Financial Transparency Coalition

PRESS RELEASE

Investigations vindicate the need for strengthening of financial systems across the globe

NAIROBI, 6 April 2016 – The recent revelation by the International Consortium of Investigative Journalists (ICIJ) of a systematic and complicit scheme of tax evasion involving major world leaders (past and present), wealthy individuals and a host of multinational corporations (MNCs) is welcome news for Tax Justice Network –Africa (TJN-A) in its fight against illicit financial flows (IFFs) out of Africa.
The exposé dubbed “the Panama Papers” follows a year of sifting through 11.5 million documents that uncover a systematic exploitation of weak financial, political and legal systems across the globe by unscrupulous individuals and multinational corporations in over 200 countries and territories for the evasion of taxes and concealment of sources of income. The records which cover nearly 40 years of operation (from 1977- 2015) indicate that there are 214,000 offshore holdings managed by the little-known but powerful Panama law firm, Mossack Fonseca.

The Panama papers serve to corroborate TJN-A’s views on the depth of corruption and impunity through which the global financial, political, and legal frameworks are operating to further impoverish and reinforce inequality in Africa. The revelation shows a complex network stretching from Senegal to South Africa implicating 18 high-powered individuals in the process.

Deeply rooted corruption
“The Panama Papers reveal the complex and murky nature of the global financial architecture where a multitude of forces are complicit in the systematic undermining of laws and regulations resulting in billions of dollars lost from poor countries in Africa. The global financial crises of 2008 and the Panama Papers of 2016 only serve to reinvigorate our (TJN-A’s) call to action against illicit financial flows to tax havens and for greater policing and transparency of the global financial architecture,” says Jason Braganza, TJN-A’s Deputy Executive Director.

According to the High Level Panel Report on IFFs, it is estimated that Africa loses approximately USD 50 billion annually in illicit financial flows resulting from illegal activities enacted by individuals and MNCs. Global Financial Integrity (GFI) further estimates that Sub- Saharan Africa lost over USD 675 billion between 2004 and 2013 in IFFs. For a continent that faces a multiplicity of challenges such as severe poverty and insecurity, this is significant and is further magnified given the resource constraint facing many countries on the continent.

TJN-A has taken a strong position in advocating for more stringent and punitive measures to restrict and discourage individuals and multi-national corporations from exploiting loopholes in African country tax and legal frameworks. In line with the CSOs recommendations on the Addis Ababa Financing for Development Agenda, African governments should call for the establishment of an intergovernmental tax body with a decision making role for African nations and push the international community to provide the resources necessary to allow the body to operate effectively.

Need for a global tax body
States should also commit to national implementation and push for global commit to making publicly available beneficial ownership registries for all legal persons and arrangements, carry out annual country-by-country reporting by multinational companies operating in their territory and make the information publicly available and establish a common standard of multilateral automatic information exchange, with differentiated responsibilities for developing countries which have less capacity to provide information over a specified time period.

The Network views the losses due to IFFs as having a damaging impact on the affected countries starving them of much- needed resources to finance development and social projects such agriculture, education, health, and infrastructure.

The Panama Papers are an indictment of the failure of the international financial architecture to protect poor countries from greedy individuals and MNCs who exploit and extract resources from these countries. TJN-A will increase its efforts in ensuring the commitments made in Addis Ababa Financing for Development Agenda are followed through by international donor governments. Through our #StoptheBleeding advocacy campaign we will continue to work with all stakeholders to ensure more robust global and national tax legislative frameworks are in place to curtail the practices that lead to IFFs from the continent.

For enquiries:
Michelle Mbuthia
mmbuthia@taxjusticeafrica.net
+254724994796