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Issue 7
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News from Anguilla
20 February 2000. Issue 7


Please feel free to contribute to, reply to, comment on or (Heaven forbid) correct any item in these newsletters. Send an e-mail to: Your input will be discretely disseminated.

Our North American readers will observe that today is/was 2-20-2000; so may you all have 20-20 vision (figuratively, at least)!

A couple of items arising from the last issue, prompted by comments received:

(1) Yes, we will consider asking any court to throw out any request for assistance received from/on behalf of U.S. fiscal authorities on the grounds that those authorities are illegally constituted (and therefore have no legal existence, so cannot make any application to a court in Anguilla) as is the legislation passed! This may be effective; it might not…..

(2) Ohio was not a legally recognised state when the Constitutional Amendment was allegedly passed. Congress accepted the constitution of the state of Ohio on 19 February, 1803; however, statehood was not ratified until 1953. (And they say things happen slowly in the islands!?!)

Latest News from Anguilla....

Following on from Sonesta Hotel, Covecastles has now re-opened after hurricane "Lenny". For a list of what's open and what (still) remains closed, please send an e-mail to:

On the political front:

1. It was Nomination Day on Friday. Prospective candidates therefore registered themselves at The House of Assembly, having been relieved of their EC$1,000 deposit which they had left at the Treasury. As in the UK system, the deposit is refundable depending on a candidate's percentage of votes cast. Each candidate had to be proposed and seconded by a voter resident in the district and these two names/signatures required a witness. If there were only one Candidate for any district nominated by 4.00 p.m. on Friday, that person would have been declared the elected candidate there and then. Unfortunately for the politically weary and happily for the proponents of democracy or change, each district will be contested. As you may know, Anguilla's political parties have hardly been riven ideologically (a fashion which has caught on, in recent years in places like the US and UK!). However, in so far as some can get on with their contemporaries better than others, here is a table of the nominees (which those who visit the island regularly will recognise), based roughly on the left-right seating in the French National Assembly (this may need to be re-tabulated on receipt):


































- - -




- - -



- -



* Member of the incumbent (elected minority) Government
** Other elected member (present opposition parties)
*** Independent Candidate supported/endorsed by United Front

As you can see there are lots of possibilities here, although it is worth noting that the only possibility of the present government being effectively returned to power would be in a coalition with one or more successful Independents.

(2) Despite calls for tolerance from the (influential) Anguilla Christian Council, requests to "stick to the issues" by some in the media, and appeals to avoid character assassination by others, the Candidates are well into the swing of things now and are, on the whole, scrapping it out in the sewers. Although the U.S. media makes a big thing of Presidential Candidates' negative campaigning, those candidates would be horrified if they were subject to anything like the abuse that West Indian candidates routinely dish out. (Locally, this is the best kept secret apart from Pokemon). However, as we are becoming more civilised, the Anguillian politicians are becoming more sophisticated. A few years ago, in The House of Assembly, Eric Reid floored our present Chief Minister with a well placed punch. Nowadays, on the other hand, Victor Banks' lawyer has published a letter written to the Chief Minister threatening legal action for (alleged) defamation, and Victor himself has written to the Anguilla Bar Association asking them to report his former lawyer ? and now political opponent ? John Benjamin (President of The Bar Association) to the Ethics Committee for (alleged) breach of client/attorney privilege, relative to remarks made by Benjamin at the hustings.

And the wonderful thing is that we have two more weeks of increasing vitriol before it's over. This will be followed (possibly) by a period of feverish activity if a coalition needed to be formed and certainly by the proclamation of a national holiday/day of deliverance. Within a week, if there were a change of guard then, as is customary, there will be an announcement by the new Minister of Finance of "the deplorable state of the island's finances, and that things are much worse than we were ever lead to believe". Regardless of who wins, it is likely that the House of Assembly would be convened as a matter of urgency; much needs to be done in that area.

And then, of course, we have Royalty coming soon, too, in the form of Prince Andrew.

Raising the profile

A local reader has forwarded these recent items in the U.K broadsheets on Anguilla: both are copyright. Readers are recommended to subscribe to this publication if they wish to see more of the same.


ROBERT HARRIS did not enjoy his time in the Caribbean. It was a waste of time, he said as he flew out.

But then Mr Harris was not a holidaymaker. He was one of the last of a dying breed, the Governor of one of Britain's overseas territories, and like many of those hard-pressed men and women, he discovered that there is more to it than wearing a feathered hat. As Governor of Anguilla, Mr Harris had a tough time, a symptom of the increasing problems of many of the last red dots on the map.

