BL Magazine Issue 46 September/October 2016

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Where do the Channel Islands stand in the aftermath of the UK vote?

beneficial oWnership

How Jersey is leading the way and why a global register is unlikely


Could the technology behind Bitcoin really transform financial services?


Taxation of non-doms and property come under expert scrutiny


corporate culture is it all it’s cracked up to be?



Estera. The new name for world-class fiduciary services RICHARD PROSSER, JERSEY

Extensive experience aligned with substantial technical expertise Independent and truly global. Over 350 people across ten jurisdictions. A proud heritage backed by 25 years of industry experience underpins our collaborative culture, where skills and expertise are shared to deliver a world-class service. An environment where the brightest minds cut through complexity, providing quality solutions aligned with individual requirements. Quality people. Quality solutions. Quality aligned.

Estera Trust (Jersey) Limited is regulated by the Jersey Financial Services Commission

2 july/august 2015



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From the sublime to the ridiculous WHAT A SUMMER this has been. Not only did we actually get a few decent days of sunshine, but there was a positively golden glow about the British Isles as our sportsmen and women did their country proud in record-breaking fashion in Rio. As an avid sports fan, the Olympics provided me with a very welcome distraction from the day job – probably too much of a distraction at times. As happens every four years, I found myself completely sucked in by all kinds of sporting goings-on, mesmerised by athletic brilliance (and plain old grit and determination), and by sports I’ve never paid much attention to before. I mean, seriously… dancing horses? Ridiculous, but utterly gripping! Of course, once the Olympic flame was extinguished, it was back to the hamster wheel and the real world. No doubt with the same thump that those of you who had two weeks on a beach somewhere felt on your first day back in the office. I say ‘real world’, but it’s still actually a pretty ‘unreal’ world at the moment. Across the Atlantic, Donald Trump seems to be doing his utmost to blow up his own US Presidential campaign. If recent comments by film-maker Michael Moore are anything to go by, Trump doesn’t actually want the job – he only entered the race last year to raise his profile and get a better deal from NBC for hosting Celebrity Apprentice. Closer to home, there’s the continued fallout from the Brexit vote. Or rather, the continued where-is-all-the-chaos-and-mayhem-and-financialpanic-that-was-meant-to-happen-but-hasn’t. At the time of writing this, financial markets are loitering around all-time highs, business seems to be very much of the usual variety, and Theresa May is going about her role as PM as if she’s been doing the job for years, not just a matter of months. This lack of apocalypse has led commentators to exclaim: ‘See: Brexit hasn’t been that bad after all’. To which others have responded: ‘Well that’s because it hasn’t happened yet, dimwit.’

Right now, that situation looks set to continue. While May has indicated that Article 50 will be triggered some time in 2017, officially starting the clock ticking on the UK’s departure from the EU, there’s no certainty that will be the case. So, for now, the waiting game continues. In this issue of BL, we follow last issue’s Brexit coverage by looking at where leading lights in Guernsey and Jersey think the islands stand, and how they might be affected before and after Article 50 is triggered. And while uncertainty seems to be a key theme, so does opportunity. Many of the experts featured in our article on page 16 point out that the islands have faced all sorts of challenges over the years and, for the most part, have risen to them, and even turned them into an advantage. Whether or not that happens this time remains to be seen. But in the meantime, there’s going to be plenty to distract us in the US in the next few months while we wait for Brexit to play out.

while uncertainty seems to be a key theme, so does opportunity

Nick Kirby, Editor-in-Chief, BL magazine


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Whether it’s an established company, a family business, an entrepreneurial start-up or the local arm of a larger operation, what businesses in the Channel Islands need to thrive in an ever-changing economy are trusted advisors who understand how to take advantage of opportunity, manage challenges and mitigate risk. Ogier’s local legal services team covers property, employment and regulatory law. We work with clients who are buying or selling a business, entering into a joint venture or restructuring, as well as advising on day to day issues from financing and corporate governance to contracts.

Local legal services Business and commercial law Competition law Dispute resolution Employment law Property and construction law Planning and environment law Regulatory law Trusts Advisory Group Wills, probate and estate planning

4 july/august 2015



BL guernsey Plans finalised for strategic review of Aurigny


he Policy & Resources Committee at the States of Guernsey has finalised the terms of reference for its strategic review of Aurigny, the States-owned airline. The Committee had previously agreed that a review of the role and objectives of Aurigny was essential to help the States, as shareholder, determine how the airline can best serve the needs of the bailiwick. The terms of reference are divided into three sections, each with various subquestions, which the review will address:

A significant part of the review panel’s work will be to take in the views of the bailiwick community. It is encouraging written submissions from anyone who wants to have their say – they should email by 30 September. The panel will also hold meetings with interested parties and, following receipt of the review’s findings, a report will be prepared and submitted by P&R in early 2017 with clear recommendations for the States of Deliberation to consider. P&R Committee Vice-President Lyndon Trott, who will lead the review, said: “P&R considers that the many issues surrounding our air and sea connectivity currently present the bailiwick with its number one strategic policy challenge. With this strategic review of Aurigny, we have a genuine opportunity to make material and potentially far-reaching policy recommendations with regard to our airline’s direction, particularly as an economic enabler. “The review will build on the work being undertaken by the Committee for Economic Development on air route development and will help set clear and long-term policy and economic aims for Aurigny. “The panel wants to hear from as many people and groups as possible, so I would urge all those who wish to have their say to do so via email by the deadline.” n

Guernsey attracts 14 relocations


he first report from Locate Guernsey – the States of Guernsey initiative to encourage relocations to the island – shows that 14 individuals or businesses have moved there in the first six months of this year, following a total of 80 enquiries. The relocations include two businesses, two individuals and 10 individuals with business interests, which the report

estimates will generate an annual income for the States of £195,780. Locate Guernsey initially focused on the relocation of high-net-worth individuals, but the team now focuses on four target markets: UK-resident but not domiciled individuals; fund managers; reinsurance companies; and digital and fintech businesses. n

Image courtesy of VisitGuernsey


1. Aurigny’s role in the future 1.1 What kind of service do we want Aurigny to offer in three, five and 10 years’ time, and how do these needs differ in Guernsey and Alderney? 1.2 How should Aurigny best balance the priorities of (a) economic enablement and (b) providing a public service for both Guernsey and Alderney in delivering that service in the future? 1.3 How might pricing policy, franchising, inter-lining agreements and code-sharing support this? 1.4 To what extent, if any, do the length of the airport runways impact on Aurigny’s ability to deliver this service? 1.5 How does the licensing system need to support Aurigny reaching these objectives? 1.6 How might Aurigny integrate with other transport networks? 1.7 If Aurigny was a purely commercial

website and booking capability and collaboration with destination tourism offices and airports? 3.5 What type of timetabling and air route prioritisation would best support the business and visitor economy needs of Guernsey and Alderney?

business, what would it cease doing and why; and what would its commercial growth plans look like if it was freed from the requirement to provide any social provision? 2. Public service and social role of Aurigny 2.1 How can Aurigny best meet the needs of the communities in Guernsey and Alderney to support (a) economic development (b) health links and (c) sports links? 2.2 How can these needs best be met in terms of pricing policy, route prioritisation, timetabling and types of aircraft? 2.3 What type of public service obligations and/or service level agreements would best support this? 3. Aurigny as an economic enabler 3.1 What objectives should be given to Aurigny in order to strengthen Aurigny’s economic enablement role in the short, medium and long term? 3.2 What initiatives could be adopted to ensure the business customer experience is further improved? 3.3 What can Aurigny learn from other small airlines with regard to innovative customer care? 3.4 How can Aurigny help in driving visitor number growth and improve fare competitiveness, the quality and reach of marketing, the visibility and quality of

64 september/october 2016

64 bl guernsey


The latest financial and business news and views from the bailiwick

7 News


BL jersey



BL is published six times a year by Chameleon Group +44 1534 615886

A round-up of the latest Channel Island business news

12 Appointments Recent key hires for Channel Island firms

16 BREXIT As the storm dies down after the UK’s vote on the EU, what’s the Channel Island view on the current state of play?

20 Interview Steve Meiklejohn, Global Senior Partner at Ogier, on decades of change in the trust and private client sector

Finance 24 the insider view Taxation of non-doms and property, and the EU Code of Conduct come under expert scrutiny

28 finance and the vulnerable With too many people willing to exploit the financially vulnerable, what protection can be put in place?

32 compliance Financial firms face an ever-increasing compliance burden, but technology is stepping in to ease the load

37 beneficial ownership A real hot potato at the moment. So how are the Channel Islands meeting the register of beneficial ownership challenge?

42 blockchain It’s not the easiest subject to get your head around, but those in the know argue that blockchain has the power to transform finance

Island sees increase in NPPR s


47 kenya tax amnesty How might a tax amnesty in Kenya affect financial services firms in the Channel Islands?

Digital Jersey and Population Office sign Mo U


igital Jersey and the island’s Population Office have signed a Memorandum of Understanding (MoU) establishing a six-month pilot scheme to provide staffing permissions, both registered and licensed, to local businesses looking to fill technology and digital commercial roles. The initiative comes in response to the Jersey Innovation Review, which looks to address skills shortages by removing barriers to entry. Up to 30 staffing permissions will be available from the Population Office to the end of the year, after which the scheme will be reviewed. Local businesses applying to the pilot scheme will be required to submit an application to Digital Jersey, showing how the roles selected will contribute to the growth and development of the local digital industry. Particular consideration will be given to sectors identified in the Digital Jersey 2016 business plan, including fintech, digital health, internet of things and Jersey testbed schemes. The MoU will support companies with potential to achieve productivity above the economy average or which offer significant wider benefits to Jersey. Licensed permissions will be granted to higher skilled/higher economic value staff, and registered permissions will be allocated where necessary to help ensure the business achieves a GVA above the economic average. n

he number of Jersey-registered alternative investment fund managers marketing into Europe through national private placement regimes (NPPRs) under the EU Alternative Investment Fund Managers Directive (AIFMD) continued to rise consistently over the first six months of 2016, according to figures from the Jersey Financial Services Commission (JFSC). As at June 2016, 115 alternative investment fund managers (AIFMs) had been authorised in Jersey to market into Europe through NPPRs, up 11 per cent compared with December 2015. Over the same period, the number of Jersey alternative investment funds (AIFs) being marketed into Europe through NPPRs stood at 251, representing a nine per cent increase. These figures were announced shortly after the European Securities and Markets Authority (ESMA) made its further recommendation, on 19 July, that Jersey should be among those ‘third countries’ granted an AIFMD passport. In addition, the Government of Jersey and the JFSC launched a joint consultation in July aimed at enhancing Jersey’s funds regime. The consultation seeks to simplify and rationalise numerous aspects of Jersey’s funds environment, with the paper confirming the intention to introduce new products to the market. These are anticipated to include a new manager-led Jersey registered alternative investment fund (JRAIF). The JRAIF will be supervised by the JFSC by proxy as it will be the relevant AIFM that will be responsible for ensuring the fund’s AIFMD compliance. The consultation also provides detail around a proposed new universal definition of a Professional Investor and consolidation across certain fund types. Geoff Cook, CEO of Jersey Finance, said: “It’s clear that the alternative fund management community is continuing to find real appeal in the optionality and certainty of European market access Jersey is able to offer. The latest figures show that the appetite to use Jersey’s existing NPPR route is consistently strong among managers, while the potential for an AIFMD passport in the future is giving managers real confidence in Jersey’s long-term future as an alternative funds domicile.” Jersey Funds Association Chairman Mike Byrne added: “As a jurisdiction, we recognise that we need to continue to enhance our funds environment in a new regulatory landscape and this latest consultation forms a significant part of that. As well as making Jersey’s regime clearer, simpler and more streamlined, it also demonstrates that the jurisdiction is committed to bringing innovative products, such as the manager-led registered fund product, to the market.” n

66 september/october 2016

50 mini bonds

66 bl Jersey

As interest rates drop even further, mini bonds could be an option for investors

A review of the biggest business developments and finance news stories

opinion 54 customer service


David Cadin at Bedell Cristin takes issue with poor customer service

business 56 corporate culture It can underpin business success, but corporate culture isn’t something every firm gets right

60 business trust How technology might help businesses win back customer trust

The Agenda It’s dark, desirable and downright dangerous as this issue’s Agenda goes all Gothic

contributors The BL Global Discussion Forum


Follow us @blglobalnews Office: Floor One, Liberation Station, Esplanade, St Helier, Jersey JE2 3AS © Chameleon Group Limited, all rights reserved. Reproduction in whole or in part without written permission is prohibited. Views expressed by our contributors are their own and do not necessarily represent the views or policies of Chameleon Group. While every effort is made to achieve total accuracy, Chameleon Group cannot be held responsible for any errors or omissions.

Tired of getting rubbish returns on your savings? Then why not do the same as financial writer David and look at mini bonds. They give you the chance of better returns as well as investing in a brand you like.


Blockchain isn’t something that we really understand at BL Towers. Thankfully, we have tech-head Nate on hand to explain exactly why it might transform not just finance but business in general.


As BL regular Kirsten discovers, compliance is a growing burden for finance firms in Jersey and Guernsey. It might come as no surprise to learn that technology is playing a big part in making life easier.


It’s a triple header for BL stalwart Dave, who dives into the aftermath of the Brexit vote, before examining how the vulnerable are financially at risk, and concluding with a wry view on corporate culture. september/october 2016 5

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© 2016 PricewaterhouseCoopers CI LLP. All rights reserved. “PricewaterhouseCoopers” and “PwC” refer to the Channel Island firm of PricewaterhouseCoopers CI LLP, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. PricewaterhouseCoopers CI LLP, a limited liability partnership registered in England with registered number OC309347, provides assurance, advisory and tax services. The registered office is 1 Embankment Place, London WC2N 6RH and its principal place of business is 37 Esplanade, St. Helier, Jersey JE1 4XA

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Collas Crill wins state immunity appeal Conduct risk a key board issue THE EMERGING CONDUCT risk agenda is a focus for boards, according to a Deloitte survey of compliance officers in Jersey’s financial services industry. More than 35 compliance officers from a range of regulated businesses took part in the survey, the fifth of its kind by Deloitte in the Channel Islands. The challenges highlighted in the survey include how elements of ethics, financial crime, culture and good corporate governance are brought together into a holistic approach and framework. More than 90 different conduct risks were identified by respondents, who are working under scrutiny by regulators locally and overseas and under the ongoing spotlight on activities in offshore jurisdictions. Recruitment was again seen as a challenge, with several businesses seeking to recruit into compliance. While overall vacancies were lower than in the last survey, the level of expected recruitment was higher than ever, and the challenge to recruit experienced staff continues. Deloitte observed that the use of consultants and outsourcing has also risen – 35 per cent of participants reported an increase in their use over the previous 12 months, typically to meet the demands of business growth or to cover vacancies during recruitment. As expected, Deloitte found plenty of discussion on the role of the regulator, notably on the Civil Penalty Regime introduced since the last survey. The focus of discussion was how the regime may be used – it is awaited with interest and, in some quarters, with disquiet. Consistent with the recent Moneyval report, the survey cited the increasing time spent by compliance teams on preventing financial crime and monitoring the business. There is also a clear increase in use of online systems for anti-money laundering and sanctions controls. One in four participants reported to be looking at further investment in technology to support anti-money laundering and compliance processes in a broader capacity, bringing together operational processes and the production of quality management information. Discussions with participants on the top three conduct risks relevant to each business revealed that many see the importance of people being engaged, having a robust framework for the identification and management of potential conflicts of interest, and ensuring timely, clear client communications reflect the tone of the business. The survey showed the best defence against a breakdown in controls is the mindset and actions of every individual supporting the compliance agenda and this needs to be automatic and intuitive. n

FOLLOWING A LANDMARK case in Jersey’s Royal Court earlier this year, Collas Crill has once again acted for the winning party in a case on state immunity when the respondent appealed the decision to the Court of Appeal. Dispute Resolution Partner Elena Moran twice represented Tepe, a construction firm based in Turkey, when its contracts were unlawfully terminated by crude oil and natural gas pipelines and trading company Botas, which is owned by the Republic of Turkey. The case began when Tepe entered into two contracts with Botas to assist with constructing the Baku-Tbilisi-Ceyhan (BTC) Pipeline carrying crude oil from Azerbaijan via Georgia and Turkey to the Ceyhan terminal on the Turkish coast. Botas terminated both Tepe contracts, which were governed by English law, and provided for disputes to be arbitrated in Paris under the rules of the International Chamber of Commerce. The Arbitral Tribunals awarded Tepe damages, costs and interest of around US$100 million. Botas failed to pay and Tepe sought to enforce the awards by arresting the shares in two Jersey companies wholly owned by Botas. The Republic of Turkey said Tepe could not arrest the shares because they are under the control of state and constitute property covered by state immunity. In a decision in August, the Court of Appeal upheld the Royal Court’s decision in January, rejecting the argument that an ability to direct Botas to transfer the shares amounts to sufficient control: until the Republic of Turkey exercises that right, the shares remain the property of Botas, not of the Republic. As a result, the shares aren’t protected by state immunity. “The Court of Appeal has recognised that while the doctrine of state immunity is important, the protection it affords shouldn’t be extended to the assets of state-owned entities,” said Moran. “These entities are separate from the states that own them. In the same way that the entities aren’t liable for the debts of the parent states, the parent states shouldn’t be able to use state immunity to protect the entities from paying their debts.” n september/october 2016 7


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client service provider JTC Group has acquired Arcange REIM in Luxembourg, enabling it to launch an AIFM management company (ManCo) business as it adds to its European alternative fund services. The acquisition of Arcange REIM, one of the first Luxembourg independent management firms to comply with the Alternative Investment Fund Managers Directive (AIFMD), was completed after approval from the Commission de Surveillance du Secteur Financier. The new ManCo is called Global AIFM Solutions. A wholly owned JTC subsidiary, it offers a fully AIFMD-compliant ManCo service through Luxembourg to EU and non-EU third-party alternative investment funds. The firm’s offering will include providing portfolio management, risk management and oversight functions and offering compliance and reporting services required under AIFMD regulation. JTC opened an office in Luxembourg in 2009 to provide a European centre for funds and corporate services. In 2015, the firm acquired a Luxembourgbased ‘Expert Comptable’ business providing accounting, administration and tax compliance services to institutional investors to create JTC Signes, which operates as a sister company to JTC’s Luxembourg operation. n

Enhance group opens Geneva Office ENHANCE GROUP, AN investment and treasury consulting business headquartered in Jersey, has opened an operation in Geneva. The new office will provide a full-service offering to current and prospective clients seeking investment oversight, investment consultancy, investment reporting, wealth consultancy and treasury services. The announcement follows openings of Enhance offices in London, the Cayman Islands and Singapore over the past two years. Enhance Chief Executive James Painter will lead the new operation in Geneva. He said: “We see Geneva as an increasingly important operational base with a concentration of world-class financial service providers.” n

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MERGERS AND ACQUISITIONS Bailiwick Investments has made its first acquisition outside the Channel Islands with the purchase of a 49 per cent interest in facilities maintenance provider Prospero. Established in 2004 in the Isle of Man, Prospero Holdings has expanded into Guernsey and Jersey and offers a range of services, including the installation and maintenance of air conditioning, access control and CCTV, as well as office refurbishment and business relocation. It employs more than 70 staff. First Names Group has acquired independent trust and corporate services provider Nautilus Trust Company, based in Jersey, Hong Kong and London. Nautilus, founded in 1999 as Beachside Trust Company, rebranded as Nautilus Trust Company in 2000. According to First Names, the acquisition will expand the group’s international presence and service offering in Jersey and add to its private client offering in Hong Kong and London. Once Nautilus is integrated and rebranded, First Names Group will have nearly 800 employees across its 14 offices worldwide. Jersey law firm Pickersgill & Co has merged with Viberts. The merger allows Viberts to expand its footprint in the property and personal law markets, while allowing Barry Pickersgill to offer an extended range of legal services to his clients. Pickersgill moves across to Viberts as a Senior Consultant, retaining a core focus on conveyancing and wills. The merger will see Pickersgill & Co relocate to Viberts House in Don Street and rebrand its services as Viberts. n


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Moore consists of a number of companies operating in multiple jurisdictions. These include entities licensed by the Guernsey Financial Services Commission and


Jersey Financial Services Commission. For details of specific activities and regulatory status please visit our website Moore does not september/october 2016 9 provide legal, tax or investment advice and the information in this document should not be regarded as such. xxxxxx


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DONE DEALS ESMA confirms AIFMD passport recommendation IN JULY, ESMA confirmed its positive

advice to the EU Commission regarding the extension of the Alternative Investment Fund Managers Directive (AIFMD) passport to Guernsey and Jersey. Its advice states: “There are no significant obstacles impeding the application of the AIFMD passport to Canada, Guernsey, Japan, Jersey and Switzerland.” Four other jurisdictions – Australia, Hong Kong, Singapore and the US – received qualified positive assessments. The European Commission now has until the end of the year to propose appropriate legislation and for the European Parliament and Council of Ministers to agree to the third-country passporting rules becoming applicable to AIFs and AIFMs. n

expansion for Smith & Williamson Financial services group Smith & Williamson is expanding in the Channel Islands with the launch of investment management arm Smith & Williamson International. The Founding Directors of the new business are former Bespoke Wealth Partners Director Aidan McAvinue (now Head of Office), former Jupiter Asset Management Offshore Sales Director Simon O’Donoghue (now Head of Business Development) and ex-Barclays Director Christopher Golding (Head of Investments). The new operation is to share offices in Weighbridge House, St Helier, with the firm’s private client tax practice, Smith & Williamson (Channel Islands). n

