p16 legal p20 regulation - gibraltar international magazine nov-dec-jan.pdf · nov/dec/jan 2009/10...

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Low tax ‘heaven’ is the key

EDITORIAL COMMENT

That’s it then; the stage isset. From now on thereis going to be an annualor bi-annual conferencefor all in Gibraltar’s

Finance Centre, judging by reactionsto “The future – 2015” event inOctober.

So many good ideas came out ofthe first event, which combined theseven professional bodies in the Finance Centre Counciland Kerry Blight, its new chairman, that there is adetermination to make it a regular fixture.

With plain talking from the speakers – including theFinancial Services Commission warning of higher chargesand still greater oversight, countered by sector demands toensure first that the FSC house was in order - no-one wasleft in any doubt that such an open forum was longoverdue.

A packed conference left many with standing roomonly and other leading lights in the business communityabsent. Being the first such event, there were clearlylessons to be learnt.

The sheer volume of ‘fresh’ information impartedbetween the professionals made obvious the potential forusing the event as a showcase platform for interestedparties beyond Gibraltar.

Underlying these points were the comments of severalin the finance centre on the contribution from deputy chiefminister, Joe Holliday; they described his words as‘encouraging and informative’ even though, in effect, helargely replayed significant facts and figures supporting theprogress of Gibraltar, that have been in the public domainfor months!

Speakers repeatedly referred to the forthcomingcorporation tax rate reduction - a low 10 per cent from2011, down from 22 per cent now – as the key factor indriving significant further growth of Gibraltar within theEU.

That and the switch in Gibraltar’s general perception-from being regarded as ‘tax haven hell’ to become ‘lowtax heaven’ - which will certainly follow from adoption ofthe raft of saviour OECD-inspired Tax InformationExchange Agreements!

More the pity then that the Chief Minister, whodoubles also as Financial Secretary, was kept away thistime by other international commitments.

An invaluable future conference addition ought to bePeter Caruana’s personal insight and aspirations for thefuture, much as he did at the Finance Centre lunch onGibraltar Day in London a week after this year’s localconference.

The Finance Centre Council may be a useful soundingboard and advisory forum for the government on fiscaland other developments.

But delivering the message to a wider local forum willhelp reinforce the new-found feeling of stronginterdependence amongst the varying professionalmembers in looking forward to 2015.

NEWS P6-8TIEAs little to do with crisis!Ten down and still growingNew sea link follows air terminalInnovative tax solutions needed

NEWS P10-12More in-depth Campo studyFrancis CantosGreater voice in Regulation

INVESTMENT P14Equities in, recession over

LEGAL P16-19Lawyers prosecute expansionWidening the legal spread

REGULATION P20-21New EU rules give an ‘edge’

RECRUITMENT P23SRG & del Sol start up

GAMING P24-25Euro Court rulings not enough

PEOPLE AND PLACES P26-27

INVESTMENT P29Opportunity in Corporate Bonds

LAST WORD P31Getting it half right

Nov/Dec/Jan 2009/10 Volume 15 / Number 4

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

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DesignBil [email protected]

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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.

© 2009 Gibraltar InternationalPublications Ltd.

GIBRALTAR INTERNATIONAL MAGAZINE

offer, the event’s underlyingpurpose is to cement relation-ships with the City ofLondon.

The Sunset ceremony fea-tured 90 musicians in fourmilitary bands, including theRoyal Gibraltar Regiment.

TIEAs ‘very little todo with crisis’

NEWS


Gibraltar fully expects to have signed at least 18 Tax Information ExchangeAgreements (TIEAs) shortly –significantly above the num-ber required by the `OECD to be regarded as a territory “fully committed to international standards of information exchange” and substantially implemented.

Although “well on tar-get” to meet OECD criteria,“we have not rushed for num-bers as some other countrieshave done”, Chief MinisterPeter Caruana emphasised toa packed Finance Centrelunch at Drapers Hall in the

City of London as part ofGibraltar Day celebrations.

At that time (whenGibraltar International wentto press), he confirmed thatten TIEAs had been enactedincluding with Australia, NewZealand, Ireland, Germany,Denmark, Austria, France,Portugal, the US and the UK.

Several others are ini-tialled waiting completion.

Gibraltar is expected tomove to the ‘white’ list of ter-ritories that have adoptedstandards of transparency andexchange of informationwhen the OECD reviewsprogress on 20 November.

The tenth anniversary ofGibraltar Day (October) celebrations in London thisyear saw a series of recordachievements that went toreinforce the fact that theoccasion had become “themost important annual show-case event” for the territory.

Around 1,000 peopleattended an evening Guildhallreception and 270 peoplewere at the Finance Centre lunch briefing withGibraltar’s Chief Minister,Peter Caruana. Both occa-sions were filled to capacityand had “sizeable waitinglists” for invitations.

“The day has achievedwhat we first set out to do inpromoting the sophisticationof Gibraltar Inc”, explainsAlbert Poggio, director ofGibraltar’s London Office, byattracting not only senior gov-ernment, military and busi-

ness professionals, but also across-section of Gibraltariansliving in the UK.

The problem now is “thatwe are growing each year andnew venues probably will beneeded in future”, saysPoggio, who co-ordinates andimplements the day-long cele-bration.

According to FinanceCentre director, JimmyTipping, the 270 places avail-able at the Drapers Hall lunchwas “heavily oversub-scribed”, despite havingincreased capacity by 50 onlast year. “When we beganthis aspect of Gibraltar Dayeight years ago we hosted 120people”, he notes.

Designed to allowGibraltar businesses to nur-ture UK business prospects, aswell as allow UK sister busi-ness offices to appreciate bet-ter what The Rock has to

financial crisis”.Recognising that greater

tax transparency is important,he asked: “What is it aboutthe absence of TIEAs in thelast 15 years that has con-tributed to the collapse oflarge banks in America andthe need for banks in Europeto be rescued and propped upby their governments?”

He felt “it an example ofthe aftermath of the [worldeconomic] crisis being used toadvance long-standing andextraneous agendas.”

The world had changed

and “in the aftermath, politi-cians are going into hyperreform mode”. It was right,in order to avoid a repetition,consideration be given to how regulation and bankingshould be done better.

But Caruana said: “It isvital we do not allow thereforms that inevitably willfollow to undermine the sovereignty of countries to settheir own tax systems and levels.”

Gibraltar was phasingout zero rate tax and imple-menting a single 10 per cent

Corporation tax level from2011. Regulatory sovereigntyof countries should not beundermined more than strictlynecessary, by “others on moredistant shores who fordecades had agendas to haltthe advancement and predom-inance of the City of Londonand other British and non-British financial services centres”.

There was “a great riskthat politicians across Europe,particularly those facing elec-tions soon, will succumb tothe temptation to respond to

an ill-informed, populaceagenda and …do incalculable- and certainly uncalculated –damage to the long term eco-nomic interests of our coun-tries and financial servicescentres”, Caruana said.

In a summer report AngelGurría, OECD Secretary-General, asserted: “Fordecades it has been possiblefor taxpayers to hide incomeand assets from the taxman byabusing bank secrecy andother impediments to infor-mation exchange. This will nolonger be possible.”

Caruana however, toldhis London audience:“Frankly, if there were morepowerful voices available tothe smaller internationalfinance centres to counteract,or at least to contribute, toG20 deliberations, some ofthese things would be muchmore constructive.”

Nevertheless, Gibraltarwould be “adopting whateverconsensus emerges in regula-tion and tax transparency” toremain in the mainstream ofinternational consensus inorder to continue to prosperand to attract large interna-tional service providers.

NEWS

Gibraltar in 2015 will be amuch enlarged financial cen-tre, substantially driven by theadvantages of having thepromised low 10 per cent cor-porate tax from 2011 – and, ifbusinesses produce as expect-ed, sufficient extra revenue, itwill ensure lower personaltaxes as well.

That was the overridingmessage coming from theseven key industry associa-tions that make up the present£170m Gibraltar finance centre, at the first joint con-ference to share information

on future challenges andopportunities.

But the on-going imple-mentation of Tax Infor-mation Exchange Agreements(TIEAs) by OECD countries,“inevitably will lead to inten-sified global tax competi-tion”, as one speaker put it,with people looking in thefuture for “safe havens ratherthan tax havens”.

Companies and individu-als increasingly will be “look-ing to book assets in a num-ber of jurisdictions – multi-shoring – and, given the com-

plexity, looking for invest-ment solutions supported bysophisticated tax advice”,suggested Carlos Martins,head of Credit Suisse(Gibraltar) institutional desk.

Several speakers con-firmed that meant account-ants, lawyers and bankersworking together closely toproduce innovative, ‘made-in-Gibraltar’ tax solutions.

Albert De Las Heras,deputy manager for JyskeBank’s local private bankingoperation, pointed out that“only tax-compliant struc-

tures will be the norm”, andmore High Net WorthIndividuals (Category 2 status) and also internationalcompanies will choose TheRock for their base.

Gibraltar had 330 peoplewith HNW status, JamesTipping, Director of theFinance Centre, reported,compared with around 200 adecade ago, when there wereminimal residency require-ments compared to now, andyet “in the last nine monthswe have seen for the first timethe inclusion of Ultra-HNWindividuals and this will createa momentum.”

