-
PACIFIC ECONOMIC BULLETIN
38
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
Offshore financial centres andinternal development in the
Pacific islands
Anthony van Fossen
The small size and isolation of Pacific islandstates—factors
that usually limit theirdevelopment options—can be advantages foran
offshore financial centre (OFC). Theirsmall size provides their
promoters withinfluence over the local state for relativelymodest
contributions, and isolation furnishesa safe distance from
inquisitive metropolitantax and regulatory officials. Some
Pacificisland countries’ OFCs play a significant rolein the local
economy and governmentrevenues, but they are increasingly
leadingthe countries into conflicts with internationalagencies,
metropolitan governments, and
even some large international banks. Hostingan OFC increasingly
leads to internationalcriticism (from the OECD for abetting
taxevasion, the Financial Action Task Force forfacilitating money
laundering, and theFinancial Stability Forum for raising
systemicrisk in global banking) and this hurts theimage of the
Pacific island country. Localoffshore institutions (small in number
andlargely run by expatriates) have been facedwith a growing
problem of image manage-ment and damage control in
internationalrelations and even in their personalised tieswith
island political leaders—who have so
This paper provides an overview of how hosting offshorefinancial
centres affects the internal development of Pacific
islandcountries. While offshore financial centres have been
attractivedevelopment options for many regional élites, none has
becomefully functional and the returns have often disappointed the
islandpoliticians who sponsored them. While there is some
synergywith up-market tourism, construction, and
telecommunications,financial centre development has also increased
island countries’contacts with criminals, increased their conflicts
with metropolitanstates and international organisations, and
increased theirdependence on unstable financial flows.
Anthony van Fossenis Senior Lecturer inSocial Sciences
andConvenor of thePolitics, Economy andSociety Major in theSchool
of Humanities,Griffith University.
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
39
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
far emphasised the OFC’s importance tothe local economy, but who
may not be ableto resist international moves towardharmonisation of
taxation and financialpractices over the longer term.
Norfolk Island
The first Pacific island offshore financialcentre was created in
1966 on Norfolk Island,a unique external territory of Australia
witha peculiar form of self-government. Promotersof Norfolk’s tax
haven have seen its potentialto become a major global OFC blocked
bythe Australian Federal Government. Therehave been enormous
opportunities foroffshore centres around the world duringthis
period—with bank deposits in offshorecentres rising from US$11
billion in 1968 toUS$2,000 billion in 1996 (Diamond et al.1997;
Financial Times, 24 November 1995, 7June 1996; Offshore Investment,
October 1999).Advocates of OFC development contrastNorfolk’s
frustrations with the success of theBritish-affiliated territories
and dependenciessuch as Jersey, Guernsey, the Isle of Man,Bermuda,
the Cayman Islands, and the
British Virgin Islands. The OFCs of these UK-affiliated make
major contributions to theirislands’ local economic
development.
While the British state and the City ofLondon have encouraged
the expansion oftax havens in present and past UK colonies,the
Australian government has usually beenantagonistic toward this sort
of offshoredevelopment in its own external territoriesand within
its sphere of influence in thePacific islands region more
generally. Thishas meant that Norfolk’s OFC has beenrepeatedly
thwarted by the Australian state,although there is still no income
tax on theisland and it still provides some offshorepossibilities.
The historical trajectory ofNorfolk’s tax haven can be analysed in
termsof its dialectical tensions with the Australianstate—tensions
between self-determinationand subordination which emerge
fromNorfolk’s anomalous status as a self-governing external
territory of Australia.
The question of Norfolk Island’s exactstatus (and the closely
related issue of thefuture of its tax haven) has been at thecentre
of local political controversy sincethe mid 1960s. OFC development
is hinderedby the constant perception that Norfolk
1962 71963 101964 261965 361966 1061967 2941968 7741969 9721970
1,3541971 1,5711972 1,4521973 1,3281974 1,294
1975 9981976 1,0251977 1,0081978 1,0561979 1,1071980 9541981
..1982 6381983 ..1984 ..1985 ..1986 ..1987 ..
Table 1 Companies registered on Norfolk Island, 1962–98
Note: Between 1962 and 1975 the year ends on 31 December; after
1975, the year ends on 31 June.Sources: Norfolk Island Report,
1968–98; Treadgold, M.L., 1988. Bounteous Bestowal: the economic
history ofNorfolk Island, The Australian National University,
Canberra:219.
1988 3501989 3751990 ..1991 ..1992 ..1993 ..1994 ..1995
approximately 2501996 approximately 2501997 approximately 2601998
approximately 260
-
PACIFIC ECONOMIC BULLETIN
40
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
Island’s political status may change in someunwelcome way at
Australia’s behest andwithout the islanders’ consent.
Nowhere in the Pacific islands regionhas there been such
consistent andgenerally successful opposition to OFCdevelopment as
from the Australian FederalGovernment in relation to Norfolk
Island.Its offshore centre was effectively attacked
from the 1970s and yet at major criticaljunctures the Australian
federal campaignsthat threatened Norfolk’s residential taxhaven
simply disintegrated in the face ofconcerted and determined local
oppositionalthough the danger has never entirelydisappeared.
In the mid 1970s, the hostility of theAustralian state was
directed primarily at
Table 2 Company fees on Norfolk Island, 1969–2000 (US$, per
cent)
Year Company Company fees/totalfees (US$) government revenue
(per cent)
1969 25,150 3.91970 48,609 7.21971 57,571 7.71972 100,521
11.81973 233,107 18.71974 209,653 14.01975 259,329 14.11976 217,944
12.91977 230,164 12.41978 270,802 11.71979 208,643 8.21980 155,831
5.41981 138,775 3.71982 104,426 3.01983 100,823 4.21984 84,793
2.51985 66,043 2.11986 56,663 2.01987 64,854 2.01988 84,741 2.31989
63,304 1.51990 54,295 1.21991 59,708 1.11992 45,606 0.81993 47,380
1.01994 39,698 0.81995 37,751 0.61996 36,608 0.51997 28,273 0.41998
25,000 0.41999 24,198 0.42000 26,470 0.4
Note: Between 1969 and 1975 the year ends on 31 December; after
1975, the year ends on 31 June.Sources: Royal Commission into
matters relating to Norfolk Island, 1976. Report, AGPO,
Canberra:127,Australian Commonwealth Grants Commission 1997:67;
Butland, G.J., 1974. A Long Term PopulationStudy of Norfolk Island
(unpublished):19; Norfolk Island Government Gazette, 9 February
1967; Norfolk IslandReport 1968–2000; Norfolk Islander, 2 September
1972, 2 August 1975.
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
41
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
offshore entities and at the island’s fledglingOFC, particularly
after the number ofregistered companies (mostly owned
byAustralians) rose from 7 in 1962 to 1571 in1971. The number of
companies was approx-imately equal to the total number of
Norfolkresidents, and the island had seven residentlegal and
accounting firms and bank depositsof A$262.8 million (US$294.4
million) in 1971(Royal Commission into Matters Relating toNorfolk
Island 1976).
New Australian amendments to countertax avoidance were applied
to Norfolk’sOFC from 19 July 1972 (Royal Commissioninto Matters
Relating to Norfolk Island1976), causing company registrations
todecline to 998 in 1975 and the volume ofbank transactions to fall
by over two-thirds in the three years from 1972. On 30March 1976,
the High Court of Australiaunanimously ruled that Australia had
fullsovereign (including taxation) powers overNorfolk, although it
added that the FederalGovernment might choose not to applythese
powers (Australasian Tax Reports,1975–76).
By 1979, the limitations on Norfolk’sability to innovate and
promote itself in theface of Australian hostility and
increasingcompetition from other offshore centres(which offered
up-to-date laws and financialsecrecy) led to the disintegration of
its offshorebusiness and a decrease in company feesreceived by the
island’s government. Thedecline of the OFC was of little concern
tomany (although not all) of the localmillionaires, since it
principally affectedoutsiders who were using artificial
Norfolkarrangements and attracted unwelcomeattention from the
Australian government tothe island’s privileged tax status. Most of
thelocal wealthy people were outsiders who hadmade substantial
investments in time andmoney to become Norfolk residents, sinceeven
millionaires find it difficult to becomepermanent residents on
Norfolk (whichcontrols its own immigration). The local
plutocracy, however, remained concernedabout their narrow
victory over Australianattempts to destroy their residential tax
havenin the mid 1970s.
Further challenges to Norfolk’s self-government came in 1990 and
1991, whensome Australian federal politicians againproposed placing
Norfolk in the Canberraelectorate, and in 1998 and 1999, when
theAustralian government challenged theisland’s immigration
controls (HumanRights and Equal Opportunity Commission1999) and
proposed changes under whichonly Norfolk Islanders with
Australiancitizenship would be allowed to be electedto the island’s
Legislative Assembly or enrolto vote. Taxation and representation
areclosely related issues and most islandersoppose moving closer to
Australia, fearing(among other things) that this will bringincome
taxation.
By the 1990s most of the companiesregistered on Norfolk were
local (NorfolkIsland Report, 1994–96), even though a fewexotic
offshore structures were still on theregister and there were
possibilities for more(Offshore Centres Report, April 1991). In
1997,however, there was an unprecedentedrecommendation from an
Australiangovernmental organisation that an OFCmight be a valuable
vehicle for the island’seconomic diversification and
growth—initially through offshore gambling or a flagof convenience
and later through offshorebanking (Australian Commonwealth
GrantsCommission 1997:31, 45–46).