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The Jersey funds team at Carey Olsen has advised Patron Capital Advisors on the launch of its fifth European real estate fund, Patron Capital Fund V, which held its final closing with a total fund size of €948,632,391 (including €143 million of co-investment capital). This is the first of the Patron funds to be domiciled in Jersey under the expert fund regime. It focuses on distressed and/or undervalued property and property-related assets, mostly in Western Europe. Carey Olsen Partner Daniel O’Connor and Counsel Chris Griffin led the team advising on the Jersey aspects of the fund’s establishment and regulatory authorisation, assisted by Associate Sarah Townsend on the fund launch. Carey Olsen has also advised property investor Raven Russia on creating and listing convertible preference shares on the Channel Islands Securities Exchange (CISE). The fundraising, originally for a minimum of £105.5 million, raised £108.7 million. The company has ordinary shares, preference shares and warrants listed on the London Stock Exchange, which all became dual listed on the CISE in May. This further listing, of convertible redeemable preference shares, is listed solely on the CISE and traded on the SETSqx platform – the Stock Exchange Electronic Trading Service of the LSE. The Carey Olsen team included Partner Ben Morgan and Senior Associate John Scanlan, who advised alongside UK counsel Berwin Leighton Paisner. JTC Group has provided structuring and financial administration services in relation to a £320 million development financing deal in London. JTC client City Pride invests in prime London real estate and the project relates to the 75-storey Landmark Pinnacle residential

tower. JTC worked on the deal with Taylor Wessing, which acted on the facility agreement. JTC’s team was Group Director Sarah Clark, Senior Director Tim Knight and Associate Director Carlo Martinengo. Mourant Ozannes has advised property investor NewRiver Retail on its migration to the UK via a court-sanctioned scheme of arrangement under Guernsey law. The law firm has also advised on a subsequent application for admission to the Main Market segment of the LSE. NewRiver, incorporated in Guernsey, specialises in UK retail and was listed on AIM in 2009. Its market capitalisation is in excess of £750 million. Partner John Rochester led the team advising NewRiver, assisted by Corporate Senior Associate Alex Davies and fellow Partner Abel Lyall. The Royal Court of Guernsey sanctioned the scheme of arrangement on 17 August and NewRiver REIT was admitted to the Main Market segment of the LSE on 18 August. Ogier has advised the Ministry of Sound Group on the sale of its record label business to media giant Sony. Lawyers in Ogier’s Jersey office advised on Jersey law relating to the transaction, with Ministry of Sound’s London lawyer, Olswang. Sony Music Entertainment UK, a wholly owned subsidiary of the Sony Corporation, has acquired the business for an undisclosed sum, including artists, back catalogue and compilations business. Ogier Corporate Partner Raulin Amy worked with Senior Associate Lisa Floris on the transaction. Ogier has also advised mineral firm Sierra Rutile on a takeover offer by Australianlisted mineral sands company Iluka Resources. Sierra Rutile has been operating in Sierra Leone for 50 years. It runs several mines in the country and its core product is natural rutile, a titanium feedstock used to manufacture white pigment for paint, paper and plastics. Ogier Group Partner Simon Dinning and Senior Associate Wendy Walker advised the firm on the BVI law aspects of the proposed takeover. n



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First Names (Jersey) Limited is regulated by the Jersey Financial Services Commission. First Names (Guernsey) Limited is regulated by the Guernsey Financial Services Commission.


First Names Group has promoted Mark Pesco to Chief Executive Officer. He takes over from Cengiz Somay, who decided to step down in July. Mark has been with the group for more than 12 years, most recently as Group Managing Director, Private Client. Having worked in Singapore, Melbourne and London, he returned to Jersey in 2004 to join the Langtry Trust Group and was appointed Partner within 12 months. In 2006, Mark led the sale of Langtry to IFG Group and in 2008 he was appointed Managing Director for Jersey.

Offshore facilities management support provider AFM has hired Niall McClure as Operations Director, based in Jersey. He was previously Managing Director at G4S Facilities Management (Offshore Islands). Niall has spent 23 years working for Mono Consultants, formerly known as James Barr, carrying out general practice surveying and developing mobile phone base station sites. He has also worked as a Business Development Director at Alfred McAlpine and Business Excellence Leader at Compass Group. He is currently the Deputy Chairman of the British Institute of Facilities Management.

Hatstone Lawyers has promoted Alvaro Almengor (pictured) and Advocate Stephen Wauchope to Partner. Alvaro is a well-regarded Panamanian lawyer specialising in civil, commercial, employment and administrative law, and Panamanian tax. He will work with Group Partner Lizst Real to further develop the Group’s Panamanian legal practice. Stephen is a practical, resolution-focused litigator who specialises in trust disputes, employment law, regulatory advice, general commercial litigation and insurance risks. He will head up the firm’s Jersey litigation practice.

Richard Le Tissier has been promoted to Partner at EY in the Channel Islands. Richard joined the firm in 1995 as a trainee. During the past 21 years he has provided a wide range of assurance and statutory audit services to clients operating in all sectors of the financial services industry. Locally, he leads the Financial Accounting and Advisory Services division, which supports clients in managing the implementation of accounting changes, ranging from single accounting standards to project planning and the implementation of IFRS.

Independent trust, fund and corporate service provider Crestbridge has appointed Mark Fleming as Director of its Family Office Services team. Mark joins Crestbridge with nearly 20 years’ of experience in the financial services industry. He has specialised in managing the financial and estate planning interests of high- and ultra-high-net-worth individuals, particularly in the UK, Swiss, and US markets. Having started his financial services career with KPMG, Mark spent 10 years in the fiduciary services sector at RBC Wealth Management before joining Crestbridge this year.

12 september/october 2016


Full Service Support

The Channel Islands Securities Exchange Authority (CISEA) has promoted Robbie Andrade (pictured) and Jon Richards to Directors, joining Chairman Mark Tubby and CEO Advocate Diana Thompson on the board. Robbie joined the Exchange in April 2005 and has responsibility for the day-to-day running of listings. Jon leads CISEA’s regulatory team, overseeing market surveillance, continuing obligations, compliance and membership. He joined in 2014 after a career in law enforcement. He had been managing the Financial Criminal Team at the Financial Investigation Unit prior to joining CISEA.

Sanne has promoted Peter MesservyGross to Group Operations Director. He will assume responsibility for Sanne’s operational environment, ensuring the effective functioning of the group’s business systems, IT infrastructure, facilities and M&A integrations. Since joining the firm in 2014 as Head of Change, Peter has led initiatives on the integration of international acquisitions, operational and system development. He was involved in the business’s IPO and listing on the London Stock Exchange in 2015. Prior to Sanne, Peter served as Vice President of Finance at State Street.


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Produces ready to submit reports Hawksford has named Jon Nobes as Manager of its Corporate Team. Jon will oversee a team of eight administrators in Hawksford’s Jersey office, providing international director services, administration and structuring expertise for the company’s multi-jurisdictional client portfolio. He brings 18 years of financial services experience to the role. Prior to joining Hawksford, he spent five years as Trust Manager at STM Fiduciaire, specialising in corporate real estate funds. Before that, Jon spent 11 years with Close Trust Company Jersey as Corporate Trust Manager.

Edward Scott has joined Jersey-based trusts and commercial practice Dickinson Gleeson as a Partner. Edward advises on a wide range of corporate matters, including establishing, buying and selling, re-domiciling and winding up Jersey companies. He has also advised a number of Jersey and international banks on finance and regulatory issues, and on secured lending. Edward previously worked at Linklaters and joins Dickinson Gleeson from Ogier, where he worked for seven years, qualifying as a Jersey Advocate in 2013.

Mike Byrne has been elected as the new Chairman of the Jersey Funds Association (JFA). He takes over from Ben Robins, who has been at the helm for the past three years. Mike, who has been with PwC for over 15 years, leads on asset management for the consultancy in the Channel Islands, with a focus on private equity and hedge funds. He returned to Jersey in 2014 after a two-year secondment in Singapore, where he led the firm’s development of services in the alternative fund space. Mike has also been a regular contributor to Jersey Finance’s funds sector promotional activity, participating in its roadshows in Hong Kong, Kuala Lumpur and Singapore.

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BREXIT the calm after the storm

16 september/october 2016


Words: Dave Waller

Despite predictions of apocalyptic proportions in the wake of the Brexit vote, it seems that very little has actually changed – and the UK and EU are still doing business with one another. It’s a situation those in the Channel Islands are watching very closely for a fortnight from late June would have returned to Earth and had their mind truly boggled. They’d have burned their way through an atmospheric entry and splashed down to a country in the wake of the Brexit vote – a tide of wild volatility, the UK suddenly heading out of Europe, sterling hitting a 30-year low, David Cameron resigning, Boris Johnson and Michael Gove facing off in a cartoon-like leadership scrap, neither of them becoming PM, Theresa May becoming PM, and apocalyptic talk of constitutional havoc as it emerged that the Leave campaign had had no plan whatsoever all along. All while anti-Brussels cheerleader Nigel Farage sat in Brussels and did his best to make his peers feel glad to see the back of Britain – before handing in his own resignation. But if our hypothetical astronaut would have been shocked and no doubt rather nervous about what was going on, he or she wouldn’t have been alone. The rest of the world was too. In the immediate aftermath, the picture did look grim – HSBC and Goldman Sachs warned of moving jobs out of the UK if the country left the EU, and City property funds barred investors from withdrawing their cash as the Bank of England warned that risks to the financial system had begun to ‘crystallise’. But now that time has passed, the situation seems to have calmed down. May met German Chancellor Angela Merkel and made it clear that she wouldn’t be triggering Article 50 any time soon. Indeed, the timeline, depending on which pundits you listen to, could be anywhere between 2017 and the twelfth of never. In the meantime, the banks are still here, and the markets have been surprisingly resilient. As reports of four horsemen on the horizon proved premature, the press duly moved on to other important matters, like the Olympics and Gary Lineker presenting Match of the Day in his undercrackers. Yet while the engines of the Brexit supertanker

remain fully engaged, its rudders locked in a slow turn away from the continent, the dominant mood among everyday folk remains one of speculation. While very little has become concrete, one thing is clear: all this uncertainty is not good for business. “Uncertainty is the killer,” says Jersey Senator Sir Philip Bailhache. “People can’t make plans, they’re reluctant to make investment decisions, and all that tends to stultify the economy. “We’re hoping the UK government will very soon articulate its aspirations, so that others who depend upon that decision are able to do their own thinking.”

INS AND OUTS The positive view is that there’s very little reason to suspect the Channel Islands will be affected – they’re outside the EU and not technically part of the UK. And if and when the UK leaves the EU, it may well simply wind up in the same position as the Channel Islands have been all along. “I can’t see anything fundamentally changing at the moment,” says Rob Kirkby, Executive Director at KPMG in the Channel Islands. “There’s been no overnight shift of business elsewhere. When meeting clients, you don’t get the sense that anyone’s incredibly worried about this, or that business optimism has crashed. Fundamentally it’s a political shock, not an economic shock, and it’s certainly not bad news.” His attitude seems bold, given the circumstances, but Kirkby may have a point. Take, for example, financial services, which are of huge value to the GDP of both Guernsey and Jersey. Brexit is unlikely to spark a drop in demand. Private clients use Jersey as a tax-neutral platform for various assets around the world, and that needn’t change – while corporate work tends to channel global capital towards London, and is driven by how buoyant the capital markets are. With the FTSE recovering quite well, and no possibility of Channel Islands links to London

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ANY BRITISH CITIZEN who’d been fired up into space


changing in the wake of the vote, those opportunities should continue. Finally, there are funds, which Geoff Cook, CEO at Jersey Finance, describes as “the biggest EU market for us by a mile”. The main impact in this sector has been delayed transactions and slower decision-making – which had already kicked in in the run-up to the vote. “I think our funds industry will have a flatter period, followed by a gradual return as people realise the world hasn’t fallen apart and asset prices haven’t gone through the floor,” says Cook. “But we’ll lose some of the buoyancy we had in the first half of 2016. “In the short-term, the sterling book will be depressed by flatter UK interest rates. But lots of our growth comes from elsewhere – two-thirds of our deposits are in dollars or euros; 75 per cent of our new business originates outside the EU. That’ll help us improve the margin on our bank deposits.” Meanwhile, Jersey Finance is releasing a report in October on Jersey’s value to Europe, focusing on capital investment flows to the EU and highlighting Jersey’s contribution. The key thing, says Cook, is that Jersey’s access to the EU won’t change. “We’re an ESMA-approved jurisdiction as a third country,” he says. “That status, which allows us to provide services to the EU on the same basis as the US and Switzerland, was negotiated independent of our relationship with the UK.” There is, however, one important EU access right that was negotiated with the UK – concerning trade of goods. Jersey is an EU member in this regard, under Protocol 3. When the UK withdraws from the EU, that right – to export agricultural and industrial products to the region free of tariff – will disappear with it. “The principle concern with Protocol 3 relates to our fisheries industry,” says Senator Bailhache. “Most of the fish caught in Jersey waters are exported to France and through France to the EU. If we didn’t have the Protocol we’d have to overcome a tariff barrier of 12.5 per cent in practical terms.” Other areas show little signs of direct suffering. Tourism may even get a boost from the weak pound, which is encouraging for European tourists, while UK tourists may prefer to holiday locally as foreign destinations become increasingly unstable. Construction also stands to benefit from the pound’s devaluation, while digital – often expounded as a great opportunity for the islands – is a largely borderless pursuit anyway. “Look at the successful digital centres like Israel, Singapore and Shoreditch,” says Kirkby. “None is dependent on EU funding for things like R&D, in the way that medical labs are. Brexit changes nothing. It’s going to be business as usual on the digital front.”

RISK AND RETURN Despite all the optimism, continued uncertainty brings with it a number of risks that can’t be completely ignored – most of which, should they arise, would be beyond the Channel Islands’ control. First, any negative impact felt by the UK economy and the City of London may well pass on to Jersey and Guernsey. Then there’s the fact that, if the UK is no

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the channel islands will be very low down the UK’s priority list in its negotiations with the EU, so we’ll have to look to paddle our own canoe more longer in the EU, it won’t be able to fight the Channel Islands’ corner – so the latter may have a tougher time making progress with negotiations. Recall how, when Jersey wound up on a French blacklist of uncooperative jurisdictions, the UK stepped in to clear up the issue. There’s also a danger that, regardless of their true status, other countries will wrongly assume the islands are part of the UK, and treat them as such. The final, and possibly most startling risk, is that the EU revisits the issue of passporting and AIFMD access in the wake of Brexit. While there’s no logical basis to think it would, the overriding message here is: nothing is certain. The result is that it’s hard for businesses to plan when they still have to work out not only how to respond, but what they’re responding to. “Businesses are looking at a range of possibilities that aren’t clear yet,” says John Harris, Director General at the Jersey Financial Services Commission. “So they won’t have a plan, as you can’t have a plan until what’s happening becomes clearer.”


For now, all Channel Islands businesses can do is review their business models, keep an eye on how Brexit is affecting them and their clients, stay close to their networks and take an entrepreneurial view to see whether there are any opportunities. That last word is an important one. Senator Bailhache isn’t alone in believing that, amid all the uncertainty, opportunities do exist. “Our financial services industry is closely linked to the City of London, so if the fortunes of the City diminish, so will Jersey’s to an extent,” he says. “On the other hand, if the City flourishes, Jersey will too.” For starters, there’s the obvious draw of the weak pound. There are signs that Asian investors are going into London commercial property on the basis that the fall in prices and UK currency effectively gives them a 20-25 per cent discount. As one of the key centres for structuring foreign direct investment into the UK, much of that work will come through to the Channel Islands. Meanwhile, the UK may well be seeking other opportunities beyond the EU – whether that’s China or the US – and the Channel Islands may be able to benefit here too. “Negotiating trade deals with China alone is too hard for us,” says Harris. “But being part of a future deal between the UK and China could make a lot of sense.” Then there’s the fact that work with the UK may now operate under different, more favourable rules. “The UK will no longer have to fully enforce all the EU restrictions that have applied in the past,” says Dominic Wheatley, Chief Executive of Guernsey Finance. “As a Crown Dependency, I’d hope we could negotiate special access arrangements to reflect the more flexible environment that the UK would be operating in. There are no changing circumstances that don’t generate new opportunities.” And the potential opportunity doesn’t just come from the UK. The Channel Islands are also a source of vital foreign capital for EU member states. “Things have moved on massively since the days of currency regulation,” says Julian Hayden, Director at Hawksford. “There’s free movement of capital globally and Jersey is in a fantastic position to facilitate that and benefit from it. So, even if the UK catches a cold, we’ll continue to do well in the EU and the global market. And if the UK benefits economically from being able to go solo from the EU, Jersey could benefit from that too – because of the vast amounts of money we invest from London abroad and vice versa.” Indeed, the world doesn’t end at the EU’s borders. And not only are those in the Middle East and Asia an increasingly important source of business for the Channel Islands, but they’re closely observing events in the area themselves. While many reacted to the news of the UK public’s decision with bemusement, there’s no reason to assume the universal reaction is disapproving. Eric Major, CEO of Henley and Partners, works with high-net-worth individuals relocating to Jersey. “I had a conversation with a wealthy Hong Kong client, who was saying that only in the UK, with its rule of law, would an issue like Brexit get resolved so quickly – with no cars on fire or turbulence,” he says.

“Within weeks, the UK had a new Prime Minister and things were confidently back in hand. Would the same thing have happened in Turkey or Russia? No. That’s what high-net-worth individuals see in the UK time and again – that’s why they continue to invest there. And that won’t change.” Hawksford’s Hayden recalls attending a family office meeting the week after the vote, at which lawyers and advisers from Spain, Germany and Austria couldn’t have been less concerned. “People were genuinely surprised,” he says. “But all of these seasoned advisers thought things would be just fine in the long run – and nobody was saying the UK had done anything really crazy.” Indeed, the truth of how crazy Brexit is won’t fully emerge until there are some hard figures available. Channel Islands business leaders will be keen to see evidence of business flows and trends into next year, to help see through the volatility. Eyes will be on figures for house prices, tourism, immigration and, of course, those reflecting banking and funds, not least the flow of capital from the islands to the EU and London. But ultimately, even with such financial data to hand, there’s very little the Channel Islands can do until the convoluted negotiations between the two other parties have played out. The job, for now, is to focus on things within their control. “We’ll be very low down the UK’s priority list in its negotiations with the EU, so will have to look to paddle our own canoe more,” concludes Rob Kirkby. “And we’ll have to do so in partnership with Guernsey – we can’t see it as a chance for competitive advantage. We have to work together.” n DAVE WALLER is a freelance business writer

BREXIT AND CHANNEL ISLAND WORKERS One of the Channel Islands’ key concerns in the wake of the Brexit vote will be ensuring it can continue to attract bright people into the islands, particularly those who will provide jobs. One important question revolves around visas. Currently a company recruiting an EU national doesn’t have to secure them a visa, just the usual work licences. But, should a company wish to recruit someone from outside the EU, it needs to organise work visas too, which can be a time-consuming process. It’s uncertain at this point how Brexit will affect this. While there seems to be a political commitment to cement the rights of those EU nationals already resident in the UK, there’s a huge amount of political force in the country behind the idea of restricting free movement. How would this affect the Channel Islands? Again, nobody knows. And, again, the Channel Islands’ moves here will be largely dictated by the UK. Then there’s the question of whether any downturn in the UK economy would affect people’s perceptions of working in the Channel Islands. While there’s no concrete reason it should, given the Channel Islands’ cultural ties and physical proximity to the UK, it is possible. But even here there are potential opportunities. “One individual contacted me within a month of the vote to say he’s relocating his business back to Guernsey from the UK,” says Dominic Wheatley, CEO of Guernsey Finance. “I thought the timing was interesting. He didn’t deny that Brexit had made a difference.” september/october 2016 19


With a stellar reputation in the private client and trust industry, Steve Meiklejohn, Global Senior Partner at law firm Ogier, has seen dramatic changes in the sector in recent years, and believes that they’ve worked in the Channel Islands’ favour

Run us through your career history in 60 seconds. I qualified as an English barrister in 1981, then came back to Jersey and started as a humble legal assistant at Ogier and Le Cornu in 1983, qualifying as a Jersey Advocate in 1985. I became a Partner in 1988 and have been here ever since. In terms of work, I had a typical mixed practice between 1985 and 1996, acting for private and corporate clients in a variety of matters, from selling businesses to applying for liquor licences. I also did a smattering of general litigation and a significant amount of criminal and matrimonial work. The legal world started specialising in the mid-90s, at which point I embarked on my career as an international private client and trust lawyer. I led our trust advisory group until a few years ago, and although I’ve handed over the reins, I’ve continued to be very much a trust and private client practitioner. The most recent development is that I was elected by my fellow partners to become Ogier’s Global Senior Partner from the beginning of this year. So what does your new role entail and will your job change as a result? The role of Senior Partner depends on what a firm expects from it. At Ogier, it’s not a direct management role. I see it as more of a figurehead for the firm both internally and externally. For instance, I will chair the partner meetings through the year, and if there’s an internal issue I will be expected to get involved and sort it out. Externally I have a role in representing the firm in its relationships with the media, regulatory bodies, intermediaries in London and elsewhere, and making comments on behalf of the firm. The role suits me because it means my responsibility to clients hasn’t changed and I continue to do as much client work as last year – acting for clients is where I get most enjoyment.

