Financial Transparency Coalition » Blog http://www.financialtransparency.org Fri, 31 Oct 2014 20:41:06 +0000 en-US hourly 1 http://wordpress.org/?v=3.7.4 Finding the Money: how capping illicit flows can spur development http://www.financialtransparency.org/2014/10/31/finding-the-money-how-capping-illicit-flows-can-spur-development/ http://www.financialtransparency.org/2014/10/31/finding-the-money-how-capping-illicit-flows-can-spur-development/#comments Fri, 31 Oct 2014 20:38:03 +0000 http://www.financialtransparency.org/?p=25569 ODAvsIFFAs the deadline for the Millennium Development Goals looms, policy makers worldwide have begun discussing a post-2015 development process to formalize new Sustainable Development Goals (SDGs). While targets have been discussed, creating a comprehensive financing framework remains essential to the process.

United Nations Secretary General Ban-Ki Moon elaborated on the importance:

“We have three priorities for the year ahead (…) First, we must accelerate our efforts to achieve the Millennium Development Goals. Second, we have to agree on a transformative post-2015 development agenda. Third, we need to achieve a meaningful universal climate agreement in Paris next year. Financing is one of the keys to succeed in all these endeavors. It will be at the heart of the political agreement that Governments have to reach for a successful sustainable development agenda.”

The success of the SDGs depends on how effectively and efficiently the world’s countries can mobilize the resources necessary to meet substantial future targets. But the current global economic climate has put pressure on major donor countries to reduce the amount of official development assistance (ODA) that goes to developing nations. In the face of this reality, one question looms large overhead: how are developing nations expected to finance the SDGs?

While there always seems to be a discussion reserved for asking how to make the aid that is given more effective, one potential source of sustainable revenue in the developing world could come from reducing illicit financial flows (IFFs). IFFs refers to money that is illegally earned, transferred or utilized, and includes money flows relating to corruption, tax evasion, organized crime, and trade mispricing.

During the 2014 Annual World Bank/IMF meetings, global leaders met to discuss the role of IFFs in the development process. In a panel titled “Illicit Financial Flows and the Post-2015 Development Agenda”, Dr. Atiur Rahman, Governor of Bangladesh’s Central Bank, stressed the importance of domestic resource mobilization in light of declining ODA. He also stressed the necessity of combating corruption. The post-2015 Sustainable Development Goals will require massive mobilization of new investment resources for developing countries, as emphasized at the forum by Dr. Rahman. The point was echoed by Hans Brattskar, State Secretary for International Development from the Norwegian Ministry of Foreign Affairs, who said that “curbing illicit financial flows is the single most powerful initiative we can take to secure the right every country has to generate domestic resources.”

GDPinfographicAs illicit financial outflows often represent a noticeable portion of a developing nation’s gross domestic product, recovering this lost revenue should be a priority in the effort to achieve effective development finance streams. Not only will curbing IFFs reduce dependence on external loans and ODA, but it will also give nations a chance to build capacity and the institutional infrastructure necessary to combat corruption and trade abuses in the long term.

The UN Open Working Group on Sustainable Development Goals has already acknowledged the substantial role IFFs must play in the post-2015 process, and the group has proposed targets to (by 2030) “significantly reduce illicit financial and arms flows, strengthen recovery and return of stolen assets, and combat all forms of organized crime.” This firmly places the reduction of illicit flows as a key component of the sustainable development goals.  Targets like this, in addition to significant support from the international community to create global initiatives, will be key to laying the foundation for sustainable financing of development.

The World Bank Group panel has put IFFs at the forefront of the financing development agenda. Secretary Brattskar pledged that Norway would use its role as co-chair for the Financing for Development process to put illicit financial flows squarely at the center as they prepare for next year’s conference in Addis Ababa, Ethiopia. While the future remains to be seen, the case for curbing illicit flows is powerful, the numbers are alarming, and the call to action is very clear.

 

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How Europe’s Investment Bank flouts its own tax haven policies http://www.financialtransparency.org/2014/10/31/how-europes-investment-bank-flouts-its-own-tax-haven-policies/ http://www.financialtransparency.org/2014/10/31/how-europes-investment-bank-flouts-its-own-tax-haven-policies/#comments Fri, 31 Oct 2014 15:25:15 +0000 http://www.financialtransparency.org/?p=25567 The European Commission has launched a series of investigations into the tax structures of companies like Google, Apple and Amazon, for fear that they are siphoning off tax revenue from Europe.

