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Wednesday, September 15, 2004

BBC: Disaster in Cayman Islands

Cayman Islands banks survive Ivan
Power lines down across a street in Georgetown, Grand Cayman
The power is out, but much of the offshore finance keeps working
The fifth largest financial centre in the world is still functioning - despite being hit by Hurricane Ivan.

The Cayman Islands is home to 5,000 funds, almost 400 banks and tens of thousands of companies.

A loss of power across most of the islands means locally-based staff are out of action till electricity returns, planned for 20 September.

But thanks to the offshore nature of the Caymans' financial services, many firms are operating almost unhindered.

With sensitive data routinely backed up elsewhere, many law firms, company agents and banks have simply told clients to contact offices in London, the Bahamas, the US or elsewhere.

The experience, experts say, is a prime example of the virtual nature of modern finance.

The rest of the islands' life, however, has been hit hard by the hurricane.

Few of their 43,000 inhabitants have mains electricity or water supplies, and there is significant damage to homes and businesses.

Communications are also suffering, with most landlines cut off during the day and little mobile phone coverage.

Haven

The Caymans are most widely known as an offshore financial centre - colloquially termed a "tax haven".

The islands' financial industry accounts for the vast majority of their $1.3bn gross domestic product.

The banks - most of which are subsidiaries of major international groups and do not have a physical presence there - hold more than $1 trillion.

The Cayman Islands, a semi-independent overseas territory of the UK, has many more companies than it has people.

Many of these firms exist as shells, functioning as part of complex systems by which companies and rich individuals can manage their tax and financial affairs.

As such, they do no business in the Caymans themselves and are routinely run remotely, experts say.

For years, the territory was seen as a honey-pot for crooks and money launderers.

International regulators such as the Paris-based Financial Action Task Force now say it has substantially cleaned up its act.

 

Cayman Islands 'devastated' by Ivan
Aerial view of the Caymans after Hurricane Ivan
Debris from destroyed homes was scattered about the Caymans
A curfew is in place in the Cayman Islands after Hurricane Ivan tore through the British territory causing extensive damage and flooding.

The scene in the capital, Georgetown, is one of utter devastation, according to local residents and reporters.

Winds of over 250km/h (150mph) pounded the islands on Sunday night, demolishing buildings, including official shelters.

The centre of the category five hurricane passed within 30 miles (48km) of Grand Cayman, home to some 45,000 people.

A British naval ship, HMS Richmond, docked at the largest of the three islands, Grand Cayman, on Tuesday to offer supplies and aid relief efforts, the UK Foreign Office said.

Uninhabitable

HMS Richmond had to wait for stormy seas to calm down before it docked at Grand Cayman. The boat has been following in the hurricane's wake, delivering relief to Grenada and Jamaica.

HMS Richmond, in the Caribbean during Hurricane Ivan
Sailors aboard HMS Richmond prepare supplies for the Caymans

Waves as high as six metres (20ft) in places crashed into the sea wall at the port in Georgetown, Grand Cayman, while floodwaters swept away trucks, cars and boats.

"The winds ripped the apartments like matchsticks - the whole island has taken a battering. Cars and trucks were floating away like toys," a Citadel Radio reporter said from Grand Cayman.

Tourism director Pilar Bush told the Associated Press (AP) news agency that up to half of the 15,000 homes on Grand Cayman were badly damaged and uninhabitable.

Police said on Monday night that they could not confirm reports of any casualties.

The UK Foreign Office said 95% of homes in the Cayman Islands had suffered damage to their roofs while some 25% of Grand Cayman was submerged.

Power and sewage networks have stopped working and the territory's governor has called for plastic sheeting and water purification equipment to be delivered.

Contact with island authorities was proving difficult, the Foreign Office said.

Emergency flights

An AP reporter who viewed the island from a chartered plane said some houses were reduced to piles of splintered wood.

Many hotels were damaged, with roof tiles torn off. The second floor of the Divi Beach Club Colony Resort was torn away completely, he said.

Debris was everywhere.

Animals could be seen gathering on higher ground, to avoid floodwaters. Trees had been stripped of their leaves, the reporter said.

The island's airport has now reopened for emergency aid flights, but other planes are being turned away.

Hurricane Ivan is one of the strongest Atlantic hurricanes on record and has killed more 60 people on its journey across the Caribbean.

It lashed the west coast of Cuba before moving towards the Gulf of Mexico on Tuesday.

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