The Panama Papers, the Bahamas leaks, the Luxleaks trial and the consequent sentence of whistle-blowers. 2016 has seen a number of revelations that have highlighted the extent of secret dealings and money laundering across the world. More than ever these revelations are uncovering the mechanisms of a system that is deliberately designed to hide the real identities of the company owners and facilitate illegal tax evasion, money laundering and other forms of corruption. The good news is as this system is being uncovered, it is no longer possible to look the other way and pretend this is not happening. Above all, no one can pretend there are not solutions.
Global corruption, while putting many democracies in jeopardy, has a substantial impact on the lives of citizens in the poorest countries. Many individuals and firms living and doing business in developing countries illegally evade paying their taxes though webs of illicit activity. This has a serious impact on the world’s poorest, as they are in critical need of cash flow to sustain their development and provide citizens with vital services. Every year a trillion dollars is siphoned out of developing countries. If this was to be recovered and tax paid much of this money could be spent on areas such as health and education.
To put an end to this financial drain we must fight the lack of transparency around financial systems. One way to tackle this is for multinational corporations to provide citizens with real means to hold their government to account. Tangible change may become a reality at the European level with two parallel processes.
Country by Country Reporting requires corporations to publically disclose some financial information such as turnover, number of employees and tax paid for every country in which they operate.
At the same time Beneficial Ownership would reveal the real owners of anonymous shell companies and trusts which facilities hidden illicit activities.
To give power back to citizens we need to make this information accessible, readable and usable. This data will allow not only government authorities but also citizens, journalists and civil society to identify illegal tax evasion and, if proved, retrieve crucial revenue that could be invested into the fight against extreme poverty. In many African countries, citizens have used this public information (which in many cases was previously private) to put the pressure on their government to increase public sector spending. Making these corporate entities transparent will not only shine a light on corruption and money laundering, but will also strengthen citizen led action and active participation in democracy.
The international community has been active on this issue. 2016, for all its revelations, also saw initiatives and international summits involving civil society, partners from the private sector and governments.
In May, the Anti-Corruption Summit held in London set the stage for a global transparency agenda which saw countries making commitments to end corruption, money laundering and illicit financial flows.
And now, as we speak, more than 70 governments, together with the private sector and civil society, are meeting in Paris for the Open Government Partnership Summit to discuss further ways to strengthen and deepen open governance, and increase citizen involvement.
All the participants of the OGP Summit have the opportunity to discuss ways to move forward to consolidate the commitments of 2016 and lay the groundwork for concrete opportunities in 2017, such as making sure the topic is on the table for elections across Europe. Only with these commitments will we be able to work towards a system that benefits all.
Eloise Todd, Global Policy Director, The ONE Campaign
Cover photo: Sean Gallup/Getty Images