In 1998, Norfolk implemented offshoregambling legislation as a
substantial step torevive the island’s OFC, which continued tobe
prominent in the minds of local politicalleaders. The online
gambling issue ledNorfolk Island to more intense conflicts
withCanberra in 2000 and 2001—with theHoward Federal Government
promising tothwart its internet gaming ambitions. Yet,even if
Norfolk’s OFC never fully develops,the island’s political economy
and external
-
PACIFIC ECONOMIC BULLETIN
42
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
Table 3 Companies registered in the Vanuatu offshore financial
centre
Year Exempt International Offshore OFC Flag of Trustcompanies
companies banks insurance convenience companies
companies registrations(including dualregistrations)
1976 469 - .. .. - ..1977 480 - .. .. - ..1978 480 - .. .. -
..1979 473 - 35 34 - 121980 505 - 41 33 - 121981 555 - 56 34 1
121982 584 - 68 34 4 121983 516 - 72 36 25 161984 600 - 85 37 46
151985 644 - 93 40 65 151986 666 - 93 43 93 101987 711 - 93 42 150
121988 736 - 97 42 198 121989 834 - 103 43 310 121990 932 - 103 43
357 121991 890 - 105 32 401 121992 1,018 . 114 35 381 121993 905
100E 120 35 386 121994 461 700E 122 35 398 121995 430 1,800 64 34
412 121996 175 1,004 74 32 444 121997 232 1,597 77 35 438 121998
235 1,789 66 36 457 121999 195 2,695 65 37 500 122000 184 3,831 56
40 485 13
E Estimate.Sources: Offshore Investment, 1996–2001; Reserve Bank
of Vanuatu, 1988–2000, Quarterly Economic Review,Port Vila;
Republic of Vanuatu Official Gazette, 20 January 1997.
relations are likely to remain inextricablybound to its tax
haven into the foreseeablefuture.
The New Hebrides–Vanuatu
Vanuatu’s OFC started in 1969. In 1970 andearly 1971 a full
offshore regime waslegislated and a significant amount of
earlybusiness came from clients who wereabandoning Norfolk Island.
The NewHebrides quickly attracted support from
major international banks. The early rapidgrowth in the New
Hebrides offshore centrebegan to slow by mid 1975,
somewhatironically, as its telecommunications (whichhad often been
regarded as substandard andhampering the development of its OFC in
theearly 1970s) were reaching a more acceptablestandard (Cockett
and Fox 1977:153, TaxHaven Review, January, May and June 1975).Over
time, most of Vanuatu’s offshorepromoters have gone somewhat
down-market, and over the past decade it has beencompeting
primarily with mass-market
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
43
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
offshore centres such as the British VirginIslands in the
Caribbean (Offshore Investment,July 1995).
In contrast to Norfolk Island, Vanuatuhas a broad international
clientele. Vanuatu’straditional markets of Australia and NewZealand
are relatively static and itspromotional efforts have targeted
growingmarkets in Hong Kong, China, Taipei,Singapore, Japan,
Canada, the United States,South Africa, Russia, and other
EasternEuropean countries (PITCO Vanuatu Update,January
1993–December 1999).
The Vanuatu haven often provides morepersonalised services to
wealthy, but notmega-rich, clients who might be served in aless
considerate manner in larger, older andmore expensive OFCs.
Vanuatu’s potentialhas been blunted by considerably higherpolitical
instability and lower governmentcommitment than exist in most of
its Pacificisland competitors. In 1993, the Vanuatu OFCbegan to
register more companies afterparliament enacted new legislation
thatcreated the international company—fromwhich little is expected
apart from solvencyand the payment of creditors (Ogley 1993).The
introduction of international companieswas aimed at satisfying the
stated needs ofAsian, particularly ethnic Chinese, clients,who find
that even the minimal reportingrequired for the older exempted
company istoo onerous. The international companyoffers them a
corporate entity that may besomething of a formality covering what
isbasically a family enterprise (although thisbusiness may, in some
cases, be quite large).The growth in registrations of
internationalcompanies has been uneven but it hasexceeded the
decline in the number of exemptcompanies.
Substantial growth has occurred duringthree principal periods:
1988–90, whenPanama faced a crisis (culminating in the USinvasion);
in 1995, when the Cook Islandswere under particular pressure from
the ‘winebox’ inquiry in New Zealand; and in
1999–2000, when the country intensifiedpromotional efforts and
the pressure broughtby international organisations (ironically)gave
it greater public recognition. TheVanuatu Letters of Guarantee
fiasco andwidely reported political instability (forexample, the
strike of the Vanuatu MobileDefence Force, the arrest of strike
leaders, andfalse newspaper stories that they hadattempted to take
over the government;Offshore Investment, December 1996) appearto be
reasons for the decline in 1996. The 1994report of William
Penman-Brown, formerFinancial Services Commissioner inGibraltar ’s
OFC, which recommendedraising the quality of banks registered
inVanuatu through more supervision andhigher reporting
requirements, resulted in adecrease in the number of registered
offshorebanks (PITCO Vanuatu Update, July 1994).
The rate of internal development ofVanuatu’s offshore centre is
indicated bystatistics concerning the gross income ofprofessional
services firms, the net earningsof commercial banks, the OFC’s
localexpenditure, employment, total foreignexchange earnings, and
value added. Allstatistics about the OFC should be treatedwith
caution, as they have in many casesbeen substantially revised and
some doubtshave been expressed about their mode ofcollection.
Nevertheless, while perhaps notbeing conclusive, the figures in the
followingtables are of value in providing a rare viewof the
continuous internal development of aPacific islands OFC.
Particularly notable is the exceptionalgrowth in the gross
incomes of legal firms incomparison with the less impressive
growthof accountancy firms and the erratictrajectories of trustee
companies. The unevenearnings of commercial banks’ offshorebusiness
are also significant, but somecomments should be made in relation
to thesebanking statistics. In 1995, the worst yearreported for
commercial banks from theirOFC operations, the overall profits of
most
-
PACIFIC ECONOMIC BULLETIN
44
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
Table 4 Gross income of OFC trust company, accounting, and legal
firms and net earnings ofbanks, 1984–99 (US$ million)
Year Trust Accounting Legal Total Bankscompanies firms firms
professional net
1984 3.34 1.93 0.68 5.95 ..1985 3.14 2.10 0.51 5.75 ..1986 2.55
2.47 0.63 5.65 ..1987 2.49 2.62 0.69 5.80 3.091988 2.57 2.66 0.66
5.89 3.501989 2.95 2.40 0.68 6.03 5.651990 2.78 2.83 1.17 6.78
3.431991 6.22 3.58 1.02 10.82 14.111992 3.59 3.48 1.23 8.30
6.061993 2.67 3.20 1.25 7.12 12.731994 3.46 3.20 1.37 7.93 6.431995
3.25 3.07 1.50 7.82 2.401996 3.70 4.01 2.20 9.91 7.261997 2.99 4.32
2.23 9.54 6.781998 3.20 3.93 1.98 9.11 8.221999 6.16 6.50* n.a.
12.66 17.612000 6.43 7.04* n.a. 13.47 ..
Note: *Accounting and legal firms combined.Source: Reserve Bank
of Vanuatu, Quarterly Economic Review, 1988–2000.
(or perhaps all) of them were still very high.While Westpac does
not reveal its incomefrom its Vanuatu activities, two other
full-service banks in Vanuatu (the Bank of Hawaiiand ANZ) reported
operating net profits of48 per cent and 36 per cent on
shareholders’equity. The overall reported profits of banksinclude
onshore as well as offshore incomeand are therefore not directly
comparable tothe Reserve Bank’s calculations of their OFCprofits.
Even if the profits of the offshorecentre are lagging,
extraordinarily highprofits can be made by being in an OFC freeof
corporate income tax.
While the contribution of the OFC’s localexpenditure (Table 5)
has been as high as12.8 per cent of GDP, a fairly high proportionof
local expenditures may leak out of Vanuatuto purchase imports such
as computers,financial technology, or goods and servicesfor
expatriates. Expatriates, while decreasingin number, continue to
have high and
presumably tax-free annual incomes ofUS$59,900 per expatriate in
2000. Indigenousni-Vanuatu employees’ yearly incomes areUS$7,400 on
average, which, while beinghigh by national standards, is less than
15per cent of the expatriate salaries (Table 6).Although the OFC
employs only a very smallproportion of the country’s labour force,
thetax haven provides a high percentage of jobsin the private
sector that are locally consideredto be well-paid.
