BUSINESS
SMALL BUSINESS
INDUSTRY
BUSINESS GAMES
CLIENTS COME FIRST
WHAT’S THE END GAME?
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P. 24
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Winning in business with game strategies
Secrets of success
May 2019 | RG BUSINESS
Striving to play by the rules
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CONTENTS
COVER STORY 26
WHAT’S THE END GAME? Bermuda strives to play by ever-changing international rules
BY JONATHAN KENT
DEPARTMENTS 5
IN PROFILE The English Sports Shop The 101-year-old store adapting for modern age
BY HEATHER WOOD
7 ACCOUNTING If it doesn’t make money, it doesn’t make sense The importance of small business accounting
BY JAMILLAH LODGE AND COLINA OUTERBRIDGE
8 BUSINESS Business Games Winning in business with game strategies
BY DAVID EZEKIEL
11 FINANCE 50 years of Schroders in Bermuda
13 TRAVEL Beyond the boardroom Alternative meeting spaces
BY ALEJANDRA OTTLEY
15 BANKING Aiming to be the ‘Netflix bank’ Clarien CEO Ian Truran talks with RG Business about the future of banking
17 REAL ESTATE
18 TECH Technology and the small business A conversation with Digicel’s Damiso Husband and Sweet Saak Bakery’s Kamilah Cannonier
21 TOP TREADS Suzuki Vitara BY IAN HIND
22 INSURANCE Retirement for one please! BY CARLA SEELY
23 RECRUITMENT Sisterhood in the workplace Women can help each other to thrive in business
BY ROBIN TRIMINGHAM
24 SMALL BUSINESS Clients come first Simple secret of success for sports medicine practice
BY JESSIE MONIZ HARDY
30 LEGAL Art of negotiation Tips on working out a commercial deal
BY ALAN BOSSIN AND MATTHEW EBBS-BREWER
Picture Bermuda’s commercial real estate How art is changing the Hamilton cityscape
BY PENNY MACINTYRE MAY 2019 RG BUSINESS
3
BUSINESSSPOTLIGHT MAGSBDA
READ:
rgmags.com
Why Do So Many Incompetent Men Become Leaders? (And How To Fix It)
Publications & Product Development Manager Carlene Spencer-Darrell Creative Director Nikeisha Burrows
AUTHOR: TOMAS CHAMORRO-PREMUZIC
CONTRIBUTORS
Heather Wood Jamillah Lodge Colina Outerbridge David Ezekiel Alejandra Ottley Penny MacIntyre Ian Hind Carla Seely Robin Trimingham Jessie Moniz Hardy Jonathan Kent Alan Bossin Matthew Ebbs-Brewer
ADVERTISING SALES & ADMINISTRATION
PHOTOGRAPHY Acting Chief Photographer Akil Simmons Photo Journalist Blaire Simmons
sales@royalgazette.com
Advertising Solutions Specialist Shawn-Nae Cann Advertising Solutions Specialist Andre Bolotenko
RGMAGS.COM Senior Digital Graphic Designer Terrina Nolan Web Developer & Template Manager Joseph To
Advertising Account Executive Marguerita Carter Administrative Sales Support Margaret Mitchell ART & DESIGN Senior Digital Graphic Designer Terrina Nolan Senior Graphic Designer Christina White Senior Graphic Designer Byron Muhammad Graphic Designer Zaire Quenette-Lowe
Decades of research have led Tomas Chamorro-Premuzic to the conclusion that organisations equate leadership potential with some destructive personality traits, like overconfidence and narcissism, which help some incompetent men get selected for a leadership role, but backfire once the person has the job. When women – and men who don’t possess these flaws – are overlooked, we all suffer the consequences.
CHALLENGE: Bermuda Half Marathon Derby MAY 24 2019 The hundreds who take on this 13.1-mile Bermuda Day challenge are rewarded by enthusiastic support from the thousands who line the route. Bermuda’s longest-standing road race, dating back to 1909, its start line alternates between east and west from year to year. This year, runners set off from St George’s – arguably the tougher course.
BUSINESS Chief Executive Officer Jonathan Howes Chief Financial Officer Cameron Poland Commercial Director Michael Grier PUBLISHED BY The Bermuda Press [Holdings] Ltd. PRINTED BY Bermuda Press Ltd.
PLAY:
The Astwood Arms
RG Mags Bda is a series of Feature & Supplement products provided by The Royal Gazette.
Established 1828; Incorporating The Colonist and Daily News (Established 1866). Member of the Newspaper Association of America. The Royal Gazette Ltd, a subsidiary company of Bermuda Press (Holdings) Ltd. BPH incorporated in Bermuda, publishers and printers of The Royal Gazette. The Royal Gazette Ltd’s Electronic Edition is published daily at www. royalgazette.com
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RG BUSINESS MAY 2019
Fashioned in the style of a Victorian era English pub, The Astwood Arms at 85 Front Street, Hamilton, has a convivial atmosphere ideally suited to meeting up for a chat. Its beer choice goes beyond the Bermuda norm and it offers no-nonsense bar food.
IN PROFILE
The English Sports Shop The 101-year-old store adapting for modern age BY HEATHER WOOD Retail sales are on a continued decline, but that hasn’t dimmed the outlook at The English Sports Shop. The clothing store has weathered many a storm since Wilbur and Aubrey Lightbourn opened it on Queen Street in 1918 selling sporting equipment, sportswear and their famed Bermuda shorts. Inventory changed when new owners moved the store to its current location on Front Street in 1954. An ongoing partnership with famed Savile Row suit-makers Alexandre of London brought made-to-measure and a suit department. By the 1960s the shop also stocked leading brands from North America and Europe, was producing its own private label collections and had branches across the island. The company believes it’s the little details that set TESS apart: consistent customer
service, diversified stock and a tradition of excellence. “It’s a carefully balanced combination of sticking to our roots while allowing a measured amount of change and innovation in our product,” Julia Hamshere Currelly, fashion director at TESS Group, said. “Our service ethic keeps our clients coming back, and we are always looking for ways to improve that are driven by customer demands and not just the usual, ‘let’s renovate and have a new look’.” However, the reality is that
Bermuda’s retail sales are on a downward trend, having fallen for 11 consecutive months through January in inflation-adjusted terms. One of the issues for most retailers is that the internet has opened up competition from overseas. It’s required a change in the way The English Sports Shop goes about its business. “The impact of online shopping on the business has been huge across the globe,” Ms Hamshere Currelly said. “For Bermuda, this impact is especially acute as our customer base is so limited. “Even a small number of our clients moving their purchasing online and sending their dollars overseas and out of our economy has an impact, not only on the volume of our business, but also on the economy of the entire island as those dollars stop circulating here.” Compounding the problem has been the fall in the number of guest workers. With fewer people buying local goods, stores bring in less inventory which leads to less selection for customers. “And thus, the endless variety available online becomes more appealing,” Ms Hamshere Currelly said. “It is a vicious cycle!
