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Putting it togetherEDITORIAL COMMENT

It’s interesting that Gibraltarhosted a meeting with seniorrepresentatives of Jersey andGuernsey to discuss matters ofmutual interest, including the

finance centre.Is this to be the start of a type

of lobbying group to defend theinterests of finance centres that havebeen labeled variously as ‘offshoretax havens’, ‘small offshore financecentres’ and the like, usually with negative overtones?

Apparently not. Guernsey’s requested fact-findingmeeting had Jersey joining in too; and not a word hasbeen spoken on the subject since by any participant, atleast in public.

The possibilities of what such a liaison might achieve– if it became a reality – are intriguing.

Chief Minister Peter Caruana told Hedge FundsReview in December that part of Gibraltar’s problem ingrowing the finance centre was achieving greaterawareness. “As a member of the EU through itsassociation with the UK, Gibraltar has a particularchallenge in making sure its voice is heard”, he said.

Given that the jurisdiction as a finance centre is smallin the global scheme of things, making a meaningfulimpact on prospective financial services businesses, hedgefunds, new insurers and the like to get them to make theirbase in Gibraltar, is a tough call.

Forging alliances with other similarly challengedfinance centres could help. Constructive dialogue to get abigger communication clout - a voice to be heard - makessense, particularly given that there is sufficient potentialbusiness to go around for all small finance centres likeGuernsey, Jersey and the Isle of Man.

Jurisdictions don’t have to compete head-to-head; butthere’s sufficient need to differentiate each, whether ontax, approach to regulation, innovation or infrastructure.

Gibraltar, for example, has benefits of “passporting”financial products within the EU; Jersey and Guernseycannot. Indeed, Jersey’s finance centre brochure illustratesthe point well by making a virtue of its EU non-membership, saying (perhaps rather injudiciously): “Jerseyis not a part of the European Union and is therefore notobliged to implement EU directives”!

When major nations are seeking to shift some of theblame for the current struggling world economies onto theexistence of offshore finance centres, then a collectiveresponse with reasoned arguments seems a good move.

Changing perceptions is key. Just about every countryis considered co-operative, or largely so, since the OECDinitiative encouraging worldwide tax transparency throughTax Information Exchange Agreements (TIEAs).

And Gibraltar achieved OECD “white list” status last November; having now signed 17 TIEAs, with apossibility of more to come.

This needs to be trumpeted as often and as widely aspossible, particularly since the authoritative City ofLondon Financial Centres Global Index in Marchinaccurately referred to The Rock’s ‘grey list’ status!

Especially when that valuable piece of research onattitudes to financial centres worldwide uses the on-lineviews of thousands of people working within financialcentres worldwide.

NEWS P6-10TIEAs come under scrutinyShip arrests growing$1m for two arrestsMore courts to solve legal issuesSharing experiences

TAXATION P12-14TIEAs taking effect

MARITIME P16-18Port spending on courseGo-getting yards

PROFILE P21-22Jimmy Tipping, Simply part of a team

NEWS P24Giving learning a boostAirport ready for summer 2011

INSURANCE P26-27Moves to protect against failures

PEOPLE AND PLACES P28-29

LAST WORD P31A timely tale

May/June/July 2010 Volume 16 / Number 2

Published by GibraltarInternational Publications Ltd.1/5 Irish Town, Icom House, Suite 6/PMB 104PO Box 561, Gibraltar

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Contents

No part of this publicationmay be reproduced withoutthe written permission of thepublishers. The publishershave tried to ensure that allinformation is accurate, butemphasise that they cannotaccept responsibility for anyerrors or omissions. Thepublishers accept noresponsibility for statementsmade by contributors or forany claim made in anadvertisement.

Gibraltar InternationalMagazine is available onsubscription, 4 issues postedto: UK £24 - EU £32 - Rest of World £44.

© 2010 Gibraltar InternationalPublications Ltd.

GIBRALTAR INTERNATIONAL MAGAZINE

cedural speed and efficiencyand its practical and flexibleapproach to arrests, togetherwith a prime position adja-cent to two of the busiestshipping lanes in the world,are the factors that help makeGibraltar’s reputation as juris-diction of choice for shiparrests.

Efficient operation“Gibraltar has become anincreasingly favoured jurisdic-tion for banks to enforce theirsecurity against ships byarresting and procuring their

judicial sale at auction.Gibraltar has a reputation asa good arrest port, because ofthe overall efficiency of theprocess”, explains RaymondTriay, a partner in law firmTriay & Triay, and who for20 years has specialised inShipping and Admiralty mat-ters.

Nevertheless, each shiparrest also produces nearly£0.5m in fees and commis-sions on average for Gibraltar,although no figures are pub-lished by the Courts on thevalue of sales handled.

“In Gibraltar it takesseven weeks on average fromarrest to sale of the ship”,says Triay, “but in Italy, forexample , it can be three or four years – and evenlonger in Spain where it’s nec-essary first to put up a bondequal to the amount beingclaimed”.

NEWS


Gibraltar’s compliance withthe operation and implementa-tion of its new Tax Information Exchange Agreements (TIEAs)is to be closely examined in aPeer review process in the second half of next year toensure rapid implementationof the arrangements with othercountries.

Gibraltar has signed 17TIEAs, the latest beingNorway and Iceland justbefore Christmas, and sincelast November has been onthe “White List” of countriesthat the Organisation forEconomic Co-operation andDevelopment (OECD),regards as meeting minimumrequirements.

The two-stage reviewprocess by the Global Forum,

which brings together 91countries and territories,including both OECD andnon-OECD countries, is ini-tially over three years andforms part of the internation-al fight against cross-bordertax evasion.

On site visitsPhase 1 of the Review will bedesktop research to examinethe legal and regulatoryframework in each jurisdic-tion, whereas Phase 2 willevaluate the implementationof the standards in practicethrough onsite visits.

Gibraltar’s InternationalCo-operation (TaxInformation) Act 2009 cameinto force just beforeChristmas, but at mid-April

Overall the world marine sec-tor saw a delay in tradeimpact last year, but as 2009drew to a close it becameincreasingly apparent thatsome ship owners couldn’tafford either to repay mort-gages, pay Port or bunkeringcosts, or even find enoughmoney for the crew.

Hence the rise in numbersof ship arrests - broadly sincethe third quarter of last year -the detention of the ship beingsecurity for the claim.

In the year to end March,there were 25 ship arrests –

including a super yacht - com-pared with only seven a yearearlier, according to figuresprepared for GibraltarInternational. Already thisyear, there has been a furthertwo arrests.

The pace is accelerating,according to Gibraltar’sAdmiralty Marshall, AnnabelDesoiza , who is charged withresponsibility for overseeingthe impounding and eventualsale of the vessels.

The jurisdiction’s wellestablished admiralty lawrooted in English law, its pro-

under three broad categories:-availability of information;access to information, andexchanging information.

Quick to respondWhilst giving recognition toprogress that has been made,the Reviewers are expected toidentify areas of weaknessand recommend remedialactions “so that jurisdictionscan improve their legal andregulatory frameworks aswell as their exchange ofinformation practices”, aForum briefing note explains.

OECD Secretary-GeneralAngel Gurría, said: “TheGlobal Forum has been quickto respond to the G20 call fora robust peer review mecha-nism aimed at ensuring rapidimplementation of the OECDstandard on informationexchange.

“This is the most compre-hensive peer review process inthe world.”

A first group of 15 juris-

dictions being assessed nowincludes Bermuda, CaymanIslands, Denmark, Germany,Jersey and Monaco and theresults will be available laterthis year. The UK is reviewedboth for Phases 1 & 2 in thesecond half of this year.

All members of theGlobal Forum ultimately willbe reviewed and “no inferenceshould be drawn about a par-ticular jurisdiction from thetiming of the reviews”, theForum insists.

Still more TIEAs may be signed by Gibraltar. ChiefMinister Peter Caruana hassaid his offer to “sign a TIEAwith whatever country wantsto sign one with us, remainsopen”.

As part of the TrilateralForum of Dialogue onGibraltar, the Spanish, UKand Gibraltar governmentsare according to a JointCommunique discussing how“to establish normal lines andmethods of co-operation

including tax exchange ofinformation, regular contacts,liaison and exchangesbetween regulatory authori-ties, taxation and anti moneylaundering issues and policies.”

They aim to conclude aTIEA in part to combat “fiscalor financial fraud” and also to adopt Double Taxationarrangements – both wouldbe a real step forward inGibraltar/Spanish relations.

Removing obstaclesIn the meantime, the OECDand the Council of Europehave agreed on an update tothe Convention on MutualAdministrative Assistance inTax Matters, an internationaltreaty that aims to help gov-ernments enforce their taxlaws and also open theConvention beyond the origi-nal 14 country signatories.

Among other things, theProtocol provides forexchange of information, mul-

tilateral simultaneous taxexaminations, service of documents and cross-borderassistance in tax collection,while respecting national sovereignty and the rights of taxpayers and ensuringextensive safeguards to pro-tect the confidentiality of theinformation exchanged.