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Regulatory change has seemed relentless in recent years. How’s it felt from the inside? The pace certainly seems to have quickened since the beginning of the financial crisis, as governments have sought ever more desperately to collect additional taxes. It’s not surprising that there would be a focus

on tax evasion and even tax avoidance, but I don’t think this represents a massive threat to the Crown Dependencies, or indeed some of the Overseas Territories that our firm practises in – the main ones being Cayman and the BVI. Ever since 1998, when the OECD started its focus on voluntary disclosure of information, those territories have responded very positively to all the initiatives. So while the pace has quickened – with FATCA, CRS, the IGA with the UK, and particularly the EU money-laundering directive, for instance – all of these things, in many ways, play to the strength of these jurisdictions. We’ve made sure we’ve introduced a set of rules in this area, whether that’s collection of data or regulation of trust companies, that are seen to work and which are enforced. And what of the way the Channel Islands have been reported in the press lately, being lumped in with the likes of Panama? The level of bad reporting we’ve seen is rather depressing, particularly coming out of the UK. The reality, as we know, is somewhat different in the quality of business done in the islands, the quality of regulation and so on. The good news is that the people who matter – the UK, and to some extent the US government, and the EU – have been made aware of and do understand that the standards observed in our locations are higher than the standards adopted and observed by many of the member countries of the EU and the G20.

Words: Nick Kirby Pictures: Natalie Mayer

How has the private client and trust space changed in the time you’ve worked in it? In one regard it hasn’t changed, in that it’s all to do with helping high-net-worth families create structures that enable their wealth to be transferred from one generation to another. What’s different is how the work has been internationalised. We’re now very aware of the opportunities in the Far East, Middle East and South America, more so than 20 years ago when you were acting for clients from these regions but weren’t overly aware or necessarily interested in their tax and general regimes. These days you need to be very aware of what is possible for a family from another region, in terms of being able to use an offshore structure – so the level of understanding and awareness of offshore practitioners has to be greater. The other side is the big difference in regulation. It’s astonishing when you think back 20 years – we didn’t have any anti-money laundering rules per se, so you would just take at face value a client or family coming to you from another part of the world to set up a trust in Jersey. And there were no rules impinging on your ability to set up that structure and there were no rules necessarily impinging on that client in the country where he or she lived. Now that’s all changed. Starting with the Proceeds of Crime Law being introduced in Jersey in 1999, we’ve had countless further regulatory changes. And from September of next year there’s going to be an obligation for a Channel Island service provider under the Common Reporting Standard to provide a minimum amount of information to the tax authorities of any given client’s home country. We’re moving into a world where there is going to be almost complete transparency in terms of a client’s personal tax affairs and an exposure to what that client has established in relation to their personal wealth. That’s the fundamental difference.

we’re moving into a world of complete transparency in terms of a client’s personal tax affairs




Steve Meiklejohn

Interview Does the success of the Channel Islands depend on demonstrating the quality of the services and products available? You’ve hit the nail on the head there. The quality of service, quality of the jurisdiction and its practitioners are key. If you look across most offshore jurisdictions, we’ve all made tweaks, enhancements, improvements to our legislation, be it trusts, companies, limited partnerships or the introduction of foundations. These are the products, so to speak. Most offshore jurisdictions broadly offer the same things. So if a family is looking to set up a structure, they have a whole world of options available. In most cases, the Crown Dependencies will be the jurisdictions of choice when UK intermediaries are looking to place a client, and there’s a reason for that. In our field, in Jersey alone, you’ve probably got five or six leading law firms, most of the main accountancy firms are here, there’s a good range of banks, we have investment managers on the island as well, and we have a very well-regarded court system, with judges of the highest calibre. It seems to me that those continue to be the really important factors when we offer our services to families. How important is a global footprint to a firm such as yours? It’s important because, as a group of Jersey partners, it enables us to hedge our risks by diversifying jurisdictions. But looking at it as regards what we can offer a client, if we can sell ourselves as global offshore lawyers we can come across as much more wellbalanced advisers and less partisan, and not simply pitching for the island we’re in. We can place a client in whichever offshore location we think is best for that client. In recent years we’ve recognised that it would be beneficial to clients if we were in jurisdictions that weren’t purely offshore – hence Ogier’s move into Luxembourg, China and Hong Kong. I certainly think that’s why the bigger firms globalise. Some firms are globalising through M&As, and there’s been a lot of activity in the private client and trust space. What’s your take on that? I look at it from the outside and I think it’s good for the offshore world. Certainly a lot of it has emanated from Jersey because a lot of acquisitive businesses have been headquartered here. It’s good because it demonstrates huge confidence on the part of investors in the administration model and indeed in the offshore model. That doesn’t mean there aren’t concerns about the level of activity. You talk to some employees in these businesses and they express nervousness. Does this mean there will be some rationalisation of business and redundancies? People quite rightly are afraid of that. People also worry that client service might be affected because the

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FACT FILE Name: Steve Meiklejohn Age: 56 Position: Global Senior Partner, Ogier Married to: Lisa Children: Sam (26), Alex (24) and Iain (19) Hobbies: Keeping fit Interesting fact: I once represented Shaun Ryder, the lead singer of the Happy Mondays, in what was then Jersey’s police court.

private equity model, in particular, would suggest a further sale of a business within three to five years. Might that represent a threat to the quality of service that’s offered to the client? On the other side of the coin, when you have serious investors coming in from private equity firms, there’s a real desire to further professionalise the offering of trust companies, to drive up corporate governance standards and service levels, and that’s got to be good for offshore. So overall, I’m encouraged by recent activity. What we’re also seeing is that there are senior teams coming out of those larger firms, who are setting up their own, smaller operations, so clients continue to have choice. We’re not just ending up with megatrust companies, we’re seeing smaller firms establishing themselves that have very good reputations with intermediaries in the UK, offering real choice to clients in terms of the size of firms they might go to. Also you have some of the smaller firms coming together – so you have somewhere with five or six members of staff joining together with two other firms of a similar size. Suddenly you have a firm that has a bit more substance, with 20 members of staff. They’re able to present a much more professional image in order to compete with the big boys.

If you had supreme power, what changes would you make to the private client and trust industry in the Channel Islands? I actually think that things are working pretty well. There have been changes already – in Jersey we’ve just concluded the consultation in relation to potentially the seventh change to our trust law, and I expect a draft law will be published this year. And the government has definitely upped its game in the past five years in responding to requests from industry for the introduction of a new product or service, or to make a change to one of our main laws to make us more attractive. The one blot on the landscape for me has been that we had a new charities law a few years ago. That hasn’t been fully introduced – cost constraints have prevented government from fully bringing it in. That law could have had benefits – we could present the island as a centre for expertise in the charitable and philanthropic sector. So I’d give the government a kick on that, but other than that we’re in good shape. What impact do you feel Brexit is going to have on private client business in the Channel Islands? Overall, I’m not expecting Brexit to have a significant impact on private client work in the CDOTs. If anything, Brexit could have a knock-on benefit. One question being asked is whether the UK government is going to be so focused on Brexit changes that it will have to put back the non-doms changes planned for April. My feeling is they will probably push on with the changes – so in the short term offshore businesses in any event are likely to have more work as clients are advised to make changes to their structures. How do you see the next 24 months in the private client and trust space in the islands? While there have been huge regulatory changes in the past 20 years, the nature of the work we do has remained much the same. That will continue to be the case. With wealth generally increasing around the world, the need for the private client industry will always be there. I’m confident we have a very good future, and there are opportunities. Wealth is being made in the fintech area, and the digital sector is growing. These are going to throw up opportunities in the private client world, in that there will be new clients who will need their wealth structuring. And as the world becomes more digital and technology driven, the way we deliver our services will change – and that applies across all financial services, not just the private client sector. All in all, I’m optimistic we are well placed to deal with whatever comes our way. n NICK KIRBY is Editor-in-Chief of BL magazine


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Whether it’s in response to Brexit or to legislation that’s been on the cards for some time, tax is high on the agenda right now. BL asks four tax experts to give their view on some of the more pressing issues

The Insider View Post-Brexit JO HUXTABLE, PARTNER, DELOITTE The result of the UK referendum on 23 June was as much of a shock to Channel Islanders as it was to the rest of Europe. The position of the Channel Islands with respect to the EU is currently governed by Protocol 3 of the UK Act of Accession to the Treaty of Rome, which places them within the free market for the movement of goods, but outside the EU for other purposes. In practice, this means that, depending on the outcome of the secession negotiations, trade between the Channel Islands and EU countries could be treated as imports and exports in future, involving duty payable and customs formalities. This would be a real impediment to trade. The issue will be what, if anything, replaces Protocol 3 to define the relationship of the Channel Islands with the EU, and whether this will be negotiated on our behalf by the UK, or by the islands directly with Brussels. From a general tax perspective, Brexit will not, in itself, cause major changes. In the UK, taxes such as customs duties are

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currently almost entirely governed by EU directives and regulations, which may need to be replaced by domestic legislation. The main UK taxes, including income tax, corporation tax, inheritance tax and VAT, aren’t likely to be materially affected in the short to medium term, although over the longer term the UK may have more flexibility to deviate from EU tax policies, depending on the nature of the relationship with the EU that Britain negotiates post-Brexit. For the Channel Islands, the key question is how Brexit changes our relationship


with the EU and in particular, from a domestic taxation perspective, whether it changes our position on the EU Code of Conduct for business taxation. The code dates back to 1997 and was established by the Council of Ministers. It isn’t a legally binding instrument but its adoption does require the commitment of member states to abolish so-called harmful tax measures and to ensure that the principles are applied in dependent or associated territories. This led to the review of the tax systems in Jersey and Guernsey and the conclusion in 2012 that they were compliant with the code. Leaving the EU would mean that the UK would no longer remain committed to the code and therefore any commitment to apply the code principles to the Channel Islands should also fall away. However, in reality there has never been any formal obligation on Jersey or Guernsey to comply with the code. Both islands have recognised the importance of voluntary compliance on a ‘good neighbour’ basis, given the possible consequences of being non-compliant. This will not change. The work of the code overlaps to a large extent with the ongoing work of the OECD focus on harmful tax practices, including BEPS. The Channel Islands have recognised the importance of cooperating with the OECD in developing the BEPS project, including appropriate local implementation of certain minimum standards. This is particularly pertinent given that the EU has recently confirmed proposals to draw up a common blacklist of ‘non-cooperative’ jurisdictions, to be finalised in 2017. It’s essential that Jersey and Guernsey don’t appear on the final list, and whilst the Zero/Ten tax regimes have been examined and found compliant with the code, there is a risk that new criteria may be applied, potentially including low (and zero) headline tax rates. Maintaining a zero per cent general rate of corporate income tax is essential for the Channel Islands’ finance sector to remain competitive, and maintaining a constructive and cooperative dialogue with the EU in a post-Brexit world may be essential in helping to achieve this. n

HAZEL JOHNSON, ASSOCIATE DIRECTOR, PRIVATE CLIENT TAX, MOORE STEPHENS The new rules for the taxation of non-UK domiciliaries were promised to us well in advance of 6 April 2017 – the date from which they will apply – so that UK-resident taxpayers would be able to plan for the transition to the new regime. Unfortunately, the draft legislation we have seen has only dealt with the new rules on domicile themselves, and not the new regime for offshore trusts or any transitional reliefs that may apply. This places taxpayers and their advisers in a difficult position, and the change in Chancellor and the surprise Brexit vote surely mean that these proposed changes will have fallen even further down the list of priorities facing the Treasury. Under the new rules, individuals who have been UK resident for more than 15 of the 20 previous tax years will be deemed to be domiciled in the UK for all taxes from the beginning of year 16 (rather than the previous rule, which applied after 17 out of 20 tax years and was limited to inheritance tax). Individuals born in the UK, with a UK domicile of origin, who leave the UK, even for very long periods of time, will be treated as UK-domiciled if they again become resident in the UK. We’ve seen the draft legislation dealing with these changes, and the implications are well understood. We are told there will be transitional reliefs, such as a rebasing of personally held assets for individuals who become deemed UK domiciled on 6 April 2017; that there may be reliefs on the winding up of house structures; there could be a softening of the rules for business investment relief; and there are suggestions the mixed funds rules could be revisited and simplified. These would all be welcome, but in the absence of the detail of

the rules, it’s impossible to advise a client to rely on these potential reliefs when they may not be enacted, may not apply in particular circumstances, or whose introduction may be delayed to later years. There’s been very little guidance on the tax treatment of offshore trusts, other than to say there would be a benefit charge on beneficiaries but there should be no charge where income or capital gains aren’t distributed (other than UK source income, which would be taxable on a settlor). This is potentially attractive, allowing for tax-free roll-up of investments in a trust structure, but this does depend on the rate applicable to taxable benefits – anything higher than capital gains tax rates will be disastrous. There will be a period of adjustment as long-term UK residents decide whether the new regime is unworkable for them, and the new statutory residence test will make it easier for people who wish to break residence to do so. Those who can’t break all ties with the UK may find they can reduce their presence in the country to such an extent that they cease to be resident, which could lead to a substantial drop in tax take from non-UK domiciliaries. n




DAN COLLINS, HEAD OF PRIVATE CLIENT AND TRUST IN GUERNSEY, AND ELAINE CONNOR, HEAD OF PRIVATE CLIENT AND TRUST IN JERSEY, EY The past four years have seen unprecedented change for structures and individuals in the Channel Islands owning UK residential property, including: ● From 1 April 2013, an annual tax on enveloped dwellings (ATED) was introduced for UK residential properties worth more than £2 million as at 1 April 2012, held by non-natural persons such as companies. The threshold for this charge has since been lowered to £500,000 and the charges range from £3,500 to £218,200, based on property value. Some reliefs from the charge are available, most notably where the property is commercially let. ● Companies liable to pay an ATED charge may also face ATED-related capital gains tax (ATED-CGT), at 28 per cent, on the disposal of the relevant property, for gains made during the period the ATED charge has applied. ● From 17 July 2013, there have been significant restrictions on the deductibility of debt for inheritance tax (IHT) purposes. ● From 6 April 2015, all non-UK owners have to pay capital gains tax (CGT) on the sale of UK residential property where there has been an increase in value from this date. ● From 1 April 2016, an additional three per cent stamp duty land tax (SDLT) is payable when purchasing a second residential property in the UK. ● From 6 April 2017, UK residential property held via a non-UK company will no longer be protected from UK inheritance tax. There has been concern that the overhaul of this regime would spell the end for UK residential property being held through trust and/or company structures in the Channel Islands. We don’t believe that to be the case. Whilst in certain circumstances it may be preferable from a UK tax perspective

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to hold a UK residential property directly – particularly as the IHT protection drops away in April 2017 – privacy, asset preservation and succession planning continue to be important factors for clients who are looking to set up structures in the Channel Islands. Also, where UK residential properties are owned for investment purposes and are commercially let, there remain UK tax advantages to holding these properties through trust and/or companies in the Channel Islands. Relief can be claimed for the ATED and ATED-CGT charges. CGT rates may be lower, and IHT will be more

privacy, asset preservation and succession planning continue to be important for clients

complex from April 2017, but in many cases the ultimate beneficial owner will be no worse off owning the property through a company. Professionals in the fiduciary sector should now be reviewing how residential property is currently held in structures. Restructuring may be required, but one should note that this could bring unintended consequences and potentially tax charges, particularly in relation to CGT and SDLT. De-enveloping reliefs have been mooted but the time period in which one will be able to act could be short, so whilst individuals may be well advised to ‘pause’ on taking action, there should be no hesitation in reviewing the current position. One final point to note is that we’ve seen a slight increase in parties willing to consider acquiring the shares of a company that already owns residential property. Care is clearly required in this regard as the purchaser is acquiring the company and all that goes with it, but with appropriate due diligence a tax saving may exist for both parties. The landscape is undoubtedly more complex than ever before and it means, perhaps unfortunately, that there is no ‘silver bullet’. The best method of owning UK residential property very much depends on long-term plans and personal circumstances. Advice should be taken where there is any uncertainty. n

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Words: Dave Waller

2014 at the age of 93, he left behind a celebrated movie career stretching back to the 1930s. Yet he apparently had only $18,000 in the bank. The reason? From 1998, he’d allowed his stepson, Chris Aber, to manage his financial affairs. Rooney alleged that Aber stole $400,000 from him, kept him in the dark about his own finances, forced him out on the road to earn more money, used abusive language and refused him basic necessities such as food and medicine. The star won out in the end – with a $2.8 million judgment against Aber in October 2013. For Aber, the matter would drag on long after Rooney’s death, in the form of a feud with his younger brother, Mark. For Rooney it was a tragic ordeal, of course, but the damage cut deeper than the lining of his pockets. He described feeling “trapped, scared, used and frustrated but, above all, helpless” because of it. He’s not alone – people are wealthier and live far longer these days, so financial abuse is a growing problem, and not just for Hollywood celebs. Thanks to the scale of its wealth management industry, practitioners in the Channel Islands need to be alert to unscrupulous and manipulative chancers looking to wrangle their way into vulnerable people’s affairs. When we talk of the vulnerable, the spectrum is broad and includes people with addiction problems, such as alcoholism, those suffering mental illness and severe depression, as well as those with physical conditions such as brain tumours. But the most commonly vulnerable group when it comes to wealth is, unsurprisingly, the elderly. And the abuse they suffer can be quite insidious and easily overlooked. “When an elderly person becomes unwell, the relative looking after them may start to isolate them, taking control of their mobile, monitoring chats and calls, and making them feel they can’t do without their help,” explains Alison Ozanne, Partner at Walkers Guernsey. “All of this

may well poison the mind of a vulnerable person against the rest of the family.” There are other ways in which such people could be taken advantage of – they might be frogmarched to the lawyer to rewrite a will, influenced to change the beneficiaries of a trust, or forced to hand over lump sums of cash. It could be carers emptying people’s purses or, more subtly, family members emptying a bank account slowly over time. Ozanne cites a case involving a stepmother to four adult siblings, whose father had passed away. Ozanne’s team challenged the wills, saying the woman was using undue influence to get new wills written. They brought in Professor Robin Jacoby, one of the UK’s most highly regarded experts in legal issues of mental capacity, to assess the testator’s cognitive powers when he executed the wills. “He’d read them out in front of jurats, so they argued it was legitimate,” says Ozanne. “But the part of the brain that deals with reading is very different to that which deals with cognitive understanding – you can read it beautifully without understanding what you’re saying. Professor Jacoby found the deceased lacked capacity when he executed those wills.”

GREY AREAS This case illustrates the difficulties when it comes to issues around mental capacity and undue influence. There are lots of grey areas. Losing mental capacity can, for example, be a gradual process, and while the family may be uncomfortable with the affairs they see unfolding, the person may not have yet reached the point where anything can be done about it legally. And that’s not just a worry for the families and beneficiaries. The wealthy themselves have much to fear here too. Jersey, for instance, currently lacks a law through which someone can set out what they want to happen to their affairs if they lose capacity, in a legally binding way. New legislation, slated for introduction

Protecting thE Financial abuse can take many forms and affects a broad range of vulnerable people – it’s an issue that Channel Islands practitioners must remain acutely aware of 28 september/october 2016

WHEN ACTOR MICKEY Rooney died in

financially vulnerable


in 2018, will allow people to do just that. “We’re getting more and more enquiries about this,” explains Julie Melia, Head of Probate and Estates practice at Ogier. “People have seen situations where others have lost capacity and issues have arisen as a result. The new law should make a lot of difference, allowing people to plan ahead for their physical care and wellbeing as well as their assets.”

