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Jul
17

The Importance of Whistleblowers to Financial Transparency

Ann Hollingshead

This week Edward Snowden, the whistleblower who leaked information about the National Security Agency’s data collection program, may be allowed to leave his temporary station at the Moscow International Airport, where he has been staying since he fled Hong Kong in June. Snowden’s leak has brought the concept of whistleblowing into sharp focus in our headlines lately, including the controversies over the relative benefits and costs of these individuals and programs that support them. As in the case of Snowden, the concept of whistleblowing can be controversial, and it is always painful for the entity or government who is having the whistle blown on it.

In many cases, whistleblowing has proven an effective tool for improving democracy and transparency—it increases information and public engagement, encourages debate, and strengthens oversight. These concepts all have particular importance to some of the issues the Financial Transparency Coalition faces. Transparency, information, engagement, and oversight are critical to each of our recommendations. As such, whistleblowers have often proved critical to fostering these values.

Here are a few of the important whistleblowers in the history of our causes, namely in tax evasion and corruption. As always, this list is representative and not exhaustive.

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Jul
16

Egypt in Crisis: A Look at Corruption Figures for the Last Two Years

Farid Farid

Cross posted from Transparency International’s Space for Transparency blog.

Egyptians are sharply divided over the military’s recent ouster of President Morsi on the back of large-scale popular demonstrations against his rule. They are far more unified, however, in their views on what ails the country.

Corruption is at the forefront of those concerns.

On 9 July 2013 Transparency International released theGlobal Corruption Barometer(GCB) that captures the views on corruption of over 100,000 ordinary citizens in over 100 countries, including Egypt.

Forty-four per cent of Egyptians surveyed consider corruption in the public sector a very serious problem. And nearly 65 per cent surveyed said corruption had worsened since the January 2011 revolution that brought first the Supreme Council of Armed Forces and in 2012 President Morsi to power.

Mohammed Morsi ran on anti-corruption platform and won presidential elections in June 2012.

Under Morsi, the Consultative (Shura) Council agreed a new constitution, approved in a popular referendum in December 2012, that included for the first time the establishment of a national anti-corruption agency.

Morsi’s government also recently launched initiatives to draft for the first time a law on the right of access to information, another one on the protection of whistleblowers, and one to prevent conflicts of interest. Civil society activists requested improvements, such as modifying the wholesale exception of intelligence bodies from being subject to information requests, but these laws remained in draft form.

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Jul
12

Job Listing: Financial Transparency Coalition Administrator

Financial Transparency Coalition

The Center for International Policy (CIP) is a non-profit founded in 1975 to advocate for a foreign policy that promotes cooperation, transparency and accountability in global relations. CIP’s programs advocate policies that advance international cooperation, demilitarization, respect for human rights, and action to alleviate climate change and stop illicit financial flows.

The international secretariat of the Financial Transparency Coalition (FTC), which CIP hosts, seeks an entry-level administrative staff person to manage the day-to-day functions of the Coalition. This is an exciting opportunity to contribute to the efficient administration of an influential coalition of civil society, governments, and experts who have joined together to curb illicit financial flows out of developing countries. This is a grant-funded position until December 31, 2014, with the possibility for extension. The administrator reports to the manager of the Financial Transparency Coalition.

Responsibilities:

  • Work with the manager to develop and implement financial systems to make the coalition run smoothly, effectively and efficiently.
  • Assist with regular budget and finance tracking to ensure that the secretariat can deliver reliable and up-to-date budget information to the Coalition’s Coordinating Committee and funders.
  • General administrative support in office management, setting up calls, managing systems like calendar, shared drive and email distribution lists.
  • Support the new media coordinator to maintain website back-end functions and email domain management, as well as FTC’s online content.
  • Draft and distribute quarterly newsletter to FTC members.
  • Assist with annual conference event planning.
  • Assist with membership database management.

Job requirements:

  • BA/BS in business, management, communications, finance or other relevant field.
  • 1-2 years’ experience, preferably in an administrative or finance role.
  • Strong organizational skills, attention to detail, and the ability to multi-task.
  • Demonstrate a successful track record with regular tracking of expenses against budget.
  • IT experience (basic computer maintenance, troubleshooting and solving minor computer problems and experience with office networks, familiarity with web-based content management systems).
  • Event planning experience is a plus.
  • Commitment to The Financial Transparency Coalition’s goals and mission.