"I did not have a successful tour and I have not found it possible to work closely with the government of Anguilla any more than my predecessors did," Mr Harris said as he departed. "I would go as far as to say I personally
regard it as a waste of my professional time."

Anguilla, a flat, dusty patch of scrub in the Leeward Islands, is the destination of choice for wealthy tourists seeking a quiet but luscious time: it has some of the best beaches in the world. But it is not necessarily paradise if you live there.

The island has been struggling with a constitutional crisis that has meant there is no effective elected government and no budget. For a community of 11,000, that is a big crisis. The British government has intervened to press for a solution to the problem, which is as much about personalities as policy, but to no avail. "The people of Anguilla have to make a choice either to go independent or accept the very light conditions that Britain imposes for its relationship with the country - to work together with the British rather than in conflict with them, for to do so would be foolish," Mr Harris said.

Anguilla is one of the very few territories that can claim to be a British possession by active choice, though it has a troubled relationship with London. Britain tried to put it into a federation with St Kitts and Nevis, and the islanders revolted. Soldiers and shirt-sleeved coppers from the Metropolitan Police were flown in to keep order, and the Union flag continued to fly in the Valley, the island's capital.

The islanders, especially Mr Hughes, interpret British policy as pressing them towards (unwanted) independence. Britain's White Paper on the Overseas Territories was a big issue in the elections, with some parties claiming it would have drastic consequences for the island. Yet the White Paper was intended to improve relations between Britain and its remaining colonies. There have been rows in St Helena, Pitcairn Island and volcano- devastated Montserrat about the terms of the ties between often small, poor, isolated islands and the motherland.

An additional problem is that Britain, which once churned out imperial officials as fast as it did steam locomotives and ships, no longer has a cadre of dedicated administrators. Most Governors or their equivalent are former diplomats at the end of their careers. Mr Harris had no experience in the field; neither does Peter Johnstone, his successor. Being consul-general in Edmonton (Mr Johnstone) or Lyon (Mr Harris) is a very different task from running a small country.

New elections in Anguilla may sort things out. A week after that, in early March, another relic of the Empire will arrive: Prince Andrew, on a visit to the Caribbean islands.

News 9 World Reporter All Material Subject to Copyright


CLASSIFIED SUPPLEMENT: Anguilla's big gamble: MICHAEL PEEL The country hopes to thrive by exploiting uncertainty about dealings over the net (Financial Times, Feb 10, 2000, 730 words)

The small Caribbean island of Anguilla is sending a kitsch but clear message to the rest of the world.

"Little acorns really do grow into big oaks!" is the dictum that appears on the screens of those using Acorn, the country's novel system for incorporating companies online.

The logic behind the software is simple: the internet is the future, and offshore financial centres are the place to use it.

"The big jurisdictions see this as a threat," says Alan Jones, registrar of companies. "It cuts out the middle man."

Like all the boldest talk, it risks over-optimism. For every attraction Anguilla has to offer, there is a corresponding concern. The suspicion is the country could be trading short-term gains for trouble later on.

Anguilla might be a case study for consultants piling in to internet business. The country hopes to thrive, in part, by exploiting global uncertainties about the status of dealings over the world wide web.

In doing so, it is tapping into a paradox of the net world. Companies might operate in the ether, but their location is of first-order importance. They must choose their country with care, knowing that laws on issues such as tax and due diligence could make or break an aspiring industry.

Anguilla's position amounts to a huge bet that deregulation will be the way forward. In 1998 laws were changed to recognise digital signatures. This built on long-standing rules that mean neither offshore nor local companies pay income tax.

Acorn is very much a part of all this. Its development was funded by the UK government, which wants to diversify the economies of overseas territories such as Anguilla. Mr Jones came out 2 1/2 years ago on secondment from the Department of Trade and Industry.

He has overseen development of an impressive system. The user inputs details and a name, which is accepted as long as it is not offensive or misleading. It took about five minutes to incorporate FT Limited. Due diligence comes in the form of restrictions on access. Users must be government-approved agents from Anguilla or overseas. Mr Jones says checks are stricter than in pre-Acorn days, when the authorities relied on local companies to vet foreign operators.

Mr Jones says the effect of going paperless has been modest but tangible. Incorporations rose 10 per cent last year to 750, a climb attributed to Acorn. "Effectively what Acorn does is give overseas agents a virtual presence on the island," says Mr Jones.

Immigration to Anguilla has not only been electronic. Internet businesses are setting up here, taking advantage of the island's fine environment and proximity to the US. "Anguilla is a quick place to get to," says Jon Gilliam, president of Hush Communications, which has offices in the US, Canada and Anguilla. "It's nice to go there for a board meeting and hit the beach."