“New provisions aim toremove obstacles to effectiveco-operation and exchange ofinformation, especially thoserelated to bank secrecy legisla-tions,” said ThorbjørnJagland, Council secretary-general.

“The amending protocolalso provides for the openingof the convention to countriesthat are not members of theCouncil of Europe or theOECD, thereby transformingit into an instrument to fighttax evasion worldwide,” headded.

See also “TIEAs takingeffect”, page 12

NEWS

He adds: “Being a smallcommunity, communicationin Gibraltar between the par-ties involved – lawyers, theAdmiralty Marshall, the shipbrokers - works with logisticalease and is completed withpragmatism”.

Significant savingsA ship arrest, in reality, is nodifferent to a liquidation of acompany, where a liquidatoris appointed to control anorderly distribution of assetsto creditors.

An efficient procedure forthe sale of the ship usuallyresults in significant savingsfor the benefit of all creditorswho have claims against the ship and Admiralty mat-ters are given priority in the Supreme Court ofGibraltar.

The legal procedureinvolves filing documents with

the Court, arrest by the Court,which is carried out by theBailiff, and then sale of theship either by private treaty orby sealed-bid auction.

“It’s a fairly gentlemanlyprocess and many ship ownersin this situation co-operate byvoluntarily ordering their ves-sel into Gibraltar to be arrest-ed. But it is not always so,and sometimes the claimanttakes the opportunity toadvance the arrest when aship happens to visit thePort”, Triay explains.

Since last July Triay’spractise has been involvedwith eleven arrests. InFebruary, Triay said he exe-cuted one arrest procedurewith a debt of £75m securedon a fleet of eleven ships, ofwhich two were arrested inGibraltar.


Continued P8

Ship arrests growing

only three TIEAs – with theUS, Greenland and Denmarkhave come into force. Theremainder are waiting for thevarious other countries for-mally to adopt them.

The second stage reviews- which in Gibraltar is notscheduled to take place beforethe first half of 2014 - will beconducted by assessmentteams that generally consist oftwo expert assessors, coordi-nated by a member of theGlobal Forum secretariat.

Rapid implementationBut the OECD makes the gen-eral point that jurisdictionsnot in the early stages of eachPhase “will want to reviewthe recommendations that are

addressed to other jurisdic-tions to see if these are rele-vant for them”.

The object of the GlobalForum’s review process is topromote universal, rapid andconsistent implementation ofthe standards of transparencyand exchange of information.

This can be achieved, theForum says, “when interna-tional tax co-operation allowstax administrations to effec-tively administer and enforcetheir tax laws regardless ofwhere their taxpayers chooseto locate their assets or organise their affairs”.

The Terms of Referencefor the Review breaks downthe standards of transparencyand exchange of informationinto ten essential elements

Tax transparency agreementsto come under scrutiny

Signs that the world economic situation is continuing to havean effect are now becoming apparent in Gibraltar. Lawyers,the Port Authority and others are seeing a significant upturnin business.

$1m for two arrests!2001 was a peak year for ship arrests in Gibraltar, whenEurope was experiencing its previous recession.

It was also the year when events caused Gibraltar toadopt a pragmatic approach to the Supreme Court‘poundage fee’ - 1 per cent of a vessel’s value - by introduc-ing a sliding scale of charges for an arrest involving multiple vessels.

The simultaneous arrest of seven cruise liners from theRenaissance Fleet Line - following a sharp and rapid down-turn in trade in the wake of the attack on the Twin TowersWorld Trade Centre in New York - became Gibraltar’s single most important incident of Admiralty Arrest.

The task, unmatched anywhere in the world, requiredboth flexibility and efficiency.

It was necessary quickly to find enough, sufficientlylarge, semi-permanent berths alongside in the Port. Foodand prompt payment of crew wages became the next priority, along with the rapid repatriation of over 1500seamen and hotel staff after 20 days afloat when they usually had one night between port visits!

The supervised removal of concessionaire equipment(discotheques, cinemas, gyms, boutiques, hairdressingsalons etc) so as not to delay the sale.

Only a short time before, Gibraltar saw the arrest of afleet of Abu Dhabi bulk load carriers - another seven vessels - at the request of a mortgagee bank.

Ordinarily, ship arrestsinvolve vessels with a value inthe range £5m-12m, althoughrecently he was involved withsale of a 150ft super yacht forE14m.

Other large legal firmsare also involved in the sector.

Isolas partner ChristianHernandez, head of the firm’sadmiralty and shipping team,is described by Legal 500 as‘undoubtedly one of theheavyweights in the sector’having represented shipown-ers, P&I Clubs, banks and theInternational TransportWorkers’ Federation.

Speedy payoutsHassans, Gibraltar’s largestfirm of lawyers, also has aspecialist Admiralty team.

Under Gibraltar law abank enforcing its mortgageover a vessel has priority overmost claims that usually arisewhen a ship is arrested. Allparties then know where theystand and this reduces theneed for expensive litigation.

Normally, payment of ajudgment can be achievedwithin eight weeks of the ini-tial arrest. Because an arrest isusually a measure of lastresort, the arresting party willusually have been out ofpocket for some time.

A procedure resulting in aquick payment out is crucialto the success of any jurisdic-tion.

An o rder for sale willusually be granted at the sametime as entry of the defaultjudgment, 14 days after thearrest of the ship. Once anorder for sale is granted bythe Supreme Court, theAdmiralty Marshal brokers tomarket and advertise the sale.The normal period of adver-tisement is three weeks.

Gibraltar’s income fromship arrests can be quite considerable – even for a

relatively straight forwardsale.

The Admiralty Marshallacts as guardian of the shipunder arrest, but is paid forby the arresting party (theclaimant, usually a bank ) andfees and costs – provision ofservices, pay and launches forcrew transfer, provisions,bunkering and fuel oils – canbe up to £100,000.

Two people acting as shipkeepers are employed tosecure the ship and preventher from breaking arrest –and costs £40,000 on average;Berthing Fees – average£2,000 a week and could costup to £5,000 a week.

Court Poundage of 1 percent of the gross proceeds ischarged following the sale ofthe vessel, but if a sale is byauction – generally consideredthe way to produce the high-est price - the AdmiraltyMarshall’s brokers will chargean additional 1 per cent com-mission.

Arrests in the financialyear just ended, produced tentimes more income for the Admiralty Marshall in poundage, a total of£555,000, compared to 2008-09, pointing to a combinedvessel sales total of £55m!

In 2001, arrests account-ed for almost all of Triay business, but last year it wasnegligible.

“Banks are being verycareful about which shipsthey call in for default of pay-ments, because effectively itmeans they are writing downthe asset, particularly foryounger loans”, says brotherMelo Triay, managing partner.

Although most sales tra-ditionally have been valued inUS Dollars, now Euros arebeing used more often withthe advent of European Banksoriginating arrests.

(See also ‘Port spending’,pages 16-18)

NEWS


More Courts meanssolving legal issuesAs work progresses to more than treblethe number of Gibraltar law courts,major changes to the way the legal profession operates are also in prospect.

Ship arrests from page7

Arti sts impressionof the new Court

building

In a much-needed multi-mil-lion pound expansion projectundertaken by the whollyowned Government companyGJBS, the number ofMagistrates Courts willincrease from one to three andthe Supreme Court is goingfrom one to four court roomswhen completed by 2012.

The present Courts arehoused in period premises offMain Street. The rising levelof cases – particularly civilones affecting business andfamilies – is causing “unac-ceptable delays” in hearingsat a time when some of thenew legislation is expected toencourage more cases to beattracted from outside of thejurisdiction.

Inclusion of pre-nuptialarrangements in Divorcehearings by Minister ofJustice Daniel Feetham, isexpected to appeal to manyHigh Net Worth Individualsin the UK who are looking to

other low tax jurisdictionsthat will respect pre- andpost-nuptial agreements,because these are unenforce-able in the UK.

The change in the law ispart of a number of amend-ments to Gibraltar’s legal system, including the appoint-ment of Gibraltar’s first specialist family judge,Christopher Butler - one ofthe two recently-appointed puisne judges .That, together with theexpansion of the number ofcourts, should speed up Courtappearances, which somelawyers at the start of theLegal Year in September saidwas adversely affecting thejurisdiction’s financial sector,as well as the prosecution ofcriminal cases, the backlog forwhich was described as “anembarrassment”.

Gibraltar is already

Continued P10

the territory’s Chief Justiceafter more than two years inan acting capacity followingthe suspension of his prede-cessor Derek Schofield whowas formally removed fromoffice in October.

And to cope with grow-ing activity, six Magistrateshave been appointed, dou-bling the number previously.

But many lawyers arecaught up also in the contro-versial debate over theappointment of Silks –Gibraltar has 10 Queen’sCouncil (QC) out of a total ofaround 190 practicing barris-ters and solicitors on theSupreme Court list .

The last three QCs wereall appointed in 2002, butnone in the previous sevenyears!