“We have been fortunate there was always a fairly healthy international demand for our own brand product which has been designed in Bermuda for many, many decades. Previously we had a strong mail order business from overseas clients but in the last few years, as the client has become more and more accustomed to the ease of ‘one-click’ website shopping, we have become aware of the absolute necessity to have a website. Our website has been in development for a while now, and we look forward to launching it as the summer approaches.” By anyone’s standards, 101 years in business is a long time and more than sufficient to work out what works and what does not. “We have a very hands-on management team, and you will find the owners on the shop floor serving customers on a daily basis,” Ms Hamshere Currelly said. “We provide a unique blend of British tailoring, preppy basics and island style. “People love the heritage, and the fact that we are the home of the original Bermuda shorts definitely doesn’t hurt. It helps having a few core products like our in-house designed knitwear, polo shirts and Bermuda shorts which are perennials and always in demand.” She added that being a business that caters to locals and tourists alike is advantageous as provides a steady year-round customer base. “We are an entirely Bermudian business, and our buyers know Bermuda, know the clients, know the lifestyle and constantly consider which trends will work here and which ones won’t!” Ms Hamshere Currelly said. “We watch carefully what the clients are looking for and make the changes.”
MAY 2019 RG BUSINESS
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ACCOUNTING Corporation (BEDC) avoid it like the plague. But without proper accounting procedures how can you be sure that you are running a profitable business.
There are some fundamental accounting terms and statements that business owners need to understand.
If it doesn’t make money, it doesn’t make sense The importance of small business accounting BY JAMILLAH LODGE AND COLINA OUTERBRIDGE
Have you heard the saying, if it doesn’t make money it doesn’t make sense? I don’t know who said it, but when it comes to business, no statement could be truer. Most people who start businesses do so with the plan to make money. How do you know if your business is profitable? The average person will say it’s because they have sales and focus on the amount of revenue that is being made from the sale of their products and services. But what are the costs associated with making the sales or costs of goods sold a.k.a. COGS? The COGS is an accounting term that helps a business owner to determine their costs of delivering a product or service
and consequently what they should be charging their customer for the product or service to ensure that they are making a profit. When you talk about COGS, you are referring to small business accounting. For most entrepreneurs, the idea of accounting is a daunting task, and some entrepreneurs that we work with at the Bermuda Economic Development
of Financial Service Providers that can help you to select the best fit for your business. You can log on to the small business toolbox on our website at www. bedc.bm to access the list and other helpful information. Accountants can assist entrepreneurs with business planning and growth projections.
Cost of Goods Sold are the direct cost attributable to the production of goods and services sold by the company, i.e. direct material, direct labour or purchase price of the merchandise. Accounts Receivables is money which is owed to a company by a customer for products and services provided on credit. This is often treated as a current asset on a balance sheet. An Income Statement is a report that shows the flow of revenues and expenses over a given period, typically a month, quarter or a year. It highlights management’s performance as reflected in the profitability of a business. It not only itemises the revenues and expenses of the past that led to the current profit or loss, but it also indicates what may be done to improve the results. A Balance Sheet is a status report that shows information about the company’s resources at one given time. It is a financial statement that summarises a company’s assets, liabilities and shareholders’ equity. These three balance sheet segments give investors an idea as to what the company owns and owes as well as the amount invested by shareholders. A Cash Flow Statement as the name suggests, is a flow statement that details the movement of cash through the company over a specified period. And a Cash Flow Forecast is a financial instrument used to plan how much money a company expects to receive and spend over a particular period.
Understanding these basic accounting principles can be the difference between success and failure. BEDC can assist entrepreneurs to learn the basics with our Financial Planning courses Part 1 and Part 2 which focuses on the utilisation of QuickBooks software to manage accounts. Once you understand the basics, we encourage business owners to hire an accountant or bookkeeper to assist with maintaining their accounts. While the cost of hiring certified accountants or Audit firms can be expensive, there are entrepreneurs who provide accounting services at better rates. BEDC has a list
Accountants use the numbers to forecast growth by analysing historical data and sales to help entrepreneurs manage revenue, spending and investment. Most financial institutions, investors and business partners will require financial statements to be able to access the health of a business. By having a grasp of the numbers early on in your business, you position yourself for the best chance at success. In the end, it will ensure that you make money because if it doesn’t make money, it doesn’t make sense. Source www.bedc.bm
MAY 2019 RG BUSINESS
7
BUSINESS
Business Games
Winning in business with game strategies BY DAVID EZEKIEL When RG Business approached me to write something on how bridge knowledge could be put to work in a business context, it seemed a daunting assignment. Once I started scribbling, however, I wondered why I hadn’t thought of doing something like this before! First a bit about bridge - it is multi-dimensional, unlike a number of other mind games where the greatest asset is the ability to crunch hundreds of different options and outcomes and choose the right one. There is some of that in bridge, but there is so much else. What makes the perfect
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bridge player? That has changed over the years as the game has become more technical and less reliant on flair and feel, but all that has changed is the mix of the ingredients not the ingredients themselves. So what follows is my take on the ingredients that produce good results at the table, and
There are already examples of great bridge players who are successful businessmen – the legendary Ira Corn who formed the Dallas Aces, Bob Hamman who was rated the #1 bridge player in the world for a number of years and has a successful business in Dallas, Jimmy Cayne of Bear Stearns and lately, two great businessmen who are yet to become great bridge players – Bill Gates and Warren Buffett who play together online several times a week.
in each case I’ll liken it to a company pursuing an acquisition target, and all that goes with that.
Bridge: a good memory for what has gone before, both at the table and from similar situations at previous hands/games. A top player can recognise a situation from decades ago and bring that to solve the current problem. Business: look at the history of prior due diligence efforts and list the mistakes made that you can avoid this time. Also list what your team did well previously and try to replicate that.
Bridge: preparation – top pairs practise bidding and defence for
hours on end, and bidding systems can comprise hundreds of pages of computer printout. Business: preparation is essential. A well thought-out agenda and timeline and preparation in the office of the roles to be performed by each team member.
Bridge: acceptance of the hierarchy. In my opinion the best bridge pairs contain one player regarded as leader. A meeting of perceived “equals” often leads to a clash of egos and disharmony. Essential to this, however, is that the follower feels respected as a player and a peer. This flows into partnership support and an absence of the “blame game” when things go wrong. Successes and failures must
be seen as collective and not individual. Too many great partnerships have dissolved due to this dynamic. Business: a strong and respected team leader is a must, but he/ she needs to know how to get a team working through support, encouragement, respect and engendering a culture of pulling together and taking collective responsibility.
Bridge: ability to read the opponents. In bridge one is not playing against a machine, but against two players one has probably played against multiple times, and knowing their behaviour pattern is crucial. Are they disciplined players, do they tend to make bids to confuse opponents, can their plays and bids be taken at face value? This is often an important factor in the bidding and play of the hand. Business: you must get to know exactly who is on the other side of the transaction. What is their history, do they display the same traits in all the deals they do, can they be trusted? With-
out this, the chances are that you will be on the losing end of any negotiation.
Bridge: skill – no amount of learning can obviate the need for skill. The ability to analyse and then execute is essential. Business: skill – you need a team of dedicated workers but also leaders who have displayed that innate talent for getting it right. Effort counts for a lot, but only if it supports real thinking at the top.
Bridge: flexibility – a good player can change strategy as evidence unfolds at the table. Often a Plan A will turn into a Plan B and even C and the player must be ready for that. Business: flexibility – the team leader must be ready to shift the agenda/timeline based on what the team sees in the early stages of due diligence. It may become clear very early that the target company has excellent accounting and IT systems but their corporate governance and attention to enterprise risk are
lacking. The leader should then be able to move resources from examining bits that are working well and shift them to digging deeper into potential problem areas.
with a transaction that should never have happened, hoping it will turn out okay. That rarely happens!
