On 12 May 2016, United Kingdom Prime Minister David Cameron will host an Anti-Corruption Summit. The summit, which is the first of its kind, will bring together leaders from around the world to further efforts to create a global response to tackle corruption.
The summit will focus on issues such as corporate secrecy, government transparency, the enforcement of international anti-corruption laws, and the strengthening of anti-corruption institutions. The aim of the summit is to agree a range of practical actions for governments to implement that will make a genuine difference.
The first Anti-Corruption Summit could become a significant event in the journey towards an international framework to combat financial crime. Corruption is more than simply a moral issue; it has serious and widespread economic effects. It leads to miss-allocation of company resources, and the unpredictable costs of bribery deters international investment.
The subsequent effect is to weaken national economies, reducing growth, competition, and innovation. This can increase poverty, reduce employment opportunities and damage access to healthcare and education. The Anti-Corruption Summit is an opportunity to address corruption at its core.
The summit comes in the wake of increased international attention on the issue of hidden corporate ownership, after an unprecedented leak of more than 11 million files from the database of the world's fourth biggest offshore law firm, Mossack Fonseca. The 'Panama Papers' leak included details of 143 politicians and 12 national leaders.
It also drew attention to rules around ultimate beneficial ownership (UBO). Despite the collected efforts of organisations such as the United Nations, G7, G20, World Bank and the Financial Action Task Force (FATF), there are no global regulations that ensure transparency around the identity of the UBO of an organisation. Despite progress in individual countries, a global framework to tackle hidden beneficial ownership is still distant.
Robert Barrington, UK Executive Director of Transparency International, stated in a recent article that, "Many observers feel that the global anti-corruption architecture has been stuck in a rut over the past decade, with certain governments blocking progress. The result has been a constant re-assertion of the problems but without real progress in solving them."
Whilst welcoming the event, Barrington also expressed concerns that Anti-Corruption Summit had the potential to be a closed-door occasion that failed to meet the high expectations set by the Prime Minister.
Some national progress on the issue of beneficial ownership has been made. The implementation of the UK's 'Small Business, Enterprise and Employment Act 2015' on 6 April 2016, means that all UK registered private companies are now required to produce and maintain a list of the individuals who have significant control over the company in a 'Persons of Significant Control (PSC)' register. This data will now be shared with Germany, France, Italy and Spain, after the five largest economies in the European Union (EU) agreed to share information on the UBO of businesses and trusts within their borders.
Only last week, Australia announced that it will join the UK to become the second major economy to create a public beneficial ownership register. The announcement aims to bring Australia into line with current G20 commitments on corporate transparency. The Panama Papers revelations revealed that more than 800 Australians were on the files of Mossack Fonseca.
When fully implemented, agreements to share data across borders would make it increasingly hard for businesses and wealthy individuals to avoid tax, and will reduce opportunities for criminal enterprises to launder the proceeds of crime. This would be a significant step in the fight against international corruption, particularly if it includes data exchange between countries such as Saudi Arabia and China, which fall at number 48 and 83 on Transparency International's Corruption Perceptions Index 2015.
The first Anti-Corruption Summit will provide an opportunity to both refine and energise the global anti-corruption agenda. It remains to be seen, though, whether the international community, individual countries and other interested parties agree any practical actions to take in the fight against corruption.
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