Countries pledge more transparency to prevent corruption

Photo source: bbc.com

The summit communiqué included new commitments on beneficial ownership information, as a number of countries, including Nigeria, Kenya, and France, pledged to create publicly available registers of ownership information. These registers, which must be freely accessible to the public in open data formats to be effective, would disclose the real person or people ultimately in control or benefitting from a company.

“More and more governments are waking up to calls from their citizens who are no longer willing to put up with the inequality made possible by financial secrecy,” said Koen Roovers, lead EU advocate for the Financial Transparency Coalition (FTC). “Public registers of the true owners of companies would help detect and deter corruption and tax abuse and restore trust in the global financial system.”

A number of countries also declared support for public country-by-country reporting on multinational corporations, which would help identify where companies are paying taxes and if they are paying their fair share.

“Twelve governments, more than half of them OECD members, expressed support for the development of a global standard of public country-by-country reporting for multinationals,” said FTC policy coordinator Pooja Rangaprasad. “Perhaps the time has come for the OECD to take a second look at its own standards for corporate reporting, which keeps this information out of the hands of citizens.”

According to FTC director Porter McConnell, the Panama Papers further confirmed that financial secrecy is a potent tool helping to fuel illicit flows around the globe.

“The Panama Papers left virtually no country unscathed,” said McConnell. “The data showed that a shadow financial system is available to the rich and powerful around the world, and individuals from rich and poor countries alike turned up in the documents. The leaks revealed that Mossack Fonseca used the British Virgin Islands, a UK overseas territory, more than any other jurisdiction in setting up shell companies.”

“When talking about corrupt politicians stealing assets from their country, it is important to note that the crime does not take place in a vacuum,” added McConnell. “Jurisdictions that are all too willing to accept dirty money, due to lax disclosure laws or high levels of secrecy, are simply on the receiving end of a corrupt bargain. And it is facilitated by lawyers and accountants, who are the gatekeepers of coveted financial centres, yet there are only a few independent controls to make sure that they are not dealing with dirty money.”

As the Panama Papers showed, highlighting the role of enablers is key to tackling corruption and tax abuse.

The London summit, which brought together the leaders of 42 countries, aimed to discuss measures to curb corruption and to galvanise global action on the issue.

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