Episode 54: Cayman Islands, Anthony Travers: Travers Thorp Alberga
In Episode 54, Caroline talks to Anthony Travers OBE, who left the UK when the top tax rate was 98% to work and live in Cayman. Anthony is the former senior partner and managing partner of Maples and Calder and the current senior partner of the Cayman Islands and British Virgin Islands law firm Travers Thorp Alberga.
Episode Transcript
00:00.00
carolinesclub
This is episode 54 of how to keep your money I am Caroline Garnham a private client lawyer specializing in international trust and success planning a pioneer of family governance and a psychologist I set up Caroline's club and into. Interdisciplinary club of private client professionals where networking works my program of excellence consists of 6 modules with two lessons each. It explains why traditional networking produces only a poor return on investment and how to dramatically improve revenue using videos podcasts. And case studies I've been awarded by great companies. International woman of the year Twenty Twenty four for my training and coaching program I'm joined remotely by Anthony Travers O B E senior partner of Travers Thorpe alberga a boutique financial services law firm with offices in kymen british virgin islands London Hong Kong Australia and New Zealand its business model is designed to be relevant to client needs in a changed offshore legal and economic environment. Anthonyton you went to tiffin school in kingthstonon-thames won an open exhibition to St Catherine's College Cambridge and graduated a scholar with a first in law you won the Jacobson prize for law you are qualified as a solicitor in one 75 at Clifford Turner
01:30.45
carolinesclub
Which later became clifford chance and the same year you joined maples and corder in the cayman islands. Why did you leave a sterling career in London to go to the Cayman Islands Anthony welcome.
01:44.68
Anthony Travers
Ah, good morning Caroline from a very sunny and already warm Cayman islands. Well if memory serves I yeah cut my teeth at as it then was as you say Clifford Turner in the trusts department I was article 2
01:48.23
carolinesclub
How infuious.
02:02.43
Anthony Travers
David Nicholson then Lord Carnock and his friends and client base as far as I could ascertain from the settled land act trust deeds and I was given to look at owned most of england the. Problem that I had was that I spent most of my time and my nose in Debrett's peerage because whilst the operational part of the documents were not that problematic various deeds of amendment. The thing that I couldn't do having been a state school boy and i'familiar with the ways of the aristocracy was get the titles right in in the party section so that he would come back largely correct. But the front page with the party section would be covered in reading ink with several pages of reading Cadenda and so I thought possibly this wasn't for me and transferred to the tax department and that was formative because I there understood that the. Top rate of tax in the united kingdom at the time on earned income over £20000 a year was 82% and the top rate of tax on unearned income at the same level was 98% which is why the beatles in their song taxman sang.
03:30.72
Anthony Travers
There's 19 for you and 1 for me. There were actually better singers than they were mathematicians that would be equated to a 95% tax rate. But but never mind. Um I realized it was going to be impossible to.
03:46.50
Anthony Travers
Accumulate any significant net worth in the united kingdom because of course no one had predicted Margaret Thatcher coming along and rolling back these years of socialist high taxation. Um, and so I resolved to. Believe and was looking for advertise in the universal page of the law society gazesette actually thinking Hong Kong would suit when I saw this advert that said Cayman Islands $8000 a year tax-free. Doesn't seem like a lot of money today. But at the time as a newly qualified solicitor clifford turner I was earning two thousand two hundred pounds a year before tax and so I resolved to find my fortunes and joined many people at the time in what was a brain drain. From the united kingdom and those of you about car shore ballots in november of this year should perhaps remember that the 1 thing we learn from history is that no one ever learns anything from history.
04:57.80
carolinesclub
Anthony that's a fabulous introduction. Um, you've had a hugely successful career. You became a partner with maples and colduler in 1977 and was its senior and managing partner for 20 years you been chairman of the Cayman Island stock exchange since its inception president of the Cayman Island law society and chairman of Cayman Islands financial services. You were also drafted the Cayman Islands exempted limitation partnership law in Ninety ninety. one and the mutual funds law in 9093 in August Ninety Ninety Eight you were awarded the order of the British Empire Obe for services to the Cayman Islands financial services industry that's quite a lot of achievements. Antony tell me a bit more about these.
