TUESDAY, SEPTEMBER 13, 2016
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Bahamas urged: ‘Resist’ Baha Mar payout new global tax pressure process ‘opening By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A former Bahamas Financial Services Board (BFSB) chairman yesterday urged the Government to resist “disingenuous” international pressure, after this nation was accused of single-handedly undermining the global “war on tax dodgers”. Michael Paton told Tribune Business that the Bahamas needed to remain steadfast and meet the commitments it has made to implement the Common Reporting Standard (CRS) for automatic tax information exchange on a bilateral (country-to-country) basis
Economist magazine slams ‘holdout’ Bahamas Nation undermining global ‘war on tax dodgers’ Ex-BFSB chief: ‘Big mistake’ to change CRS plans by 2018. He warned that it would be “a big mistake” for the Bahamas to alter its position in response to an ar-
ticle in the respected international magazine, The Economist, which described this nation as ‘The Holdout’ on automatic tax information exchange, The article, published both in print and electronically on September 10, 2016, described the Bahamas as “chief among the recalcitrants” who had not agreed to the automatic exchange of tax information on a multilateral basis. Agreeing to this would require the Bahamas to exchange tax information on the financial services industry’s foreign clients with all signatory countries - more than 100 - instantaneously. Instead, the Bahamas has agreed to implement the
CRS on a bilateral basis, meaning it will negotiate agreements one country at a time with nations seeking to automatically exchange tax information with it. Even though the Organisation for Economic CoOperation and Development (OECD), the global tax information overseer, has agreed that countries are free to determine their approach - bilateral or multilateral - the Bahamas has been portrayed as a noncompliant threat to the international order. The Economist, whose target readership is the global financial and business community, just the sort of high net worth clients See pg b4
Bank of the Bahamas saw almost $70 million wiped off its stock market value last week, as investors searched for the ‘floor’ following the removal of price movement restrictions. Tribune Business calculations show that the BISXlisted institution’s market capitalisation fell some 62.45 per cent in just five days, as buyers and sellers found prices at which they were willing to act. Based upon the 21,387,924 ordinary shares outstanding prior to Bank of the Bahamas’ $40 million rights issue, which closed yesterday, the $5.22 share price as at Monday, September 5, meant it started last week with a market capitalisation of $111.645 million. However, BISX’s decision to expand the trading ‘bandwidth’ for Bank of the Bahamas’ stock to 54 per cent paid dividends in that it stimulated trading activity in a stock that had been stuck at a $5.22 price for more than two-and-a-halfyears. As a result, Bank of the Bahamas’ share price closed last week at $1.96, which caused its stock market value to drop to $41.92 million. Such a calamitous fall would normally be regarded as a spectacular destruction of shareholder value, but in Bank of the Bahamas’ case, it was more a reflection of
Bank’s market capitalisation slashed 62.45% Price 28% below $40m rights offering level Govt likely to soon own 80-90% of BOB allowing the market to findand reflect - what it believes is the bank’s true value. BISX normally allows trading prices to only fluctuate by a maximum of 10 per cent either side of the previous day’s close, in a bid to eliminate the price volatility produced by small retail sellers wanting to exit a stock at any price. Yet in Bank of the Bahamas’ case, BISX took the view that this was unduly restricting trading activity and preventing better ‘price discovery’ by the Bahamian capital markets. The stock, though, is now valued some 27.6 per cent below what was the $2.70 rights issue price, where existing Bank of the Bahamas shareholders were being invited to purchase one new share for every 1.44 currently held. This means that the rights issue was significantly overvalued, based on where the market believes Bank of the Bahamas’ true value is See pg b4
The Opposition’s deputy leader yesterday expressed alarm at “the potential reputational damage” that may have been inflicted by allegations that the Bahamas is ‘non-cooperative’ in the “global war on tax dodgers”. K P Turnquest said the article in the respected magazine, the Economist, which described this nation as “cocking a snook” at efforts to crack down on international tax evasion and avoidance, could negatively influence investor perceptions of the Bahamas and its financial services industry. “That is the crux of the concerns I would have, and the industry has,” the east Grand Bahama MP said of the article, which was pub-
Bran: ‘No doubt’ about foreign creditor litigation
Joins BFSB chief in slamming Economist article Turnquest: ‘What more is required from Bahamas?’
Govt slams tax exchange delay claim ‘hearsay’
‘reputation damage’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
By NEI L HAR T NELL Tribune Bu siness Ed i tor nhartnell@tribunemedia.net
The Democratic National Alliance’s (DNA) leader yesterday warned that the Baha Mar creditor payout process threatens to “open the floodgates” to litigation by foreign claimants, amid warnings that the Bahamas’ investment reputation is again under threat. Branville McCartney told Tribune Business he had “no doubt” about the possibility of lawsuits being initiated, both in the Bahamas and abroad, by Baha Mar’s foreign creditors who view the payout process as ‘discriminatory’ in favour of Bahamians. He also agreed that the “priority” being given to Bahamian creditors threatened to undermine this country’s reputation as a safe destination for foreign investors and companies, given that they appeared likely to recover little to See pg b4
BOB: $70m wiped Tax ‘holdout’: FNM off value in week deputy leader fears By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
legal floodgates’
McCartney: ‘Our actions speak for us’ lished on September 10, 2016. “That this kind of unfortunate article has the potential to cause reputational damage to the jurisdiction. Those individuals who may be investors here may not See pg b5
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net The Government has dismissed as “hearsay” allegations that public and private sector officials have been suggesting the Bahamas will hold back on automatic tax information exchange, making this nation more attractive to “undeclared” funds. The assertion was contained in the Ministry of See pg b5
Attorney warns Bahamas viewed as ‘unsafe’ Process can’t discriminate in treatment
Branville McCartney
Refutes claim Bahamas open to ‘undeclared funds’ Little of Ministry’s denial made The Economist Questions if article was ‘plant’ of OECD position