As with other small juris-dictions – such as Jersey, Isleof Man, Bermuda – Gibraltarhas a fused legal professionwith barristers and solicitorsenjoying the same rights andprivileges on court appear-ances.

Many lawyers believetaking Silk confers an advan-tage – financially and in clientselection of law practices –and that Gibraltar’s image asa thriving finance centrewould be enhanced by havingmore QCs.

The UK ‘norm’ is foraround 10 per cent of lawyersat the Bar to be QC’s, whichwould indicate many moreGibraltar appointments, but

this has divided the legal pro-fession, both as to need andthe appointment system itself,some arguing it is not trans-parent.

The President of theCourts of Gibraltar, SirMurray Stuart-Smith – an ex-officio member of the JudicialService Commission thatadvises the Governor onappointment of QCs – pointsout that the rank is usuallybestowed on “those who havedisplayed outstanding abilityin litigation”.

Debate on QCsHowever, there is debate overwhether any solicitor not usu-ally appearing in Court canalso become a QC. As SirMurray points out: “In acommercially active jurisdic-tion there may be exceptionalcases where an applicant hasnot had significant, or any, lit-igation experience.”

At the same time, the BarCouncil has proposed “it maybe opportune to consider theappointment of senior barris-ters to act as part-time judgesto assist the judiciary,” fan-ning the QC debate still fur-ther.

However, CouncilChairman David Dumas, aHassans partner who gainedQC status in 2002, accepts:“In a small jurisdiction, issuesof conflict of interests may bedifficult to overcome, but thisshould not present itself as aninsurmountable obstacle.”

NEWS


regarded as “jurisdiction ofchoice” for Admiralty cases,because of its long experienceat processing arrests andspeedy disposal of assets tocreditors – and this area ofwork is growing as a directresult of the world economicrecession (see story page 7).

High level linkWork on increasing from twoto seven court rooms andassociated facilities more thantrebles the present capacityfor hearings, and involvesrefurbishing the existingcourts, as well as a new 3-storey Town Range buildingwith high-level link and atri-um on the sloping site.

The Supreme Court ofGibraltar has a criminal juris-diction similar to that of theEnglish Crown Court, and acivil jurisdiction equivalentto that of the English HighCourt.

Feetham sees provision ofthe new Courts, with suffi-cient back-up resources andequipment as well as over-hauling numerous laws, to be“part of the task where wehaul the justice system intothe 21st century”. Prior tothe new Constitution in 2007,justice was the responsibilityof the Governor, not the elect-ed Government.

The Courts will soonhave a video conference facil-ity - similar to that viewedtwo years ago by Feetham at

the Inner London CrownCourt - between the Courtand the prison, which is beingmoved from the historicMoorish Castle, to a new£5.5m facility at LathburyBarracks. The aim is to cutunnecessary prisoner andlawyer time at the Courtswaiting for their hearing.

In up-grading the com-puter infrastructure, he envis-ages claim forms being filedon-line. He is also tacklingadministration efficiency withthe imminent appointment ofa chief executive to managethe modernised facilities,rather than have only theCourt Clerk, whose primaryrole is to assist Judges, JPsand the Registrar.

Formerly a partner inHassans, Gibraltar’s biggestlaw firm, Feetham was a liti-gator who worked in the 90’sfor independent barristers’chambers in Manchester, thefirst outside of London doingonly commercial litigation.

Making changesHe sees his Ministerial posi-tion, established more thantwo years ago under the NewGibraltar Constitution, as“providing me with a uniqueopportunity to give somethingback to the community andthe legal profession I love”,before returning to privatepractice.

Earlier this year, AnthonyDudley, was appointed thefirst Gibraltarian to become

Gibraltar played host to theChief Ministers of Jersey andGuernsey on “a fact-findingand familiarisation visit inrelation to taxation, the EU,financial services and politicalmatters”.

Held at the request initially of Guernsey chief

minister Lyndon Trott, whoinvited his Channel Island col-league Terry Le Sueur, Jersey’schief minister, the delegationsalso met with Gibraltar com-missioner of Income Tax,Frank Carreras; FinanceCentre director JamesTipping; and the head of

Gibraltar’s new EuropeanUnion & InternationalDepartment, Michael Llamas.

Although a rare event, itwas not without precedent;“we have co-operated previously when asked byother jurisdictions to see whathappens here in Gibraltar”.

The move follows growing interest by majorcountries in offshore financecentres and the impact theyhave on national economies,but no joint counter initiativeis believed to have been dis-cussed by the three smalljurisdictions.

More courts from page 8

Sharing experiences across jurisdictions

The past decades have witnessed an unprecedentedliberalisation and globalisa-tion of national economies.An increasing number of

countries have removed or limited con-trols on foreign investment and relaxedor eliminated foreign exchange controls.

While tax administrations remainconfined to their respective jurisdictionstaxpayers operate globally. But theimbalance and differences in national systems have led to harmful tax practices.

These problems were addressed byThe Organisation for EconomicCooperation and Development (OECD)by focusing on improved transparencyand co-operation between tax authoritiesso that countries can fully enforce theirtax laws to protect their tax base.

The efficient functioning of tax co-operation helps to ensure that taxpay-ers who have access to cross-bordertransactions do not also have access togreater tax evasion and avoidance possi-bilities than taxpayers operating only intheir domestic market.

Co-operation in tax matters alsoreflects the basic principle that participa-tion in the global economy carries bothbenefits and responsibilities. The contin-ued viability of an open world economydepends on international co-operation,including co-operation in tax matters.

The momentum that TaxInformation Exchange Agreements(TIEAs) have gathered might be as aresult of the financial crisis, or perhaps,

because of the number of tax evasionscandals that hit the headlines.

As Angel Gurria, OECD Secretary-General, remarked at the InternationalTax Dialogue Global Conference inBeijing: “While tax may not have been aprimary cause of the financial crisis, ithas to be part of the solution”.

He believes that we have to “lookbeyond the current crisis to rebuild a sustainable and vibrant financial sectorfor the future” and needs more international co-operation on taxation”.

Requirements and rulesTIEAs are bilateral agreements negotiat-ed and signed between two countries toestablish a formal regime for theexchange of information relating totaxes.

The standards for Transparency &Exchange of Information, which arereflected in Article 26 of the OECDModel Tax Convention, require:� Exchange of information on requestwhere it is “foreseeably relevant” to theadministration and enforcement of thedomestic laws of the treaty partner� No restrictions on exchange caused bybank secrecy or domestic tax interestrequirements� Availability of reliable information andpowers to obtain it.� Respect of taxpayers’ rights� Strict confidentiality of informationexchanged

There are a strict set of rules thathave to be followed when making an

TAXATION

Even though new taxagreements between financecentres may yet move fromreactive to proactive exchangeof information, DesireeMchard argues that having taxtransparency through TIEAs is agood thing for clients too!


Seeing tax informationexchange taking effect

information request and these aredesigned to protect the legitimate confi-dentiality of taxpayers and the holders ofinformation in both countries.

In particular, they guard againstwhat are often known as “fishing expeditions”, where a tax authoritymight look for a large amount of generalinformation, hoping that some of itmight be useful!

Safeguards are thereInformation requests are sent to the‘Competent Authorities’ of the respectivecountries - in Gibraltar’s case, it is theFinance Minister or his authorised repre-sentative - and must include the identityof the person under investigation, detailsof what information is sought, the taxpurpose for which it is sought, etc.

Failure to submit these details or tonot follow the rules means the request forinformation can be declined. If the competent authority needs to use legalpowers to obtain the information, evenmore safeguards are built into theprocess.

Jurisdictions need to have necessarylegal and administrative frameworks tosupport their commitment to exchangeinformation. The 28-page GibraltarInternational Co-operation (TaxInformation) Act 2009 came into force inDecember and gives TIEAs legal effect inGibraltar.

The detailed procedures for theexchange of information with authoritiesfrom another jurisdiction are set out inthis Act, as well as the jurisdiction’s pow-ers to request documents and to compelthe production of documents, compel witnesses to give evidence and the powersof search and seizure in the event of non-cooperation.

The Act establishes the grounds onwhich parties can appeal and the timelimits thereof and it enables tax officialsfrom other jurisdictions to seek permis-sion to participate in tax investigationscarried out in Gibraltar.

Continued page 14

TAXATION


It also makes it an offence to inter-fere with, alter, suppress, destroy, placebeyond access, remove from Gibraltar,knowingly or recklessly furnish incorrector misleading information related to aTIEA request or failing to attend whensubpoenaed.

These offences are punishable by amaximum of two years imprisonment ora fine or both.

If a matter is not a criminal tax mat-ter, or an alleged criminal tax matter, theAuthority can notify the subject of arequest for information. However, fail-ure to do so will not invalidate the notice.

Statutory protection from suit forbreach of confidentiality, to persons disclosing confidential information thatis not privileged, is also provided.

In the current global financial crisis,exchange of information and transparen-cy has become an even more importantpolitical objective for OECD.