Bridge: execution – many Bridge: knowing when to cut your losses. Quite often it becomes clear very early that a contract is not going to make, and the good player takes his medicine, cuts his losses, and salvages a few points from the hand. The bad player goes on trying to achieve the impossible and almost every time turns a bad situation into a disaster. Business: this is so important – how do you turn back from climbing the last 500 yards to the mountain top when you know life-threatening conditions are building? How do you give up after months of preparing, training and cost? Often during due diligence, potential problems emerge late in the game, yet after much work, cost and the expectation of a deal, the acquirer starts making excuses and turning a blind eye to problems, and goes ahead
players find it hard to see the problem in the hand in front of them. Even those who then find it hard to develop a plan to solve the problem can end up sleep-walking through the hand, hoping things fall into place before hard decisions must be made. Business: the same – the leader has to approach the project with an open mind as to whether he will give it the green light and to view all data with a high degree of cynicism in order to dig into potential problem areas. Once problem areas emerge, the leader must decide whether to pursue the project. So there it is – you will notice that it won’t take much to turn this article around and ask how a businessperson can put their knowledge to work at the bridge table!
MAY 2019 RG BUSINESS
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Celebrating 50 years in Bermuda Since 1969, Schroders has been building strong relationships based on honesty and integrity. We are proud to be a trusted member of Bermuda’s financial community and thank our clients for our success. Contact Robin Peters on 298-7356 or robin.peters@schroders.com
Schroders (Bermuda) Limited is an indirect wholly-owned subsidiary of Schroders plc and is licensed to conduct investment management business by the Bermuda Monetary Authority.
FINANCE
Michel J.
50 years of DREW Schroders in Bermuda BY JONATHAN KENT
Schroders arrived in Bermuda in 1969 when an investment management subsidiary was created to focus primarily on the institutional and private wealth growth under a very robust legal framework that had English common law at its historical heart. The local business quickly established itself expanding into international trust work with a focus on private equity, and subsequently private equity administration. Worldwide Schroders was going from strength to strength as the Schroder family, in its sixth generation of involvement since its formation in 1804, remained closely involved with the busi-
ness in all areas. The Schroder family, led by its then current patriarch – Bruno Schroder, was very involved with the Bermuda operation having fallen in love with the island.
was the first employee of Schroders in Bermuda who opened the office in July of 1969 at the age of 33 on the ground floor of the International Centre. Before joining Schroders, Mr Drew worked at Ernst and Young as an Account Manager and Auditor. Merchants Finance, a marketing and credit firm, was one of the companies that Mr Drew audited during his tenure at Ernst & Young. It was there that he met Ray Craerin, who recommended that John Bailey, Finance Director of Schroders, meet Mr Drew as a potential candidate to establish the Bermuda office. Shortly after the office was opened, Schroders acquired Merchants Finance and offered credit underwriting and corporate service solutions for investment holding companies. When the business expanded to more than 30 employees, Schroders moved offices to the Burnaby Building. Another move to the Penthouse in the Washington Mall II was warranted in the mid-nineties as the group continued to expand their offering to include investment management and private equity services.
MAY 2019 RG BUSINESS
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SCHRODER FAMILY PATRIARCH
Bruno Schroder BY JONATHAN KENT
Bruno Schroder died at the age of 86 on February 20 this year. He was Patriarch of the Schroder family which controls the asset management group of the same name. Mr Schroder was the longest serving non-executive board member of any company listed on London’s FTSE 100. Michael Dobson, Schroders chairman, said: “Bruno made an enormous contribution to Schroders over more than 50 years. His long experience, good judgment and sense of humour will be sorely missed.” In his twenties, Mr Schroder spent several years in the banking and corporate finance units of J Henry Schroder Wagg & Co before joining the board of what was then Schroders Ltd as a non-executive director in 1963. He took up that position as the health of his father, board chairman Helmut
In 2000 Schroders decided to re-focus its global business and sold its investment banking arm to Salomon Smith Barney, part of Citigroup. While this affected most Schroder business around the world, the investment hub in Bermuda continued to thrive. Private wealth management was introduced providing those local clients with an international feel with a service that drew upon the worldwide expertise of the group. By this time Schroders was operating in more than 30 countries across the globe with a fabulous brand that was fast approaching its 200th year birthday. This was celebrated in 2004 with the Schroder family visiting every office across the now significant empire to
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Schroder (1901-69), declined. Leonie Schroder was Mr Schroder’s only daughter. Mr. Schroder was the great great grandson of John Henry Schroder, co-founder of the Schroders businesses in 1804. After doing British national service in the lifeguards, and after attending Oxford University and Harvard Business School, he joined J Henry Schroder in 1960. He began his career working in the internal audit division, in commercial banking and subsequently in corporate finance. Away from the family firm, Mr Schroder enjoyed flying his private plane and was a keen breeder of Middle White pigs on his Dunlossit Estate on the island of Islay in the Scottish Inner Hebrides. He funded the Islay lifeboat and sponsored the island’s Highland Games.
remind all of the value of not just the family name – but also the importance of taking a long term view. Now as a global investment and private wealth manager, we help institutions, intermediaries and individuals meet their goals, fulfil their ambitions, and prepare for the future. But as the world changes, so do our clients’ needs. That’s why we have a long history of adapting to suit the times and keeping our focus on what matters most to our clients. Doing this takes experience and expertise. We bring together people and data to spot the trends that will shape the future, providing us with a unique perspective which allows us to always invest with conviction. We are responsi-
ble today for $536.7 billion of assets for our clients who trust us to deliver sustainable returns. We remain determined to build future prosperity for them, and for all of society. Today, we have 5,000 people across six continents who focus on doing just this. We are a global business that’s managed locally. This allows us to always keep our clients’ needs at the heart of everything we do. For over 200 years and more than seven generations, we’ve grown and developed our expertise in tandem with our clients’ needs and interests. Explore our interactive timeline to see how we’ve been shaping financial futures since our very beginnings. Our current business in
“
Bruno made an enormous contribution to Schroders over more than 50 years. His long experience, good judgment and sense of humour will be sorely missed.
Bermuda continues to reflect all of the values mentioned above, enshrined in our drive for excellence, integrity, innovation, teamwork and passion in all that we do for clients. Our employees all continue to recognise the importance of taking a long term view – at the heart of all family relationships. Further, all also know that it is a privilege, particularly in today’s fast moving and short term thinking world, to be able to look to the long term. Schroders is proud to have been in Bermuda for 50 years. Article by: RG Business in conjunction with Schroders (Bermuda) Limited www.schroders.com
TRAVEL
Beyond the boardroom
Alternative meeting spaces BY ALEJANDRA OTTLEY
Meetings are inevitable in every industry, and while necessary, it can be challenging to keep them engaging and productive. After all, a plain and neutral boardroom doesn’t necessarily scream casual and collaborative. Think business in Bermuda and your mind will probably wander to pink sand beaches, sunny days and turquoise waters. So why not move your business meeting to our picturesque surroundings? Nicole Minnich and Josh Crockwell, owners of True Bermuda Charters, have curated the perfect opportunity for those looking to mix business with pleasure. True Bermuda was born from a desire to create a luxury experience that also felt authentically Bermudian. “To me, nothing beats Bermuda, we’re really trying to show everybody how amazing it is,” Ms Minnich said. “We want to create an experience and for people to feel that.” As they close in on their first year in business, they have built their brand on pristine customer service.
