Tax havens in spotlight at Singapore meeting
A forum set up to tackle tax fraud and bank secrecy, blamed in part for the global financial crisis, will present its first findings on Thursday as the Group of 20 gears up for a key summit on reform.
More than 90 countries, meeting in the World Forum under the auspices of the Organisation for Economic Cooperation and Development, will review reports on eight states as part of broader financial sector reform.
The idea is to "ensure that all the pressure (for reform) in 2009 does not drop off," said Pascal Saint-Amans, in charge of tax supervision for the Paris-based OECD and who heads the secretariat for the World Forum meeting.
In the immediate aftermath of the global financial crisis and ensuing economic recession, the G20 of developed and major developing countries made reforms to tame tax fraud one of the priority areas.
The OECD then named 42 countries as tax havens, among them Monaco, Luxembourg, Switzerland and Singapore, leading a drive for transparency and accountability to ensure that huge sums of money could not be moved around the world without record or check.
The named countries were obliged initially to negotiate at least 12 tax information accords with major partners to show that they were complying with the tighter regulatory framework and so escape sanction.
Since then, most have done this minimal amount to get off the OECD blacklist, which now only counts a few small states and Pacific Ocean islands as falling short of the required standards.
Critics say the underlying problem remains, however, with the regulations not tough enough and the blacklisted countries falling well short of the true extent of the problem.
"This list is no longer credible", said Marina Yung of Transparency International, the group which tracks corruption.
Francois d'Aubert, charged by the French government to crack down on tax fraud, said he believed the system "had the not inconsiderable merit of having forced the countries targeted to change.
"Now, we are going to introduce a much tougher system," d'Aubert said.
For example, a tax haven which has signed tax information accords with other tax havens may no longer be considered to have done enough to meet the minimum standards required.
At the same time, scrutiny will be tightened -- to get through, countries will have to be able to identify who exactly stands behind a trust holding funds and assets, information previously hidden on a key element in the financial system.
Between now and the end of the year, some 40 reviews will be conducted, with the aim of going over all members within two years.
In a first phase, the forum's members will examine tax legislation in force in their peers so as to single out the "good from the bad pupils," said the OECD's Saint-Amans.
The first to be reviewed will be Monaco, Panama, the Cayman Islands and Bermuda, alongside Botswana, Jamaica, Qatar and India.
Francois d'Aubert said two states so far had failed this first examination and if the Forum followed the recommendations of the reviewing group, they would not proceed to the second stage of the examination.
He did not name the two countries.
"The problem is that it is not certain that all the reports will be accepted and published because the meeting follows the rule of consensus," noted Marina Yung of Transparency International.
"This meeting is a first test; we will see if the Forum is really able to keep the pressure on," Yung added.
As for what happens afterwards with those countries identified as still posing a problem, Saint-Amans said it would be up to the G20 to decide what to do. The G20 holds a summit in November in Seoul, South Korea.
"The G20 will draw the conclusions it wants to," he said.
"The essential thing is that we will have a neutral, objective and international analysis of the progress made and of all the progress that still remains to be achieved."
© 2010 AFP