International finance jurisdictionsare under increasing pressure as thefinancial crisis forces industrialisednations to seek more sources of tax rev-enue.

OECD Member States have startedto implement defensive measures againstjurisdictions that refuse to sign TIEAsand have adopted a three-tiered gradingsystem for jurisdictions and the level oftransparency that they have.

The current system is that thosejurisdictions that have signed 12 TIEAsare considered to have ‘substantiallyimplemented the internationally agreedtax standard’ and form the so-called‘white list’.

Increasing requirementsGibraltar has so far signed 17 such agree-ments and is one of 66 jurisdictions nowon the ‘white list’.

However, recent comments byOECD Secretary General Angel Gurriaand the leaders of France and the UK suggest the requirements to meet thestandard are likely to increase in the nearfuture.

By mid-March 20 jurisdictions (15 ofwhich are considered by the OECD to betax havens) were on what is commonlyknown as the “grey list”, being countriesthat have committed to the international-ly agreed tax standard, but which havenot yet substantially implemented it.

Gibraltar’s TIEAs involving the US,Greenland and Denmark have been inoperation since the end of January, but asof mid-March none of the other 14 coun-tries with which Gibraltar has signed aTIEA had enacted their relevant legisla-tion to give effect to the agreements.

Peer reviewsThe international fight against cross-bor-der tax evasion has entered a new phasewith the launch by countries participat-ing in the Global Forum on Transparencyand Exchange of Information of a peerreview process of TIEAs country-by-country.

They will look at:1. the jurisdictions with which the agree-ments have been signed, ie: “quality” (atax haven which has 12 agreements withother tax havens would not pass thethreshold), 2. the willingness of a jurisdiction to con-tinue to sign agreements even after it hasreached this threshold and, probablymost importantly,3. the effectiveness of implementation.

Clearly, this is not a numbers gameand quality and implementation areimportant, as it is apparent that TIEAcompliance will be regularly updated, initially over the next three years.

Gibraltar has not been included inthe first wave of 18 jurisdictions to bereviewed.

The review reports will be publishedonce they have been adopted by theGlobal Forum, which next meets inSingapore at the end of September.

Gibraltar’s Chief Minister, PeterCaruana, has repeatedly stated that thejurisdiction is ready and willing to enterinto TIEAs with any country that wishesto do so.

The present list includes severalmajor countries of importance toGibraltar – France, Germany, Portugal,Ireland, Belgium, Denmark and Sweden,the UK and the US.

All of Gibraltar’s agreements arebased on Exchange of Information onRequest.

In future, Automatic Exchange ofInformation - typically information com-prising many individual cases of the sametype - may be required.

There is even a possibility thatSpontaneous Information Exchange maybe required, including any information

uncovered as a result of domestic investi-gations that might be considered of inter-est to another party. Such informationmight be passed on without the otherauthority having sought it.

Globalisation not only makes itharder for tax authorities to accuratelydetermine the correct tax liabilities oftheir taxpayers, it also makes the collection of tax more difficult.

In future another part of the OECDModel Tax Convention, which requiresassistance with tax collection might alsobe implemented.

There is concern that companies andindividuals daunted by the unknown con-sequences of these TIEAs might movetheir assets and corporations to countriesthat are not in any tax treaties, such asPanama.

However, TIEAs can be of benefit tothose using financial centres that havesigned up to them, as they allow forgreater reporting transparency betweencentres by following the OECD modelagreement for exchange of information intax matters.

Secret bank accountsAs a reputable financial centre Gibraltar’sclients should be utilising structureswhich legitimately reduce their tax liabil-ity and not just hide earnings/profits andas such they should not be affected byany enquiries.

The easiest targets for any enquiriesmight be companies and individuals thathave “secret bank accounts” where they“hide” untaxed earnings.

The evidence so far is that TIEAshave produced little more than a trickleof information. This could be becauseyou have to know what you are lookingfor before you request it, or perhapsbecause the jurisdictions involved havelimited resources to dedicate to enquirywork.

Undoubtedly, TIEAs are very impor-tant international agreements.

Gibraltar’s programme of TIEAnegotiations has enhanced our standingin the global financial community, pro-vided economic opportunity and furtherbuilt our reputation as a reputable financial centre within the EU.

Gibraltar is a secure, competitive andattractive place to do business.

Desiree McHard is managing director of BDO, Gibraltar

TIEAs taking effect from page12

continued small decline – 179 ships and apotential 328,000 passengers – althoughmore vessels still could decide to call!

“From our soundings at the recentMiami Seatrade Cruise ShippingConvention in March, we know thatalthough the current year will not be finan-cially great for cruising in theMediterranean, operators expect the sectorto bounce back and 2012 to be a good year.

“I have sold them the idea of anextended cruise terminal, plus the new airport terminal which could be attractivefor operators of vessels with around 750passengers to use Gibraltar as a turn-aroundport,” Holliday asserts.

The new facilities at the airport willhave bedded down and “although I don’t

think we will get many takers initially, wecould well attract maybe two or three companies to take up the idea,” he speculates.

Part of the reason for the increased portrevenue this year is a near doubling in thenumber of anchorages to 38, by chargingfor ships using the east side of The Rock.Previously they stayed for free while ownerslaid-up vessels waiting for fresh instructions.

MH Bland is Gibraltar’s largest shipagent for merchant as well as cruise liners,claiming a quarter share, having started inmaritime services 200 years ago.

For a fee, Bland represents owners’interests when in Port co-ordinating theprovision of services. – stores, spares, crew,

documentation, and fuel – from its ownresources.

Under the banner, ‘Three ports, oneteam’ Bland’s marine agency operations alsohas offices in Algeciras opened in 2002 andin Ceuta from early 2005, contracting sup-pliers across the range of requirements,(much as most of the other 15 firms do inGibraltar).

“However, the long term aim is to replicate the complete Gibraltar service inthe other two ports,” says Gaggero who is“actively eying up the new Tangier Port andin the future, also the Canary Islands forsimilar agency services”.

A year ago Bland bought its sixth craft,

With dry dock, ship repairand maintenance facili-ties, bunkering, cruise-related operations, ship-ping agents, tug operators

and logistics companies all prospering, TheGibraltar Port Authority (GPA) has profitably grown its own business.

Gibraltar Port attracts around 10 percent of all maritime traffic in the Straits andlast year handled 10,042 vessels – 3.1 percent more than in 2008 – representing aslightly lower year-on-year gross tonnage of276m.

“This is extraordinary, considering theshipping world has seen a significant negative effect from the recession”, says JoeHolliday, Minister for the Port.

The total is made up of 238 cruiseships, 6,708 bunkers, 132 repairs, 193cargo ships and 547 others for lay-ups,change of crew and arrests!

Gibraltar is known as a giant filling sta-tion for ships and bunkering last year saw a12 per cent rise to reach 4.7m tonnes. Inaddition to ships stopping at the Port specif-ically for bunkers, around 65 per cent ofcruise ships also took on fuel while docked.

They are serviced by 16 registeredbunker barges, supported by three ‘mother’supply ships anchored in the Bay and byshore-based storage facilities in bothGibraltar and nearby Algeciras.

The rising bunkering total goes againstthe trend. Most other ports are showingsignificant falls in bunkering in the Region,maintains Peter Hall, Captain of the Port fornearly two years, having previously beenBristol Port harbourmaster.

Across the Bay of Gibraltar in Algecirashowever, the Spanish port also reportedbunkering up - 5 per cent more last year toreach 2.5m tonnes – less than half ofGibraltar’s growth level.

Gibraltar does well because of its strate-gic location at the intersection of the twomain shipping lanes to provide a broad market, he explains, and also because the

Port is almost the last location where shipsgoing north can get low-sulphur fuels, tocomply with EU requirements.

“Concern over piracy has caused manyship owners to avoid use of theMediterranean to reach the Suez Canal andinstead use the Atlantic, but fortunately thatstill leaves Gibraltar en-route, plus theworld economic situation has meant there isless need for fast deliveries, so ships can takelonger routes and travel more slowly” Hallexplains.

In May, the GPA increased port feessubstantially – some were virtually doubled- to increase income from £2.5m in 2008-09to reach £4.5m to end-March this year,when fees were again raised for many by afurther 5 per cent!

Last year’s higher fees – opposed bysome as likely to harm trade in times of economic recession – raised the extra £2mand targeted bunkering in particular as thesector most able to stand the charges.

Fees no deterrent“The rates had not been increased for manyyears”, explains Holliday, who ordered ananalysis of charges by other ports in theregion “and we found that we could affordto put charges up and not deter vessels fromcalling at Gibraltar.”

Income could have been even greater

had not the port closed through extremebad weather for 10 per cent of January and12 per cent of February – at least double theusual winter down time.

Charges for cruise ships remaineduntouched, reflecting the government’sdesire to preserve liner business in difficulttimes, and all the spin-off port trade andtourism the vessels bring for Gibraltar plc.

