An exclusive interview with Mrs. Lorna Smith, OBE, Interim Executive Director at BVI Finance
Recognised as the top offshore jurisdiction in the world, for the eighth consecutive year based on the 2018 edition of the Vistra 2020 Report, the British Virgin Islands (BVI) continue to prove its competitiveness in helping companies, institutions and individuals to safely and efficiently carry out their business and make investments across international borders. Recently, we had the pleasure of speaking with Mrs. Lorna Smith, OBE, Interim Executive Director at BVI Finance, a premier offshore financial centre catering to companies that wish to establish or expand their business in BVI. We talked about the Territory’s highly-regarded business landscape as well as BVI Finance’s role in helping companies succeed across multiple markets even at a time of economic uncertainty.
Good day, Mrs. Smith! Thank you so much for taking the time to talk to us today. To start, we would like to know what’s the average day in the life of a senior C-level executive like you?
Pleasure! It’s difficult to say as I work seven days a week – except for the odd vacation or day sail, or something fun with family and friends. But I would say my average day is 14 hours. Of course, during the hurricanes and other near catastrophic events like the “Panama Papers”, sleep was a precious commodity – during those difficult times it was as little as three to four hours per day.
How did your decades of experience at the highest levels of the public service in the British Virgin Islands (BVI) help you transition into your current post as Interim Executive Director of BVI Finance?
I had the good fortune during my thirty-plus years of public service of always working on the international scene. My Masters in International Relations from Fletcher School of Law and Diplomacy also prepared me.
I was Chief Advisor to the Minister during the negotiations for the BVI to become associated with regional and international bodies such as the Organization of Eastern Caribbean States (OECS), the Caribbean Community (CARICOM) and the UN. The Premier’s Office (then called Chief Minister’s Office) was responsible for all international relations, so as far back as the late 90’s when “Harmful Tax” reared its head, I was a part of the team that put the Organisation for Economic Co-operation and Development (OECD) on the back foot so to speak with the seminal work, Towards A Level Playing Field, prepared at our request by the law firm Stikeman Elliott. Be that as it may, I am pleased that today BVI has an excellent relationship with the OECD Global Forum – in fact serving as a member of the steering group. So, I developed that international business experience from then.
I was also the first Head of BVI International Finance Centre (now BVI Finance), developing the direct relationships with the island’s financial industry. I also led the tax treaty negotiations with most of the 28 countries as head of the International Finance Centre. Then, two and a half years ago I was running my own business – LGS and Associates – and BVI Finance had found itself in a bit of crisis, I answered the call to take charge once again as Interim Executive Director for six months, which has now turned into two and a half years at the helm.
BVI is recognised as the world’s leading jurisdiction for company incorporations as reflected in your latest quarterly results showing an annual increase of 20% in new company incorporations. What is it that enables the BVI to attract such a significant proportion of foreign direct investment on an international level?
The BVI provides companies, institutions and individuals with the legal structures to safely and efficiently carry out their business and make investments across international borders.
The BVI’s popularity is a reflection of a growing preference for tried-and-tested service at a time of economic uncertainty. This was proved this year by our ranking as the top offshore jurisdiction in the world, for the eighth consecutive year, in the 2018 edition of the Vistra 2020 Report.
The BVI provides companies, institutions and individuals with the legal structures to safely and efficiently carry out their business and make investments across international borders. We offer legal and commercial certainty, cost effectiveness and flexibility, backed by a highly qualified, well respected and experienced private sector offering first class expertise.
This, combined with our continued compliance with global standards and tax neutrality, makes the BVI one of the most popular jurisdictions for cross-border trade and investment and sets us apart from our competitors.
BVI is highly-regarded by investors because of its “political stability, efficient and reliable legal system and experienced industry practitioners on the ground”. What else sets the territory apart from other international financial centres and why?
The strength of the BVI’s relationship with businesses in Asia is a key differentiator and advantage for the jurisdiction. Often seen as the partner of choice for international business and investment in Asia, the BVI plays a key role in the facilitation of international investment and, given the speed of development in the region, there is considerable scope for the BVI to further build on this relationship moving forward.
Chinese companies in particular are responsible for more than 40% of funds mediated through the BVI. The Belt and Road Initiative is a prime example of a key global programme being supported by the BVI through the strength of our international capabilities and trusted reputation.
