There are plenty of tax havens in the world, but one stands head-and-shoulders above the rest when it comes to notoriety: the Cayman Islands. One never hears or reads of the Cayman islands in any other context. President Obama singled it out when he spoke about the need to close tax loopholes that are abused by US corporations. Indeed, he singled out one building in the Cayman Islands – Ugland House – saying that it houses over 12,000 businesses. He characterised it as “either the biggest building or the biggest tax scam on record.”
So when Malcolm Turnbull, Australia’s new Prime Minister, was looking around for a home for much of his very considerable wealth, why did he choose two investment funds headquartered in the Cayman Islands?
It is normal and proper for senior politicians to place their private wealth in a blind trust, insulating it from their decision-making while in office. Malcolm Turnbull has done this. But why, when the very fact of his great wealth makes many Australians distrust him, would he choose investment funds domiciled in the Cayman Islands, a territory whose very name has become a synonym for ‘shonky’?
It should be no surprise that the Labour Party has picked this up as a stick to beat him with. He maintains that the tax efficiency of the fund will produce larger profits on which he will in due course pay Australian income tax. I have no reason to doubt this. But in heaven’s name why the Cayman Islands?!