Cayman National subsidiaries in US tax evasion probe
While Cayman National maintains its financial stability it says it is unable to declare a dividend as it prepares to pay some CI$5 million as a potential settlement with the US authorities over criminal law breaches related to tax evasion.
The financial institution, in its Fourth Quarter report (ending 30 September) posted on its website, revealed that Cayman National Trust Co. Ltd. and Cayman National Securities Ltd. have been under investigation by the US Department of Justice (DOJ) with respect to potential violations of US criminal laws relating to the evasion of tax by US taxpayers.
However the financial institution hastened to add, “No issues, and no wrongdoing, have been alleged with respect to CNB (Cayman National Bank Ltd.), or the parent company, Cayman National Corporation Ltd.”
While no details on the actual circumstances around of the investigation was revealed in the annual report Cayman National stated in its report that the probe “focuses on mainly past wrong doing by Cayman National Securities Ltd. and Cayman National Trust Co. Ltd.”
It reported that “as a result of our ongoing discussions and negotiations with the US DOJ, for this present year reported, we will be obliged to accrue an expense of CI$5 million as a potential settlement amount.”
It said that necessary remedial action within these companies is nearly complete. “We have cooperated with the investigation as far as we are able, given the laws of the Cayman Islands,” the report added.
The Cayman Reporter reached out to Cayman National Bank President Osmond Williams, who passed all queries to Cayman National CEO and President Stuart J Dack.
However up to press time Mr Dack did not respond to the questions sent about the investigation.
However while the group reported a strong financial performance it said that the Board of Directors decided that it “would not be prudent to declare a dividend at this time.”
“Our ambition remains one of rewarding shareholders with viable dividend payments whilst also maintaining stability and a sound capital base of the business,” the report added.
The report stated that as a group, it looks forward to concluding the investigation and “focusing on the opportunities of building our business in 2016 and beyond. The remedial actions now taken enable us to refocus our business on strong profitability as we move forward.”
Cayman National boasted, in its report, that net income attributable to the Company relating to normal activities stood at CI$5,670,990, “an increase of 68 per cent over the same period last year.”
While “total comprehensive Income for the year was CI$6,401,930 which is up just over 100 per cent on last year. Total Income increased by 7 per cent on a year ago with Total Expenses up by 3 per cent mainly due to some additional loan provisions which we felt prudent to provide,” the report stated.
The report stated that the company’s Balance Sheet remains strong with Total Assets remaining well above the CI$1 billion mark and Shareholders’ Equity up by 5 per cent on a year ago at CI$85 million.
“The performance of the business from our normal activities remains strong and is improving. The measures we have taken to cut costs and improve our non-interest income are bearing fruit, and we are on course to continue to reap those benefits,” the report added.