Salary: Mid $30Ks, commensurate with experience, includes full health benefits, dental insurance, life insurance and a retirement plan.

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Jul
10

Behavioral Economics and Lessons for FCPA, AML, and Tax Compliance

Ann Hollingshead

Under the standard economic theory of crime, compliance with laws is a mix of two important factors.  One: the penalty that results if the offender is caught and 2: the probability of the offender getting caught in the first place.  If the fine is proportional to the crime, but the probability of being caught is almost certain, few will risk it.  In the same way, if the probability of being caught is low, but the penalty is very high, again few will risk it.

Gary Becker—the libertarian economist who wrote Crime and Punishment: An Economic Approach, an authoritative economic theory on crime—has described his own encounter with these tradeoffs. In one inspirational moment for his research, while teaching at Columbia University, Becker asked himself whether he should park in a spot that was closer to campus, and illegal, or in a lot which was somewhat further away. He notes that he had to make a calculation: What was the likelihood that he’d be caught if he parked down the street, versus the time and the money that would be lost by parking further away?

Economists often use this framing device when talking about a whole host of crimes—including white collar crime—and, I have discussed these tradeoffs as well, in particular with respect to the Foreign Corrupt Practices Act.

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Jul
9

Are High Bribery Rates in Poor Countries Blocking Development?

Craig Fagan

Cross posted from Transparency International’s Space for Transparency blog.

New findings from the United Nations show that global development commitments – called the Millennium Development Goals – are off track. Governance and corruption are one of the culprits.

Yet whole regions are behind on achieving the targets set for 2015, such as making sure all children are in school and that women get proper healthcare.

People from these same regions are more likely to pay bribes when using basic services, according to Transparency International’s Global Corruption Barometer 2013.

These results show the terrible impact corruption has on efforts to fight poverty. Almost one of every two people living in poor countries reports having paid a bribe in the last year when trying to do such basic things as seeking services from public utilities, enrolling their child in school, interacting with the police and getting an identity card.

You are twice as likely to pay bribes if you live in a poor country

The 20 nations included in the survey which fall among the least developed countries in the world have an average rate of bribery that is almost twice as high as the average for all 107 countries surveyed.

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News
Jul
8

Global Witness’s Charmian Gooch at TED Global: Meet global corruption’s hidden players

EJ Fagan

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Press Releases
Jul
3

GFI Disappointed by Court Decision to Vacate Key Extractives Transparency Rules

Global Financial Integrity

WASHINGTON DC – Global Financial Integrity (GFI) expressed disappointment today at the decision by Judge John D. Bates of the United States District Court for the District of Columbia to vacate key extractive industry transparency rules. The decision prevents the rules from taking effect until the Securities and Exchange Commission (SEC) revises the rules to address the court’s concerns.

The rules—which the SEC finalized last summer after two years of deliberation—implemented Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Also known as the “Cardin-Lugar provision,” this statute requires all oil, gas, and mining companies that report to the SEC to publicly disclose all of the payments they make to governments worldwide. The rules took effect in September of this year despite the lawsuit, with companies due to file their first reports in 2014.

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Jul
1

Corruption is Still a Problem for Croatia

Transparency International

Cross posted from Transparency International’s Space for Transparency blog.

Croatia became EU member number 28 today. After Tudjman and Milosevic and a bloody war 20 years ago in the Balkans, this is definitely good news for both the European Union and Croatia.

The new story of the Balkans started with disintegration 20-odd years ago, but Croatia’s membership is a clear sign of the era of re-integration. We can only hope that the engine of the EU project will not be switched back into a reverse mode, and Croatia’s membership will give new incentives for the others in the Balkans to join the EU.

Nevertheless, we cannot ignore the risks this membership brings both to the EU and to Croatia. Joining the EU requires across-the-board reforms, particularly in the area of corruption. At Transparency International, we are worried about what happens after accession.

The last countries to join the EU, Romania and Bulgaria, are still plagued by corruption.

So are the majority of former Communist countries. A stark warning was issued by our report on corruption in Europe in June 2012:

In some countries of Central and Eastern Europe – particularly the Czech Republic, Hungary and Slovakia – there has been a rolling back of positive progress on anti-corruption since accession to the EU.”

