Friday, April 28, 2006

BVI FSC issued the first Advisory Warning for 2006

From time to time British Virgin Islands Financial Services Commission issues advisory warning for the general publics to protect them from scams, misunderstandings or wrongdoings. This year’s first FSC Advisory Warning is issued on Curam Investment Management Limited and states that this company is not licensed by the Financial Services Commission to provide management and/or administrative services to mutual funds under the Mutual Funds Act, 1996 (as amended).

As far as the BVI Financial Services Commission is charged with the supervision and licensing of all regulated activities (like the provision of management and administrative services carried on in or from within the BVI), it is the highest authority and source of licensing information in the British Virgin Islands.

As you may know, Curam Investment Management Ltd was licenced to provide management and administrative services under the Mutual Funds Act, 1996, and this licence was cancelled on the 15th of October, 2003. As a result, according to the Mutual Funds Act, 1996 amendments, Curam Investment Management Ltd is no longer regulated under this act.

Therefore, Robert A. Mathavious, Managing Director/CEO of the British Virgin Islands Financial Services Commission informed public that transactions should not be conducted with Curam Investment Management Ltd as far as it is not licensed to carry on business in or from throughout the BVI.

Some time ago it appeared both on public and private information channels that Curam Investment Management Ltd still provides the management and/or administrative services to mutual funds under the BVI Mutual Funds Act, 1996. The British Virgin Islands Financial Service Commission took seriously the potential threat that offshore investors could suffer as a result of misleading or erroneous information and made the public announcement to protect the offshore investors as well as the reputation of the BVI jurisdiction itself.

Today, on the web you can find the website of a company called that Curam Investment Management Ltd with address in Switzerland, Zug. There is almost no public information on the site, just login for existing offshore investors and registration form which is not functional. Investment news and contact form also don’t work. The domain names are registered both in com and Swiss zone (ch).

Thursday, April 27, 2006

Law Enforcement Meeting To Fight Crime

The heads of Her Majesty’s Customs, the Royal Virgin Islands Police Force (RVIPF) and the Immigration Department are participating in an international law enforcement conference, which is held in Anguilla this week. The conference runs from April 24 to April 28. It is held each year in order to facilitate discussion on law enforcement matters for United Kingdom Caribbean Overseas Territories. The theme of this year conference is Ensuring Capacity, Capability and Sustainability in the Delivery of Effective Law Enforcement Services.

The conference will hold discussions on several issues related to crime fighting in the UK Overseas Territories, including crime prevention, regional and international cooperation to fight crime, drug trafficking threats, witness protection, immigration and customs enforcement as well as recruitment and retention of law enforcement personnel.

From BVI officials information it comes out that the efforts will be mostly directed towards "local" things like illegal immigration to the BVI, British Virgin Islands Customs Department improvement, reducing "local" crime or crime on the borders. Offshore business and offshore banking that could be used for international crime seems less important in this context. The conference will be attended by the representatives of BVI Financial Services Commission (FSC) this fact itself means at least "something". The function of BVI FSC includes also: "Policing the perimeter of regulated activities and instigating and pursuing enforcement actions against any individual or business found in violation of BVI financial services laws" and "Monitoring and detecting financial crime, as well as assisting in the prosecution of such crime".

BVI Police Commissioner Mr. Reynell Fraser suggested that the conference will increase the recent intensified efforts aimed at reducing crime in the BVI. He also stated that the information shared at the conference will help law enforcement agencies in the BVI to identify and adopt international best practices in order to fight crime. So, the BVI is going to gain some considerable benefits from the conference, which will by all means strengthen the law enforcement strategies in the BVI.

Mr. Wade Smith, the British Virgin Islands Customs Department official said Government is looking for modernised law enforcement and information sharing capabilities. He said Her Majesty’s Customs indicates the following top priorities - integrity, accountability and transparency.

Mr. Malvern Brathwaite, Acting Chief Immigration Officer states that the region faces a daunting task in illegal immigration matters. According to him, Government recognises that illegal immigration can become a serious threat to the economic and social welfare of the British Virgin Islands. However, Government is doing its best to ensure that this will not happen.

Law enforcement officials from Anguilla, Bermuda, Cayman Islands, Montserrat and Turks and Caicos Islands are also attending the conference. Two years ago - in March 2004, the BVI hosted the event.

Wednesday, April 26, 2006

BVI Chief Minister at UK-Caribbean Forum this week

Chief Minister Honourable Dr. D. Orlando Smith - the Head of BVI Government - is one of Caribbean Community (CARICOM) leaders to attend the 5th United Kingdom-Caribbean Forum in Barbados.

Dr. D. Orlando Smith will take part in discussions on international developments and their implications aimed at achieving both medium and long-term development in the Caribbean. The UK-CARICOM Security Cooperation Agreement that provides a plan of action, involves border security, training of security and law enforcement officials, maritime cooperation as well as the establishment of a regional information and intelligence-sharing network will also be on the agenda at these discussions. The forum will also focus on issues such as private sector tourism, trade, energy, disaster preparedness, HIV-AIDS as well as financial services, which is very topical for such offshore country as the British Virgin Islands.