Far less attention has been paid to the role of institutions like the EU-backed European Investment Bank (EIB) in financing this offshore trade, particularly when it comes to developing countries.

Could this change? The Tax Justice Network’sIllicit Finance Journalism Programme has discovered that hundreds of millions of euros have flowed to companies linked to the secretive British Virgin Islands (BVI) though an Egyptian private equity fund, Qalaa Holdings.

The full investigation was published in a number of European and African publications, and it reveals some worrying loopholes in the EIB’s policy on offshore finance.

According to the EIB, the bank was able to knowingly send hundreds of millions of tax payer backed funds to companies controlled from the British Virgin Islands, because in 2010 when the investments were approved they didn’t consider the BVIs a tax haven.

The EIB was using the OECD’s famous ‘empty list’ of tax havens, which by 2012 had just two tiny Pacific islands on it. This opened up potentially hundreds of billions of euros of tax payer funds being invested in loosely regulated tax havens across the world.

How many other investments like this the EIB made before the publication of the (slightly better but still deficient) Global Forum analysis of jurisdictions is a question the European Parliament may want to consider. The European Parliament’s International Development Committee has recently started putting together a report on tax havens and Linda McAvan, the chair, has promised to pass the TJN’s investigation onto the report authors.

There is also another question to consider here too. As Eurodad has noted, over 50% of funds that go to the private sector from DFIs go to the finance industry.

We all know that the finance sector is addicted to offshore – so why isnt the EIB and other institutions using some of that huge leverage they have to do something about it?

It was published today in the EU Observer here.  It is running as the front page splash in Germany’s Tagesspiegel today in both its print and online version here. The piece is also expected to be published on a progressive Egyptian news magazine, Mada Masr later, as well asDe Correspondent in the Netherlands, and in  The Observer, Uganda on Monday.

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Not an end to secrecy, but a first step in the right direction http://www.financialtransparency.org/2014/10/30/not-an-end-to-secrecy-but-a-first-step-in-the-right-direction/ http://www.financialtransparency.org/2014/10/30/not-an-end-to-secrecy-but-a-first-step-in-the-right-direction/#comments Thu, 30 Oct 2014 21:11:15 +0000 http://www.financialtransparency.org/?p=25560 5761956488_abc5734fc7_zA multitude of officials are heralding a new cross-border tax information exchange crafted by the Organization for Economic Cooperation and Development (OECD) as the end of tax evasion as we know it. Unfortunately, the truth may be a bit more ambiguous. Wolfgang Schaeuble, Germany's finance head, stated unequivocally that "banking secrecy in its old form has had its day." Others, from George Osborne of the United Kingdom to Michel Sapinof France echoed similar praises. While the reforms, which were discussed at a Berlin conference this week, are a big step in the direction of real financial transparency, the Tax Justice Network, a member of the FTC, has released a new report detailing their concerns with the plan, and why it's vital that we continue to push for stronger and more inclusive measures.]]> 5761956488_abc5734fc7_zA multitude of officials are heralding a new cross-border tax information exchange crafted by the Organization for Economic Cooperation and Development (OECD) as the end of tax evasion as we know it. Unfortunately, the truth may be a bit more ambiguous.

Wolfgang Schaeuble, Germany’s finance head, stated unequivocally that “banking secrecy in its old form has had its day.” Others, from George Osborne of the United Kingdom to Michel Sapinof France echoed similar praises.

While the reforms, which were discussed at a Berlin conference this week, are a big step in the direction of real financial transparency, the Tax Justice Network, a member of the FTC, has released a new report detailing their concerns with the plan, and why it’s vital that we continue to push for stronger and more inclusive measures. 

The OECD plan on automatic exchange of financial information is aimed at cutting down on individuals and companies hiding their money in foreign bank accounts. Currently, countries enter into bilateral agreements that are often “on request”, meaning that if a country believes individuals are hiding money in other jurisdictions, and thus evading taxes, the authorities must put in a request for the information.

This bureaucratic and time consuming process often ends in no information sharing at all, especially when the money is held in highly-secretive jurisdictions. The new system would allow for the exchange of this information automatically at designated intervals, but there’s some concern that developing and low income countries may be left out of the exchange, and they’re often among those most affected by illicit financial flows.

