The G-20 today published the Leaders’ Statement: The Pittsburgh Summit.

Concluding two days of meetings, the leaders agreed to “launch a framework that lays out the policies and the way we act together to generate strong, sustainable and balanced global growth”.

The Bahamas Financial Services Board (BFSB) appreciates the extraordinary effort of the Government that has led to The Bahamas surpassing the number of Tax Information Exchange Agreements (TIEA) that meet the G20 and Organization for Economic Cooperation and Development (OECD) standard for tax cooperation and transparency. The OECD has acknowledged that The Bahamas has “substantially implemented” the internationally agreed tax standard.

“We would like to thank the Government for its willingness to engage the private sector throughout the past twelve month period as they sought to advance meeting the OECD standard,” said Craig Tony Gomez, BFSB’s Chairman. “By meeting the OECD standard the Government has demonstrated that it intends to ensure The Bahamas remains a well regulated jurisdiction which meets evolving standards for offering international financial services.”

The signing today of a TIEA with seven Nordic countries (Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden) and the expected signing of a similar agreement with Spain tomorrow means The Bahamas will have 19 tax treaties in place, surpassing the G20 standard of twelve OECD compliant agreements, required by March 31, 2010.

Jeffrey Owens, Director of the OECD’s Centre for Tax Policy and Administration, said: “Given the role that The Bahamas plays in the financial world, I am particularly pleased that they have made significant progress and they continue to expand their network of partners with whom they can exchange tax information.”

The Bahamas previously has signed agreements with the United States, the United Kingdom, Mexico, China, France, New Zealand, Argentina, Belgium, the Netherlands, Monaco and San Marino. Additional TIEAs are still expected to be signed. (See Tax Cooperation for additional details on The Bahamas Stance on International Cooperation and to download copies of signed Agreements)

BFSB with its member firms have been engaged in the examination of tax cooperation and transparency and the broader implications of tax policy over the past 10 years, as well as ongoing dialogue with the Government.

In early 2009, broad industry support was secured for The Bahamas to move ahead with adopting the OECD standard for tax cooperation and transparency negotiations, based primarily on the attainment of the level playing field. While this consensus was reached in the first quarter of 2009, the activities of the G20 and OECD in September 2009 confirmed that the right decision was taken. At that time the G20 advised that sanctions would be imposed on countries that did not meet the G20 standard of twelve compliant agreements by March 31, 2010.

“We look forward to continuing to work with Government to build on the Strategy Statement for the sector that started in 2009,” said Wendy Warren, BFSB’s CEO and Executive Director. “The priority now is to build the strongest possible business case for our key lines of business, ensuring in each case that the necessary SCRIPT is written, an acronym that means a Strategy for cross-sector Coordination; a proactive and pragmatic Regulatory environment; a recognition that Infrastructure is vital;; a Proactive and targeted business development strategy; and an emphasis on building and attracting a world-class Talent Pool.”

Mr. David Harvey, Chief Executive of STEP, will be one of the featured speakers of an upcoming Leadership & Entrepreneurship Seminar in the BFSB Lecture Series, addressing participants on “Riding the Tide: How to be a Resilient Professional”. BFSB’s CEO Wendy Warren says, “Changes in the world of financial services range from increasing demands from ever better informed clients to jurisdictional competition over capital flows and onto the geo-political shift of power to Asia. Mr Harvey will contend that while these matters may be beyond the control of a professional, even in this climate, there are things a resilient professional can do to shape their future, to keep afloat on the tides, to be the best informed and most trusted advisor to their clients and so keep a competitive advantage.”

Additionally, Mr. Harvey will set out some of the big trends in private client issues that will shape the next few years, speaking specifically to the need for high quality trusted advisors who can cross jurisdictions.

According to the STEP Executive, professionals need to be highly educated in hard and soft skills, capable of working across jurisdictions and types of practice, and capable of relating to other professionals and working with them. He will draw on examples from STEP and his broader professional life. He is firmly of the view that individuals taking a positive approach to work through regulation understand it, and position themselves well to build business.

Mr. Harvey is a former President of the UK Institute for Small Business and Entrepreneurship and an Industrial fellow at Kingston Business School. He is a member of the Family Firms Institute and has written and commentated widely on family business issues. He has participated in a range of government initiatives, including as deputy chairman of the UK Better Payment Practice Group, as a member of the Bank of England Finance Panel on Small Firms and an EU expert. Mr. Harvey qualified with Ernst & Young and practiced in public affairs in accountancy, between 1994 and 2001.

