Yöntem olarak literatür taraması ve karşılaştırmalı veri analizinin esas alındığı bu çalışmada, düzenlemeci bir yaklaşım çerçevesinde İstanbul’un finansal merkez olması projesinin gerçekleştirilebilirliği incelenmiştir. İnceleme sonucunda; daha çok konjonktürel nedenler/siyasi cazibesi nedeniyle gündeme getirildiği ve içsel dinamiklerinin zayıf olduğu düşünülen İstanbul’un finansal merkez olması projesinin; salt düzenlemeci bir yaklaşım çerçevesinde hayata geçirilmesinin gerçekçi/inandırıcı olmadığı sonucuna ulaşılmıştır.

Since the last global financial crisis, private equity activities have increased again in Germany. This article provides an overview of developments between 2012 and 2018 from an employee perspective. It shows the volume and sectoral focus of company takeovers, the new owners after the exit of financial investors, and the proportion of companies in which parity co-determination is practiced. It also examines the most active private equity firms, their funds, their returns and their use of tax havens.

Currently, numerous physician practices in industrial and emerging countries are being taken over by private equity firms and integrated into novel physician corporations. This involves private equity firms producing a global wealth chain (GWC) between their investors and the target asset, using offshore financial centres to facilitate tax-avoiding reflux of capital. Moreover, they are opening up ambulatory health care as an asset for capital investment by overcoming previous market barriers to ambulatory health care via a legal construct. In this paper, we trace the spatial links of these finance-side and sector-specific corporate chains based on a capital flow analysis of private equity takeovers of Medical Care Centres (MCCs) in Bavaria, Germany. With our heuristics of a double-layered GWC, which enables the extraction of value from the German health system, we contribute to the emerging GWC debate that aims to conceptualise the complex and often opaque spatialisations of financialisation processes.

Over the past few decades, the islands of Sark and Brecqhou have featured in much media and legal discourse. Such factors as jurisdictional contestation, tension and criticism have arisen either between the owners of the private island of Brecqhou and the jurisdiction in which it is located, or as a result of other factors that have an association with Brecqhou on the larger island of Sark. As a type of microstate with a contested history and distinct traditional ways of life, the jurisdictional geographies in the Sark/Brecqhou dyad are of particular interest to the field of Island Studies. I use the term ‘Sark/Brecqhou dyad’ as a way of emphasising the distinct physical, political and social binaries that exist between the islands of Sark and Brecqhou. It is argued that key to understanding some of the points of contestation within and between this island dyad is a comprehension of some of the ways jurisdictional geographies and contested histories have been (re)interpreted. This article is an extension of my earlier article on the subject (Johnson 2014), and one that offers clarification, or one interpretation, of several significant points that help in comprehending this particular case of inter- and
intra-island dynamics.