The BVI Chief Minister is going to use the opportunity to raise issues of concerning how the region could forge a better working relationship with the UK.The forum is held every two years. This one will be co-chaired by the UK’s Foreign Secretary Mr. Jack Straw and Foreign Minister of Grenada Mr. Elvin Nimrod, who is incoming Chairman of the CARICOM Council for Foreign and Community Relations (COFCOR).

The Caribbean Community (CARICOM) was established in 1972, when Commonwealth Caribbean leaders at the Seventh Heads of Government Conference decided to transform the Caribbean Free Trade Association (CARIFTA) into a Common Market. The signing of the Treaty establishing CARICOM was one of the key moments in the history of the Commonwealth Caribbean. CARICOM aims at improving standards of living and work, the full employment of labour, accelerated and sustained economic development, economic relations and expansion of trade with third States, increasing international competitiveness as well as production and productivity.

Since its establishment, CARICOM has substancially expanded. Now it consists of 15 member states (Antigua and Barbud, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago) and 5 associate members (Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, the Turks and Caicos Islands). The British Virgin Islands (BVI) became a CARICOM Associate Member on the 2nd of July 1991.

Tuesday, April 25, 2006

BVI foreign investment in Vietnam

The British Virgin Islands is a leading foreign investor country not only in China. The BVI has strong positions also in other countries, especially in Asian region. Today let’s have a look at Vietnam.

The Law on Foreign Investment in Vietnam was officially introduced on the 1st of January 1998 and up to the end of 2004, foreign investment into Vietnam experienced a period of 17 years and enjoyed great results. In accordance with statistics, over 5,000 projects are still in effect in Vietnam with a total capital of $45.5 billions. The half of these projects are under operation with the total realized capital of $26 billions.

The foreign investment sector in Vietnam contributes to the country about 15% GDP and approximately 17% development fund. Foreign investment projects created 739 thousand jobs.
In the first 2 months of 2006, Vietnam has attracted US$1.32 billion in foreign direct investment. Of the total, $1.18 billion came from 113 newly licensed projects, an increase of 16% in project numbers and 15% in registered capital over the same period. $135 million was added to 38 existing foreign direct investment (FDI) projects, a year-on-year increase of 41%.
In February 55 projects with registered capital of $765 million were granted licences. 27 projects added $110 million to their investments. In the first 2 months of 2006, the biggest investors in Vietnam were South Korea, Japan, Taiwan, USA, as well as the British Virgin Islands. Most investment capital went to the real estate and industry sectors. In the same period, HCM City attracted the largest FDI with $645 million from 40 projects.

In the first half of 2005, the BVI companies have invested 35.28 million US dollars in 11 projects in Vietnam. Till the end of 2004, the British Virgin Islands companies participated in 212 projects with registered capital 2.4 billion US dollars and executed realized capital 1.14 billion US dollars. It placed the BVI on the 6th position in foreign investor’s list after Singapore, Taiwan, Japan, South Korea and Hong Kong. The foreign investor’s position of the BVI is not as strong as in China, but it is also very considerable.

One of the latest projects is MegaStar Media, a joint venture between Envoy Media Partners Limited (BVI) and local Phuong Nam Corp that is going to increase capital to develop multiscreen cinema exhibition centres in Vietnam. The BVI - Vietnamese joint venture will receive a loan of US$25 million from the ANZ (Australia and New Zealand Banking Group) in order to develop around 10 cinema centres across Vietnam. Prudential Fund Management Co sources, structures and arranges the fund of this project.

Sunday, April 23, 2006

The BVI strengthens ties with Macao (Macau)

The BVI strengthens its ties with Macao – a region near another small offshore jurisdiction under China People republics control – Hong Kong.

The BVI granted visa-free access to the passport holders of the Macao Special Administrative Region (MSAR). The diplomatic agencies informed the MSAR about ther granting on Thursday. Of course, BVI was not the only country - 72 countries and territories have granted Macao passport holders visa-free access or visa-on-arrival status previously.

Macau is commonly known as the Macao Special Administrative Region of the People's Republic of China. It is situated on the southern coast of China. Macau was the oldest European colony in China and it was administered by Portugal until 1999. Then, in 1999, the administrative power over Macau was transferred to the People's Republic of China. Now, together with Hong Kong, it is 1 of 2 Special Administrative Regions of the PRC.

Its historical colonial relics are great, still Macau's biggest attraction is its gambling industry and casinos. Many forms of gambling are legal here. The most popular game is Pai Gow, which is played with Chinese dominoes. It is typical of gamblers from Hong Kong to take one-day excursions to Macau.

In 2004 the Sands Casino opened - and gambling revenues from Macau's casinos for the first time exceeded those of Las Vegas (about $5 billion). So, Macau became one of world's highest-volume gambling centres in the world. Many casinos are going to be opened through 2008 - the Wynn Macau Casino in 2006, the Venetian Macau in 2007, the Crown Macau, Galaxy, and others.

To make the long story short, the small economy is growing rapidly due to gambling-related tourism from mainland China and construction from the new casinos.

As to the legal system of Macau, it is based largely on Portuguese law. This is the legacy of the law – the same as the British Virgin Islands, the law of which is based on United Kingdom law. The Macau territory has its own independent judicial system. It is headed by the Court of Final Appeal (CFA), which makes final judgments on court cases.

The chief executive of Macau is appointed by the People's Republic of China's central government by an election committee. The members of this committee are nominated by corporate and community bodies. The first China-appointed chief executive of the Macau SAR is Edmund Ho Hau Wah - a community leader and former banker.