Economic surveys show that cruise passengers are the highest tourist spenders,even though ships generally call for onlyhalf a day. That means the Port will be ableto accommodate at least four dockings aday, as well as cruise ships anchoring nearby.

The free-standing GPA business, whicha year ago grew out of the former govern-ment port department, was set the goal tomake income 20 per cent higher than expenditure in the first year. “This has beenachieved and the business model envisagesthe Port will continue to do so at the samerate for this current year and several yearsto come”, he adds.

“The government is embarking on aprogramme of significant investment andchange in the port to modernise, extend andimprove its facilities, so that it continues tobe an important engine of our economy”,Holliday declares.

In the year to end-March £1.3m hasbeen invested, more than half in respect ofup-grading the Vessel Tracking System(VTS). A further £0.7m is anticipated to bespent on upgrading infrastructure this year.

The biggest up-coming project however,is a £1m extension to double the size of the cruise terminal. The year-long work programme will start this summer to beready for the 2012 cruise programme.

Fewer cruise ships plan to call atGibraltar this year, the 193 expected beingdown by nearly a fifth on 2009, but withpassenger numbers only 8 per cent less at332,000, illustrating the trend towards larger capacity vessels.

At April, bookings for 2011 show a


MARITIME


Gibraltar’s 100-years old former RoyalNaval dockyard is gearing up for an expan-sion in business as is a small repair yard foryachts, despite the marine world sufferingthe effects of economic recession.

“Over the last three years we havespent millions of pounds on infrastructure –cranes, tools and other facilities – and wewill continue to do so”, says New YorkerJoe Corvelli, chief executive of Gibdock.

The yard changed its name fromCammell Laird (Gibraltar) in December to

avoid confusion with the separately-ownedCammell Laird yard at Birkenhead, andtoday has two wharves, three dry docks,workshops and seven cranes.

Privatised in 1985, the yard has oper-ated under several names. Repair and con-version work – such as adapting offshoresupply vessels for work in Brazil, and cut-ting vessels in half to extend their length –means making efficient use of the docks tomaximize turnaround times.

Offshore industry is attractive – work

on semi-submersible and jack-up oil rigs forWest Africa and Mediterranean need mini-mum down-time and space booked well inadvance.

“Our investors are committed to thisbusiness and are prepared to spend more.We enjoy being debt free”, enthusesCorvelli, the marine engineer and navalarchitect, who took over the Gibraltar jobthree years ago for a London-based privateequity group.

Employing 250 full time and up to 400part time staff, Gibdock’s turnover last yearwas £30m, but Corvelli expects business

Go getting yards

Continued page 18

Continued page 18

Port spending to stay on courseGibraltar Port is thriving despite the general downturn in shipping as a result of theworld economic crisis and Ray Spencer learns of multi-million pound investment tokeep the jurisdiction ahead of competition in the Straits.

M H Bland's fast catamaran MHB Swordfish

Gibdock's three dry docks and 1km-long quayside work space

MARITIME

the 15m-long aluminum catamaranMHB Swordfish, to supply ships forrapid service of vessels on the eastern side– “at 20 knots she can go around the Bayand to ‘off-limits’ anchorages almosttwice as quickly as the craft it replacedand carries a larger payload, plus 12 crewfor changeovers”, declares deputy chairman George Gaggero.

“Tighter controls aim to minimisethe risk by ensuring that only vessels calling at Gibraltar for commercial rea-sons can anchor on the east side”,Holliday emphasises.

Key to that development is being

able to safely manage use of thoseanchorages and part of the reason forinvestment of over £1m in the VTS radarsystem. The VTS system allows operatorsin a new state-of-the-art control roomlocated on the Port’s North Mole to visu-alise and interact with all marine trafficwithin the GPA ‘Area of Responsibility’.

Gibraltar has experienced two majorshipping accidents in recent times – thesinking of the Fedra cargo ship 1 mile offEuropa Point after a collision with another vessel in October 2008 that costaround US$70m and another cargo ship,the New Flame, 14 months earlier, whichcost over US$120m!

No blame was attached to the juris-diction for either incident and the costsmet the owners’ insurers, but it is recog-nised that a VTS system might havehelped prevent one of them. The expen-diture is good value, says Peter Hall,acknowledging that “potential damage toour reputation is our biggest risk”.

Environmental concerns over thepotential for an incident involving thebulk storage bunkering ‘mother’ shipspermanently anchored in the Bay ofGibraltar has fuelled fresh efforts toorganise replacement facilities on-shore.

Chief Minister Peter Caruana toldParliament earlier this year that therewere “four or five applications” from

firms to restore the former Kings Linesdepot and associated supply pipelines tothe quayside operated by the Ministry ofDefence (MoD) for the Royal Navy.

A decision is not expected for at leasta year, but Caruana emphasised that “theGovernment has a medium to long-termaspiration to reduce - and if possibleeliminate - floating bunker storage”.

Another aspect is land delivery oflubricant oils from Spain which are thentrans-shipped to vessels at anchor, as anadjunct to bunkering.

MH Bland invested in a barge earlylast year called Oilfish, which is beingconverted to lubricant use in Algeciras todeliver 280,000 ltrs of oils to vessels onbehalf of Shell and BP.

this year to be a little lower.“There was a significant lag amongst

ship owners compared with the recessiongenerally. In the first half of last year, weachieved the most growth we had everseen, and then in the second half it all fellaway.”

Nevertheless, Corvelli forecasts:“The future is strong and as we continueto be successful in this business, ourgrowth multiples could be significant”.

A big opportunity area is in develop-ing afloat work, where Gibdock also hasuse of half of the South Mole, giving thefirm a total 1km of quayside space!

There is growing competition in theregion from Algeciras, Cadiz andPortugal, and from a wider geographicscope, “because ship owners under finan-cial pressure have more time at present tosend vessels wherever makes the best economic sense - Eastern Mediterranean

yards and even Baltic countries wherethey have lower labour costs”, he notes.

Competition for yacht maintenancehowever, is not the problem for MSheppard & Co, which has been tryingfor five years to invest in expanding itsrepair and lifting operation – it’s a lack ofsufficient waterside space!

Needing more spaceFor the past three years Sheppards hasoperated a 1,000 m2 workshop formechanical and other repairs in an oldNaval cold store on Coaling Island,where around 50 yachts a year can behandled.

“The firm used to deal with ten timesthat number before the original boat yard- where Ocean Village now is – closed in2005 and we’ve been waiting since thento get new premises”, says MichaelSheppard, managing director.

Sheppard bought the business,including a chandlery that remains at

Ocean Village, from his father, (whofounded the firm in 1980), and then setabout reforming the operation.

With 16 staff remaining, Sheppardwants to grow the business over a threeyear period to its former size so thatGibraltar can offer a premium yacht serv-ice. Such was Sheppard's reputation inGibraltar that the firm also used toattract clients for more specialist work onelectronics for riggings and engines thatotherwise only is available in theMediterranean at Palma, Majorca.

“Clients came from as far as Turkey,the Caribbean and the UK, but we don’tnow have the physical facilities to handlethem, space is so restricted”, explainsSheppard.

He hopes to re-open a 5,000 m2boatyard at a proposed industrial sitenext to the airport runway as part of theWestern Beach reclamation, but after fiveyears, complex airport planning require-ments make an early resolution unlikely.

MARITIME


Go getting yards from page17

Port spending to stay on course from page 17

Michael Sheppard's Coaling Island yard

Cruise Terminal to be doubled in size

He’s relied on both con-stants since returning toThe Rock in 1999 to takeon the role of soundingboard and facilitator for

the diverse finance sector businesses intheir dealings with government. He isalso promoter of Gibraltar to attractmore firms and Category 2 / High NetWorth (HNW) individuals.

While emphasising throughout a policy of ‘quality not quantity’, 48 yearsold Tipping sees his task as ensuring thebenefits of Gibraltar are seen as a package that stand scrutiny and consider-ation by anyone thinking of relocatingtheir base.

But “it’s about what Gibraltar has tooffer and not about what other places arelacking”, he emphasises.

Drawing on his earlier 14 year expe-rience of Capital Markets, Tipping isemphatic: “It’s like when you are pitchingfor Eurobond business to a bank – thelast thing you want is to talk about ishow other people aren’t very good.

“That would be negative – veryunprofessional – and something I havenever, ever done”.

Instead, “you detail what you areable to achieve and then it is up to indi-vidual advisors to look at the offeringmore closely”.

In promoting Gibraltar, “we deliber-ately don’t look to generate a high profilein newspapers.

Journalists from major UK publica-tions have called up looking for a storyabout Gibraltar being predatory as afinancial services centre; that we can’twait to get our hands on all the peopleand businesses to encourage them tomove across. But that’s a double edgedsword”.

Gibraltar looks instead to provideinformation to relevant professionals –

intermediaries, accountants, lawyers,consultants and other advisors – inLondon and other major financial capitals “rather than titillate the greatpublicin the business pages of XYZnewspaper”.