FAMILY DYNAMICS While the issue of mental capacity is at least provable by medical records, undue influence is a more difficult territory for practitioners, not least because it throws them into the centre of those impossibly charged family dynamics. “I had one client who became increasingly difficult to deal with, because his wife was only interested in his money,” says Mark Biddlecombe, Client Services Director at Nerine Group of Fiduciaries. “As trustees, we had to preserve what was left, in a trust set up as a lifeboat by the man’s father, who’d feared such a thing would happen. “It was a very difficult situation for us, making sure he had the care he needed while trying to keep wife number two at arms’ length. When he died, the first call I had was from her, saying ‘Now he’s passed on, what are you going to do for me?’. That trust now serves the needs of his children.” Indeed, a huge part of the problem is that such struggles may only surface after the key player has passed away. Lawyers are left forensically recreating evidence for the court to decide whether that influence was undue. So where does that leave the family or beneficiaries who have concerns over the influences being exerted on a wealthy relative? Court is an option, but it invites expense

and stress, and success is far from a given. “Undue influence is very difficult to prove in law,” says Professor Jacoby, who as well as being Professor Emeritus of Old Age Psychiatry at Oxford University, spends most of his time compiling legal reports for solicitors in cases where wills have been challenged, usually by family members who feel cheated out of their inheritance. “For undue influence, you must establish coercion, which is very, very difficult,” he says. “And if the person challenging the will can show there’s a case of suspicion, the burden falls on the other side to prove otherwise. Most wills are challenged on the grounds of lack of capacity.” Practitioners such as trustees and lawyers need to be aware of how to deal with vulnerable clients to avoid becoming embroiled in expensive, lengthy disputes later – quarrels that can destroy the client relationship and damage their business. “It’s not easy,” says Biddlecombe. “You have to know the client, the family and the people around them, as well as understanding the client’s needs and what kind of request they’re going to make. See them on a regular basis, in an environment where you know you’re speaking to them and it’s their own mind you’re accessing, not an influence being practised by others. People who take advantage of the vulnerable tend to be very cunning about it. Trustees will have to deal with that.” Lawyers may also find themselves entering that cauldron of family turmoil to prevent clients from over-reacting and chasing a lost cause through the courts. “We’re only humble lawyers,” says Melia. “We can warn people about the scale of the challenge and the potential cost, but there’s only so much we can do.” n DAVE WALLER is a freelance writer

RED FLAGS The International Psychogeriatric Association (IPA) publishes guidance to help experts who are requested by the courts to ascertain whether a person has suffered undue influence in managing their affairs. Here’s what it says to look out for: ● Social or environmental risk factors such as dependency, isolation and sequestration ● A change in family dynamics: recent bereavement or family conflict ● Psychological and physical risk factors, including physical disability, deathbed wills, sexual bargaining, personality disorders, substance abuse and mental disorders including dementia, delirium, mood and paranoid disorders ● Legal risk factors such as unnatural provisions in a will, or provisions not in keeping with the previous wishes of the person making the will, and the procurement of a will by a beneficiary Undue influence is more likely to occur where there is: ● A special relationship in which the testator invests significant trust or confidence in another ● Relative isolation (whether due to physical factors or communication difficulties), which limits free flow of information and allows subtle distortion of the truth ● Vulnerability to influence through impaired mental capacity or emotional circumstance (such as withholding of affection, or persuasion on grounds of social, cultural or religious convention or obligation) The IPA warns that such influences ‘may be subtle, insidious, and powerful, requiring little pressure to bring about the desired result’.

to prove undue influence you must establish coercion, which is very, very difficult 30 september/october 2016

Professor Robin Jacoby will be speaking at BL’s Guernsey Trust Conference on 16 November in St Peter Port on the subject of ‘Fraud and financial abuse of the vulnerable’. For more information, visit

Finance september/october 2016 31


Tech and compliance get personal as financial services firms face an increasing compliance burden, technology is helping to make the process faster, more efficient and less onerous for clients Words: Kirsten Morel

TO SOME, COMPLIANCE is a challenge, to others it’s a burden. To everyone working in the financial services industry, it’s a reality. The seemingly never-ending growth of regulation and compliance can’t be ignored by any company that wants to continue operating in the Channel Islands. Long ago, Jersey and Guernsey accepted the carrot of increased reputation in exchange for their ability to meet standards set down by major international organisations such as the OECD, the IMF and the EU. These in turn used the threat of blacklisting as a stick to encourage compliance. “There have been a huge number of changes caused by reactions to various financial services sector crises and leaks, which have led to an increase in political will internationally to address what are perceived as socially unacceptable behaviours,” explains Andy Pryke, Deputy Group Head of Compliance and Risk at fund administrator Ipes. Companies had to begin collating Know Your Client (KYC) data and instituting Client Due Diligence (CDD) and Anti Money Laundering (AML) procedures. Today, these are everyday tasks, but back in the 1990s few firms had such formal procedures in place. Historians are likely to point to the financial crash of 2008/09 as a key cause of this change in political will and the subsequent acceleration in the growth of regulations and standards. The US, UK and OECD response to widespread public concerns about the possible misuse of international finance centres was to introduce new responsibilities for financial institutions. They are now required to report in-depth client financial information via mechanisms such as FATCA and the Common Reporting Standard (CRS). These new regulations and reporting requirements

32 september/october 2016

Finance mean that financial service providers throughout the world are having to receive, process and store vast amounts of highly confidential data. Clients, who more often than not use a range of professional service providers from accountants to lawyers, trust companies and banks, have to supply this information over and over again. “The world of risk and compliance is only going in one direction, which is more of it,” says Robert Surcouf, Group Chief Enterprise Risk Officer at JTC Group. This means companies need to keep their clients informed so that they understand why they are continuously being asked for information. “It’s important to liaise with clients to help them understand that this is necessary and isn’t us trying to generate more work. Communication with clients, explaining why you’re asking for something, is important,” Surcouf says.

DATA TRANSFER The information that clients have to give every professional services provider that they engage in the Channel Islands ranges from the banal – such as name, address, birth dates and certificates – to the more intrusive, including information about business interests, sources of funds and, in certain circumstances, the purposes for which withdrawn money is being used. This information is collated and analysed by the firm in question, which then attributes a level of risk to that client. This factor is dependent on a wide range of elements but includes information such as whether the client is politically exposed or operates in countries that are known to be corrupt or unstable. Under the terms of the different FATCA regimes, financial institutions must report information about their clients’ investments to tax authorities in the UK and US, which means that firms aren’t only holding vast amounts of sensitive data but are also transferring it to other jurisdictions. With such a large amount of work surrounding every client, it’s easy to make the case for using technology to help to securely store, analyse and transfer the information. The need for clients to repeatedly present the same information to every service provider has been identified by a number of Channel Island firms as an opportunity to create technology that enables clients to provide that information just once, usually via an online app, so it can subsequently be shared with other providers or the relevant authorities in a secure and authorised environment. “Anyone who wants to access any Jersey service provider experiences a situation in which their KYC details, copies of their passports, birth certificates and so on are asked for at every turn,” explains Dan Le Blancq, Director of Operations at Elian in Jersey. “For the client, it’s irritating. But the opportunity is there for us, as a jurisdiction, to say we can do it differently. That once you’ve provided the details on september/october 2016 33

The world of risk and compliance is only going in one direction, which is more of it


one occasion, then that’s enough and we will share the information. That’s where the opportunity is, and technology has a role to play in that, sitting in the middle and enabling institutions to share.”

SHARE AND SHARE ALIKE The opportunity lies in removing the burden of compliance for both clients and the businesses themselves. In the Channel Islands, JTC, Ipes and Elian have all developed solutions that attempt to address this for use within their businesses and, in some cases, as software that other firms can adopt for themselves. From an internal perspective, multijurisdictional firms such as these benefit from being able to share their own client information with their offices in other countries. However, the Holy Grail would be for regulators to accept these solutions because this might also encourage other businesses to use them. “Firms are looking for a kitemark of approval, but regulators, quite rightly, won’t endorse products because they need to remain independent,” says Andy Pryke. “It would be good for government to look at creating a kitemark, or something similar. If Jersey and Guernsey could use a kitemarked CDD system, it could create a competitive advantage.” In order to overcome the Catch 22 of needing an endorsed product to gain client confidence, but not being able to get such an endorsement from an independent regulator, Le Blancq suggests another way. “Whilst people understand the system and the problem that it addresses, there’s no guarantee for them and there’s a reluctance to rely on something new,” he explains. “It’s seen as just too different. But this could be

overcome by a centralised registry.” Whether a centralised, trusted registry could ever become reality is open to argument. In the meantime, in actively seeking to rise to their own compliance challenges, are the aforementioned firms developing systems that could become the foundation of a Channel Islands-based technology industry?

Two of the three companies have developed their solutions using only inhouse resources, effectively turning parts of their financial sector businesses into island versions of Silicon Valley start-ups. Whilst this may be an unexpected development, it does make sense within the context of the challenge the industry is facing. Digital Jersey, the government-owned company charged with developing the island’s digital sector, has invited conference speakers to make the argument that the compliance environment presents an opportunity for the island. This line is reinforced by the presence of a number of firms that are developing marketable systems in the area. As with all technology markets, there is a problem of fragmentation, something that’s already reflected in the fact that a number of Channel Island firms have individually set about developing compliance systems. Whether consolidation among islandbased businesses will be able to address this is difficult to tell, but Le Blancq says another option may be impossible to resist. “For there to be a real shift, you probably need a Google or a Microsoft to turn their mind to solving the problem,” he says. The most realistic view may also be the most pessimistic from the Channel Island perspective, but that isn’t likely to stop the islands trying. By addressing the issue of compliance, they are backing an industry that’s set for considerable growth in the coming years. To truly make the most of the opportunity, however, a rapid increase in coordination will be necessary. n KIRSTEN MOREL is a freelance financial writer

THE CHANNEL ISLANDS IN ACTION As the compliance burden has increased, companies have increasingly looked to technology to relieve the pressure. Here, we look at the technology solutions used by several Channel Island firms.

l Elian and Ipes have developed tools using their in-house teams, with a view to making these available to third parties and, in the process, turning the compliance cost base into a revenue stream.

l JTC Group worked with Jersey-based firm Prosperity 24.7 to develop Self-Certify 24/7, a tool that uses Microsoft Azure and Microsoft Dynamics CRM to enable JTC’s clients to provide CDD information at their convenience, any time of day or night. JTC is then able to process any exceptions that have been flagged during the firm’s normal working hours.

l IDCheck is an app launched by Elian in 2014. It is billed as being ‘the completely paperless alternative to certified true copies for client due diligence purposes’. The app enables clients to upload their identity information (passport, national ID card or driving licence, and utility bill) by using their smartphone. The app verifies this information by requiring a nominal

34 september/october 2016

payment to be made from an appropriate bank account. The information is checked by Elian staff, who compile a single-page ID report that’s held in a secure online vault. l Ipes’ ID Register creates a KYC and FATCA profile of individuals that can link to their investments, lawyers or bankers. The profiles are continuously screened against politically exposed persons and global sanctions lists and are assessed for FATCA and CRS. This easily updated profile gives firms live CDD data to fulfil compliance requirements. The tool is available to other firms, giving Ipes an extra revenue stream.


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Beneficial ownership of companies and trusts is at the top of the international agenda right now, but will legitimate rights to privacy lose out to the demand for public registers? ?

Words: Richard Willsher

THE UNITED KINGDOM’S announcement in April that companies will be required to hold a register of people who exercise ‘significant control’ over them highlighted the way in which jurisdictions around the world are closing loopholes to criminal activity. The move was the latest in a series of measures taken by multilateral agencies, governments and financial regulators to combat money laundering, terrorism funding and tax evasion. Yet there is still a lack of global coordination to stamp them out. Meanwhile, the revelations in the Panama Papers have brought further intense scrutiny, giving all jurisdictions fresh impetus to tighten up their controls. One of the chief debates that surrounds the issue of beneficial ownership of companies and trusts is what level of privacy people should legitimately have in their financial affairs. Hiren Mistry, a Barrister and Legal Counsel at international trust and corporate services provider Equiom (Jersey), says: “Why do clients want that level of secrecy? Tax avoidance is a no-no. There is no need for it. However, for PEPs [politically exposed persons] sometimes because of their line of work and who they are, they don’t want to expose themselves or to have their ownership structures ‘out there’. “If a high-profile person owns a yacht, for example, they may not wish it to be widely known because it could expose them to terrorists, kidnappings and so on. There can be legitimate reasons to keep beneficial ownership concealed.”

september/october 2016 37




It would be very difficult to get all countries to agree on actually pooling their information – some have better systems than others

This is why the so-called ‘Jersey Model’ of beneficial ownership registration has been hailed as a balanced, secure way of responding to the issue, notably by the World Bank in its 2011 report The Puppet Masters – How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It. While the new UK approach allows the public to have access to the beneficial ownership register, Jersey has, since 1989, kept such a register but shares the information only with appropriate authorities, such as those involved in law enforcement and tax collection. This is aimed at preserving the privacy of individuals.

FOCUS ON DUE DILIGENCE There is a second significant difference between the UK and Jersey models. While the UK register maintains records of ownership supplied by companies themselves, the Jersey approach requires trust and company service providers (TCSPs) that register companies on behalf of overseas persons and businesses to carry out independent checks of their own into beneficial ownership and supply their data to the registry. The registry itself also uses public and private information sources to carry out its own due diligence. The result provides a ‘double lock’ against potential wrongdoing. Earlier this year, Moneyval, the Council of Europe’s expert committee on anti-money laundering measures and the financing of terrorism, endorsed the World Bank’s view of the Jersey Model following its fourth assessment visit to the island. It said: ‘Jersey’s combination of a central register of UBOs [ultimate beneficial owners] with a high level of vetting/evaluation not found elsewhere and regulation of TCSPs of a standard found in few other jurisdictions, has been widely recognised by international organisations and individual jurisdictions as placing Jersey in a leading position in meeting standards of beneficial ownership transparency.’ Guernsey doesn’t yet have such a register. But, having also received a positive report from Moneyval, the island does place the onus of thorough due diligence on TCSPs and is developing a register of its own that’s likely to follow the Jersey model.

38 september/october 2016

In April, the island’s then Chief Minister Jonathan Le Tocq announced: “Guernsey is committed to ensuring enhanced co-operation between law enforcement authorities on information sharing for the prevention, detection and investigation of corruption, economic crime, money laundering and terrorist financing.” The government has also set a target of 30 minutes for responding to UK authorities’ requests for information, and it aims to have a register in place by 2018. Jersey has committed to exchange information with UK authorities, but recognises that even its own much-praised beneficial ownership registration model is not perfect. “We published a consultation in March that addressed one area where we felt we could improve on our leading position and that’s by ensuring that the register is as up to date as possible,” explains George Pearmain, Jersey’s Lead Policy Adviser on private wealth and financial crime in the Financial Services Unit of Jersey’s Chief Minister’s Department. “We want to ensure that when there’s a change in beneficial ownership, a TCSP transmits the new information to the central registry as quickly as possible. “We’ve signed an exchange of notes with the UK, which enhances our position on sharing information with their law enforcement authorities. What we’re seeing now is the need by such authorities to have the information on beneficial ownership available to them very quickly in certain circumstances. “In terrorism financing matters, for example, the security services may need to obtain information very fast – in some cases within an hour of a request being made. We expect to issue our consultation feedback paper in the near future.”

THE BIGGER PICTURE This push towards transparency on beneficial ownership does lead one to ask whether we’re heading towards a worldwide standard. One proposal that’s been mooted is that there should be a global register with buy-in from all nations and access for all appropriate authorities and possibly the public too, but this is looking remote to say the least, and may not be appropriate.


Colin Powell, Adviser on International Affairs to the Chief Minister of Jersey, points out that there is, as yet, no international standard on automatic exchange of beneficial ownership information with law enforcement authorities. “It also appears unlikely that jurisdictions such as the US, Singapore and China will agree to an international standard calling for a public register of beneficial ownership of companies,” he says. “There is no indication from them at all that they are contemplating the implementation of such a public register. “If you look at the G20 high-level principles on beneficial ownership transparency, the Financial Action Task Force recommendations on anti-money laundering and the OECD recommendations on tax transparency, they don’t include a requirement for a public register of beneficial ownership.” “One size of regulation and registration does not fit all,” says Andrew Whittaker, Managing Director of Ipes in Guernsey, who has been closely involved with the development of Guernsey’s beneficial ownership register. “Registration and the pursuit of transparency of beneficial ownership should coalesce around global standards. These should include, among other things, common accounting standards on taxation prepared by the OECD.” He adds that different financial markets and financial structures require different regulatory approaches. Back in Jersey, John Harris, Director General at the Jersey Financial Services Commission, which runs the island’s beneficial ownership register, says: “It would be very difficult to get all countries to agree on actually pooling their information. There are 200 countries in the world, some with better systems than others. “At the same time, the security of that data is critical. Centralising all the world’s data would be too much of a concentration risk, in our view. So we support the idea of global

standards to be met by countries around the world [as opposed to a global register].” Moreover, while there are moves afoot to compel jurisdictions to be equally transparent, being an early adopter isn’t necessarily an advantage, according to Steve Meiklejohn, Global Senior Partner at law firm Ogier. “If we’re going to have to go further than a commitment to make registers open to law enforcement, so far as companies are concerned, and to make them publicly accessible, then Jersey’s position will be that we will only consider that when there is a level playing field. And clearly, there’s a lot of water to go under the bridge in terms of relationships with the EU. “For trusts, France already has a public register of trusts. The EU seems to be requiring that the obligation applies only to trusts that are taxable in your jurisdiction, which is a bizarre test. Given that most offshore trusts are not taxable here, they would not be affected.” A level playing field for registration of beneficial ownership is clearly a long way off, although the G20 forum of most powerful nations has endorsed the need for greater transparency. As offshore financial centres, the Channel Islands inevitably attract scrutiny, especially since the Panama Papers. However, Jersey and Guernsey can both demonstrate evidence of a strong commitment to clarity of beneficial ownership – though they both stop short of making their data publicly available. Money laundering, terrorism funding and tax evasion are front page news. Calls to mitigate them are now firmly on government agendas across the world as calls from the press, public and politicians ring out louder and more stridently year by year. But whether global agencies and local regulators can, or should, implement worldwide standards and linked up action on beneficial ownership registration is probably one step too far. n RICHARD WILLSHER is a freelance writer

september/october 2016 39

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A ‘hostile takeover’ of trusteeship Mason Birbeck, Head of the Corporate, Commercial and Trust team at Parslows, reflects on the implications of the outcome of the Anatares Trust case for trustees in Jersey THE RECENT CASE In the matter of the Anatares Trust and other trusts [2016] JRC099 provides insight into the rights and obligations of minority/majority trustees, the basis for determining new trustees’ powers where legal title to assets has yet to vest, and the basis to challenge the effective freezing of trust assets under Jersey’s proceeds of crime legislation. It involved four Jersey law trusts, of which UBS Trustees (Jersey) had been the sole trustee. The trust assets were held in Zurich by a Swiss-based UBS group intermediary (UBSF) under contractual agreements (Fiduciary Agreements). Two separate Italian criminal cases were involved, alleging environmental offences and undervalue share sales involving shares settled on the trusts. The allegations were denied. Once aware that the trust assets were potentially criminal proceeds, UBS Trustees filed a Suspicious Activity Report (SAR) under the Proceeds of Crime (Jersey) Law 1999, and the Joint Financial Crimes Unit (JFCU) prohibited UBS Trustees from moving relevant assets outside its control. The Italian authorities took action to seize the trust assets, which UBS Trustees was pressured by the trusts’ beneficiaries to resist. UBS Trustees’ view, on advice, was that neither it nor UBSF could resist the impending confiscation. The trust terms empowered the trustees to act by majority. The protectors sought to appoint a majority of overseas-based trustees (Additional Trustees), with a view to the majority instructing UBSF to resist seizure or, failing this, to terminate the Fiduciary Agreements, removing UBSF’s powers. Based on the JFCU prohibition, and concerns as to the standing of the Additional

Trustees, UBS Trustees refused to endorse the Additional Trustees’ appointment or control of the trust assets. The Additional Trustees made a representation to Jersey’s Royal Court to determine: the validity of their appointment as co-trustees; and their authority, as the trustee majority, to instruct UBSF or terminate the Fiduciary Agreements. The Court held the protectors’ power to appoint new trustees to be a fiduciary power. It accepted that, in appointing the Additional Trustees, the protectors had sought in good faith to prevent loss of the trust assets, which could not be categorised as irrational. Having determined the appointment of the Additional Trustees effective, the Court was then asked to decide whether or not the Additional Trustees, being a majority, could either instruct UBSF or terminate the Fiduciary Agreements. The Court confirmed that: ● The appointment of a trustee does not itself vest the trust assets in that new trustee. It will often be necessary to vest title to the assets in the new trustee, and the new trustee can demand that the existing trustee do so. ● The Additional Trustees could, as a matter of trust law, therefore demand that UBS Trustees assign the benefit of the Fiduciary Agreements to all the trustees. ● UBS Trustees was obligated to act in accordance with the trustee majority’s decision, including any direction to terminate a contract in its name. ● However, whether a new trustee can effectively act in relation to trust assets before title has vested depends on the circumstances and, in the case of a contract, its governing law. The Court therefore held that it could

not make a decision on whether the Additional Trustees were empowered to instruct UBSF or terminate the Fiduciary Agreements, as that would fall to be determined by the governing law of those agreements. As to the effect of the proceeds of crime legislation, the Court held that the Additional Trustees would either have to institute a judicial review challenging the JFCU’s decision, or seek a court order enforcing the transfer of trust assets to all the trustees. The latter would necessitate them proving on the balance of probabilities that the trust assets weren’t proceeds of criminal conduct. The Court wouldn’t rule on whether the Additional Trustees instructing UBSF or terminating the Fiduciary Agreements would constitute an offence under the 1999 Law. To make a declaration that the Additional Trustees were so empowered might imply that this was lawful conduct, and it was wholly inappropriate for the Court (being a civil court) to make a declaration as to the criminality or otherwise of future conduct. The Court did, however, determine that the mere provision of all necessary documents to any new/additional trustees (the duty of a trustee, whether outgoing or continuing) enabling them to familiarise themselves with the trust assets, would not amount to a breach of Article 30 of the 1999 Law. The Court considered the JFCU had exceeded its powers in refusing its consent to UBS Trustees providing such documents to the Additional Trustees. n

Mason Birbeck can be contacted at or on +44 1534 630530. september/october 2016 41


Bitcoin is dead long live the



Words: Nate Jordan

IN 2009, PIONEERING geeks used 10,000 of the then worthless cryptocurrency Bitcoin to order a pizza. At the time of writing, Bitcoins are being traded for around £500 each, which means even the anchovies would retrospectively have been worth more than 10 times their weight in gold. Since its creation, Bitcoin may well have become the most popular cryptocurrency, but its reputation is far from squeaky

clean. As Matt Thornton, Director of Professional Services at C5 Alliance explains: “Bitcoin will struggle for some time to shake off the stigma of some of the well-publicised fiascos and the fact that by far the biggest use of Bitcoin has been for undesirable activities.” Arguably the largest fiasco was when, in 2014, hackers exploited Bitcoin’s anonymity to carry out a digital heist of over $450 million from MtGox, the largest Bitcoin exchange at the time. Another hack in August this year hit Hong Kong-based exchange Bitfinex and led to the price of Bitcoin falling by 10 per cent. The underground dark net website Silk Road further muddied

Bitcoin’s reputation by using the currency for drug deals. Bitcoin’s tarnish, however, doesn’t affect the underlying code behind the currency – the blockchain – which many believe has the potential to reshape global finance. In layman’s terms, if Bitcoins can be thought of as digital honey, then the blockchain is the structure of the honeycomb itself. Anyone can inspect the honeycomb to see which cells are bursting at the seams with honey and which are empty. In more technical terms, the Bitcoin blockchain is a digital file that contains a record of every single transaction ever made. The blockchain is decentralised,


in that it’s distributed across thousands of computers and updated frequently. As such, if a fraudster tried to tamper with it to make it seem as though they’d received a digital wagon-load of Bitcoins, their version of the blockchain wouldn’t tally with the other copies distributed throughout the network. The transaction would be rejected. As Bill Byrne, Group General Counsel at JTC Group, explains: “One of the best descriptors of the blockchain is as a mini trust engine. It enables Bitcoin to transfer value without the involvement of any bank or counterparty.” A decentralised blockchain ensures honesty and accuracy. Crucially, the blockchain can be used for much more than a financial ledger. As Byrne explains: “The UK employed a type of ‘distributed ledger technology’ for land ownership for centuries, prior to the institution of a centralised land registry in the late 1900s. “Up until this time, property transactions would require the production of a ‘root of title’, a cascading list evidencing the entire provenance of the land. “A modern, digital version of the distributed ledger, rendered indelible by cryptography, represents a fairly powerful, if not entirely novel, solution.” As Thornton points out: “There are theoretically no limitations as to what could be done with blockchain, but things like the guaranteed execution of ‘smart contracts’ [a type of computerised contract] are getting most interest. For the time being we will most likely see it used in scenarios where the object is easily digitised.” One alternative use for the blockchain would be in copyright disputes. Rock group

september/october 2016 43

with some pundits predicting Bitcoin’s days are numbered, others argue that the technology behind the cryptocurrency is the real story – but is excitement about blockchain just as overblown?