Friday, April 21, 2006

BVI new Governor’s speech at his swearing

It was interesting to hear what the new BVI Governor David Pearey said regarding the future of the offshore business in the British Virgin Islands at his Swearing on Tuesday, April 18, 2006.

In particular the new BVI governor said the following:
"In the seven years since the White Paper on the Overseas Territories - Partnership for Progress and Prosperity - was published, much has been achieved not least in the territories themselves. The progress made in the BVI is a shining example of this. But some things have not of course changed. Amongst these is the need to ensure that the territories continue to be stable places, secure internally and externally, where the rule of law is paramount and where governments govern honestly and in the best interests of the people."

It’s nice to hear that the new BVI Governor who has just arrived from the United Kingdom emphasized the achievements of the BVI. But the list of what has not been done seems a little bit alerting. However, the last phrase may be interpreted as related to the fact that the new BVI Governor just wanted to emphasize that he is not going to fold his arms. Just contrary – there is a full list of things that are a subject to improvement, no matter how they are arranged now.

The new BVI Governor continued:
"The attainment of these aims becomes ever more challenging in a globalised world and as the economies of the territories (not least the BVI) become more sophisticated and complex. My own responsibilities, as currently defined, place a heavy emphasis on this area. I am in particular required to help ensure that in the BVI we meet our international obligations, that Britain is protected against contingent liabilities, and that good government is maintained. These are of course all moving targets. Success demands constant attention and vigilance. In the area of international obligations your financial services sector, like all others, has to comply with international demands for transparency if the international community is to defeat the triple scourges of money laundering, terrorism and drug trafficking. But, as it happens, legitimate business demands precisely the same. So compliance does not just match international concerns, but also makes sound business sense. Keeping up with evolving international expectations is never easy, but is for very good reasons essential."

It seems that the heading for fighting offshore business by the British Virgin Islands related to money laundering, terrorism and drug trafficking will stay the same. It should keep this offshore jurisdiction as attractive for legal offshore business as it is now.

Thursday, April 20, 2006

The BVI as the 2nd largest foreign investor in China

April 14, 2006 the Ministry of Commerce announced that China's actual foreign direct investment experienced a 6.4% year-on-year increase to 14.25 billion USD in the 1st quarter of the year.

In accordance with this statement, the largest sources of foreign direct investment during the period were Hong Kong, the British Virgin Islands and Japan.The 10 largest sources of foreign direct investment (FDI) accounted for 84.75% of China's total actual FDI for the period. So, the British Virgin Islands is the leader following Hong Kong. According to the statement, in the 1st quarter the number of new foreign-funded companies was 8,909, which is down 4.26% year-on-year.

Director of the FDI Research Centre under the ministry, Jin Bosheng suggested that FDI into China is expected to continue increasing steadily for 5 to 10 years. Central China expects to attract further FDI in such industries as high-tech, chemical and auto parts. Jin Bosheng added that China is about to attract more FDI through mergers and acquisitions (M&A), a common practice worldwide.

All over the world, 80% of FDI is obtained through M&A, while the figure is currently 10% in China, where FDI is mainly obtained through investments such as the establishment of new properties.

Jin Bosheng made comments on FDI recover, which should be attributed to China's rapidly growing economy and the nation's efforts to provide a more favourable foreign investment environment.

In 2005 the gross domestic product (GDP) of China reached US$2.23 trillion, the 4th largest in the world, and an increase of 9.9% year-on-year. The head of the National Bureau of Statistics, Qiu Xiaohua suggested that China's GDP is expected to remain stable but fast and increase by 9% this year.

Since China's entering the World Trade Organization, the Chinese Government has been trying to improve the investment environment for foreign companies, improving relevant rules and regulations as well as service quality and opening previously forbidden zones such as banking, retailing and insurance. And China's major FDI sources were Hong Kong, the British Virgin Islands and Japan.

Tuesday, April 18, 2006

David Pearey as BVI's New Governor

David Dacre Pearey today is sworn as the Territory’s next Governor. He took the Oath of Allegiance and the Oath for Due Execution of Office. The welcome and swearing-in ceremony was held at the Legislative Council at 9 a.m. Chief Minister the Honourable Dr. D. Orlando Smith and Leader of the Opposition Honourable Ralph T. O'Neal addressed and David Pearey made a reply.

The Governor Designate arrived with his family at Terrance B. Lettsome International Airport on Saturday afternoon. He was greeted by Chief Minister Honourable Dr. D. Orlando Smith, Deputy Governor Dancia Penn, Q.C., and Police Commissioner Reynell Frazer.

It should be noted that Mr. Pearey came to the BVI after 27 years of work in the UK diplomatic service. From 1995 to 1999 he was counsellor and head of the Commercial/Economic Department in the British High Commission in Lagos, Nigeria. From 2000 to 2004 he was British Deputy High Commissioner and and Head of Post at Karachi, Pakistan. Then until January 5, 2006 Mr. Pearey was British High Commissioner at Lilongwe, Malawi.

Earlier in the 1990s Mr. Pearey's was working as a Foreign and Commonwealth Office (FCO) inspector, and for two years he was an assistant head of the FCO’s Southern European Department.

