The American Con Man Who Pioneered Offshore Finance

Wallace Groves was a financier and bon vivant who had little use for the law or social norms.

He turned the Bahamas into a powerhouse of the global economy and a model for what we now call the offshore financial system.

He pioneered the model for turning British colonies with lax financial regulation and minimal taxation into snug harbors for foreign capital seeking refuge from other countries’ laws.

The Economist described the Bahamas as “the archetype of the tax haven’t.” Local publications billed it as the “Little Switzerland of the Western Hemisphere ” Hundreds of American , Canadian , and Swiss banks opened branches in the capital city of Nassau .

Yet the country’s Gini coefficient for household wealth—a measure of economic inequality—is among the highest in the world.

As the British empire in the Caribbean began to break up in the late 1960s and early ’70s , many of the islands turned to Groves ’s model as a way to gain economic self-sufficiency.

Within 20 years , by revamping itself along the Bahamas ’ lines, the Caymans went from being neglected dependency of British Jamaica to surpassing the per capita income of Great Britain itself.