Statement by José Ugaz, Chairman, Transparency International
On the occasion of the April 13, 2016, conference at the Woodrow Wilson Center, Washington DC, ahead of the May 12, 2016, international Anti-Corruption Summit in London.
Preventing corruption, ending impunity and empowering victims and citizens to report corruption and secure justice are overarching issues to be addressed at the Summit in London, hosted by UK Prime Minister David Cameron.
The Panama Papers have demonstrated that secrecy in the financial system is one of the most critical issues that leaders must address on May 12, with clear timetables for concrete action. Secrecy jurisdictions and the opportunity to open anonymous shell companies and bank accounts make it too easy for the corrupt and criminal to hide their identities and transfer stolen wealth.
Equally, lawyers, accountants, real estate agents, bankers and other “professional enablers” must not be complicit in the transfer of corrupt cash. Not all of what the "enablers" do is illegal. But as a system, the widespread use of anonymous she'll companies facilitates much of what is illegal.
Momentum to date
The use of shell companies is not a new issue.
- A 2011 study by the World Bank found that 70% of grand corruption cases involved companies camouflaging the identities of corrupt politicians. A report from the OECD on 450 cases of transnational bribery demonstrated that in a considerable amount of cases corporate vehicles were used as a means to hide illicit transactions.
- In 2013 the G8 committed to enhance beneficial ownership transparency. In 2014, financial transparency was described as a “high priority” issue for the G20 and they too adopted principles on beneficial ownership transparency.
However TI research has found that little has been done to implement those commitments.
- Two countries (South Africa and Brazil) have yet to even adopt a legal definition of beneficial ownership. In eight G20 countries banks can still go ahead with making a transaction even if they can’t find out the identity of the real person behind the money.
Act now: the solutions are direct and pragmatic
All countries should make it harder for the corrupt to hide and transfer stolen wealth. Therefore, countries should agree individually and at the London Summit the following actions:
- Governments must investigate and prosecute any professional enabler found knowingly complicit in the transfer of stolen funds.
- Government should collect and publish beneficial ownership information of all companies incorporated in their jurisdictions in central registries.
- Governments should require any company, whether incorporated domestically or abroad, bidding for public contracts or seeking to purchase property to publicly disclose its beneficial ownership information.
- Governments should support the efforts of Transparency International, Open Corporates, Open Contracting Partnership, Global Witness, the Web Foundation, and the One Campaign in their efforts to develop a global public beneficial ownership register.
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