International Services Ltd. (ISL) to suffer a loss in expected business, as it drove up the cost of getting that business.

ISL president Mr. Michel Drew said he had just quoted figures the day before the Budget was announced that he had to revise once it was learned of the Corporate Services tax.

"We were just at the time of the Budget, considering establishing 20 companies here for a particular client, who needed a major family operation and 20 different vehicles to keep things separate,'' he said. "It became an issue of how much it was going to cost to run 20 companies out of Bermuda.

"When you take 20 companies and you even take the $1,680 tax, multiply it by 20, you are talking about $33,000 there, right from the start. It can very quickly get very expensive.

"Bermuda is an expensive place from which to administer companies.

Eventually, we did set up 18 companies, but they will be, in fact, largely administered, for more one than one reason, but one is definitely cost, out of some other jurisdiction.

"So we won't in fact be doing the ongoing administration here. To that extent, Bermuda and this firm, will lose some of that business. It's just being done elsewhere. We still do what is necessary to be done here. But that is some business that will have been lost. And it came at the time when, of course, the Minister of Finance, was talking about slapping a four percent tax on top of that.

"Having quoted to our client the day before, a figure that didn't take account of the fact that I was only going to get 96 percent, as I was trying to trim it as close to the bone as I could in order to keep the business here, it basically failed, anyway. I had to go back the next day and say I couldn't do it because I was losing that four percent.

"I know the situation could still change. I'm not sure what the Minister will finally decide, but at the time, I had to say it was non-competitive, because I was going to lose money on it. I was cutting these things to three and four percent probably on gross, hoping in part that there would be other spin-offs.'' Mr. Drew, the long-time Schroders chief in Bermuda, had just retired from the international merchant banking and fund management group to spend more time with his own ISL, a decision that had been under discussion with Schroders for a year.

After opening the Schroders (Bermuda) Ltd. office in 1969, the Bermudian had spent the last 25 years developing a wide range of financial services that the Bermuda group now offers to clients.

ISL was set up to manage or administer the affairs of exempted companies in Bermuda. The management company was set up by Mr. Drew in the mid-seventies with Schroders taking a 40 percent stake.

For practical purposes, ISL was being run from the Schroders group offices in Bermuda in the penthouse suite of Phase Two of the Washington Mall. It has now been established one floor below. And Mr. Drew has acquired all of the outstanding shares.

Said Mr. Drew: "We were managing non-affiliated companies. Velcro is one of our major ones. We also run some of the Sedgwick companies. In fact, we were the sort of birthplace of Sedgwicks in Bermuda, which is now a major insurance manager here. Scandinavian Bank. We manage those kinds of companies.

"ISL is into private trusts and insurance company management, but don't specialise in insurance companies. The firm specialises in non-insurance companies, but there is a licence to manage insurance companies.

"The companies include general finance, like the association with Skandinavian Bank and Schroders, to industrial.

"ISL does whatever the client needs here. The grass roots of managing or administering these companies is corporate services on the one side, which is quasi-legal, and then on the other side it is financial, which is basically accounting.

"We have four accountants here out of our staff of six.

Mr. Drew said that with continued stability in Bermuda, significant opportunities existed for Bermuda. His firm has had to deal with companies from around the world, something he probably won't have had the chance to do in other major business centres like London or New York.

"Young Bermudians today should see the opportunities that are here, rather than seeing the walls that hold them in,'' Mr. Drew said. "There are all sorts of opportunities, especially with modern electronics. The strides that are being made with Internet are going to have us in communication with everybody, sooner rather than later.'' Mr. Michel Drew