The offshore centre has had a decisiveeffect on the history of
the New Hebrides–Vanuatu. From 1970, it greatly boosted therevenues
of the pro-independence Britishadministration and reduced the
relativeimportance of the French, with whom theBritish shared rule
in a condominiumarrangement. The OFC brought lawyers,trustees, and
bankers, particularly fromAustralia and New Zealand, who were
morefavourably disposed toward independence
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
45
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
Table 5 Vanuatu offshore financial centre local expenditure and
GDP, 1981–99
Year Total local expenditure Total expenditure(US$ million) (per
cent of GDP)
1981 12.69 12.81982 .. ..1983 .. ..1984 10.45 8.71985 10.31
8.41986 10.59 8.81987 12.47 10.91988 15.27 10.91989 18.66 12.81990
17.56 10.71991 19.67 11.61992 27.38 16.01993 20.25 11.71994 20.36
10.81995 17.67 8.11996 18.82 8.21997 17.42 7.41998 16.60 7.81999
17.88 7.42000 20.96 8.7
Sources: Asian Development Bank, various issues. Key Indicators
of Developing Countries, AsianDevelopment Bank, Manila; Reserve
Bank of Vanuatu, various issues, Quarterly Economic Review,
ReserveBank of Vanuatu, Port Vila; World Bank, various issues.
World Tables, World Bank, Washington, DC.
and Melanesian aspirations than the Frenchsettlers, who were
predominantly planterson the large proportion of the country
thathad been alienated from the indigenousinhabitants. Thus, the
offshore centre greatlyincreased the powers of the British
admini-stration. By 1976, British revenues hadreached twice those
of the French, who werein favour of maintaining the New Hebridesas
a settler bailiwick. The OFC helped totransform Port Vila from a
sleepy Frenchcolonial village into an active town with afew French
people in it. More importantly,it contributed to the
independencemovement by providing resources for theBritish
administration and anglophoneindigenous politicians (Treadwell
1989,personal communication).
After the indigenous anglophonepoliticians—led by the country’s
first Prime
Minister Father Walter Lini—won theindependence battles in 1979
and 1980, theyjettisoned their ‘socialist’ reservations aboutthe
offshore centre. All prominent Vanuatupoliticians express support
for the OFC andeven francophone politicians now seek togain
benefits for their constituents fromoffshore development.
Independent Vanuatu’srelatively high level of sovereignty and
itspolicy of non-alignment during the Cold Warcontributed to the
country’s image of resistingpressures placed upon it by
metropolitangovernments and taxation officials.
Clearly, Vanuatu has come to depend onits offshore centre. This
dependence can beseen very clearly when we consider the
OFC’sforeign exchange earnings, which actuallyexceeded the total
value of all the country’smerchandise exports in two years (1990
and1991) and made substantial contributions to
-
PACIFIC ECONOMIC BULLETIN
46
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
reducing Vanuatu’s balance of paymentsdeficits in all the other
years listed. Whilethe use of vatu (rather than the more commonUS
dollar) as the currency unit for many ofVanuatu’s offshore
activities may have putoff some potential clients, it has
assistedVanuatu in solidifying its national currencyand foreign
reserves.
New offshore gambling operationspromise even greater foreign
exchangeearnings as they are subject to a 2.5 per centrevenue tax
and reportedly draw up to A$600million (US$360 million) a year out
of theAustralian racing industry alone (TheAustralian, 21 February
2000), but questionshave been raised about whether all keyoffshore
promoters are making their contri-butions to foreign exchange and
paying their
local taxes. One scheme to avoid the turnovertax (and to escape
converting fees into vatu)led to a split among Vanuatu’s tax
havenpromoters in 1998 and 1999—one accountingfirm resigned from
the Finance CentreAssociation over its claims that the
Associationhad failed to act against a rival accountingfirm for
using a Vanuatu offshore companyto avoid paying the 4 per cent tax
on its fees.It is not known how commonly tax havenpromoters in Port
Vila use offshore structuresto avoid paying revenue to the
Vanuatugovernment. Likewise, considerable numbersof passports of
convenience have been soldillegally to ethnic Chinese, but the
proceedsdo not appear in government accounts.Finally, Vanuatu is
struggling to refuteaccusations that it is a centre for money
Table 6 Vanuatu: wages and employment, 1979–99
Year Wages Vanuatu Total OFC Expatriate ni-Vanuatu and salaries
citizens’ employment employment employment(US$ million) wages
and
salaries(US$ million)
1979 .. .. 311 249 621981 .. .. 322 210 1121984 3.97 1.45 380
123 2571985 3.90 1.48 365 104 2611986 3.92 1.65 370 98 2721987 5.13
1.81 366 89 2771988 5.83 2.36 389 82 3071989 4.80 1.90 389 76
3131990 5.00 1.86 393 80 3131991 5.79 2.63 397 86 3111992 7.98 2.73
432 70 3621993 7.35 1.96 374 59 3151994 7.15 2.10 386 62 3241995
5.55 2.55 386 61 3251996 6.04 2.79 424 64 3601997 6.66 2.99 409 61
3481998 6.13 2.78 393 56 3371999 6.66 2.61 409 61 3482000 6.79 3.26
506 68 438
Sources: Asian Development Bank, Key Indicators of Developing
Countries, Asian Development Bank, Manila,various issues; Reserve
Bank of Vanuatu, various issues, Quarterly Economic Review, Reserve
Bank ofVanuatu, Port Vila; World Bank, World Tables, World Bank,
Washington, DC, various issues.
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
47
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
laundering and tax evasion and to ward offpossible sanctions
from the OECD and otherorganisations (including four large
inter-national banks that suspended US dollartransactions with
Vanuatu, Nauru, andPalau in November 1999—contending thatthe three
countries were not vigilant againstmoney laundering). However, the
FinancialAction Task Force regarded Vanuatu asmaking substantial
progress against moneylaundering and removed it from its
blacklistin November 2000.
Nauru
Nauru began to provide offshore services in1972. Like Vanuatu,
Nauru promotes itselfas one of the world’s few ‘pure’ tax
havens,with no internal or external personal orcorporate income
taxation. Nauru’s policy
toward offshore development has beenparadoxical. On one hand,
the OFC wasinitiated to provide an industry that wouldcompensate
somewhat for the ultimatedisappearance of the phosphate that
hadmade the country one of the richest in theworld on a per capita
basis. On the otherhand, Nauru has been extremely reluctantto issue
work permits to foreigners who couldpromote the industry. The
government hasoften been suspicious of attempts to open theisland
to tourism, which usually hassynergies with the offshore sector.
The airportis small, the hotel facilities are mediocre, andbusiness
travellers require a visa to visit thecountry. The Nauru Agency
Corporation hasa monopoly on all offshore trustee businessbut has
only six employees. Furthermore,almost no legal, accounting, or
bankingservices are available on Nauru for offshorebusiness, which
means that clients must
Table 7 Vanuatu OFC foreign exchange earnings, 1982–99
Year OFC/foreign exchange Per cent of total earnings (US$
million) merchandise exports
1982 9.002 39.31983 9.924 33.51984 12.698 28.71985 15.109
49.31986 16.131 92.91987 13.028 73.61988 16.242 83.41989 22.182
99.81990 25.901 137.61991 20.999 114.81992 17.039 72.21993 14.106
62.21994 11.168 44.71995 13.148 46.51996 14.511 48.11997 13.524
38.31998 12.995 38.71999 12.085 48.72000 11.247 44.0
Sources: Asian Development Bank, Key Indicators of Developing
Countries, Asian Development Bank, Manila,various issues; Reserve
Bank of Vanuatu, Quarterly Economic Review, Reserve Bank of
Vanuatu, Port Vila,various issues; World Bank, World Tables, World
Bank, Washington, DC, various issues.
-
PACIFIC ECONOMIC BULLETIN
48
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
organise all of these by themselves. Thisproduces very weak
regulation of Nauru’soffshore entities. Fraudsters have used somany
Nauru offshore banks that the country’sOFC has a credibility
problem in manyquarters. Its reputation has not been enhancedby the
country’s government-ownedphosphate trust (a capital exporter on
its ownaccount) having been defrauded of millionsof dollars in a
prime bank instrument schemeoriented around Vanuatu and other
OFCs.
As a result, Nauru’s OFC has sometimesformed alliances with
questionable operators.For many years in the 1980s and 1990s itsOFC
strongly resisted pressures from US andother investigators and it
justified thisrefusal to cooperate in terms of its
sovereignindependence (Shockey 1992, personalcommunication). In
1999, according to theUS Treasury, Nauru had registered at least400
offshore banks (about half of them ownedby Russians) and the
Russian Central Bankcontended that US$70 billion had
beentransferred from Russia to Nauru’s OFC asof 1998. The
association of Nauru’s offshorebanks with crime is so strong that
the OECDthreatened to terminate Nauru’s links withthe international
financial system in 1999and further pressure came from the G-7,
theUS government and some internationalbanks. The image of the
country was notimproved when President BernardDowiyogo reportedly
wrote to the USTreasury Department (in what one officialdescribed
as an attempt at extortion)demanding a minimum of US$10 millionfrom
the United States before Nauru couldbegin reforming its OFC. Nauru
has cometo be regarded as a prime target for globalfinancial
regulators. The OFC contributedapproximately US$500,000 (or 2 per
cent)of government revenues in 1999 (Diamondand Diamond 1997;
Diamond, Diamondand Kaplan 1997; Global InformationNetwork, IFS
Newsfeed, 25 May 1999; NewYork Times Magazine, 10 December
2000;Pacific Islands Monthly, April 1999).