05:49.55
Anthony Travers
Well Caroline I yeah I don't look down the the legal highway of life and and and drive it drive down it looking in the rearview mirror. Um, but I think looking back? Um, certainly at my time at maypoles there. There were so worse were certainly things that occurred to me that could have been done differently or much better. Not at the time that I was thinking of sorry a new law firm but but circumstances happened um where I was asked to do so and I thought to put a number of those. Improvements refinements into into into place. So the history of of the mapbels years was extremely useful in in designing as you mentioned earlier a different law firm. This was post-financial crisis remember I know everyone likes to say they they are different but um. I thought there but were certain things that just weren't working in in in major offshore law firms and I resolved to to to change those.
06:57.55
carolinesclub
Good, Um, and and what ways does you change those because you you were drafting legislation. You were um, give me a bit more flavor.
07:09.70
Anthony Travers
Well, the I think the the the period of of our drafting legislation was very much um, a a consequence of time and circumstance of the the. Difference with the cayman politicians in those days was that they knew what they didn't know um and were very keen to to to avail themselves persistence and if you understood how an offshore financial centers ought to work. In terms of tax neutrality which I may come on to later. Um the the type of legislation we needed was what was very clear to me and so so so that that was prepared but but you know I don't think those circumstances prevail today that there isn't the same degree of input. Ah, so um, yeah, it was very much a case of being in the right place at the right time in terms of the the legislative developments and of course there were other circumstances the pendling government in the Bahamas in 71 had decided to behaianize the Bahamas Financial Services industry which caused a mass exodus of of business. Um, and so ca and got a sort of kickstart and then we produced the new legislations my partner Anthony Duckworth at the time I was a very bright chap um drafted the initiated and drafted all the firewall legislations that's now called trust foreign element law.
08:41.94
Anthony Travers
My other partner. Tim Ridley drafted legislation on the company's law particularly migration of companies particularly giving us redeemable preference shares which a long time before they they they were. They were introduced in the united kingdom and not until 9098. So so we were able to create hedge fund structures. All of that was time and circumstance. But but but in terms ah of of the changes to a law firm. There. There were things that occurred to me that just didn't work fixed fixed equity interests I found did not work billable hour targets.
09:10.62
carolinesclub
Ah.
09:19.20
Anthony Travers
And and at Ai rate billing I found did not work and and I think a number of firms are are discovering this today I think there is great disquiet in and a lot of the major onshore firms. Um, um, and and you're seeing this little exodus of.
09:32.61
carolinesclub
I pray.
09:38.74
Anthony Travers
Ah, of talent young talent from from the legal profession which of which I think is a pity but I resolved to change those things if I ever had the opportunity of starting a new law firm which I wasn't planning on I was planning on skiing a hundred days a year which I did um. Um, and then and then then realized I wasn't getting any better of that and should perhaps think about doing other things. But um I had this sort of checklist in my head of of what would you do differently? How would you improve what you'd done before and as it as it transpired with the new firm travis thorbar burger I was able to introduce these principles.
10:14.25
carolinesclub
Well, you're obviously a pioneer um and the right person at the right time as you say the Cayman Island is hardly a backwater in the global financial market recent statistics put a good fund flow in excess of 8000000000000
10:30.55
Anthony Travers
Yes.
10:31.00
carolinesclub
UDollars? Um, Traver Thor olberger has had its fair share of these big ticket transactions looking at your list of recent transactions I note that the firm of just under 60 lawyers has been involved as lead counsel for us dollar 1.25 Billion swiss private bank and a Us dollar 300000000 subscription financing financing facility to a leading fund group. What attracts these significant financial deals to your firm Antony.
