Transparency: putting G8 to the test

It’s become a slightly tired cliché to say that sunlight is the best disinfectant.  But there is no question that transparency – about what payments are being made to governments, and then how that money is being spent – is vital for development. Giving citizens knowledge about key financial decisions being made in their countries empowers them to get involved in the debate about whether companies are paying the right taxes or fees, and about how much of it should be spent on schools, hospitals, and other issues close to their hearts – helping to wash away the stain of corruption.

It is great that David Cameron has made this a high priority at this year’s G8 Summit – no doubt responding to the public outcry about tax dodging in the UK, as well as out of a desire to tackle poverty around the world. And there has been lots of encouraging progress so far. But, what will be the acid tests of his success when the G8 communique is published tomorrow?  There are a couple of things that we’ll be keeping a keen eye on:

1. Will Japan and Russia agree to make oil, gas and mining companies publish what they pay?

Recent months have seen big strides forward in improving transparency in the oil, gas and mining sectors. With the Dodd Frank legislation in the USA, the EU legislation passed last week, and Canada’s recent announcement that they will follow suit, all companies listed on their stock exchanges (around two thirds of the global trade) will soon need to publish what they pay to government to access their mineral wealth.

These efforts to unearth the truth have been hugely encouraging. But, as businesses such as Rio Tinto have noted, we don’t yet have a level playing field, and companies not listed in these countries, but in places like Russia and Japan, don’t yet need to publish their payments. Cameron has said he will prioritise this in G8 discussions so that momentum can then build in the G20 and beyond, so there is no place where companies can hide their payments. Let’s hope he delivers.

2. Will all G8 members agree to share tax information with developing countries as well as each other? And will they create public registries of the “real” owners of all companies?Image

On Saturday at Cameron’s trade, tax and transparency Summit all of the UK-linked tax havens agreed to join an existing multilateral agreement to share tax information. And the Prime Minister announced that the UK would create a central registry of company ownership. Again, these are really encouraging steps. But we need other G8 countries to agree to increase their transparency too and automatically share tax information – not just with each other, but also with developing countries. And we need more G8 countries to commit to create a public register of the “real” owners of all companies in their countries to help stop tax dodging (see the full IF response here)

 Cameron obviously has a lot to talk to Putin and other leaders about – not least trying to find a way forward on tackling the horrendous situation in Syria. But ensuring increasing transparency in these key areas could have a massive and life-changing impact in many poor communities. Something he shouldn’t forget as he enjoys the canapés this evening.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s