While typical clients are groups who want to spend a fun day on the water, business folks are seeing the potential of holding meetings aboard the catamaran. “We have a lot of customers who want to take clients out on the water and mix business with pleasure,” Ms Minnich said. “We create a structured experience, where you’re having a good time but also feel like you can be productive and get your work done.” The boat can hold up to 25 people and it can be booked for as little as two hours. It is equipped with informal sitting areas, a chef, a maid,
and a crew that is happy to personalise the experience. You want it? They will make it happen. The motto is to create an environment in which anybody who steps aboard feels like it’s their boat for the day. “We have partnered with Discovery Wines and a couple of other places,” Ms Minnich said. “For example, our clients can order wine to the boat and we’ll have it chilled to the right temperature to be served without them having to ask. Everything is pre-ordered and done for you, so you don’t have to worry about it.” Meeting off-site is always pleasant, especially considering the scenery that surrounds us, and creates a neutral ground where all parties can feel at ease. This charter embodies that “business-in-Bermuda” experience, prioritising productivity, but in a relaxed environment you’d wish for while on an island. We live in a time when there is a demand for business to be conducted differently. Some of the world’s most successful companies are investing in working environments far removed from the typical office space. Steve Jobs, the late former CEO of Apple, was a fan of walking meetings and scheduled as much time as possible outside. And Amazon’s new headquarters are designed to bring the outside in, with a rainforest-like space featuring a giant glass dome that houses more than 40,000 plants. Maybe productivity and collaboration can thrive in a more relaxed environment. So go on, step away from the desk, leave the boardroom behind and give it a try. True Bermuda Charters, truebermuda.com MAY 2019 RG BUSINESS
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BANKING have the choice to opt out, but for those who do, we can create unique solutions based on their spending habits, or how they take advantage of financial services.
Clarien CEO Ian Truran
Aiming to be the ‘Netflix bank’
Clarien CEO Ian Truran talks with RG Business about the future of banking How does Clarien Bank try to keep improving customer experience? At Clarien, we have a purpose statement: “We make it easier for clients to navigate their financial future.” I would expect any member of staff to know that statement. Our first value is that we’re client-driven. We invest in technologies to enhance products, services and efficiency. We take a client-centric approach. Our online banking tools are competitive, and
our mobile app was launched last year. We have chosen bestof-breed technology partners, as I believe this is not a time to experiment. With regard to information security, our client data are our crown jewels. We’ve invested heavily in hardening our external walls as well as information security protocol internally to make sure the crown jewels are always protected. Are human relationships still important in banking? Absolutely. However, clients
want choice in how they interact with us. If they’re going to act through digital means, then we have to provide that choice to them. For those who don’t wish to go through that channel, we have to make alternatives available to them. So, we’ve coupled the automation with people support. Human relationships are less important in basic transactions. For anything more complex, technology has a role to play, but you cannot totally replace humans. For example, our iTrade platform. You can totally self-direct and not interact with a person at all. However, we have two very experienced financial advisers, and you can ask their views about certain stocks or the state of the market. They can provide that value-added service that technology can’t. Is there more technological progress to come? Yes. Overlaying the digital capabilities with the skills of the organisation, we can provide experiences to the customer that they didn’t even know they wanted. One of our goals is to utilise the data we have about our customers to provide services to them in a more focused way. Some clients would not wish us to use that data and will
An analogy is Netflix. The TV experience was to go through the channel guide and choose what to watch. Netflix gives me mobility. I can log on anywhere. They’ll show exactly where I left off, and they’ll recommend choices for me based on what I viewed in the past. I would love to see Clarien become the “Netflix” bank offering clients financial services how, when and where they want. How have things changed since Jamaican-born billionaire Michael Lee Chin’s NCB Financial acquired a majority stake in the bank in December 2017? The transaction provided stability for the organisation’s future. We have now moved past integration and onto transformation. We are more focused strategically than we were able to be in the past. Michael Lee Chin’s ethos is allowing us to think like that. He is very entrepreneurial. One of the things he reminds us is, we must always think like it is “day one” in the organisation. Once you start thinking it’s “day two” you lose that entrepreneurial spirit and drive of “day one”. What do you to relax? I have two primary hobbies, both centred on family. I volunteer as president of the Bermuda Equestrian Federation, and I’m an avid equestrian supporter but do not compete. I’m involved on the organisational side. Both my boys, Casey, 18, and Christian, 17, compete and my wife is active behind the scenes as well. My second hobby is boating. So, when I’m not here and not doing chores in the stables or at the National Equestrian Centre, then you’ll probably find me on my boat. That’s my idea of relaxation. MAY 2019 RG BUSINESS
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LIVE INSPIRED RESIDENTIAL COMMERCIAL SALES RENTALS VALUATIONS PROPERTY MANAGEMENT
441.292.3921 regosthebysrealty.com info@regosir.com 83-85 Front Street, Hamilton, HMAX Each Sotheby’s International Realty Office is independently owned and operated.