He considered it would


Innovative ‘made-in-Gibraltar’tax solutions needed

Continued P8

Ten down and still growing

In addition, as part of theTrilateral Forum of Dialogue,Spain, Gibraltar and the UK,are negotiating a TIEA and ondouble taxation “preferablyby the end of this year”,according to a Ministerialjoint communiqué.

The objective is “to com-bat money laundering, terror-ist financing and fiscal orfinancial fraud.” As soon asthat TIEA is signed, Gibraltarwill - under Spanish law - beremoved automatically fromits list of ‘tax havens’.

But as Caruana pointedout, when the OECD came toits second stage review, “We

will be very well placed,because we have gone straightto the relevant G20 jurisdic-tions” – US, France, Germanyand the UK.

The OECD says it willlook at the appropriateness ofagreements, how quickly theycome into force and whetherthey are being effectivelyimplemented?

However, Caruana wasscathing on “the new criteria,invented at the G20 requiringan arbitrary number of TIEAs…we must beware pretextsbeing relied on to achievethings that have very little to do with the global

on business development,given increasing demands -largely as a result of EU directives and initiatives – was a recurring theme, butPenny Hudson, chairman of the Gibraltar InsuranceAssociation, pointed out:“Gibraltar prides itself on aregulatory body that is acces-sible and pro-active; thisneeds nurturing and protect-ing, especially, the larger weget as a centre.

And she flagged up: “We are presently working with the Financial ServicesCommission on Solvency II[an EU Directive to ensurefinancial soundness of insur-ance companies], and we needto find a measured under-standing, with sensible, equaland fair timeframes andresource requirements onboth sides”.

Hudson said the GIAwish list for 2015 included,more entrepreneurs and cor-porates, more innovation, andshe added pointedly, “regula-tors who understand and cre-ate openings for new business,with equally appropriatelytrained staff behind them andactive oversight.”

Attended by over 250people from the sector, plusgovernment representatives,the day-long meeting pro-duced other common themes,including the need for financecentre sectors – accountancy,banking, insurance, funds &investment, legal, trust &company – to maintain highoperating standards to meetincreasing (largely European)legislation and localised training.

See also Regulation pages 12 & 20

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FROM ONE GENERATION TO THE NEXT.

aircraft, bookings for theMadrid route have been insuf-ficient to maintain a greaterservice, but MH Bland hastaken control of Andalus saleslocally and with the GibraltarGovernment began a jointroute marketing campaign in

mid-October with a high profile visit by Spanishtourism journalists.

And Transcoma may alsobring Ceuta in North Africainto the Madrid link furtherboosting the Gibraltar serviceappeal.

The new air terminal willhave capacity of up to 1mpassengers per year - a six-fold increase - and be owned

and controlled by theGibraltar Government.

No detail on the terminalinternal layout has beenreleased, but it will be “aniconic” building containingretail outlets and bank facilities.

A dual carriageway roadwill run beneath the terminaland underneath the runway toreplace the cross-runwayroad, because of disruption totraffic crossing the borderbetween Spain and Gibraltarby the present 34 flight rotations.

Despite difficult commer-cial circumstances for the airline industry worldwide,the number of Gibraltar airarrivals last year grew 2.2 per cent to reach 183,663passengers, and 2009 isexpected to be anotherrecord. Gibraltar now hasflights to Gatwick, Heathrow,Luton and Manchester, aswell as to Madrid.

Gibraltar’s new £55m air terminal is taking shape, withwork on the 20,000+sq mtwo-storey building scheduledto be completed in the firstquarter of 2011.

“I believe this move is apositive development, espe-cially for the business commu-nity”, Joe Holliday, Ministerfor Transport, told theGibraltar 2015 FinanceCouncil conference inOctober, where for the firsttime he revealed artists’impressions of the buildingexterior.

From early December,The Rock is also set to have anew sea link with Algecirasfor the first time in 40 yearswhen Transcoma, a Spanishtransport and shipping group,introduces its catamaran service across the Bay ofGibraltar.

Punta Europa II, a 22mlong vessel currently havingan-all weather roof fitted to

the top deck in Barcelona, isecpected to make four sched-uled half hour trips each day (except Sunday), plus potentially tourist trips inbetween taking advantage ofa glass viewing panel in thebottom.

There is talk too of joint ticketing with Andalus airline, which operates fromGibraltar, although now on a temporary reduced service;the airline has halved itsMadrid service to one a dayeach morning and eveningand ended its short-livedBarcelona route (at least untilnext summer).

Even with small, 50 - seat

take another year forGibraltar’s transition fromtax haven to internationalfinancial centre to be widelyrecognised as a reality, withthe benefits of sound regula-tion, tax transparency, lowtax rates and stability of gov-ernment.

This would attract morecompanies looking to relocateto a jurisdiction with a sound reputation within the European Community,Tipping said, whilst reinforc-ing government policy of“quality, not quantity to bringabout cautious, sustainablegrowth.”

As Joe Holliday,Gibraltar’s deputy chief min-ister, pointed out: “Smallinternational finance centreslike Gibraltar are a vital partof the machinery that con-

tributes towards the prosperi-ty and smooth running of theglobal economy.

“Innovation, speed andflexibility are facets that allowa small jurisdiction likeGibraltar to compete and dis-tinguish itself against a back-drop of large and wealthierstates which are inherentlyslower and more complex todo business in”, he added.

Gibraltar’s economy hadbeen “summarised as one thatis running on all cylinders”,Holliday noted and added: “Itis well set to move into a newera of social and economicprosperity”.

As a business location,Holliday said Gibraltar had“a first rate professionalinfrastructure that is fullycompliant with Europeanstandards of regulation”.

The impact of regulation

New sea link as air terminal takes shape

NEWS


Innovative tax solutions from P7

had been “pretty straight-forward reporting of the factsand figures from the studydirectly”, Edward Macquisten,Chamber Chief Executivereported, and on some mediasites “there were various reader comments, both for andagainst, but generally it waspretty positive”.

Haynes reminded thelaunch press conference thatthe Gibraltar effect accountedfor only 0.42 per cent ofAndalucia’s GDP in 2007, butwith Gibraltar accounting forone-in-six Campo jobs at thattime, there has been “a signifi-cant acceleration since inunemployment” so that TheRock accounts for possibly aquarter of local jobs.

Conversely, “Gibraltar’s

prosperity since the frontierwith Spain was opened [in1985] has only gone in onedirection; it has benefited sub-stantially,” he noted, adding:“Gibraltar companies are theengine of economic growthand wealth creation for theentire region.”

The Chamber study hadbeen prompted by Spain’s for-mer Director general ofForeign Affairs and chief nego-tiator in the Tripartite Forum(involving UK, Spain andGibraltar), Snr Jose MariaPons Irazabal, whose “percep-tion about the workings ofGibraltar’s economy, its keyeconomic activities and in par-ticular, Gibraltar’s economic

influence on Campo deGibraltar – the Spanish hinter-land – was quite different fromthe reality”.

The Spanish Minister’sconcern in particular was theGibraltar Finance Centre. Theexpenditure of that sectorwithin the Gibraltar economyin 2006/7 at £296m, represent-ed more than 15 per cent ofGDP, but it became over 17per cent when Governmentand Ministry of Defencespending was excluded.

20 per cent of GDPWhile financial services repre-sented just 8.7 per cent of thenear-19,000 total (full timeequivalent) employees inGibraltar, their contribution toGDP was the highest at£87,000 per person. Offshorefinance centre activity has adirect and indirect effect onincomes that increases, wheninduced effects are taken intoaccount, to become £142m –around 20 per cent of totalGibraltar GDP.

The Report says it “wouldnot be unreasonable toassume” that financial servicesalso accounts for a fifth, or£84m, of the Campo economy.

“This is considered to be aconservative estimate, becausethe finance sector employshigher income staff than thenational average for Gibraltarand a number of them are likely to have second homes inSpain and more than propor-tionately make up the numbersof Gibraltarians who makeexcursions into the Campo deGibraltar”, the Report asserts.

Reinforcing that point,Prof Fletcher’s report saysGibraltar finance centre activi-ties are conducive to the

More in-depth cross-bordereconomic study planned

NEWS


It would be a joint venture bythe local Spanish private sectoror academic institutions, andthe Gibraltar Chamber ofCommerce.

A £25,000 initial econom-ic impact study just publishedby the Chamber suggests thatGibraltar was responsible for anet gain of some £420m -around 12 per cent of the Campo’s gross domestic product in 2007.

The implication, given therelative stability of Gibraltar’seconomy, is that since therecession the contribution iseven greater!

But figures designed todemonstrate the interdepend-ence between Gibraltar andthe neighbouring areas of La Linea, Algeciras andSotogrande have been extrapo-lated on the Spanish side large-ly by allocating a proportionof the Andalucia RegionalInput-Output model.

Attempts to also considerthe effect on Campo propertyprices of demand fromGibraltar residents andGibraltar workers living inSpain, which would not exist ifthere was not a thrivingGibraltar economy, werebased on hypotheses.

Lack of dataThe Chamber suggestsGibraltar’s effect on propertyadded up to £5.4bn to Campoasset values.