Markus Meinzer, one of the report’s authors, states his caution:

The new OECD standard on automatic information exchange is a big first step towards tackling illicit financial flows. However, serious obstacles to the inclusion of developing countries and a number of unresolved loopholes will prevent its effectiveness, allowing rich individuals with plenty of options to avoid reporting. Moreover, its narrow focus on tax evasion represents a missed opportunity in the fight against corruption and money laundering.

Meinzer, along with Andres Knobel, highlight many of their concerns in the full report, which you can download here.


Image used under Creative Commons Licensing / Flickr User Gobierno de Chile

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Feeding The 1%: new report exposes the disturbing world of agricultural investors, financial secrecy and land grabs http://www.financialtransparency.org/2014/10/29/feeding-the-1-new-report-exposes-the-disturbing-world-of-agricultural-investors-financial-secrecy-and-land-grabs/ http://www.financialtransparency.org/2014/10/29/feeding-the-1-new-report-exposes-the-disturbing-world-of-agricultural-investors-financial-secrecy-and-land-grabs/#comments Wed, 29 Oct 2014 20:13:01 +0000 http://www.financialtransparency.org/?p=25541 5377584938_356a5c688c_b The G8 and World Bank argue that the recent huge wave of private sector investment in agriculture increases innovation, jobs and food output. But is this correct? Forensic new research from influential campaign group, GRAIN suggests the opposite is true. GRAIN’s report, Feeding the 1 percent, produces evidence which indicates the avalanche of investment after the 2008 global food crisis is predatory and that investors have “little or no background in agriculture”.]]> 5377584938_356a5c688c_b

The G8 and World Bank argue that the recent huge wave of private sector investment in agriculture increases innovation, jobs and food output.

But is this correct?

Forensic new research from influential campaign group, GRAIN suggests the opposite is true.

GRAIN’s report, Feeding the 1 percent, produces evidence which indicates the avalanche of investment after the 2008 global food crisis is predatory and that investors have “little or no background in agriculture”.

It finds “a worrying picture emerges of what happens when speculative finance starts flowing into food production” when deals are scrutinised in detail.

Feeding the 1% also says a lot about the failure of governments to protect both their land and populations from this new class of investors who often seem more interested in maximising generous payouts to their directors and shareholders than increasing food production.

Disturbingly, many governments have granted an array of incentives to facilitate “dubious land deals and kick back schemes” that are resulting in undermining food production and pushing small farmers off their land without any debate.

In one such example a farmer in Sierra Leone who had his land taken tells GRAIN: “Only the chief, the member of parliament and ‘the white people’ knew that the agreement involved all of their land.”

GRAIN focuses on investments made by Indian billionaire Chinnakannan Sivasankaran – one of the world’s largest farmland holders.

His business strategy takes advantage of the so-called ‘commodities supercycle’ – taking advantage of rising populations and the resulting demand for resources.

Sivasankaran, like many investors, identifies Africa as the focus of all that demand and he is pouring his money in there now.

Through the Siva Group, the Indian tycoon is buying shipping lines, oil and gas reserves, mines and plantations. And he’s particularly big on palm oil. From Cameroon to Papua New Guinea, Indonesia and Sierra Leone, his ‘near term objective’ is apparently “to have control over a total of 200,000 hectares of plantable lands in each of at least four African countries and another 200,000 hectares in Papua New Guinea”.

A senior manager of Sivasankaran’s Siva Group is quoted in the report saying: “If you go to Liberia, the Liberian government issues you a concession, the local people don’t agree, the president of the country tells them that the government agrees so you must agree. If you go to Cameroon, again it is basically the government that gives you the land.”

According to GRAIN, many of these companies have failed to produce much food, yet curiously “have been very useful for shifting finance and debt around and paid their directors handsome salaries”.

GRAIN’s analysis suggests:

  • Siva Group is structured around a web of tax havens and shell companies. The two centres of this empire are Singapore and the British Virgin Islands, numbers 5 and 20 on the Tax Justice Network’s Financial Secrecy Index respectively.
  • Payment for major land concessions for oil palm development from Liberian companies equal to about 6% of the country’s entire land area was made to two offshore companies – where there is no record of who the beneficial owners are.