The Leadership and Entrepreneurship component of BFSB’s Lecture Series has as a primary goal the profiling of Bahamians who have achieved success in financial and professional services, whether as top management and/or as entrepreneurs; specifically focusing on how our present leaders can be used to mentor future leaders. In this connection, other speakers for the March 18 event will be Anthony Ferguson, Principal, CFAL; Lynden Nairn, Vice-President, Life Division, Colina Insurance; and Vaughn Delaney, Deputy Managing Director, Bank of the Bahamas International. These BFSB member firms are sponsors of the seminar. Messrs. Ferguson and Nairn will speak to “The Pursuit of Excellence”,while Mr. Delaney will present on “Leadership Characteristics and Abilities: What Really Matters”.

BFSB previously launched the leadership and entrepreneurship seminar series in collaboration with sponsor Bahamas First Holdings. That first seminar was considered a success with attendees from banks, trust and insurance companies and legal and accounting firms. Presenters were Patrick Ward Group President & CEO, Bahamas First Holdings; Judith Whitehead, Managing Partner, Graham, Thompson & Co; and Raymond Winder, Managing Partner, Deloitte.

Long-term growth and development for The Bahamas can be achieved through the maritime sector Minister of the Environment Earl Deveaux told key players attending The Bahamas International Maritime Conference and Trade Show (BIMCATS), that was held in Freeport, Grand Bahama from February 9 to 12.

“The Bahamas, and in particular Grand Bahama, serves as a key maritime centre in the region,” the Minister said. “Grand Bahama, strategically located in the major shipping lanes, has the necessary framework to permit and facilitate long-term growth and development of the maritime sector. We seek to achieve growth within a planned national development plan which requires responsible environmental practices,” he said.

The Minister added “We do not take our position in maritime affairs for granted. We appreciate the importance of stimulating further interest in the world-class services we offer. This conference offers a key platform for important discussions regarding the industry and it is our hope that it will serve as a springboard to the exploration of new frontiers in this important industry in the years ahead.”

He also pledged his commitment to creating a long-awaited yacht registry.

In keeping with the theme of the conference – The Maritime Sector and the Environment – the Minister said: “It is essential environmentally sensitive policies are implemented and relevant legislation remains current for the conservation and rehabilitation of marine habitats.

“These guiding principles will frame our decisions as we broaden the base of our International Ship Register and build an impressive register of yachts.

“Our goal is to ensure sustainable economic progress, especially with respect to our chief industry, tourism. We are focusing, therefore, on attracting owners of small and large quality vessels.”

Wendy Warren, CEO and Executive Director of the Bahamas Financial Services Board (BFSB), a sponsor of the conference, said there is an emerging synergy between the financial services and maritime industries and that both should continue to look for opportunities to leverage mutual business opportunities.

Ian Fair, Chairman of the Bahamas Maritime Authority, said BIMCATS would return next year, and after that be held every two years to alternate with Posidonia, the major shipping conference held in Greece,

The Hon. T. Brent Symonette, Deputy Prime Minister and Minister of Foreign Affairs provided opening remarks for the first ever International Business & Finance Summit, sponsored by the Bahamas Financial Services Board (BFSB) on January 29-31. The event was held at the Bimini Bay Resort, Bimini and attracted over 120 participants representing the Government and Regulators (11%), International Presenters and Summit delegates (21 %) and the private sector (68%).

The Deputy Prime Minister spoke to the need for both political and economic domestic policies to ensure that The Bahamas became and remained in tune with global developments, particularly those relating to the regulation of international trade and trade in services. This, he said, was necessary position the jurisdiction to take advantage of the many opportunities, arising at bilateral and multilateral levels.

Strategy Development

The main working sessions of the IBFS, which is the successor event to BFSB’s annual Bahamas Financial Services Retreat, focused on identifying and securing opportunities in international business and finance, with a selection of international presenters providing food for thought on these measures, including the challenges ahead.

Recognising that the first step in any business strategy is to understand the scale and nature of available opportunities, BFSB invited the Scorpio Partnership to present a sector review, looking at the “size of the prize” in the private wealth industry. Scorpio’s Sebastian Dovey led these discussions, speaking to topics such as market definitions, market sizing and global distribution of high net worth wealth. He followed this with an assessment of the “global drivers of value” in private wealth, with focus on The Bahamas. He tabled a proposal for a SCRIPT for The Bahamas, noting that key success factors include: A Strategy for cross-sector Coordination; a proactive and pragmatic Regulatory environment; a recognition that Infrastructure is vital; a Proactive and targeted business development strategy; and an emphasis on attracting and building a world-class Talent Pool.

