OECD – so far wide of the mark

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This comes from the TJN blog, but I reproduce it with permissions:

The OECD has now responded to Raymond Baker's excellent comment article in the Financial Times, with a swaggering letter seeming to add little to the debate other than to question his impertinence (though not his data). As the OECD letter said:

"Influential non-governmental organisations such as Global Financial Integrity can help developing countries most by pressuring for delivery, rather than risking an unravelling of what has been achieved through calls to reopen debates."

In other words: 'we (the OECD) call the shots here - support our agenda, don't try and challenge us.' But that is not the end to its haughty myopia. The letter, written by the OECD's director of public affairs Anthony Gooch, continued, referring to the OECD's appalling mechanism of information exchange by request:

"While they enjoy universal endorsement, the challenge now lies in their swift and effective implementation."

Universal endorsement? Really? Has the OECD heard of theEuropean Union Savings Tax Directive? Has the OECD heard of, ahem, what the OECD might consider to be a small irritant: an irritant called civil society? Has it looked at TJN's draft briefing paper? TJN has just sent this letter out to a very large number of people at the G20 process on this - the OECD would do well to take note.

A little background research on whether or not there is "universal endorsement" of the OECD's policies would be in order before firing off letters like this to the newspapers. At a well-attended meeting at the London School of Economics yesterday, delegates almost unanimously excoriated the OECD for being seemingly incapable of taking a responsible lead on this most crucial issue.

Sadly, some people still seem to agree with the OECD. One influential voice at the meeting yesterday (whose name or affiliation we can't reveal under the Chatham House Rule) said that TJN's preferred model of automatic information exchange could not work because developing nations cannot handle it.

Really? First, this argument suggests that if it is so difficult, there must be a huge volume of information to flow south, confirming TJN's case. Second, it is extraordinarily patronising to these countries to tell them that they don't have the capacity. As Richard Murphy has pointed out, automatic information exchange requires an Excel spreadsheet, and not much more. Third, it shows political cowardice.

Last year John Christensen flew to Zambia. This is how he described his arrival.

"On entry, the Zambian police took my passport, scanned it through USAID computers, and in seconds they could get my police records anywhere in the world. Ditto in Kenya, and every place in the South in the past three years."

So next time you cross a border and show your passport, remember that here you have a global, multilateral system for information exchange, ably implemented by developing countries, with technical support. There is a unique personal number involved (you will find it at the bottom of the picture page on your passport if you've got one of the newer ones), and information can be shared very quickly and efficiently. This system follows the 9/11 attacks in the United States, and demonstrates that where there is the political will and the technology, it is quite possible and workable to create PINs, and also to agree on protocols on what information shared, and how it is shared.

The OECD has failed to create, or even push for, a framework for PINs for taxpayers, failed to agree protocols, and now is arguing that nobody should challenge it on its approach of allowing almost no information on tax to flow across borders.

We have already heaped opprobrium on the OECD for its approach on its fatally flawed black/white/grey list, and now we are confronted with this folly. Mr Gooch and those who directed him to write this letter should be thoroughly ashamed.

I would add this: for an organisation supposedly committed to tackling tax abuse the OECD’s failure is staggering to note. The 1998 initiative failed — and it was partly the OECD’s fault. The current G20 initiative has been widely undermined by the OECD’s petty internal politics that means there is a refusal within the organisation to countenance the automatic information exchange the EU is pioneering simply because ‘it was not made here’ — an attitude that suggests the OECD is not suited to the responsibility it has been given. That failure has been compounded by the absurd white list criteria of just 12 Tax Information Exchange Agreements — chosen to appease the Isle of Man.

If they’re serious about tax evasion they need radical reform. They’re acting right now like a monolith form a bygone age. It’s not an appealing sight.