Tonga
Tonga’s ventures in offshore banking andpassports of convenience
have a chequeredhistory. In 1978–79, the Bank of the SouthPacific,
which was given a monopoly overOFC activities, rose and fell
amidstallegations that its principal, John Meier, aformer executive
in the Howard Hughesorganisation, had been involved in anassortment
of felonies. New offshore bankinglegislation introduced in 1984 led
to thelicensing of a number of banks that defraudeddepositors.
Almost all were deregistered, butin 1999 three new offshore banks
wereincorporated in Tonga.
Passports of convenience have been soldto wealthy foreigners
seeking freedom ofmovement and tax minimisation. Despite
legalchallenges from some commoner members ofTonga’s parliament,
all Tongan offshoreprojects have been initiated by the King, whois
a nearly absolute monarch. The highlysecretive registration of
offshore banks andthe surreptitious issuance of passports byTonga
delayed the construction of a morecomprehensive and transparent OFC
thatcould offer a broader, less lopsided range ofoffshore entities
and better prospects fordurable and continuous future
development.Despite Tonga’s problems, its experiment inoffshore
banking has apparently producedrevenue of at least US$100,000 in
1986, judgingby the vague replies of the Minister of Financeto
parliamentary questioning. Tens of millionsof US dollars of profit
have been derived frompassport sales and deposited in the
TongaTrust Fund. Only small proportions of theselarge amounts (most
of which are held in SanFrancisco bank accounts) have gone to
thekingdom’s internal development, and mostof the funds that have
been forthcoming arein the form of loans, not grants—so that in1999
US$10.7 million of advances to theTongan government were held as
assets of theTonga Trust Fund (Tonga Government Gazette,29
September 2000). There has been little
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
49
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
domestic legislative control over theseventures.
The assets and contributions togovernment revenue of the Tonga
Trust Fundare detailed in Table 8.
Most people in Nuku'alofa politicalcircles believe that the
Tonga Trust Fund isultimately controlled by and for the benefitof
the royal family. A scandal emerged in 2001when more that US$20
million of the Trust’sfunds were alleged to have been lost in
thepurchase of life insurance policies thatgambled on the early
deaths of prominentAmericans.
Guam
The US territory of Guam has remaineddependent on the decisions
or indecisionsof Washington, DC, and the island has had
little ability to determine its own course foroffshore
development. Guam became anofficial offshore banking centre in 1979
underfairly strict US supervision, but it had beendoing less formal
offshore banking since about1975. The approval of international
bankingfacilities in the continental United States inthe 1980s
diminished Guam’s relativeattractiveness as an offshore banking
site witha US connection. OFC promoters have beencontinually
frustrated by what they felt to belost opportunities, comparatively
low returnsfrom offshore operations for the local economyand the
island’s extreme dependency on thepriorities and legislative
predilections of theUS Congress for whatever offshore develop-ment
Guam might be permitted to enjoy. Itsoffshore deposit and lending
facilities haverisen and fallen and its ambitions to become atax
treaty shopping centre (Anonymous 1984)have been scuttled as a
result of US legislative
Table 8 Tonga trust fund: assets and contributions, 1988–99 (US$
million)
Year (as of Tonga trust TTF’s budgeted TTF’s actual Total actual
Total recurrent31 March fund’s reported contributions to
contributions to development revenueunless other- assets
development development budgetwise noted) budget budget
1988–99 8.1* - - 8.4 29.01989–90 19.4 1.6 1.7 8.0 32.31990–91
24.7 6.2 1.6 9.6 36.61991–92 27.6 5.6 0.2 5.6 34.81992–93 26.5 10.8
1.8 7.2 37.61993–94 27.8 8.4 0.0 8.5 40.21994–95 28.1 2.5 1.6 16.2
45.61995–96 30.1 6.4 1.1 13.8 50.91996–97 32.3 6.5 0.9 12.8
49.21997–98 32.3 4.0 3.6 12.6 41.71998–99 42.0 2.3 1.1 ..
..1999–2000 43.1 .. .. .. ..
Note: * 1 July 1989Sources: Kingdom of Tonga, Budget Statement
for the Year by the Minister of Finance, Kingdom of
Tonga,Nuku’alofa, various issues (1989–96); National Reserve Bank
of Tonga, Quarterly Bulletin, National ReserveBank of Tonga,
Nuku’alofa, various issues (1993–98); Kingdom of Tonga, 1997.
Report of the Minister ofFinance 1997, Kingdom of Tonga,
Nuku’alofa; Kingdom of Tonga, 1998. Report of the Minister of
Finance 1998,Kingdom of Tonga, Nuku’alofa; Tonga Chronicle, 3 June
1999; Tonga Government Gazette, 28 October 1992, 26May 1993, 31
January 1996, 29 February 1996, 30 June 1997, 26 February 1998, 31
July 1998, 10 August1999, 29 September 2000, 18 September 2001, 21
September 2001.
-
PACIFIC ECONOMIC BULLETIN
50
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
changes. The uncertainty about Guam’sexact relationship to the
US tax system hasstifled its captive insurance initiatives in
thelate 1990s. Guam’s recent attempts to offertax minimising
offshore trusts wereeffectively thwarted by the US Treasury
inNovember 2000.
Guam’s most successful OFC operation—the licensing of foreign
sales corporations(FSCs)—was completely dependent on theinitiatives
of the US Congress. The FSCregime was destroyed by the World
TradeOrganization, which ruled in 1999 that theFSC regime was an
illegal export subsidy toUS businesses and proclaimed that it
wouldhave to be eliminated by October 2000. In1994, Guam derived
only 0.2 per cent ofgovernment revenue (or approximatelyUS$150,000)
from all offshore activities, thevast majority being from the
registration of215 active and 131 relatively inactive largeand
small FSCs (Government of Guam 1997).These revenues were minuscule
comparedto the advantages that Guam’s FSCsconferred on their
owners. In 1992, the mostrecent year for which figures are
available, 7per cent of all FSCs were in Guam, and allFSCs were
providing additional net profitsto US businesses of between
US$1.4–2.5billion a year (Quest Economics Database,21 October
1999).
The general situation has producedfrustration and a sense of
futility among localoffshore promoters. Many indigenousChamorro
politicians see a considerablyhigher level of sovereignty as being
necessaryfor the creation of a larger and moresuccessful offshore
centre, a goal that is oftenmentioned by indigenous nationalists,
evento casual visitors (see also Malcomson1990:57). Many local
offshore promotersacknowledge that proper OFC developmentcannot
come without Guam moving from itscurrent status as an
unincorporated territory.Becoming a commonwealth similar to
theNorthern Marianas or Puerto Rico might beenough to propel some
offshore development,but even this would give Washington
considerable power to over-rule tax haveninitiatives. Many local
offshore supportershave long doubted that the US will everpermit
the creation of a proper OFC in Guam(South Sea Digest, 8 May 1992)
and it seemslikely that their desire to create an offshorecentre
along the lines of Bermuda (GuamBusiness, September 1997) will not
succeedwithin the foreseeable future.
Cook Islands
Cook Islands emerged as an OFC in 1981 and1982. The advent of a
modern satellite linkin 1980 increased the feasibility of a
projectthat had first been proposed some time earlier.Cook Islands
(like Niue more recently)emphasised that it combined the
sovereigntyto write its own laws (without any higherauthority
needed to ratify them) and thestability provided by its
relationship of freeassociation with New Zealand.
The Cook Islands offshore centre wasseen as taking advantage of
the politicalinstability in Vanuatu after it becamepolitically
independent in 1980. Vanuatu’srhetoric of ‘Melanesian Socialism’,
itsLibyan connections, and its volatilecoalition governments
contrasted with theconservatism and continuity of the CookIslands
polity. Vanuatu’s principal rival asa Pacific islands tax haven has
been theCook Islands. The Cook Islands OFC hasdeveloped in a
steadier manner. A roughidea of the comparative positions of
theOFCs is provided by the ratio of theircontributions to their
respectivegovernments’ receipts (Table 9).
The Cook Islands’ figures do not includethe secret proceeds to
government revenuefrom artificial withholding tax schemes (suchas
that outlined in Parliament of New Zealand1994), that alone may
have produced morerevenue than is indicated here for each ofthe
years in the late 1980s. This means thatthe actual government
revenues may besignificantly more than the reported
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
51
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
amounts for these years. The former CookIslands Finance Minister
Michael Fleming(who left the position in the middle of
1988),claimed that OFC deals were generatingmillions of dollars of
secret revenues for theCook Islands government—as much asNZ$900,000
(US$530,000) a month in 1987that were not reported in public
accounts(Cook Islands Press, 6 August 1995). The CookIslands
Trustee Companies Associationestimates that these indirect benefits
exceeddirect payments, so that in 1995 the OFCcontributed (directly
and indirectly) a totalof NZ$4.5 million (US$3 million) to the
government or well over 6 per cent of itsreceipts (Cook Islands
News, 5 July 1996).