There are more substantial reasons for Hush's arrival. The company offers software over the internet that allows users to encrypt e-mails. Anguilla's laws relating to this kind of business are more relaxed than those in most big economies.

This argument has two sides. Anguilla benefits from variations in the law that are unlikely to endure. The US has already slackened its regulations on encryption and the trend will probably be to scrap rather than make rules.

The same thinking can be applied to some of Anguilla's other competitive advantages. If the big economies get their way, the zero income tax regime may have to be scrapped. That may not be a problem for profitless internet companies such as Hush now, but it will influence their long-term thinking.

Anguilla also suffers from the problems and prejudices that afflict many small countries. Hurricane Lenny hit the island late last year. All communications went down as people were forced into hiding.

Perhaps Anguilla's greatest problem is one of perception. The country is a relative newcomer to offshore finance, and is disparaged by competitors. It is held to be poorly regulated, giving other jurisdictions a bad name.

Acorn has provided grist to this mill. People in other havens attack it as a licence for criminals to run amok in a country of 12,000 people that does not have the structures to cope. One such says: "They have started to run without walking."

This is unjust, say Mr Jones and others. The same goes for international efforts to force offshore centres to raise income taxes. Even the frequency of hurricanes has increased, adding further to the sense of unfairness. Mr Jones is all too aware of the potency of this outside pressure. A one-time critic of tax havens, he now defends Anguilla's cause with passion. He knows that for all Acorn's technical quality, the country's fate may be settled by decisions made elsewhere.

The ambivalence is reflected in Acorn's slogan. It is surely no accident that the aphorism of choice has a flip side. While every acorn can grow into an oak, the vast majority do not.

Copyright ' The Financial Times Limited


On Friday 18 February, viewers of the US network, ABC, would have seen a "virtual vacation" at Rendezvous Bay, Anguilla, interspersed with their shots of Time Square. Their breakfast programme featured live shots of (supposed) holidaymakers limin' on the beach etc.

The following material is courtesy of OFFSHORE ROUND-UP: An OFC publication (which also holds the Copyright 1999) ' please contact "Offshore Canada" for subscriptions:


Source: Financial Times

Investing in hedge funds is no longer the sole domain of the very wealthy. An expanding number of 'enhanced' mutual funds are using strategies pioneered by hedge funds to offer investors the best of both worlds; superior returns in both bull and bear markets typical of hedge funds combined with the stricter regulatory characteristics of regular mutual funds.

The catalyst for the creation of these funds was a 1997 decision by the IRS to allow mutual funds to generate more of their gross income from short sales or from stock held for less than three months. As a result, mutual funds can now use many of the specialised hedge fund investing techniques such as leverage, the purchase of options and warrants and short selling.

Such methods, although risky, provide the potential for higher returns.

Research by Professor Matthias Becker of St. Gallen University in Switzerland suggests that hedge funds produce long term returns of 17-20 percent, compared to nominal equity returns of 10 percent for most mutual funds. They also allow astute managers to build portfolios that have a low correlation with the wider stock market. This is an excellent method of diversification that can help protect a portfolio in a bear market.


Source: National Post

Spammers who send bulk, unsolicited e-mail to Canadians could be out of business under the federal government's proposed privacy legislation.

Bill C-6, now before the (Canadian) House of Commons, will make spamming illegal because the law "will prohibit the collection of personal information that can identify an individual," according to John Gustafson, president of the Canadian Marketing Association.

This won't stop spammers located outside the country, unless the law in their own jurisdiction makes spamming illegal also. Some spammers, especially Internet pornography companies, are using new technologies such as HTML-based e-mails to send intrusive graphical images which can appear on a computer screen just by highlighting the message in the queue.

Although Internet providers and users can try to block unwanted e-mails, spammers often find a way to get through.

The bill requires organizations to identify the purposes for which they plan to use personal information and to limit the use of that information for those purposes only.

Online marketers are worried that sweeping government legislation could inadvertently restrain e-commerce.

On to our scams section (same magazine):


Source: National Post

The British Columbia Securities Commission has uncovered a fraudulent investment scheme whereby investors were promised returns of up to 10,000 percent. As a result, the BCSC has issued cease trade orders against Corporate Express Inc., a Bahamas-registered company with headquarters in Surrey, B.C.

According to the commission, Corporate Express, along with affiliates Corporate Express Club, Fortress International Ltd., Great American Gold ltd. and Offshore Knowledge Network, were involved in a "prime bank instrument scheme."

This type of scheme lures gullible investors by promising them their money will be placed in hidden offshore accounts where large, established banks secretly trade bank documents. No such market exists, but investors often believe the promises of incredible returns that are kept secret from tax collectors. The Paris-based commercial crime bureau of the International Chamber of Commerce estimates $10 million (US) is dropped into similar schemes in North America every day.