11:05.14
Anthony Travers
Well that that's that's very simple and short answer. We we simply have better lawyers and mean that was the niche that um that I was intending to fill with with the new firm. Um, and in in the offshore space. Great number of firms.
11:21.98
Anthony Travers
Came to rely increasingly on what I call their fiduciary divisions um moving into directorships fund management. My old firm certainly did so in my twilight years there I found a great number of. The difficulties that I that I had to deal with ah Ray because of the conflicts of interest that that came about in in providing directorships to to client structures. Um, and so you know I resolve not to.
11:57.25
Anthony Travers
Not to have a fiduciary division at all on this new law form firm. The the result of it's actually that when the law an offshore law firm relies heavily on on the peduciary limb that the the peduciary tail wags the dog. And and there is a deterioration. The quality of lawyers they recruit because the fee income firm becomes driven by by by the administration producer side and that I thought was going to create a niche in terms of just a sort of high quality offshore law firm providing just. Legal services without conflict of interest and so so that's where I focused and if you look at the Cvs of the partners of this firm associates and you'll see that we have a number of partners that were full equity partners in in in major onshore London firms. Um, but but is that that higher caliber of lawyer. Don't doesn't start out that way of course 2012 when we started. We had 4 4 partners um but by way of referral word of mouth if you have better lawyers. The the story will out.
13:10.90
carolinesclub
Um, you've really talked on this just briefly. But I just want to dig a little bit deeper your firm dispensed with billing targets and hourly billing but has seen 18% compound profit increases yearly. Ah, Anthony tell me a bit about this success and and and why.
13:31.53
Anthony Travers
Well um I do think the 2 things are related um, hourly billing rate targets I found to be extremely problematic in my my my old firm.
13:47.63
Anthony Travers
And I thought to do something ah different. Um, which actually reverses the Psychology. What we we We we say to a client is look Um, we have better lawyers at that point of course the client doesn't know you have better lawyers. Um, but if you reverse the psychology of say to the client when we finish the transaction. Why don't you pay us what you think is reasonable and fair in relation to the value you Perceive. We added um that actually changes the dynamic completely. Um. No one is then worried about billing targets because we're going to have a discussion with the client. Ah when the transaction has closed now. Firstly when the transaction is Closed. You have a happy client but you also have a client who at that point if you're right that you had the best lawyers and you've got to assume the risk of that.
14:42.34
Anthony Travers
I mean by reversing the psychology of it if you assume the risk and you're happy that a client to make the decision when the transaction is closed at that point if you're right? The client will know you have better lawyers and furthermore if the client wants to repeat a transaction. He won't then want. Less good lawyers from another firm on this on his next transaction and and I think that that is the psychology that's actually driven the the significant gross fee income increases over the years
15:15.28
carolinesclub
How very interesting. Um I never thought of you as a psychologist but obviously you can put all this into practice.
15:22.62
Anthony Travers
I want I think I think 20 years of of of being a senior partner of an offshore law firm. You really have to be a psychologist. Um.
15:30.49
carolinesclub
Ah, ah, the Cayman Islands has seen the green eye of envry from places like the Eu which has tried to damage the island's reputation by saying the jurisdiction causes. Great concern about tax matters but is unable to give us. Single specific example. Meanwhile it turns a blind eye to jurisdictions in its own territory such as Ireland and cyprus which actively attract tax avoidance businesses I know you feel strongly about this Anthony tell me a little bit of.
16:02.60
Anthony Travers
Well well we we honestly don't have enough time to drill into the the the nature and extent of the false narrative that that that's perpetuated by Ngo organizations like the tax Justice network.
16:03.51
carolinesclub
About it from your perspective.