The Registrar of International andForeign Companies of the Cook
Islands issecretive (refusing to give figures even toOffshore
Investment, a periodical orientedtoward OFC promoters and clients),
but afragmentary understanding of the history ofoffshore
registrations is available from othersources (Table 10). The early
years were quiteslow for the Cook Islands OFC. In early 1986,only
176 offshore companies were registeredand most of them were from
the United States.In New Zealand, however, a new élite of
Table 9 Vanuatu/Cook Islands offshore financial centre
government receipts
Year Vanuatu Per cent of Cook Islands Per cent of Cook
Islands/OFC taxes, government OFC taxes, Cook Island Vanuatulevies,
fees receipts levies, fees government receipts
(US$ million) (US$ million) receipts (per cent)
1984 1.068 4.2 0.011 0.1 1.01985 1.122 4.0 0.055 0.4 4.91986
1.480 5.3 0.367 2.0 24.81987 1.508 4.6 0.671 2.6 44.51988 1.705 4.6
0.749 3.5 43.91989 2.628 7.3 0.752 2.7 28.61990 3.443 8.2 1.003 2.6
29.11991 5.758 13.7 1.067 3.1 18.51992 5.971 13.4 .. .. ..1993
4.688 11.3 .. .. ..1994 1.967 3.9 .. .. ..1995 2.908 5.5 .. ..
..1996 2.569 4.5 .. .. ..1997 1.942 3.5 1.256 4.5 64.71998 2.227
4.1 .. .. ..1999 1.666 .. .. .. ..2000 3.239 6.4 .. .. ..
Source: Asian Development Bank, 1990. National Accounts of the
Cook Islands: technical assistance report, AsianDevelopment Bank,
Manila; Asian Development Bank, 1995. Cook Islands: economic
performance, issues andstrategies, Asian Development Bank,
Manila:18; Parliament of Cook Islands, Cook Islands
ParliamentaryDebates, Parliament of Cook Islands, Avarua, various
years (1982–97); Asian Development Bank, KeyIndicators of
Developing Countries, Asian Development Bank, Manila, various
issues; National Business Review,18 March 1994; New Zealand Audit
Office, 1991. Report of the Audit Office and Financial Statements
of theGovernment of Cook Islands, New Zealand Audit Office,
Wellington; New Zealand Audit Office, 1992. Reportof the Audit
Office on the Accounts and Transactions of the Government of Niue,
New Zealand Audit Office,Wellington; Parliament of the Cook
Islands, Papers and Order Papers Presented, Government of the
CookIslands, Avarua, various issues (1986–94); Reserve Bank of
Vanuatu, Quarterly Economic Review, ReserveBank of Vanuatu, Port
Vila, various issues (1988–2000); World Bank, World Tables, World
Bank,Washington, DC, various issues (1993–98).
-
PACIFIC ECONOMIC BULLETIN
52
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
financiers (who would become prominentclients or promoters of
the Cook Islands taxhaven) was at this time rising to prominenceand
influence in New Zealand power circles,and this group acted to
encourage offshoredevelopment in the Cook Islands.
Spectacular growth occurred in 1986 and1987 and by the end of
July 1987 about 1,600offshore companies had been registered—most of
them with connections to NewZealand, Australia, Singapore, Hong
Kong,the United States, and Europe. The CookIslands became an
important centre for thebusiness of large corporations and
thisencouraged the creation of branches by ANZand Westpac banks in
1988 and the purchaseof its largest trust company by
StandardChartered Bank (in 1991) and then by theBank of Bermuda (in
1994). The OFC directlyaccounted for about 6.4 per cent of the
CookIslands’ total GDP in 1994, compared to lessthan 1 per cent ten
years before (AsianDevelopment Bank 1995, Cook Islands Press,23
July 1995).
Despite these successes, a serious imageproblem arose in the
1990s. Documents fromthe largest trust company in the Cook
Islands(outlining tax schemes for leading companiesin New Zealand,
Australia, and Japan) foundtheir way (in a wine box) to Brian
Henry, a
lawyer for Winston Peters, a maverick memberof the New Zealand
parliament. Petersattempted to table them in the parliament on23
September 1992 and subsequentlysummarised their contents (not
always verysuccessfully) under the protection ofparliamentary
privilege. This set off the ‘WineBox Affair’ that dominated
headlines in NewZealand and stigmatised the Cook Islands foryears
(Davison 1997; Parliament of NewZealand 1994; Wishart 1995,
1999).
Yet the Cook Islands OFC still demon-strated long-term growth.
In contrast toVanuatu’s legislature, the Cook Islandsparliament has
constantly and speedilyintroduced, passed and amended legislationto
attract new offshore business. This isconnected to the fact that
some parliament-arians in Rarotonga have close connectionswith
offshore promoters. Local indigenousCook Islands Maoris
(particularly those whohave earned law degrees) are prominent inthe
OFC. In March 1999 the offshore centreemployed about seventy
people, includingeighteen expatriates and over fifty CookIslanders.
Cook Islanders constituted almosthalf of the twenty-four
professionals, withfour of the qualified accountants and sevenof
the lawyers being indigenous. The CookIslands OFC tends to be
lawyer-driven. This
Table 10 Registrations in the Cook Islands offshore financial
centre
Companies Trusts Banks Partnerships Total
Early 1986 176 .. .. .. ..October 1986 325 .. 33 .. ..July 1987
1,600 .. .. .. ..1988 .. .. .. .. 1,500Late 1980s 855 266 24 5
..1995 .. .. 12 .. 3,0651997 .. 500 .. .. ..2000 1,200 .. .. ..
..
Sources: Asian Development Bank, 1995. Cook Islands: economic
performance, issues and strategies, AsianDevelopment Bank, Manila;
Cook Islands Government Gazette, 8 September 1997; Cook Islands
ParliamentaryDebates, 23 July 1987; Davison, R.K., 1997. Report of
the Wine Box Inquiry: Commission of Inquiry Into CertainMatters
Relating to Taxation, vol. 1, Department of Internal Affairs,
Wellington; Los Angeles Times, 23 June 2000.
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
53
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
contrasts with Vanuatu and most other OFCsin the world, where
accountants are moresignificant, and makes the Cook Islands alegal
laboratory (with important andinnovative offshore vehicles such as
the assetprotection trust having been pioneered inRarotonga).
Although the Cook Islands havebeen placed on international
organisations’blacklists for not taking sufficient actionagainst
tax evasion and money laundering,asset protection trusts (which are
notprimarily oriented toward tax minimisationor money laundering)
have accounted for asubstantial and growing proportion of
thebusiness of Rarotonga’s OFC since theearly 1990s. The great
importance of assetprotection trusts may make the Cook Islandsless
vulnerable to possible sanctions by theOECD and the Financial
Action Task Forcecompared with offshore centres that rely moreon
tax minimisation structures and financialsecrecy. The ultimate
threat to the Cook IslandsOFC may come from US courts that seek
tooverturn the asset protection trusts, whichwere primarily
designed for US clients seekingto escape the so-called ‘litigation
explosion’.
Thwarted offshore centres in‘American Micronesia’
The OFCs of the Northern Marianas, Palau,and Marshall Islands
rose but then fellquickly between 1982 and 1986. This
erratictrajectory was the result of concerted pressurefrom the US
government to halt theunregulated registration of offshore
bankswithin its sphere of influence in the US dollarzone of
Micronesia. A small number ofoffshore banks survived and a few new
oneswere even registered after the campaign, butthe original
offshore plans of all three stateswere effectively thwarted until
Palau becameindependent in 1994 and the MarshallIslands OFC
reinvented itself (primarily as aflag of convenience registry) in
1990. We shallconsider the reinvented Marshall Islandsoffshore
centre later.
Even after the virtual demise of theNorthern Marianas’ offshore
bankingoperations in 1982–83, the Commonwealthcontinued to assert
some sovereignty bymaintaining a registrar for a few offshorebanks,
conflicting with the US FederalGovernment over its tax regime, and
servingas a place of tax exile for rich US citizens.Planners in the
Northern Marianas continueto give high priority to the development
ofoffshore financial services (NorthernMarianas College 1999),
despite the fact thatonly two offshore banks were registered
therein 1998 (Annual Report of the Director ofBanking 1998).
Palau defiantly reinstated its 1982offshore banking laws (which
had beenemasculated by US diktat) soon after itsindependence in
1994, although doubts wereexpressed about whether Palau could
developa full OFC if it remained part of the USmonetary system
(Government of Palau1994). In late 1999, four large
internationalbanks suspended US dollar transactionswith Palau,
contending that the country hadnot taken adequate precautions
againstmoney laundering. The Palau governmentinitially protested
with vehemence, and suedthe Bank of New York, which was
itselfembroiled in a major Russian money-laundering scandal. The
Bank of New Yorkreplied that there were a number of question-able
banks registered in Palau and that oneof them had handled over
US$1.7 billion intransactions over an eighteen month period(Palau
Horizon, 9 June 2000). Despite thecontroversy and the fact that
Palau registeredfour new banks during 2000 (Guam Business,April
2001), including one particularlydubious institution that was
developingstrong ties to local politicians, Palau was noton the
money laundering blacklists of theFinancial Action Task Force. The
contributionof the international banking sector to the localeconomy
is not clear in official statistics and(as in Tonga) many offshore
activities seemto take place on a rather secretive and
-
PACIFIC ECONOMIC BULLETIN
54
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
informal basis. Since Palau has no corporateincome taxation and
weak banking regulation(with low capitalisation requirements),
somede facto offshore operations have beenorganised according to
its domestic laws.