He uses Gibraltar’s status as being afinance centre within the EU for insur-ance enquiries, as an example. “We saywe are part of the EU and if asked whoour peer group is, it’s EU countries withcaptives and general insurers havingaccess to a single market.”

“Knocking somewhere else – beingnegative – is completely and utterlywrong. If I went to a law firm and saidI’m thinking of using you for a particularmatter and they said, ‘oh by the way, thisother lot are not very good’, you wouldnot be impressed and rightly so”.

But Gibraltar has competitors. “Fifteen years ago, I would suggest

that the market here was much smallerand we would have been looking towardsthe Crown Dependencies. Whether welike it or not - from our obligations pointof view and a rights point of view – our


Two things have remained constant throughout thecareer of James (Jimmy) Tipping, Director of theGovernment’s Finance Centre Department – a maximthat “there are never problems, only challenges”, and hispleasure at being simply part of a team - as Ray Spencerfinds out.

Simply part of a teamPROFILE

Continued P22

EU status has pushed us away from com - parison in that market”, Tipping says.

The introduction within the EU of aminimum guarantee fund for insurers,which raised minimum capitalisationrequirements more than tenfold, from€200,000 to €3m, “was seen as the kissof death for Gibraltar as a captive insur-ance centre, because they were suddenlyobliged to maintain much higher mini-mum capitalisation levels than elsewhere– the Crown Dependencies, for example.

“But actually it d idn’t. It made people focus on the fact that to play inthe single market and operate within thebenefits of a single market system meanta change in approach.

“The small captive industry wasforced - and indeed wanted - to change totargeting multinationals to come hereinstead of Crown Dependencies, forexample”.

Funds increasingly will follow thesame path, he believes and “our peergroup will be EU countries as opposed toanything outside of the EU, particularlywhen new Directives such as UCITS IVstart to kick in, and I can see that trendcontinuing”.

Another area of Tipping’s responsi-bility is handling the Category 2 HNWresident status, where other EU countriesare not seen as being in competition forpotential clients, but rather the more tra-ditional range, including the Isle of Man,Monaco, Andorra and Switzerland.

No wholesale moveHowever, Tipping is dismissive of thenotion that large numbers of HedgeFunds Managers are relocating from theirtraditional London base to Switzerland.

“I don’t believe there is a wholesalemove of a significant number of people; Ithink there is a lot of smoke about it – alot of noise – but the actual numbers arenot that significant at the moment.

Gibraltar’s Tax Exempt regime -introduced in 1967 to attract internation-al companies that in the main had noholding companies - was not designed toattract the wholesale move of industries.

The number of such companies with

Tax Exempt status has been steadilyreducing from a high of around 10,000;around 2,900 remain. That status is nolonger available and by the year-end willbe rescinded when a general 10 per centCorporation Tax rate is introduced.

“But of course, Gibraltar has to putover an attractive package. That maymean low taxation, having no workquota systems, the lack of housing quo-tas, showing a strong fiscal position (evenin the face of terrible financial positionsworldwide), enjoying a stable politicalenvironment – all are designed to beattractive”, he says.

No fiscal nomadsThe number of HNW residents – some340 people at present - is growing steadily, but increasingly there’s a needfor tax planning both in Gibraltar andthe country Cat2 applicants are leaving,or where they might also spend a significant amount of time.

“There is no such thing as a fiscalnomad in today’s environment” and “it’salmost that these people must be able toshow beyond doubt, that they are livinghere as a main home, which means theyreally have got to spend time here”, heemphasises.

It’s a similar situation with compa-nies. An insurance company setting up inGibraltar might be using an insurancemanager locally to help, and they mayhave a host of broking relationships inthe UK, but inevitably the advice is tomove key staff to Gibraltar - to have theirpresence as an operator in Gibraltar.

This would “demonstrate that notonly are they ticking all the boxes, butthe management is taking decisions inGibraltar.

“It’s a trend that many practitionershave been putting across for a long timeto demonstrate clearly that mind andmanagement is here; the key individualshave to be here in Gibraltar - people thatyou can see and touch. Gibraltar cannotbe used as a brass plate jurisdiction,” heexplains.

Relationship management, as hecalls it, has always been a strong aspectof Tipping’s work, dating back to 1986when he joined merchant bank SamuelMontagu & Co (owned by MidlandBank, and then HSBC) and was sent after

a 12 month induction to Brazil where asmall investment bank had been estab-lished as a joint venture with a Brazilianbank.

His banking entry was opportunist -“I needed a job”.

With a degree at University College,London in Iberian and Latin American(LA) studies - “although there was noincredible link between that and spending14 years doing LA Capital Markets” - hefaced stiff competition to join account-ants Arthur Andersen as a tax trainee.

But “it was the worst thing I’veexperienced in my life having gone frombeing an arts student to a very technicalenvironment”.

He left after a year having neverthe-less learnt a great deal about presenta-tions and other skills sets, including being“taught to never, ever use the word problem – there are challenges”.

However, aged 25 and by that stagemarried for three years, the appeal ofworking overseas in a bank, the result ofa second go at the University ‘jobs milkround’, was greater.

His entry into the small niche marketof Latin American (LA) Debt Tradinghad been assisted by his knowledge ofSpanish and learning Portuguese.

“I was basically the PA of one of theManaging Directors, and then got drawnmore and more into the trading side, buy-ing and selling debt, and into arbitrage –I loved my time there”, he recalls.

Trading was done by knowing themarkets – economically, politically andsocially –interpreting developments and,without the aid of computer screens, buy-ing and selling LA Debt bonds personallyusing telephones and contacts. Afterthree years he was sent for a similar period to join the Bank’s New York trad-ing team.

Alien situationAs markets recovered and governmentsstarted to issue 1-year Eurobonds, his jobbecame less about fundamentals of thecountries - although part of it - and morepuremarkets. “It was a very alien situation”, he recalls.

Tipping regards his six years at WestMerchant working as country specialistsoriginating new business from institu-tions, winning mandates, building relationships with other banks to buyand sell distressed debts and issuing new

bonds, as “a Golden age of being able tolead the markets and things going terriblywell in a merchant bank that was verycollegial”.

But here too things changed; towardsthe end it had all become “very corpo-rate”, moving from a relatively smallbank with 300 people and rising to 1,000people.

Gone was the flat management structure “where you can talk easily tothe chief executive, because he’s rightnext to you. Instead, there were numer-ous systems, manuals and flexibility was gone.

Fond memories tooTipping’s present job was unplanned.

The job came up by co-incidence; afriend told me it was being advertised inthe Financial Times”.

He saw the opportunity to return toGibraltar while his two children – now15 and 18 - were still young enough, and“to improve our quality of life - Londoncan be great, but it is anonymous, where-as Gibraltar is quite small and quitefriendly.”

Tipping has fond memories of theLA banking scene, having made manyfriends who remain so today. However,he still finds his finance centre job chal-lenging. “I think there’s more to be doneand I’m happy in what I’m doing”.

Although the marketing message isunchanged to reinforce objectives overtime, “I like seeing the story unfold andsticking to the issues”.

Last year there was a new develop-ment: Gibraltar signed 17 TaxInformation Exchange Agreements innine months. Tipping worked closelywith Chief Minister Peter Caruana (acting as Minister of Finance) and onoccasions he signed the documents onbehalf of the Government.

Tipping’s main function is to advisethe Minister of Finance on all aspects ofinterest to the finance centre.

“Gibraltar has always portrayeditself as being a complementary jurisdic-tion to large financial capitals” he says.

With “a great team of ten people”,Tipping also liaises with the private sector through the Finance CentreCouncil, an independent representativebody, and advises government on legisla-tive changes needed to develop thefinance sector.


PROFILE

Continued from page 21

Members of Gibraltar Bankers’Association (GBA) have turneddown a request to establish a‘loan guarantee scheme’ fromthe Federation of SmallBusinesses to help memberswith cash flow issues.

“But we have proposedinstead that we support a seriesof workshops to help smallbusinesses better make their

case for finance when they are establishing a company, byexplaining what banks want to know and how best to present it”, says GBAPresident, Thomas WesthOlsen.

At the same time the 16-member banks of the GBAhave set up an education com-mittee aimed at improving

qualifications and future learn-ing for existing staff, as well astargeting school leavers inter-ested in the finance sector as acareer.

In a separate move, theGBA has established a Charityreserve fund and as a first step£1,000 is to be given to both ofGibraltar’s Comprehensiveschools to fund an aspect of

learning, such as presentationsmaterials in consultation withschool managers.

And the Gibraltar FinanceCentre Council – the represen-tative body of eight profession-al areas – is hoping to create a Gibraltar FinanceCertificate to aid the employ-ment prospects of local schoolleavers.

Gibraltar’s airport will openin time for the 2011 airlinesummer schedules, insistsDevelopment Minister, JoeHolliday – although theSpanish side may not be completed at that stage.

The terminal stillretained a skeletal appearance

in early April and someobservers had questionedwhether the £50m projectwas behind schedule.

