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Identifier
Created
Classification
Origin
06BRIDGETOWN1934
2006-11-02 19:13:00
CONFIDENTIAL
Embassy Bridgetown
Cable title:  

DOMINICA: A NEW ATTEMPT AT OFFSHORE FINANCIAL

Tags:   EFIN  ECON  EINV  ETRD  PGOV  PREL  DO  XL 
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VZCZCXYZ0025
PP RUEHWEB

DE RUEHWN #1934/01 3061913
ZNY CCCCC ZZH
P 021913Z NOV 06
FM AMEMBASSY BRIDGETOWN
TO RUEHC/SECSTATE WASHDC PRIORITY 3635
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUMIAAA/HQ USSOUTHCOM J5 MIAMI FL
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL
RUEHCV/USDAO CARACAS VE
						C O N F I D E N T I A L BRIDGETOWN 001934 

SIPDIS

SIPDIS

SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 10/14/2016
TAGS: EFIN ECON EINV ETRD PGOV PREL DO XL
SUBJECT: DOMINICA: A NEW ATTEMPT AT OFFSHORE FINANCIAL
SERVICES AND ECONOMIC CITIZENSHIP

REF: A. BRIDGETOWN 1898

B. BRIDGETOWN 1072

C. BRIDGETOWN 875

D. 03 BRIDGETOWN 257

Classified By: CDA Mary Ellen T. Gilroy for reasons 1.4(b) and (d).



1. (C) SUMMARY: Dominica plans to resurrect both its
economic citizenship program and its offshore financial
services sector. Both programs previously left scars on
Dominica's reputation, and so the government is emphasizing
that it will implement these programs with appropriate
regulation and increased due diligence. The appointment of
Julius Timothy as the Minister of Economic Development and
Planning raises some questions about Dominica's commitment to
a new course because of his service as finance minister
during the failure of the previous offshore financial
services sector. END SUMMARY.



2. (U) Dominica is striving to revitilize its economic
citizenship program and its offshore financial services
sector. Prime Minister Roosevelt Skerrit has publicly stated
multiple times that offshore financial services will play a
crucial role in economic recovery. PM Skerrit named Julius
Timothy to head these programs as Minister of Economic
Development and Planning. Timothy was the co-founder of the
opposition United Workers Party (UWP), but he crossed over to
the ruling Dominican Labor Party on September 25 to accept
the ministry portfolio. Timothy also served as finance
minister during the UWP's last stint in government
(1995-2000).



3. (C) This is Dominica's second attempt at both programs.
The previous UWP administration, which was widely considered
corrupt, initiated Dominica's first versions of the economic
citizenship and offshore financial services programs. The
financial services sector lacked crucial regulation, bred
corruption and money laundering, and resulted in the
blacklisting of Dominica's financial sector by various
international organizations and financial institutions.
According to the current press secretary, Sean Douglas, once
the DLP took power in 2000, the government pushed out the
"dodgy" banks responsible for these problems and put most
owners of these financial institutions in jail. One of these
banks, Carib Bank, is still under investigation by the U.S.
Internal Revenue Service (IRS).



4. (SBU) Dominica's economic citizenship program has also
generated serious concerns, particularly about the types of
people purchasing citizenship and the purposes for which they
were using Dominican passports. In the 1990s, Dominica
issued over 600 passports to citizens of China, Russia,
Ukraine, Pakistan, India, and other countries (reftel D).
The economic citizenship program recently came under scrutiny
when Dominica took Switzerland to the International Court of
Justice over the Swiss decision to strip a Russian-born
Dominican "diplomat" of his diplomatic status (reftel B and
C).



5. (C) Government officials are emphasizing that both
programs will not repeat the problems of the past. Douglas
stated that PM Skerrit plans on diligently regulating the
offshore financial services sector and increasing due
diligence to avoid repeating history. Kevin Wessell, CEO of
Companies Incorporated, an American company, supported this
comment. Wessell visited with PM Skerrit in late August
looking for opportunities in this new sector. According to
Wessell, it is clear that PM Skerrit is trying to create a
transparent sector, incorporating substantial due diligence.
Futhermore, Wessell hopes other U.S. businesses will join him
in this sector to help ensure that the regulations are to
U.S. standards and compatible with U.S. laws. Officials say
the same concerning the economic citizenship program. Both
Douglas and Rayburn Blackmoore, Minister of State in the
Prime Minister's office, stated that the government is always
reviewing the economic citizenship program to make it tighter
and increase due diligence so as to avoid compromising the
integrity or name of Dominica (reftel A).



6. (C) IRS Attache is tentatively traveling to Dominica next
week to meet with the Attorney General, who supervises the
Financial Intelligence Unit. In this meeting IRS Attache
hopes to learn more specifics about how the government of
Dominica plans to regulate these two programs and what it
means by due diligence. Post will report on this meeting in
septel.





7. (C) COMMENT: At first glance, it appears Dominica is
honestly striving to establish a transparent offshore
financial services sector. PM Skerrit has already shown his
dedication to financial reform through his government's
implementation of a politically unpopular International
Monetary Fund restructuring program. As of yet, the
government shows little evidence of corruption and all
sources agree that plans for these new programs include
regulatory oversight. The wild card, however, is Timothy.
His service as finance minister during a corrupt
administration and the failure of the previous offshore
financial services sector raise questions about his
suitability to run these programs now. Post will continue to
monitor the development of each of these programs. END
COMMENT.
OURISMAN