16:21.88
Anthony Travers
Picked up by the guardian the financial tos which are are tediously inaccurate. Um, the yeah suggestion that that a 0 tax base in the cayman islands of all corporate transactions to the sort talking about high network trust transactions. Has anything to do with tax avoidance or tax evasion is ridiculously flawed and and very badly confused. The the fact of the matter is that cayman and and and the other oversea's territories have. The most superior system of registering ultimate benefial ownership of of every structure down through to a 10% interest that is all verified and documented which which renders the the comparative system in the united kingdom. Derisy by the way if you look at what goes on a company's House. It's complete and utter nonsense and we shouldn't be lectured to on the subject by english politicians like Dame Hodge or Andrew Mitchell who clearly have no idea what's going on in their own backyard. But but we have this verified system of benefial owner every entity which any law enforcement body or tax authority can access um, and not only that we have common reporting standards.
17:55.19
Anthony Travers
Automatic reporting a bit of every account of every investor in the cayman islands right? right across thelabe and of course the us fatca which does the same thing but for for us citizens although is not receparcal as you know, um. And and and so you know the suggestion that cayman is involved in in in tax avoidance or tax evasion is is actually nonsensical and nor do you ever see any evidence and notwithstanding this unrestricted right of access that that tax authorities have to the information in Cayman the the cayman structure based on the principle of tax neutrality which means that when when when investment funds are pooled in cay and from investor groups around the world. A lot of recycling comes from the Middle East petrick dollars welcome until recently a great deal from mainland china ah less so less so now. Um, but but those monies when pooled are invested in onshore jurisdictions and 99% of those eight trillion or nine trillion whatever number may actually be and we don't know precisely because half the private deputy funds aren't aren't regulated and so so don't file accounts. But.
18:59.21
carolinesclub
Are.
19:11.21
Anthony Travers
Numbers in excess of eight trillions say that um those monies are tax in accord through the laws of the jurisdiction of of investment. Of course they are ah you can't do otherwise and so the simple way of remembering it is that there's a taxes are paid in the jurisdiction where investments are made. The net proceeds when remitted the Cayman Islands have distributed to a shareholder or investor by way of dividend distribution or redemption of proceeds um are automatically reported under the common reporting standard and so taxes are also paid. In the jurisdiction of the investor's residence or domicile which means that there is actually no margin for tax avoidance or tax evasion and tax avoidance and and here's the heresy in in the narrative false narrative tax avoidance necessarily requires. A double tax treat and said it the major tax avoiding jurisdictions are as you mentioned Ireland but but Netherlands and and Ireland Netherlands and Luxembourg um, and you know there's the jurisdictions where where where the money was necessarily. Be be deductive which causes the the tax Avoidance problem.
20:30.10
carolinesclub
Um, interesting, very interesting Anthony. Thank you in November Twenty Seventeen you're on the Bbc News night program talking about the paradise paper leaks which you called fake news. This arose from the criminal hacking into the respectable law firm of Applebee in Bermuda a very different firm to the hacking of the panamanian law firm mossak pansecca having read the misinformed book money lands by Oliver Bullow I don't disagree with you. Journalists who publish misleading and misinformed information should be jailed tell me more about these views. Anthony.
21:10.71
Anthony Travers
Well I think there there are 2 or possibly 3 main points in all this that the first thing is that the what occurred is is actually illegal criminal hacking. Um, in in gross derogation from the rights to privacy of the persons whose information was disseminated had nothing whatsoever to do with tax avoidance or tax eversion or illegal activity. Um, and and what I don't understand. Maybe someone can explain it to me is how we have things called the data protection legislation and in in and the european union United Kingdom United States we have we have the the european court of justice upholding data protection and and. Quite recently and and saying that that supervenes the right to access a private beneficial ownership information which is the most recent ecj ruling for which we have for evenva the say of mishcon to to thank in large part. Um, and yet this group the icij. The yeah I think it's the illegal consortium of illegitimate journalists are allowed to um, hack away to their hearts content and just look at look at the facts.
22:33.80
carolinesclub
Suffer.
