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Was it a good G8 for Transparency?

Written by Robert Barrington on Wednesday, 19 June 2013

Back in January, in a speech at Davos, David Cameron announced that the theme of his G8 Presidency would be the 3Ts – Trade, Tax and Transparency. Great excitement ensued among the anti-corruption community. Now the summit is over, how much do we think have things changed?


Back in January, in a speech at Davos David Cameron announced that the theme of his G8 Presidency would be the 3Ts – Trade, Tax and Transparency. Great excitement ensued among the anti-corruption community. Now the summit is over, how much do we think have things changed?

There are mixed views from civil society. The Tax Justice Network, quoted in the Guardian is disappointed about the progress on tax reform. Of course, some will feel let down by slow progress in their own specialist areas; but TI’s interest is primarily in transparency, and as it relates to corruption, and we judge the Summit’s success by progress on those issues.

Global Witness gave the G8 Communique a cautious welcome under the headline ‘The beginning of the end of corporate secrecy? G8 strikes a blow against corruption – but still more to do’.

How you judge the G8 Summit’s success will depend on what your expectations were. For those who viewed it as a one-off chance for a G8-wide agreement on global tax transparency – or a global trade deal or Syria – it will be a disappointment. For the real specialist, there were some notable gaps in areas such as trust ownership and transfer pricing. For those who have been plugging away for years to get arcane issues such as beneficial ownership into the public eye, it will be seen as an encouraging step on a long journey.

Perhaps as important as the Summit itself was the Open for Growth event held at Lancaster House in London on the Saturday before the G8. Chaired by the Prime Minister and Deputy Prime Minister this brought together members of the UK Cabinet and several African heads of state with leaders from resources-resources-business and civil society. It demonstrated that the tax and transparency agendas are highly relevant to many African countries, some of whose oil revenues makes them increasingly important trading partners for the G8 countries.

I think we may look back on the Lough Erne as a turning point. Why do I say that? For three reasons:

  1. Setting the agenda. It was ambitious of the UK to put transparency on the agenda, and individual asks were ambitious – such as public registers of beneficial ownership and extractive revenue transparency. Perhaps most marked was the free use of the word ‘corruption’ in an international forum, as well as the Prime Minister’s naming and shaming of Equatorial Guinea for corruption, at the Lancaster House meeting. This should prove an irreversible step in putting these issues on the international agenda. Civil society can now progress from fighting to have these issues recognised as important, to fighting to get solutions adopted and implemented. Don’t underestimate what a change that is.
  2. Specific actions. For all the regrets that more could have been done, there was some movement on key areas (see summary below). In my view, the UK civil servants played a difficult hand extremely well. Getting agreement of all eight countries on some new issues in sensitive areas was a tough ask. They realised this early on. One thing they succeeded in doing was to get some useful common language agreed on areas such as transparency in mining transactions. But most importantly, they succeeded in getting some bilateral agreements and some majority agreements where they could not get all eight to agree. It was pragmatic diplomacy at its best. Who would have guessed we would see Canada, recalcitrant for so long, declaring in favour of extractive industry transparency? With just enough countries agreeing on each issue, there should be the critical mass to move others in future – assuming those who have agreed don’t back-track.
  3. UK actions. Perhaps the biggest surprise – the willing ness of the UK to set a good example in the hope others will follow in future, if not now. And recognising that those who need to follow are not just in the G8, but the G20 and beyond. Statements in favour of public registries of beneficial ownership; commitments to press for change in the Crown Dependencies and Overseas Territories, starting with data exchange; signing up to EITI.

What matters now is whether sufficient momentum has been generated to turn words into action. David Cameron had the good fortune that his tax agenda had a certain appeal to a public, and governments, increasingly angry about tax avoidance and evasion. That gave him some political space in which to operate, and helped the anti-corruption community due to the cross-over of interests in having a more transparent international financial system. If he wants this Summit to create a lasting legacy, he must make sure that the promised changes are implemented at home and in the Overseas Territories, and that he keeps up the international pressure on others. That includes making sure Russia, the next G8 President, does not stall what was agreed this time round. Below, we have put together a to-do list for Mr Cameron, as well as summarizing some of the Summit’s key outcomes.

Was it enough? No. Corruption is rife in the world, and a much greater response is needed. Was it more than we expected 12 months ago? Certainly yes. Overall, I am quietly optimistic that progress is being made. That’s a good feeling to have in the year that Transparency International celebrates its 20th birthday.

It’s therefore fitting to end with the assessment from Laurence Cockcroft, one of TI’s founders in 1993:
‘This year always stood a good chance of being the one in which the international framework on corporate and banking secrecy, project by project reporting and the status of offshore centres became recognised as critical to building a fairer world. By mid year the G8 have taken important steps to that end.’

David Cameron’s to-do list
While this list is not complete, it is a starting point for implementing the UK’s vision expressed at the G8 Summit to fight corruption.

