As Albertans brace themselves for the long, cold winter ahead, it may seem downright devious for a Caribbean island to dangle its white-sand beaches, warm waters and cool rum drinks under their noses.
"It's a good time for recruiting," John Bujouves says with a smile.
The CEO of Toronto-based financial services provider Bayshore Bank & Trust accompanied a delegation of business and government officials from Barbados to a recent Calgary investment symposium to pitch the benefits of the island.
Bujouves says that while charting a course to offshore business destinations may not be for everyone, for some it makes perfect sense.
"If you're living in Canada and want to take on a contract in Saudi Arabia at some point, or have children who are going to school in other countries, or you have grandparents you're anticipating inheritance from in other countries, or your business is crossing borders, then you're a candidate for international services," Bujouves says.
A senior Barbadian government official says the island paradise is not trying to coax Alberta companies to uproot from the frozen prairie and transplant themselves to sandier soil, but rather encourage them to examine the business synergies the Caribbean country can offer.
"We're not luring companies, we're saying 'Here's an opportunity you many not have considered before,' " Dale Marshall, minister of industry and international business, said in an interview following the symposium.
According to Marshall, Barbados is the third-largest recipient of Canadian foreign investment after the U.S. and England. More than half the foreign companies operating on the island are from Canada.
"Those companies - and we're talking huge Canadian corporations - use Barbados as part of their strategy to go global. They use Barbados as a way of achieving certain competitive edges over North American counterparts, in Europe and so on."
Among the Canadian giants working out of Barbados are the Bank of Montreal, Bank of Nova Scotia, London Life & Casualty and the Royal Bank.
Because of a double taxation agreement between Canada and the island nation, Canadian companies can open a branch in Barbados to capture the income generated outside Canada and pay a nominal tax, which allows them to return the lion's share of the income back to Canada as a dividend, essentially tax free.
The symposium, which drew around 60 Calgary businesspeople, paid special attention to the "captive" insurance industry - where companies that are not normally in the business of insurance establish an insurance arm to mitigate the risk to their owners.
"I think Calgary has become more prominent on our radar simply because it is the fastest- growing city in Canada today, and also the measure of prosperity it's enjoying through the oil and gas industry and so on," Marshall says.
"In the oil and gas sector there's a significant amount of risk that's associated with all aspects of that business, whether it's in the exploration or the exploitation of reserves, and therefore we have the idea that a captive insurance company introduced into the thriving Albertan oil and gas industry would be very timely."
The companies pay premiums to third-party corporations to provide the insurance service, which Marshall says represents a significant cost of business.
"What has been established now is you can better manage your own exposure and your own cost if you establish your own insurance company essentially to self-insure."
Anoop Bungay isn't the head of a major corporation looking for a way to cut insurance costs. The Calgary entrepreneur, who says he has his fingers in a few business pies, attended the symposium to see if there was a way to maximize his own international business interests.
"I have a business process outsourcing company (Bungay International) where we do data entry - Canadian and U.S. tax returns - based out of New Delhi, India," says Bungay.
"Because I'm generating business outside of Canada and at present all my business income is funnelled back into Canada, apparently it can be restructured to my benefit by going through Barbados," he says.
Bungay adds that he also sees advantages for moving some parts of his mortgage consultancy - such as data input, risk analysis or credit analysis - offshore to the Caribbean island.
Bayshore's Bujouves says there were a number of options to choose from when his financial service company looked to open an offshore branch a few years ago.
He went with Barbados, in part because of a strong connection between the two countries.
"There are a lot of Canadian ex-pats there, it's a comfortable place, they speak English, it's in the same time zone, they are Internet savvy, it's a well-educated community, so we have great labour resources and it's relatively cost-effective," he notes.
On the downside, Bujouves added that offshore entities in Barbados and elsewhere have been hit by the fallout from 9/11, as U.S. President George W. Bush's Patriot Act has made it tougher and more expensive to operate.
"I'm happy that Bayshore bank has been able to manage that, but we've seen some of our smaller competitors drop out," he says.
Meanwhile, the image of wealthy business people squirrelling away ill-gotten booty in Caribbean bank accounts may make for fabulous reading, but is far from reality.
"It's great for novels, but it's not the way it is and hasn't been for many decades," Bujouves says. "Now, with technology and the systems you can follow money anywhere; it would be naive for someone to think they can stash away money offshore."
(John Ludwick can be reached at ludwick@businessedge.ca)