David Pearey was First Secretary and Head of Chancery in the British High Commission in Kampala, Uganda. This was from 1988 until 1990, and prior to that Mr. Pearey was a policy planner in the Energy Science and Space Department of the FCO. His first diplomatic service was the post of secretary in the British Embassy in Ankara from 1979 till 1982.

Mr. Pearey succeeds Thomas Macan, the previous Governor who left the Territory on April 10 after serving more than three years in the BVI.

Monday, April 17, 2006

BVI IBCs in Australian Tax avoidance scheme

Australian Federal Police investigators allege the Gold Coast scheme was controlled by local tax agent Ewan Alisdair Stoddart. According to documents filed in the Supreme Court in Brisbane, commonwealth prosecutors allege Mr Stoddart ran a tax avoidance scheme for his clients through a series of companies on the British Virgin Islands, Hong Kong and the Gold Coast.

In documents filed in court, three men, including a tax agent and a Japanese mining entrepreneur, are alleged to have used the scheme to avoid paying at least $5 million due in income and business taxes.

Again millions of unpaid tax dollars and BVI IBCs among other offshore jurisdiction companies. So can we not mention once again the popularity of BVI IBC as an offshore vehicle.

In order to secure claim the Australian prosecutors have filed an application in Brisbane's Supreme Court to freeze 12 properties worth almost $6 million under the commonwealth Proceeds of Crime Act 2002. The documents connected with the Australian Federal Police inquiry were kept sealed until this week to enable investigators to conduct raids and secure the assets.

The part Queensland properties which is worth millions of dollars will be seized as part of an investigation into an alleged Gold Coast tax avoidance scheme.

One of the companies alleged to be the central party of the tax scam was the now-insolvent Creditlink Finance, of which Mr Stoddart was a director with notorious property marketeer Dudley Quinlivan. Creditlink provided last-resort mortgages and property marketeering services around Queensland, but went into liquidation shortly after Quinlivan's activities were publicly exposed.

It is alleged that the scheme involved BVI and HK offshore companies, charging participants for services not actually performed. Funds for the service would be sent offshore and then later returned to the scheme's participant as a loan.

Investigators told the court that "The purpose of participating in the scheme was to stop paying tax on profits from the business." Australian Police allege Mr Stoddart's firms charged a 10 per cent fee for this service. Australian Federal police have told the court that Mr Stoddart, an undischarged bankrupt, is facing charges of defrauding the Australian Tax Office, dishonestly obtaining a financial advantage from the commonwealth and aiding and abetting the commission of the offence.

The scheme is estimated to have cost the Australian Government at least $300 million of lost revenues. It should be noted that the scheme is separate to the alleged nationwide tax avoidance scam.

E.A. Stoddart was declared a bankrupt with almost $40 million in debts two years ago when he disclosed his problems to liquidators in 2004 as his web of international business interests began to unravel. A report by Ann Fordyce, of Pilot Partners, who acts as trustee of Mr Stoddart's estate, revealed he had disclosed outstanding debts of $36.8 million.

Mr Stoddart is registered as a chartered accountant in Britain. Short time ago he reapplied for registration as a tax agent after losing his licence when he was declared a bankrupt.
It is understood the investigation is still in its initial stages, and more participants of the six-year-old scheme are expected to be identified and prosecuted in the coming months. Nobody should be named guilty before the court has made the final verdict.

Mr. Stoddart said the following words: "This wasn't a scam - it was simply my clients' investing money in these companies, and in some cases they failed … Now the police and tax office are trying to destroy me and freeze my assets so I can't fight them."

The bad part of this story is that if Australian authorities admit wrongdoing, this could bring losses to many clients who trusted the advice provided by professional - chartered accountant. Yesterday we get to the conclusion that one who would like to set up offshore business in British Virgin Islands or any other offshore jurisdiction should get professional advice. To continue with, this professional should be trusted. Offshore law firms with tens or even hundreds of partners working there could be the choice.

Saturday, April 15, 2006

BVI IBCs used in offshore structure accused of the biggest ever tax scam

Some examples of possibly wrong use of British Virgin Islands IBCs and mistakes some offshore businessmen have made recently.

Short time ago USA Internal Revenue Service published information on perhaps the biggest-ever tax scam where telecommunication investor used offshore structure based on British Virgin Islands and Panama offshore companies and failed to pay US$ 200 million in taxes.
On March 10 the BVI Justice Department filed the biggest personal tax evasion case ever, accusing Walter Anderson, - the man who once tried to rescue Russia's Mir space station, - of failing to pay more that $200 million in personal income taxes by placing income in offshore bank accounts.

Mark Everson, the commissioner of the Internal Revenue Service, noticed that this is the largest criminal tax case against an individual.

Anderson earned millions of dollars, dealing in telecommunications companies after the AT&T breakup. He became a global figure about five years ago when he started the mission of rescuing the ailing Mir space station: he put up $20 million trying to salvage Mir, which had to burn up on eventual re-entry. He hoped to lease money to drug companies or firms interested in micro-gravity research, but the only market that gave some promise was space tourism. Dennis Tito, a high-rolling investor, agreed to pay over $20 million for a visit to Mir, wishing to become the world's first space tourist. Also, the producer of reality TV shows Mark Burnett signed a contract with Mir Corporation for a show "Destination: Mir." Contestants would train in Russia, with the winner getting a trip to the space station.

