A group of civil society organisations in the U.S. has just published an open letter to U.S. Treasury Secretary Tim Geithner, outlining a series of steps which, as Arvind Ganesan of Human Rights Watch notes:
“would inject much-needed transparency into the global financial system and help ensure that governments are accountable to their people and that public funds are invested to help them realize their rights."
The Honorable Timothy Geithner
Secretary of Treasury
U.S. Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, DC 20523
Dear Secretary Geithner,
As the United States prepares for the upcoming G20 Summit in Seoul, we urge the U.S. government to lead the discussion on transparency by advocating for strong positions that will create greater accountability in the global financial system in order to promote economic development and alleviate poverty.
The G20 has claimed, “the era of bank secrecy is over.” It is now time for the United States to step forward and make that claim a reality. We ask the United States government to champion the following within the G20 Communiqu?©:
â€šÃ„¢ recognize the links between illicit outflows of capital from developing countries, absorption of those resources by tax havens and financial institutions in international financial centers, and the adverse impact those flows have on poverty alleviation and economic development;
â€šÃ„¢ call on the Financial Action Task Force to amend its recommendations 33, 34, and VIII to provide that the beneficial ownership of all companies, trusts, foundations and charities be a matter of public record; and
â€šÃ„¢ recommend that the International Accounting Standards Board adopt a standard that all multinational corporations report their income and taxes paid on a countryâ€šÃ„Ãªbyâ€šÃ„Ãªcountry basis.
In preparation for the upcoming G20 Summit in Seoul, we want to underscore the interconnected nature of the subject matter of the G20 working groups on corruption and development. Every year developing countries lose approximately $1 trillion in illicit financial flowsâ€šÃ„Ã®the proceeds of crime, corruption and tax evasion. This number is roughly ten times the amount of official development assistance going into the developing world. While we recognize it is necessary to have separate tracks to address these issues at a detailed level, we believe it is equally important that the participants of each working group recognize that their decisions directly affect the ability of the other working group to achieve its goals.
Given this connection, our diverse group of nongovernmental organizations is working to raise awareness of
(1) how illicit financial flows undermine economic development efforts in poor countries and contribute to corruption, crime and poverty;
(2) how the laws and policies of wealthier countries enable this outflow; and
(3) changes that the wealthier countries can make to stem this outflow.
The recommendations above follow through on the Obama administration’s stated support for corporate transparency and align with the South Korean government’s goals for the upcoming G20 Summit of addressing development and corruption. Our call for countryâ€šÃ„Ãªbyâ€šÃ„Ãªcountry reporting is the logical extension of the extractive industries transparency provisions of the recently adopted Doddâ€šÃ„ÃªFrank Financial Reform Act (¬ÃŸ 1504), and would ensure a level playing field for all companies worldwide. This is a prime example of the type of initiative that crosses into both the corruption and development working groups, as explained above.
Greater transparency in the global financial system would curtail the harmful loss of hundreds of billions in illicit capital flight currently exiting developing countries and would result in greater resource availability for use in health, education, nutrition, and economic development. Transparency and accountability are the keys to effective economic development and efforts to alleviate poverty around the world.
The full list of co-recipients and co-signatories is available here.
That will do me too for the G20.