Tonight:
4°c
A few years ago, to escape the tyranny of a different newspaper, I moved to the Cayman Islands - the hedge fund and hurricane capital of the world.
The plan was simple: befriend the police, the governor and some seedy offshore finance types while learning to dive and becoming an expert on cocktails that hold little umbrellas.
After a couple of years, I'd emerge with some tax-free cash in the bank and enough material for a popcorn novel that was bound to be turned into a dreadful movie. As presumably the only reporter in what is a tiny country, every story would be an exclusive.
I arrived to discover that at least two other jokers - one from the Wall Street Journal, one from the South China Morning Post - had had the exact same idea. We'd sit in government press conferences scowling at each other. For the next 12 months, almost nothing happened. A new restaurant opened, another one shut. There was a big shark just off Seven-Mile Beach once.
There was a hum of low-level corruption, but it felt no different to the average UK local council. As for financial crime, clearly far more was occurring on Wall Street and in the City.
The islands' tax-haven status hinted at scandal, but the hedge funds who made it their official home - while working from offices in Mayfair - did so legally. I flipped through documents filed by the funds at the Grand Cayman court and found little. That was the whole point: they didn't have to disclose much about their operations. Gripped by profound boredom, I returned home in search of a harder life.
Last week a Caymanian friend emailed: "Where are you? This place has gone nuts."
A summary of recent events:
Police chief Stuart Kernohan has been sacked for "unauthorised absence" and "inappropriate action", having been suspended amid a wider probe of corruption allegations. Other top cops remain suspended.
Kernohan, a former chief inspector with the Strathclyde force who hit the headlines because of a relationship with a murder witness, is in turn demanding damages from Governor Stuart Jack for bringing his good name into disrepute.
A senior officer from the Met in London has been drafted in to investigate various allegations, including the suggestion of a corrupt relationship between the police and a local jailbird-turned-media magnate.
The president of the University College of the Cayman Islands has left after the auditor-general found serious and ongoing "financial irregularities" in the college finances.
Other senior officials have also been arrested as part of the bizarre and increasingly complicated corruption probe.
An unsolved rape case has been reopened after it emerged that the paperwork relating to the case had mysteriously disappeared.
Oh, and a refrigerator full of guns and ammunition was discovered by the Customs Narcotics Inspection Team en route from Miami.
None of this excitement has an immediate impact on the offshore finance business or the thousands of UK lawyers who earn a living from it. Except that it could throw an uncomfortable light on the industry - the only way, tourism aside, that the islands make any money.
Chancellor Alistair Darling has just ordered a review of the offshore centres (the Caymans are a Crown dependency). The clear implication is that places which attract banking customers with lower taxes at a time when our own banks are desperate for capital face a clampdown.
In his Pre-Budget Report, Darling noted "growing international pressure to line up standards of regulation and meet international norms with regard to taxation [and] transparency".
The banks that have just been nationalised, such as Royal Bank of Scotland, all have offshore arms - so in effect the UK taxpayer is now subsidising a financial operation that has as its sole purpose the avoidance of UK taxes.
It seems highly unlikely that this will be allowed to continue.
Potentially, this is all quite bad news for the Cayman Islands. And it will be a lot easier for Darling to impose rule changes if the islands look like an unruly, dishonest place that can't manage its own affairs.
Hedge funds, as if they haven't enough problems, could soon find that being based there is more trouble than it's worth if the threat to increase transparency is carried out.
Perhaps it is time for me to return.
Suspension of a fond hope at New Star
The handy thing about bringing a former regulator on to your board is you can be sure you won't accidentally fall foul of the regulator's rules.
Perhaps that was the hopeful thought behind getting John Tiner to become a director of New Star Asset Management, soon after he stopped being the head of the Financial Services Authority.
Some awkward questions last week then, when the doomed New Star sought — and assumed it had been given — permission to suspend trading in its shares while it negotiated a bailout with its banks.
After some confusion, while the shares continued to tumble, the FSA came back with its verdict: no.
When Tiner arrived last April, the shares were 100p. Today they are less than 2p.
Too much head on Punch's portfolio?
Rumours of our demise have been greatly exaggerated, Giles Thorley insisted recently as he unveiled the annual results for Punch Taverns.
The shares are down 80% in the last year, which suggests all is not well. Under certain circumstances, reckon analysts at Morgan Stanley, a fair value for the stock is a miserable 10p.
Thorley thinks the pint glass is a fifth full rather than four-fifths empty. Both he and Punch will still be going in a few years once trade has picked up after the recession, he reassured.
One reason for the chief executive's upbeat mood was the resilience of the 8400-strong estate. The accounts say it's still worth £6.5 billion, so the £4.5 billion of debt looks perfectly manageable.
Numbers last week from Fleurets, the pub trade's leading estate agency, were far less ebullient in its annual report on the industry. Even allowing for the fact that Fleurets is in the business of shifting properties and is taking the line that great assets can be picked up cheap, the gap between its numbers and Punch's is hard to reconcile.
Fleurets reckons the value of the average pub freehold fell 29% in the North to £451,000, 13% in London to £987,000 and 23% overall to £537,000.
Punch's accountants claim its pubs are worth £770,000 each.
Frothy, I'd say.
Merrill right to throw out Thain claim
John Thain of Merrill Lynch was never going to get the $10 million bonus he wanted this year, but the fact he even felt able to ask suggests that massive banker bonuses will be back before long.
Bankers are paid absurd salaries on the basis that otherwise they would jump ship to more lucrative places such as hedge funds. And the chief executive who flogged the former Thundering Herd to Bank of America might reckon he made the best of a bad job.
But at the moment no one is making that kind of money, not even the hedge funds. Even if Thain really is that brilliant, no one else can afford him. Merrill's board was on safe ground refusing
this demand.
