Global Witness response to the UK Government’s statement on tackling corruption overseas

The new UK Government has revealed its approach to fighting corruption in its response to the International Development Committee’s October 2016 report “Tackling Corruption Overseas.” 

“Corruption is one of the great injustices of our time, which must be tackled at the source," said Shauna Leven, Corruption Campaign Director at Global Witness. "The UK has led the world so far, and we applaud the new Government’s focus on the notoriously corrupt natural resource industry.  But as the Panama Papers showed, we will not crack this unless we stop the UK’s tax havens from helping the world’s criminal and corrupt hide from the law.  Theresa May’s refusal to tackle the problem in her own backyard raises serious questions about her Government’s ability to walk its talk on fighting corruption overseas.” 

Reactions on specific areas of concern:

• UK’s tax havens: We are deeply concerned by the Government’s rejection of the need to stop the UK tax havens selling secrecy.  Stopping anonymous company owners exploiting our tax havens is a crucial component of any credible strategy to fight corruption overseas.  This new position is a major u-turn on David Cameron’s promise to remove the “cloak of secrecy” from shell companies, and calls into question Theresa May’s commitment to continuing the UK Government’s transparency and anti-corruption drive.
  
  Over half of the offshore companies revealed in the Panama Papers were registered in the British Virgin Islands, a UK tax haven. This demonstrates the role the tax havens play in enabling the corruption that keeps poor countries poor.  The UK Government’s opposition to public registers of the beneficial owners of companies in its tax havens is particularly concerning, as it comes just ahead of crucial EU negotiations over implementing public registers of the owners of companies and trusts across Europe.
  
  In light of Philip Hammond’s recent comments about the potential for the UK to move to a low-tax, low-regulation model following Brexit, this is even more concerning.  It is vital that the Government does not abandon the progress it has made so far in increasing the company transparency that is so vital in tackling corruption.

• UK Extractive Industries Transparency Initiative: We welcome UK Government’s work to establish the UK Extractive Industries Transparency Initiative (EITI), which produced its first report in 2016. The report provides, for the first time, a detailed public breakdown of taxes, licence fees and other payments made to the UK government by 71 oil, gas and mining companies that operate in the UK.
  
  The Government should ensure that, under the UK EITI, the true beneficial owners of companies are disclosed, in line with the UK’s statutory beneficial ownership register. The UK Government should also continue championing the EITI internationally, including by supporting efforts being made to enhance transparency of the true beneficial owners of companies and extractive contracts for all  EITI implementing countries.
  
  
• Mandatory disclosure of payments to governments: The UK Government’s early adoption of an EU law that requires extractive companies to publish their payments to governments, such as taxes, royalties and licence fees, is strongly welcomed. In the first year of reporting, tens of billions of dollars in public revenues have been disclosed, including in corruption-prone countries. However, the reports show that some companies are side-stepping the rules to keep payments secret, allowing badly-needed public funds to remain hidden from public scrutiny in some of the world’s poorest countries.
  
  The UK Government should work to improve the mandatory rules to ensure companies disclose their payments in full, and defend the rules from industry attack.
  
  
• Oversight of the UK’s anti-corruption agenda: We welcome the UK Government’s recent re-appointment of the Rt. Hon. Sir Eric Pickles as Anti-Corruption Champion and its continued support of the Joint Anti-Corruption Unit at Cabinet Office. Strong cross-party support and resourcing for this issue will be critical to ensuring our approach to the problem is as efficient and strategic as possible. To this end we reiterate our call for the Champion to be given a Cabinet-level appointment, so as to be able to exert more influence, encourage a coordinated approach and ensure that anti-corruption efforts remain a key priority at the highest levels of government.