The report asks how the rights to such a large amount of land could have been acquired as Liberia was only just emerging from a brutal civil war and was still governed by a National Transition Government. Liberia’s Public Procurement and Concession Commission found the agreement in question contained “gross irregularities and non-compliance with the law” and the company involved had to renegotiate.

It appears that much of these complex land deals, acquisition rights and shares are more about gaining greater leverage in terms of credit and inter-company loans to expand and make even more land deals than solving the global food crisis.

Contrary to what glossy investor brochures may state, many of these ‘agricultural’ ventures have resulted in only a small fraction of its land concessions being brought into production. The company involved in the Liberia land deal has reported multi-million dollar losses year on year. So why did it pay its directors huge salaries over the same period?

GRAIN is a small international non-profit organisation that works to support small farmers and social movements in their struggles for community-controlled and biodiversity-based food systems.

Two of the report’s authors attended the Illicit Finance Journalism Programme – a four day training course combined with a pro-active mentoring service for participants run by the Tax Justice Network and supported by the FTC.

“I did a lot of digging through company reports that I probably wouldn’t have done or been able to do properly without having attended the IFJP and this is where a lot of really important info came out,” said GRAIN researcher, Devlin Kuyek.

This is a timely and excellent examination of ‘agricultural’ investors by GRAIN. It provokes a series of questions, not least: will today’s ‘agricultural’ investors improve the global food situation? And how long will it take the world to stop anonymous ownership and financial secrecy structures that are facilitating the sacking of nations in the name of addressing the global food crisis?


You can download their report Feeding the 1 percent here: http://www.grain.org/article/entries/5048-feeding-the-1-percent

Image used under Creative Commons License / Flickr User Lian Pin Koh

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Money Laundering: Too Important To Leave To The Experts Alone http://www.financialtransparency.org/2014/10/21/money-laundering-too-important-to-leave-to-the-experts-alone/ http://www.financialtransparency.org/2014/10/21/money-laundering-too-important-to-leave-to-the-experts-alone/#comments Wed, 22 Oct 2014 00:42:52 +0000 http://www.financialtransparency.org/?p=25536 Financial Action Task Force (FATF) – will be meeting in Paris. On the agenda is the adoption of a document on an issue that has major implications for the fight against crime, corruption and tax evasion around the world. It’s a shame nobody outside of this small circle of experts from governments and international organisations has had a chance to see the document before it comes out. According to the FATF website, at its upcoming plenary meeting the organisation will adopt guidance on beneficial ownership and company transparency. Beneficial ownership is the term used to describe who actually benefits from the assets and profits of a company. At the moment many countries allow the formation of shell companies with proxy directors which obscure the real (beneficial) owner. When people are allowed to hide their identity behind a shell company in this way, there is a risk of this advantage being used to hide illicit money.]]> This article originally appeared on the blog of Transparency International, a Coordinating Committee member of the FTC.

Starting tomorrow a group of government officials and experts belonging to the world’s leading anti-money laundering organisation – the Financial Action Task Force (FATF) – will be meeting in Paris. On the agenda is the adoption of a document on an issue that has major implications for the fight against crime, corruption and tax evasion around the world.

It’s a shame nobody outside of this small circle of experts from governments and international organisations has had a chance to see the document before it comes out.

According to the FATF website, at its upcoming plenary meeting the organisation will adopt guidance on beneficial ownership and company transparency.

Beneficial ownership is the term used to describe who actually benefits from the assets and profits of a company. At the moment many countries allow the formation of shell companies with proxy directors which obscure the real (beneficial) owner. When people are allowed to hide their identity behind a shell company in this way, there is a risk of this advantage being used to hide illicit money.

The FATF guidance matters because it “will assist countries to design and implement measures that will deter and prevent the misuse of corporate vehicles, such as companies, trusts and other types of legal persons and arrangements – for money laundering, terrorist financing and other illicit purposes.”

Corporate transparency of beneficial ownership is an essential measure to stop the abuse of shell companies by hidden owners. There is large and growing evidence to show that anonymous shell companies play a role in most major corruption and crime cases. Just last week, for example, it wasreported that 19 UK shell companies had been used to allegedly launder US$20 billion in illicit funds.