But “the lack of data thatare available without under-

taking a detailed survey” inpart made difficult a moreaccurate assessment of theeffect on the 86,000 house-holds in the region, theChamber noted.

There appears to be noCampo-specific statistics on itslocal economy, unlike inGibraltar where for severalyears Professor John Fletcherof Bournemouth University – aspecialist in economic impactmodels – has produced reportsfor the Government.

Although political sup-port is seen as necessary forsuch a broad-based freshstudy, the Chamber feels it hasto be independently driven,says Andrew Haynes, a lawyerwho presented the Gibraltar-funded study on behalf of theChamber.

“I have been promotingthis idea for 15 years and it hasnot previously taken off, but Ibelieve that if we now worktogether as businesses to pro-duce a study from the Campoperspective, it will have greatercredibility on both sides of theborder and is more likely tohappen”, he told GibraltarInternational.

Media coverage in Spain

A wide-ranging economic study of the Campo deGibraltar area is being projected for next year asa means of producing reliable data to reinforcethe message of business interdependencebetween Gibraltar and Spain with opportunitiesfor both communities.

Gibraltar companies are the engine of economic growth

and wealth creation for the entire region

Continued P12

“

”

NEWS


working on The Rock with payof £57.39m.

Gibraltarians living inSpain but working in Gibraltarand others living on The Rockand crossing the border con-tribute nearly £30m to theCampo economy, the reportsuggests. Those Gibraltarianswith second homes in Spainadded a further £33.5m to thelocal economy.

The total assessmentexcludes some 1.5m tonnes ofpetroleum products imported

into Gibraltar from the Campofor bunkering during 2007, butif it was included it would add£300m to the impact ofGibraltar on the region!

The Report concludes:“Both economies and societieswould be the poorer withoutthe other, but together thestrengths of both economieshave ensured that the entireCampo region [includingGibraltar] has developed to agreater extent than would otherwise have been possible.”

Campo’s economic develop-ment, “because they add to thequality and range of activitiesavailable in the region and have a reputation for strong regulation”.

Financial services broughtadditionality rather than com-petition for existing services inthe Campo, which largely isaround banking.

The Report should helpstimulate positive debate andhelp to break down traditional

misgivings and barriers thathave affected cross-border rela-tions in the past, Chamberdirector and head of RBSInternational and NatWest inGibraltar, Marvin Cartwrightsaid.

In late 2007, there were2,748 Spanish workers crossingthe frontier into Gibraltar andthey earned almost £43m inthat year, most being spent inAndalucia. At the same timethere were 2,689 other nationalities living in Spain and

Campo study from P10

Current UK efforts to resolveissues by focusing on bankers’bonuses are wrong, doomed tofailure and “lack imagina-tion”, believes Marcus Killick,Gibraltar’s Financial ServicesCommission’s Chief ExecutiveOfficer.

“Incentive induced shortterm-ism clearly had a role toplay in the crisis, but this focusis not the solution. There werebigger issues at play in thecauses of the crisis than bonus-es”, he told October meetingsof bankers, insurance andfunds industry leaders inZurich and Geneva.

Either jurisdictions willnot apply it in a uniform wayor star performers will simplymove to non banking institu-tions - perhaps even partowned by banks - so reducingthe pool of talent available inthe banks themselves, he main-tained at the meetings organ-ised by Gibraltar FinanceCentre on Funds and WealthManagement.

Killick emphasised that asa Regulator with a valid input,Gibraltar needed to play a rolein the shaping of the futureinternational regulatory envi-ronment; “We must engageand participate with our fellow regulators”, ensuring “our voice is heard in the international regulatory com-munity”.

FSA must understandThe new European SystemicRisk Board, due to go live nextyear and which will impact onthe way Gibraltar and otherEU regulators operate, “willonly have one CompetentAuthority per Member Stateon it”, Killick pointed out.

And he maintained: “Thismeans we must ensure the UKFSA understands any issues wehave, and that it representsthem. The FSA will be doingthat for the CompetentAuthorities that exist in theUK, but who will not havedirect participation.

“They should also do itfor us”, he emphasised.

Killick pushed home hispoint by saying in respect ofthe new European SupervisoryAuthorities - where Gibraltar’sexclusion was less clear cut –“we will, if Government sowishes, push for participationor, at least, observer status”.

Given that the proposalsappear to expect Gibraltar to contribute to thoseAuthorities’ budgets, “then weshould get no less”, he maintained.

But more positively,Gibraltar’s Regulator also hadjust been asked to join theEuropean Global FinancialPlatform, set up to bringtogether high level EU officialsand finance sector representa-tives to exchange views on EUissues of concern or relevance.

This included areas ofbanking, securities, insuranceand accounting, he said.

see also ‘New EU rulesgive an edge’, page 20

Bid for greater ‘voice’ ininternational regulationGibraltar - a financial services centre relatively unaffected by the current world economic crisis - is bidding to make sure it has a role in shaping future international regulation.

Francis CantosFrancis Cantos, GibraltarGovernment Media Director,died suddenly aged 57 whentaking a short holiday inSotogrande this summer. Hewas for 13 years the eyesand ears of Chief MinisterPeter Caruana, whodescribed him as “aconsummate mediaprofessional and a personalfriend.”Having previously served for12 yearsas editorof theGibraltarChronicle,Franciswas wellknown andrespectedacross thepoliticaland socialspectrum– within Gibraltar and inSpain and the UK – fromwhere numerous tributeshave been received.Ray Spencer, GibraltarInternational Editor, says:“Francis was a realprofessional, and will bemuch missed. Although Iknew him for only acomparatively short time, itwas clear that he lovedworking in and for the media,combining his interest inpolitics.“The government will find ithard to find such a capableand knowledgeablesuccessor.”He is survived by his wifePamela and two daughters.

He emphasised in a strong-ly upbeat presentationearly in October: “Ourexpectation is that worldrecession is at an end; we

have got through the worst and growthwill return to the major economies in thisthird quarter.

In the latest investment seminars,Potts was adamant that “there are tangi-ble signs of the speed andstrength of world economicrecovery.”

However, asked if a down-ward ‘blip’ was likely in thetrend for equities, Potts con-ceded: “In the short term therewill be some element of consol-idation coming through –rather than a blip, we prefer tocall it a pre-decline rally.

“We would not be sur-prised if we saw a 5-10 per centperiod of consolidation, butgiven the other factors wedon’t believe it is likely to befor long and we have a positivethree month view. This quarter’s resultswill be the biggest determinate.

“There is an increase in optimismand decrease in pessimism”. Potts pointsto the “explosive rally in financial markets over the past five months – thestrongest rally seen in seven decades.”

There are a number of reasons to beoptimistic; historically low interest rates,unprecedented levels of fiscal stimulus, arecovery in confidence with house stabilisation of the financial sector on aglobal basis.

“The UK is a great example of housing stability returning, admittedlyfrom a very low base. The latest surveysshow a small rise in house price levelsover the last year - they are only down 13

per cent from their peak and have risen10 per cent since February. In the US,peak-to-trough house prices fell a fright-ening 45 per cent, but some of the latestsurveys are more positive. “

Potts says “we are certainly movinginto world economic recovery phase”and points to experience in the secondquarter of this year when “the majorityof major companies were achieving or

exceeding analysts’ expectations”.Although revenues were sometimes dis-appointing, “companies are leaner andmeaner having adapted to the lowerdemand environment by cutting costs,and that should be good news in terms ofCorporate profitability”, he forecast.

Nevertheless, earnings this year over-all are likely to fall about 10 per cent –still better than analysts were expectingat the start of this year. In the US, corpo-rate earnings are down only 5.5 per cent,“but analysts are pencilling in a bigrebound in 2010 – possibly by up to 25per cent”.

He emphasised: “It is still necessaryto be careful about buying into this equi-ty rally; in a very short time, we have

INVESTMENT

Despite uncertainty over how long the ‘bullish’ stocksand shares market will continue to rise, strategistHenk Potts, Equity Strategist at Barclays Wealth, toldGibraltar clients and financial advisors that “equitiesare where you need your investments to be now”.


Equities are the place to be – recession is over!

moved from the bottom to the top of thetrading range, but we see the Bull runcontinuing with brokers becoming moreoptimistic.

“Earnings upgrades have gone from10 per cent in January to around 60 percent now for corporate stocks”, and hebelieves it will lead to further gains into2010, but at a slower pace. “It’s a betterresult than you would have imagined,given that we have gone through themost potentially damaging economic crisis since World War 2,” he pointedout.

Barclays Wealth tended to look atmarkets on an international basis andthere is a changing global dynamic takingplace. “Most people point to China – a

major focus for us - andadvise investors to gainexposure to that part of theworld. China’s economicgrowth expectation for2009 is just over 8 per cent;in 2010, growth will be up10 per cent. China is antici-pated to become the world’ssecond largest economy overthe next two years”, he said.

Unlike in May, Pottsnow believes in switching toinvestment in small capi-talised companies – thosewith a market value ofbetween US$250m to

US$1bn, particularly in the US. A smallcompanies’ index there expects a 150 percent earnings growth in 2010 and 50 percent more a year later, compared with theS&P Index of the biggest US companies,where a 20-25 per cent rise in earningsperformance is predicted.

