LATAM: The Other Side of the Road

In last year’s article (‘The Latin Landscape and its Moral Compass’, IFC Review 2013) I wrote about the culture of ‘confianza’ that is a fundamental element of the Latin character and how the need for transparency, driven by developed countries, has been received with reluctance by most Latin Americans conducting legitimate business without any trace of improper behaviour. Add to this the double standards practised by developed countries (see ‘Latin Economies in 2012: Toads and Tortillas’, IFC Review 2012) and you can appreciate their position.

After all, the Tax Justice Network, a coalition of researchers and activists that focuses on tax issues, including evasion, and which has criticised frequently the corporate regime in Delaware in the United States of America, has now said that the Marshall Islands, once under the administrative control of the US, and which still retains full authority and responsibility for the islands’ security and defence, is one of the five most secretive tax havens. The islands’ corporate registry, in fact, is operated by a private US company in Reston, Virginia; it is difficult to see how the US would not be concerned by this, if one is to reconcile it with US policy towards Switzerland, the Cayman Islands and other foreign finance centres.

Culture, not that of the secretive kind, is once again featured this year. This time it concerns the cultural differences of countries, which is seldom featured in the programmes of offshore financial services conferences. Specifically, I am addressing the case of Latin America where, for nearly four decades, I have watched the uninitiated stumble and fall. I spoke on this subject at meetings in Monaco and at Oxford University last year and did so again at an offshore business conference this March in Panama. Perhaps it is because the connection between financial services and culture is not so obvious that a link is never made.

‘Corporate-culture’ is spoken of constantly but should not be a priority for those embarking for the first time on a journey to Latin America with a suitcase packed with clothes and a head full of business ideas. An understanding of Latin American culture is essential to anyone’s success, be it banking, investments, or the many facets involved in asset protection and succession planning.

Firstly, some perspective. W H Auden argued that: “We would rather be ruined than changed; we would rather die in our dread than climb the cross of the moment and let our illusions die.” Change, in other words, the ability to adapt, is important for those seeking opportunities, be it investments or clients, in Latin America; they must change their normal approach and, most certainly, rid themselves of as many illusions about Latin America as they can. I am defining Latin America as all those countries that have either Spanish or Portuguese as their first language.

Foreign practitioners must appreciate that, for example, Ukrainians and Uruguayans do not just speak a different language. It is important to remember that even if we are travelling in the same direction, some cars drive on the right and others on the left, and the view one sees out the side window can be very different.

Handling cultural differences is a skill the value of which, like gold, is hidden, especially if you are dealing with professionals in service-based economies. Unlike gold, however, its value never fluctuates and its relevance has equal application in Australia as it does in Zambia and every country alphabetically in between. And as a foreigner myself to Latin shores, not to mention several other ones in the past too, I am able to argue the point that Rudyard Kipling made: “What should they know of England who only England know?” We are so often poor judges of our own culture as seen through the eyes of others and as a British linguist, Richard Lewis, and a Danish headhunter, Kai Hammerich, argue in their book Fish Can’t See Water: One may look but fail to see.

How true that is. Walmart entered the German market in the 1990s with disastrous results. ‘Have a nice day’ greetings at the door coupled with an Americanisation of the business led to losses of US$150 million dollars a year until they sold out to a German rival. During Britain’s empire, it is worth remembering that the East Indian Company dominated a continent with only a few hundred men by adapting to local customs.

What is considered important changes in every cultural zone: in Asia it is the importance of face as well as harmony; in Northern Europe and North America time-keeping and candour prevail; in Southern Europe and Latin America emotion and sociability rule the day. Let me say, however, that generalisation is only a guide and I have found it foolish to have a stereotype approach.

Shrugging off the Past…

From being isolated and introspective – what has been compared to the Japanese ‘Galapagos Syndrome’ – Latin Americans have emerged from frequent tumultuous times, which have forged part of their character and who have been described as extrovert, talkative, inquisitive and impatient. A portrait of the past can be found in Cien Años de Soledad, One Hundred Years of Solitude, written by Gabriel de la Concordía García Márquez, a Colombian who received the Nobel Prize for Literature in 1982. Although the novel is, in many respects, a fictional fantasy, it reminds us how the thriving population of Aztecs and Incas were confronted by the European explorers who brought with them their technology and capitalism.

It was written in 1967 and reflected the political status of the day. There were frequent changes in government when countries seemed unable to produce one that was stable and because of these changes, dictatorships were spawned. It tracks the histories of civil war, plantations and labour unrest, amidst the struggles with colonialism, which have shaped the views and attitudes of Latinos. They live with the ghosts of their past and it is not hard to understand why they have never completely trusted their governments, often transferring assets to other countries for safekeeping against expropriation and political uncertainty.

No article on Latin America can be complete without discussing Brazil and in May the country will hold its presidential election, the result of which will be far-reaching, more so than the other ones this year in Colombia and Uruguay. It is somewhat ironic therefore that the largest country in South America does not feel part of it, so when reflecting on doctrines of American exceptionalism, one should also think of Brazil, which together with the US represent the two biggest economies in the Americas.