22:43.60
Anthony Travers
They they they proudly boast that 11000000 pages of of ah private confidential information is obtained and um, what do we find out of it where are the prosecutions where are the convictions we find 1 icelandic minister 1 pakistani minister. Um, apparently we're up to no good. Um, we don't find that that the the pakistani or the icelandic authorities had the slightest idea about what was going on and weren't prosecuting any such breach from the right end of the funnel. Um and and yet. Um, millions of pages of private data have have been made available. You know I I just don't understand the double standard. Why aren't these these these journalists so called in prison and and the answer that is for the same reason.
23:27.61
carolinesclub
Um.
23:30.70
carolinesclub
Yeah I don't disagree.
23:36.20
Anthony Travers
Um, that that chap Hallett Therycewaterhouse reporter who was responsible for the luxembburgg leagues in 2016 initially convicted but was set free by the european court of human rights set free as a his fine was set aside and he was so was his suspended sentence. Um. So let me get that right? but you know that there you have it massive leaks actually much more interestingly in Luxembourg revealing 750 illicit tax deals at the time junkers was chairman of the european commission. Um, and um. Actually no, no no recourse whatsoever in terms of the data protection issues I mean I'm just a simple Cayman Islands lawyer perhaps somebody can explain this to me.
24:17.61
carolinesclub
Ah.
24:21.51
carolinesclub
Well I think it's double standards Anthony you left maples and coulder where you were the senior partner in 2006 but did not join Travers Thorpe al burga a senior partner until 2012 you called this the longest non-compete clause in history. What on earth did you do with your time for 6 years
24:46.52
Anthony Travers
Um, yes, well I had to find something to do because my wife made it very plain to me that she married me for love not for lunch. So um I had to get out of the house. Um and thought well. I've done all these sorts of transactions and it can't be that difficult to do private equity. Um, so I got involved in a private equity deal in China the most exciting part of which was actually I woke up one morning having slept through the shan earthquake final.
25:21.80
carolinesclub
Ah.
25:21.47
Anthony Travers
Sunlight streaming into my hotel room through the roof of the hotel and my gucci loaf is floating in two inches of water that didn't work out terribly well as a venture. The Gucci loaf is dried out. But um. The chinese parties counterparts on the deal stole our banking chop and and all the money in the account. Um, so that was the end of my private equity endeavors. So I then turned my hand to whale cat oil drilling. Um, and ah drilled a hole to the death of six thousand two hundred and fifty feet in Tasmania um, did find the carboniferous dome but couldn't actually penetrate it so that turned out to be an an unsuccessful venture. And um, so I resorted to skiing a hundred days a year as I said earlier I realized I wasn't getting any better and my I thought I was doing trebly well fifty miles an hour and my son saw me skito to me.
26:32.50
Anthony Travers
180 degree turn and was skiing down the hill backwards faster than I was skiing forwards and I realized at that point that perhaps I wasn't wasn't going to improve sufficiently so I thought to um I thought to maybe going back to doing the 1 thing I seemed to know. How to do and that was start another law firm.
26:52.79
carolinesclub
Think that's charming. Absolutely charming. Yes, it's it's it's a bit of ah of a rude shock when your kids um, start overtaking you on the Ski slopes and then overtaking you on everything else I think so.
27:03.35
Anthony Travers
The site for.
27:07.53
carolinesclub
Like you so much Anthony for joining me on how to keep your money. You've been vociferous in promoting the cayman islands as a good place for financial services on a global scale and have succeeded in building a great business in Traver Thorpe alberga with an enviable track record. Well done. If any of our listeners would like to know more about Caroline's club where networking works please visit our website or contact us by email or phone also make sure you are registered to receive our weekly newsletter to hear more podcasts with leading professionals on how to keep your money. And register your interest in Caroline's club on our website or from our newsletter. Thank you very much Anthony for joining us bye bye.
27:52.84
Anthony Travers
Caroline. Thank you I buy not.