“We still advise portfolios to containstock on the cyclical side of the economy-industrials, technology and, more selec-tive, the mining sector. We are cautiouson consumer staples and utilities – theseare highly valued already, and are idealfor cautionary investment times. “Interms of asset class, equities are whereyou need to be now”, he maintained.

see also “low inflation bringsBonds opportunity”, page 29

The emerging economies benifit most from therevival in world trade

No English law firms have Gibraltaroffices, unlike in many other UK territories,but Triay Stagneto Neish, a 13 lawyer prac-tice, took over the local business of interna-tional firm Denton Wilde Sapte in early2006.

However, Gibraltar law firms haveopened offices abroad.

Indeed, 26 year old Marrache & Co,which employs around 100 people and has54 lawyers, now positions itself as the onlytruly ‘international’ firm having alsoopened offices in Lisbon (2004),Luxembourg and Prague (2005), as well asbeing the first Gibraltar firm to open inLondon 14 years ago.

Among Marrache’s most prominentwork in recent times has been advisingshareholder in the £28m sale of WestCornwall Pasty Company shares, andadvising on establishment of a $1.5bnExperienced Investor Fund in Gibraltar.

Spanish operations, initially largelyfuelled by the residential property market,have been launched by Isolas, Triay andTriay, Marrache & Co, and Hassans.

Cruz & Co, a law practice formed in1996 by Nick Cruz after six years withIsolas, joined up with Spanish firm BalmsAbogados, to form Balms & Cruz Moroccoin January 2007.

And Marrache in recent years has been

with 120 staff and 20 lawyers, they runinto hundreds of thousands of pounds.

“Today we have commercial pressuresand I am no longer able to spend time inCourt”, he observes, adding: “The profes-sion is a lot more competitive and complexand clients are more demanding, especiallyon the commercial side, wanting advice byreturn.

“It is not possible to serve commercialclients properly and have a litigation prac-tice, in one generation there has been ahuge change.”

Pay can be significantly below the UK.A trainee solicitor locally would be onabout £17,000, but in England it is at least£30,000 and when qualified after twoyears the solicitor would earn some£60,000, probably double that ofGibraltar.

Favourite arrest portYet there is no shortage of youngsterswanting to enter the profession, and thenumber grows annually. This year, theGovernment has provided 150 scholarshipsto study law in the UK, where just about allGibraltar’s lawyers have trained.

Although based substantially onEnglish law, adopted wholesale in 1962,Gibraltar’s law has been substantiallyaltered, and in one major area – property –

it differs significantly, making it difficultfor ‘outsiders’ to quickly practice.

Melo Triay’s firm remains one of thestrongest in Gibraltar’s banking scene, aswell as general financial industry, privateclient business and property/conveyancing.

Strongly involved in litigation workgenerally, Triay claims still to be the largestfirm in Admiralty cases with a 70-plus percent share of work. Instructions comedirect, or from UK shipping law firms andadvisors to banks, although Triay also hasfor more than five years been “chasingassets in Gibraltar for the US Securities &Exchange Commission”.

Triay’s largest Admiralty case involvedarresting a fleet of seven Renaissance cruiseliners –each worth £200m - in 2001 in theaftermath of America’s 9/11 attack that

prompted a dramatic fall in US passengernumbers resulting in default on mortgages,” explained Melo Triay.

Gibraltar’s English-based Admiraltylaws, coupled with its strategic position inthe Mediterranean, makes it a favouritearrest port, with a speedy and efficient sys-tem and relatively low Court and othercosts.

However, lawyers see the biggestopportunity is in the continuing growth ofGibraltar’s finance centre, virtually unaffected by the worldwide economicrecession.

Offshoots establishedTriay’s wealth management off-shoot, wasestablished in 1974, under the tradingname of T&T Management Services, tocombine the skills of asset managers, independent financial advisors, lawyersand accountants. Totus (who replacedT&T Management Services) provides awide variety of services and was formed toprovide trust and company services toTriay & Triay private clients, but widenedits activity to include IFA work through anassociation from 2005 with UK-licensed20Twenty.

Totus has offices in the UK and nowSpain and claims to be the largest trust

Gibraltar’s barristers and solic-itors are taking the opportu-nity to ramp up the skills andprofessional training locallyto take full advantage of the

big influx of corporate and financial busi-ness expected as a result of the introductionin 2011 of a new low tax regime.

The close interaction between lawyers,accountants, company administrators,local regulators and the Finance Centre hasbeen a key factor in the success ofGibraltar’s economy in recent years.

In the last decade, the number oflawyers in Gibraltar practices has morethan doubled to reach some 200. The 30firms have an estimated collective turnoverof around £95m, including several off-shoot and associated enterprises in the territory and abroad.

With only 30,000 inhabitants inGibraltar – people know each other welland, as throughout Gibraltar history, poli-tics, family ties and the people you know,can make the legal andbusiness process smootherand quicker than in manyother locations.

However, in gearingup for the expandingworld, significant differ-ences have emerged in theapproach to law and tothe development of law.

Undoubtedly, thelargest firm by far isHassans. It has 70 quali-fied lawyers (24 as part-ners) and a staff total of245 – more than twice as many as the sec-ond largest firm.

But as James Levy, senior partner,recalls: “In 1976 when I joined Sir JoshuaHassan [then Gibraltar’s chief minister], we

were probably the smallest law practice inGibraltar, residing in quaint Victorianpremises.”

Four years later, when Hassans tookon a third person, Tony Provasoli – now afinancial services expert – the practice sup-plied him with a collapsible playing cardtable as work station in thereception area.

David Dumas, chief liti-gation partner and Chairmanof the Bar Council, was num-ber 44 on the Bar list when hejoined as 1 of 5 lawyers atHassans in 1981.

“It was then said, therewere too many lawyers in thejurisdiction. But the frontieropened a year or so later, andlife – and business - tookoff”, Dumas reflects.

Levy, described as “ahuge dynamo of work andcommitment” is credited by many of his

peers with “being significant-ly responsible for the growthof the economy, particularlythe finance sector”.

Yet all of the major firmsclaim to have been involvedin preparing aspects of newfinance centre legislation, tohave strong litigation teams,give tax advice, and to beinvolved in company, trustsand funds formation.

Within ten years ofLevy’s arrival and subsequentcommercial drive, Hassans

had overtaken the Triay firm as largest inGibraltar.

“Other firms have taken a strong com-mercial approach”, notes Melo Triay, man-aging partner with the traditional, family-

run firm Triay & Triay. The 104-years oldfirm started by the late Arthur C CarraraQC and subsequently taken over by Melo’sgrandfather, P S C Triay QC, promotesitself on “integrity – professional ethics are

the firm’s bedrock.”“I consider that we are

lawyers first and foremost, givingclients the best possible objectiveadvice; the business side comessecond”, Triay reflects.

“This traditional approachcould have impacted financiallybut the client comes first”, heasserts.

“James Levy took the legalprofession by storm, andchanged Hassans from a sleepypractice into a commercial busi-ness”, recalls Peter Isola, seniorpartner of the third largest firm

and great, great nephew of the firm’sfounder Horace Parodi in 1892.

Levy seems proud to admit commer-cialisation of Gibraltar law. “I looked atwhat successful UK firms were doing andmoulded mine on it; specifically, the waywe charge, time management and lookingbeyond our boundaries for work.

Commercial pressures“People expect to be charged and pay, asthey do everywhere else in the world, butwe are middle of the road when it comes tocost here in Gibraltar.”

Indeed, he maintains the cost ofGibraltar lawyers generally is 30-40 percent below that charged in the UK, becauseoverhead costs on The Rock are cheaper.

Nevertheless, 50-years old Peter Isolasays: “When I began in practice in 1982 thetotal of our overheads was £29,000; now


LEGALLEGAL

Gibraltarians can trace their law firms back to 1892 – some300 years less than in England – but as Ray Spencer finds,the professionals who account for around 12% of GDPare expecting to expand their businesses on the back ofthe jurisdiction’s growing appeal.


Widening the legal spread

Continued page 19

James Levy, senior partner, Hassans: “generallyGibraltar lawyers cost 30-40% less than UK”

Peter Isola, senior partner,Isolas, whose 1892 documentis pictured above

‘Melo’ Triay, managing partner, Triay & Triay: “we are lawyers firstand foremost”

variously reported as planning offices alsoin New York and Hong Kong, although noprogress has been made on these.

New offices are not the only way topick up international work. A year ago, 43years old Rafael Benzaquen set up as solepractitioner heavily utilising internet tech-nology to build a client base requiring,amongst other things, advice on EU law.

Building on his seven years experienceas head of the Government’s legislationunit, Benzaquen plans to expand early nextyear, and he specialises in putting togetherprivate equity investment funds in supportof Mediterranean projects in luxury markets.

Gibraltar lawyers prosecuting expansion

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company linked to a law firm, bringingtotal Triay staffing to over 100 people.

This followed formation by theIsola brothers, Peter, Lawrence andAlbert in 1989 of the Fiduciary Group,with offices in London and Zurich, toprovide corporate and trust servicesworldwide.