REAL ESTATE
3D rendering of the future Point House on Front Street
Picture Bermuda’s commercial real estate How art is changing the Hamilton cityscape BY PENNY MACINTYRE Look up more. The commercial building landscape throughout the City of Hamilton in Bermuda is changing beyond just its bricks and mortar. Art is actively taking shape two- and three-dimensionally on the façade of an increasing number of offices, retail locations and prominent hotel properties. As more structures are undergoing renovations or complete knock-downs and rebuilds take place, the exterior “skin” of commercial buildings (also referred to technically as the “cladding”) are integrating grand scale art walls, 3-D structures and designs in a wide array from a growing number of international and local artists. Now look deeper. The impact of art on the exterior of commercial real estate is more than meets the eye, the art itself, or the building alone. All three elements combined generate greater qualitative and quantitative value to the structures, their cityscape and a burgeoning art medium. Statement pieces placed prominently offer public access, tend to improve the aesthetic appeal of a prop-
erty’s otherwise repetitive brick or cement or glass siding. Some commercial, subprime areas and industrial communities thorough Bermuda, just as in other islands and cities, are visibly the backdrop of one form of art one may perceive in its crudest form as graffiti. Unauthorised graffiti, generally attributed as the outcome of adolescent rebellion or gang-related activities, have
signified one’s presence or memorialised love or hate of someone or something using symbols or tags. In stark contrast, perhaps by evolution of a former graffitist, muralists are creating art-forhire with elaborate painted images in large scales to cover even full sides of commercial properties. Coupled with the proliferation of social media posts by owners, tenants, onlookers and tourists, the visuals created draw attention to the art itself, the building, neighbourhood, town, city, state or country. Bermuda’s newest example is the arrival of the Greetings Tour with the Greetings from Bermuda postcard colour mural strategically placed for high visibility over the parking lot on the side of the newly renovated office building, Dorchester House, on Church Street. Our company, Rego Sotheby’s International Realty, has had Dorchester House on the commercial rental market in recent months and seen the number of rental inquiries increase since the art installation occurred. The building has also captured more attention from the public and tourists who snap selfies and pictures, and post them to their social media platforms. An otherwise ordinary white side of a four-storey office building is attracting a wider audience. The creators, muralist Victor Ving and photographer Lisa Beggs, packed up their lives into an RV and have thus far created over 35 murals and counting in numerous states across the United States and crossing borders into international waters. Mr Ving said his first impression of Bermuda was that “the island felt very clean and calm. We pulled the colour scheme from all the buildings and the imagery sums up the entire place.” Mr Ving said their largescale murals have generated tremendous positive reactions
“creating destinations bringing business to local businesses”. As another form of art, sculptures are noticeably also taking up positions of prominence such as the gigantic Mickey Mouse statue called “At This Time” by New York-based artist KAWS (also known as Brian Donnelly) outside the Hamilton Princess Hotel. KAWS got his start doing graffiti. As E.A. Bucchianeri put it best: “Art is in the eye of the beholder, and everyone will have their own interpretation.” But the positive effect of art on commercial properties is undeniable. Proponents and effectors of this emphasis of exterior building and grounds art are the Green family. Through their real estate acquisitions and redevelopments cited above, the Greens have improved the public, tenants’ and visitors’ experiences, whether at the Hamilton Princess and Beach Club they acquired back in 2014 to their latest office redevelopment at Dorchester House where they commissioned the Greetings Tour. Their latest project is under way at Point House on Front Street in Albuoy’s Point area. Art — yet to be selected — is conceptually expected to vertically grace the new seven-storey building, further elevating the location with an iconic property visible from the harbour and down Front Street and Pitts Bay Road. “The modern-day postcard is eye candy,” according to Mr Ving. The qualitative effects of art on commercial real estate are priceless, creating visually pleasing cityscapes. As Mr Ving observed: “Art feels safer. Knowing someone was there doing it. You’d be surprised how art transforms communities.” Penny MacIntyre is a Partner at Rego Sotheby’s International Realty regosothebysrealty.com MAY 2019 RG BUSINESS
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TECH
Sweet Saak Bakery’s Kamilah Cannonier with Digicel’s Damiso Husband
Technology and the small business A conversation with Digicel’s Damiso Husband and Sweet Saak Bakery’s Kamilah Cannonier Technology can play an enabling role in the success of small enterprises, as well as large. Kamilah Cannonier, of Sweet Saak, describes how her bakery’s growth has been tech-fuelled, as Damiso Husband, of Digicel, asks the questions. What size of business do you consider yourself? A small family business located in the town of St George. Give me a brief overview of your day-to-day operations. Each day we bake fresh products starting at 4:30am. The remainder of our day is spent greeting, assisting and tailoring baked goods to customers. Our products include breads, cakes, scones and our famous cinnamon buns.
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How has technology assisted in your business operations? Our main source of marketing is through social media. We initially started as a one-person bakery out of a home kitchen, and thanks to technology we were able to grow into two locations. Additionally, utilising technological tools has assisted us in streamlining our orders, accounting, scheduling and pricing. Most importantly our point-of-
sale system relies on internet. Up to 45 per cent of our customers actually prefer card transactions, as opposed to cash. Therefore our revenue has become reliant on reliable internet. Without modern tools, we don’t know if we would still be operational today. Technology turned a passion into a career and I am forever thankful. Who is your telecommunications provider? Digicel Business. More specifically Digicel Fibre. How long have you had Digicel Fibre? Three months.
Name one major advantage you’ve noticed since switching to Digicel Fibre? Quicker speed and more efficient service are the two points that jump to mind. Care to elaborate? My internet has not dropped since I have switched to Digicel Fibre. As a family business you can often find my children in my bakery doing homework or browsing their favourite YouTube channels as I prepare for the day. Or my parents using the guest WiFi to send photos via WhatsApp. Overall Digicel Fibre has provided us with a seamless connection that I know I can count on. How helpful do you find (me) your account manager to be? Very helpful. My favourite part is that I do not have to sit in a queue for minutes on end, listening to elevator music in order to reach you. You’re always willing to go above and beyond to ensure that we are a happy customer. I never feel as if I am a “small business owner” when speaking with you or requesting help. You treat Sweet Saak as I imagine you would a big enterprise. Would you recommend Digicel Fibre to another business owner? Absolutely. Without questioning it. Damiso Husband is a Business Account Manager with Digicel Bermuda. He is a fairly new to the company but comes with a wealth of experience and knowledge. He is known to go above and beyond to ensure all business clients receive the best service possible. He can be contacted by phone 500-0012 or Damiso. Husband@digicelgroup.com
TOP TREADS
Suzuki Vitara BY IAN HIND
The term ‘SUV’ was first used in the late 1980s to describe sports utility vehicles that were based on light truck chassis and were categorised by an upright stance, raised ground clearance, robust looking design and high towing capacity. Very utilitarian. Typical examples then were the Land Rover, Toyota Land Cruiser and the Jeep Cherokee. Launched in 1970, the Range Rover, the granddaddy of SUVs, in production to this day, remains the best of them all. To gain a piece of this growing market segment, other manufacturers began to produce SUVs, albeit smaller, and cheaper, and so the Suzuki Vitara was born in 1988. The Vitara’s 2019 model is the fourth generation. The second and third generation were known as the Suzuki Grand Vitara, but now we are back to the simpler, more concise Vitara. Strictly speaking, the 2019 Suzuki Vitara is categorised as a compact SUV. In line with its
competitors, gone is the boxy shape of the original model which has been replaced with the curved roofline and raised haunch above the rear wheels that now epitomises modern compact SUVs. It is also about 5inches shorter, 3inches lower and 1-1/2inches narrower than the previous model, thus more suited to our narrow roads and making it easier to handle for those of you who are somewhat challenged in parking skills. Not that the Vitara is indis-
Suzuki Vitara
tinguishable from its competitors, with the traditional Suzuki front grille, redesigned for 2019. The all-white model that I drove is an attractive car, well designed both outside and in. Build quality is good, with even, narrow shut lines, smooth welded seams, no body rattles and doors that close with a satisfying clunk. Powered by a 1.6l naturally aspirated gas engine, through a 6-speed automatic transmission, the Vitara is no slouch as it quietly nipped along, taking tight bends with no fuss. I know I was miles away from pushing it to its limits; nevertheless, I stayed within the speed limits and it handled well. Comfort levels in the cabin are high. Well sculpted suede and leather seats with firm lumbar support meant I felt not a jot from my chronic sciatica. The view through the 3-spoke leather steering wheel to the instrument panel is completely uninterrupted. The 2019 model now has an armrest so that there is some arm support for long journeys, even with your hands on the wheel at the 10
to 2 position. At 164.5inches long, this ‘F’ Class car is a good size, and that is apparent in the cabin, especially when you sit in the rear. Even with the front driver seat pushed back halfway, I was comfortably seated with adequate leg room. The boot/ trunk has a capacity of about 375l expanding to 1160l with the rear seats folded down. They also do the usual 60:40 split. The 2019 Vitara comes with a bucket load of features. You can even spec the 4-wheel drive option, though why you would, beats me, unless you need to tow a boat trailer off a beach or wet slipway. Maybe. Other interesting features available include shift paddles, LED daytime running lights, automatic dim rear view mirror, smartphone linkage, a rearview camera (I am now of the opinion that these should be mandatory), roof rails, auto headlamp levelling, hill hold and hill descent control, and a panoramic sunroof. There are ten colours to choose from including the bi-tone, which has a different roof colour from the body. In the showroom, I spotted the Ice Grayish Blue body colour with Cosmic Black roof and thought that was really cool. The full list can be had from the dealer. Prices start at $43,995 for the 2-wheel drive mono-tone. For a test drive and a chat contact, Auto Solutions, St John’s Road.