Philip Marcovici of LawInContext was next on the packed agenda, speaking to what model The Bahamas should adopt to take advantage of the prevailing opportunities, and some of the prerequisites for success. Mr. Marcovici identified transparency and unprecedented wealth transfers in a transparent world as two megatrends that The Bahamas must address. He stressed that jurisdictions must have the right people, asking the right questions, and a government and private sector prepared to be leaders.

Vince Colvin, formerly of Deloitte’s International Financial Jurisdiction Advisory Services, discussed mechanisms that would engender a consistent approach to strategy building across sectors; and possibly as a part of an overall “national” plan. Referencing the work done since the 2009 Bahamas Financial Services Retreat with regard to possible strategies for tax and insurance, and his own experience with other IFCs, he noted that it was important going forward to use key industry and government stakeholders collaboratively to provide input not only into a national strategy but to drive commitment to action. He likened the process to the same core steps that a company would take from (i) strategy development; to (ii) performance management; to (iii) resource allocation, all working in parallel.

Securing Opportunities & Examining Building Blocks

Moving away from The Bahamas centric opening presentations, the agenda turned to ones that were more client focused, bringing together experts to give advice on building the client base. Under the “Securing Business Opportunities” theme, each of four international presenters spoke to “Capturing the Client”, providing client profiles and doing business: Monica Reyes Rodriguez of Reyes Abogados Asociados – Colombia; Ivan S. Sacks, Withers Bergman LLP – United States; Rene Werner, Werner & Associados – Latin America , with a focus on Brazil; and Joe Field, Withers – Asia. All presenters were positive about the opportunities available for jurisdictions such as The Bahamas – provided there is a clear understanding of client needs and a willingness to address these.

The next session – “Reexamining our Building Blocks” — concentrated on how The Bahamas can stay ahead of the competition. Landmark changes in regulatory and tax policy have changed the international financial services industry and BFSB positioned these discussions to engender a better understanding of what can be expected of this unrelenting momentum. Andrew Todd of Deloitte (UK) spoke to what a Bahamas Tax Strategy might be, referencing a study on “The Changing Global Landscape”, a project commissioned by BFSB in 2008 to look at how tax and privacy influence development of the sector. The primary focus of his presentation was to provide an update on developments since the 2009 Report and how these might impact The Bahamas Strategy going forward. John Lawrence, Chairman of STEP Caribbean and Latin American Region, along with Philip Marcovici participated with Mr. Todd in Panel Discussions on this topic, both also speaking to international developments and the response by The Bahamas.

Other presenters included the Hon. Alfred Sears, who brought remarks from the Official Opposition, who he said was mandated to play a significant role in promoting The Bahamas and the international business and finance sectors, in the national interest. The Opposition firmly believes, he said, that the many challenges facing the business and financial services sectors require a bipartisan response, with a strong private/public partnership of stakeholders, to clarify the way forward.

Regulation, Business Development & Workshops

Regulation and Business Development & Promotion were the concluding topics under the “Re-Examining Our Building Blocks” Session, with presentations from Governor Wendy Craigg of the Central Bank of The Bahamas, the Hon. Zhivargo Laing, Minister of State for Finance, and Sen. The Hon. John K.F. Delaney, Attorney General and Minister of Legal Affairs. These presentations all focussed on providing a review of 2009 developments, globally and domestically, and a Perspective of 2010.

Governor Wendy Craigg of the Central Bank provided an overview of the global financial regulatory reform agenda – taking into consideration initiatives within the United States, and by global standard setters – and the response by The Bahamas. The latter, she said, has focused on building high quality, capital, and mitigating procyclicality. In this connection she provided an overview of initiatives relating to (i) enhanced surveillance; (ii) the strengthening of (a) accounting standards and (b) liquidity risk measurements – with standards and monitoring; (iii) addressing cross-border resolutions and systemically important institutions; (iv) adherence to international supervisory and regulatory standards, and (v) developing macro prudential frameworks and tools.

Attorney General John Delaney presented on a “New Commitment for the Future”, noting that the Government of The Bahamas, working hand in hand with the private sector and other industry stakeholders, is steadfast in its approach to strategic development for the nation and the financial services sector. He said notwithstanding the challenges of 2009, a framework was developed and a number of preliminary steps already taken. In this connection, he spoke to the nation’s commitment to transparency and cooperation and related initiatives with the Global Forum, legislative and judicial developments, and tax and trade matters.