Samoa
A very different process of OFC developmentcontinued in the New
Zealand-orientedzones of Polynesia. In Samoa (formerlyWestern
Samoa, the first independentcountry in the Pacific islands), there
has beensome growth in the number of registeredentities since the
offshore centre was foundedin 1988. Samoa (unlike other Pacific
islandOFCs such as Vanuatu and the Cook Islands)lists cumulative,
rather than current,registrations (Table 11).
At the end of 1999, Samoa’s OFC registerheld 3,329 live
international and long-termcompanies, 161 trusts, 11 offshore
banks, and6 insurance companies (Central Bank ofSamoa 1999). These
figures are comparableto those supplied by other Pacific
islandOFCs.
Table 12 presents the growth of govern-mental receipts from the
Samoan OFC.Although the total direct and indirectcontributions of
the Samoan OFC to thecountry’s economy from 1988 to 1998
wereestimated to be US$9.3 million and itemployed 55 people in 1999
(Pacific IslandsMonthly, April 1999), there is disappointmentamong
many politicians that the economicbenefits for the country have not
been as greatas promised or anticipated, especially asthere was
more state assistance for earlyoffshore development in Samoa than
in theCook Islands.
This attitude has a history—governmentofficials had been
convinced as early as 1983that enormous benefits would accrue if
theyperformed one-off licensing of the Inter-national Pacific Bank,
wholly owned by theHong Kong-based Erylmore Co. Ltd.
(IslandsBusiness, March 1983). After great promises,it never really
started operating—temporarily discouraging local officials whohad
previously contemplated creating anOFC in the early 1970s but had
abandonedthe idea because they felt the country’s
Table 11 Registrations in Samoa’s offshore financial centre
Year International Long-term International Offshore OFC
Trusteecompanies companies trusts banks insurance companies
companies
1989 126 - 5 4 1 31990 232 - 22 4 3 31991 404 - 65 7 4 31992 622
- 67 10 6 31993 877 14 73 13 7 41994 1,487 34 204 17 8 41995 2,127
69 215 20 12 51996 2,930 91 235 23 14 51997 3,878 113 262 25 14
51998 4,736 124 275 25 16 61999 5,876 147 303 25 16 62000 7,300 ..
.. .. .. ..
Source: Asiamoney, September 1995; Central Bank of Samoa,
various years (1989–99). Annual Report,Central Bank of Samoa, Apia;
Offshore Investment, March 2001.
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
55
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
infrastructure was not sufficientlysophisticated. Plans for the
current offshorecentre developed soon after the famous NewZealand
‘entrepreneur’ Ron Brierley (whosecompany, Brierley Investments,
had a largestake in the largest trust company in the CookIslands)
joined the board of directors of thecountry’s largest bank, the
Bank of WesternSamoa, in 1987. The Western Samoan parlia-ment
passed the enabling legislation inJanuary 1988, less than one year
afterBrierley’s appearance in local financial circles.
By world standards, the parliament isrelatively responsive to
the desires of offshorepromoters, although they
occasionallycomplain of delays in passing legislation(Offshore
Investment, October 1999). Therefusal of Malietoa Tanumafili II,
the Headof State, to sign an offshore bill in 1993 (partsof which
were to facilitate deals similar tothose found in the ‘wine box’),
after the NewZealand government put pressure on him,tends to
consolidate the impression that OFCpromoters have less influence
than theywould like to have.
Unlike the Cook Islands, which initiallygained its stature as an
important inter-
national OFC primarily through US, NewZealand and Australian
clients, Samoa hasfrom the start been oriented primarily towardHong
Kong, China (with which Samoa haslong had strong diplomatic
relations),Singapore, and (after the disintegration of theSoviet
Empire) Eastern Europe (particularlyRussia and the Ukraine). In
some ways it issurprising that Samoa’s growth has not beengreater,
since much of the business of theBritish Virgin Islands comes from
Chinesein Asia (particularly Hong Kong)—the singlemost important
source of Samoa’s clients.However, the British Virgin Islands
(likeBermuda, another Hong Kong favourite)have become
institutionalised as a brandname for this clientele (which also
appearsto value their British colonial status). Samoa’spromotional
strategy has emphasised thedisadvantages of the colonial link and
theweak sovereignty of the British Virgin Islandsand Bermuda, as
well as the uncertaintiesentailed by Britain’s taxation policies
andits integration into the European Community(Powell 1997). Samoa
proclaims its fullsovereignty and sees this as the key to
itsoffshore development, but recently it has been
Table 12 Governmental OFC receipts and total governmental
receipts
Year Governmental OFC OFC/total governmental(July–June) receipts
(US$) current revenue (per cent)
1992 0.082E 0.21993 0.096E 0.21994 .. ..1995 .. ..1996 0.803
1.21997 0.925 1.51998 1.021 1.81999 1.297 2.1
E EstimateSource: Asian Development Bank, 2000. Key Indicators
of Developing Asian and Pacific Countries, AsianDevelopment Bank,
Manila; Central Bank of Samoa, Annual Report, Central Bank of
Samoa, Apia, variousissues; Legislative Assembly of Western Samoa,
1992. Approved Estimates of Receipts and Payments,Legislative
Assembly of Western Samoa 1992, 1997, Legislative Assembly of
Western Samoa, 1997.Approved Estimates of Receipts and Payments,
Legislative Assembly of Western Samoa, Apia.
-
PACIFIC ECONOMIC BULLETIN
56
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
under pressure from the OECD to ‘harmonise’its system of
taxation or risk possiblesanctions if it remains on the OECD list
ofnon-cooperative countries. Significantly,Samoa (like Vanuatu and
Palau) was not onthe money laundering blacklists of theFinancial
Action Task Force, giving it a betterreputation than the Pacific
islandscompetitors that remained on the list—Nauru, Niue, the Cook
Islands, and theMarshall Islands.
The reinvented Marshall Islands
The reinvented Marshall Islands OFC wasset in place in 1990 by
International RegistriesInc. (IRI) of Reston, Virginia. IRI was
also thepromoter and administrator of the Liberianoffshore centre.
It wanted a less politicallyturbulent jurisdiction in the Pacific,
whichwould enact the innovations it had desiredin offshore law in
Liberia, where the legislaturewas immobilised by the civil war
(Grundy1993:63). It acquired the Marshall Islandsflag of
convenience registry that had beenfounded a short time before by
Howard Zeder,the son of Fred Zeder, the chief confidant offormer US
President George Bush. The initialsuccess of the reinvented
Marshall IslandsOFC was at the expense of Panama, whichwas beset by
crisis around the time that Bushordered the 1990 US invasion (van
Fossen1992).
The OFC has grown and quickly becomethe ninth largest shipping
registry in theworld. The Marshall Islands OFC generatedUS$500,000
in annual revenues for thegovernment there in 1996 (1.6 per cent of
theMarshalls’ total government revenue ofUS$30.5 million for that
year), but consider-ably less than the US$9,977,255 (32.4 per
centof total revenue) that the government receivedin 1996 from
offshore passport sales, whichwere unrelated to IRI (Marshall
Islands Journal,7 November 1997).
After IRI refused to accede to Liberia’sdemand that it end its
relationship with the
Marshall Islands, IRI was stripped of its rightto operate the
African country’s offshoreregister in 2000. This intensified
itsconcentration on developing the MarshallIslands OFC—as
foreshadowed in February1999 with its completion of a new
US$1.3million two-storey office building at Ajetakon Majuro atoll
near the capital, althoughmost of the Marshall’s increasing
offshorework is done in Reston, Virginia and IRI’snumerous offices
in other metropolitancountries.
Niue
Most impressive has been the growth ofoffshore company
registrations in Niue,oriented particularly toward the
growingChinese markets (Table 13). In 1993, thegovernment was
cautious about creating anOFC on Niue in view of the
gatheringcrusade that the New Zealand parliament-arian Winston
Peters was leading against theCook Islands OFC in relation to the
‘winebox’ documents. Niue has a very similar ‘freeassociation’
relationship with New Zealandand Peters was calling for the
termination ofaid to the Cook Islands in retaliation againstits
offshore activities which, he said,deprived the New Zealand
government ofhundreds of millions of dollars of taxrevenue.
However, Peter’s threat to cut off aid tothe Cook Islands seemed
increasinglyhollow. Raising the issue also highlightedthe series of
cuts in New Zealand aid thathad already occurred in both the
CookIslands and Niue and the fact that Niue, oneof the most
aid-dependent countries in theworld, needed new sources of revenue.
Thewealthy against whom Peters wasfulminating had more influence
over the NewZealand government than at any time in theprevious one
hundred years (Eldred-Grigg1996) and the New Zealand state took
noeffective action against the creation of theOFC in Niue.
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
57
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
The success of Niue in such a short timeseems to indicate the
desirability of new Pacificislands offshore centres becoming a
(highlypromoted) part of a pre-existing global multi-OFC marketing
strategy. Like the MarshallIslands, another jurisdiction
withoutextensive local infrastructure, Niue hasentered into a
franchising agreement with amultinational offshore promoter
head-quartered in another country. The earlyexclusivity of the
powerful Mossack Fonseca& Company’s promotional contract with
Niueis also connected to the great effort this legalfirm spent in
promoting Niue to its existingand prospective clients from its
headquartersin Panama and its many offices in the OFCsand onshore
financial centres around the
world. While Mossack Fonseca maintainedits monopoly on Niue
company registrations,some of the responsibilities for registering
andadministering Niue offshore banks were spunoff to a
complementary trustee companycreated in 1997 which began to promote
Niue’soffshore banks actively in 1999.