Anderson was arrested by the Justice Department on weekend at Dulles International Airport as he was returning on a flight from London. He is accused by the grand jury of conducting business through offshore companies in Panama and the BVI to make the appearance that the income was not personally earned by him. Those ventures earned nearly a half billion dollars. Anderson appealed that he is not guilty to the tax evasion charges and was ordered held without bail until a hearing.

He could get up to 80 years in prison for all the charges. This case is part of a recent push by federal prosecutors to crack down on use of offshore accounts to evade U.S. Taxes.

Here we can remember the words that were said many years ago by USA Supreme Court Judge - G.Sanderland "The right of taxpayers to evade taxes ... by all legal means may be contested by no one". Also the difference between tax avoidance and tax evasion should be kept in mind. The first one is the legal utilization of the tax regime to one's own advantage, in order to reduce the amount of tax that is payable by means that are within the law. The second one is efforts made by individuals, trusts or incorporated entities to evade taxes by illegal means. That is why, before starting offshore business, it would always be helpful to get the consultation of experienced tax advisor which takes responsibility for his advice.

Friday, April 14, 2006

BVI stamp duty fraud in details

It is suggested in the BVI Public Accounts Committee report that a number of companies deliberately avoided payment of the correct amount of stamp duty on property they acquired, and thus reduced BVI Government revenues by hundreds of thousands of dollars. The committee investigated transfers of property for between 250,000 and $500,000 from June 18, 2004, to June 19, 2005, and property selling for more than $500,000 during the period June 1, 2004, to June 14, 2005.

The properties about which questions arose are the Virgin Gorda Yacht Harbour, the Treasure Isle Hotel, Village Cay Marina and R. J. Development Limited's 14.8 acres in west central Tortola. The Virgin Gorda Yacht Harbour was sold by Little Dix Bay Hotel for $3 million. Village Cay Marina was sold to Village Cay Marina Enterprises Ltd. for $2.1 million. Virgin Islands Resort Limited sold Treasure Isle Hotel for $1 million. R. J. Development Limited bought the west central property from Clarence Edgar Thomas and Bernice Louise Thomas Heyliger for $600,000.

All the above-mentioned bargains with the BVI property are estimated by the committee as "unreasonable and the considerations grossly undervalued, done to deliberately avoid paying the correct stamp duty, and in that case defraud the government of revenue legally due and payable." The committee also said that it is not just a problem of collecting a charge on the cost of the property, but it is all done to ensure that a fair and reasonable valuation is declared.

The committee names the directors of Virgin Gorda Yacht Holding Limited as Meade Malone, Romney Penn, Verlin Crabbe, Franka Pickering and Rita Frett-Georges, with members Sage Yacht Harbour Enterprises Limited and Virgin Gorda Yacht Holdings; the directors of Village Cay Marina as Anthony Esposito, with members Village Cay Holdings Limited and Gerard St. C. Farara; the directors and members of Village Cay Marina Enterprises Limited as Glenn Harrigan and Vanburn Maduro; and the director of R. J. Development as Robert Wong, with members Wong and Edward and Cheryl Stroh.

One thing is to find the problem, another thing is to make all reasonable actions to avoid such wrongdoings in the future. It can be done by improving appropriate BVI legislation norms as well as doing other preventive actions.

Main recommendations from the Committee are to establish a Commission of Inquiry for investigating this matter and deciding on actions, and to make the update of the Stamp Duty Act, which is 111 years old, as soon as possible, bringing it in accordance with the Conveyance and Law of Property Act Cap. 220.

Thursday, April 13, 2006

BVI Government investigates stamp duty avoidance

Recently the BVI Public Accounts Committee laid a report containing serious allegations regarding the payment of stamp duties on a number of properties bought and sold throughout the BVI territory. This report followed the investigation that was arisen because there appeared to be a disparity in the valuation of property to avoid paying the taxes.

It was pointed out by the Acting Chief Minister and Minister for Finance in the British Virgin Islands Honourable Ronnie W. Skelton, that at the moment of its election the Government pledged to be transparent and open to public scrutiny in all its business. He said also that justice should always be blind and fair for this Government. The BVI Government representative reminded that the Government works hard to ensure that everybody on the British Virgin Islands have full respect and observe the laws of this Territory.

The Acting Chief Minister Ronnie W. Skelton made an inquiry to the British Virgin Islands Attorney General to begin a full investigation concerning the allegations made in the Public Accounts Committee’s Report, and to deal with the offences that have been done, if any. Currently full investigation has been initiated by the BVI Government into the allegations of issuing stamp duty, and the results seem to appear very soon. As Minister for Finance in the BVI Mr.Skelton is a holder of the portfolio for the Inland Revenue Department, which is responsible for collecting stamp duties. He assured that the investigation will move forward swiftly and comprehensively, and full bulk of information will be provided to the public.

Here are some facts about Stamp Duty in the British Virgin Islands. For the purpose of stamp duty collection, properties transferred in the BVI Territory are treated according to the Conveyance and Law of Property Act, Cap 220; the Non-Belongers Land Holding Act, Cap 122; and the Stamp Duties Act, Cap 212. Stamp duty is charged as a percentage of the price paid for the property or its market value, and this amount, in its turn, is assessed by the Financial Secretary. Also, stamp duty is due and payable on all property transferred between vendor and purchaser in the British Virgin Islands, except for that transferred to or from the Crown. Other cases should be specifically defined by the Financial Secretary of the BVI, in accordance with the Conveyance of the Property Act. 4 percent of stamp duties are payable by belongers of the BVI Territory, and 12 percent – by non-belongers.