“There has been a shift from beingoff-shore and a tax haven to an EUfinancial centre – an essential step in thatdirection being with Gibraltar benefitingfrom the growth in insurance, funds andinvestment services and able to markettheir services throughout the EU”, Isolabelieves.

Today insurance, investment servic-es, funds and e-gaming (where PeterIsola was one of the pioneers) are stillbig growth areas, he notes, making for amore diverse Gibraltar economy,although Isola’s Private Client businessalso continues to grow and remains asignificant part of Gibraltar’s business.

“But there will be a certain amountof pain, especially for companies thatonly provide corporate services, such ascompany formations, and do not have anumber of strings to their bow”, hemaintains.

“They need to move to added-valueservices on the corporate and trust side:broader offerings or merge with others”,is his analysis.

Oportunities open upTriay sees “a huge window of opportu-nity” opening up in just over a year’stime from the introduction of the 10 percent corporation tax.”

Hassans’ Levy, also enthused by theforthcoming tax change, points out that“unlike Jersey, Gibraltar has an island-type economy and approach to attract

business, but - having the isthmus to linkThe Rock with mainland Spain - with-out any physical limitation.

“Gibraltar has to change to dealwith the changing off-shore world andcompanies seeking to relocate are look-ing to move to jurisdictions that aremore sophisticated in the way theywork. Gibraltar is moving that way.”

In the meantime, Hassans wasdescribed this year by Legal 500 as beingGibraltar’s “most highly reputed lawfirm” and Levy rated “Star Performer”by Chambers and Legal 500 for a thirdsuccessive year. He nevertheless, stillgives up to 25 per cent of his time to probono work locally.

Hassans has been undertakingParliamentary drafting work for SouthAfrica, Kenya, Maldives and Malta, aswell as Gibraltar, and Levy senses thereis “more large-scale off-shore workaround where we can compete, particularly with Jersey and Guernsey”.

In September Levy and a team ofthree colleagues, shuttled betweenLondon and Gibraltar to complete aUS$350m takeover of a UK public com-pany in mining, giving strength to theclaim that local lawyers are frequentlyregarded as effective as their Englishcounterparts and able to attract interna-tional business.

And Hassans has just been retainedby a large telecommunications companywanting to become established in Spain,because the law firm could “provide abridge between Anglo Saxon andSpanish cultures.”

Levy notes: “On a number of occa-sions we have appeared in Court inGibraltar for one party with Englishlawyers on the other side. Theselawyers have come back to us a few

months later to ask us to represent theirclients.

“Gibraltar’s reputation is definitelyspreading.”

Litigation still is big business inGibraltar.

“People are more aware of theirrights, warranty work and commerciallitigation all are being resolved in localcourts, as with companies based hereand involved in disputes between theirpeople and a commercial operation bothlocated elsewhere”, says Dumas.

Part of the reason he feels is thatlocal courts have a shorter waiting timeand are less expensive than in the UKand can cut out one level of the profes-sion, because of the fused barrister /lawyer system.

However, having more lawyers stillmeans spreading the available workmore thinly.

According to Dumas: “We havereached saturation at the practicingBar.”

One possible solution is for morelawyers to go into commerce – becomingin-house lawyers. “Clients can feel itbeneficial to have people on hand whohave legal training and who are able togive initial advice; lawyers too like todeal with their own kind”, Dumas suggests.

Superintendent Jay Gomez of theRoyal Gibraltar Police is one example.This summer he became the first servingpolice officer to be Called to the Bar ofEngland & Wales and provides the forcewith its own in-house barrister.

LEGAL

Lawyers prosecuting expansion from page17

Gibraltar’s Law● a Separate and distinct jurisdiction

with own legislation

● only Common Law jurisdiction in continental Europe (courts, statutes and principles of equity based on English law), where there is a duty of confidentiality

● most professionals trained in UK

● some 200 lawyers - one of Europe’s highest number of lawyers per capita

● fused legal profession - barristers and solicitors enjoy same rights and privileges on court appearances and direct contact with clients

● independent & growing judiciary

● Law firms generate circa £95m pa

Three of the seven Renaissance passenger cruise liners lay berthed and arrested on Gibraltar Port’sdetached mole in 2001

It has been said that six out oftodays most “in demand” jobs didnot exist ten years ago and that inthe 21st century we will have totrain our children to do jobs that

do not yet exist, using technology thathas not yet been invented.

What is true of education is equallytrue in the finance sector.

The truth is that it was not innova-tion that let us down - it was the failureof senior management within financialinstitutions and their regulators to understand it and the risks it brought.

The benefits were easy to see - vastlyimproved short term profitability - butthe medium and long term impacts wereignored by most.

This is where we, as regulators, mustaddress the issue, because if ourapproach was simply to stifle develop-ment, then we will let down the marketand its consumers. If financial innovationhad been disallowed in the past, wewould still be in a barter economy ortrading using coloured beads!

Part of the Financial ServicesCommission (FSC) mission is to“enhance Gibraltar as a quality financialcentre”.

This is not a passive statement it isan active obligation. And that inevitablyinvolves working with industry and

Government to develop new financialproducts, for example our ExperiencedInvestor Funds (EIF) and Protected CellCompanies (PCCs).

We have a very specific, Statutoryrole to reduce systemic risk and protectthe reputation of Gibraltar. But ratherthan act as a brake on growth, our objec-tives require us to be a partner in it, complementing government and industryin developing the finance sector.

The FSC covers the full gamut offinancial and quasi financial areas, frombanking to insurance, funds to companymanagement and, most recently, over-sight of auditors through Gibraltar’stransposition of the Statutory AuditDirective.

This latest addition presents us withsignificant challenges.

No sleepless nights overbanksOur banking sector continues to thrive -dominated by UK and Swiss institutions- providing a range of services to the localand international community. The sectoris small by many standards, with assetstotalling about £11.5bn and; lending isstable at £3.1bn.

Backed by the recently increaseddeposit guarantee scheme, banks providesolid bedrock to other parts of the

New financial products and servicesare constantly being devised anddelivered to consumers, often atbreathtaking speed. Some, such ascredit derivatives have proved to betoxic, but Marcus Killick, chiefexecutive of Gibraltar’s FinancialServices Commission, argues thisdoes not mean innovation should beshunned.

Opportunities arisingfrom new EU rulesgive ‘an edge’

finance sector. Given the nature andnumber of banks, and our risk based regulatory approach, we do not havesleepless nights as supervisors.

Most of our banks have their headoffices and therefore, lead regulators, inother jurisdictions. This has some weak-nesses, as has been seen in the recent crisis with regulators being less than“joined up” with each other.

However, the introduction of EUwide colleges of supervisors to monitorthe largest banks will improve mattersand the FSC will play its part in those colleges where appropriate.

Insurance growingThe insurance sector - a blend of selfmanaged firms and those managed inwhole of in part by insurance managers -continues to grow with significant elements passporting into the UK andelsewhere.

Gibraltar has about 8 per cent of theUK car insurance market and our lifebusiness is showing particular growth.

As with the banks, the Governmenthas made it clear that we do not wantbrass plates and that mind and manage-ment must be in the jurisdiction.Outsourcing, of course is permitted, butnot so that there is a lack of a real presence in Gibraltar.

The issue of the EU is equally vitalfor insurance. We are commencing theimmense task of getting ready for imple-mentation of Solvency II: the legislative,regulatory and supervisory requirementsfor this are enormous; greater than theCapital Requirements Directive, greaterthan MiFID.

As supervisors, if we get it late orwrong, we threaten the viability of muchof the industry and we are working with,and supporting, the Gibraltar InsuranceAssociation on this.

Our investment services sector is stillvibrant. The Gibraltar Investor

REGULATION


REGULATION


Compensation Scheme is one of the onlyones in the world that has its own insur-ance cover to provide a high level of protection for firms in the event one oftheir fellow industry members’ defaults.

The fact that it was possible to renewthis cover in the teeth of the credit crisisis testimony to the way in which this sector operates.

Over the past three years, Gibraltarhas grown into a competitive funds jurisdiction.

To date this has been primarily as aresult of the development of EIFs, follow-ing introduction of the CollectiveInvestment Schemes Act in 2005.

The number of such funds has con-tinued to grow, despite recent marketupheavals. The investment types mayhave changed, but growth has continued.

Innovative opportunities forfundsGibraltar’s ability to innovate within asound regulatory structure provides uswith an opportunity to become a leadingEU fund centres. Like so much in today’sworld, it will be regulatory driven.

UCITs III is the third incarnation of the Undertakings in CollectiveInvestments in Transferable SecuritiesDirective and was transposed inGibraltar via the CIS Act and, to date,there it has stayed. Gibraltar has notdeveloped a UCITS fund industry in theway it has EIFs.

But now with the new economicenvironment and with UCITS IV in thewings, things are different. The changedmarket conditions are making the switchfrom unregulated, or under regulated,hedge funds into retail UCITS funds farmore attractive.

The wider investor base is one rea-son; the investor confidence in a UCITSwrapper provides another.

Whereas for hedge funds, Cayman,BVI and the rest provided a fertileground, they cannot compete in respectof the move to UCITS.

