UK urged to build on financial transparency move

By agency reporter
22 Feb 2011

The UK government’s decision to back a ‘publish-what-you-pay’ standard for mining and other ‘extractive’ companies across the world is a welcome but partial move, says British-based development agency Christian Aid.

The NGO says the move will challenge corruption in the oil, mining and gas sectors - but does not go far enough to tackle the massive damage done by tax dodging and financial secrecy.

Chancellor George Osborne is reported to have told fellow G20 finance ministers that the UK backs French President Nicolas Sarkozy on the introduction of rules requiring mining, oil and similar companies to publish details of their payments to governments in the countries where they operate.

But David McNair, Christian Aid’s Senior Adviser on Economic Justice, said that while the reform would be a welcome step forward, more radical changes are needed to combat tax dodging, corruption and other financial crimes across the world.

"It’s exciting to see that UK ministers have accepted the benefits of requiring some firms to reveal far more about their financial dealings with governments," said Dr McNair.

He continued: "Financial transparency makes it harder for businesses to use bribery in order to get deals on their terms with the governments of poor countries. It also helps citizens to hold their governments to account about what they are doing with the money they get from foreign companies.

"But we need multinationals in every industry to be more transparent about their finances – tax dodging and corruption are not confined to the extractive industries.

"Christian Aid is calling for the introduction of country-by-country reporting for all multinational companies, which would mean that they revealed their financial performance in every country where they operate.

"We also need an end to the tax haven secrecy which allows companies and individuals to hide money – whether bribes, laundered money or untaxed profits and wealth, safe in the knowledge that their crimes will not be detected," concluded Dr McNair.

Christian Aid is one of the organisations backing the End Tax Haven Secrecy campaign (www.endtaxhavensecrecy.org) which was launched this month and which calls on Nicolas Sarkozy and other G20 leaders to use their November meeting in Cannes to put a stop to tax haven secrecy.

The agencies are also calling for the G20 to work towards the automatic sharing of tax-related information between governments. The Indian government said last week that it will be pressing the G20 on information exchange, because it realises that such information will help it catch up with tax dodgers.

Developing countries currently lose more to tax dodging than they receive in aid each year. Christian Aid estimates that tax dodging by unscrupulous companies trading internationally currently costs poor countries around $160 billion a year and deprives them of the revenues they need to fund schools, hospitals and other public services.

Christian Aid highlighted the need for greater financial transparency last week, in relation to alleged tax irregularities at a copper mining company which is a subsidiary of Swiss commodity giant Glencore (http://bit.ly/hwAN9J).

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Fort more about Christian Aid’s 'Trace the Tax' campaign, see http://www.christianaid.org.uk/ActNow/trace-the-tax/g20/index.aspx

[Ekk/3]

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