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20 February 2012

MAKING GLOBAL FINANCIAL TRANSACTIONS MORE TRANSPARENT 

The demand for greater transparency in the international financial system is gathering momentum, especially as many governments struggle to cope with the global financial crisis.

Tax havens which enable wealthy elites and companies to evade their taxation responsibilities are coming under increased scrutiny. According to the Task Force on Financial Integrity and Economic Development (an organisation allied with Edmund Rice International), developing countries lose more money through tax dodging than they receive in aid.

Several recent developments give encouraging signs that this problem may begin to be addressed, although resistance to improved transparency from vested interests is strong.

The chief of India's federal investigation agency estimates that Indians have illegally deposited $500bn in overseas tax havens. Central Bureau of Investigation (CBI) director AP Singh said Indians were the largest depositors in foreign banks with funds being sent to tax havens such as Mauritius, Switzerland, Lichtenstein and the British Virgin Islands among others. This flight of capital has helped widen inequality in India, although India is now playing a major role in the global crusade against tax crimes.

In 2009, the United States Department of Justice pursued both criminal and civil charges against the giant Swiss bank UBS for systematically offering wealthy Americans the opportunity to evade taxes. UBS agreed to a settlement on the civil charges and as part of the deal, offered to hand over the names of 4,450 tax evading Americans to the Internal Revenue Service.

Earlier this month, for the first time ever, US authorities charged a bank with helping Americans evade taxes. Wegelin & Co. is Switzerland’s oldest private bank.

Meanwhile Anti-poverty groups and supporters of financial transparency have urged the oil industry to drop its attacks on a new US law that will reduce corruption and reveal the money trail between industry and resource-rich governments. They also called on the public to take action by telling oil companies, such as Chevron, Exxon, Shell and ConocoPhillips, to stop fighting transparency.

"Countries around the world have suffered deeply from corruption, conflict and unfair foreign exploitation," said Simon Taylor, founding director of Global Witness. "By trying to water down these transparency laws, oil companies are in effect trying to gag millions of people who have a right to know how their countries’ wealth is being managed and who is getting the money" he said.

Oxfam America and ONE international have online petitions urging legislators in the US and Europe to resist corporate lobbying against proposed transparency laws.

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