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January/February 2000 issue:
You've probably heard about the Richard Hape case (the joint RCMP-TCI
police investigation of British West Indies Trust Company and the seizure
of documents in the TCI office) and the John Mathewson case (the former
Cayman Islands banker who turned over client files to the FBI in a plea
bargain after being charged with tax evasion and facing criminal
sanctions). In light of these events, our cover story in this issue
focuses on trust and confidence in professional relationships. How much
background information is available from offshore regulatory authorities?
Who should you contact to carry out due diligence? What can they do for
you and what can they not do for you? All of these questions and more are
answered in our cover story.
This issue reports on over 40 news items in our offshore reports, industry
news, investment news and offshore financial planning columns.
Our caveat emptor column focuses on the advance fee fraud with an in-depth
look at Operation Risky Business and the 419 fraud.
St Vincent is the subject of our special focus section. One of the first
Caribbean centres to have offshore financial legislation, St. Vincent has
emerged as a premier jurisdiction for privacy and confidentiality.
And don't miss Part I of our Due Diligence Directory, which contains six
new warning notices, and Part II, which lists eight new individuals
charged with financial fraud - an indispensable due diligence resource.
The issue is available on the newsstands until approximately February
25th. It can also be purchased directly from our website, while supplies
last.
You can order a copy of the January/February 2000 issue at a price of
CDN$15 (US$12) through our web site at:
offshorefinancecanada.com
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Vol.1. No. 21
Dec. 5 to Dec. 11, 1999
OFFSHORE ROUND-UP: An OFC publication
Copyright 1999 O.F.C. Publications Inc. ISSN Pending
Table of Contents
1. Latin American funds make impressive gains
2. Proposals to regulate financial planners
3. Finland proposes compromise solution to tax evasion dispute
4. Venture Exchange aims at high-tech firms offshore
5. More ways around the 20% foreign content limit
6. Internet site to track hedge funds
7. World Bank warns of perils to come for emerging economies
8. Federal e-commerce and privacy legislation
9. Survey rates RBC web site as one of the world's best
10. Hong Kong's highest court rules that Beijing is supreme
11. UK gambling legislation will target offshore
LATIN AMERICAN FUNDS MAKE IMPRESIVE GAINS
Date: 3 December 1999
Source: Wall Street Journal, C-11
An economic recovery has allowed Latin American mutual funds to post
stronger gains. Led by the dominant markets of Mexico and Brazil, Latin
American funds posted gains of more than 30% in 1999, after suffering
comparable losses in 1998.
In Brazil, a strengthened currency and positive economic forecast pushed
the Bovespa Index to 14,213; breaking the 14,000 barrier for the first
time. The gains are particularly impressive considering that only a year
earlier Brazil's poor economy nearly caused the index to dip below 6,000.
PROPOSALS TO REGULATE FINANCIAL PLANNERS
Date: 7 December 1999
Source: Globe and Mail, B-6
Under proposed regulations, anyone selling insurance or securities in
Canada who claims to be a "financial planner" will have to pass a
standardized exam.
The aim of the common exam is to make it easier for consumers to
distinguish qualified financial planners from investment salesmen.
Currently, anyone can claim to be a financial planner, regardless of
training or qualifications. Those who have completed or are registered to
take existing exams will be exempted from the test. The test would apply
across the country with the exception of Quebec, which already has
extensive financial planning regulations.
FINLAND PROPOSES COMPROMISE SOLUTION TO TAX EVASION DISPUTE
Date: 7 December 1999
Source: Financial Times, p. 1
Finnish Finance Minister Sauli Niinisto outlined a proposed compromise to
the UK-EU standoff over a plan aimed to counter evasion of taxes levied on
savings.
Under the current plan, European Union member states are given the option
to provide information on savings accounts to other states or levy a
withholding tax. However, the UK government has taken a firm stance on
the exclusion of Eurobonds from information exchange requirements.
In order to encourage a compromise on the issue, Niinisto suggested that
the information exchange on savings accounts between member states be
limited to providing only the bondholder's name and address.
VENTURE EXCHANGE AIMS AT HIGH-TECH FIRMS OFFSHORE
Date: 7 December 1999
Source: Financial Times, p. 6
The Canadian Venture Exchange (formerly the Vancouver Stock Exchange)
announced a program to attract listings from high-tech Chinese firms. At
a presentation made at the Great Hall of the People in Beijing, the CVE
described itself as the ideal place for hi-tech Chinese start-ups to go
public.
In recent months, executives from Nasdaq and its counterpart in Singapore,
Sasdaq, as well as officials from Hong Kong have made trips to China in a
bid to woo young high-tech firms.