Finance Led Zeppelin was recently falsely accused of plagiarising a guitar chord in Stairway to Heaven. They were able to win the legal battle, but today a band could simply create an electronic signature (known as a ‘hash’) of a song or individual riffs and place it in the blockchain. In any dispute, the band could point their eagle-eyed legal team to the hash in the blockchain to prove beyond all doubt that they were in possession of the oldest copy of the music. Of course, finance is the area in which Blockchain is seen as having the power to transform. As Jason Laity, Chairman of KPMG in the Channel Islands, explains: “Financial statements are built on double-entry book-keeping, and when one company trades with another there will be another auditor testing those entries on the other side of the transaction.

Actually getting something working in blockchain still remains the realm of the highly technical

There could be efficiencies gained by comparing those entries in a decentralised shared ledger of some description.” Few bank clients would want their every transfer, trade or ATM withdrawal made available worldwide via a public ledger. For this reason, Barclays Bank has experimented trading with derivatives using a customised blockchain named Corda, which can be stored privately. Corda was developed by R3 – a consortium of the world’s biggest banks, including JP Morgan and CitiGroup. Currently, derivative trades work with a three-part paper contract, the standard for which is set by the ISDA. Banks fill in their parts of the contract and mail the paper contracts to others. When a paper contract comes in, the recipient has to look through their in-tray to find their own version of the contract. Sometimes paper contracts vary slightly, causing even more delay and confusion. For the trial, Barclays created a ‘smart contract’ – an electronic version of the document conforming to ISDA standards to make sure every bank has a copy of the same document. The fields in the document could then be filled by each bank, and then the transaction was negotiated and finalised once certain pre-programmed conditions had been met. For instance, if Mr MoneyBags Bank in London wishes to buy a dozen gold futures contracts for no more than £5,000 each from Tanaka Savings Bank in Tokyo, each bank can fill in their corresponding portions of the contract and it can be executed automatically. Despite the trial’s success, financial institutions aren’t going to be ditching current models and replacing them with blockchain any time soon. Peter Todd is one of the main current developers of the Bitcoin blockchain and also claims to have worked on the initial design of Corda. “For most applications, I think we’ll see improvements on the status quo,” he says. “For any application that already successfully makes

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use of trusted third parties, blockchain tech reduces fraud, but frequently fraud is already low anyway.” As Matt Thornton adds: “Blockchain is already described as ‘the solution looking for a problem’ but for every ‘could I do this with a blockchain?’ there’s usually no reason why the same thing couldn’t be done with conventional technology. “Actually getting something working in it still remains the realm of the highly technical. Adoption will gather speed as the likes of Ethereum [a program that runs across thousands of computers via a blockchain] establish scale.”

SEARCH FOR THE KILLER APP “Decentralised or shared registers such as blockchain hold significant potential within financial services,” says Laity. “But trying to apply it to existing problems will likely not produce the ‘killer app’ that will somehow exploit the ability to transparently, securely and efficiently record both the ownership and transfer of value.” Thornton is of the same opinion. “I don’t anticipate

the use of Blockchain reaching the mainstream public consciousness,” he says. “The vast majority of average consumers have no idea how their retail banks work – even stockbrokers understand how the markets work but have virtually zero understanding of the technology behind it.” As Bill Byrne concludes: “Most of the visible applications of distributed ledger technology within finance will be ‘under the hood’. This will be through a combination of vested interests and ‘super-caution’ exercised by central agencies who are either paralysed by bureaucratic inertia or living in genuine fear of losing their dominant influence. “In less regulated sectors, I think interesting applications of distributed ledger technology will begin to emerge.” Incremental and obscure though change may be, the implications for blockchain are intriguing, and exciting times may lie ahead if some of the innovative applications so far come to fruition. n NATE JORDAN is a freelance technology writer


● Provenance ( employs a blockchain to help consumers trace the supply chain of products. From making sure smoked haddock really is Cornish to discovering the cotton mill in India where your pullover was made, the blockchain lists each stage in the process. ● Ethereum ( uses a specialised blockchain to allow an application to be run across many computers around the world. As such, it doesn’t matter if individual machines go offline. One example is the VeVue project, which promises to ‘bring Google Street View to life’. Users set the mobile app to take 30-second video clips of restaurants, hotels, places and events, and these are then distributed across everyone’s devices through the blockchain. ● BitNation ( uses blockchain technology to create virtual nations and even passports. More usefully, the project has been experimenting with recording the transfer of land titles in Ghana, where there are no paper deeds for more than 70 per cent of property. ● Kyc-Chain ( allows users to submit documents and create digital wallets which can be submitted to authorised people such as bank officers to manage Know Your Customer data in an easy manner. Using the blockchain means once the correct data is entered, it’s nearly impossible to tamper with undetected.


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Could change be brewing in Kenya? CHANNEL ISLANDS’ BANKS and trust

companies have a long history of managing wealth on behalf of the Asian and white colonial communities in Kenya, and, more recently, the emerging wealth of the indigenous business community. Nairobi today is the thriving diplomatic, banking and commercial capital of East Africa, home to the Africa HQs of many global multinationals, and, through Kenya Airways, the gateway to countries in the sub-Sahara region. Within the memory of many investors, however, Kenya hasn’t always been the politically and economically stable country it is today. Historically, instability in Kenya and surrounding countries, mistrust of the banking system, currency volatility and personal security were all factors contributing to an understandable desire to place family savings in well-regulated and secure jurisdictions such as the Channel Islands, Isle of Man or London. Many such relationships go back more than 40 years, during which time wealth has been invested and reinvested through global markets, private equity and UK property, such that the capital maintained outside Kenya now looks very different from those funds that were first expatriated. At the present time, the Kenya tax code doesn’t generally seek to tax income and gains earned on assets held outside of the country on behalf of Kenya-resident tax payers. Furthermore, with exchange controls abolished 20 years ago, Kenyan residents have long been free to invest overseas. Whilst this is the current reality, the Kenyan government recognises that there are Kenyan tax residents who hold assets outside the country, but who may not have fully complied with the tax code as it was at the time funds were

expatriated. Alternatively, if prior to the abolition of the Exchange Control Act in 1995, they may have contravened those controls. With this in mind, and to the surprise of Nairobi practitioners, the budget speech delivered to Parliament on 8 June this year included the following (Clause 47): “The government is committed to providing an environment that enhances the investment climate and tax compliance. The government is aware that there are

taxpayers who own assets and businesses outside the country and would be willing to reinvest back home provided that there is a conducive environment to facilitate such reinvestments. Consequently, I propose to declare tax amnesty for such taxpayers provided that they submit their return and accounts for the year of income, 2016, between 1st January, 2017 and 31st December, 2017. Mr Speaker, taxpayers who take up this amnesty shall have all principal taxes, interests and penalties for september/october 2016 47

Sailesh Navsaria, Head of Africa Strategy & Development at Minerva Group in Jersey, examines the impact of a tax amnesty in Kenya – not only on the country itself but further afield in the UK and Channel Islands

Finance the year of income, 2016 and the prior years automatically remitted in total. In addition, the government shall not follow up on the sources of such income and assets declared.”


the transparency that follows the amnesty will allow for the freer movement of capital between structures/bank accounts administered in the Channel Islands and kenya

48 september/october 2016

Channel Islands and London practitioners are no strangers to amnesty arrangements and disclosure facilities, so the apparent generosity of the Kenya budget statement may come as a surprise. It may also give rise to close consideration of the budget text, in particular what phrases such as ‘willing to reinvest back home’ and ‘conducive environment to facilitate such reinvestments’ really mean, and generally how the amnesty would be practically implemented. The subsequently issued Finance Bill, 2016, provided little by way of practical clarification, and reference to the amnesty was limited to (Clause 37B): “Notwithstanding any other provision of this Act, the Commissioner shall refrain from assessing or recovering taxes, penalties or interest in respect of any year of income ending on or before 31st December 2016, and from following up on the sources of income under the amnesty where: ● that income has been declared for the year 2016 by a person earning taxable income outside Kenya; and ● the returns and accounts for the year 2016 are submitted on or before 31st December 2017. Provided that this section shall not apply in respect of any tax where the person who should have paid the tax: ● has been assessed in respect of the tax or any matter relating to the tax, or ● is under audit or investigation in respect of the undisclosed income or any matter relating to the undisclosed income.” There is still a lack of specific guidance notes concerning how the amnesty will be implemented, and applications made. However, there is no doubt in the minds of professional advisers in Nairobi that this amnesty represents a genuine and generous

opportunity for Kenyan families to regularise historic Kenyan tax compliance issues, provided they aren’t already under Kenya Revenue Authority investigation. Those same advisers believe the amnesty may be a first step towards amending the Kenyan tax code to extend taxation to worldwide income, as is more normal across the world, and it may also provide for an easier transition to reporting under the Common Reporting Standard. So how will the amnesty affect Channel Islands practitioners? Despite the text of the budget statement, the emerging consensus is that funds held offshore will not have to be repatriated to Kenya in order to take advantage of the amnesty. Indeed, to do so would prove highly problematic if, for example, those funds now take the form of a Channel Island company owning a UK commercial property. There is a risk of some attrition. Bank depositors or trust beneficiaries who have hitherto felt constrained by an inability to satisfactorily evidence the manner in which funds were expatriated so many years ago will now be free to repatriate wealth to fund investments, repay loans or supplement their income. More positively, the transparency that follows the amnesty will allow for the freer movement of capital between structures/ bank accounts administered in the Channel Islands and Kenya. This is likely to generate more activity for practitioners over the years to come and builds on the positive work that has already been undertaken in the islands, such as Jersey Finance’s Jersey’s Value to Africa research. It’s expected that more detail around the mechanics of the amnesty will emerge before the end of the summer. Minerva associate company MTC Trust & Corporate Services, based in Nairobi, is part of a small group of legal, tax and accounting professionals specifically looking at the implications of the amnesty so as to make recommendations to government around its practical and effective implementation. n


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The value of investments and the income from them can fall as well as rise and you may not get back the original amount invested. Exchange rate changes may affect the value of investments. Nedbank Private Wealth is a registered trade name of Nedbank Private Wealth Limited. The parent of Nedbank Private Wealth Limited is Nedbank Group Limited, which is incorporated in South Africa and is regulated by the South African Reserve Bank. The ultimate parent of Nedbank Private Wealth Limited is Old Mutual plc, which is incorporated in England and Wales. The latest audited report and accounts, and details of the credit rating are available at Nedbank Private Wealth Limited is licensed by the Isle of Man Financial Services Authority and is a participant in the Isle of Man Depositors’ Compensation Scheme as set out in the Compensation of Depositors Regulations 2010. For full details, please see Registered office: St Mary’s Court 20 Hill Street Douglas Isle of Man. The Jersey branch is regulated by the Jersey Financial Services Commission and is a participant in the Jersey Banking Depositor Compensation Scheme. See for full details of the Scheme and banking groups covered. The London branch is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registration No: 313189. Your eligible deposits with Nedbank Private Wealth Limited, London branch, are protected up to a total of £75,000 by the Financial Services Compensation Scheme, the UK’s deposit guarantee scheme. Any deposits you hold above the £75,000 limit are unlikely to be covered. Please ask for further information or visit The UAE representative office in Dubai is licensed by the Central Bank of UAE. Licence No: 13/191/2013. Representation in South Africa is through Nedbank Limited. Registered in South Africa with Registration No 1951/000009/06, an authorised financial services and registered credit provider (NCRCP16). september/october 2016 49


Tired of miserable interest rates? Looking to invest in a company you like that also offers a decent return? Then mini bonds could be the answer – but beware the risks Words: David Burrows

50 september/october 2016

year, their bitter rivals Wasps launched a bond offering 6.5 per cent – the offer was oversubscribed and met its £35 million fundraising target within days. With rates on offer from mini bonds typically ranging between six per cent to eight per cent (compare this with many bank or building society accounts, which are paying two per cent or lower), the obvious question is ‘sounds great, so where’s the catch?’. Whether you call it a catch or not, as Martin Bamford, Chartered Financial Planner with Informed Choice, points out, there’s a trade-off between risk and reward. “They’re definitely not cash savings accounts, so investors considering this option need to understand the risks involved,” he says. “The reason for the much higher interest rate on offer from mini bonds (than available from a cash deposit) is the additional risk to capital involved.” Bamford explains that because mini bonds are often issued by relatively small or newly formed companies, the risk to capital is much higher than investing in corporate bonds. “The corporations issuing mini bonds are under less scrutiny than companies issuing corporate bonds, so investors can’t rely on the same amount of financial

analysis or judgement about credit rating. Using the interest rates on offer as a guide, most mini bonds would be given ‘junk bond’ status and are very high risk.” Mini bond investors also need to be aware of the fact that, unlike corporate and retail bonds, which are similar in nature but stock market listed, they get no protection from the Financial Services Compensation Scheme. This means that there’s no prospect of industry funded compensation should things go wrong.

UNDERSTANDING THE RISKS And things do go wrong – in January 2015 we saw the first high-profile default, when the mini bonds issued by Secured Energy Bonds stopped paying interest to investors. Such negative press coverage hasn’t served mini bonds well, but as Martin Belcher, Chairman at Polygon Group stresses, mini bonds serve a useful purpose for companies looking to raise finance, and to bond buyers too, as long as they understand the risks (and ideally the companies in which they are investing). “For Channel Island investors there’s an opportunity to invest in local businesses through mini bonds,” Belcher explains. “They don’t feel they are investing from a distance and can take an interest in what a company does and in what it is achieving.” He adds: “I would agree that the main motivation is fundraising but there’s the loyalty factor too, which is especially evident with those rugby club bonds. Investors feel part of the family and are supporting the development of their club.” Polygon Group has a mini bond that enables the company to develop its property portfolio and investment broking business. “It’s not our principle way of raising finance,” Belcher says. “We intentionally keep it small (only ever around 20 per cent of funding) but it is useful. From our point of view, as a family business, we don’t want to sell shares so it’s a good way of raising finance.” For the investor too, the onus is on keeping things small – not least because of level of risk and lack of liquidity. While minimum investments aren’t always high – Wellesley allows you to start with as little as £100 – mini bonds typically have minimum terms of three or more years,

WITH THE BANK of England base rate remaining at 0.5 per cent for more than seven years before being cut to 0.25 per cent in August, investors are understandably looking elsewhere for better returns. And in this low-interest rate environment, alternative investments such as mini bonds are attracting attention. Put simply, a mini bond provides income via an agreed ‘coupon’, paid at regular intervals, which may be quarterly, half-yearly or annually, and at the end of the agreed term the investor’s capital is returned in full. Over the past few years, companies as diverse as Hotel Chocolat, Naked Wines, John Lewis, The Jockey Club and brewer Innis & Gunn, have issued mini bonds as a way of securing debt-based finance. Rather than approaching banks to finance anything from a new brewery to a new stand at Cheltenham, companies pay interest to people who love their product. It encourages brand loyalty and allows investors to play an important role in the future success of the business. Mini bonds have also been used as a source of finance in the world of rugby. In May this year, Harlequins looked to raise £7.5 million via a mini bond by tempting fans with a 5.5 per cent interest rate paid every six months. The previous



bonds Credit: Getty images for Harlequins

A Rewarding Experience?Â


during which time investors are unable to get access to their capital (unlike listed equities and conventional bonds). In many cases, the return is a mix of cash and ‘perks’, which vary depending on the sector of the organisation issuing the mini bond (see right). Mini bonds are a relatively new kid on the block, so it could be several years before we can judge their success. In light of this, should investors be putting money into mini bonds? And what percentage of their portfolio are we talking about? Bamford believes investors should tread carefully. “Any investor considering putting some money into mini bonds should have a healthy appetite for investment risk and, most importantly, the capacity for losses.” Investors should only consider mini bonds if they have a real interest in the business involved – for example, rugby or horse racing, he adds. “Mini bonds should be viewed as an extension of a hobby in the first instance and as an investment second,” he says. “I wouldn’t advise a client to expose more than a few thousand pounds to mini bonds, so certainly nothing approaching a percentage of their overall investment portfolio.”

ON THE UP? Even if exposure to mini bonds is relatively conservative within a broader investment portfolio, with interest rates looking set to go lower, might mini bonds in general become more prevalent across the market? And will that in turn mean they get some protection? Phil Lancaster, Investment Analyst at Lowes Financial Management, believes the popularity of mini bonds is likely to grow, but not radically. “There will be an increasing number of providers offering access to new opportunities, and investors who are investing capital they have the capacity to lose could potentially enjoy higher returns,” he explains. “The case for regulating the sector is well made, affording investors additional protection, but the cost would deter many small firms from raising much-needed finance.” Aldwyn Boscawen, Marketing Manager at UK mini bond provider Wellesley, agrees there’s been strong demand for mini bonds recently but says they’ll never be, nor were they designed to be, a mass market product. “Mini bonds shouldn’t be seen as an alternative to cash,” he says. “They’re very different in terms of the risk involved – an investment not a savings product.” Consequently, Wellesley has introduced an online suitability questionnaire, which outlines the risks to potential investors taking into account their circumstances and net worth.

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Mini bonds shouldn’t be seen as an alternative to cash – They’re very different in terms of the risk involved EYE-CATCHING MINI BONDS

In terms of accessing mini bonds, Boscawen makes the point that availability is limited. “There aren’t that many mini bonds issued and they aren’t products available through the likes of Hargreaves Lansdown.” Belcher at Polygon Group says there are two options for investors – they can either invest directly with the bond provider or via a lending platform such as CrowdCube, Syndicate Room or Independent Portfolio Managers. These platforms are mostly regulated by the Financial Conduct Authority and their role is to promote a company’s mini bond on a non-advised basis. The Polygon mini bond uses the direct option. They don’t market to the general public. Instead the company looks for investors from within their own contacts. Belcher agrees that mini bonds aren’t for everyone – but for those who understand the company issuing the bond and the risk versus reward trade-off, they can be an attractive addition to a broad investment portfolio. n DAVID BURROWS is a freelance financial writer

Returns offered on mini bonds are frequently a mix of cash and perks – in addition to return of the original capital at the end of the term. Here are some of the more interesting recent offerings: ● The Jockey Club’s Racecourse mini bond offered investors 7.75 per cent a year, split between 4.75 per cent in cash and three per cent in loyalty scheme points to use at their racecourses. ● The Hotel Chocolat mini bond gave investors the option of 7.25 per cent paid as in-store credit annually or 7.33 per cent in the form of a monthly delivery of chocolates. ● Camden Town Brewery successfully repaid its investors, while anyone who put in more than £1,000 received a case of lager each year. ● Mexican food chain Chilango, offered ‘burrito bonds’, rewarding investors with free burritos in addition to fixed-rate payments. ● Other companies have used mini bonds to engage with investors to encourage consumption and brand loyalty. River Cottage and fast food outlet Leon have both launched bonds with perks such as free food and discounts on their products.

