Your weekly update from the TJN

THE TJN WEEKLY - Friday February 3

Dear Subscriber,

Welcome to another round up of news from the world of tax justice. 

Trump turns on the corruption taps

A year ago, nobody would have believed you had you said that Donald Trump would be the next President of the United States. Neither would anyone believe you had you told them that one of the first acts of any President would be to sign a law repealing legislation designed to fight corruption in the oil and gas industry.

But that is just what happened. In an unbelievably retrograde step the US congress has just passed a new law which means that extractive industries will no longer have to declare their payments to foreign governments. The purpose of the law was to shine a light on corrupt payments made in return for oil and mineral extraction rights. That light has now been turned off.

As you would expect, the act has come under some fierce criticism from anti-corruption campaigners such as Global Witness. Corinna Gilfillan, Head of U.S. Office for Global Witness said the measure “sanctioned corruption by green lighting secret deals between oil companies and despots.”

Even if you wanted to promote corruption this seems like a particularly stupid way of going about it. The US has some of the most aggressive anti-corruption authorities in the world who have frequently shown their willingness investigate companies for their behaviour overseas.

Bringing transparency to an industry like oil and gas, which has a particularly high risk of corruption, acts as a way of preventing it. Surely this kind of backward step will simply just provide more work for law enforcement?

Deutche Bank caught up in money laundering allegations

One company which has been feeling US law enforcement’s interest in corruption is Deutche Bank. This week the company has been given a fine by US and UK authorities of over $600m for helping to launder over $10bn.

The scheme worked on a system called mirror trading. The company allowed clients in Russia to buy stocks in Rubles and then immediately sell them in London. This allowed people to transfer money out of Russia and convert it into dollars without the individual in question making an international transfer. As a statement by the UK financial watchdog said:

"The purpose of the mirror trades was the conversion of Rubles into US Dollars and the covert transfer of those funds out of Russia, which is highly suggestive of financial crime,"

Khan Bowls a googly at Nawaz Sharif over the Panama Papers

Imran Khan has launched a high stakes court petition targeting the country’s president Nawaz Sharif. The petition asks the country’s supreme court to remove the president on charges of corruption.

The genesis of the petition is the revelation in the Panama Papers that Mr Sharif’s children owned high value London properties through offshore shell companies. Khan alleges that the properties were bought with kickbacks from public contracts in the early 1990s. Mr Sharif denies the allegations and has even had representatives of the Qatari Royal Family send evidence in his favour.

Tanzania’s tax crackdown

President Magafuli of Tanzania has announced a fresh crackdown on tax evasion. In a speech to the country’s judiciary, he told judges to go after tax cheats who were refusing to comply with court orders.

According to the President the country has a jaw dropping 7.5 trillion Tanzanian shillings (£2.7bn) still owed to it by companies who have lost claims in the tax court and exhausted their right of appeal. That amounts to about 10% of Tanzanian GDP. No wonder Magafuli wants his money back.

The President also suggested that judges were looking after their own in a series of criminal trials against magistrates. He told the judiciary "Some 28 magistrates were prosecuted (in Tanzania) last year for various criminal offences, mostly corruption, but all 28 of them were acquitted…. It is hard to believe that all 28 of them were absolutely not guilty."

The latest from the TJN Blog

TJN moves forward with work on 2017 Financial Secrecy Index

The next financial secrecy index has now reached its first big milestone with questionnaires being sent out to 112 jurisdictions. The Financial Secrecy Index (FSI) is the Tax Justice Network’s flagship research project. Every two years we publish the FSI, which is the most comprehensive analysis of the secrecy of the global financial system. It […] The post TJN moves forward with work on 2017 Financial Secrecy Index appeared first on Tax Justice Network.
Read more

Tax justice news from around the web

Image used under the creative commons license - image by Binuri Ranasinghe

Links Feb 3

U.S. Congress votes for corruption by overturning historic transparency law in gift to big oil Global Witness
See also: U.S. Congress Votes to Kill Anti-Corruption Safeguard FACT Coalition, and Oxfam condemns Senate’s shameful gutting of bipartisan anti-corruption rule, Section 1504 Oxfam America

Eradicating poverty requires far more than aid, says Christian Aid  
"The UK and its Overseas Territories are cornerstones of the international system that allows corrupt elites and multinationals to avoid paying thetaxes they owe to developing countries."