Source: National Post

The Swiss Government has frozen $550 million in bank accounts belonging to the late Nigerian dictator Sani Abacha, his family members and entourage as part of a money-laundering investigation.

The discovery of the money indicates that Swiss banks are having compliance problems with a new money-laundering law that took effect in April, 1998.

The investigation could result in the return of the money to Nigeria, whose current elected government has accused Abacha and his associates of systematically plundering $2.2 billion from the Nigerian central bank during his four years in power.

Although Swiss officials insist that the banks always take vigorous steps to weed out money laundering, a series of high profile cases indicates possible problems. Famous cases of Swiss bank clients probed for money laundering include the brother of former Mexican president Carlos Salinas, Pakistan's former prime minister Benazir Bhutto, Ukraine's former prime minister Pavlo Lazarenko and Zaire's late dictator Mobutu Sese Seko.


$7bn laundered through BoNY By Thomas Catan in New York - 17 Feb

A former employee of the Bank of New York and her Husband have admitted laundering at least $7bn through the bank, much of it for Russian nationals hoping to evade customs duties and taxes. In a New York federal court, Lucy Edwards and Peter Berlin pleaded guilty to a range of offences.

They included setting up a branch of a foreign bank without regulatory permission, operating an illegal wire transfer business, fraudulently obtaining visas, bribing an official, evading US taxes, accepting illicit payments and laundering them offshore.The confessions represented a major break in the case, described as the largest ever money laundering investigation.

Until now, the couple were charged only with the relatively minor offence of operating an illegal money transfer business.The Russian-born couple surrendered to the FBI in a deal with prosecutors on Tuesday, after flying in from London. Federal prosecutors are likely to use their co-operation to secure further convictions. An FBI director said that "much remains to be done".

Reports that they would admit they had bribed a BoNY official had sparked speculation that the conduct of the bank could again be questioned. But on Wednesday it emerged the employee in question was Svetlana Kudryavstev, a junior employee dismissed last September. The couple said they paid Ms Kudryavstev $500 a month to ensure the transfer business ran smoothly after they moved to London. Prosecutors have already charged her with lying to the FBI.

According to the couple, the scheme began in late 1995, when Ms Edwards was approached by members of Russia's Depozitarno-Kliringovy Bank (DKB) to set up the accounts at the BoNY. She was working as a vice-president at the bank's eastern European division, and along with her husband was able to set up an account under the name Benex International in early 1996. Later that year, officers at DKB asked the couple to open a second account, which they did under the name BECS International. In autumn 1999, they said they would be acquiring control of Flamingo Bank, and would need a third account, which was set up under the name Lowland Inc.The couple said they received $1.8m in commissions, transferred to offshore accounts to evade US taxes.

To prove money laundering charges, prosecutors must show the funds were the proceeds of illegal activity. They said the accounts had been used to facilitate criminal activities, including paying a ransom to kidnappers of a Russian businessman. The couple agreed to forfeit more than $1m in proceeds, a brokerage account and their London residence. The US has also seized $6m held in BoNY accounts.


You may start seeing some advertising on this newsletter starting next week. This will be a service/initiative of "Topica", the hosting outfit. Hopefully they will be useful and tasteful. If there are any/enough objections I'll ask Topica to take them down; the decision is effectively yours.

Speaking of advertising, the web page of C.E.G. is being redesigned and rebuilt. Check it out at (there are other addresses and I'll provide them next time round when I find them!). It is being done (for consideration received) by Sombrero Information Services, one of the best website designers in the Universe. They can be contacted at Availability is limited though, for all sorts of reasons, so if they cannot immediately help you, be patient and get in line. The wait will be worth it; meantime, shun impostors and upstarts!

Best wishes,


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İMMI  C.E.G. Limited. CEG Ltd. is Licensed by the Government of Anguilla as a Registered Agent under the Company Management Act, 2000

This information has been prepared by C.E.G. Ltd. for the benefit of those who may be considering using Anguilla as a fiscal jurisdiction for international, financial or commercial transactions, or investing in the island. This web site is by no means enough in itself as a basis for decisions but rather designed to be an outline of the administrative and legal environment for such businesses. Before taking action on any business or other decisions related to Anguilla, precise and particular advice should be obtained from taxation, legal, accountancy and other relevant professional advisors both in Anguilla and in your home jurisdiction. As information is subject to change, you are urged to consult with us as well as your professional advisors before concluding any business decisions. We look forward to assisting you regarding any of the professional services you may require.