Despite the success of the Niue OFC,there is disappointment
among legislators,who were apparently told at one point that
itwould be a panacea for the country’s extremedependency on foreign
aid (particularly fromNew Zealand), which amounted to 171 percent
of GDP in 1993. Nevertheless, Niue’sOFC started auspiciously (Table
14).
Niue’s offshore promoters have also hadsome influence over the
Niue government’s
Table 14 OFC contributions to government revenue in Niue
OFC fees Per cent of(US$) total government
revenues
1994-95 320,001 3.11995-96 142,155 1.61996-97 300,945 3.01997-98
381,970 4.21998-99 447,865 6.5
Sources: Far Eastern Economic Review, 4 July 2000, New Zealand
Audit Office, Report of the Audit Office on theAccounts and
Transactions of the Government of Niue, New Zealand Audit Office,
Wellington, various years(1997–2001).
Table 13 Niue offshore company registrations
Registered Niue offshore companies
1994 1411995 5561996 (30 November) 1,4051997 (15 November)
2,3961998 3,6621999 5,5502000 7,262
Source: Offshore Investment, 1995–2001.
-
PACIFIC ECONOMIC BULLETIN
58
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
proposed policy of becoming a pure taxhaven (like Vanuatu and
Nauru) through adeliberate effort to eliminate all onshore
andoffshore corporate and personal incometaxation (Niue Star, 26
June 1998). Since 1999,however, Niue, like many other
PacificIslands OFCs, has been threatened withsanctions by
international organisationscombating money laundering and
taxevasion. In January 2001, the JP MorganChase Bank and the Bank
of New Yorkbanned transactions with Niue, citing itsvulnerability
to money laundering.
A comparative view
OFCs tend to emerge in microstates, usuallyconcentrated in the
capital cities, and theiractives have a tendency to dominate the
hoststate’s economic activity. Nevertheless,Pacific island OFCs’
payments intogovernment revenues are not particularlyhigh when
compared to some offshorecentres in other parts of the world.
Forexample, 60 per cent of Jersey’s governmentrevenue in 1998 was
generated by its OFC(Financial Times, 22 February 2000). The
figures in Table 16 exclude the proceeds ofepisodic offshore
passport sales.
While OFCs may supply a number ofclerical jobs, most of the
professionalsworking at the highest levels of PacificIslands OFCs
are expatriates (although thereare significant numbers of
indigenousoffshore professionals in the Cook Islandsand Samoa). In
the Pacific islands this‘foreign domination’ has not created
theunrest which has characterised some otheroffshore centres, such
as the anti-OFC protestmovement on the Isle of Man, where
activistsfighting rent increases and evictions havegone as far as
committing arson (OffshoreAdviser, October 1989).
The strongest development links in thePacific islands have been
with up-markettourism, construction, and the channellingof local
people into clerical, accounting,financial, and legal careers, as
well as growthin telecommunications, air links andfinancial
services. Up-market tourism isassisted by offshore development.
Vanuatuhas gone the furthest in the region inestablishing this
synergy—including a greatdeal of advertising for its OFC in
local
Table 16 Contributions of major Pacific island offshore centres
to government revenues
Government Per cent ofYear revenues from total
the OFC (US$) governmentrevenues
Vanuatu 2000 3,239,000 6.4Cook Islands 1997 1,256,000 4.5Samoa
1999 1,297,000 2.1Marshall Islands 1996 500,000 1.6Nauru 1999
500,000 2.0Niue 1999 447,865 6.5Guam 1994 150,000 0.2
Source: Central Bank of Samoa, 1999. Annual Report 1999, Central
Bank of Samoa, Apia; Government ofGuam, 1997. Guam Code Annotated,
Government of Guam, Agana; Marshall Islands Journal, 7
November1997; New York Times Magazine, 10 December 2000; New
Zealand Audit Office, 2001. Report of the AuditOffice on the
Accounts and Transactions of the Government of Niue, New Zealand
Audit Office, Wellington;Parliament of the Cook Islands, 1997. Cook
Islands Parliamentary Debates, Parliament of the Cook
Islands,Avanua; Reserve Bank of Vanuatu, 2000. Quarterly Economic
Review, Reserve Bank of Vanuatu, Port Vila.
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
59
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
tourism promotional literature. The successof the Vanuatu and
the Cook Islands; thecurrent limitations of the Marshall Islandsand
Niue; the unattractiveness of Nauru; theunrealised potential of
Samoa and Tonga;and the significant opportunities for
offshoredevelopment on Guam, the NorthernMarianas, and Palau are
related to theirappeal as destinations for the sorts ofwealthy
visitors who use offshore facilities.
Local élites often find the potential fees,commissions and
benefits generated by OFCsan attractive prospect. Furthermore,
offshorecentres can be relatively cheap for a nationto create.
There may also be relatively fewethical qualms about tax haven
development,since some Pacific island states deriverelatively
little (or, in some cases, no) revenuefrom direct taxation.
Nevertheless, offshorepromoters generally ‘oversell’ the OFC to
getit established by local politicians, who arethen generally
disappointed after few of thepromised benefits materialise.
Only one Pacific island state, Tuvalu, hasrejected concerted
pressure by promoters todevelop an OFC, and this rejection was
basedon particular factors rather than a general orabstract
opposition to offshore developmentthere. The defeat of the first
Prime Minister,Toalipi Lauti, in 1981 was attributed to
hisinvesting most of the government’s funds ina Californian
business that was (among otherthings) promoting offshore
development.Although this firm reportedly returned themoney (with
interest) in 1984, it remainedhighly unpopular within Tuvalu and
itsassociation with the idea of building an OFCthere created
substantial antagonism to theidea.
Offshore development may be seen inrelation to a typology of its
likely effects onthe political economic development of itssociety.
There is a continuum between thebooking, paper, or brass-plate OFCs
(that dolittle more than paperwork), on one hand,and functional
offshore centres where banks,lawyers, accountants, and other
financial
personnel have a physical presence and arelikely to have a
greater local impact on theother. On Norfolk Island, Guam, and
theNorthern Marianas, booking OFCs havebeen stifled by pressures
from hostilemetropolitan parent states, although theresidential tax
havens (and local tax exiles)on Norfolk and Saipan continue to
haveimportant influences on the political economyof these islands.
The booking centres in Tongaand Palau display erratic patterns. In
Nauruand the Marshall Islands, booking centreshave emerged, but
only the Marshall Islandsshow some initial signs of maturing into
amore functional centre that might be able tomake important
contributions to shaping thelocal society. In Samoa and Niue,
successfulbooking centres have developed rapidly(generating locally
significant fees for thegovernments of these countries) along
withthe possibility (given these OFCs’ highgrowth rates) of their
becoming increasinglyfunctional, although there may be some
locallimitations on this in Niue. The Cook Islandshave successfully
developed importantfunctional aspects, which has had aconsiderable
impact on the country’s politicaleconomy. Vanuatu’s functional
operations aremore mature and have for years exercised asignificant
influence on the archipelago’spolitical economic structure (for
example, insuccessfully lobbying against the intro-duction of
income taxation on residents).Nevertheless, all Pacific Islands
havens areprimarily involved in booking regardless ofhow large
their functional operations mayhave become (see also Hampton
1996).
In one of the few general considerationsof the impact of
offshore development on theeconomy of its host country, McCarthy
(1979)finds that, while the benefits exceed the costs,the net
benefits are not likely to be very greatfor new OFCs, particularly
as they areentering a very crowded, competitive andperhaps stagnant
global market for tax havenservices. According to him, ‘new
papercenters are not likely to succeed [and]...even
-
PACIFIC ECONOMIC BULLETIN
60
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
existing centers might become less importantand less profitable’
(1979:48). In a similarspirit, Johnson (1976) is only slightly
lesspessimistic when he observes that anygrowth in Panama’s
offshore centre isunlikely to make a great contribution to
thecountry’s economy. Francis (1985) isconsiderably more optimistic
about thepossibilities for offshore development, bothgenerally and
in relation to the Bahamas. Herview is that the offshore market is
continuingto grow and that there is a tendency for OFCsto move from
booking to functionaloperations. Although Francis’s work is
morehelpful in explaining how Pacific islandoffshore centres have
emerged in the 1980sand 1990s, all three of these studies arenarrow
cost–benefit analyses.
Caulfield’s (1978) interpretation of theCayman Islands is
unusual in showing howthe centrality of the offshore centre in
thatsmall Caribbean country (and its synergieswith up-market
tourism) have led to apolitical, economic and social
metamorphosis—the transformation from one type of life(more
independent and subsistence-oriented)to another kind of life based
on intensemonetisation, commodification, and growingdependency on
the vagaries of internationalfinancial markets and taxation
regimes. Yetthere are reasons to doubt that the OFC(rather than
non-OFC-related tourism) hasbeen as decisive in the Caymans as
Caulfieldsuggests.