Although it is not the most well-known of international organisations, the FATF is a powerful inter-governmental body which sets global standards for the prevention of money-laundering and the financing of terrorism. Since its creation in 1989, the FATF has been highly successful in getting countries to sign up to its recommendations, with over 180 countries already having done so.

The FATF not only sets standards; it also evaluates how well countries are complying with them and can place laggards on “blacklists” and “greylists” if they are not up to scratch.

To what extent it has been successful in getting countries to comply with its recommendations, however, is less clear. The Organisation for Economic Cooperation and Development found in December 2013 that none of its 34 members is fully compliant. Other independent studies have questioned the effectiveness of the global anti-money-laundering system.

Despite these criticisms, the fact remains that the FATF is the go-to organisation when it comes to money-laundering, with impressive leverage over national governments. It has also updated and strengthened its methodology, which starting in 2014 will measure the effectiveness of countries’ regulatory frameworks.

Given that hidden corporate ownership is one of the key loopholes which is used to launder dirty money, it is a missed opportunity not to have shared the beneficial ownership guidance in draft form with the public and asked for comments: the FATF would have been surprised at the quantity and quality of responses.

The Financial Transparency Coalition, for example, brings together over 150 civil society organisations, as well as governments and thematic experts, and its members have developed significant expertise on the problem of hidden company ownership and its consequences. A strong consensus has emerged that the best way to tackle abuses is to create central public registries of beneficial ownership, which would allow authorities to easily identify the real owners of companies, greatly increasing the chances of criminals being caught.

At the recent annual conference of the Coalition, held last week in Lima, transparency in beneficial ownership was discussed on panel after panel, linked to issues as diverse as human rights, extractive industries and climate change.

The FATF has already taken significant steps to increase its transparency by publishing its reports and other guidance documents in full on its website. However, it only publishes after documents have been approved in final form.

The organisation should take its transparency a step further, making greater efforts to allow citizens to participate and comment during the process leading up to publication.

Citizens are the primary victims of the crimes which result in illicit money being laundered. They should be given the chance to contribute solutions to something that affects them directly.


Read this blog in Spanish here.

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EU Savings Tax Directive to be repealed? http://www.financialtransparency.org/2014/10/17/eu-savings-tax-directive-to-be-repealed/ http://www.financialtransparency.org/2014/10/17/eu-savings-tax-directive-to-be-repealed/#comments Fri, 17 Oct 2014 14:51:19 +0000 http://www.financialtransparency.org/?p=25531 Wall St. Journal reported:
“European Union finance ministers agreed Tuesday on a far-reaching crackdown on tax evasion that will bring the bloc’s standards on par with global rules by 2017, although Austria is getting an extra year to build up a data-exchange system with its banks.”
The DAC currently covers only EU Member states, while the EUSTD is extended by agreement to cover also a range of third countries in the EU’s orbit, including Switzerland and a bunch of British (and Dutch) tax havens. Both are systems ofautomatic information exchange (AIE), the new global financial transparency standard which TJN has been fighting for for years but only came into vogue in the past couple of years. The DAC was being beefed up to accommodate the new global Common Reporting Standards (CRS) led by the OECD. The CRS is another AIE system, which we have described as a vast improvement on a bad situation – but it still has various holes.]]>
This article originally appeared on the blog of the Tax Justice Network, a Coordinating Committee member of the FTC.

The EU Savings Tax Directive (EUSTD) has been the EU’s flagship transparency initiative since its introduction in 2003, and we have written about it on many occasions. It complements another EU transparency scheme called the Directive on Administrative Co-operation, which was beefed up this week, as the Wall St. Journal reported:

“European Union finance ministers agreed Tuesday on a far-reaching crackdown on tax evasion that will bring the bloc’s standards on par with global rules by 2017, although Austria is getting an extra year to build up a data-exchange system with its banks.”

The DAC currently covers only EU Member states, while the EUSTD is extended by agreement to cover also a range of third countries in the EU’s orbit, including Switzerland and a bunch of British (and Dutch) tax havens. Both are systems of automatic information exchange (AIE), the new global financial transparency standard which TJN has been fighting for for years but only came into vogue in the past couple of years. The DAC was being beefed up to accommodate the new global Common Reporting Standards (CRS) led by the OECD. The CRS is another AIE system, which we have described as a vast improvement on a bad situation – but it still has various holes.

