Opacity’s Kryptonite?
June 16th, 2009
The Guardian newspaper is running a story today that says the UK government will push G20 ministers (who meet in Berlin next week) to adopt a new standard of financial reporting by multinational corporations. Under the plan, called “country-by-country reporting,” multinationals will be required to report income and tax paid in every jurisdiction where they operate.
The issue of tax dodging by wealthy individuals and multinational corporations (MNCs) has often been in the news over the last several months . At its meeting in London on April 2 the G20 focused on the use of tax havens by MNCs and President Obama has spoken of Ugland House in the Cayman Islands – where some 18,000 companies are said to be registered – as a “tax dodge.” As far as corporations are concerned, some estimates of the global value of off-balance sheet assets are said to be in the trillions of dollars. Indeed, the Wall Street Journal reported last November that Citigroup alone had over $1.2 trillion in assets not shown on its balance sheet.
If the UK plan is adopted and implemented it would be the beginning of the end of financial opacity – an opacity that facilitates not only tax evasion but also money laundering and terrorist financing.
The UK plan follows by just two days an outline for a new set of international standards of financial conduct that will be pushed by the G8. Dubbed the Lecce Framework (after the Italian city where the G8 finance ministers met last week), the plan will establish “a set of common principles and standards for propriety, integrity and transparency regarding the conduct of international business and finance.” Transparency is the key word there of course. Hopefully its not just window dressing – transparency is mentioned six times in the five paragraph document.
Stay tuned.