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INSURANCE
Retirement for one please! BY CARLA SEELY
Growing up, my parents sacrificed a lot for their children, and in their later years, they made many more sacrifices to ensure their retirement years would be comfortable. They sacrificed exotic trips overseas, making any big purchases unless really necessary and most importantly they made sure they always put extra into their pension plan through voluntary contributions. At age 62, my mother was diagnosed with terminal cancer, and the reality of it suddenly hit my father – he was going to lose his wife of 40 years and also spend his “Golden Years” alone. Sadly, my mother never reached her 65th birthday and rebuilding a world without a wife, a mother, a sister or a grandmother
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has been a slow and ongoing process. As each generation begins to retire, many look forward to spending more time with their spouse in their golden years, while for others, the reality is they will face retirement alone. Furthermore, being alone during retirement makes you
have to think big picture. The great news is today’s singles are reinventing what it means to retire alone; staying active in their communities and leading fulfilling lives. Whether you’re single by choice or circumstance, you need to dedicate time and energy into taking care of your finances. Finances are at the forefront when you start thinking about retirement. However, adding the single factor can be daunting. Do you have enough money? How much money is needed annually? What happens if you run out of money? Managing your finances and saving needs to be a priority. Watching your pennies today will help you fold your notes in later years. The simplest way to build your retirement savings is through your company pension plan. The mandatory pension plan contributions are 10 percent with employers contributing 5 percent and the employee contributing a further 5 percent (based upon their salary). But why stop there? There is no reason why you shouldn’t be able to squeeze another 1-5 percent off your paycheque and use those for additional voluntary contributions into your pension plan. Now if you do not have a company pension plan, that should not stop you, open an individual pension plan and make monthly contributions into it, the most important aspect is saving for the long term. A great website to start crunching those numbers is www.pensions123.com – click on the learning centre and download the retirement planner tool. LIVING SINGLE A single person typically spends more income on expenses such as housing, transportation, food and even travel than an individual in a relationship who
can share their expenses. While that means singles may need to save more for retirement, there may be other areas where expenses are lower, in particular for those who do not have any dependents. SUDDENLY SINGLE If divorce or a spouse’s death is a recent event, you may want to avoid making rash decisions for the next 12 months. In other words, hold off on selling your home, rethinking your investment allocations or making any big gifts or purchases while you are still coming to terms with your new reality. If you’re recently divorced, consider revisiting your retirement plan as soon as possible after a divorce. You may want to set different goals for your new life and adjust savings rates accordingly. If your ex-spouse is still listed as your beneficiary, he or she could still receive proceeds from your estate, update your will to reflect your current wishes. For widows, if your spouse has passed away, don’t assume you should simply be able to roll over their retirement accounts into your own. Since the funds are directly paid to the beneficiary, you may not be able to put those funds into your company pension plan. Rather, you may need to open an individual pension plan until you are ready for retirement. Make sure your beneficiaries are updated, as well as your will. Finally, it is also important that both your health care directive and power of attorney are updated to reflect your current situation and wishes. At the end of the day, retirement will happen whether it is by choice or by force. Understanding your finances and preparing in advance for retirement will be the greatest gift you can give yourself.
RECRUITMENT
Sisterhood in the workplace
Women can help each other to thrive in business BY ROBIN TRIMINGHAM If there is one thing that nine years of education in an all-female environment will teach you, it’s how to get along with girls. Just as males have their own ways of bonding, younger females have their own natural way of forming and maintaining productive relationships. Once in adulthood, this powerful form of “sisterhood” can provide a career-minded woman with a reassuring sense that someone “gets her” without judgment, that her sense of humour is not beyond comprehension, that she does have a right to feel anger (but not express it unjustly) and that at least one colleague will instinctively know it’s time to invite her out for a drink just by the way she answers the phone. The desirability of having a “work sister” for younger women is supported by a 2018 job site survey by Comparably which revealed that 62 per cent of women between the ages of 18 and 30 had a best friend at work whom they could trust to support them and to tell them the truth. However, this same survey discovered that only 50 per cent of women in their mid50s indicated that they still had a close friendship in the workplace. Just as a “rising tide lifts all boats”, finding a “work
sister” to bond with, bounce ideas off and share skills, can elevate the careers of all generations of women by helping them navigate challenges, tackle larger projects, and avoid being mired in corporate politics that might have previously defeated them. It can distinguish them as decisive leaders who are trusted by their peers — qualities that all employers seek when identifying candidates for promotions. In a perfect world, every woman in Bermuda would have a “work sister” to support and encourage them and nudge them back into the mainstream in the odd moment of insanity, and yet as they rise through the ranks of the corporate world some women invariably make the mistake of viewing their female counterparts as competitors. “It’s tempting to see a competent woman as the person standing between you and your next promotion — particularly if she is currently
holding a job that you aspire to,” said one woman who asked not to be named. “It took me a while to realise that I could learn so much more by asking to work-shadow her, rather than talking behind her back and imagining she was my adversary.” For years, leadership coaches and HR professionals alike have preached that finding a mentor is key for women seeking advancement, higher pay, professional development or help with their networking skills and making business contacts, yet some younger women are reluctant to seek a female sponsor for fear of being viewed as weak. Not so, says Kendaree Burgess, chief executive officer of the Bermuda Chamber of Commerce. “Women helping women should be a natural occurrence. We naturally seek out a woman for help or support in our personal life, why should our career be any different? Women need to encourage each other to become secure in their own positions and work together in a productive and helpful manner.” The recent WeSpeak Boot Camp that took place in Bermuda in mid-April is a perfect case in point. By working together to provide women with the skills they need to become confident public speakers, women can help each other achieve their career goals and ultimately fill more seats on company boards, both locally and internationally. Women in Bermuda are fortunate that there are opportunities for advancement for those with business skills and leadership abilities. By mentoring their female colleagues and supporting their aspirations to get ahead, everyone wins.
SMALL BUSINESS
Clients come first Simple secret of success for sports medicine practice BY JESSIE MONIZ HARDY
There’s no rushing patients out the door at the Centre for Sport and Orthopaedic Medicine in Hamilton. Founder and director physician Annabel Carter confesses she’s often running late, because she’s lingered too long, chatting with a client. “I’ve always felt strongly about giving patients ample appointment time within which to more correctly diagnose, treat and educate, even if it means seeing fewer patients in a day,” Dr Carter said. For her, it’s not about the money or prestige; it’s all about her clients. “I like people, and I enjoy my patients,” she said. A New Zealander by birth, she first came to Bermuda in 1989 after finishing her postgraduate training in England. She assisted sports doctor Carol Hammond in a tiny office on Victoria Street for many years and married Bermudian filmmaker and writer Andrew Stevenson in 2001. She took over the practice in 2015, when Dr Hammond retired, but it wasn’t until she moved to the Vallis Building on Par-la-Ville Road in July 2016, that she made a fresh start of things, and founded CSOM. CSOM focuses on nonsurgical treatment of musculo-
skeletal ailments and sport and exercise-related injuries. “We treat the gamut of individuals from elite athletes, weekend warriors and urban athletes to children in sport, office workers and senior citizens,” Dr Carter said. Within ten months, CSOM was so busy she had to hire a third clinician. It continues to grow. Last year they
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For her, it’s not about the money or prestige; it’s all about her clients.
hired two new staff members, sports doctor Hamish Reid and chiropractor Raffi Titizian, and expanded their physical space. They now have 4,000 square feet, comprising six consultation and treatment rooms, a procedural room, a small studio and a staff room. “With six clinicians now, all with different niche skills, the majority of patients can be managed within CSOM, and the few that cannot, can be referred appropriately elsewhere, be it to other therapists, trainers, advanced pain management or surgery,” Dr Carter said. Early on, CSOM physiotherapist Michelle Monk, joined forces with doula and nurse, Fiona Dill, to provide birthing classes at the practice over a weekend every few weeks. Melony Kendell hosts a breastfeeding class as well, and Ms Monk and Ms Dill have set up a midweek class.
