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The battle against global pirate banking has just begun

Report from the French Platform “Paradis Fiscaux et Judiciaires” [1] which investigates Tax Shelters and Tax Evasion:

The battle against global pirate banking has just begun

After the October 21conference of the OECD on tax shelters NGOs welcome the strong political commitment to end tax haven abuses and demand concrete measures. The NGO members of the PJF platform** also welcomed the commitment of French policy makers as well as their 16 OECD counterparts “no longer to tolerate States and territories prospering from fraud.” However the PJF platform esteems that the reality of the OECD engagement can only be evaluated once the measures are enacted. They also want to ensure that this engagement applies to the tax fraud plaguing developing countries.

Yesterday Nicolas Sarkozy before the European Parliament and Eric Woerth at the OECD 17 country gathering proposed some strong political measures to end tax sheltering. They both shared the view that tax havens are an “intolerable source of injustice,” which have participated in aggravating the financial crisis and which thrive in the same environment as money laundering and corruption, namely secrecy and opacity.

  • The first measure welcomed by the platform aims at prohibiting banks that have benefited from public re-capitalization from working with offshore banks or tax shelters. Such regulatory measures could have considerable impact since most banks maintain their own offshore affiliates and work with other offshore centres. The PJF platform questions the sincerity of this commitment given that all six of the French banks recently backed up by the government have subsidiaries in tax havens. At the very least the government must require these banks to present annual reports which detail all their dealings with offshore banks and tax shelters.
  • The PFJ platform also approves Eric Woerth’s proposal to enumerate all those States and territories that don’t respect transparency and tax information exchange standards. Mr Woerth proposes to revise the black list of tax havens by enlarging the list to include all those states – including OECD states– which provide excessive bank secrecy and by ostracizing non-cooperative banking territories. The PFJ platform will scrutinize the sanctions applied to those territories and plans to check whether or not the revised black list includes all these non-cooperative territories, including those states which don’t have complete banking secrecy legislation but use trust funds to get around this legal technicality, for example Great Britain.
  • Another announcement greeted by the PFJ platform seeks to upgrade European Union savings directives–by extending its geographical outreach, by broadening coverage to include trusts, foundations and corporations as well as by re-examining the tax withholding mechanisms applied by some states. The NGOs participating in the PFJ platform have been recommending such measures for years.
  • Finally European economic policy makers publicly recognized the disastrous consequences for developing countries of fiscal fraud and tax evasion. We all agree that this public admission must now translate into concrete regulatory measures at the next conference on development funding to be held in Doha at the end of November, 2008.We all realize that the OECD works mainly for the benefit of its own members so the PFJ platform is calling for the creation inside the United Nations of an intergovernmental agency to monitor monetary agreements and study their impact on developing countries in the Southern Hemisphere. The Platform also calls for the adoption by the OECD countries of the UN code of conduct which is presently being elaborated in order to discourage tax fraud, tax evasion and global pirate banking.

Obviously we await the real outcome of these commitments as they depend heavily on the adherence of countries missing from the OECD meeting, in particular the United States. The PFJ platform expects Nicolas Sarkozy to make these subjects the priority of the upcoming world G-20 summit to reform global finance. The platform also regrets that the responsibility of certain economic actors in the present global financial crisis was not clearly indicated:

- No statement made reference to multinational companies operating in developing countries that use offshore banks to hide revenues thereby causing Southern countries to lose nearly 200 billion dollars of tax revenues per year.

- No statement referred to the possibility of requiring commercial enterprises to detail in their annual activity reports the results and risks they incur through financial operations in offshore banks and tax havens.

- No commitment was made to revise international accounting standards to produce verifiable records on the activities of multinational companies abroad.

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Website : http://www.argentsale.org

Members of the PFJ platform

Attac France - CADTM France (Committee to abolish the debt of third word countries) - CCFD Terre Solidaire - CRID (Center for Research and Information on Development) - Droit pour la justice - Oxfam France Agir ici - Réseau Foi et Justice Afrique Europe - Secours Catholique Caritas France - Sherpa - Survie - Transparence International France.

(translated by VD)

Recommended Further Reading: the article by James S. Henry, “Attack of the Global Pirate Bankers”, which recently appeared in The Nation

NOTE : For the original press release consult Communiqués de Presse et letters ouvertes from our French site


[1] The PFJ platform against tax evasion and offshore banking was created in February 2006 and unites 13 NGOs alongside other civic associations who work together to generate rules and regulations which would work towards eliminating massive tax evasion, money laundering and large scale fraud and corruption.

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