Just a few days ago, the message was that the DAC and the EUSTD would continue complement each other. French Finance Minister Pierre Moscovici said at the press conference announcing the DAC’s extension this week (see about 3.00 minutes in on the video)

“Our objective is clearly to have a general principle of automatic exchange of information within the EU, without exception. The DAC in field of taxation already gives us a legal basis, but we should also move forward and settle the negotiation of the Savings Tax Directive as well as its extension to third countries.”

The idea had been that the DAC would incorporate the OECD’s CRS as its technical standards, while leaving the EUSTD to plug the gaps where the CRS has loopholes. But now, from an FAQ published by the European Commission:

“Q: Is the Savings Directive still relevant, given the new, full-scope automatic exchange now agreed by Member States?

A: The revised Administrative Cooperation Directive, agreed by Ministers yesterday, covers a wide scope of income and capital – including most of what is covered by the revised Savings Directive. Therefore, in order to have just one standard of automatic exchange and to avoid legislative overlaps, the Commission will now consider the repeal of the Savings Directive. Coordination of the likely repeal of the Savings Directive with the introduction of the revised Directive on Administrative Cooperation will ensure that we do not create or leave any loopholes for tax evaders. The Administrative Cooperation Directive is comprehensive and largely covers all areas that had previously been covered by the Savings Directive.”

If this happens then the DAC, we understand, is likely to adopt the role of the old EUSTD, as regards extending transparency to the third countries.

So it seems that things are in flux, and there may be some disagreements going on in there.

To be clear: the DAC covers a number of categories of income that aren’t covered, or aren’t adequately covered, by the OECD, so it adds value.

For the record, as regards another transparency scheme, the U.S. Foreign Account Tax Compliance Act (FATCA,) Moscovici added:

“we hope we [will] move forwards to agreement with third countries for full automatic information exchange with the EU, while in parallel we will be implementing the agreements that we just signed with the United States of America”

This statement by Moscovici raises question about the EU’s willingness to treat the US as another ‘third country’ to which to extend the information exchange system: we have in the past pointed fingers at Swiss chicanery by trying to wriggle out of this via various schemes such as cherry-picking countries to exchange information with. But we worry that the United States is, while hungry for other countries to provide it with data, much more reluctant to provide reciprocal data to other countries, raising the spectre of a large, rather monopolistic and still secretive offshore monster emerging on that side of the Atlantic.

Read more about Tax Haven USA here.

It is high time that the rhetoric that’s being applied to the likes of Switzerland is directed towards the United States.

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On the Eve of the Annual Conference http://www.financialtransparency.org/2014/10/13/on-the-eve-of-the-annual-conference/ http://www.financialtransparency.org/2014/10/13/on-the-eve-of-the-annual-conference/#comments Mon, 13 Oct 2014 23:46:20 +0000 http://www.financialtransparency.org/?p=25523 Untitled-1small We've arrived at the eve of the our annual conference, co-hosted this year in Lima, Peru by FTC member Latin American Network on Debt, Development, and Rights (LATINDAD). While the main conference begins tomorrow, journalists, civil society leaders and researchers are already hard at work. The week began today with a journalist training that included presentations from renowned investigative journalists like Hernán CapielloÁngel Páez, and former Wall Street Journal reporter Glenn Simpson. The training brought together more than 15 journalists from 10 different countries in Latin America to discuss how investigative journalism can be a tool for uncovering illicit financial flows. Alongside the journalist training, members of civil society gathered to discuss illicit flows, corruption, and financial transparency. As today's sessions have come to a close, we're looking forward to the launch of the conference tomorrow. You can view the full agenda for the event here. If you're unable to join us in Lima, you don't have to be left out. Follow along and add to the conversation on Twitter using the hashtag #FTC2014Lima and by following @FinTrCo.]]> Untitled-1small

We’ve arrived at the eve of the our annual conference, co-hosted this year in Lima, Peru by FTC member Latin American Network on Debt, Development, and Rights (LATINDAD). While the main conference begins tomorrow, journalists, civil society leaders and researchers are already hard at work. The week began today with a journalist training that included presentations from renowned investigative journalists like Hernán CapielloÁngel Páez, and former Wall Street Journal reporter Glenn Simpson. The training brought together more than 15 journalists from 10 different countries in Latin America to discuss how investigative journalism can be a tool for uncovering illicit financial flows. Alongside the journalist training, members of civil society gathered to discuss illicit flows, corruption, and financial transparency.