Nor can the Channel Islands: we arein the EU, they are not; we can launch aUCITS platform they cannot.

However, we are a quality not aquantity jurisdiction. We do not have thehundreds of funds that, when theAlternative Investment ManagersDirective comes into force, wouldinevitably move to a less regulated

non-EU environment.Rather we have the benefit of the

reverse. The Directive, in whatever finalform it takes, will present Gibraltar’sfund industry with possibly unparalleledopportunities. Inevitably, the Directivewill throw some kind of cordon aroundthe EU.

Funds outside the Union will find itmore difficult - if not impossible - toeffectively sell within it. The competitiveadvantage of Gibraltar for those wishingto market alternative investment funds inthe EU will be palpable.

For example, at the very least, thenon EU fund manager will have to showits home jurisdiction has equivalent regulatory protection. What will be theexact test; who will judge? How couldjurisdictions such as Cayman, with theirpreviously highly successful bulk model,achieve this?

Given the global market of Caymanand BVI funds, would they want to seekequivalence and add cost burdens tothose funds, which are marketed in juris-dictions that do not require equivalence?

Will they create two tiers of funds,EU marketed and non EU marketed? Dothey have the regulatory resources todemonstrate equivalence even if theywanted to?

Whilst the focus of the draftDirective is on the manager and not thefund itself, my view is that a number ofexisting alternative investment fundsseeking to sell in Europe will move intothe EU - just as some of those managerscurrently operating out of London, butaimed at the Far East or the Americas,may move away.

For those coming in and those set-ting up, Gibraltar will provide one of thefew natural platforms. Of course we willhave to be ready, again demonstrating theimportance of innovation.

Supporting new lawsWithin the FSC, we will have to standprepared to implement the regulationsand legislation that will be needed tofacilitate all of this. Our supervision willhave to be visible, efficient and stand upto outside scrutiny.

Indeed, our ability to demonstratethe quality of our supervisory approachwill never be greater. We will have toshow we have the resources, the capabil-ity and the will to meet the international

standards expected of us.Our track record may be excellent,

but the eyes are still upon us.Just as the OECD has created its tax

white, grey and black lists, so theFinancial Stability Board (FSB) will devel-op one for jurisdictions that are uncooperative in prudential supervision.

Using as its basis the IMF assess-ments of individual jurisdictions, togeth-er with whatever other methodology theychoose, the FSB will first categorise, thenencourage, then criticise and finally askfor proactive countermeasures to betaken against the unwilling.

From this we have nothing to fear,being members of two of the internation-al standard setters, IOSCO and the IAIS,and connected to Basel on the bankingside and the FATF move against moneylaundering, via our membership of theOffshore Group of Banking Supervisors.

We also play a significant role in theOffshore Group of Insurance Supervisorsand in 2007 the IMF reported that“Gibraltar has a well regulated financecentre”. We were more compliant withinternational standards than the majorityof centres, both large and small reviewedsince!

No complacencyYet despite this track record we cannot becomplacent. Like other regulators, wehave sought to learn from global supervi-sory errors of recent years and we mustensure that the legislation under whichwe operate is fit for purpose. We arestatutorily required to advise governmentwhere we find it wanting.

Some changes as a result of the crisiswill be forced on us by international stan-dards or the EU; some, such as increasedsolvency requirements, are much neededand overdue.

Gibraltar has demonstrated its pow-ers of innovation and will continue to doso. It has demonstrated the partnershipof Government, industry and regulator,each complimentary of the others, eachrespecting the others’ roles.

It is a challenging, but exciting,future.

Based on a speech at the GibraltarFinance Centre’s October

seminar in Geneva.

see also FSC bids for recognition, page 12

The promise that “our job applicant‘short list’ provided to employers will beshorter than those provided by our com-petitors” may sound an odd way to pro-mote the launch of the latest recruitmentagency in Gibraltar, but managing direc-tor Angelique Pearson thinks it makessense.

The Select Recruitment Gibraltar(SRG) agency based at Waterport, spe-cialises in service for the Finance Centre,building on Pearson’s UK-wide experi-ence where she set up, and for eight yearsran, the Select Group (now SF Group)

financial recruitment consultancy.A change of lifestyle and her hus-

band’s semi-retirement caused her to set-tle in Marbella, but she soon got back towork, initially for another Gibraltaragency. “Quickly disillusioned”, shedetermined to launch a business with herproven professional formula of ensuringthere are clear job profiles, short listapplicant references are taken up inadvance, and interviews with candidatesto ensure “a good fit”.

“It sounds basic, but it’s essential todo these things to provide a good service

both to client companies and the jobseekers – no-one wants to waste timeunnecessarily with interviews that are notwell-suited to their needs”, Pearson says.

Along with Senior ConsultantThomas Pearson (no relation), who hasin-depth project IT background, she seesstrong demand developing fromGibraltar’s e-gaming companies andalready counts one as a key client, alongwith a large firm of lawyers.

“From our soundings around theRock, there are several more large com-panies moving here at the end of thisyear; it’s a good time to launch our con-sultancy”, Pearson declares.

Merchant House, 22/24 John Mackintosh Square, P.O. Box 758, Gibraltar

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RECRUITMENT

Shorter list to fill the gap

Having moved home 15 times in his 20-year international marketing and generalmanagement career, Simon Robertsonreckons to know a thing or two about theproblems and distractions of relocation.

His Russian-born wife and businesspartner, Marina, similarly had to cope for15 years with uprooting at short noticeon peacekeeping missions around the

Moving times made easyworld with the United Nations.

So they quickly spotted the absenceof relocation specialists in Gibraltar andthe Costa del Sol (where they had settled)and saw the opportunity to draw on theirpersonal experiences to benefit localemployers and staff being recruited fromoutside of the region.

“It’s a big step for some moving to

this part of the world, where legal andsocial requirements are quite differentand, potentially distracting”, explainsSimon. Companies, which are charged afee by Del Sol Packaged (DSP), “get as aresult, fresh staff that are free to concen-trate on the job from day one withoutrelocation distractions”, says Simon, whoalso speaks Arabic, whilst Marina addsother languages, including Spanish,Portuguese and Italian.

In a preliminary judgement, theCourt in September found that“the Portuguese legislation consti-tutes a restriction on the freedomto provide services”, but main-

tained “that restrictions on the freedomto provide services may be justified byoverriding reasons relating to the publicinterest”.

That meant bwin, which employsover 200 people in Gibraltar, could notpromote its services in Portugal under a4-year sponsorship deal with the nation-al professional football league (LPFP)

because all gaming activity is controlledby Santa Casa da Misericordia deLisboa, a 500-years old charity.

Now Holland’s attempt to restrict e-gaming operators from operating incompetition with its national operatorsis being challenged at the ECJ by twogaming companies, Gibraltar-licensedLadbrokes and the UK’s Betfair and adecision is expected in November.

“The Dutch situation allows activemarketing of gaming products by theState monopoly and any restriction oninternet gambling seems to be designed

GAMING

Gibraltar’s sizeable on-line gaming community istaking strong interest in the two latest cases ofalleged illegal protectionism in Europe, followingunexpected support by the European Court ofJustice (ECJ) for Portugal’s monopoly over gamblingwithin its territory.


Euro Court rulingsnot enough foronline gaming firms

to protect the profits of local companiesand, as has been found in cases involv-ing other European countries, that con-flicts with European law outlawing pro-tectionism”, explained Gibraltar’s headof gambling regulation, Phill Brear.

“A State monopoly can only be jus-tified if it is found to be acting in thepublic interest”, he told GibraltarInternational.

Declaring that “it’s time for legisla-tors to act” bwin’s joint chief executiveManfred Bodner said in a statement: “Alegal vacuum has emerged in theEuropean gaming sector, because of therapid pace of technological progress.

“Among other things, this is borneout by over a dozen preliminary rulingproceedings still pending before the ECJas well as numerous infringement pro-ceedings against EU Member Stateswhich the European Commission has sofar put on hold.”

The Gambling Division of the GibraltarRegulatory Authority (GRA) has beenawarded the prestigious ‘Regulator ofthe Year’ award by the management ofthe World Online Gambling LawReport (WOGLR) magazine at its annual conference in the UK.

WOGLR is a UK based legal andpolitical commentary magazine with aneditorial panel of lawyers reaching fromAustralia to Canada and the rest of theworld.

“The responsibilities of regulatorsare rarely recognised, yet Gibraltarhosts some of the largest and mostdynamic on-line operators in the world,and their regulator is clearly making a significant contribution to their

continued success and the success of thejurisdiction”, said managing editor,Lindsey Greig.

Paul Canessa, Chief Executive ofthe GRA said: “We have a small team inthe Gambling Division and I know they

work incredibly hard keeping pace withproposals and developments in theindustry, as well as ensuring consumerinterests across the world are properlyrecognised and protected. We are fortu-nate to be in a position where we havetop class operators and a regulator tomatch.”

Phill Brear, the GRA’s head of gam-bling regulation received the award andlater added: “What we have inGibraltar is unique in the world in termsof its quality and transparency, and weaim to keep it that way by working withGovernment and the industry to keepour high standards.”