Minister Laing spoke to the need to forge ahead in interesting times, noting that as a national priority, the Government remains committed to the preservation and growth of financial services industry as the second pillar of the national economy.

The Summit concluded with Workshops on “Building Sustainable and Profitable Businesses”; specifically, action that must be pursued to build winning and mutually consistent strategies across sectors. The four workshops focused on the Private Wealth Industry; Securities & Capital Markets; Business Environment; and Competing in the International Arena.

BFSB Chairman Craig Tony Gomez says developments relating to transparency and information exchange, the evolvement of the level playing field, and the need to evaluate the approach to financial services all bring focus to the strategy framework and “vision” first announced last year and around which IBFS sessions were structured. Specifically, BFSB’s work programme going forward will reflect the vision that The Bahamas will become a globally competitive international business jurisdiction for private wealth management, capital investment into the Americas and emerging markets, and residency for High Net Worth Individuals, creating high value jobs and business opportunities on a sustainable basis.

BFSB CEO & Executive Director Wendy Warren confirms that the groundwork has been set, noting that various Reports commissioned in 2008 and 2009 also were successful in awakening awareness within the industry on the need for change but, more importantly, the need for a comprehensive action plan to ensure sustainability of the financial services sector – within the integrated context of international business and finance.

Proposals relating to various amendments to the Investment Funds Act, 2003 have been tabled in Parliament. Some of these amendments more broadly define Bahamas-based and non-Bahamas-based investment funds so as to remove restrictions adversely affecting Bahamian investment managers/advisors, and to bring the legislation in line with industry standards.

Other amendments extend the definition of a professional fund to avoid certain restrictions on the category of persons to whom a professional fund may be offered, and remove the minimum regulatory capital requirement for a broker dealer or investment securities advisor to invest in a professional fund.

Specific amendments:

Removal of the investment advisor/manager nexus to Bahamas-Based Funds: To ensure that a fund established in another jurisdiction would not inadvertently require licensing under the Investment Funds Act due to the nexus created when this foreign fund secures the services of a regulated Bahamian investment manager. Non-Bahamas-Based Funds would be required to appoint a registered representative in The Bahamas, with that registered representative being required to register with the Commission.

Expanding the Definition of Recognised Foreign Funds: To allow funds to become RFFs provided they are incorporated or established in a prescribed jurisdiction. Effectively, the requirement of a fund to be licensed or registered in a prescribed jurisdiction would be repealed.

Amending the Definition of Professional Funds: To remove the requirement for bank, trust, insurance or investment fund companies to be licensed in a prescribed jurisdiction, provided they are duly licensed (or registered in the case of investment funds) in another jurisdiction; (b) to allow eligible investors to include any registered firm under the Securities Industry Act or licensed in another jurisdiction; (c) to remove the minimum regulatory capital requirement for a broker-dealer of securities investment advisor to qualify to invest in a Bahamian professional fund; and (d) to include entities with net assets in excess of $5 million.

Amending the Annual Audit Filing Deadlines: To change the filing period of annual audited financial statements of investment funds to six months.

The Amendment Bill also empowers the Securities Commission of The Bahamas to publish guidelines made pursuant to the provisions of the Act or any regulation or rule made under the Act.

A new Arbitration Act 2009 has been Gazetted in The Bahamas as well as the Arbitration (Foreign Arbitral Awards) Act 2009, which addresses matters of international arbitration.

The new arbitration regime enhances the level of services The Bahamas is able to provide to the international business community. It gives teeth to the goal of establishing The Bahamas as a Centre for Arbitration, supported by a modernised legislative framework with a dedicated state of the art facility. The Government has indicated support for specialist court divisions that would showcase the specialist judicial expertise to be offered in arbitration and in other commercial matters.

A tried and true system of Alternative Dispute Resolution (ADR) is essential in the conduct of international business. Arbitration, one of the pillars of ADR, essentially is designed to provide just that. It is a private system of justice which exists parallel with but independent of the judicial system which would have powers limited only to the enforcement and recognition of arbitration agreements and arbitral awards and adjudicating appeals on points of law. In short, arbitration is the consensual process by which commercial disputes are resolved, outside of the court system, by an impartial tribunal in private.