There are, however, some generalconclusions that may be drawn
from survey-ing Pacific islands tax haven development.The OFC may
move the Pacific island hostfurther toward a MIRAB-style
rentiereconomy (Bertram 1999, Bertram and Watters1985) dependent on
volatile transnationalfinancial flows and ever-changingmetropolitan
political-economic agendas.Offshore centres help to bring countries
intothe world’s financial and banking systems,make them more
recognisable to financiers,and make it easier for them to borrow
money.
In addition to reputable banks, however,OFCs also attract
criminals. The loans for thedisastrous Cook Islands Sheraton
hotelproject (associated with Mafia interests) andthe fraudulent
letters of guarantee thatthreatened to bankrupt the Cook Islands
andVanuatu in 1996 were all deals negotiatedwith people attracted
to or associated withthese countries’ offshore centres.
The creation of new offshore centresobviously increases
competition. It does notnecessarily follow that in the long term
thisdiminishes the opportunities available toolder OFCs. The
proliferation of offshorecentres creates many new opportunities
forcapital to escape taxation and regulation.Offshore development
has dramaticallyincreased the global pool of hot, statelessmoney
(Wachtel 1990). Even the traditionalhavens are still growing,
despite competitionfrom new OFCs.
New offshore centres are not justcompetitors. Their entities and
services areused by older havens to make their taxminimisation and
other strategies moreopaque and effective. The amount of
moneyavailable to OFCs is not fixed. The moreavenues that
international finance capital isoffered for exiting from costly
responsibilitiesin metropolitan states, the more capital islikely
to flow into a growing pool of offshorefunds.
It is clear that the revenues to the OFCs’host countries are a
small proportion of therevenues lost by the governments of
metro-politan countries. It is also in the interest ofmetropolitan
states and offshore govern-ments to agree to trade the abolition of
OFCsfor higher levels of economic assistance. Theproliferation of
countries offering offshorecentres and the intensified
competitionbetween them, however, make bilateralagreements
difficult. Any OFC entering intosuch negotiations is extremely
vulnerable(Irish 1982). The new multilateral strategiesof
international organisations (involving‘black lists’ and threats
against OFCs) may
-
OFFSHORE FINANCIAL CENTRES AND INTERNAL DEVELOPMENT IN THE
PACIFIC ISLANDS
61
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
be more effective than the older bilateraltactics and they may
continue to pose achallenge to Pacific islands countries thathope
to increase revenues through offshoredevelopment.
References
Anonymous, 1984. ‘Guam against theUSA’, Bulletin for
International FiscalDocumentation, 38(2):59.
Asian Development Bank, 1990. NationalAccounts of the Cook
Islands: TechnicalAssistance Report, Asian DevelopmentBank,
Manila.
——, 1995. Cook Islands: economicPerformance, Issues and
Strategies, AsianDevelopment Bank, Manila.
Australian Commonwealth GrantsCommission, 1997. Report on
NorfolkIsland, Australian GovernmentPublishing Office,
Canberra.
Avi-Yonah, R.S., 2000. ‘Globalization, taxcompetition, and the
fiscal crisis of thewelfare state’, Harvard Law
Review,113(7):1573–676.
Bertram, G., 1999. ‘The MIRAB Modeltwelve years on’,
Contemporary Pacific,11(1):105–38.
Bertram, G. and Watters, R.F., 1985. ‘TheMIRAB economy in
Pacific microstates’,Pacific Viewpoint, 26(3):497–519.
Butland, G.J., 1974. A Long TermPopulation Study of Norfolk
Island,(unpublished).
Caulfield, M.D., 1978. ‘Taxes, tourists, andturtlemen: island
dependency and thetax haven business’, in A. Idris-Sovenet. al.
(eds), The World as a CompanyTown, Mouton, The Hague:345–74.
Central Bank of Samoa, 1999. Annual Report1999, Central Bank of
Samoa, Apia.
Cockett, E.J. and Fox, N., 1977. TheInternational Tax Haven
Directory, HDM,London.
Davison, R.K., 1997. Report of the Wine-BoxInquiry: Commission
of Inquiry IntoCertain Matters Relating to Taxation, 2volumes,
Department of InternalAffairs, Wellington.
de Fontenay, P., 2000. ‘The financial sectorin Vanuatu: reform
and newchallenges’, Pacific Economic Bulletin,15(1):17–26.
Diamond, W.H. and Diamond, D., 1997.Tax Havens of the World,
MatthewBender, New York.
Diamond, W.H., Diamond, D., Kaplan, B.A.(eds), 1997.
International Trust Laws andAnalysis, Warren, Gorham and
Lamont,Boston.
Dwyer, T., 2000. ‘“Harmful” taxcompetition and the future of
offshorefinancial centres, such as Vanuatu’,Pacific Economic
Bulletin, 15(1):48–69.
Eldred-Grigg, S., 1996. The Rich, Penguin,Auckland.
Francis, C. Y., 1985. ‘The offshore bankingsector in the
Bahamas’, Social andEconomic Studies, 34(4):91-104.
Grundy, M., 1993. Grundy’s Tax Havens,Sweet and Maxwell,
London.
Government of Guam, 1997. Guam CodeAnnotated, Government of
Guam,Agana.
Hampton, M., 1996. The Offshore Interface,Macmillan, London.
Human Rights and Equal OpportunityCommission, 1999. Territorial
Limits:Norfolk Island’s Immigration Act andhuman rights, Human
Rights and EqualOpportunity Commission, Sydney.
Irish, C.R., 1982. ‘Tax havens’, VanderbiltJournal of
Transnational Law, 15(3):449–510.
Johnson, H.G., 1976. ‘Panama as a regionalfinancial center: a
preliminary analysisof development contribution’,
EconomicDevelopment and Cultural Change,24(2):261–86.
-
PACIFIC ECONOMIC BULLETIN
62
Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia
Pacific Press
McCarthy, I.S., 1979. ‘Offshore bankingcenters: benefits and
costs’, Finance andDevelopment, 16(4):45–48.
Malcomson, S.L., 1990. Tuturani: a politicaljourney in the
Pacific islands, HamishHamilton, London.
New Zealand Audit Office, 1991. Report ofthe Audit Office and
Financial Statementsof the Government of the Cook Islands,New
Zealand Audit Office, Wellington.
——, 1992. Report of the Audit Office andFinancial Statements of
the Government ofthe Cook Islands, New Zealand AuditOffice,
Wellington.
——, 1997. Report of the Audit Office on theAccounts and
Transactions of theGovernment of Niue, New Zealand AuditOffice,
Wellington.
——, 1998. Report of the Audit Office on theAccounts and
Transactions of theGovernment of Niue, New Zealand AuditOffice,
Wellington.
——, 1999. Report of the Audit Office on theAccounts and
Transactions of theGovernment of Niue, New Zealand AuditOffice,
Wellington.
——, 2001. Report of the Audit Office on theAccounts and
Transactions of theGovernment of Niue, New Zealand AuditOffice,
Wellington.
Ogley, A. (ed.), 1993. Tolley’s Tax Havens,Tolley, Croydon,
Surrey.
Parliament of the Cook Islands, 1997. CookIslands Parliamentary
Debates, Parliamentof the Cook Islands, Avanua.
Parliament of New Zealand, 1994. PapersPresented by Leave, to
the House ofRepresentatives by the Member forTauranga, the
Honourable Winston Peters,on 16 March 1994, New ZealandParliament,
Wellington.
Northern Marianas College, 1999. AnEconomic Study for the
Commonwealth ofthe Northern Marianas, NorthernMarianas College,
Saipan.
Palau, 1994. Republic of Palau EconomicDevelopment Plan: Fiscal
Years 1995–1999. Volume I: sector analysis,Government of Palau,
Koror.
Powell, A.J., 1997. ‘The SamoaInternational Company: a
competitor tothe BVI IBC’, Offshore Investment, 82:31–32.
Reserve Bank of Vanuatu, 2000. QuarterlyEconomic Review, Reserve
Bank ofVanuatu, Port Vila.
Royal Commission into Matters Relating toNorfolk Island, 1976.
Report. RoyalCommission Into Matters Relating toNorfolk Island,
Australian GovernmentPublishing Office, Canberra.
Treadgold, M.L., 1988. Bounteous Bestowal:the economic history
of Norfolk Island,Australian National University,Canberra.
Van Fossen, A., 1992. The InternationalPolitical Economy of
Pacific Islands Flagsof Convenience, Centre for the Study
ofAustralia–Asia Relations, GriffithUniversity, Nathan.
——, 1998. ‘Sovereignty, security, and thedevelopment of offshore
financialcentres in the Pacific islands’, in M.Bowe, et al. (eds),
Banking and Finance inIslands and Small States, Pinter,
London,155–70.
——, 1999. ‘Globalization, statelesscapitalism and the
internationalpolitical economy of Tonga’s satelliteventure’,
Pacific Studies, 22(2):1–26.
Wachtel, H., 1990. The Money Mandarins: themaking of a
supranational economic order,M.E. Sharpe, New York.
Wishart, I., 1995. The Paradise Conspiracy,Howling At the Moon,
Auckland.
——-, 1999. The Paradise Conspiracy II,Howling At the Moon,
Auckland.
AuthorCountrySubjectIssueStatisticsSearchPrintExit