New blood for

a tax haven

By Angela McCarthy

THE Cook Island offshore financial centre, which was set up a decade ago, has become the centre for a drive into the Pacific region by Standard Chartered Bank (SCB).

SCB, which is an international bank ing group represented in over 50 countries, has taken over the business and staff'of the biggest trust company in the Cook Islands, European Pacific Trust Company (Cook Islands) Ltd. It is also acquiring the business of European Pacific offices in Western Samoa, Hong

Kong and Singapore.

The change was formalised last month at a ceremony where European Pacific Centre was renamed Equitor House.

Equitor is to be the new logo for the

Standard Chartered Banking group’s

new corporate identity.

Standard Chartered is an interna tional banking and finance group with a head office in London, but whose business is centred mainly in the Asia/ Pacific region where it has more than 231 offices and branches. The modern bank’s forerunner, the Chartered Bank, was established in England under Royal Charter over 130 years ago. Its financial

division, Chartered Financial Holdings, presently administers assets worth US$l7.2 billion, most of which are invested in the Asia Pacific area.

Standard Chartered had been looking for an appropriate offshore centre for more than two years, and discussions with European Pacific had dominated that search in the past 12 months.

Managing Director of Standard Char tered financial services division, Michael Brogan, explained that the purchase of the trust business of the European Pacific Group was an essential part of Standard Chartered’s drive to raise its profile in the Pacific region. He says Standard Char tered needed a quality organisation set up in a recognised safe haven and found it in European Pacific Trust Company (Cook Islands) Ltd.

Trust companies such as European Pacific form the basis of tax havens by managing companies and other similar entities both institutional and private.

Brogan, who prefers to call the offshore centre a safe haven not a tax haven, says that the aim is to protect its clients’ assets.

“Clients are not paying tax here, but they will be elsewhere,” says Brogan.

Safe haven or tax haven, it is all the same to the vast majority who do not have the

use of such institutions.

The Cook Islands trust company will be Standard Chartered’s first offshore trust company and will be marketed as their exclusive offshore finance centre within the Asia and Pacific region, an area in which European Pacific already has a good profile.

The Asia/Pacific market holds good opportunities for offshore finance centres because the region’s private and insti tutional wealth is increasing markedly at a time when its traditional centre for asset preservation, Hong Kong, is in a state of flux.

Earlier this year the Cook Islands became one of three nations to be

registered on the Hong Kong stock

exchange as an alternative offshore domicile for locally listed companies.

This was an important reinforcement of credibility for the Cook Islands which is a relatively new tax haven compared to the other two registered the Cayman Islands and Bermuda.

European Pacific Group was the brainchild of Australian lawyer David Loyd assisted by Trevor Clarke, ex Solicitor General of the Cook Islands.

They were involved in setting up the Cook Island offshore financial centre legislation back in the early 1980 s. In 1981 Clarke, with one employee, set up the first Cook Island trust company, Cook Island Trust Corporation Ltd (CITCL). In 1986 CITCL became a subsidiary of the European Pacific Group which is believed to be owned by interests associated with European Pacific execu tives and New Zealand corporates Brierley Investments Ltd and Fay Richwaite and Co Ltd. The Bank of New Zealand also has had involvement in the European Pacific Group.

The Group also set up an offshore bank in the mid-eighties, and purchased the only .retail bank in the Cook Islands at that time — the National Bank of New Zealand.

“It increased our profile to own a retail bank and have the staff — and it made a profit,” explained Clarke. The local retail bank was sold to Westpac two years later, but the offshore bank remains part of the European Pacific operations and no change is planned in its structure or

ownership.

European Pacific employs 40 people in

Raratonga, including nine accountants and five lawyers, which makes it the biggest of the six registered trustee companies in the Cook Islands. Standard Chartered will not be making any initial changes to the trust’s management or staffing. It will continue to be run by Trevor Clarke, who has been European Pacific’s chief executive for the Cooks.

For the Cook Islands, the offshore industry has provided a lucrative source of income it is second only to tourism in national revenue. □