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my opinion…

David Cadin, Managing Partner at Bedell Cristin, takes a shot at professional services businesses which, he believes, can be complacent, don’t engage with clients and aren’t adept at spotting and adapting to change

Illustration: Marthinus Slabber IF YOU’VE EVER felt like screaming “Who do you think is paying the bill? Why didn’t you listen to me?” then you’re not alone. I’ve certainly felt like it. Usually when professionals (doctors, plumbers, builders, banks and so on) treat me like a number rather than a person and carry on doing what they’ve always done, because it suits them, not me. And when I feel like that, I take my business elsewhere. Permanently. I don’t think this is just about me – I’m not a difficult customer, honestly – but my expectations (along with those of huge numbers of others) have changed. If we go back a few years, I used to wait for internet pages to load – now if a page is slow, I move on and click somewhere else. And I’m not alone in this – the current view is that people click again in two or three seconds. If internet sites don’t deliver the content we want, in the way we want it, we don’t use them. And that attitude has extended beyond the borders of the virtual world into daily life. As customers, clients and consumers, we expect more – we expect a service to be delivered as we want it, reflecting our views, to a timescale that meets our needs, and at a price that we understand and can afford. Yet how often are you, as a client or customer, asked what you actually want? Probably never. Professionals inevitably know more about their own specific subject than their clients or customers, otherwise we wouldn’t need their assistance. They have an innate sense of their own worth, and often an unshakeable (probably misguided) belief that they know best. As part of their practices, they have certain ways of doing things and engaging with clients, which they’ve done for years and which obviously

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work. Until they don’t. At which point it’s too late, they’ve lost a client or a business. I think that professionals need to listen more to what their clients are saying, or, indeed, sometimes not saying. It may be the visceral reaction of a client to a communication, a new office or a person that speaks loudest. Professionals need to ask more questions about what clients want and how they want to receive it. Simply put, if a client wants soft documents, give them soft documents; giving them hard copies will simply aggravate them. Yet so few interact in this way, and it’s this arrogant complacency that kills business, in my opinion. If professionals don’t talk to and listen to their clients, then they can’t spot any changes in behaviour or expectations, nor can they adapt to those changes. And that’s where the risk lies. Not only are professionals facing external challenges from others, but their very client base is evolving dramatically, at a pace. Yet professionals not only seem to be wholly unaware of these fundamental shifts, but are also unable or unwilling to respond.

Clients have become far more sophisticated, with a greater sense of what they want, and are far less tolerant when they don’t get it. In fact, professional firms are no different to coffee shops – the preferences that drive customers from one coffee shop to another may be miniscule, but unless a proprietor is aware of them, they can’t respond. Professional services firms can no longer do what they’ve always done if they’re to maintain their position and reputation in the market. Firms need to engage with clients so that they can react continuously to developments. That way, clients themselves can lead the change and feel some ownership of ‘their’ firm. With ownership comes brand loyalty and, ultimately, success. These aren’t difficult conversations to have, but in my view, they can’t be random client interactions. They need to be structured around key issues such as client preferences (instead of merely asking what the problem is, take the time to learn about me as a client and what I want in terms of service delivery); planning (tell me about the process and about the various stages and ask me what I want in terms of delivery); or billing (ask me how I found the experience of being a client and whether there was anything you could or should have done differently). In my opinion, humility and accepting that as a professional you don’t know everything about me, are virtues and a real point of differentiation for professional service firms. And I think that dynamic is important, if not crucial, for the Channel Islands in a post-Brexit world. As jurisdictions that pride themselves on quality, we need to ensure that we don’t just talk about client service; we deliver it too. Always. n

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r u e t l s u ho c

Companies often boast that they’re a great place to work, but what value does corporate culture really give a firm? and does the fantasy live up to the reality?

T h 56 september/october 2016


Words: Dave Waller

employee market, and companies are all looking for the same type of people. Most companies pay similar salaries and give the same benefits, so in the interview process a lot of people ask you to give examples of your culture and how that may be different to other companies. People want to feel proud of their organisation. And if you’re demonstrating that behaviours are important, they do feel proud.”

CUSTOMERS AND CULTURE The likes of Google, Twitter, Facebook, Apple and Expedia in the UK are frequently praised for their culture. Then there’s Zappos, the US online shoe retailer that’s as famous for its culture as it is its footwear. The idea of fit is so important there that new employees are offered $2,000 to quit after the first week of training if they decide the job isn’t for them. The link between corporate culture and customers may be a trickier one to define. After all, Apple punters are happy to suffer the exorbitant costs and everchanging interfaces of its trendy products, not because their staff get free fruit in the canteen, but because they love what the products can do and how they’re designed. But the link is there. Apple’s culture is one of reverence for expertise, belief in the power of small teams doing great things, and a strong work ethic – all of which draws the best people and results in its signature standards of design and

I see corporate culture as how things are done, versus what things are done

apparently effortless ease, which in turn lures the custom. “Culture is an integral part of strategy. Anything that influences strategy and affects how it’s executed will be connected with how people behave, and is therefore connected to culture,” says Richard Sheath, a Partner at board consultant Independent Audit, which recently surveyed FTSE 350 CEOs on their approach to corporate culture. “Strategy is made up of various things, including how people behave and work. And that’s connected to how the organisation interacts with customers.” Innocent Drinks is a great example of this, a company that actively sends its september/october 2016 57

AMAZON FOUND A neatly packaged parcel of criticism in its shopping basket last year, courtesy of the New York Times, after an exposé revealed the cut-throat nature of the online retail giant’s working culture. In it, Amazon staff revealed that they’re ‘encouraged to tear apart one another’s ideas in meetings’ and to ‘toil long and late’ while being ‘held to standards that the company boasts are unreasonably high’. They were also given instructions on how to send secret feedback to bosses, often to sabotage colleagues’ careers. And when they complain of hitting the wall as a result of the relentless pace? They’re told, bluntly, to ‘climb the wall’. Anyone who’s ever been forced to sit through an annual employee conference and been baffled by the distant higher-ups dragging out their latest concept of abstract company values can be forgiven any scepticism around a phrase like ‘corporate culture’. But Amazon shows that, beyond the veneer of marketing speak, it’s a concept with some substance. Wherever you find a group of humans together, a culture of some kind will inevitably emerge. Some are clearly more constructive for business – and kinder to humans – than others. As such, it’s important to approach a culture’s development deliberately. If at this point you’re wondering what corporate culture actually is, then you’re probably not alone. Campbell Lund, Head of HR at RBC Wealth Management, has a handy definition. “I see corporate culture as how things are done around here, versus what things are done around here,” he says. “Diversity, CSR and flexible working are examples of what’s done, as are recruitment and training. Corporate culture is about how that’s all done.” We’re talking issues like what’s important in the company, what kind of behaviours are rewarded and who gets promoted. But is it really that important to have a desirable corporate culture? You don’t have to employ a powerful algorithm to see that Amazon’s done rather well for itself, thank you very much. But if the average company wants to attract and retain decent staff, it seems the answer is yes. “Corporate culture is a differentiator, and is possibly more important now than ever,” says Fiona St Clair-Bolam, Head of HR at Crestbridge. “In Jersey in the past few years, we’ve seen a huge increase in the

Business internal corporate culture beyond the walls of its office and trades on it as part of its brand – where the youthful, energetic sense of innovation encouraged in its employees finds its perfect mirror in the marketing of its products to punters. So how does a company decide its culture? Senior figures have a huge role to play, whether that’s the board itself or, more likely given the contact they have with the rest of the business, the CEO. “Boards do feel a direct responsibility for culture,” says Sheath. “They just struggle at times to pin down what they can do – and they worry about it. But it’s important not to expect too much of the board. The CEO is responsible for executing strategy, and getting the right culture is part of that. And with their proximity to other managers, they’re in a better position to influence culture anyway.”

BEING REAL Yet culture isn’t simply a top-down deal. “It doesn’t just arrive because someone did a presentation and stood at the front saying this is what it is today,” says RBC’s Lund. “You need an ongoing, two-way dialogue to make sure the collective ambition is well understood and lived at all levels.” Tools are emerging to do so. RBC used IBM InnovationJam, a purpose-built largescale platform that enabled conversation with 80,000 employees to clarify what the company’s purpose and values should be. “Culture is a critical thing to look after,” says Lund, “but it’s not simple. It requires focused effort over time.” Finally, it’s about authenticity. It’s no good management announcing they have a certain culture if the employees’ direct dayto-day experience shows it to be completely

Corporate culture is a differentiator, and is possibly more important now than ever


COMPONENTS OF GREAT CORPORATE CULTURE different in reality. It’s no good a bank proclaiming to support LGBT lobbying group Stonewall if its internal culture shows intolerance and bullying towards those of different persuasions. “People can be a bit sceptical when they read the values of a company,” says St Clair-Bolam. “And they are meaningless unless the behaviour of everyone matches those values. The open door policy can’t just be about saying your door is open. People have to know they’re welcome to walk through it.” And flagrant inconsistency isn’t the only way to get it wrong. Copying another successful firm’s approach without checking its relevance to your own team is a surefire way to have a disjointed culture, as is fixing it and not letting it evolve. Company culture is a living, breathing thing that should shift to meet changing demands as companies grow, customers change and teams evolve. And it needs to be flexible – your company’s culture in London, say, may well be different to that in Toronto, even though the values and purpose are the same. The same goes for different parts of the same company. “Look across our different businesses in the Channel Islands – from trusts to investment banking,” says Lund. “Each has their nuances in culture.” As do all companies. The good news, both for workers and customers, is that for every Amazon and its metaphorical walls to scale, there’s a Zappos offering people cash to leave if they don’t like it. Which would you pick? n DAVE WALLER is a freelance business writer

58 september/october 2016

Author John Coleman, writing in the Harvard Business Review, identified six factors that help create a strong corporate culture:


Vision A great culture starts with a vision or mission statement. These simple turns of phrase guide a company’s values and provide it with purpose. That purpose, in turn, orients every decision employees make. Values A company’s values are the core of its culture. While a vision articulates a company’s purpose, values offer a set of guidelines on the behaviours and mindsets needed to achieve that vision. Practices Values are of little importance unless they are enshrined in a company’s practices. If an organisation professes that ‘people are our greatest asset’, it should also be ready to invest in people in visible ways. People No company can build a coherent culture without people who either share its core values or possess the willingness and ability to embrace those values. That’s why the greatest firms in the world also have some of the most stringent recruiting policies. Narrative Every organisation has a unique history, a unique story. And the ability to unearth that history and craft it into a narrative is a core element of culture creation. Place This shapes culture. Open architecture is more conducive to certain office behaviours, such as collaboration. Place — be it geography, architecture or aesthetic design — has an impact on the values and behaviours of people in a workplace.



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trust through tech Words: Dr Liz Alexander

Some of the newest technologies are helping us achieve more than ever before, but tech is having to go back to basics in order to rebuild trust between businesses and their customers

WE LIVE IN a cynical age – and the reasons why aren’t remotely surprising. We don’t trust our financial institutions, we certainly don’t trust our politicians, and we frown upon big companies that do their utmost to dodge taxes. Indeed, there’s no end of research showing how trust in business has been eroding for years. However, when you consider that Forbes once called trust ‘the most valuable business commodity’, can businesses really afford to lose the trust of existing and potential customers? When global PR firm Edelman asked survey respondents how much they trusted various businesses ‘to do what is right’, a higher percentage gave the thumbs up to ‘high tech’ mobile banking and e-payments compared with ‘high touch’ financial advising and asset management. As for the financial services industry overall, that languishes at the bottom of Edelman’s 2016 Trust Barometer, along with energy, telecommunications and healthcare. In comparison, technology – for the 16th year in succession – was considered the most trusted business

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sector by most of the countries surveyed. So it’s something of a natural extension, then, that technology might be able to provide the way forward in rebuilding some of that lost trust – which is ironic considering that in many instances, tech precludes human interaction. These days, most of us are comfortable making purchases from our mobile phones, and think nothing of uploading our personal data to the cloud. We may not understand how some of the newer digital solutions work, we just assume they will. But as Charles Irvine, Chief Executive Officer of UK consultancy Questions of Difference, explains, trust doesn’t apply in the same way to machines as it does to humans. “One of the challenges with trust is that it’s one word we think covers everything,” he says. “When we talk about machines, a more accurate paradigm is confidence, as in ‘Do I have confidence, proven through robust algorithms, statistics and data, that this process will be efficient and my data will be secure?’. On the other hand, we can’t definitively prove whether human

beings are trustworthy or not, because of our different interpretations of competence, integrity, honesty, authenticity and the other terms we combine to define ‘trust’.”

WHAT IS TRUST? When working with clients to handle conflicts, develop leaders or change cultures, Irvine chooses to see trust as a continuum, with the needle moving higher or lower depending on the degree of integrity that each party brings to the conversation. “To say ‘I trust everyone until you break my trust’ or ‘You’ve got to earn my trust’ isn’t helpful,” he says. “Taking an either/or approach to trust implies notions of people as machines, rather than complex and flawed human beings.” In other words, while automation instills a sense of safety, this isn’t the same as trusting – something we’re always trying to mitigate because of the risks inherent in human relationships. According to Dr Graham Dietz of Durham University’s Business School, who co-authored a report entitled

Business so when large institutions came along with more efficient systems, they co-opted the mantle of trust. “Local providers once had an advantage over large ‘faceless’ firms because it was easier for them to adapt to the characteristics of trust expected by their communities,” says Cyrille Joffre, Chief Technology and Information Officer at telecommunications services company Sure, which operates in Guernsey, Jersey and the Isle of Man. “Digital technologies, including the cloud, machine learning and data analytics, now provide large companies with the vehicle and fuel for regaining trust,” he adds. “Data sources can be integrated and services highly personalised based on consumer data.”

POWER TO THE PEOPLE Technology is also helping to spearhead the burgeoning kinship economy – sometimes referred to as the ‘shareconomy’ – as thirdparty platforms begin disrupting legacy players in industries such as insurance. For example, Joffre points to Germany-based startup Friendsurance, which uses a peer-to-peer model to transfer knowledge and power back into the hands of consumers. Segmented into small communities according to the type of insurance they need, members pool premiums, spread risk and share a cashback ‘kitty’ when no claims are made. Stephen Scott, CEO and co-founder of Starling Trust Sciences, emphasises: “A reputation for trustworthiness is increasingly the necessary pre-condition to participation in the kinship economy.” He points to examples such as Airbnb, which “use digital systems to ensure accountability via sharing networks”. “These platforms for peer exchange don’t require that we place trust in the person on the

technologies including the cloud, machine learning and data analytics now provide large companies with the vehicle and fuel for regaining trust

Building and Restoring Organisational Trust for the Institute of Business Ethics, trustworthiness is comprised of a number of characteristics: reliable competence, benign motives, and actions that demonstrate fairness, honesty and integrity. Ethics is certainly a major factor of trust, although sometimes the focus is on a specific business outcome – as when a Gallup Panel assessed levels of trust by US consumers in relation to data security. According to InterContinental Hotels Group Chief Executive Officer Richard Solomons, companies should look to add ‘trust capital’ to their existing financial capital, intellectual capital and human capital – all of which, he believes, are vital to revenue growth through a “new definition of value”. That includes enhancing customer service through personalisation – something that today’s data-capturing technology certainly can facilitate. This makes it easier for today’s businesses to respond to a human need – something that’s underpinned trust for centuries: being known and understood. Indeed, it’s only been in the past 200 years that trust has been institutionalised. Until then it was a bottom-up process involving small groups – such as guilds and chartered companies – comprised of ‘people like us’. However, that wasn’t doing much to boost economic prosperity,


other end,” he says, “but rather with the company or community of people ‘like me’ that have self-assembled around shared goals, such as renting one another’s homes so as to facilitate more affordable, and more ‘authentic’ travel experiences.” Joffre also believes that blockchain will help transform our concept of trust by enabling economic empowerment. “This will allow us to reclaim ownership of our identities and our personal data, as well as create and exchange value without powerful intermediaries acting as the arbiters of money and information,” he says. One outcome of this is that consumers will no longer need to concern themselves with whether a new service provider is likely to act ethically and responsibly, or if a company will handle their problems quickly and efficiently when things go wrong. They will be in control of frameworks populated by people to whom they relate and therefore trust. (See page 42 for our article on blockchain.) Unfortunately, technology has also made it easier for fraudsters to build ‘artificial credibility’ by gaming systems, resulting in the kind of inflated product ratings that required Amazon to sue those responsible after they posted thousands of false five-star reviews on its site. Nevertheless, says Scott, companies that attempt to regain the trust of customers by forcing “a culture of rules compliance among employees” or responding to regulatory overreach are unlikely to succeed.

ALL ABOUT RELATIONSHIPS To Iain Beresford, Group Head of Business Development and Marketing at global law firm Collas Crill, however, “technology is just technology”. His responsibilities include maintaining the promise of the brand and ensuring clients experience consistent reliability and integrity. Picking up on the point Charles Irvine made earlier, this inevitably means accepting that the human beings charged with demonstrating trust are fallible.

62 september/october 2016

Today, when an organisation is considered trustworthy it’s almost a competitive advantage

“Sometimes the expected behaviour falls down and someone isn’t as responsive as they should be, which fundamentally affects the trust a client has in us,” says Beresford. “But there’s an upside to that in offering us a chance to see where gaps exist, so we can remedy them.” This is where technology needs to take a back seat, he says. While blockchain enables users to self-regulate and leverage the natural instinct of people to trust each other, and data mining allows companies to know more about consumers in order to offer individualised products and services, at the end of the day it’s all about relationships. Human relationships. Not least between leaders that are open and transparent and establish clear guidelines with their teams. “My team trusts that I support them. I joke that while I’ll always give them enough rope to hang themselves, I’d never allow them to do it,” says Beresford. “Today, when an organisation is considered trustworthy it’s almost a competitive advantage. But it’s crazy that it should be.” As American economist Joseph Stiglitz once pointed out: “It’s trust, not money, that makes the world go around.” Maybe we just need to wait until technology has caught up, so that we can reinstate trust to where it’s long been – with small groups of ordinary people, not those in positions of power or bureaucratic processes. n DR LIZ ALEXANDER is an author, educator, business strategist, and Founder of business consultancy Leading Thought

A MATTER OF TRUST The 2016 Edelman Trust Barometer highlighted the following 10 attributes as being the most important in building trust in a CEO. ● Takes responsible actions to address an issue or crisis ● Treats employees well ● Exhibits highly ethical behaviours ● Behaves in a way that is transparent and open ● Listens to customer needs and feedback ● Places a premium on offering high-quality products or services ● Places customers ahead of profits ● Communicates frequently and honestly on the state of their company ● Ensures that the company addresses society’s needs in its everyday business ● Ensures that the company creates programmes that have a positive impact on the local community in which it operates

STRAIGHT TO BUSINESS Arrive in the heart of London. London City Airport from ÂŁ39.99 one way.

Fares are one way including taxes and charges, only available on, subject to availability. Available for travel until 24.03.17. Route operated by Blue Islands. Route information correct at time of going to print. No debit card fees apply. Bookings made by credit card will incur a fee of 3% of the total transaction value, with a minimum charge of ÂŁ5.00 per booking.

