Governor of the Central Bank of Barbados Cleviston Haynes is defending the island’s supervision of the international business sector, stating that the systems in place continued to attract legitimate businesses while keeping out those who want to use the jurisdiction for illicit activities.
His comments came on the heels of reports that the Canadian-based Loblaw Companies Ltd was embroiled in a legal battle over allegations by the Canada Revenue Agency that Loblaw’s Barbados-based banking subsidiary Glenhuron Bank Ltd has been misused for the purpose of tax avoidance.
Glenhuron, which was incorporated in 1992 and liquidated in 2013, was registered as a bank in Barbados.
However, the department of justice’s lawyer Elizabeth Chasson was quoted in the Canadian press recently as saying that Loblaw Financial Holdings took steps to have Glenhuron Bank Ltd appear to be a foreign bank in order to avoid paying taxes.
The dispute, which dates back to 2015, could cost the retailer more than CA$400 million (BDS$623 million).
Haynes told Barbados TODAY he did not foresee any fallout from the island’s major source market for international business as a result of the ongoing case.
“I don’t envisage a fallout. I think the change in Canadian policy has already led to some financial institutions either leaving the jurisdiction or altering their business model. So I do not envisage there would be any further negative impact as a result of this case,” said Haynes.
“For the sector generally I think we have to remain very watchful because there is the risk that person may want to use your jurisdiction for illicit activity, but I would not put the transactions of the Glenhuron bank in that context of illicit activities. When we speak of illicit we are talking about people who are trying to launder money, [which] is distinct from a situation where a company was restructuring their business model in order to be efficacious for them,” he said.
Recalling that the island lost a chunk of its international business following major changes to tax laws in Canada, Haynes said Barbados must continue to “redouble” its efforts in order to maintain what was left and to get new business.
“At a marketing stage we need to see if we can identify additional markets to complement our existing reliance on the Canadian market. We have to look at whether there are additional products which we can introduce,” said Haynes.
However, stating that the international business sector was a very competitive one, Haynes said he remained confident that Barbados had a comparative edge because of the high quality of skills among local professionals in the sector.
“One of the things that we like to pride ourselves on is that we have relatively good financial system that is designed to discourage persons who want to use the jurisdiction for illicit activities. I think that is part of the process of licensing. It is very important that you are able to do due diligence on those firms that want to set up in Barbados . . . to minimize the risks that you are dealing with persons who may not be above board,” said Haynes.
“It is not foolproof. Every now and again someone will slip through the cracks but I think we have a relatively good record as the jurisdiction tries to attract legitimate and legal business into the economy,” he said.