Some words about the Public Accounts Committee: it is a subcommittee of legislators chaired by Opposition Leader Honourable Ralph T. O’Neal. Other members of Public Accounts Committee are Rep. Julian Fraser, Rep. Andrew Fahie, Rep. Delores Christopher and at-large Rep. Elmore Stoutt, who replaced Eileene Parsons after her appointment on the post of Minister for Natural Resources and Labour.

Wednesday, April 12, 2006

Governor says farewell to BVI

It’s time for Governor change on the British Virgin Islands.

Thomas Macan has been the Governor of the British Virgin Islands offshore jurisdiction for three-and-a-half years. He spent his last day on this job Thursday, April 6, 2006, and left the territory of the British Virgin Islands on April 10. His succeedor David Pearey will be sworn as the BVI Governor on April 18.

The last remarks of Governor Macan were about rapid development of relationship between the BVI and the United Kingdom. His comments are connected with the first round of constitutional negotiations that were held between the UK and BVI offshore jurisdiction in Road Town a month ago.

The speech of Governor Macan at a farewell reception hosted by Chief Minister included the following words: "So long as the BVI wishes those bonds [between the BVI and the UK] to continue, both Governments have to agree on how the shared responsibilities between them are dealt with. Either side may propose change: both must agree it. Both must be comfortable with the consequences; neither must feel either threatened by or at risk from them".

Also, in his speech Mr. Macan touched upon the powers of BVI Governor. He said that it has been a great prvilege for him to perform the functions of the Governor of the British Virgin Islands. Mr.Macan noticed that the governor is inevitably going to be at the centre of the relationship between the United Kingdom and British Virgin Islands and, consequently, should have enough powers to successfully work with both Governments.

Some words about Governor’s institution on the BVI. As you may know the executive authority in British Virgin Islands belongs to the Queen. The Governor of the British Virgin Islands is appointed by the Queen on the advice of the British Government and excercises this power on her behalf. Still, the United Kingdom is responsible for the Defence and Foreign Affairs of British Virgin Islands. The BVI Governor represents the British monarchy in the United Kingdom's overseas territory of British Virgin Islands. The Governor of British Virgin Islands is responsible for appointing the Chief Minister and the Executive Council in BVI, and de facto he acts as the head of state.

Tuesday, April 11, 2006

BVI moves to Category One Shipping Registry status

The BVI Shipping Registry was created as a new department working under the Chief Minister’s Office. On Tuesday, the announcement was made at a media briefing by BVI Chief Minister Honourable Dr. D. Orlando Smith. The newly established BVI Shipping Registry is a merger of the Shipping Registry of the BVI Financial Services Commission (FSC) and the BVI Maritime Administration of the Ministry of Communications and Works.

The BVI Shipping Registry, which will comprise former staff of the Shipping Registry and the BVI Maritime Administration, will be headed by Captain Baboucar Sallah will head, who previously was the head of the FSC’s Shipping Registry.

The Chief Minister expressed his elation that all the agencies dealing with maritime and shipping matters now have united as one department. New department is the result of Government’s efforts to turn the BVI into a Category One Shipping Registry. To achieve Category One Shipping Registry status for the British Virgin Islands, the regulatory and legislative framework will be necessary to implement. The Chief Minister also considers that achieving this status will help to strengthen the economy. Two senior shipping surveyors were employed by the Government in order to allow the BVI to move toward Category One status quickly.

As to the current situation, the BVI is ranked a Category Two Shipping Registry by the UK Red Ensign Group (so, it can register ships of up to 150 gross registered tons (GRT) and pleasure vessels of up to 400 GRT). The Red Ensign Group is an affiliation of shipping registries based in UK and it share a set of common ethos and standards for safety and environmental protection and is charged with control by the UK Government.

Monday, April 10, 2006

British territories unite in fighting terrorism

Another step towards making the world (and the offshore world as well) better and leaving the offshore jurisdictions only for those who are wisely planning their international business activities, legally reducing taxes and using the benefits of offshore banking secrecy for legitimate purposes.

April 4 - April 6, 2006 the conference of the Attorney Generals for British Overseas Territories in Bermuda was held. It was held because Britain's top lawyer urged all British overseas territories (BVI includingly) to come together in the fight against terrorism and made a statement that no place is immune as far as terrorists do not recognize boundaries.

At the conference Attorney General Lord Goldsmith said that terrorists acted globally. He exemplified the global nature of terrorism by the last-year devastating July 7 terror attack in London and the attempted bombings on July 21. Attorney General Lord Goldsmith claimed that Britain's territories must work together in order to counter the threat because terrorists do not respect boundaries.

This conference was attended by Cherno Jallow, Attorney General of the British Virgin Islands as well as Attorneys General of Gibraltar, Bermuda, Anguilla, the Cayman Islands, the Falkland Islands, Montserrat and the Turks and Caicos Islands. British policy regarding the territories, the sentencing of drugs offenders, economic crimes and unified approach to fighting crime were the topics on the agenda. The conference ended on April 6, 2006.