Chief Minister PeterCaruana told Parliament inMarch that the new tunnelunder the east end of the runway and associated ring

road work will cost £36.7mand will be completed by Julynext year.

In the meantime, Andalushas suspended its Gibraltar toMadrid & Barcelona flights‘indefinitely’; a Spanish gov-ernment report suggests theairline owes €7.5m and in the

short term is able to meet lessthan a fifth of its debts!

However, Air Europa hasbeen attracted by the new air-port terminal that is beingbuilt and has had exploratorydiscussions on possible services with Gibraltar’s Joe - Holliday.

Giving learning a boost

Airport ‘ready for summer 2011’ says Minister

NEWS

Anew European-wide Directivedesigned to strengthen both therisk management and the capitalisation requirements ofinsurers to avoid failures is

the most far reaching change to affect theindustry for many years.

The Solvency II requirement, expect-ed to come into effect in late 2012, willinvolve fundamental changes to the man-ner in which some businesses are man-aged.

More crucially, it is expected to havean adverse impact on the capital require-ments of insurance companies across theEuropean Union (EU). Being within theEU, Gibraltar insurers are not exempt.

The UK Financial Services Authority(FSA) describes Solvency II as “a funda-mental review of the capital adequacyregime for the European insurance indus-try”, which “aims to establish a revisedset of EU-wide capital requirements andrisk management standards that willreplace the current Solvency 1 require-ments.”

Reducing the impactGibraltar insurers and their advisers can,however, take certain key actions in thecoming months to reduce the expectedimpact of Solvency II and to benefit fullyfrom the more robust management prac-tices it will require.

The new Directive introduces threePillars that aim to: ‘demonstrate ade-quate financial resources (Pillar 1);demonstrate an adequate System ofGovernance (Pillar 2), and instil PublicDisclosure and Regulatory ReportingRequirements (Pillar 3).

Under Pillar 1, if an insurer takes no

action it will be directed towards aStandard Model for calculating solvency.Quantitative Impact Studies have shownthat the result of this action could be todouble a company’s current capitalrequirement.

Performance penaltyThe Standard Model is expected topenalise “monoline” insurers - those thatunderwrite only one or a limited numberof classes of business, such as motorinsurance.

The penalty occurs in part becausean insurer’s performance is being com-pared to the industry norm, rather thantaking account of its own experience.

This would have a considerableimpact on the Gibraltar insurance indus-try, which to date has built a strong rep-utation on the back of niche insurers whohave typically developed strengths in oneline of business being distributed in onecountry.

However, a ‘Full’ or ‘Partial’ InternalModel is also possible and can reduce the


The risk framework is key inenabling the company to carry out itsORSA. We have been working with ourclients for many months on this area,devising Risk Frameworks to address allof the relevant issues.

Interest in assisting with Solvency II is considerable, particularly from actuarial practices that are able to pro-duce appropriate Full or Partial InternalModels.

Attracting firmsThere have been several visits toGibraltar over the last year or so, withpresentations undertaken to the industryfrom various front line firms, some ofwhich have not had a presence inGibraltar previously.

Several of these firms are known tobe considering establishing offices inGibraltar, and this can only be a positivemove generally for the insurance industryas it continues to mature.

As an example of innovative think-ing, Quest Insurance Management(Gibraltar) has teamed up with Deloitte’s

actuarial practice from the City ofLondon, to provide a modelling solutionfor at least eight of its clients.

It is expected to provide a cost effi-cient answer to the Modelling needs ofsmall insurance companies such as existin Gibraltar.

A further central element of SolvencyII is the Supervisory Review Process.

This requires a supervisory authorityto review insurance and reinsuranceundertakings to ensure compliance and to identify financial and/or organisational weaknesses.

Gibraltar’s Financial ServicesCommission (FSC) has waited to see matters develop before finalising a strategy for executing its role underSolvency II.

It can be expected that the FSC willwork closely with more than one actuarial practice to avoid any conflictthat may arise from analysing the variousmodels produced by insurers.

These models need to be ready forsubmission to the FSC by the second halfof this year to allow it time to fully

understand them, and to work with the insurer and its model over the period before Solvency II is finally implemented.

Higher feesConsultation recently undertaken by theFinance Centre has highlighted the needto raise Regulatory Fees for insurers topay for the costs of work required inrespect of Solvency II, in particular.

The new fee structure came intoeffect in April, with a further increaseanticipated next year.

Whichever route an insurer decidesto take to satisfy the Directive, time is ofthe essence.

Although implementation ofSolvency II requirements may seem awhile off, plans need to be put in placenow to prepare Models to suit individualinsurers’ needs, so as not to be caught outby the changes next year.

Elisabeth Quinn is Group FinanceDirector of Quest Group

[email protected]

INSURANCEINSURANCE

Upcoming European solvency rules could present asubstantial financial burden for insurers, but somebusinesses can reduce the effect and benefit in otherways if they act now, suggests Liz Quinn.


Moves to protect againstinsurance failures bringsfresh opportunities

capital requirement by more accuratelyassessing the actual risks that the entityfaces.

Such risks would include the actualperformance of a particular business, thereinsurance programme and the compa-ny’s investment profile.

In Gibraltar these are key issues.

Historically betterThe establishment of the overwhelmingmajority of insurers in Gibraltar hasresulted from the fact that these business-es have historically operated to betterresults than the industry average.

In addition, once established - andespecially in their formative years - theseinsurers tend to maintain their funds incash or equivalent investments, ratherthan adopting a more risky investmentprofile.

Gibraltar entities have tended also toenter into extensive reinsurance arrange-ments with high quality partners in orderto mitigate risks.

A Full or Partial Internal Modeltherefore, will more closely mirror theactual risks of the business and is likely tobenefit the local market.

Pillar 2 demands that insurersdemonstrate their own effective risk man-agement system and prospective riskidentification through an Own Risk andSolvency Assessment (ORSA) and this isan area where a company’s local serviceprovider or insurance manager should beable to provide valuable assistance.

Regular reviewsThe Insurer’s Board of Directors needscollectively to agree and document thestrategy that the business should beadopting - this should be fairly straight-forward for most - and also the level ofrisk that it is prepared to accept in itsbusiness operation.

These factors need to be reviewedregularly and taken into account in allkey decision-making.

Commanding Officer of theGibraltar Regiment untilretiring late last year, has beenappointed to the Board of theGibraltar-founded privatecompany and made chiefexecutive, with specificresponsibility for the Group’sinterests in the territory, Spainand Morocco.

The company, whichowns the Rock Hotel, BlandTravel and Gibair, the airportground handling operation,employs 750 people locallyand “remains fully committedin increasing its investment inthe region”. Perez assures.

James Gaggero, BlandGroup Chairman, pointed toPerez’s outstanding leadershipskills that would enable himto “play a key part indeveloping the potential ofour people and businesses inthe region”.

Married to Emma,managing director of S GHambros Bank (Gibraltar),the couple celebrated the birthof their second daughterwithin a week of taking up hisnew post.

More mediationStephen Bossino, who workedalongside well known UKcriminal and human rightslawyer Colin Nicholls QC, on asuccessful challenge to the firstEuropean arrest warrant issuedin respect of a Gibraltarian, ha s

joined local law firm StephenBullock & Co as a consultant.

A past chairman of

Gibraltar’s industrial tribunaland an experienced mediator,Bossino says he is “hoping todedicate more of my time tocourt work and alsopromoting greater use ofmediation and arbitrationservices within thisjurisdiction.”

Lighting upCelebrating 25 years inGibraltar, Europa Trust

Company Ltd has re-brandedits Rock operation focusing onthe lighthouse at Europa Point“being an emblem of trust,safety and security” thatreflects the company’s values.

At the same time, it haslaunched a new website –www.europa.gi – that showcases its services andfeatures an interactive mapshowing the worldwidejurisdictions in which itoperates.

Ensuring growthPaul Sykes, 42years oldmanaging director of AonInsurance Managers (Gibraltar)and its sister company in Maltasince 2006, has been electedchairman of the GibraltarInsurance Association, whichhas 52 member businesses.

“The outlook forinsurance industry growth isextremely positive having beengiven further impetus by thedevelopment of tax certaintyand Gibraltar’s achievement ofa ‘white listing’ by theOECD”, he says.

With the jurisdictionhaving 63 licensed insuranceand reinsurance companies,

there are also over 30 cellsbelonging to five ProtectedCell Companies, he reports.

Sykes moved to start theAon operation locally from

working with the parentbusiness in Guernsey, whichhe joined in 2003, and nowhas a team of 17.

“We have enjoyed doubledigit growth year-on-yearsince we came here”, Sykesreports, and clients include

household names such asGeneral Electric, Tate & Lyleand BRIT insurance.

“There are many moreopen market insurancecompanies established today inGibraltar writing ‘third party’risks, that passport theirservices into the EEA memberStates”, he points out.

Gibraltar could nowboast a motor insurancemarket of internationalsignificance, underwritingsome 8 per cent of all businessin the UK motor sector - morethan Lloyds of London.

