Financial Transparency Coalition

The Guardian just published a fantastic article citing concerns from the OECD about Ghana’s growing popularity as an offshore financial center.  The OECD now openly warns that Ghana’s potential status as a tax haven could facilitate corruption.  From the article:

Ghana has had a stern warning from the Organisation for Economic Co-operation and Development to ensure that its emergence as a tax haven does not fuel corruption and crime in west Africa.

Ghana is becoming an offshore financial centre but Jeffrey Owens, head of the OECD’s Tax Centre, said: “The last thing Africa needs is a tax haven in the centre of the African continent.” Ghana wants to become a west African financial hub, taking advantage of its emergence as an oil producer. This year the first of Ghana’s 3.2bn barrels will begin to flow from its waters.

The OECD is in talks with Ghana to guarantee the country “adheres to the highest standards and integrity”. Owens said Ghanaian officials “are aware of the risks they are running”. Barclays Bank has been advising Ghana’s government on establishing its financial centre.

Wilson Prichard, a researcher at the Institute of Development Studies who has closely followed Ghana’s development as an offshore centre, said: “Aside from the general social costs associated with the operation of tax havens globally, in the absence of a very strong regulatory framework and very strong standards of transparency there’s a particularly high risk that a tax haven in west Africa, which is home to major oil wealth and high levels of corruption, could facilitate large-scale corruption and tax evasion, and pose a correspondingly large risk to good governance and economic growth in the region.”

It’s nice to see an influential body like the OECD making the connection between secrecy jurisdictions and corruption.  However, while I definitely agree with the OECD that it would be bad for Ghana to become a tax haven, I find it incredibly interesting that when a European state decides to become an offshore financial center, nobody talks about the potential corruption risks.  However, now that an African state is moving in that direction, everyone is up in arms about “corruption.”

Indeed, Ghana being a tax haven would facilitate corruption, and that’s bad.  But, as the Tax Justice Network points out, there are already 60+ tax haven/secrecy jurisdictions in the world which are currently being used by both government and corporate officials around the world for corrupt purposes.  Just because Switzerland doesn’t physically border an African country doesn’t mean that it’s not facilitating corruption within Africa.

Indeed, quite the country is true.  Just consider the case of Mobutu from the DR Congo.

It’s great that the OECD now wants to make the connection between corruption and financial secrecy.  However, they can’t pretend that this is only a problem in Africa.