Meanwhile, a dispute has erupted between branches of the Chinese
Government regarding foreign listing by Chinese firms. It is uncertain
whether Chinese companies require the approval of the China Securities and
Regulatory Commission before listing abroad. Some Chinese firms plan to
escape CSRC control by listing through offshore domiciles like the Cayman
Islands or the British Virgin Islands.
MORE WAYS AROUND THE 20% FOREIGN CONTENT LIMIT
Date: 8 December 1999
Source: Financial Post, E-3
A self-directed RRSP offers at least two solutions for maximizing the 20%
foreign content limit.
The first solution is provided by a special rule that helps small
businesses to obtain equity financing. This rule enables you to increase
your RRSP's foreign content by $3 for every $1 invested in a Canadian
small business. For example, a 6.67% holding of qualifying small business
property would boost your foreign content limit by 20% (three times
6.67%). The foreign content limit would then be increased to 40%.
Another way to boost the foreign content limit using a self-directed RRSP
is to invest in a qualifying mutual fund trust. Under certain conditions,
the mutual fund trust can also invest up to 20% of its holdings in foreign
property.
INTERNET SITE TO TRACK HEDGE FUNDS
Date: 8 December 1999
Source: Financial Times, p. 28
PlusFunds.com, a new service supported by Standard and Poor's and Ernst
and Young, promises to supply investors with risk and performance
information on hedge funds.
Since the collapse of the hedge fund Long Term Capital Management, the
industry has faced increasing pressure to change its secretive ways.
While the hedge fund industry faces few legal requirements of disclosure,
the PlusFund.com service will broadcast details of fund holdings and
trades, and will forecast the probable maximum change in fund worth over
daily and monthly periods.
WORLD BANK WARNS OF PERILS TO COME FOR EMERGING ECONOMIES
Date: 8 December 1999
Source: Financial Times, p.7
After raising its short-term forecasts for economic growth in developing
countries, the World Bank cautioned against the dangers of economic
imbalances in industrial countries. It singled out the "consumption boom
(driven by the stock market), widening external deficit in the US, and the
uncertain outlook for Japan" as the primary reasons for concern.
Although the higher short-term forecasts are evidence of a
better-than-expected recovery from financial crises, long-term growth
forecasts were reduced due to persisting structural flaws.
FEDERAL E-COMMERCE AND PRIVACY LEGISLATION ON ITS WAY
Date: 9 December 1999
Source: Globe and Mail, T-2
Bill C-6, which is expected to become law shortly, aims to enhance privacy
protection for individuals in the realm of electronic commerce.
Attached to the federal legislation is a code on privacy. The code lists
ten provisions to provide Canadians with greater control of their personal
information. The most notable provisions require organizations to:
- identify the purposes for which personal information collected will be
used,
- obtain consent before collecting that information, and
- ensure that individuals have access to personal data held by companies.
Despite the enhanced privacy protection for individuals, Michael Geist, a
law professor at the University of Ottawa School of Law specializing in
Internet and electronic commerce law, says that many loopholes in Bill C-6
could offer organizations a way around the legislation.
SURVEY RATES RBC WEBSITE AS ONE OF THE WORLD'S BEST
Date: 9 December 1999
Source: Globe and Mail, B-6
According to a survey conducted by Lafferty Group, the Royal Bank of
Canada has the best web site among the world's major banks. RBC beat such
industry heavyweights as San Francisco's Wells Fargo and Switzerland's
Credit Suisse.
The survey ranking was based on the interactivity, content, navigation,
speed and design of web sites. Canada's five biggest banks were all
ranked in the top twenty in North America.
HONG KONG'S HIGHEST COURT RULES THAT BEIJING IS SUPREME
Date: 10 December 1999
Source: Financial Times, p. 2
The highest court in Hong Kong ruled that the country's post-colonial
constitution (the "Basic Law") grants China unrestricted power to
interpret the law. The judgment upheld an interpretation by the Chinese
Parliament, which effectively reversed a previous immigration ruling.
The immigration case dealt with the rights of children born before their
parents had become citizens of Hong Kong. The court originally held that
Hong Kong's laws applied in determining immigration applications.
However, the recent judgment upheld China's definition of the rights of
applicant for immigration.
UK GAMBLING LEGISLATION WILL TARGET OFFSHORE CENTERS
Date: 12 December 1999
Source: Financial Times, p.6
The British Government announced an extensive review of gambling
legislation made necessary by moves from the country's largest betting
groups to establish offshore and online gambling operations. The
government is worried about a potential loss of tax revenue that will
result if offshore Internet gambling operations are left unregulated.
From 1998 to 1999, government revenues from gambling fell by one million
British pounds.
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