Thinking about the view from the roadside, I recall Tom Jobin, who co-wrote the famous song, ‘The Girl from Ipanema’, saying: “New York is great, but it’s a mess; Rio is a mess, but it’s great”.

Eric Hobsbawm, the late British historian, once wrote: “Nobody who discovers South America can resist the region, least of all if one’s first contact is with Brazil”. Brazilians use the word ‘grandeza’, or greatness, to describe their country, and by some accounts it is the world’s sixth-biggest economy, and sees itself destined for empire.

Boldness and confidence, however, needs to be kept in check. There have been many empires but all should heed the words of the poet Percy Bysshe Shelley on the subject of their permanence: “My name is Ozymandias, King of Kings: Look on my works, ye mighty, and despair!"   His works were all decayed, his civilisation gone, both falling under the destructive power of time. History is awash with hubris and over-reach that either ruined empires or nations; Afghanistan, in fact, known as the graveyard of empires, has seen invaders attempt to conquer it, but still it remains unchanged; it is not Afghanistan, however, that must change, but those who do not understand it.

… Facing the Future

The previous century belonged to America. What about this one? China is on everyone’s lips but in Latin America the country mentioned as frequently is Brazil. The whole of South America is destined to fall within Brazil’s influence to some degree and Brazil has made it clear that it will be very comfortable in the role. It sees the rim of a wheel encircling the continent whose hub is Brazil. The IMF once loaned US$42 billion to Brazil – one of its biggest–ever rescue packages. Now we find the Brazilian government has loaned US$14 billion to the IMF.  

Latin America has left obscurity behind with a new sense of strength and determination. Brazilians may have grandeza, but the reality is that Latinos in general are patriotic and proud. Cecil Rhodes, the founder of the country where I spent my youth, said that “to be born an Englishman is to win first prize in the lottery of life”. The peoples of South America share his sentiment in the love of their own particular country. Interestingly, not every Panamanian likes to be regarded as Central American; you will hear reference being made rather to the Isthmus of Panama by many of them.

Actually, doing business in Latin America can be a bit of a lottery. Nepotism has its place in the culture and explains the large number of family businesses, although the younger generation is more inclined to concentrate on business practicalities outside the family circle. And although punctuality is not key, the importance of time in the context of negotiations is. Business is never rushed. ‘Small talk’ is important and as the Uruguayan writer Eduardo Galeano puts it: “We Latins are known for jabbering on”.

That’s something I do not wish to do. So let me end with a comment about the economic ills that began in the US, infected Europe, particularly its southern countries, then were followed by concerns, which continue, over China’s economy, with its growing middle class confronting a government promoting state-led capitalism. The ripple effect has been felt in Latin America, which has 30 per cent of the world’s fresh water; that is what, metaphorically, most economies there will be treading in 2014.

Regional countries with houses built of straw, rather than brick, will suffer most from any attendant turbulence. But whatever the social, political or economic climate may be this year, I rely on Joseph Conrad, that Polish novelist, sailor and sage, who always advocated perseverance when encountering rough seas: “Facing it – always facing it – that’s the way to get through”. So it is with business in Latin America and, at the same time, one must be prepared to climb the cross and adapt.

Derek Sambrook
Derek Sambrook is a member of the Society of Trust and Estate Practitioners in the United Kingdom and obtained the Trustee Diploma of the Institute of Bankers in South Africa in 1973, becoming a Fellow of the institute in 1996. He emigrated in 1977 from Rhodesia (now Zimbabwe) where he was branch manager of a trust company and continued his profession in North America (Miami), Europe (including London and the Channel Islands), and the Caribbean (including the Cayman Islands). He has lived in Panama since 1996 where he is the Managing Director of Topaz Services, S.A. (www.trustservices.net), a Panamanian financial services company. He was Treasurer of the British Chamber of Commerce Panama for several years. Mr Sambrook‘s regulatory experience began in the corporate division of the Rhodesian (now Zimbabwe) Ministry of Justice (1965-1970) and subsequently he was appointed by the British government (1989-1992) as the first Bank, Trust Company and Insurance Regulator in the Turks & Caicos Islands, British West Indies; he established a regulatory body and drafted trust and insurance laws, banking and other regulations including licensing guidelines. As a direct result of his innovative captive insurance law, the Turks & Caicos Islands at the end of his contract had more than 5,000 producer-owned reinsurance companies and was the leading domicile in the world for this service. During his tenure he was also an affiliated member of the Latin American and Caribbean Banking Commission and Chairman of the government’s Offshore Financial Services Committee. He was a columnist for a leading United Kingdom offshore financial journal for over 15 years. His newsletter, Offshore Pilot Quarterly, has been published since 1997. In 2021 he celebrated 50 years in the trustee profession.