Weathering the storm

After coming under pressure from tax authorities in China and elsewhere, offshore jurisdictions are fighting hard for China business. George W Russell reports

Offshore finance came under heavy scrutiny from tax authorities and other regulators in 2009 as the global financial crisis spread. The Organization for Economic Co-operation and Development updated its list of “uncooperative tax havens”, with the threat of sanctions enforced by the US, EU and other major markets.

The future of offshore finance looked uncertain. But two years on, the appetite for offshore legal structures and the lawyers able to advise on them shows no signs of diminishing. “The right blend of offshore and onshore expertise has proven vital to achieving favourable resolutions of insolvency and restructuring issues resulting from the global financial crisis, while international financial centre structures have greatly assisted global private equity houses in their recent efforts to build a stake in the burgeoning industry in China,” says Guy Locke, managing partner of the Hong Kong office of Walkers, a prominent offshore law firm.

According to Peter Cockhill, a Cayman Islands partner at Ogier, another offshore firm, “the competition for offshore business is increasing”. Cockhill is also a director of Cayman Finance, the promotional and lobbying agency for the islands’ financial services industry. The Cayman Islands, along with the British Virgin Islands (BVI), have emerged as a major destination for Chinese offshore investment.