His team monitors the operationsand arrangements of the gamblingindustry in Gibraltar, including onlineoperators, the casino, betting shops andgaming machines, to ensure they com-ply with relevant laws and regulations.

Regulation’s contributionto success earns award

Bodner continued: “Online gaminghas become a market reality. There isurgent need to develop a legal frame-work in tune with the times to warrantthe interest of consumers, the state andoperators.” Court rulings would not beable to fill in for regulation in the medium and long term.

Gibraltar has long-been a fully regu-lated jurisdiction for gambling and hasbeen developing Codes of Practice insupport of legislation. The Generic Codewas approved earlier this year and theGRA is now consulting on an AntiMoney Laundering Code for approvalnext year.

The Generic Code includes theintroduction of cyclical RegulatoryReturns, the formalisation of site andpremises visits, and – critically - the bespoke examination of local arrangements.

bwin’s other joint chief executive,Norbert Teufelberger, insisted: “Only aregulated online gaming market with adiversified and attractive line-up ofgames will provide adequate securityagainst the risks of a black market,

which not only opens up the floodgatesto crime, but also passes up on consumerprotection.”

In the meantime, Victor Chandler,which moved its gaming business fromthe UK to Gibraltar a decade ago, hasbecome the first British bookmaker toobtain an online gambling licence inMadrid a market said to be worth some£250 million pa. and hopes to gain asimilar licence in South Africa next year.

Party Gaming, another Gibraltarfirm, bought London-based Cashcadefor an initial £72m to increase its globalshare of the US$ 1.5bn online bingomarket. It will pay the bingo and casinooperator, known for its Foxy Bingo web-site, up to £24m more depending onprofit performance.

Expectations for continued e-gam-ing growth remain high: 888 Holdingsanother local operator, sees a 20 per centrise in online gambling next year as con-sumer confidence returns, according toChief Executive Officer Gigi Levy

In common with other gaming firmsin Gibraltar, an element of growth willcome from running operations for other

businesses, which is unlikely to lead toany significant rise in local sectoremployment, which currently is estimat-ed to stand at around 2,000 people.

Ladbrokes was one of the first togain a Gibraltar gaming license, which ithas maintained throughout, enabling itto threaten the UK government with amove of more of its on-line betting operations to The Rock by the end ofthis year unless betting taxes arereduced.

Betting tax rates in Gibraltar are alow 1 per cent of turnover comparedwith 15 per cent in the UK based on bet-ting profits. Gaming is taxed inGibraltar on a similar ‘profit’ basis as 1per cent of gross gaming yield, bothlocal taxes being capped at £425,000.

However, Gibraltar will introduce a10 per cent Corporation Tax for allcompanies from January 2011 and it isunclear at present how the tax on gam-ing companies then will be handled. Thegovernment is expected to publish itsproposals for implementation of the flatrate tax for debate in Parliament earlynext year.

GAMING


trust and company formation & managementyacht & marine registration

administrative & company secretarial services

PROFESSIONAL OFFSHORE AND ONSHORE COMPANY MANAGEMENT SERVICESWORLDWIDE FROM GIBRALTAR

THE EUROPA GROUPWatergardens 6, Suite 24, Gibraltar

[email protected]

Tel: +350 200 79013Financial Services Commission Licence No00108BGibraltar Registration No 10511

keeping your assets confidential

Stepping upPeter Isola, senior partner forthe past two years ofGibraltar’s oldest law firmIsolas & Isolas, has beenelected chairman of the Societyof Trust & Estate Practitioners(STEP).

Recognised as an expert infinancial services, corporateand trust law, Isola is alsoGibraltar’s contributor toTottel Publishing’s Planningand Administration ofOffshore and Onshore Trustsand its InternationalSuccession Laws.

He is a past President ofGibraltar Chamber ofCommerce.

ExperiencedlandingRocio Fernandez hasbecome the BritishAirways airportmanager forGibraltar after a yearin a similar positionwith BA in Alicante,where she developedcollaborative andprofessional relationships withkey agencies and serviceproviders.

Her appointment comes asBA moved its Gibraltar routefrom London Gatwick toHeathrow and she will belooking to build on theexperience gained at Alicanteand a number of otherairports.

Working for pensionsDavid Erhardt, PensionsDirector of STM Fidecs Life,Health & Pensions, has beenelected chairman of the newAssociation of Pension FundAdministrators (APFA) inGibraltar that provides aforum to promote best practiceamongst local firms involved inpension scheme administrationand operation.

Hassans, CapurroInsurance, London and

Colonial, ECS and Castle Trust& Management Services arefounder members of theAssociation.

Erhardt said the firms arekeen to maintain thereputation of Gibraltar as oneof the leading financial centres,which has seen “a rapidincrease in the demand forpension schemes and relatedservices”.

He added: “We are keento ensure that we fully complywith all necessary standardsand regulations, both locallyand internationally. We need toself-regulate where necessaryand liaise with Governmentbodies both inside and outsideGibraltar in a seamless way.”

Blight followsGomezKerry Blight, former managingdirector of Royal Bank ofScotland International inGibraltar, has been electedChairman of the FinanceCentre Council, therepresentative body thatadvises government on thesector’s progress and needs.

He took over from EmilioGomez, who held the positionsince February 2005 andserved as sector representativefrom the Council’s inception13 years ago. “I felt that thetime had come to let someoneelse get involved on a full timebasis”, said Gomez, who hasbeen central to liaison withGovernment, on key taxationissues.

However, asrepresentative of an insurancecompany on the GibraltarInsurance Association and a

member in his own right of theGibraltar Society of Charteredand CertifiedAccountants,Gomez will continueto be involved infinancial servicesmatters.

Blight hasworked in Gibraltarfor 18 years and hasserved on theCouncil as aGibraltar Bankers’ Associationrepresentative. In his new role,he plans to help ensure thatdevelopments in the localfinance industry benefit notjust international customers,but also the local corporateand retail markets.

“The Finance Industry is amajor contributor to theGibraltar economy. It employsthousands directly andindirectly, and supports bothinternational and localcustomers with their financialneeds”, Blight said.

We’re BritishOver 100 people have beenpresented with a certificateconfirming their BritishCitizenship having sworn anoath of allegiance at aGibraltar ceremony led byDeputy Governor, LesleyPallett.

She said that “gainingBritish Citizenship is asignificant moment in yourlives which should becelebrated” and reminded thenew citizens that they hadresponsibilities as well asacquiring certain rights.

“I am sure all of you will

contribute enormously tomaintaining Gibraltar as a

harmonious, diverseand tolerant society”,she added at the thirdceremony of its typeheld on The Rock.

Excellent resultTwo students haveeach been awarded£1,000 from thePartners of

PricewaterhouseCoopersGibraltar (“PwC”) under itsfour years old StudentScholarship scheme designed toencourage and rewardacademic excellence.

Rebecca Gray andChristopher Torrilla have bothjust started at Imperial College,London reading biology andmedicine respectively and willalso receive a similar sum foreach of the next two academicyears. Both students hadgained four A level grades at‘A’ Level.

PwC Senior Partner, ColinVaughan said that with over100 Partners and staff inGibraltar, the firm is asignificant employer ofgraduates and annually recruitsgraduates on trainingcontracts.

The firm also held itsthird and most successfulannual “PwC Experience” dayseminar on how all staff couldcontribute to achievingcompetitive distinctiveness,using “10 small things” ineveryday behaviour toimprove client perceptions.

Having previouslyfocussed on businessdevelopment and interactionwith PwC’s internationalnetwork, “this year we’veconcentrated on our people inGibraltar, asking them to thinkabout their roles in thepractice, how challenging theyfound their work and what itmeant to work for PwC”,explained partner, ChrisPitaluga.

PEOPLE AND PLACESPEOPLE AND PLACES

&AroundAbout


TV man arrivesResponsible for internal andexternal communications forJyske Bank group since 2004,including the launch of a stateof the art TV station withdaily broadcasts in English andDanish, 41 years old LarsAarup Jensen, has beenappointed managing directorof Jyske Bank (Gibraltar).

Having started in thebranch of the bank’s Headoffice in Silkeborg,Denmark, he workedin CorporateBanking for a decadeand had key accountresponsibility forsome of the biggestcorporations inScandinavia beforetaking upmanagement of acombined IT andcommunications operationdeveloping the Group’swebsites and intranet.

Jensen holds a diploma inBusiness Administration andAccounting from the AarhusSchool of Business in Denmarkand is married with threeyoung children.

At the same time,Nicholas Wright, has becomemanager of businessdevelopment at Jyske Bankhaving worked for the Banksince 1990 and until recentlyserved as an officer in theRoyal Gibraltar Regiment’sterritorial element.

Exceptional servicesThe Medallion of Honour hasbeen bestowed on fourGibraltarians - Jose Netto,Adolfo Canepa, JoesephGaggero and Maurice Xiberras- for the “exceptional” serviceand contribution they hadeach made to the interests ofGibraltar.

Gaggero’s was singled outfor services to aviation,shipping, business andcommerce. He headed theBland Group for 60 years and

through GB Airways [nowsold to easyjet] he made amajor contribution to aviation,the global travel industry andGibraltar tourism in particular.