BL guernsey Plans finalised for strategic review of Aurigny


he Policy & Resources Committee at the States of Guernsey has finalised the terms of reference for its strategic review of Aurigny, the States-owned airline. The Committee had previously agreed that a review of the role and objectives of Aurigny was essential to help the States, as shareholder, determine how the airline can best serve the needs of the bailiwick. The terms of reference are divided into three sections, each with various subquestions, which the review will address: 1. Aurigny’s role in the future 1.1 What kind of service do we want Aurigny to offer in three, five and 10 years’ time, and how do these needs differ in Guernsey and Alderney? 1.2 How should Aurigny best balance the priorities of (a) economic enablement and (b) providing a public service for both Guernsey and Alderney in delivering that service in the future? 1.3 How might pricing policy, franchising, inter-lining agreements and code-sharing support this? 1.4 To what extent, if any, do the length of the airport runways impact on Aurigny’s ability to deliver this service? 1.5 How does the licensing system need to support Aurigny reaching these objectives? 1.6 How might Aurigny integrate with other transport networks? 1.7 If Aurigny was a purely commercial

business, what would it cease doing and why; and what would its commercial growth plans look like if it was freed from the requirement to provide any social provision? 2. Public service and social role of Aurigny 2.1 How can Aurigny best meet the needs of the communities in Guernsey and Alderney to support (a) economic development (b) health links and (c) sports links? 2.2 How can these needs best be met in terms of pricing policy, route prioritisation, timetabling and types of aircraft? 2.3 What type of public service obligations and/or service level agreements would best support this? 3. Aurigny as an economic enabler 3.1 What objectives should be given to Aurigny in order to strengthen Aurigny’s economic enablement role in the short, medium and long term? 3.2 What initiatives could be adopted to ensure the business customer experience is further improved? 3.3 What can Aurigny learn from other small airlines with regard to innovative customer care? 3.4 How can Aurigny help in driving visitor number growth and improve fare competitiveness, the quality and reach of marketing, the visibility and quality of

website and booking capability and collaboration with destination tourism offices and airports? 3.5 What type of timetabling and air route prioritisation would best support the business and visitor economy needs of Guernsey and Alderney? A significant part of the review panel’s work will be to take in the views of the bailiwick community. It is encouraging written submissions from anyone who wants to have their say – they should email by 30 September. The panel will also hold meetings with interested parties and, following receipt of the review’s findings, a report will be prepared and submitted by P&R in early 2017 with clear recommendations for the States of Deliberation to consider. P&R Committee Vice-President Lyndon Trott, who will lead the review, said: “P&R considers that the many issues surrounding our air and sea connectivity currently present the bailiwick with its number one strategic policy challenge. “With this strategic review of Aurigny, we have a genuine opportunity to make material and potentially far-reaching policy recommendations with regard to our airline’s direction, particularly as an economic enabler. “The review will build on the work being undertaken by the Committee for Economic Development on air route development and will help set clear and long-term policy and economic aims for Aurigny. “The panel wants to hear from as many people and groups as possible, so I would urge all those who wish to have their say to do so via email by the deadline.” n

Guernsey attracts 14 relocations

64 september/october 2016

estimates will generate an annual income for the States of £195,780. Locate Guernsey initially focused on the relocation of high-net-worth individuals, but the team now focuses on four target markets: UK-resident but not domiciled individuals; fund managers; reinsurance companies; and digital and fintech businesses. n

Image courtesy of VisitGuernsey


he first report from Locate Guernsey – the States of Guernsey initiative to encourage relocations to the island – shows that 14 individuals or businesses have moved there in the first six months of this year, following a total of 80 enquiries. The relocations include two businesses, two individuals and 10 individuals with business interests, which the report

BL Guernsey

New Senior Decision Maker for GFSC


he Guernsey Financial Services Commission (GFSC) has appointed Dr Kirsty Hood QC to its panel of Senior Decision Makers. The panel was established last year and, with the addition of Dr Hood, now comprises seven QCs. Members of the panel are required to hear cases involving serious findings against a licensee and/or individual directors where those findings are contested by the licensee. Where a case is proven, the Senior Decision Maker will determine what penalties should be imposed on the licensee and/or directors, including the level of fine to be paid, any period of prohibition from practising in the industry and the contents of any public statement that is to be issued by the Commission. Dr Hood practises at the Scottish Bar in the civil litigation field. She is currently the Advocate Member on the Scottish Courts and Tribunals Service Board and also Clerk of Faculty at the Faculty of Advocates, an elected office-bearer position in that professional body. n

Substance is key focus for funds


ubstance in the fund management sector, particularly in the context of the Alternative Investment Fund Managers Directive (AIFMD) and Base Erosion and Profit Shifting (BEPS) initiative, is of increasing importance, according to a newly published white paper from Guernsey Finance. The white paper, Investment funds – why substance is key, written by funds journalist Kirstie Brewer, examines how the need to prove that an offshore fund manager has the necessary ‘substance’ to its business dealings and functionality has never been more important, particularly in the context of the current climate of regulatory reforms and politically motivated improvement of tax transparency. The white paper looks specifically at what substance is, where it came from and how to get enough of it. Guernsey Finance Chief Executive Dominic Wheatley (pictured) said it was clear that substance requirements would be of the utmost importance, given the growing raft of regulation and international policy initiatives. The recent recommendation from the European Securities and Markets Authority (ESMA) that Guernsey be granted a third-country passport under AIFMD is further proof that the island is ready to meet those requirements. “Guernsey has now come in the top tier of two successive ESMA reviews of third countries and these, together with the recent review by Moneyval, demonstrate the quality of financial services regulation in Guernsey. The island was also one of only five jurisdictions to receive an unqualified and positive assessment from ESMA in its most recent advice,” said Wheatley. “This clearly offers a greater degree of certainty for investment managers utilising Guernsey for funds that are then sold into the European Union. Unlike some other jurisdictions, Guernsey has a financial services industry with substance, where governance and administrative functions are performed within the island to a level that meets not only the demands of international regulatory standards but also the expectations of the market.” The white paper, Investment funds – why substance is key, can be viewed on the Guernsey Finance website, n

GFSC consults on licence fees for next year


he Guernsey Financial Services Commission (GFSC) has completed its consultation period on proposals for increases in the 2017 licence fees paid by firms. An overall blended rate of an increase of two per cent, including anomalies, is proposed for 2017. Commission Chairman Cees Schrauwers said: “This will be the fifth year in succession where the Commission has proposed fee increases of two per cent or less. It remains our intention to continue to focus on strong cost control and ensure that future fee increases are set at modest levels, with a view to helping our firms remain competitive.” One significant proposal would result in international commercial general insurers and reinsurers bearing a greater proportion of the fees relative to other types of insurer. This

would enable insurance-linked securities (ILS) businesses to bear a lower proportion of the fees. Jeremy Quick, Director of Banking and Insurance, said: “The Commission has worked with the Guernsey International Insurance Association [GIIA] in reviewing the overall fee structure for the sector. GIIA proposed, with the support of its membership, a restructuring of certain fees, which is seen as helpful for the development of the ILS area of the market. However, any restructuring proposal remains subject to the consultation process.” The estimated fee income for 2016 is £12.67 million and for 2017 it will be £12.93 million, based on current estimates for new licensees and licence surrenders. The consultation paper is available to view on the GFSC’s website, n september/october 2016 65

BL jersey Island sees increase in NPPR s


Digital Jersey and Population Office sign Mo U


igital Jersey and the island’s Population Office have signed a Memorandum of Understanding (MoU) establishing a six-month pilot scheme to provide staffing permissions, both registered and licensed, to local businesses looking to fill technology and digital commercial roles. The initiative comes in response to the Jersey Innovation Review, which looks to address skills shortages by removing barriers to entry. Up to 30 staffing permissions will be available from the Population Office to the end of the year, after which the scheme will be reviewed. Local businesses applying to the pilot scheme will be required to submit an application to Digital Jersey, showing how the roles selected will contribute to the growth and development of the local digital industry. Particular consideration will be given to sectors identified in the Digital Jersey 2016 business plan, including fintech, digital health, internet of things and Jersey testbed schemes. The MoU will support companies with potential to achieve productivity above the economy average or which offer significant wider benefits to Jersey. Licensed permissions will be granted to higher skilled/higher economic value staff, and registered permissions will be allocated where necessary to help ensure the business achieves a GVA above the economic average. n

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he number of Jersey-registered alternative investment fund managers marketing into Europe through national private placement regimes (NPPRs) under the EU Alternative Investment Fund Managers Directive (AIFMD) continued to rise consistently over the first six months of 2016, according to figures from the Jersey Financial Services Commission (JFSC). As at June 2016, 115 alternative investment fund managers (AIFMs) had been authorised in Jersey to market into Europe through NPPRs, up 11 per cent compared with December 2015. Over the same period, the number of Jersey alternative investment funds (AIFs) being marketed into Europe through NPPRs stood at 251, representing a nine per cent increase. These figures were announced shortly after the European Securities and Markets Authority (ESMA) made its further recommendation, on 19 July, that Jersey should be among those ‘third countries’ granted an AIFMD passport. In addition, the Government of Jersey and the JFSC launched a joint consultation in July aimed at enhancing Jersey’s funds regime. The consultation seeks to simplify and rationalise numerous aspects of Jersey’s funds environment, with the paper confirming the intention to introduce new products to the market. These are anticipated to include a new manager-led Jersey registered alternative investment fund (JRAIF). The JRAIF will be supervised by the JFSC by proxy as it will be the relevant AIFM that will be responsible for ensuring the fund’s AIFMD compliance. The consultation also provides detail around a proposed new universal definition of a Professional Investor and consolidation across certain fund types. Geoff Cook, CEO of Jersey Finance, said: “It’s clear that the alternative fund management community is continuing to find real appeal in the optionality and certainty of European market access Jersey is able to offer. The latest figures show that the appetite to use Jersey’s existing NPPR route is consistently strong among managers, while the potential for an AIFMD passport in the future is giving managers real confidence in Jersey’s long-term future as an alternative funds domicile.” Jersey Funds Association Chairman Mike Byrne added: “As a jurisdiction, we recognise that we need to continue to enhance our funds environment in a new regulatory landscape and this latest consultation forms a significant part of that. As well as making Jersey’s regime clearer, simpler and more streamlined, it also demonstrates that the jurisdiction is committed to bringing innovative products, such as the manager-led registered fund product, to the market.” n

BL Jersey

JFSC signs Mo U with Liechtenstein

JFSC issues Annual Report



he Jersey Financial Services Commission (JFSC) has signed a Memorandum of Understanding with the Liechtenstein Financial Market Authority (FMA), which puts in place a mechanism to enable the regulatory authorities to co-operate on supervisory matters, exchange information and oversee regulated firms. John Harris, Director General of the JFSC, Dr Urs Phillipp Roth-Cuony, Chairman of the FMA Board of Directors, and Mario Gassner, Chief Executive Officer of the FMA, signed the MoU at a ceremony at the FMA’s offices in Liechtenstein. Commenting on the signing, Harris said: "With the similarity and extent of issues and challenges in financial services for Jersey and Liechtenstein expected to increase in the coming years, it is important that the JFSC and the FMA are in a position to co-operate closely. "This Memorandum provides a formal framework for the exchange of regulatory information and mutual assistance. We understand each other and already work effectively together, so this agreement reinforces an already excellent Pictured (l-r): Dr Urs Phillipp Roth-Cuony, John Harris and Mario Gassner relationship." n

he Jersey Financial Services Commission (JFSC) has released its Annual Report and financial statements for 2015. The Annual Report highlights the JFSC’s standards of regulation and progress with strategic priorities – ensuring Jersey develops access to international financial markets, protecting investors and the reputation of the island’s finance industry, and deterring financial crime. JFSC Chairman John Eatwell said: "It is vital we learn of the opportunities and concerns of Jersey businesses. Industry will always know their potential and how they can create jobs and growth better than we do. But we can only listen if they speak." Director General John Harris added: "The internal Change Programme has occupied a significant amount of focus and resources, and the resulting improvements are beginning to be realised." The 2015 Annual Report is available on the JFSC website – n

Jersey scoops financial centre of year award

Tax agreement signed with Cyprus



ersey’s strengths as a hub for fund servicing and management have been recognised for the second consecutive year in the Global Investor/ISF Annual Investment Excellence Awards. Jersey was named Financial Centre of the Year in the awards, organised by the Euromoney investment fund title, at a gala dinner held at the Grange Tower Bridge Hotel in London. Hosted by Alastair O’Dell, Editor of Global Investor, the awards also marked the 30th anniversary of the publication. Designed to recognise the achievements of fund managers, investment consultants and fund administrators across the global investment fund landscape over the previous 12 months, the awards were judged by a panel of independent experts. Geoff Cook, CEO of Jersey Finance, said: “We are delighted to have received this award and it is encouraging Jersey continues to receive recognition for the quality of its expertise, regulation and international offering. The jurisdiction has evolved its funds services in line with investor demand and regulatory standards, which helps position it as a leading centre for funds business.” n

ersey has signed a comprehensive double taxation agreement (DTA) with the Republic of Cyprus – the island’s 12th DTA to the international standard. The agreement was signed at the Cyprus High Commission in London by Minister for External Relations Senator Sir Philip Bailhache, for the Government of Jersey, and by High Commissioner His Excellency Euripides Evriviades, for the Republic of Cyprus. Senator Bailhache said: "This continues Jersey’s commitment to the international standards of transparency and information exchange. Jersey also pursues a good neighbour policy in relation to the European Union and we are delighted that, with the signing of this DTA, we strengthen our political and business relationships with an EU member state." n september/october 2016 67

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The Agenda is compiled by BL’s Fashion and Lifestyle Editor, Thom O’Dwyer, with additional material by Danny Cobbs.


1. WALLS ON FIRE Taking wall covering in an amazingly new and different direction, London-based Katja Behre and her company Elli Popp Designs is causing quite a stir in the world of interiors. Experimenting with perception and off-beat patterning, she is creating a playful, fanciful world of colours and textures. One of her most ground-breaking moves is her collaboration with German artist Kata Lips, most notably her Come Closer and See – See Into the Trees collection of wallpaper. The fanciful wall covering has a subdued, neo-romantic, almost Impressionistic pattern and feel during the day, but come nighttime, via special fluorescent 3D effects, the wallpaper bursts into life with a super-saturated psychedelic glow. A dreamlike journey into a darkly Gothic surreal world. All orders are printed fully customised and according to the client’s specs. This luminous effect created through technological innovation is a major new direction in interiors. At this moment in time, however, Come Closer and See – See Into the Trees may only be for the brave! From £150 per sq metre,



2 2. SCENTS OF BATTLES PAST Niche fragrance brand BeauFort London is the creation of musician and writer Leo Crabtree, whose life-long love of fragrance and preoccupation with the darker elements of British history is at the very core of the brand’s identity. The Come Hell Or High Water collection of fragrances and scented candles draws inspiration from strands of Britain’s nautical history in creating darkly luxurious, intoxicating fragrances. The 1805 Tonnerre Eau de Parfum, pictured, imagines moments within the Battle of Trafalgar. Powerful accords of smoke, Guy Fawkes-ish gunpowder, ‘blood’ (actually a metallic tang) and brandy combine with sea spray and a penetrating citrus note. The fragrance is singularly bold in its composition yet ultimately refined, provocative and wholly unique. The scented artisan candle is handpoured in small batches deep in the English countryside, and is an evocative blend of smoky woods, salty amber and bright citrus notes that are stirred to life as the flame warms through. BeauFort London also offers an online sample service, so you can try before you buy. Only £5 per sample. Eau de Parfum, £95; Artisan candle, £39,

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3. BAGS OF ATTITUDE This Sweet Charity mini black shoulder bag, courtesy of Christian Louboutin, is a real attention grabber. It’s crafted from the finest leather, punctuated with a heavy dose of gunmetal spikes across the sides, base and bow, and opens to reveal a luxurious suede-lined interior in the designer’s signature red colour – Pantone 18-1663 TPX – that’s also used for the red-lacquered soles of all his luxury footwear. Bags don’t come more badass than this one. Use it as a clutch to bring a tougher, sassy Cleopatra vibe to softer, more feminine evening wear, or go chic and hands free using the long chain strap. £1,145, www.

4. A REAL HAIR-RAISER Sir James Dyson – British inventor, industrial designer and founder of the Dyson Company – has probably done more than anyone else to drag mundane household appliances into the age of high technology and grand design. And he’s now moved into the beauty and personal care market. Enter the Dyson Supersonic Hairdryer – the result of a £50 million investment over four years that’s been tested on more than 1,000 miles of human hair. Launched in Tokyo last April, it’s already created a revolution in hair technology. Whether your hair style of choice is a tousled rock-chick bob like Taylor Swift, or you have long, gorgeously Gothic and blunt-cut dead-straight hair à la Brides of Dracula, this high-powered baby is the one for you. Dyson’s brainchild is based on fitting a microprocessor to the hairdryer to regulate temperature and prevent damage. With the patented digital motor placed in the handle, it’s light, easy to handle and engineered for perfect balance. It comes with three styling attachments, which snap instantly and magnetically in place. It also has a proper cold shot, essential for fixing your blowdry. And it’s far quieter than low-tech dryers of old. Finally, in keeping with this issue’s Gothic theme, you can buy your dryer laid to rest in a limited-edition Dracula-style coffin case designed by the man himself! £299.99,





6. LOOKS FIT TO KILL Fitness trackers have come a long way since the digital monstrosities of old. Not only have they become smaller, more eye-catching and fashion-friendly, but thanks to Swarovski – world-renowned producer of high-quality crystals, jewellery and accessories – a game-changer has hit the market. Swarovski’s Activity Tracking Jewellery, a ‘wearable’ that syncs to the app on your smartphone, tracks steps taken, distance travelled, calories burned and sleep patterns in a discreet but utterly stylish way. There’s no screen display, that’s what the app’s for. The look is glitzy and gorgeously, glamorously Gothic. The Activity Crystal range features two iconic bracelet designs Slake and Slake Deluxe. Both are lavishly studded with a string of dainty crystals for just the right tough Goth chic. Despite coming in a range of colours, black definitely has the edge. Wear it as a sport band for a workout or a bracelet for work. Or by adding a stack of Slake Dot bracelets, you’ve got an after-dark evening look. From £129,

5. LITTLE BLACK CLASSIC This frock can only be described as Haute Goth meets Rococo Loco. Inspired by legendary courtesan Madame de Pompadour – icon of high style and beloved mistress of King Louis XV of France – this just ain’t any old Little Black Dress. No indeedy. This black velvet mini-dress by Balmain exudes a certain je ne sais quoi and Gothic opulence that Madame P would have definitely approved of. Beautifully cut, it has a streamlined fit with a crossover front highlighting the waist, and is detailed with elaborately draped strings of faux-pearls and glistening over-sized floral embellishments. This is glamour with a capital G. All a girl needs now is a pair of jet-black divinely decadent stilettos by Nicholas Kirkwood – see review, right. £2,540,

7. FOOTLOOSE AND FRIGHTFULLY FANCY Award-winning British shoe designer Nicholas Kirkwood launched his eponymous label in 2005 and has attracted a global fan base. His architectural and bold shoes continue to push the boundaries of footwear design with the ingenious placement of faux-pearls in the most unexpected places. The chunky black suede Maya sandals shown here feature a single creamy faux-pearl ‘floating’ on the underside of the teetering block heel. They may be scarily vertiginous, but they’re fabulously lightweight. Great choice for a glamorous late-night party. £495,

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8. DEFINING AN AGE Malvern-based sports car maker Morgan has always marched to the beat of its own drum. Whilst the rest of the car industry remains obsessed with redefining the future, Morgan has stuck to its 1930s styling since, well, the 1930s, writes Danny Cobbs. Its latest offering, the Plus 8 Speedster, might look like it’s trapped in a sepia-toned time warp of smoky pubs and bomb sites, but it’s actually a thoroughly modern roadster that pays homage to the glamour days of motoring. And it conforms to European safety standards. Sitting on a lightweight aluminium chassis and stripped of all creature comforts, the Plus 8 isn’t for the fainthearted. Fripperies such as a windscreen, side windows, hood and bumper are forgone to ensure that this car, at just 1,220kg, remains one of the lightest V8 passenger cars in the world. Traction control and ABS don’t make it onto the menu either, as this car’s exquisitely thought-out chassis renders such inventions virtually redundant. Power is generated by a mighty 4.8-litre BMW engine, which produces 367bhp and 370lb ft of torque and delivers the sort of numbers the power-to-weight ratio suggests – zero to 62mph in 4.5 seconds and a top speed of 155mph. Yes, there’s a crudeness in the execution of the Plus 8’s design, and it’s far from practical, but with so many predictable and monotonous cars currently being produced, this fabulously demented roadster remains a beguiling and engaging alternative. And as with all Morgans, each car is individually hand built by craftsmen in a time-honoured fashion that hasn’t changed since, well, the 1930s. From £69,995,

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9. TOFF GOTH Under Creative Director Riccardo Tisci, couture house Givenchy – famous for dressing Hollywood star Audrey Hepburn both on and off screen – has steered the house’s precision-cut, architectural, classic style into the 21st century. This season’s menswear takes on a darkly romantic, edgy, Gothinspired aesthetic. Streetwear influences with Parisian sophistication. The label’s statement knitwear, sweatshirts and T-shirts have garnered a cult following. Pictured here, an otherwise classic knit crewneck sweater with a relaxed fit is adorned with an embroidered ring of tonal-white Goth lilies. Coolly cutting edge. £535,

THE AGENDA 10. WHERE THERE’S SMOKE… Award-winning Dutch artist-designer Maarten Baas is a new breed of designer whose work involves customising existing items of furniture rather than creating them from scratch. In 2002, Baas graduated from art school showing a collection of burned furniture entitled Smoke. Found wooden objects and furniture were appropriated and metamorphosed, making them the designer’s own with a signature technique. Charring and singeing them with a blowtorch, he then treated them with multiple layers of epoxy resin, lending a luxurious sheen akin to lacquer. Burnt skeletons of furniture were turned into usable pieces of furniture again. The designer’s Smoke and the later Where There’s Smoke collections are now considered 21st century design icons, and his work is displayed at a number of prestigious museums and art galleries worldwide, including New York’s Museum of Modern Art. Baas’ work is also in the private collections of Brad Pitt, Kanye West and gallerist and art collector Adam Lindemann. Yet his work remains affordable. So if you’re looking for a solid investment in art, this is it. Buy it while you can! Smoke Clock III, £10,730,; Smoke Chair, £3,067,



11. HER DARK MATERIALS A celebrity favourite, the UK’s leading fine jewellery brand Astley Clarke produces ravishing pieces that hover between seriously refined and chilled-out street. The designer, Bec Astley Clarke, was awarded an MBE in 2013 for services to jewellery. Her star-studded customers include Dame Helen Mirren, Lady Penny Lancaster-Stewart, Sienna Miller and Naomi Watts. Singer Ellie Goulding has been photographed countless times wearing the stunning Icon pendant pictured left, featuring 360 rare black diamonds in a 14-carat rose gold disc. The necklace chain is adjustable and is finished with the designer’s signature star-set diamond tag. The matching Icon drop earrings (right) feature black diamond discs also set in a delicate hue of rose gold. An open back setting allows the light to pass through the diamonds, enhancing their natural magnificence. The Biography bracelet also shown is a grownup friendship bracelet. It’s made up of two alternate rows of hand-cut black spinel gemstones with faceted nuggets and a fire element charm set in 18-carat gold plated sterling silver. So go on, treat yourself! Pendant, £1,950; earrings, £995; bracelet, £125,

12. OH, THOSE RUSSIANS… They don’t come any more darkly Gothic than Ivan the Terrible, the 16th century Grand Prince of Moscow and Tsar of All the Russians. And now there’s a quintessentially Russian luxury vodka named after him. Unlike ordinary vodkas, Ivan the Terrible Vodka is specially adapted from a 16th century recipe in the unique Osobaya style. Its distinctive elegant character and exceptionally smooth finish come from delicate infusions of wild buckwheat honey and Siberian cedar nuts, combined with the finest grain spirit and natural spring water. It’s best drunk neat at room temperature, like fine Cognac.