As today’s sessions have come to a close, we’re looking forward to the launch of the conference tomorrow. You can view the full agenda for the event here. If you’re unable to join us in Lima, you don’t have to be left out. Follow along and add to the conversation on Twitter using the hashtag #FTC2014Lima and by following @FinTrCo.

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Countdown to Lima Conference: Transforming the post-2015 momentum into an enduring fiscal justice movement http://www.financialtransparency.org/2014/10/09/countdown-to-lima-conference-transforming-the-post-2015-momentum-into-an-enduring-fiscal-justice-movement/ http://www.financialtransparency.org/2014/10/09/countdown-to-lima-conference-transforming-the-post-2015-momentum-into-an-enduring-fiscal-justice-movement/#comments Thu, 09 Oct 2014 12:57:13 +0000 http://www.financialtransparency.org/?p=25517 This blog is part of a series ahead of our annual conference, which takes place next week. Each piece is written by a conference speaker and aims to give a preview of some of the issues to be discussed. 

Written by Niko Lusiani, Director of the Human Rights in Economic Policy program at the Center for Economic and Social Rights (CESR)

Experts, advocates, government officials and journalists from all regions of the globe will be gathering next week in Lima, Peru to scale-up strategic efforts to curb illicit financial flows in ways which ensure sufficient, equitable and accountable financing of sustainable development.

The timing couldn’t be more auspicious. As governments move into the final stages of negotiating a set of new Sustainable Development Goals (SDGs) to replace the Millennium Development Goals after their expiration date next year, this post-2015 momentum represents a once-in-a-generation opportunity to shape the contours of national government priorities, policies and financing decisions in areas from education to ecology, housing to health, climate change to care work. Beyond national commitments, the post-2015 process is also an important strategic opportunity to secure global commitments on tax cooperation in a truly multilateral institution whose reason of being and higher-order imperative—unlike other bodies like the G20—is to promote human rights in development.

As the post-2015 process now starts to harden and fault lines become more pronounced, experts and activists from the development, environmental and human rights communities are converging around a fairly straightforward argument.[1] Unless governments agree to concrete tax and budgetary commitments which ensure robust, equitable and accountable fiscal foundations for sustainable development, the SDGs will end up merely dead letters.

In light of this unique moment, a special breakout session, “The 2015 Fiscal Revolution: Where Human Rights, Development, and Fiscal Policy Converge” will be held in Lima. Participants from the Center for Economic and Social Rights, Christian Aid, DAWN, Tax Justice Network and Jubilee USA will explore why the post-2015 debates matter, discuss concrete proposals to embed fiscal justice in the post-2015 commitments, and consider how human rights standards, accountability mechanisms and organizations like my own can be better leveraged to overcome some of the political obstacles to ensuring robust, equitable and accountable financing of sustainable development.

So join us as we together devise ways to transform this fleeting post-2015 momentum into an enduring fiscal justice movement.

 


[1] The convergence is striking, just starting with the UN Millennium Campaign Africa, Oxfam, Save the Children, Global Financial Integrity, Action Aid, the UN Special Rapporteur on Extreme Poverty and Human Rights, a wide array of experts, and “A Post-2015 Fiscal Revolution,” recently co-published by Christian Aid and my organization the Center for Economic and Social Rights.

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Publishing tax breaks and subsidies for corporations – a good idea whose time has come http://www.financialtransparency.org/2014/10/08/publishing-tax-breaks-and-subsidies-for-corporations-a-good-idea-whose-time-has-come/ http://www.financialtransparency.org/2014/10/08/publishing-tax-breaks-and-subsidies-for-corporations-a-good-idea-whose-time-has-come/#comments Wed, 08 Oct 2014 18:26:33 +0000 http://www.financialtransparency.org/?p=25512 Good Jobs Firsthas sent a fascinating email, which relates to the United States but could have general relevance for other countries. This one is located at the fascinating, busy intersection between tax and transparency.]]> The indefatigable US-based organisation Good Jobs First has sent a fascinating email, which relates to the United States but could have general relevance for other countries. This one is located at the fascinating, busy intersection between tax and transparency.

