Corruption scandal clouds Bermuda reputation

An alleged £3.95m fraud committed within the state-controlled Bermuda Housing
Corporation is clouding the reputation of the tax haven and insurance centre.

The FT reports that the controversy erupted in June, when local
press reports said a confidential police dossier had revealed that there had
been fraud involving bribes, questionable accounting practices and inflated
invoices at the Bermuda Housing Corporation between 2002 and 2004.

The most striking allegation was that then transport minister and now prime
minister Ewart Brown had allegedly received $150,000 of renovations to his
property out of state funds.

Further reporting of the case has been halted after the privy council in
London, the top appeal court for about 24 current and former British territories
including Bermuda, placed a gagging order on the reporting the case for almost
three months.

Grant Gibbons, former leader of Bermuda’s opposition party, the United
Bermuda Party, said the case could cause Bermuda reputational damage even though
it had nothing to do with the quality of the jurisdiction’s regulation and
financial set-up.

The government has maintained that the dossier was leaked for political
purposes, and after losing its attempt to block reporting of the dossier in the
Bermudan courts, it turned to the Privy Council where it successfully obtained a
gagging order.

The Privy Council will, however, hear the case in full when it returns from
vacation. The hearing is to hear the case on 29 October.

Other tax havens are believed to be relishing the problems in Bermuda, as it
could see businesses leave Bermuda and choose other jurisdictions.

Further reading:

Hiscox heads for Bermuda

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