Writing for latest issue of Bahamas Financial Services Review (BFSR), a publication of the Bahamas Financial Services Board (BFSB) John Wilson, Co-Chair of BFSB’s Arbitration Committee, said, “Arbitration has been embraced by legal systems worldwide in an attempt to expeditiously resolve conflicts where resorting to litigation is undesirable or avoidable, and also to endeavor to preserve business or personal relationships between litigants where there may be acrimony as a result of the proposed or ongoing legal action.”

He noted that arbitration can operate in two discrete contexts – international and local. The international context covers disputes involving international commerce such as sale of goods, construction, foreign direct investment, international shipping, international banking and finance, and international licensing or intellectual property agreements. All of the foregoing, to varying degrees, play a part in the commercial life of The Bahamas. In particular, the existence of an internationally respected arbitration regime is a pivotal and indispensable complement to The Bahamas’ position as one of the largest quality flags in international shipping. Local arbitration can be a useful tool in assisting with the resolution of personal disputes such as divorce proceedings, family trust disputes, labour disputes, property, and defective construction disputes, among many others.

BFSB’s Chairman Craig Tony Gomez, the other Co-Chair of the Arbitration Committee, agrees that there are many opportunities in international arbitration. In a recent article prepared for The Bahamas Investor, Mr. Gomez points out that the commercial world is now seeing more contracts between business entities than ever before. “Quite naturally, a by-product of contractual relationships is conflict, disputes and disagreement over the terms in, and meanings of, a contract. Historically, the aggrieved party has sought redress through the courts. However, as the courts have become overburdened, contracting parties have sought to have their conflicts resolved outside the courts but under the auspices of the courts. This manner of resolution of disputes could provide a unique opportunity for The Bahamas.” He maintains that The Bahamas is well positioned to become a centre for alternative dispute resolution, with the legislative regime firmly in place and with the commitment by both the private and public sectors towards this goal.

Additional Background

In The Bahamas arbitration is governed by statute. The Arbitration Act was passed at the end of the 19th century, and The Arbitration Clause (Protocol) 1931 updated the Arbitration Act by giving effect to the Protocol signed at the League of Nations in 1923. The Arbitration (Foreign Awards) Act 1931 also updated the Arbitration Act by giving effect to the Geneva Convention. The Protocol and the Geneva Convention were superseded by the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards 1958, to which The Bahamas is a party. For international arbitration to flourish, it is necessary that the legislative regime recognises and upholds the integrity and the autonomy of the arbitration process

In his annual speech to the nation Bahamas Prime Minister the Rt. Hon. Hubert Ingraham pointed to targeted efforts toward securing and growing financial services and a new investment promotion thrust as two of several Government initiatives that are expected to create economic benefits for the country.

“A number of large international companies are opening corporate headquarters, sales offices and training facilities in The Bahamas,” the Prime Minister reported. “Most notably, the exclusive Swiss watchmaker Rolex (Caribbean) has received approval to locate its watch making and repair training centre in New Providence; Oldcastle Building Products (Caribbean) was approved to operate its sales office for the region and North America from New Providence, and Brimac Environmental Group received approval to transfer its corporate headquarters to The Bahamas.”

The Prime Minister said work on the $275 million Phase I redevelopment of the Lynden Pindling International Airport is continuing on schedule for a 2011 opening of the new US Departure Terminal.

The developments outlined by the Prime Minister are consistent with the strategic plan for the financial services industry, which includes infrastructural developments.

The Prime Minister also noted that a dedicated Commercial Court will be located in the Bank Lane area of downtown Nassau, part of a programme to increase Supreme Court rooms and to further improve work conditions in the judicial service.

Earlier at the official opening of the 2010 legal year, Attorney General Sen. the Hon. John Delaney said the Government will re-double its efforts to support the administration of justice in the country. He said the Office of the Attorney General will re-order and re-align resources to strengthen and enhance its efficiency and output, and that law reform initiatives will continue and be expanded.

The Prime Minister said he expects that as the US economy begins to grow there will be improvement in the second-home market while investments in other segments of the Bahamian economy are showing positive signs.

“We also expect additional benefits to come to our economy from other initiatives being undertaken by the Government,” the Prime Minister said. “These include a more refined and diversified tourism initiative aimed at today’s more discerning international travelers and modernisation of our fiscal regime for enhanced efficiency and business facilitation.”

While foreign direct investment flows into The Bahamas have declined, the Prime Minister said there are new signs that several of the tourism related developments which stalled because of the global recession and international financial crisis are preparing to move forward this year.