The intro:

“For many years, we at Good Jobs First have criticized GASB-the Governmental Accounting Standards Board, or “GAZ-bee”- for failing to require state and local governments to disclose economic development subsidy spending in a uniform way.

It appears that’s finally about to change, and if it does, it will be hard to overstate the significance of the news.

As the group that has been successfully shaming states and cities to disclose on subsidies all these years, with our 50-state and 50-locality “report card” studies, and as the group that has been collecting all the public data (and also lots of previously unpublished data) in our Subsidy Tracker database, we are intimately familiar with the irregularities and gaps that exist in these vital public records. And we have long shown how to fix them in our model legislation.”

Their generic criticisms and analysis, of course, are extremely valid, for any country. And they continue:

“Now, GASB is preparing rules that say: to meet GAAP, governments will have to publish an annual accounting of the revenue lost to economic development subsidies. The proposed wording of these rules has not been issued; all we have are board-meeting minutes of a low-profile process spanning more than two years, as GASB gathers information and debates how best to achieve this new standard.”

Now this is an interesting, and welcome, development. Investors welcome it, and citizens welcome it.

That’s the gist of it. For those who want the details, see here.

Endnote: the tax specifics are summarised:

“GASB is using the term “tax abatement” as an umbrella term (not just specific to local property tax exemptions) but “a reduction in taxes… in which (a) one or more governmental entities forgo tax revenues that [an individual] taxpayer otherwise would have been obligated to pay and (b) the taxpayer promises to take a specific action that contributes to economic development or otherwise benefits the government(s) or its citizens.” This would appear to also cover state corporate income tax credits and state or local sales tax exemptions, but apparently not tax increment financing.”

Note that in the race to the bottom between states, tax rates don’t stop at zero, but just keep going down. Pile the non-tax subsidies on that, and the overall equation can become very alarming.

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Countdown to Lima Conference: Tackling some of the biggest problems in the Americas http://www.financialtransparency.org/2014/10/08/countdown-to-lima-conference-tackling-some-of-the-biggest-problems-in-the-americas/ http://www.financialtransparency.org/2014/10/08/countdown-to-lima-conference-tackling-some-of-the-biggest-problems-in-the-americas/#comments Wed, 08 Oct 2014 16:59:57 +0000 http://www.financialtransparency.org/?p=25510 Hidden Money, Hidden Resources conference in Lima, organized by the Financial Transparency Coalition and Latindadd, and the agenda covers a number of topics which are highly relevant to the Americas. The panel I´ve been invited to moderate, for example, will be exploring the links between citizen security, organized crime, corruption and money-laundering. Latin America and the Caribbean as a region has the highest levels of citizen insecurity in the world, and is the only region where criminal violence increased between 2000 and 2010 according to UNDP.]]> This blog is part of a series ahead of our annual conference, which takes place next week. Each piece is written by a conference speaker and aims to give a preview of some of the issues to be discussed. 

There is just a week to go before the start of the Hidden Money, Hidden Resources conference in Lima, organized by the Financial Transparency Coalition and Latindadd, and the agenda covers a number of topics which are highly relevant to the Americas.

The panel I´ve been invited to moderate, for example, will be exploring the links between citizen security, organized crime, corruption and money-laundering. Latin America and the Caribbean as a region has the highest levels of citizen insecurity in the world, and is the only region where criminal violence increased between 2000 and 2010 according to UNDP.

While each of these issues could easily be the subject of a conference in itself (and they have – see for example here and here), we hope to focus specifically not just on how these issues are connected, but also on how to improve the coordination of responses to them.

The problem of organized crime – perhaps most often associated with Central America in the international media – is increasingly affecting the entire continent. The conference´s host country Peru is now the world´s number one cocaine producer, and is increasingly struggling to contain the influx of money from drug trafficking into the political system, with at least a quarter of candidates to regional governor positions currently under investigation for drug-related crimes.

Our guest speakers on the panel will include experts from the United Nations Office on Drugs and Crime (UNODC), the Financial Action Task Force (GAFISUD), the Institute for Strategic Studies and Public Policy of Nicaragua (IEEPP) and Costa Rica Integra.

For more information please check in next week, when we will be blogging the main outcomes and recommendations from the panel right after the conference.

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