“We hope to have further classes available during the week in yoga and Pilates,” Dr Carter said. Now Dr Carter says, CSOM is the only clinic in Bermuda to boast the make-up of sport and exercise medicine, physicians, physiotherapists and a chiropractor. Staff are encouraged to keep training and remain current with best practices in their field. Dr Carter said: “Over the last ten years I’ve trained and qualified in musculoskeletal ultrasound, which has proven to be an incredible and essential tool both in providing immediate diagnoses for patients and in guaranteeing accuracy of injections via interventional ultrasound-guided injection therapies.” For Dr Carter, some of the challenges of the sports medicine industry are keeping
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PHOTOGRAPHY BY ANDREW STEVENSON current with new technology, and providing for an increasingly ageing population. “As with most other health practitioners, as well as the health insurance industry
here, the clinic is placing more emphasis than ever on a holistic — and going forward hopefully more preventive — approach to managing health,” she said.
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What’s the end game? Bermuda strives to play by ever-changing international rules BY JONATHAN KENT Bermuda’s adoption of “economic substance” legislation at the behest of the European Union — and its blacklisting by the EU in March — were the latest moves in a great game that has spanned more than 20 years. The game encompasses international business and politics, the long arms of large countries’ tax authorities, a few tax evaders and many tax avoiders, along with their professional-services enablers. At stake are vast amounts of money and the economic lifeblood of many small countries, including Bermuda. Over that time, the game has assumed a familiar pattern. Large, powerful economies cajole and even bully low-
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tax jurisdictions into making changes aimed at eliminating tax evasion and tax avoidance. Regulation has been tight-
ened, and transparency on tax matters improved beyond all recognition from two decades ago. Most of the small countries, including Bermuda, jump through every hoop the rich world puts in front of them. It’s like a game of chess, where the aggressive player is constantly forcing their opponent to make defensive moves to stay in the game. The big question is: what is the end game? What would the big economies regard as “checkmate”? It could be argued that the clock started ticking in 1998 when the Organisation for Economic Cooperation and Development produced a blacklist of noncooperative jurisdictions and a definition of what constitutes a “tax haven”. At the turn of the 21st century, the big idea was “tax harmonisation”, with both the EU and the OECD pursuing their own different versions of that. The idea that corporate tax rates could be coordinated across countries was always a non-starter, given that some large countries, such as Britain, would have stood to lose their competitive advan-
tage on tax rates. Under the OECD’s initiative on “harmful tax competition”, the focus became transparency. This was based on the notion that financial secrecy was one of the hallmarks of a tax haven. Forcing the sharing of information in areas like accounts and beneficial ownership would ensure that the tax authorities in higher-taxing rich countries would be able to track down what was owed to them, the thinking went, and it would deter those who sought secrecy from shifting their capital and profits to tax havens in the first place. Efforts to create this international information-sharing network intensified after the global financial crisis of 2008, which prompted big-country fingers to be pointed accusingly at the offshore financial world, even though the root cause of the crisis was rampant loose lending being brutally exposed by a property market slump. Over the past decade, Bermuda has obligingly jumped through a series of hoops. It has signed tax information
exchange agreements with more than 100 jurisdictions. It was an early adopter of common reporting standards, a framework that enables the sharing of financial account information between participating countries. It also exchanges information across borders on Bermudian multinational companies under the OECD’s Base Erosion and Profit Shifting country-by-country reporting regime. The new environment has left little opportunity for “lighttouch regulation”, which used to be a catchphrase to describe one of Bermuda’s many attractions to international businesses. The island’s financial-services regulator, the Bermuda Monetary Authority, has upped its game remarkably over the past decade. In 2016, it earned a badge of honour from the European Union in the form of Solvency II third-country equivalence, meaning the island’s insurance regulation standards are regarded as the equal of those in the EU. It has similar recognition from the National Association of Insurance Commissioners in the US, meaning that super-
vision of the island’s flagship global industry can justifiably claim to be world class. The EU has put up the latest hoop in the form of “economic substance” requirements, designed to eliminate “brass plate” companies that serve as vehicles for multinational corporations channelling profits to low-tax countries, while lacking in the employees, premises, local expenditure and revenue-generating activity that constitute “substance”. In mid-2017 a scoping paper was drawn up by the European Council’s Code of Conduct Group, a team of bureaucrats who work behind closed doors to come up with ways of closing tax avoidance loopholes. The message from Brussels to offshore financial centres was blunt: comply or face blacklisting, with the potential for economic sanctions. In chess terms, it looked like “check”. Failing to act would leave Bermudian companies competitively disadvantaged in the world’s largest trading bloc. If there was any doubt whether the island should comply, the OECD’s promise to adopt the
same substance rules — making it a global standard — made the consequences of non-compliance too awful to contemplate, “checkmate” in fact. The island’s responding move was the Economic Substance Act 2018. It requires that companies prove that their presence, employment and expenditure on the island are “adequate” for their size and their business. There are no metrics yet to describe what constitutes “adequate”, leaving companies grappling for guidance from the Registrar of Companies on what they have to do to comply by the July 1, 2019 deadline. Adding to the challenges for business was Bermuda’s blacklisting by the EU in March. A mistake in the formatting of economic substance regulations resulted in the omission of a critical clause in the section on intellectual property companies — perhaps the EU’s biggest single target. David Burt, the Premier, called it “a drafting error” while the European Commission accused the island of “playing games”. The mistake was quickly remedied, but not
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We have a huge advantage, not just to grow the population of these companies as it stands, but also to bring people onto the island to create economic substance as well.
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in time for the island to avoid being voted onto the list of noncooperative jurisdictions on tax matters. At the time of writing, the problem was expected to be only temporary and for the island to be removed from the blacklist on May 17 at the meeting of EU finance ministers. The continually rising bar does not mean that the offshore centres are losing the game, however. Low-tax jurisdictions have remained magnets to multinational corporations and high net worth individuals alike. The adage that capital will go to where it is treated best is as true today as ever it was. Increased transparency has not proved the deterrent that some had thought it would. There are hopes that the substance rules, far from causing damage to Bermuda’s economy, will actually benefit it. Among the more than 12,000plus international companies domiciled in Bermuda, there are likely to be many who fall short on the substance requirements. They will either decide to leave or ramp up their operations to comply. James Ferris, of PwC Bermuda, estimated that those 12,000 companies spend about $130
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Each new international standard that Bermuda adds to its repertoire is another source of comfort to legitimate business people.
