Update May 18, 1998

David Marchant is on a mission. His aim is to expose crime, fraud and financial abuses offshore to hopefully make it a safer place to do business and invest. He is not afraid of a fight and often invites litigation by publishing his often sensational and biting exposés about suspected wrong-doing in the Caribbean. Located in Miami, critics may wonder if Marchant's often critical attacks on the various tax havens may be clandestinely supported by various sectors of the US (and G7) governments who make no bones about the fact that they would like to dractically reduce bank secrecy offshore in an attempt to stamp out tax evasion and avoidance. Proponents would argue that many offshore jursidictions are lax in enforcing legislation targeting fraud and that Marchant performs a very necessary and daunting task of making offshore jursidictions less risky business propositions. Only time will tell which camp speaks the truth!

The following paragraphs were taken from his new web site and demonstrate some examples of his forays into investigative journalism in the various tax havens he covers.

"OBNR was established as a Florida corporation in November, 1996 by David Marchant, a British journalist who worked as a business writer in Bermuda from 1990-96 before being kicked off the island for writing investigative articles that the government and some local businessmen did not want reported in the overseas press.

In 1993, Marchant’s stories of how regulators allowed some of Bermuda’s most influential businessmen to strip Bermuda Fire & Marine Insurance Company of over $40 million of assets before it went bust with a net deficiency of over $1.4 billion were quoted extensively in a US Congressional report into the sometimes lack of regulation in offshore domiciles.

He also exposed the questionable business practices of Boston businessmen Gilbert Beinhocker and Gregory Plunkett, whose failed investment schemes had cost investors millions of dollars over many years. Their worldwide assets were frozen by a US court as a direct result of Marchant’s
articles.

In October, 1997, an investigation by OBNR directly led to the shares of hi-tech firm NimsTec Limited being de-listed from the Bermuda Stock Exchange for publishing misleading and inaccurate statements in its share prospectus. In the same month, McKeeva Bush was forced to resign as a Cayman Islands government minister, largely as a result of OBNR exposing his role in the fraudulently-run First Cayman Bank.

In the summer of 1997, they were the first media organization to reveal an attempt by the UK government to force its offshore financial centers to start complying with fiscal investigations by foreign regulators. (A number of issues have followed the course of events and negotiations between the Territories and the UK.)

Well there it is, from the horse's mouth so to speak. It is interesting to note that according to the Harris Organization and David Marchant, there is a $30 million dollar lawsuit against David Marchant and OBNR by the Harris Organization charging him with negligence. The suit seeks $5 million compensatory damages and $25 million punitive damages saying that Marchant "recklessly and negligently" published statements that were erroneous and that those statements "adversely reflect on the business of the plaintiffs." Marchant stands behind the accusations he made so the courts now have the task to decide who is scamming whom.

The following is a review written of the newsletter.

Offshore Alert: Tax Haven Watchdog Offers Scam Alert

Rumours are circulating offshore that a directive from the British Foreign and Commonwealth Office in London was sent to Governor John Owen instructing the Cayman Islands to pass legislation allowing tax investigators from G7 countries to examine bank accounts. Government and business sources are denying that such a directive exists but at least one political source, who did not want to be named, insisted that it did in fact exist. "This could potentially have a devastating affect on our banking sector and could lead to us choosing independence or self-determination, which is the phrase being talked about here," the source was quoted as saying. The source stated that he expected the directive to be introduced for discussion in the next Legislative Assembly when it reconvenes on August 27. (July 31, 1997)

A stolen Cayman bank tape is in the hands of the U.S. Internal Revenue Service. The tape containing the names of 1,000 account holders of the failed Guardian Bank & Trust was handed over to the Federal Bureau of Investigation by former bank chair, John Mathewson in June, 1996 as part of a plea bargain agreement after he was charged with money laundering offenses in the U.S. Liquidators of Guardian Bank & Trust lost a petition filed against the U.S. government to have the tape returned after a judge ruled that the U.S. was entitled to keep and use the tape, even for other purposes such as prosecution of Americans for tax evasion. (October 31, 1997)

These stories and more are contained in the pages of a newsletter that is designed to keep offshore investors and companies up-to-date with the latest news. Offshore Alert, first published by Offshore Business News & Research in February, 1997, is printed monthly. It specializes in providing essential business news about Bermuda, the Bahamas, the Cayman Islands and other nearby islands in the Caribbean. OBN&R is run by British journalist, David Marchant who lived and worked as a journalist in Bermuda from 1990 to 1996. He was quoted as saying in a letter, "I was thrown out of Bermuda for reporting on corruption there."

It is easy to understand why he may have rubbed more than a few people in Bermuda the wrong way. His stories include how Bermuda's government and regulators allowed some of the island's most senior businessmen to strip Bermuda's Fire & Marine Insurance Company Ltd. of in excess of $40 million of assets before it went bankrupt with debts of over $500 million, owed mostly to U.S. insurance companies.

Another article exposed two American scam artists who had cost investors around the world millions of dollars in failed and dubious investment schemes and who subsequently had their worldwide assets frozen by a U.S. court. He also reported on apparent inaccuracies and misrepresentations in the share prospectus of NimsTec Limited, a Bermuda-based hi-tech company whose shares were listed on the Bermuda stock exchange. The company, which raised $2.6 million in share sales, was later de-listed for breaches of the Exchange's disclosure regulations, leaving investors wondering where their money had gone and regulators with egg on their faces.

Getting back to the first story regarding the rumour of pressure from the British Foreign Office to cooperate with tax authorities; I can't wait to hear what happened. Either the Cayman's Legislative Assembly were able to keep the matter a secret or the rumour was just that, a rumour. Regardless, investors will be keeping an eye on Offshore Alert to see what scandal, scam or inequity is exposed next. Mr. Marchant also publishes Inside Bermuda, a newsletter devoted to keeping investors in that country informed. Offshore Business News & Research is located in Miami, Florida.