Also, with Latin America being our closest neighbour, we pride ourselves on our relationship with the region. Over US$114 billion of outward investment stock is mediated through the BVI in the LatAm region. We intend to build on our relationship further with Latin America in 2019.
What are the key growth sectors in the Territory?
The Territory’s economy is based on the twin pillars of tourism and financial services – the former normally employs one in four people on-island. Although our hotels were severely impacted by the hurricanes, our shoreline businesses and activities were up and running in a matter of months and continues to contribute significantly to our economy – the BVI has always been and continues to be the yachting capital of the world. Also, with the recent signing of a Memorandum of Understanding (MOU) between the BVI and Airbnb, we are able to collaborate more with the company to give visitors more accommodation options in the Territory.
The BVI’s popularity is a reflection of a growing preference for tried-and-tested service at a time of economic uncertainty. This was proved this year by our ranking as the top offshore jurisdiction in the world, for the eighth consecutive year, in the 2018 edition of the Vistra 2020 Report.
In addition to our ongoing work with the Asian and Latin American business community, a key focus for the BVI going forward is the fast-growing, emerging economies of Africa. With six of the ten fastest growing economies in the world located on the African continent, the region is attracting investor interest at a global level. BVI companies have already engaged in direct investment relationships with numerous African countries, including Nigeria, Mozambique, Kenya, Tanzania, Zambia and Botswana. But we believe there is significant opportunity to work more closely with the international business and finance community to facilitate and encourage growth across Africa. Similar to our yearly Asia trade mission trips, the BVI will be visiting several key regions in Africa in 2019 as we look to strengthen ties with businesses in the region.
How does the BVI address the ever-changing demands and behaviours of international businesses and ensure that it continues to meet their needs to the highest standard?
The BVI has demonstrated its ongoing dedication to developing new and innovative financial services products to aid international businesses at all levels. We are committed to ensuring that our business legislation is modern and fits market needs, reflecting the real commercial landscape in which companies operate.
For example, over the last year the BVI has worked on our Micro Business Company Act (MBC) which allows small businesses to operate and structure themselves akin to larger businesses operating on an international level. The MBC is designed to be transparent, affordable and easy to use, and will automate both simple and complex multi-party business transactions for small businesses.
We also launched our innovative new Limited Partnership Act (LPA) earlier in the year which provides all the typical benefits of limiting liability, as well as a number of unique features to the benefit of investment funds, private equity funds and joint venture structures.
Q: What initiatives are the BVI focussing on at the moment with regard to continuing to foster a business-friendly environment and what should your present and future business partners look forward to in this respect?
Locally we are ensuring that we become a more “business friendly” and welcoming jurisdiction by working directly with leaders in the departments of Immigration and Labour.
In a time of political and economic uncertainty across multiple markets, the BVI is currently focussed on promoting our role within the global economy. Specifically, we are looking at how the BVI can support UK businesses in a post-Brexit world by leveraging our international relationships with key strategic partners in Asia and Africa. More widely, we are also looking for our own opportunities in new markets to further strengthen our global economic position.
Locally we are ensuring that we become a more “business friendly” and welcoming jurisdiction by working directly with leaders in the departments of Immigration and Labour. This initiative is ongoing, and we are already beginning to experience greater ease of doing business in the Territory.
As a respected centre for business and financial services adhering to the highest global standards, we are dedicated to serving the needs of our own people, as well as the international community, and our existing and future business partners can look forward to receiving more of the same going into 2019.
What’s the most significant impact your services have to companies across industries? Can you provide an overview of some of the most remarkable achievements you have accomplished?
According to a recent report by Capital Economics, an independent economics consultancy, the BVI mediates over US$1.5 trillion of investment globally and contributes over US$15 billion in tax annually to governments around the world.
As a leading facilitator of cross-border trade, investment and business, the BVI, alongside other International Finance Centres (IFC), is at the heart of the globalisation success story.
We are committed to ensuring that our business legislation is modern and fits market needs, reflecting the real commercial landscape in which companies operate.
Thanks to our unique hub of specialist financial, legal and accounting firms we have enabled numerous emerging markets nations, including Africa, Latin America and Asia, to attract increased international investment which, in turn, has led to infrastructure development and economic improvement in these regions.