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million on island. While any net increase in staffing, space, or economic activities would be a boost, the real substance opportunity lies farther afield, he believes. In particular, by gaining additional businesses from other jurisdictions that have implemented substance rules and which have far greater numbers of international companies than Bermuda. Cayman, for example, has about 200,000 companies, while the British Virgin Islands has more than 400,000. “For us, as a territory, we have a huge population of companies that we can go after in terms of BVI and Cayman,” Mr Ferris said at a March information session on the impact of the substance rules. “They can only go after 12,000 of our companies. “We have a huge advantage, not just to grow the population of these companies as it stands, but also to bring people onto the island to create economic substance as well.” With hundreds of thousands of companies in different jurisdictions deciding on their course of action to comply with the new rules by the middle of the year, the blacklisting could hardly have been worse timed for Bermuda. The longer-term picture is that substance, at least as it appears today, does not appear to sound the death knell for Bermuda’s international business sector: far from it, in fact. Some believe that the EU’s latest move may even backfire spectacularly. Richard Teather, a tax policy consultant who advised Jersey on its substance legislation, wrote in the Cayman Financial Review: “Studies into the reaction of businesses and investors to these requirements have found that, rather than moving operations back to high-tax countries and facing ever-increasing tax bills, they will do the opposite and move more of their actual activities
to low-tax locations, to make it easier to demonstrate economic substance there. “This will be a huge problem for the European Union, because when those economic activities are moved out, they do not only lose corporation tax, but they lose jobs, income and employee taxes as well.” If that proves to be the case, don’t expect the rich countries to take it lying down. Certainly, one of the next moves has already been decided, the imposition of public beneficial ownership registers on the British Overseas Territories. Thanks to an amendment to the UK’s Sanctions and Money Laundering Act, an Order in Council will be made at the end of next year to oblige all OTs that have not yet got a public register to establish one by 2023. The Bermuda Government has taken the position that it should only create such a register when others are doing it too, and it also claims that the order from the UK would breach the island’s constitution. Lord Tariq Ahmad, the UK Foreign Office Minister for the Overseas Territories, told The Royal Gazette on his April 17 visit to Bermuda that he hoped a legal battle over the issue could be avoided by virtue of such registers being an international standard by 2023, something which Britain is lobbying for in G7 and G20 meetings. Bob Richards, who had plenty of experience dealing with the powers that be in the EU during his 41/2 year tenure as finance minister, believes that the Europeans regard offshore financial centres like Bermuda as “dots on the map” whose financial services are, by definition, “illegitimate”. There is little doubt in his mind that their end game is to “literally put the offshore world out of business”. In an editorial published by The Royal Gazette in March, Mr Richards
said: “I was at a meeting abroad recently, and a colleague of mine from one of the Channel Islands said he thought they had ‘dodged this bullet’. I said to him: ‘This is no bullet, mate, it’s a heat-seeking missile. You may dodge it once or twice, but it’s going to keep coming back to blow you up.’” An alternative, brighter future is also possible. The irony is that with each new requirement that the economic powers foist on Bermuda, the bar is raised and the island’s legitimacy as a centre of business strengthens. As the saying goes, what doesn’t kill you makes you stronger. Each new international standard that Bermuda adds to its repertoire is another source of comfort to legitimate business people. It’s also a deterrent to bad actors, who may come looking for the “secretive jurisdiction” described in international media, only to realise they would be much better off going to Nevada or Delaware for that. So, in the end, the secret of excelling in the great game may simply be to play by the rules. Remember how some rival jurisdictions argued that Bermuda was shooting itself in the foot by going through the long and painful process to achieve Solvency II equivalence and potentially losing its regulatory advantages? Three years after claiming that hardwon equivalence, it has proven to have built a moat around our competitive advantage as an offshore international re/insurance centre, with smooth access to EU markets that is virtually impossible for other offshore centres to mimic. While complying with international standards has made good sense for Bermuda so far, we should fight tooth and nail against the imposition of rules that ask more of us than others. We all know this is a high-stakes game and there are cheats out there.
LEGAL
Art of negotiation Tips on working out a commercial deal BY ALAN BOSSIN AND MATTHEW EBBS-BREWER
Negotiation in the classic diplomatic sense assumes parties are more anxious to agree than to disagree, it is said. This should also ring true in the context of a commercial deal. Negotiation should not be looked upon as a combative process, rather a collaboration where all parties should be moving forward together to strike a deal. However, before taking part in that process it is of the utmost importance that parties work with their professional advisers to understand what their own position is and what might be considered “market” in the jurisdiction(s) and sector(s) related to the deal in question. For example, in some jurisdictions, it may be absolutely standard for certain buyer protections to be given by the seller in the form of indemnities while in others that may not be the case. A seller may not feel able to give indemnities for long periods of time, perhaps they need to return funds to their investor. All of these factors need to be taken into account to understand a party’s ideal position. Once that position is understood, consideration can be given as to what is deal critical and what they might be willing to sacrifice in order to reach a commercial position that they can strike a deal on.
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RG BUSINESS MAY 2019
Knowing the rules of the game and what should or should not be accepted allows the parties to focus on the real issues, thus leading to more fruitful and productive negotiations. In order to consider where the parties may land at the end of a negotiation, time should be taken to understand the relative bargaining power of those involved. A motivated seller of an unpopular asset class with only a single buyer in view, may be willing to make concessions that they would not make if there were multiple bidders. Negotiations may take place in ways including face-to-face meetings, telephone conferences or e-mail exchanges. While the key themes of the negotiations may be the same, they do have nuances that should influence one’s approach. For example, points may get addressed more effectively in interactive discussion than by trading multiple e-mails. In contrast, a clearly worded e-mail may make it easier to set out a position in full, together with detailed reasoning, that a recipient can reflect upon with-
out feeling forced to respond in real time when they feel they have insufficient understanding or instruction. Whichever medium is used, in keeping with the emphasis on a collaborative approach, communications should remain professional and respectful. All too often, parties can confuse robustly defending their position with being overly aggressive and discourteous. Whilst this may “win” a particular point it is likely to lose goodwill in the long term and the ability to agree upon a mutually acceptable deal. When the parties do begin to negotiate, it will likely be on the basis of a draft agreement prepared by or on behalf of one of the parties. A more balanced draft should serve to reduce the level of negotiation required to reach a deal. That being said, particularly where the party with the greater bargaining power is preparing that first draft, it is not uncommon for a draft that heavily favours that party’s interests to become the starting point.
The thinking behind this is often that you are more likely to get more of what you want by starting from your ideal position and making the other side pare it back. This may well be true, but such an approach also carries with it the risk of antagonising the other party or parties. If that approach continues over multiple drafts, the aggrieved party may walk away leaving the other with “no deal”. Of course, knowing when to walk away from a deal is in itself part of the art of negotiation. If, after best efforts, the parties are unwilling or unable to accept the position of the other(s), it may be that no deal truly is the better deal. However, the parties would want to know that this was as a result of careful, collaborative negotiations and not of failing to understand the value of adopting a collaborative approach to agree rather than disagree. Alan Bossin and Matthew Ebbs-Brewer are partners at Appleby.