Financial Transparency Coalition

WASHINGTON DC – As international financial turmoil intensifies, G20 leaders of the world’s largest economies meeting in Cannes produced a final document that offers some limited hope for international financial transparency and meaningful action on tax evasion and aggressive tax avoidance.

“Governments around the globe are missing the funds necessary for promoting growth and combating poverty. But these funds haven’t vanished off the face of the Earth. They’ve simply been rerouted from public coffers to private pockets via aggressive tax dodging and grand corruption,” Raymond Baker, director of the Task Force on Financial Integrity and Economic Development commented today.

The OECD yesterday reported that a tougher crackdown on tax evasion could yield $100 billion with probably $1 trillion held illegally offshore.

“From Wall Street to the Acropolis people are voicing their anger on issues like job creation and pensions. Meanwhile, in poorer parts of the world people are worrying about the future of development aid for food and medicines. The G20 is taking slow steps forward but could still do more to tackle the endemic tax dodging and corruption that are keeping poor countries poor,” Baker continued.

The Task Force supports Indian Prime Minister Manmohan Singh, who during the meeting asked that the G20 take the lead on introducing automatic information exchange to herald a new era of transparent international financial relationships. It is unfortunate that G20 leaders didn’t heed his advice as the introduction of such a mechanism, in addition to welcome new anti-bribery measures in Indonesia, China and India could help bring about much needed transparency and go a long way towards ending the underlying problems of financial secrecy.

The Task Force is also encouraged that many jurisdictions are currently in the process of introducing “publish what you pay” mechanisms for the extractive industries. This will require companies to state the amount of tax they pay in each country where they work and would lessen the possibility of tax evasion or avoidance. We hope this measure will soon be adopted by all G20 countries and its scope broadened to include all industries and that they be required to report all profits, revenue, employee numbers and sales data.

The G20’s development working group recognised the link between poverty, illicit financial flows and secrecy jurisdictions. There was also an acknowledgement of existing work to encourage greater transparency in the tax affairs of major global companies.

We look forward to seeing more progress in the future by the G20 and other world leaders on implementing measures that shed light on who the beneficial (real) owners of companies are and that provide full disclosure on a company’s sales, profits, taxes paid and employee numbers in each country in which they do business”, Baker said. “The interests of rich and poor, developed and developing countries are all served by greater financial transparency and a clamp down on tax evasion.”

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Contact:

Dietlind Lerner
dlerner@financialtransparency.org
+1 202.577.3455

Nick Mathiason
nmathiason@financialtaskforce.org
+44 7799.3486.19