Ivan the Terrible Vodka is also an official sponsor of one of London’s most lavish social events, the Russian Debutante Ball at London’s Grosvenor House Hotel on Saturday 19 November, hosted by Princess Olga Andreevna Romanov, great niece of Tsar Nicholas II. The scene is straight out of War and Peace. In full-length white couture ballgowns, tiaras and enough diamonds to blind you, the daughters of the Russian elite make their glittering debut to London society. With a champagne reception, gala dinner, Russian entertainment, charity raffle and free drinks at your table until 30 minutes before the witching hour, this is a right royal knees-up. And it’s open to the public! Depending on your table, tickets are £590, £450 or £290. Ladies, of course, must wear proper ballgowns, and men full evening dress. Uniforms are also permitted – very Tolstoy indeed! Also sponsoring the event, and the perfect accompaniment to your vodka is Mottra Caviar, the only licensed producer of farmed caviar in Latvia, whose farming techniques put the welfare of the sturgeon first. Mottra is a member of Slow Food, a global, grassroots, non-profit association linking the pleasure of good food to a strong commitment to the environment and community. Combining age-old methods of production used by the Russian Imperial Court with new environmental approaches has resulted in the purest, most delicious caviar. Two types are on offer: Osetra, the traditional greyblack light-tasting sturgeon caviar; and golden-grey Sterlet from a rare, smaller sturgeon. Ivan the Terrible Vodka £37.19,; Russian Debutante Ball,; Osetra Caviar, £39, 28g; Sterlet Caviar, £49, 28g,

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13. KISS YOUR ASS Originally designed by radical Turin-based design group Studio 65 and produced by renowned Italian furniture manufacturer Gufram – now celebrating its 50th anniversary – the limited edition Bocca Dark Lady Sofa was first created as an homage to Salvador Dali and his famous Mae West Lips Sofa produced in 1937. The piece combines the outlandish imagery of surrealism with the dark aura of the Goth subculture. The sofa is luxuriously soft and has a removable cover, so you can switch to bright red if that takes your fancy. The stainless steel piercing decorating the darkly luscious lips is also removable. This is definitely a museum piece of the future. £6,066.90, www.




14. THE EYES HAVE IT Jimmie Martin was established in London in 2004 as a high-end, luxury furniture and interior design company. Jimmie Karlsson and Martin Nihlmar, the brains behind the award-winning brand, are notorious for creating innovative designs that have attracted a commendable list of celebrities, such as Madonna, Dawn French and Liam Gallagher. Their furniture and eclectic range of homewares combine the decadent and quirky with the nostalgic and urban. The design duo’s sophisticated pieces always exude a sexy, edgy, modern design element. Jimmie Martin also offers a comprehensive handson design service, working with private, commercial and high-profile clients worldwide. Pictured above are their frighteningly bizarre and Gothically gorgeous ‘eye cushions’. The designers say they pride themselves on ‘bringing the unthinkable to life’. They succeed royally. £95 each,


15. MAN OF THE MOMENT Man about town, red carpet regular, East London mover and shaker, designer and tailor to the stars, Joshua Kane is currently one of the hottest names in fashion. With his trademark waxed mustache, flowing tresses, kohl-smudged eyes and black, oversized specs, he’s always formally booted and suited, and makes an impressive sight in London’s trendy Spitalfields, where his flagship store is located. After graduating from Kingston University, he honed his talent working for Brooks Brothers, Jaeger, Burberry and finally Paul Smith, where he worked his way up to become senior designer. Building his (now) eponymous label from scratch three years ago, he has amassed a cult following that includes Russell Brand, Jennifer Saunders, McFly’s Dougie Poynter, Made In Chelsea’s Oliver Proudlock, and rapper Machine Gun Kelly. Kane was determined to “shake up the stuffy old-school world of bespoke tailoring”, and he’s doing a pretty darn good job of it. The sleek, modern, wool twill doublebreasted suit pictured here really does epitomise Kane’s design ethos – formal, razor-sharp tailoring with quirky twists on classic British craftsmanship. Check out the cool, laser engraved mother of pearl buttons on the suit jacket. The two-tone patent leather and calf ‘co-respondent’ dress shoe pictured below may have a louche heritage, but today’s version of the jazz age favourite is the epitome of elegant refinement in the welldressed man’s wardrobe. Suit, £1,350; shoes, £590; Bespoke Service, POA, september/october 2016 75

Directory To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or

Training to improve your business performance ALX Training is dedicated to making sure that your staff have the tools they need to do their jobs efficiently and effectively. Our extensive range of courses covers all Microsoft Office products including Excel, Outlook, Powerpoint, Word, Project and Visio as well as training on the major bookkeeping packages: Sage and Quickbooks. We also offer a wide range of online courses through our exclusive partnership with LearnDirect. From Microsoft Office Expert exams to short focused IT modules, you can use our range of online courses to provide your staff with a truly flexible way to learn. Where software packages are unique to your business, we are able to create courses that will effectively train both your customers and staff on bespoke systems, getting the most from your investment. Operating with complete flexibility - you can choose to use our training rooms or we can come to your workplace - we deliver courses in short two or three-hour sessions that ensure learning is maximised whilst time out of the office is minimised. For more information, please contact: Alex Morel Managing Director Hilary House 19 Hilary Street St Helier JE2 4SX

Appleby is one of the world’s largest providers of offshore legal advice and services. Uniquely positioned in the key offshore jurisdictions of Bermuda, BVI, the Cayman Islands, Guernsey, Isle of Man, Jersey, Mauritius and the Seychelles, as well as the international financial centres of London, Hong Kong and Shanghai. We are also the only firm to have offices in all three British Crown Dependencies. Our services include: l Corporate l Dispute Resolution l Private Client & Trusts l Property Members of the Jersey and Guernsey offices regularly advise London City and international law firms on all legal aspects of offshore corporate, finance and investment fund transactions and arrangements in the Channel Islands. For more information visit our website Michael Cushing Managing Partner, Jersey +44 (0)1534 818 395 Gavin Ferguson Managing Partner, Guernsey +44 (0)1481 755 603

Ashburton Investments is a new generation investment manager. We are the investment management arm of the FirstRand Group, one of Africa’s largest financial services companies. Our offering spans traditional and alternative investment strategies, as well as active and passive investment styles. The strength of our investment proposition is our unique ability to leverage investment thinking and capability from across the FirstRand Group, to offer our retail or institutional clients unique investment opportunities. With us, investors can access more sources of return, broader investment capabilities, informed risk management and deeper investment insight. We are experienced emerging market investors in Africa, India and China, with a proven track record in multi asset investing. Our assets under management total approximately US dollar $8.55 billion as at 31 December 2015 and we have international reach with offices in the Channel Islands, South Africa, the United Kingdom, and the United Arab Emirates. To find out how Ashburton Investments can help you access more opportunities, contact us today on: +44 (0)1534 512000

01534 873785 07797 774676

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Independent and Professional

Bright. Commercial. Responsive.

We provide a full range of management services to our domestic and international private clients.

Benest Corbett Renouf provide solutions to a wide range of legal issues.

l Family office – bespoke assurance l Wealth management – your strategy l Fiduciary services – impartiality with vision l Corporate services – attention to detail l Good governance – a helpful eye We aim to assist in the provision of personal service to meet your requirements, being vigilant and proactive in the face of a fast changing legal, economic and fiscal landscape. We can provide the focus to your solution. Try us. Our team has many years of experience dealing with a wide range of clients in different countries. We look to provide good corporate governance to achieve your aim. Contact us: Mrs Ann Williams, TEP – Director Mrs Áine O’Reilly, ACCA – Director Robert McIlvaney, FCCA – Director Nigel Bentley, Solicitor – Consultant Nicholas Falla, TEP – Managing Director Tel: +44 (0)1534 870670 Licensed by the Jersey Financial Services Commission in the conduct of trust company business

We may be Jersey’s newest law firm, but we draw on the combined wealth and experience of our partners and fee earners in the following practice areas: l Litigation l Employment Law l Trust Law l Property & Planning l Family Law l Wills & Estates l Corporate & Commercial l Insured Risks Our team aims to provide the best possible advisory and advocacy services to clients, tailored to your particular needs, or those of your business. We are proud of our ability to resolve matters by giving leglly sound, commerically practical advice at sensible cost. For further information about how we can assist you, please contact: David Benest, Managing Partner Tel: +44 (0) 1534 760 860 Follow us on Twitter @bcr_law

Deloitte LLP Deloitte LLP offers professional services to the UK and European market. The company has the broadest and deepest range of skills of any business advisory organisation and employs over 14,400 exceptional people in 28 offices in the UK and Switzerland. We provide professional services and advice to many leading businesses, government departments and public sector bodies and publish many influential studies and thought leadership pieces. Deloitte LLP employs 160 professionals across the Jersey, Guernsey and the Isle of Man offices. It is the UK member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its global network of 150 member firms, each of which is a legally separate and independent entity. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. For further information please do not hesitate to contact: John Clacy, Partner, Guernsey Phone +44 (0) 1481 724011 Greg Branch, Partner, Jersey Email: Phone: +44(0)1534 824325

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About EY EY is a global leader in assurance, tax, transactions and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EXCELLENCE IS OUR STARTING POINT As specialists in Corporate Services, Fund Services, International Finance and Private Wealth, Elian has a clear, uncompromising vision: to continually deliver more value by raising the bar in administration services. We work with multi-national corporations, financial institutions, high net worth individuals, family offices and investment funds, and we believe that the best can always be better.

Our strong network has enabled us to build close working relationships with our colleagues in EMEIA and across the world. This allows us to respond quickly to our CI clients’ needs, drawing upon our industry experience across all our services lines.

With over 640 professionals across a network of 16 international offices, covering a wide range of time zones and key financial centres, we are able to handle large, demanding and complex engagements. We are always looking to set new industry standards by challenging standard practice.

To discuss how we can support your business, please contact one of our partners below:

From technical skills and market understanding to outstanding client service, we are relentless in our pursuit of excellence.

Mike Bane, Partner, Assurance and TAS E: T: 01481 717435

SERVICES l Private Equity, Real Estate and Hedge Fund Administration l Depositary Services l Corporate Services l Private Wealth Solutions l Capital Markets Solutions l Employee and Executive Incentive Plans l Investment Monitoring and Management l Regulatory Reporting and Compliance Services

Andrew Dann, Managing Partner, Assurance E: T: 01534 288655 Geraint Davies, Partner, Assurance E: T: 01534 288639 Chris Matthews, Partner, Assurance E: T: 01534 288610 David Moore, Partner, Assurance and Advisory E: T: 01534 288697 Peter Willey, CI Head of Tax E: T: 01534 288 212 Wendy Martin, Partner, Tax E: T: 01534 288 298 David White, Head of Tax, Guernsey E: T: 01481 717 445

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For more information please contact: Philip Norman Chief Commercial Officer +44 1534 504430 Lisa Mclauchlan Business Development Director +44 1534 673749

Equiom is a global fiduciary services provider with offices in some of the world’s premier International Financial Centres, including Jersey, Guernsey, Hong Kong, the Isle of Man and Malta. We create innovative and effective structures to protect private and corporate clients’ wealth. Our experienced and highly qualified teams offer services in specialist sectors including trust, corporate, property, family office, eBusiness, yachting, aviation, crewing, tax and VAT. We are an award-winning, independent company focused on strategic thinking and quick responses to clients’ requirements. We continually seek to develop our services to provide an unrivalled range of opportunities for clients. Equiom’s Jersey and Guernsey teams have significant experience relating to the setup and administration of trusts and companies and the market-leading knowledge required to appropriately protect clients’ assets. Equiom (Jersey) Limited is regulated by the Jersey Financial Services Commission. Equiom (Guernsey) Limited is licensed by the Guernsey Financial Services Commission. Equiom (Jersey) Limited Address: Equiom (Jersey) Limited One The Esplanade St Helier Jersey JE2 3QA Tel: +44 1534 760100 Email: Web: To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or

Hawksford is an international and awardwinning corporate, private client and funds business. Through our three core service pillars corporate, private client and funds - we are experts in providing a wide range of administration and structuring solutions across our seven international offices. We offer a comprehensive range of services to and for trusts, companies, foundations, partnerships, family offices and investment funds. We also provide listing services, wills and probate, succession planning and employee solutions. Our people are highly trained, experienced and offer impeccable client service. We are constantly evolving our thinking, seeking new and better ways of doing things, and making investments for the long-term benefit of our clients. Our independence enables us to offer creative and pragmatic solutions for a wide range of institutional, entrepreneurial and high networth clients. We have expanded our global footprint and service offering, moving into core regional markets across Europe, Asia and the Caribbean and drawing on a global network of leading professionals and advisers. For more information, please contact us: T: +44 (0)1534 740000 E: W: Steve Robinson – Director, Corporate T: +44 (0)1534 740270 E: James Howe – Director, Private Client T: +44 (0)1534 740246 E:

The Intertrust Group is a global quality leader in the trust and corporate services sector, providing a broad range of specialised administrative services to multinational corporates, financial institutions, alternative investment funds and private clients from every corner of the world. Intertrust in Guernsey is one of the Channel Islands leading fiduciary companies offering a range of trust and corporate services, fund administration services, taxation services and compliance out-sourcing services. With over 130 experienced and highly qualified staff and a presence in Guernsey which goes back to 1900, Intertrust Guernsey can provide professional, personal and multi-jurisdictional services for clients all over the world. For further information, please contact: Intertrust Guernsey P O Box 119, Martello Court, Admiral Park, St Peter Port, Guernsey GY1 3HB Phone: 44 (0)1 481 211 000 E-mail: guernsey

A leading accountancy practice, with offices based in Jersey and Guernsey, KPMG in the Channel Islands provide audit, tax and financial advisory services. KPMG’s global network enables us to draw on our international resources and skills to meet our clients’ needs. We address complex business challenges with methodologies and processes spanning markets and national boundaries. Fundamental to KPMG’s approach is our focus on industry sectors. Our vision is simple, to turn knowledge into value for the benefit of our clients, people and capital markets. For further information please contact: Neale Jehan Head of Audit Andrew Quinn Deputy Head of Audit, John Riva Head of Tax Tony Mancini Executive Director, Tax Ashley Paxton Head of Advisory Robert Kirkby Executive Director

Keith McSorley – Funds Manager T: +44 (0)1534 740451 E: september/october 2016 79


Lumiere Wealth is proud to be one of Jersey’s leading Independent Wealth Management providers. Based at Castle Quay in Jersey, we offer a bespoke, independent, wealth planning advisory service to our private clients, corporate intermediaries and corporate clients. We provide a first class and friendly service. Our qualified consultants have over 200 years of experience collectively and all are very proud of the relationships they have built and continue to build with their clients. Our scope of services includes: l Investment products l Retirement planning l Life cover l Income protection l Critical illness cover l Key man insurance l Private medical insurance l Life policies l Employee benefit schemes Lumiere Wealth is regulated by the Jersey Financial Services Commission. To discuss how we can help you with your wealth planning needs, please contact: Andrew Wesley Forster Business Development Manager Lumiere Wealth Millais House Castle Quay La Rue de L’Etau St Helier Jersey JE2 3EG Telephone: (0) 1534 625 001 Email:

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Minerva is a family owned business that has been in existence in Jersey for over 35 years.

Specialty: Bespoke IT Development & Business Consultancy

As a leading independent provider of trust, corporate and fund administration services, we focus on internationally active clients located in sub Saharan Africa, India, the GCC and Europe.

Puritas is an award-winning provider of intuitive software and business solutions for the financial services industry.

We firmly believe in the value of personal relationships and are familiar with how our clients and professional intermediaries operate from a cultural and business perspective within these regions. In addition to Jersey, we provide services from a number of offices based in key jurisdictions including London, Geneva, Mauritius, Dubai, Singapore and Amsterdam, as well as affiliate offices in Kenya, India and New Zealand. For further information, please contact: John Wood Managing Director Minerva Trust & Corporate Services Limited PO Box 218 43/45 La Motte Street St Helier Jersey JE4 8SD Channel Islands T +(0)1534 702930 E

Specifically designed to meet the increasingly complex accounting, compliance, and reporting needs of our clients, all software features robust audit and control capabilities which can be easily updated to reflect changes in the regulatory environment. Our products include: l PureFunds - a unitized product platform specifically designed to support many different types of asset class and fund structures and help fund administrators and portfolio managers better manage investor activity l PureClient - an advanced customer due diligence/client management system which will maintain and update client records for any entity or relationship and provides the necessary transparency and look-through reporting that is needed to manage sophisticated structures l PureManager - a bespoke software package for fund and investment managers which provides for effective control, analysis, reconciliation and reporting of daily trading activity. As well as software development, our services include: l Systems integration and implementation l Programme and project management l Project and business consultancy To find out more how Puritas can help your business. Contact: Mike Feighan - Director Phone: +44 (0) 1534 874100 Email: To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or

Building trust in society and solving important problems We focus on three things at PwC in the Channel Islands: assurance, tax and advisory services. But how we use our knowledge and experience depends on what you want to achieve. So whichever one of our 320 plus staff in the Channel Islands you work with (or 208,000 people across the PwC global network of member firms), they’ll start by asking the following questions: Are you looking to build trust? Give your shareholders more value? Or do you want to do something completely different with your strategy? When we work with you we really listen, to understand you better. We’ll get to know you, your business and your goals. Then we’ll share what we’ve learned to help you get there. We want to deliver the value that you, our clients, our people and our communities are looking for. Talk to us about your issues and aspirations. For further information, please contact: John Roche, Partner, Guernsey Tel: +44 1481 752040 Karl Hairon, Partner, Jersey Tel: +44 1534 838276 Follow us: @PwC_CI

Rathbone Investment Management International is part of the award winning Rathbone Brothers PLC (“Rathbones”), which was established in 1742. Rathbones is a leading provider of discretionary investment management services for private investors, charities and trustees. We enjoy the stability afforded by being a FTSE-250 listed company with significant critical mass (£28.3 billion of funds under management as at 30 June 2015). We offer a range of tailored investment options: l Bespoke portfolio management l Multi-manager portfolios l Unitised portfolios (the RIMI Strategies Funds) Our services are delivered by a team of innovative and experienced offshore professionals based on an understanding of a client’s specific investment and risk objectives, backed-up by the performancedriven Rathbone investment process and encompass the full universe of assets. For further information please do not hesitate to contact: Jonathan Giles, Managing Director Phil Bain, Director

Viberts is dedicated to providing outstanding legal advice and customer service, both in Jersey and internationally. Our clients range from private individuals to multinational corporations, local businesses and governments. We are large enough to offer a full service but small enough that each client has direct contact with one of our partners. We always take a pragmatic approach so that we can deal with matters as efficiently as possible, but we are also compassionate and understanding when it comes to sensitive issues. We partner with other specialists across the globe where required to bring you the best possible advice and representation. Our range of bespoke legal services includes: l Commercial l Employment l Family l Litigation l Personal l Property For expert legal advice, please contact us today. E: T: +44 (0) 1534 888 666 W:

Vaughan Rimeur, Director + 44 (0) 1534 740550 Rathbone Investment Management International Limited is regulated by the Jersey Financial Services Commission september/october 2016 81


Tea or coffee? Both! Espresso ristretto or green tea. Favourite movie? Babel. I like the way it’s filmed and scripted – how all the stories start very differently and are finally interconnected, giving a great sense of humanity and the impact of our actions on others. Your earliest memory? Waking up at my grandmother’s house as she opened the shutters to let in the sunshine – hearing the birds and cockerels crowing, and the smell of the garden outside. Somewhere you’ve never been that you’d love to visit? Ushuaia, Terra Del Fuego in Argentina, for its beauty and wilderness. Is there anything you’re scared of? I’m scared of seeing my family and loved ones suffer and will do anything to avoid this.


Your best quality? Loyalty. Something about yourself you’d change? I’m far from thinking I’m perfect, but I’ve grown into my own skin and have adapted to who I am, so I’m happy to continue this way. Last meal on death row? No meal, but a very good bottle of wine! Cats or dogs? Both – I love dogs outside and cats inside. Most embarrassing moment? Almost crashing a catamaran in Lake Garda in front of German sailors and with my wife as my crew. I was supposed to be teaching her to sail. HILL CLIMB


money, I worked on farms picking potatoes. It was back-breaking. Which famous person would you love to meet? Dalai Lama. I’m not Buddhist but I’m sure this would be an incredible experience. Any hobbies? I used to mountain bike quite extensively and I also enjoy reading. Something that drives you nuts? Stupidity associated with arrogance. If you could go back in time, where would you go? I wouldn’t want to go back in time. Tomorrow is my best day. But if I could, I’d like to spend some time with my father, who was gone too early, and with my mother, when she was still capable of recognising me. What song would you like played at your funeral? I’d love a big, groovy gospel choir! No matter the song, especially if they sing in English in a French church. Buzzword you hate the most? We use a lot of buzzwords in the telecommunication field – they’re useful to create momentum and alignment. But I’m always impressed by the number of different interpretations people have. One I came across recently is the word ‘agile’. Sweet or savoury? Savoury, without a doubt.

Your first job? My first proper job was in a woodworking shop. I was 16 and worked there for a month. I spent my time sanding wood and cleaning the workshop, and had no skin left on my fingers by the end.

Something about you people might be surprised by? I used to sing and play the guitar when I was young and decided to learn piano when I was 28. I took lessons for five years and loved Chopin and JS Bach. I’m no longer able to play any of those wonderful pieces, but I still like singing.

Worst job you’ve done? When I was young, I spent my holidays in Brittany. To make some

Thierry Berthouloux is Chief Information and Technology Officer at JT Group

Dalai Lama image: Phaendin /



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