Sykes succeeds Penny

Hudson, managing director ofCaledonian InsuranceManagement Services, after athree year term.

Quest Group movespremisesAiming to keep up withdevelopments in the insurancesector, where local firms lookafter the interests of majorinsurers when first becomingestablished in Gibraltar, Quest

Group is moving in June tonew offices at Ocean VillageMarina.

“We will have about thesame space overall as we donow in Main Street, but it willbe much more flexible andcapable of accommodating theinterests of start-up insuranceenterprises that we willmanage”, explains Steve

Quinn, chairman.The location will be

convenient for the airport andthe frontier with Spain toensure good accessibility.

Quest, along with Lamp

Insurance, which shares spacein the same 400 m2 building,has 22 staff and wasestablished in 2004 by formerLloyds TSB UK banker, Quinnwho was concerned withinsurance company start-upsin Gibraltar and spotted anopportunity to provide localmanagement services forthem.

PEOPLE AND PLACESPEOPLE AND PLACES

&AroundAbout


Banking on change“If we are to position ourselvesin the Gibraltar market as aworld class wealth manager &local bank, we have to ensurethat our operational efficiency& effectiveness is second to

none”, says Lee Francis, whohas been appointed as director– sales & business managementin Gibraltar and Cyprus for -Barclays Wea lth Intermediaries& Corporates.

Reporting to FrancoCassar, Head of Barclays’operations in the region, 38years old Francis has an initialinternal focus to develop theGibraltar team.

“Looking at the business,our strategy and businessrequirements, it becameapparent that we needed abusiness management directorin Gibraltar because of itssheer size and complexity”,says Francis, who for twoyears previous had beenCountry director for BarclaysWealth in Cyprus.

In 2001, Francis becameone of the youngest retailbranch managers in theBarclays Group, having joinedthe group thirteen yearsearlier. He has extensiveexperience in corporatebanking, learning &development & changemanagement, the latter asnational change director inJohannesburg.

Early objectives this yearfor Francis, who lives with hispartner in Gibraltar, includesachieving “pure revenuegrowth and reduced operatingcosts through enhancedefficiency.”

Building on lawThree associates of Hassans,Gibraltar’s largest legal firm,have been called to theGibraltar Bar/ Admitted to theRole of Solicitors in a series ofdevelopments that also sawSenior Partner, James Levy

QC, become the only Gibraltarlawyer to receive a ‘StarIndividual’ ranking for lawyerswith exceptionalrecommendations in their field.

Chambers, also rankedHassans as No 1 in its Global2010 directory.

Joelle Hernandez (24)and Lizanne Noguera (23)were called as barristers –specialising in Funds andcorporate and commercial lawrespectively, whilst 38 yearsold Grahame Jackson, whoworks in tax, was admitted asa solicitor of the SupremeCourt of Gibraltar.

In the meantime,Hassans’ partners Peter C

Montegriffo and James Lasry,were speakers at the A nnualFamily Office and WealthManagement Conference inTel Aviv.

“We hope that by takingGibraltar to Israel that morecompanies and individualswill look to do business here,which can only be a goodthing “, explains Lasry.

Commanding leaderThe expanding Bland Group,which this year is celebratingits 200th anniversary, hasbroken with tradition andcreated a new post, specificallyto look after its expandingcommercial interests in theRegion.

Forty three years old LtCol (Retd) John Perez MBE,

bedrooms104 Bedrooms and suites in a colonial

style all with a sea view

conference facilitiesFull upgraded conference facilities

available for board meetings, trainingcourses and presentations

InternetFREE Wireless broadband available

throughout the hotel and an internetroom for our guests to use

weddingsThe Rock is an ideal wedding venue

whether it be a small intimate weddingor large family gathering. We are also a

recognised venue for civil marriagesand ceremonies can now be conducted

in various parts of the hotel

Swimming PoolOutdoor swimming pool with poolside bar and pool side menu. We

welcome private pool membership,our lido club, with private pool hire

for parties and barbecues

RestaurantThe restaurant has stunning viewsover the bay. Our “house” menu isexcellent value for three coursesincluding an aperitif Manzanilla,

olives and coffee. A full á la cartemenu along with a superb eclectic

wine list is also available

wisteria terraceThe Wisteria Terrace for lunches,dinner, barbecues, afternoon teas,evening drinks and informal dining

Barbary barBarbary Bar and terrace for a

relaxing drink and for the winebuff, a choice of nine wines by

the glass

LoungesTake a good old fashioned Englishtea in one of the spacious lounges

An oasis...

in a busy world

Europa Road, GibraltarTel: +350 200 73000Fax: +350 200 73513

E-mail: [email protected]


James Gaggero and John Perez Bland Group

Paul Sykes

Lee Francis

Unit 14, Queensway QuayGibraltar

Opening hours12.30pm-11.00pm, last orders 10.45pm

Tel: +(350) 200 43731

14 On the QuayRestaurant

Not the scheduling ofappointments variety –meetings, squash match-es, bar lunches, visits,meetings, more meet-

ings, school visits, social engagements.These are what I’d define, if I wasforced to do so, as managing my time inorder to get the most out of it – for me.

No. Time management was some-thing that my then employers felt wouldbe beneficial in getting the most out ofme – for them. It would help me, theysuggested, in balancing the things I likeddoing – strategizing, planning, buildingbusiness and political relationships, get-ting out and about, as well as writing, ofcourse – with those things Ididn’t.

In fact, it’s using whatWikipedia describes unappetiz-ingly as “a range of skills,tools, and techniques to man-age time when accomplishingspecific tasks, projects andgoals”.

As a manager, I foundbudgeting, financial forecast-ing, performance appraisals,pay grading and so on, simplytedious; the bits that got in the way ofdoing the real job. I never did get thehang of it – that too was boring.

So imagine my surprise when onholiday recently at being confronted yet again with the need for time management.

Not as you might reasonablyexpect, in order to fit in the competingdemands of reading books & magazines,swimming, sun bathing, tennis, going tobars, lunch and so on.

The things I liked doing.This time, to my horror, it was more

about acquiring the skills, tools andtechniques for securing our sun beds!Everyone knows personal sunbeds – orat least ones you wish to make your own

for the duration – are an absolute mustfor a successful beach holiday.

Everything revolves around them,from the start of the day to the end. It’sthe base from which holidaymakers –lazing or active - move on to do whatev-er they enjoy. And to secure said ‘bed’,it’s necessary to ‘mark’ it as your own,much as a dog will wee to mark its territory.

You can see where this is going. Inorder to secure the bed, you need toleave your real (hotel) bed sufficientlyearly to deposit a towel, so claiming theposition for yourself.

But we found to our horror that notonly had our towels been piled on a low

table nearby, but our sunbeds had beentaken over by ‘foreign’ bodies – in theinterests of discretion I’ll not revealwhich nationality, (but suffice to say awhole race has been characterized by theearly morning towel-on-sunbed act)!

Challenged as to why this out-landish act had been perpetrated, ourabsence for three hours was given as suf-ficient justification –and they were notmoving. Three hours! I’ve known peo-ple book whole day trips out and stillclaim their sun bed. Such anarchy…..such cheek!

True, we had been away twice aslong as we had expected and maybe theyhad a point about taking up some of thevery few prime sun bathing, sea view

spots right next to the beach. But theprinciple of moving our things seemedall wrong.

Being British (reserved by nature,naturally) we resigned ourselves to the‘possession being nine tenths of the law’rule and were relegated to a fully sheltered, back row space on our ownbalcony. But we fumed.

Who determines how much unoccu-pied time is too much? If one group feelsable to commandeer previously reservedspace, can anyone invade ‘our’ space atany time, without a by your leave? Warscould have been started for less.

And then came my deployment oftime management. And as a good man-ager, I delegated the prime task to mysignificant other….

She got up before 6am – “you cansee the ball of sun come out of the sea”,I enthused – and not only marked our

beds with beach towels, butadded my yesterday’s shirt, twomagazines, books and otheritems to emphasise our ‘owner-ship’. Move those weighteddown beds at your peril.

But then the ‘foreign’ bod-ies were spied circling round,coveting our beds – at 06.30am;daring my wife to move away.

And so the die was set forthe next few days. One or otherof us would remain on or

within view of the beds. Our meals werean anxious time away, and daytimeshopping excursions (I was relieved tofind) meant I had to stay put.

The offending bodies eventuallysorted their own spaces out, after alsocommandeering three sun umbrellas(but who is counting) and an uneasydaily rhythm ensued. And as I sippedmy Pina Colada, gazing up to the cloud-less blue sky, I reflected that theWikipedia definition of time manage-ment may not have been so wrong.

I’d employed skill, tools, and tech-niques to manage time to accomplish aspecific task, project and goal. Here’s totime management – cheers!

Steve Richards


LAST WORD

A timely taleIt’s a long time since I was confronted with time management and its something I didn’t think I’d everhave to face again.

Who determineshow much unoccupied

time is too much? ”

“

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