Tanzania's President Magufuli vows to toughen tax evasion crackdown Reuters

South Africa's Kumba Iron Ore, a unit of Anglo American, pays $186 million to settle tax dispute Reuters

IFC investment in Stora Enso: the need for a responsible IFC tax policy Bretton Woods Project

Getting to the core of Europe’s case against Apple and Ireland The Irish Times
See also: If Apple won’t pay tax what hope is there for civilisation? The Irish Times

Famed tax haven Switzerland chases hidden cash Reuters
"Swiss finance ministry said on Thursday it had reached a deal with Liechtenstein to exchange tax information, potentially helping to uncover billions of dollars in undeclared assets kept by Swiss citizens in neighboring Liechtenstein."

Canada / Barbados: tax breaks ‘unfair’ Nationnews

U.S.: Groups Push for Laws to Fight Anonymous Shell Companies Public News Service

U.S.: Shell company legislation awaits Oregon lawmakers KGW

U.S. Treasury Secretary-designate Mnuchin’s Offshore Companies Underscore Need to Tackle Tax Havens in Tax Reform FACT Coalition

Accounts in Luxembourg: Billionaire French senator barred from office over tax fraud Luxemburger Wort

Links Feb 1

Cutting company tax won't drive investment: Australia Institute Camden Haven Courier

UK ‘can’t afford tax cuts to attract more firms after Brexit’ The Telegraph
See our recent blog Tax haven UK? It already is…      

The Irish model: How low should taxes go? BBC News
See also our recent blog: Is tax avoidance at the heart of Ireland’s economic miracle?, and read about the Race to the Bottom, here.

A fair tax breakthrough in procurement Fair Tax Mark

Panama Papers: Court is in session, Pakistan holding its breath The Indian Express

EU Nations Set Up Panels, ‘Mini-Inquiries’ After Panama Leaks Bloomberg BNA

Why would you open a secret company in Panama for legitimate reasons? The Malta Independent

Proposed Repeal of U.S. Extractives Transparency Rule Would Increase Corruption and Poverty Natural Resource Governance Institute

Nigerian authorities seize billion dollar oil block from Shell and ENI following corruption probe, showing why US transparency law must be protected Global Witness
See also: Revenue disclosure laws – Cardin-Lugar and the global transparency standard Global Witness, and To Russia with love from the US Congress Oxfam- Politics of Poverty blog

Fuelling Kleptocracy: Transparency in the Extractives Industry Kleptocracy Initiative

Deutsche Bank to Pay Millions in Fines for Helping Wealthy Russians Launder US$ 10 Billion OCCRP

Ireland to get 'majority of  Apple €13bn' Irish Independent
'The bulk of €13bn that the European Commission says Apple must pay in back-taxes to undo the benefits of a previous sweetheart tax deal will remain with Ireland, EU Commissioner Margrethe Vestager has said.' See also: Apple has missed the deadline to pay €13bn it owes to the Irish goverment Irish Independent

New requirement to disclose ultimate beneficial owners of Uruguayan resident and non-resident entities STEP

If we are to have the economy we want we must get rid of tax havens Tax Research UK

Links Jan 30

EU Committee on Economic and Monetary Affairs - Committee of Inquiry to investigate alleged contraventions and maladministration in the application of Union law in relation to money laundering, tax avoidance and tax evasion  
Live stream 31 Jan at 9.30am (Brussels time)

Africa: Accelerated Agenda on Illicit Financial Flows Global Alliance for Tax Justice

Shell companies: How Russia sold its oil jewel: without saying who bought it Reuters
"Like many large deals, the Rosneft privatization uses a structure of shell companies owning shell companies, commonly referred to in Russia as a "matryoshka", after the wooden nesting dolls that open to reveal a smaller doll inside."

Cayman: beneficial ownership, lawyers’ rules up for debate Cayman Compass
"The beneficial ownership register will not be made public in Cayman, according to government ministers"

UK government says ‘no’ to crown dependencies public registers International Investment

Switzerland charges man with selling bank's client data to Germany Reuters

Beyond Panama: Big Accountants, Banks, Law Firms in 'Systematic' Tax Ring Sputnik International
Cites TJN's chief executive Alex Cobham

Professionals who have turned corruption into a global phenomenon Financial Times (paywall)

Germany: Chancellor Merkel Takes on Starbucks in Bashing Over Unfair Tax Practices Bloomberg

Swiss vote on multinational tax perks in February referendum Reuters

PwC nets €600,000 in State fees for Apple probe Irish Independent

UK Prime Minister May must crack down on tax-avoiding millionaires, lawmakers warn Bloomberg

UK Parliament demands crackdown on image rights 'tax avoidance' STEP

'John Doe' disclosure notice served on U.S. owner of Panamanian firm STEP

How do tax evasion and tax avoidance create economic and social inequality? Tax Research UK

Not Being Able To Swiss Bank Anymore A Real Drag On Big Swiss Bank DealBreaker

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