According to a recent report by Capital Economics, an independent economics consultancy, the BVI mediates over US$1.5 trillion of investment globally and contributes over US$15 billion in tax annually to governments around the world. What’s more, the investment and trade facilitated by the jurisdiction supports more than two million jobs worldwide demonstrating the tangible benefits the BVI brings to the lives of employees, voters, families and businesspeople around the world.
In terms of the latter part of your question, we are pleased to point you to another recent study by a leading international Institution, where BVI structures were shown to be used in infrastructure projects that support economic growth in countries that have high levels of poverty.
For example, the International Finance Corporation made investments through loans from a company domiciled here in the BVI into Pakistan, choosing to do so as our structures provide better protection in relation to creditor rights than those available to onshore investment vehicles in that part of the world. This particular infrastructure investment created 4,000 jobs in 45 cities across Pakistan. That’s just one of many examples of how BVI vehicles facilitate economic growth across the world.
Are there any areas that the BVI could strengthen in order to continue to position the region as an attractive place to do business?
BVI remains committed to working closely and in partnership with the UK and a number of other international bodies to tackle problems of tax evasion and illegal use of the global financial system.
There have been a number of political and regulatory developments over the last year which have posed a threat to the BVI’s business model, including the passage of the Sanctions and Anti-Money Laundering (SAML) Act by the UK government, and the upcoming publication of the EU’s list of non-cooperative jurisdictions for tax purposes.
Nonetheless, despite the challenges these political and regulatory developments may create moving forward, we remain committed to working closely and in partnership with the UK and a number of other international bodies to tackle problems of tax evasion and illegal use of the global financial system. We are an active participant in a number of international initiatives, often exceeding global standards, and operate within a stringent regulatory framework and respected legal system.
Is there a key message that you want to get across to businesses that are wondering about the status quo of BVI’s investment opportunities and business environment in today’s environment of political and economic uncertainty and volatility?
In today’s environment of political and economic uncertainty, the BVI provides a tried-and-tested service for international businesses looking for secure and reliable investment channels.
The BVI’s attributes – a legal system based on English common law, internationally compliant regulations and tax neutrality – make it absolutely crucial in making global business happen and will continue to position us as an integral part of the international business and finance community in the coming year.
On a lighter note, leaders atop a company naturally have a lot on their plate. What are your favourite routines to keep yourself focussed and healthy at and off work?
Exercise is critical to my well-being and to keeping my energy high, so a three-mile jog three days a week supported by a hike in the hills when I can is a must. Additionally, a daily smoothie of kale and green apples goes a long way. Friday evenings are sacrosanct for a couple of glasses of wine with friends at a favourite bar as all work and no play makes Jill a dull girl.
One of the global advocacies we have nowadays is to empower women for leadership roles across all industries. As a female leader yourself, what do you think makes female-led leadership significant?
I have always been a believer in the best person for the job – male or female. I accept that women have to work harder to get noticed but that makes us more resilient in the workplace.
What are the three things you will not leave home without?
My phone, my iPad and my smoothie.
Thank you very much, Mrs. Smith. It was a real pleasure speaking with you.
About the Interviewee
Lorna Smith is currently the Interim Executive Director of BVI Finance, having previously held the position between 2002 and 2004, and 2005 and 2013. Mrs Smith is responsible for establishing and maintaining sound relationships with the industry and engaging collaborations when appropriate on marketing and promotional strategies for the British Virgin Islands. Other responsibilities include the organisation of promotional tours in key markets, including the US, Hong Kong, Europe, Latin America and other emerging markets to promote the industry’s key messages to potential clients and international investors.
Mrs Smith has more than 30 years of experience at the highest levels of public service in the BVI. Over the course of her senior-level service, she has developed extensive relationships with leaders from the business community, international non-governmental organisations and government leaders from around the world.
She previously served as the founding director of the BVI London Office and BVI House Asia. Currently, amongst other areas, she serves as the Chairman of the Financial Services Business Development Committee, which provides government with strategic advice on Financial Services policies.
She was honoured with an Order of the British Empire (OBE) for her ‘outstanding public services’ to the Government of the British Virgin Islands in 2011.