Saturday, April 08, 2006

The BVI population and housing census

We already know that BVI is really a big player in offshore industry and a very quick advance has occurred in last 20+ years since the British Virgin Islands IBC legislation was implemented in 1984 by adoption of the International Business Companies Act, 1984. What’s about its population both in absolute numbers and dynamics?

The census was conducted in the BVI in 2001, but the summary of the population and housing census was published on March 28, 2006. At the time of the 2001, the population of the British Virgin Islands was at just over 23 thousand.

To conduct the census, numerous radio and newspaper advertisements informed the public about the census and its benefits. The exercise began in May 2001 and ended in October 2001.
What this document gives us is a comparative breakdown of essential demographic and economic changes in the British Virgin Islands from 1946 up to 2001.Then, it reports on changes in population size and growth, migration patterns and fertility rates. The document is a sufficient base for long-term predictions based by means of analysing existing trends.
The population and housing census says that 23,161 people were living in the BVI in 2001, and 16,115 people were living in 1991 – so the increase is 43.7%. It also shows there has been an annual percentage growth of 3.6% in the population of the British Virgin Islands from 1991 to 2001, which is a high rate. As to the predictions of the 2001 population and housing census, it is noted that if population continues to grow at the same rate, it will double in just 19 years. The census also analyses changes in the BVI migration rate in 2001 as compared with 1946 when the outward migration of people was encouraged by the prevailing economic circumstances. Starting from 70-ies high and active migrants coming to the BVI became the main resource for the BVI population growth. The census states that besides the USA, "the BVI is one of the few countries where the number of foreigners outnumbers the number of natives". 39.7% of the population was born in the BVI, 60.3% - elsewhere. As to the decreasing rates, the population and housing census reports that fertility levels in the BVI were lower in 2001 than in 1946.

It is quite interesting that the country with only 23 thousand population has provided home for almost 700,000 offshore IBCs. This makes 30 offshore companies per each person living on the British Virgin Islands. I guess there are offshore jurisdictions where this proportion is even more surprising, but if we take into account only the biggest players in offshore industry, I think the British Virgin Islands is on the top.

Friday, April 07, 2006

BVI increases school ties with the University of West Indies

The University of the West Indies (the UWI) is planning to expand collaboration with the school of continuing studies in the British Virgin Islands.

Nigel Harris, Vice Chancellor, MPhil, MD, DM and Lawrence Carrington, Pro Vice Chancellor, were the members of a delegation consulting with local people and private officials in March. The officials of the University of the West Indies were making visits to all the contributing UWI member countries in order to assess both their human resource and their training needs.

The Minister for Education Lloyd Black suggested that it is essentially to look at how it is possible to make the University of the West Indies the school of choice for BVIslanders.
Not so long ago the tertiary level unit of the UWI made a survey that was completed by among not only students, but also employers and educators. As Lloyd Black said, the results determined the need to focus on the training people in the following fields – education, medicine and health, communication, information technology, technical and vocational fields.

Nigel Harris stated that "The first step is to define those human resource needs, and the methodology is really to go to the student population, employers and the providers of education to give their input as to what is important". Harris emphasized 8 or 9 major disciplines, which include maritime studies and banking and financial services. So, the University of the West can be a good for such an offshore country as the BVI.

Thursday, April 06, 2006

Sinosmart Group Inc. (BVI IBC) acquired by China-Biotics, Inc.

Do you want to get to know what the real British Virgin Islands offshore companies are? Here you are – the latest example:

In a Form 8-K filed with the Securities and Exchange Commission on the 23rd of March 2006, China Biotics, Inc. (CHBT.OB) informed that it had acquired Sinosmart Group Inc. This company is organized in the BVI, and it owns 100% of a Shanghai based producer of probiotic dietary supplements. At the closing of the acquisition, in exchange for all of the equity of Sinosmart, China Biotics issued 15,980,000 shares of common stock. The transaction resulted in outstanding 17,080,000 shares of common stock which China-Biotics now has.

Sinosmart was incorporated in the BVI on the 13th of February 2004 in accordance with the British Virgin Islands IBC Act. On the 11th of August 2005, Sinosmart entered an agreement to acquire 100% of the equity of Shanghai Shining Biotechnology Co. Ltd. for a total cash consideration of $2.27 million. Company net sales for 2005 was $14.42 million, at the end of the financial year total stockholder’s equity was $4.83 million.

Just before the acquisition of Sinosmart, the British Virgin Islands company, led by Chinamerica Fund, LP, had completed a private placement for US $5.07 million.

The BVI IBC Sinosmart fiscal year ends on the 31st of March. As far as nine-month period ended on the 31st of December 2005, International Business Company reported its revenues of $15.1 million and its net income of $6.1 million, or $0.36 per share, based on 17.08 million shares of China-Biotics outstanding after the acquisition. This is a 40.3% net margin and represents a 59% increase in net income over the previous period.

Of course, this is not the biggest BVI IBC. Many BVI IBC’s are much bigger and there are plenty of BVI offshore companies working worldwide. This is just one example for those who think of offshore company as of something curtained off and not related to everyday business.

