Bermuda was "grey-listed" by the Organisation for Economic Co-operation and Development (OECD)because of its lack of follow-up action since the Island's commitment to international tax transparency standards nine years ago.

That was the explanation given by Jeffery Owens, the director of the OECD's Centre for Tax Policy and Administration, who said yesterday that the list was drawn up on a factual basis and that Bermuda had not done enough to reach the highest level.

His comments come after Finance Minister Paula Cox said last week that she believed the Island deserved to be in the top tier of OECD-ranked countries, given its commitment to OECD standards in 2000 and tax information exchange agreements (TIEAS) negotiations that were well advanced when the list was drawn up on April 2.

The grey list of countries that have committed to OECD standards but have not yet implemented them includes countries like Liechtenstein, whose secretive banks have been the subject of a massive international tax evasion probe, and Switzerland, which committed to OECD standards only last month.

Speaking with The Royal Gazette at the OffshoreAlert Annual Financial Due Diligence Conference in Miami, Mr. Owens said the list had nothing to do with longevity of agreement to meet OECD standards, but was focused on actions.

"Bermuda committed in 2000, but there has not been enough actions taken since that time," Mr. Owens said. "We're not interested in just commitment, we want to see tax information exchange agreements agreed and implemented swiftly and effectively."

Some countries alongside Bermuda on the grey list had committed only recently, but had make rapid progress, he added.

"Belgium, for example, has written to 46 countries in the space of a few months, and is working to update its treaties very quickly.

"I anticipate they will have 20 to 30 agreements very quickly. They are working swiftly and effectively."

Mr. Owens gave Bermuda credit for its use of a multilateral approach to TIEA negotiations, in the successful conclusion of seven TIEAs in one go, with the Group of Nordic Countries.

"This has given Bermuda seven quality agreements and this model of negotiation makes good use of scarce resources,"

Mr. Owens said. "It's something we would like to see more countries do."

The model was also adopted by jurisdictions such as the Cayman Islands, Guernsey and the Isle of Man, all of whom managed to sign their seven TIEAs before the OECD list was updated, while the Bermuda agreements were not signed until two weeks afterwards.

Bermuda now has 11 TIEAs signed, one short of the minimum number required for "white list" status by the OECD. It has agreed two more, with Germany and the Netherlands, which are due to be signed in the coming months. The two-day conference, which has attracted 263 delegates involved in multiple aspects of offshore financial centres, from lawyers to government regulators, from due diligence experts to 13 agents of the US tax authorities.

In a keynote address the conference hall, Mr. Owens said realisation of the OECD's aims would create a world in which "onshore and offshore financial centres will compete not on the basis of what secrecy they provide, but on what services they provide".

The 30 TIEAs signed internationally since last November were more than had been agreed over the previous two years, he added.

The OECD did not consider the minimum number of 12 TIEAs a "magic" number, but merely a sign of satisfactory progress, Mr. Owens said.

"We are as much concerned about the quality of these agreements as the quantity," Mr. Owens said. "Twelve TIEAs between tax havens wouldn't count, for example. Similarly, if a country signs 12 agreements, we don't expect them to say, 'That's it, we're going to the beach'.

We expect countries to continue to negotiate more agreements after they've reached 12."And there will be continuing assessment of how these agreements work in practice. We are interested in real change."

The OECD project to achieve international tax transparency started in 1996. Progress had sped up rapidly in recent months for a clutch of reasons, Mr. Owens said, particularly the Liechtenstein scandal, which had led to some 40 countries investigating tax evasion that ran into billions of dollars through a bank in the tiny alpine territory.

The initially thwarted US effort to get information from Swiss bank UBS about suspected tax dodgers was another major factor, as were the needs for extra government revenue because of expenses brought about by the financial crisis, and the arrival of a new administration in the US that had promised harsher action against tax cheats.

Mr. Owens also explained that an OECD definition of a tax haven was a jurisdiction with no or nominal tax, a lack of information exchange, a lack of transparency, and no substantial local activities. "Low tax alone does not classify any place as a tax haven," Mr. Owens said. "The key thing is to have effective exchange of information.

"Countries have the right to tailor their tax systems to their own needs. But information is the lifeblood of any tax administration and we want to ensure that tax authorities can gain access to the information they need."