Illustration: Michael Mucci.

Investigators for the Australian Tax Office and their lawyers were told by a judge last year that if they travelled to the Cayman Islands they could be locked up.

A year earlier the Tax Office had suffered a setback. It lost a case in the Grand Court of the Cayman Islands. This was the first lawsuit, and apparently the only one, to test whether a Tax Information Exchange Agreement (TIEA) actually worked. It didn't.

After years of gabfests, conferences, issues papers and symposiums, when the Australian government finally sought to uphold its rights under an international tax treaty and obtain a bit of information, thwack, it was promptly thwarted by a judge in the Caribbean.

"The Commissioner's staff and lawyers would be exposed to risk of incarceration should any of them decide to visit the Cayman Islands," wrote Justice Nye Perram of the Federal Court in a judgment after the Caymans defeat. The Caymans judge ordered the relevant documents, now in the hands of the Australian court, destroyed.

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As G20 leaders prepare for their talkfest in Brisbane in the coming week they would do well to ponder this. Even if they were to talk day and night for a year, sally forth with a shipping container brimming with white papers, sign a slew of resolutions and an array of treaties on top, it would hardly put a scratch on the Leviathan that is global profit shifting.

The key is to stop the money from getting to the tax haven in the first place, properly enforce Australia's existing tax laws and enact some new ones not try to get it back from a low-lying island in the Caribbean. The G20 does not make laws, or enforce them; sovereign nations do.

The idea of a multilateral solution plays straight into the hands of the perpetrators, the multinationals, their lawyers and the big four. You can almost hear PwC, Ernst & Young, Deloitte and KPMG chuckling about the G20 from their city eyries. While solemnly pontificating to governments on tax policy, in the very next breath they go about showcasing the latest in tax avoidance fashions to the world's premier tax cheats.

The Caymans Islands is the fifth largest banking centre in the world; its hundreds of banks and insurance companies are the stewards of trillions in the wealth of other nations. In a fiscal ring-a-ring-a-rosy, they even help prop up OECD bond markets with their surfeit of capital. The overflow has to go somewhere; why not buy government bonds in the countries where the profits originated?

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Cayman Islands court leaves tax agreement in tatters