Financial Transparency Coalition

The Anti-Corruption Summit hosted by Prime Minister David Cameron has started today and will continue through tomorrow. Heads of State, business leaders and civil society representatives will be in attendance with an aim to “expose corruption, punish perpetrators, and drive out the culture of corruption.”

And this could not be more timely.

Cameron has been developing the summit for the past year, but in the wake of the recently released Panama Papers, those gathered will be forced to address issues that have come to the forefront in the wake of the leak.

About a month ago, the so-called Panama Papers sparked international uproar when the International Consortium of Investigative Journalists (ICIJ) released a months-long investigation into millions of confidential files belonging to Mossack Fonseca, a Panamanian law firm.

The files unearthed a window into the shadow financial industry, which provides wealthy and powerful elites with the secrecy needed to avoid paying taxes or conceal their identity. The files didn’t even spare the summit host, as David Cameron’s father was wrapped up in the investigation.

The leak was a loud, and much-needed, wake up call for governments and policy makers around the world, who far too often fail to address the underlying issues around financial secrecy. More shockingly, it showed that many of those responsible for creating and enforcing the law were potentially using financial secrecy to skirt the very same regulations.

This week, more than 300 top economists from around the world came together in an open letter publicly criticizing the existence of tax havens and urging world leaders to take the agenda of this summit seriously.

Jeffrey Sachs, director of Columbia University’s Earth Institute and an adviser to UN secretary general Ban Ki-moon questioned the economics of tax havens:

Territories allowing assets to be hidden in shell companies or which encourage profits to be booked by companies that do no business there are distorting the working of the global economy…If the UK and US and the European Union as a whole decided on Thursday at the UK conference that enough is enough … there could be a phenomenal change in a very short period of time.

In the past few weeks leading up to the summit, Cameron has proposed various methods to undercut corruption, the most recent of which being a global anti-corruption agency designed to track dirty money and crack down on tax evasion. However, it would be solely reliant on other state and cross-border organizations and would have no law enforcement power of its own.

But one step countries at the summit could take would be to create public registers of beneficial ownership information, so that we’re able to tell who the real owners behind companies actually are. Right now, it’s far too easy for criminals, corrupt politicians, and tax evaders to hide behind the anonymity that anonymous shell companies provide.

And there’s been some encouraging momentum on this over the last few weeks:

• At the Open Government Partnership (OGP) discussions in Cape Town last week, South Africa announced a National Action Plan (NAP) that includes a high-level commitment to creating a public register of beneficial ownership information.
• Nigeria has assured that the establishment of a publicly accessible ‘beneficial ownership’ register is one of the areas Nigeria would explore in support of the forthcoming London Anti-Corruption Summit.
• Australia commits to creating a public register of beneficial ownership information

Public beneficial ownership registers are an important tool to “expose corruption, punish perpetrators, and drive out the culture of corruption”, and there needs to be a greater level of accountability and transparency if we hope to bring an end to the corrupt tax practices of the wealthy and powerful.

This week, it is essential that those present at the summit have a genuine conversation about who and what are the true causes of corruption, and what is necessary to combat these forces.