G20 Summit: promised transparency measures must be enforced to have real impact
The Group of 20 leading economies (G20) today called on 11 secrecy jurisdictions to substantially increase their cooperation on tackling tax evasion, but failed to address the main users of tax havens by not committing to mandatory country-by-country reporting by multinational companies.
Non-cooperative jurisdictions offer safe havens for the proceeds of corruption, tax evasion and organised crime. Greater transparency in the activities of multinational companies (in every country they operate in) would reduce opportunities for hiding the proceeds of illegal activity that ends up in tax havens.
“Those who profit from financial secrecy will be very happy with the weak level of transparency agreed today. Although the G20 has acknowledged the need to tackle corruption and secrecy, they will have to step up their efforts in enforcing practical measures that force money-launderers and tax evaders into the full light of day,” said Angela McClellan, G20 Senior Programme Coordinator at Transparency International.
By failing to deliver on financial reform, G20 continues to tackle the symptoms and not the causes of the financial crisis
The current sovereign debt crisis demonstrates that the G20 have failed to meet their long-standing commitment, articulated at the April 2009 London summit, to sustainable financial reform and transparency.
Transparency International is calling for:
- Enhanced corporate transparency by obliging multinational companies to publish key financial and legal data in every country where they operate, including country-by-country reporting on revenues,
- Enhanced transparency of beneficial ownership of trusts and companies,
- Full implementation and enforcement of laws criminalising foreign bribery and prohibiting off book accounts, in accordance with the OECD Anti-Bribery Convention.
By committing to a new multilateral convention on tax information exchange the G20 have committed to facilitating mutual legal assistance, which can help authorities to follow the money. However, in order to be effective, the G20 has to ensure that tax havens join the new convention. It remains to be seen how effectively information exchange will be enforced under the convention.
If the G20 want to effectively tackle illicit financial flows like tax evasion, estimated at US $1.3 trillion annually by Global Financial Integrity, they have to mandate country-by-country reporting by multinational companies The Cannes summit set low targets for disclosure requirements of companies’ payments to governments on a country-by-country basis, even though stronger rules exist in the United States (the Dodd-Frank act) and Hong Kong, and have been proposed in the European Union.
The G20 has made some progress in its fight against corruption with the introduction in 2011 of new foreign bribery legislation in China, India, Indonesia, Russia and the UK as well as agreement on best practices for whistleblower protection.
Transparency International is the global civil society organisation leading the fight against corruption
Notes to editors
G20 Anti-Corruption Action Plan: After the G20 announced its anti-corruption action plan in November 2011, Transparency International joined other NGOs to call for its swift implementation, and has throughout the year laid out priorities and benchmarks to make sure that the G20 targets are concrete. The G20 goals were monitored by a working-group of government representatives, whose progress report was supposed to be approved at today’s summit.
Bribery: 2011 has seen new anti-bribery measures and legislation in the Russia, China, India, Indonesia and the UK. On 2 November, Transparency International released a report warning the bribery of foreign public officials and business partners is perceived as widespread in G20 countries, especially from Chinese and Russian companies.
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