His Bland Group wasdescribed as “instrumental inGibraltar surviving the Spanisheconomic blockade”, byproviding sea and air servicesto Morocco to relieve siegeconditions, carrying Moroccanworkers to Gibraltar and

supplying fresh fruitand vegetables.

At the sametime, he built apartnership withBritish Airways,maintaining the linkwith the UKthroughout thosedifficult times forGibraltar.

Canepa and Xiberras wereboth recognised for publicservice and services to politics,the former having at one timebeen Chief Minister andLeader of the Opposition, andthe latter also an OppositionLeader strongly promotingIntegration with Spain.

Leaving moneylaundering behindMark Jason Bridge has beenappointed General Manager ofEuropa Trust, succeedingJessica Mila Schutzman, whoafter four years returned forpersonal reasons to her nativeUnited States.

Offering on-shore and off-shore company servicesworldwide, Europa promoted34 years old Bridge from beingLegal Advisor & MoneyLaundering Reporting Officer.

In South Africa he was aprivate practice attorney,before re-qualifying in 2004 asa solicitor in the UK, where heworked for the OfficialReceiver, the litigation teamsof two London boroughs andfor more than three years, theFinancial ServicesCompensation Scheme.

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]


Lars Aarup Jensen

Rocio Fernandez

Kerry Blight

The prospects of growth infinancial markets for theshort term are mainly drivenby the dynamics of stockreplenishment and the big

monetary and fiscal stimuli.However, there still is a big risk that

demand is unable to then act as a growthengine.

The big uncertainty over what thefuture will bring in itself is enough for usto maintain a defensive portfolio. Seeingno reason to fear inflation at present inview of the deflationary forces whichcontinue to persist, we still prefer bondsto equities on the strength of a risk/returnconsideration.

Yet we can take advantage of thenormalisation process in the credit mar-kets to raise the allocation of high-yieldbonds to neutral, and lower the alloca-tion of developed-market bonds – infavour mainly of corporate bonds.

The economic indicators point topositive growth in Q3; the US will prob-ably follow Germany, France and othersand leave recession behind.

Global business confidence paintsalmost the same picture after a plunge inthe wake of Lehman’s failure, recentmonths have seen solid increases.

Financial markets seem to anticipatean early return to growth, and riskyassets have continued to perform well.However, bond yields have not risen,despite fair price rises of equities.

Stabilised fasterThe economy has stabilised much fasterthan expected, but it matters not whetherthe recession has technically ended ornot; more on whether we are in for anearly return to potential growth.

So far, the stabilisation of growth hasbeen driven mainly by two factors: monetary and fiscal-policy easing, which

for the short term helps to supportdemand (the scrap bonus offered to UScar owners being the most obvious example) and the notorious effect ofcompanies stepping up production forthe short term to replenish stocks.

For this to lead to a lasting upturn, itis necessary that demand also showssigns of lasting improvement, and con-cerns over that remain. Encouragingsigns on the production side, have notbeen matched on the demand side in theWestern world

In the US, we can expect to see continuing negative growth in householddebt in view of rising unemployment, thefalling rate of wage increases, and aheavy fall in asset values.

The supply and demand for loans arefalling, since banks continue to tightentheir lending conditions and overall con-sumer spending is expected to remainweak for a long time yet.

All things considered, the upturnshould be regarded as somewhat luke-warm - and a return to recession cannotbe ruled out!

A defensive portfolio allocationmight best be retained.

No early inflationWhile indicating that strong weightshould be given to interest-bearing instru-ments in a portfolio, it might mean theopposite, if there is a fear of inflation.

Yet deflationary, rather than inflationary, forces dominate. There aresimply such big idle resources in theeconomy that we cannot imagine infla-tion to be a problem in the foreseeablefuture, expansionary monetary policynotwithstanding.

There is a close historical correlationbetween capacity utilisation and changesin inflation 18 months later, and this points to lower inflation for a

Recent economic indicators confirmed stabilization ofthe global economy, but the big question according toIb Fredslund Madsen, chief economist at DanishJyske Bank, is what follows when the stock replenishment and stimulus effects fade out?

Low inflation brings opportunityin corporate bonds

good part of 2010.The labour market confirms the

picture - wage increases have slowed to ahalt in most places, and given mountingunemployment, this development isunlikely to change soon.

All things considered, there is no reason to fear inflation for the next 1-2years, and a better risk/return ratio forbonds than for equities can be expected.

Yet we switched out of developed-market bonds into high-yield Bondsimmediately after Lehman’s collapse inthe autumn of 2008. We saw near-collapse in the market for corporatebonds, and this illiquidity prompted us toadopt a very cautious approach to high-yield bonds.

Since then, the market has beenimproving, and systemic risks have beenthrust into the background.

Move to normalisationThis provides an opportunity to take thenext step towards normalisation of ourportfolio, by raising the proportion ofhigh-yield bonds to neutral and reducingdeveloped-market bonds, preferring cor-porate bonds to emerging-market bondsamong high-yield assets, despite theirimpressive performance.

Corporate bonds are an asset classoffering fair risk-adjusted returns both atthe end of a recession and the beginningof an upturn.

Equities and emerging-marketbonds, for instance, depend more on theeconomy confirming that the upturn isgetting a firm hold. This asset class stillholds value, although the credit spreadshave already narrowed considerably.

Increasing the proportion of corpo-rate bonds in a portfolio adds valuestrategically in the long run - and givencontinued uncertainty on economicdevelopment, this may also be seen as aprotective hedge against the possibility ofeconomic growth actually materialisingfaster than expected.

Based on a recent Jyske Bank presentation to business professionals

in Gibraltar on “the big picture”.see also “Equities Place to be” page 14

INVESTMENT


Modern Mediterraneandining

Business lunchesa speciality

54 Irish Town, Gibraltaropen:10am-late

closed Sundays + Saturday lunch

Tel: +(350) 200 51738to reserve a table

B A R R E S T A U R A N T

CAFE R

OJO

There are a lot of questions Ikeep asking myself and needto sort out first. I know thedictionary explanation ofsemi is half but which half?

In my life to date I recall two semis: 1)being a semi-professional musician and2) the first house I bought was semi-detached.

So why was I only a semi-profes-sional musician and not a full profes-sional? Was it because I was not goodenough to be a full time professional(maybe) or was it because I liked mymusic, but wanted to develop in businessas well. Probably the latter but you cannever be sure.

Business has also been good to meso it did not matter which I chose, but ifI get semi-retirement wrong that willprobably be for the rest of my life!

I purchased a semi-detached house,because I could not afford the other halfand I was delighted to have a semi,because that was more than the terracedhouse I had lived in as a child. So in thatcase, semi was the full circle.

Other everyday semis include semi-skimmed milk - but the half that hasbeen taken away is the rich part. I cer-tainly do not want the rich part, or to bemore precise, the semi rich part, to betaken away when I retire.

Semi-final - almost made it to the

end but not quite! When I retire I wantto feel I made it to the final, that I wonand therefore there is no further to go.Semi can also be a prefix for almost. I donot want to be an almost man, I want tobe the full product.

Colleagues who have retired tell methey are so busy they do not know howthey ever had time to work. They tell methey are doing all the jobs around thehouse that their wife has been demand-ing for years - and they are playing golffive days a week.

My problem is I do not like doingjobs around the house and would ratherwork to earn the money to pay otherpeople to do them. If I was semi-retiredwould the half that was retired beexpected to do these jobs?

That is not what I have in mind. Ilike my golf, but I will never be a TigerWoods. Also would I want to play withthe same people five days a week - that

sounds a bit like going to work.Maybe the solution can be found by

dividing in two the things I do at work -the things I like doing and the things I donot. I know this is selfish but at my agemaybe that is allowed.

So if I was lucky enough to semi-retire and on the work front had only todo the things I enjoy, I still have todecide what to do with the retired half.The danger is if I don’t have a plan I’llslip into doing the jobs-around-the-house syndrome.

Agatha Christie’s Hercule Poirotfrequently referrers to ‘using the littlegrey cells’. I believe that retirement timeshould be spent keeping the brain work-ing and if you do that the body will fol-low.

I like writing so maybe I shouldstart that book which is said to be insideall of us - you may not think that is sucha good idea after reading this. Or maybeI could launch a web-site called “ face-back”. Retirement would be a great timeto meet up with all those friends I havelost touch with over the years.

My older sister has just got herdegree from the Open University, havingmarried young, she now has the time tofill in the gaps she felt existed in her life.I do not want to do a degree, but retire-ment as a time in life to fill in the gapsmakes a lot of sense.

I’ve been fortunate enough in busi-ness to have gone half (or should I saysemi) way round the world. Yes, thereare places I would like to visit and cer-tainly will include them on the itinerary.

However the most important thingis for my tomb stone not to read: “Herelies a semi man”. I need the years left tocomplete the circle!


LAST WORD

Getting it half rightTony Tanner has been thinking that he might like totake semi-retirement, but what does he imaginesemi-retirement will be?

retirement time shouldbe spent keeping thebrain working and the

body will follow

“

”

Unit 14, Queensway QuayGibraltar

Opening hours

12.30pm-11.00pm, last orders 10.45pm

Tel: +(350) 200 43731

14 On the QuayRestaurant

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