By being “in the club”, the pressure dissipates and ironically political elites have much less incentive for good behaviour and hardly any sanctions if they “misbehave”. Based on their current performance, some members would not be admitted to the EU today.

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News
Jul
1

Taxcast Edition 18: June ’13

Taxcast by Tax Justice Network

In the June 2013 Taxcast: ‘Coulds’ and ‘shoulds’ – but any real action? We analyse what the G8 summit did for tax justice and why some tax havens may get a competitive advantage. And, while the world waits for reform, the Taxcast looks at how some countries are finding creative ways around the current global tax system.

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Jun
26

Liberty Reserve, Money Laundering, and Implications for Bitcoin

Ann Hollingshead

In April, I argued Bitcoin, one of the world’s most mainstream currencies currently operating, may become a viable, sizeable, and more dangerous alternative to offshore accounts for money laundering and tax evasion. I argued the U.S. government isn’t paying close enough attention to the growing threat posed by these currencies. Yet, just a month later, the Department of Justice arrested the founders of Liberty Reserve, another digital currency, and charged them with money laundering. It might seem I was wrong. I say not so fast. For counter-intuitive reasons, Bitcoin still poses a more serious, and long-term, threat than currencies like Liberty Reserve.

First a recap of what happened. In May, DOJ charged Liberty Reserve, Arthur Budovsky (its founder), and his associates with conspiracy to commit money laundering. According to DOJ, nearly all of Liberty Reserve’s five million transactions were illegal and used to launder more than $6 billion in proceeds from drug trafficking, child pornography, ponzi schemes, and many other crimes. The founders of Liberty Reserve incorporated the company in Costa Rica, which later seized about $19.5 million from the company’s bank account as requested by U.S. government officials.

Liberty Reserve posed obvious money laundering threats. So what does that mean for other online currencies, particularly mainstream ones such as Bitcoin?

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Jun
19

Why Developing Countries Should Care About the G8 Summit

Ann Hollingshead

The leaders of the world’s eight wealthiest economies have finished their meetings, headed home, and issued a final communiqué for the G8 summit in Lough Erne. And though emerging economies are not represented at the meetings,[1] there are plenty of reasons they should deeply care about what was said. In general, the G8 communiqué goes a long way to calling out important tax issues, but in particular understands the importance of tax in the context of mobilizing domestic resources, curtailing illicit financial flows, and promoting development. And while the G8 did not go as far as they should have on some issues, they did make a fair number of important promises on tax and transparency to developing countries. Developing countries should take heed of these promises—and hold the G8 accountable to them.

Before I dive down into the specifics, I’ll start with a quote from the G8 communiqué that reiterates the importance of these ideas:

It’s in everyone’s interests for developing countries to be able to: strengthen their tax base to help create stable and sustainable states; improve their ability to fund their budgets through their own domestic revenues; and increase ownership of their own development processes.

This quote is significant. First, it acknowledges that the world is not a zero sum game. In the last few years, the world accepted that a less polarized global economic system, one in which all of the players drive economic demand and where wealth is more diffuse, would benefit everyone. That developing countries should grow their economies is not only in the interest of those in the developing world, but in the industrialized world, as well. Second, this quote draws a strong connection between development, sustainable economic growth, and taxes. In particular, it acknowledges the importance of mobilizing domestic resources in the context of economic development. It’s a simple idea that has gained a lot of traction in the last few years. I’m glad the G8 has paired these ideas together—and taken them as given.

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News
Jun
19

Taxcast Edition 17: May ’13

Taxcast by Tax Justice Network

In the May 2013 Taxcast: Google and Apple are forced to defend their tax affairs in public, how anti-EU sentiment serves offshore interests and the Taxcast looks at tax havens and the arms trade: how secrecy kills. The Lord of War makes an appearance.

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Latest Press Releases

$2 lost for every $1 gained: New report shows global financial system fails developing countries

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Financial Transparency Coalition · December 17, 2014

WASHINGTON D.C.—The Financial Transparency Coalition congratulates two members of its Coordinating Committee who were named to the International Tax Review’s “Global ...

EU compromise tightens regulation on shell companies, but without public access, many still in the dark

Financial Transparency Coalition · December 17, 2014

BRUSSELS — In a deal reached last night, parliamentarians and campaigners have succeeded in making company ownership a fundamental topic. While EU ...