Domestic corruption

  • An understanding and acknowledgement of where corruption is a problem in the UK: through conducting an independent corruption risk assessment for each government department; a published review of the corruption risks facing the UK as a whole; and the government’s proposed response in the form of a prioritized and resourced action plan.
  • A more effective anti-Money Laundering regime: through an independent review of the UK’s anti-money laundering regime to assess its effectiveness and how it can be improved; and the implementation of a public register of beneficial owners of both companies and trusts.
  • Evidence of action against intermediaries: through the development of a plan to tackle the UK’s role as a clearing house for global corruption, including the role of professional intermediaries and poorly-regulated high-risk sectors such as property and corruption-resources-corruption-resources-education.
  • Asset recovery: through demonstrating significant progress, supported if necessary by updated legislation, on the recovery and repatriation of stolen assets.

Overseas corruption

  • Increased law enforcement: through the adequate resourcing of the Serious Fraud Office and other law enforcement agencies charged with investigating corruption and specifically the stronger enforcement of the Bribery Act.
  • Greater corporate transparency: through implementing into UK law a requirement for country-by-country reporting of revenues, profits and taxes of all companies in all sectors, taking advantage of the requirement to pass such legislation for extractive companies due to recent EU Directives.
  • Action on Crown Dependencies and Overseas Territories: by ensuring that the UK’s Crown Dependencies and Overseas Territories fully implement laws that are compatible with UK and international best practice, are sufficiently resourced to combat illicit financial flows, and do not allow for loopholes in the system which can be exploited; and ensuring there is in each territory a public register of beneficial owners of trusts and companies.

International forums

  • Leadership in the OGP: through continuing support for the principles of open data, freedom of information and open governance in the Open Government Partnership (OGP) and beyond, establishing the UK as a best practice country and supporting other countries to achieve best practice.
  • Creating a level playing field through the OECD: by pressing signatories to the Anti-Bribery Convention to be active enforcers of the Convention, and closing the loopholes and exemptions that exist in some countries, notably the USA, on facilitation payments; and ensuring that no excuse is given to others by watering down the UK’s own Bribery Act.
  • Extending the EITI: through making the case to other G20 governments to sign-up to the Extractive Industries Transparency Initiative (EITI).
  • Widespread adoption of IATI: through encouraging other overseas development assistance providers to adopt the standards of the International Aid Transparency Initiative (IATI), for example with regard to for climate financing and South-South cooperation.
  • Support for whistleblowing: by actively supporting, and where possible protecting, individuals who speak up against corruption where they see it, and by unambiguously supporting the principles of whistleblower protection.

In terms of who takes this forward within the UK Government, the UK actually has an Anti-Corruption Champion – currently Ken Clarke. It has not been a prominent role of late, which is why we have consistently called for the Anti-Corruption Champion’s role to be active, visible and better-resourced. This can be effected through: formal acknowledgement that this role has both a domestic and international focus; publication of an action plan through which the role’s objectives and progress can be assessed and accountable; and allocation of resources such that the role can be made effective. 

Some of the positives

Courtesy of my colleague Maggie Murphy, who monitors the G8 globally at the TI Secretariat:

The Prime Minister sought to establish a “transparency revolution”:

  • There is the enhanced understanding of G8 countries about the threats that shell companies and opaque ownership systems can have on accountability the economy and law enforcement.
  • The UK and the US have published action plans specifically on money laundering corporate structures, beneficial ownership and tax evasion.

o    We understand that Action Plans from France Italy and Canada, will be published in the very near future, and that they will contain a commitment to at a minimum, consult over having a central registry of beneficial owners. We hear that registers (or incorporation of beneficial ownership information in existing registers) are a likely outcome in France and Italy.

o    Russia Japan and Germany are due to publish action plans before the end of the year. Germany refuses to consider the idea of public registries.

  • The G8 adopted an Action Plan on principles to prevent the misuse of companies and legal arrangements.
  • There were moves towards the establishment of multilateral automatic exchange of tax information as a global standard.

o    Four members of the G8 have already embarked on a pilot programme to exchange tax information automatically on a multilateral basis.

o    The remaining four (Canada Japan, Russia and the US) need to join this pilot programme, and work towards ensuring that automatic exchange of financial information becomes the global standard.

  • Prior to the Summit the UK and France signed up to the Extractives Industries Transparency Initiative (EITI).  At the G8, Solid steps were taken to institutionalising transparency in the extractives sector, which can provide a platform for future such initiatives in other sectors.
  • G8 leaders signed an Open Data Charter.  The Open Data Charter sets out five strategic principles that all G8 members will act on. These include an expectation that all government data will be published openly by default, alongside principles to increase the quality, quantity and re-use of the data that is released.

 

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Read 18021 times Last modified on Tuesday, 24 November 2015 11:47
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Robert Barrington

Robert is TI-UK's Executive Director. You can view his full bio here, and tweet him @TIukED.

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