Chapter 335: Chapter 335: MacArthur's Annoyance
Everyone present was intrigued by the policies of the Cayman Islands. Hardy smiled and said to Andy, "Andy, please introduce the details to everyone."
Recently, Hardy and Andy had been exploring the concept of transforming the Cayman Islands into a tax-free zone and a financial haven. Hardy had shared his knowledge about tax havens, which left Andy amazed.
Taxation is crucial for a country's government operations; without it, the government cannot function. However, the Cayman Islands, being a small territory under Hardy's ownership, required minimal capital and collected negligible taxes. Hardy, as the head of the Hardy Group, wasn't concerned about tax revenues.
If the Cayman Islands were established as a tax haven, the benefits would be substantial.
For instance, the Hardy Group has significant international holdings, including in Hong Kong, the UK, France, the Netherlands, Italy, and potentially Japan in the future. With assets totaling around $200 million, if profits from these international ventures were repatriated to the U.S., they would be subject to high taxes.
Previously, funds were channeled through Switzerland, which also required tax payments and fund management fees. By shifting this to the Cayman Islands, these costs would be eliminated, leading to considerable savings. This model would make Cayman a central hub for financial transactions, potentially transforming it into a global super bank.
Andy, along with his team of lawyers and financial experts, had been working on refining the financial policies of the Cayman Islands.
"The Cayman Islands will adopt a tax-exempt policy, imposing no direct taxes on individuals or companies," Andy began. "There are no nationality restrictions for registering a company, and the minimum capital requirement is only $50,000, with no verification needed."
"Only one shareholder and one director are required to establish a company, and these roles can be held by the same person. Aside from specific sectors like banking and insurance, there are no other restrictions on company operations."
"Foreign exchange in the Cayman Islands is unrestricted. The government does not impose controls on funds, and confidentiality is maintained without requiring registration of the owner—only a fund code and withdrawal password are needed."
Upon hearing this, the immediate thought for many in the room was money laundering—a practice often associated with such unrestricted policies.
"Cayman is a self-governing territory under the Commonwealth, thus protected by the UK, ensuring its safety. However, it maintains its own administrative regulations and taxation policies."
"Companies in Cayman are subject only to fixed account opening, annual report, and review fees. These costs are minimal compared to the benefits, amounting to only a few hundred or thousand dollars annually. With a large number of companies, this can cover the operational expenses of the Cayman Islands."
Andy continued, "The ease of setting up companies in Cayman facilitates multinational operations and helps avoid trade barriers and foreign exchange controls. This is highly advantageous for international investments, such as our current venture in Japan."
One representative from the consortium remarked, "If this is the case, it would be beneficial. We have numerous overseas investments and could re-register these companies in Cayman, significantly reducing taxes and simplifying fund flow."
The financial leaders in the room quickly grasped the advantages of tax avoidance and fund management in the Cayman Islands.
A vice president from Morgan Stanley inquired, "How many banks are currently in Cayman?"
"Only Wells Fargo," Andy replied. Since Hardy owned Wells Fargo outright, it would naturally serve as the settlement bank.
The prospect of Wells Fargo becoming a central hub for financial transactions, including those for laundering and smuggling, was noted with interest. The possibility of opening a bank in Cayman was discussed.
Andy clarified, "We welcome financial institutions to enter Cayman, but there are restrictions on banks, insurance, and securities. We require these institutions to either pay certain taxes—albeit lower than elsewhere—or collaborate with Wells Fargo."
Finance is incredibly lucrative, and with such a loose monetary policy, many financial institutions would be tempted to exploit it. Hardy had to ensure that the benefits didn't slip away.
The consortium leaders accepted Hardy's proposal to invest in the financial sector in Cayman, with the understanding that Wells Fargo should hold no less than 30% of the shares in any new banks. This arrangement would help establish a robust financial network, enhancing the efficiency of fund flow.
The challenge of tracking money flow would become almost insurmountable, given the vast and sophisticated financial network in place. This power structure would undoubtedly make the U.S. government cautious, as antagonizing several major consortia could have serious repercussions.
After finalizing the pricing for the Japanese seized assets, Hardy submitted the proposal to President Johnson. The total price of $570 million seemed like a bargain compared to the actual value of the assets.
President Johnson was initially taken aback by the low unit prices but was heartened by the total sum, which would be a substantial aid for the U.S. government to support Japan's economic recovery.
"I hope you will present this proposal to Congress. If they approve, I plan to proceed with the sale to help address Japan's economic situation," Hardy told President Johnson.
President Johnson agreed, promising to push the bill through Congress. The approval from Congress would make the transaction official.
The Japanese Embassy in the U.S. quickly obtained the pricing list, and the Japanese government was alarmed. The proposed prices were drastically lower than the original investment, threatening Japan's heavy industry with severe consequences.
Prime Minister Shigeru Yoshida urgently sought to persuade MacArthur to halt the sale. Visiting MacArthur's office in Tokyo, Yoshida bowed respectfully.
"General MacArthur!"
As the Supreme Commander of Allied Forces in Japan, MacArthur had the authority to make significant decisions. Yoshida presented the pricing list and explained its implications.
MacArthur reviewed the list, noting that it had been prepared by Jon Hardy, a special economic envoy. MacArthur was aware of Hardy's recent appointment and his role in Japan's economic recovery. Despite being unimpressed by Hardy, MacArthur had to consider the broader implications.
The Japanese had previously bribed MacArthur for the return of some seized assets, and he had planned to release certain companies in due course. However, Hardy's pricing list disrupted these plans, heightening MacArthur's frustration.
"I'll contact President Johnson and express my concerns. Perhaps we can find a way to address this issue," MacArthur said, puffing on his pipe.
Shigeru Yoshida expressed his gratitude, hopeful for a favorable outcome.
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