Wednesday, April 05, 2006

BVI and 809 area code scams, part II

The victims of this scam may have unpleasant associations with the BVI and BVI calling code, but I would like to add that it in no way means that the fraudsters come from the British Virgin Islands. It is even more likely means that they do not live in the British Virgin Islands as well as they do not have an account in BVI bank and BVI offshore IBC. It is likely that they hold their criminally earned money in another, not necessarily offshore, jurisdiction.

By the way, since 1997 the area code for the British Virgin Islands is 284. That happened during a split from the original 809 area code that was for the entire Caribbean region plus some neighbouring countries. The split was necessary to satisfy increasing demand in telecommunication sector. Now 284 is a code for the BVI, 264 for Anguilla, 345 for Cayman Islands, 649 Turks and Caicos Islands, 242 the Bahamas and so on.

How to prevent yourself from getting into such a trap? Firstly, never open unknown email attachments and never make calls to any unfamiliar or suspicious long-distance numbers. Then, always check area code charges before returning a phone call from an unknown source. If it is really urgent, you will be contacted again. Do not return a call from someone you don't know, just because it is urgent. If you receive any type of suspicious solicitation, call the appropriate organization that legally fights frauds.

Tuesday, April 04, 2006

BVI and 809 area code scams, part I

Have you ever received a message on a consumer's pager, answer machine, voicemail or email asking to call a telephone number with an 809 area code?

This is a so-called 809 area code scam which is usually and mistakenly related the British Virgin Islands. Yes, 809 was a code for the British Virgin Islands but it was also an area code for many other Caribbean countries: Anguilla, Antigua Bahamas, Barbados, Bermuda, Cayman Island, Dominica, Dominican Republic, Grenada, Jamaica, St. Kitts & Nevis, St. Lucia, St. Vincent, Turks and Caicos as well as some others. The fact that this code is usually associated with the BVI shows how popular the British Virgin Islands offshore jurisdiction is, however it goes without saying that this could be not the best popularity at all.

So, the situation is such: you get an urgent message in which you are asked to call a phone number with area code 809 (or some other, but 809 is the most popular one). Many callers suppose this is in the United States, but this is some other country – for example, the British Virgin Islands. This number, which is pay-by-minute, is similar to the 900 numbers in the United States, but tolls are much higher. Sometimes the charge can be almost $2,500 per minute.

Unfortunately, in some Caribbean countries no strict legal requirements state that callers must be informed on being charged extra. As a result, many callers have to wait for a very long time. The person answering the phone just keeps the person who dials the number for as long as possible by means of using any way to confuse a caller and to delay time. Meanwhile, the charges run up.

To seduce the callers to make the return phone, many methods are used. You won the prize, somebody has family members, you owe a debt and therefore should call urgently before legal problems appear – these are just some of them. Sales people in businesses can be left a message about a substantial purchase. The fraudsters do not hesitate to cheat elderly people. Whatever the pretext, there is one common theme: the call is to be urgently returned. Thus, the fraudsters hope for immediate calling back without thinking about the number because it is urgent.

to be continued.

Monday, April 03, 2006

Offshore financial services industry does a workshop – Part 2

The BVI International Finance Centre needed the workshop as it realized the necessity for delivering public relations and communications activities that are valuable for the BVI financial services industry. Doing this with the private sector key representatives was the most effective way to hit their goals.

Humphry Leue, IFC Chief Operations Officer hopes that the outcome of the workshop will provide the blueprint for IFC marketing and promotional efforts as well as it will become a respectable and effective reference tool for the BVI.

IFC was established in 2002 and it played a vitally important role in both the promotion and marketing of the British Virgin Islands as a leading financial centre. Its launch was a part of Government plans of separating the marketing&promotional and regulatory&supervisory functions of this financial services sector.

Sunday, April 02, 2006

Offshore financial services industry (BVI) does a workshop – Part 1

The BVI International Finance Centre and practitioners from the offshore financial services industry have recently participated in a workshop. It was aimed at discussing and identifying a clear positioning strategy as well as agreeing on the major selling points for the BVI. For the next 1-1.5 year, the results of the workshop will become the basis for the promotional efforts and marketing for the offshore jurisdiction’s finance sector.

What it gives to the BVI – it gives an opportunity of formulating how the BVI could be differentiated from its offshore competitors. Many offshore jurisdictions claim that increased awareness of their brand is vitally needed, nevertheless, few actually invest their time in developing a corporate positioning strategy and research. This results in using similar messages for marketing purposes by many jurisdictions.

Saturday, April 01, 2006

Offshore Certification Programme – opinions

As one could expect, the launch of the first BVI offshore certification programme for offshore corporate administration is generally taken with optimism and delight.

Founding Chairman of the ICSA BVI Group and an Associate at Conyers Dill & Pearman, Mr. Gareth Thomas (manages incorporation and administration of the offshore companies in another offshore jurisdiction - Anguilla) considers that there is a strategic fit between the programme and the financial services sector and that the programme has already become the standard of offshore industry in the BVI.

Senior Administrative Officer at the Financial Services Institute, Ms. Diana Maduro (also member of the BVI FSC Board of Appeal) appreciated the opportunity to provide the offshore financial services industry with relevant training. Chief Operating Officer of the BVI International Finance Centre, Mr. Humphry Leue saw this as essential development to enhance advancement opportunities for offshore finance professionals in the BVI.