The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The ‘tax expert’ quoted in The Economist’s full-scale attack on the Bahamas warned two months ago that the OECD would never accept this nation’s preferred tax information exchange approach, and asked: “What koolaid are you drinking?”

Mark Morris, who describes himself as an adviser to members of the OECD’s Global Forum on tax transparency, told Tribune Business via e-mail that the Bahamas “will be obliged to exchange” tax information via a multilateral approach.

This nation has instead elected to implement the Common Reporting Standard (CRS) for automatic tax information exchange via a bilateral approach, but Mr Morris warned that this meant the Bahamas would now become the “poster” villain of international financial centres (IFCs).

His July 12, 2016, e-mail to Tribune Business criticised comments on the CRS by Hope Strachan, minister of financial services, and her predecessor, Ryan Pinder, plus Bahamas Financial Services Board (BFSB) chief executive, Tanya McCartney.

In particular, he described Mr Pinder’s concerns over the multilateral approach to CRS - and whether some countries may compromise the confidentiality of client data - as “garbage”.

In what at times turned into a three-page rant against the Bahamas, Mr Morris said: “Does everyone in Bahamas mindlessly believe the OECD is going to let the Bahamas undermine the world’s CRS? Are you all drinking the same koolaid?

“It’s not exactly rocket science to figure who is next in line for being the poster child to beat on, now that Panama is no longer the main offshore villain.”

Tribune Business initially ignored Mr Morris’s e-mail, given that it was unsolicited and he never gave any indication of who he was and/or acting on behalf of - key determinants of credibility. He also never provided any contact details.

This newspaper is publishing the contents of this e-mail now given that Mr Morris appears to have been the main source for The Economist article that attacked the Bahamas and its approach to the CRS.

It is important for the Government, and the financial services sector and associated industries, to understand where the latest assault on this nation is coming from if they are to properly respond to it.

The question for the Bahamas now is whether Mr Morris’s e-mail rant, and The Economist article, represent the official position of the OECD towards this nation and its approach to CRS implementation.

Given that Pascal Saint-Amans, the OECD’s tax policy head, was quoted in The Economist article, there is every chance that it does, or at least was endorsed by that organisation.

The magazine article is likely to be the first salvo in a campaign to pressure the Bahamas into abandoning the bilateral approach to CRS implementation, something that would allow this nation to exchange tax information automatically with those that approach it - rather than with all-comers.

Given that the OECD’s membership is drawn from the world’s most powerful nations, the Bahamas cannot afford to ignore its position and pressure.

Tribune Business attempted to contact Mr Morris for comment yesterday, but could not reach him via either his listed office in Zurich or mobile numbers.

However, his e-mail, which was entitled ‘Be realistic’, reiterated the position taken two months later in The Economist article, namely: “The Bahamas will be obliged to exchange information with a multilateral convention.”

His description of the Bahamas’ stance as “disingenuous compliant non-compliance” was also quoted in the magazine’s piece, indicating that the e-mail sender and person quoted in the article are one and the same.

Referring to the Bahamas’ “abuse” of the CRS bilateral approach, Mr Morris said: “The Bahamas is using the bilateral route to outfox the OECD’s Common Reporting Standard.

“Their strategy is to commit to the CRS so that it doesn’t incur the OECD’s wrath, but deviously implement the CRS so that it doesn’t exchange info with the authorities of its financial institutions’ clients.

“Exacerbating their intransigence, the Bahamas brazenly market their ‘compliant non-compliance’ strategy to attract the world’s untaxed money looking for refuge from the CRS elsewhere.”

Mr Morris said the Bahamas was “falsely claiming” it could decide which countries to exchange information with under the CRS, and being “delusional” in thinking it could determine the criteria for selecting them.

He also claimed the Bahamas was “fantasising” if it felt it could reject exchanging information with countries because of data security concerns.

“Rejecting automatic exchange not only helps the survivability of its offshore business, but [ability] to attract untaxed money globally,” Mr Morris wrote of the Bahamas.

“The Bahamas, more so than any other tax haven, abuses the bilateral option using subjective, fabricated and fallacious excuses.

“The Bahamas uses phoney data security concerns to protect its existing offshore industry but, more so, it is aggressively attracting untaxed assets from around the world. Egregiously, it does this under the guise of being a committed CRS participant,” he added.

“The Bahamas government delegations travel globally, sponsoring seminars, attracting new business by assuring financial industry intermediaries that Bahamas will categorically not undertake exchange of information with many countries, especially Latin America, due to bogus security concerns.”

The language and topics addressed in Mr Morris’s e-mail to Tribune Business bear a striking resemblance to The Economist article’s content and presentation, suggesting that he had a significant influence over it - and was likely the key source.

A previous Economist article from 2013 described him as “a tax expert with a conscience”, indicating he is something of a ‘go to guy’ for the magazine. Bahamian financial services executives spoken to by Tribune Business say they have never heard of him.

Mr Morris, though, appeared to admit in his e-mail that the Bahamas and other countries can opt to automatically exchange tax information bilaterally, although he argued this route was “not an international legal instrument.”

And the Bahamas has also acknowledged that the OECD has moved to address data security concerns related to information sharing.

Mr Morris, though, queried whether the Bahamas’ approach was designed to obtain a competitive advantage, and whether attracting ‘untaxed’ assets was key to its “survivability” as a financial services centre.

“Only Bahamas is being exposed,” he added.

These themes and words again featured in both the questions submitted to the Government by The Economist, and in its final article.