RUTH GREEN

Related IBA Anti-Corruption Committee Panama Papers leak lifts the lid on offshore finance and provides further impetus for reform Remarks: David W Rivkin, IBA President - Anti-Corruption Summit: London 2016

The UK Anti-Corruption Summit was always going to attract global interest, taking place just weeks after 11.5 million leaked documents exposed the extent to which companies and individuals worldwide are concealing their wealth via offshore tax havens.

The invitation-only event aimed at tackling global corruption took place in London on 12 May and was attended by around 300 people, including dignitaries such as Nigerian president Muhammadu Buhari, Colombian president Juan Manuel Santos and Afghan president Ashraf Ghani.

IBA President David W Rivkin, who attended the Summit, says he welcomed the discussions and outcomes of the Summit, including moves by the UK and other nations to improve tax and ownership transparency.

‘It was clear from the Summit that steps are being taken and it’s a good thing that governments are focusing on these issues at the highest levels,’ he says. ‘It was recognised by leaders of developed countries that corruption has a massive impact on society and that some of our biggest challenges, including terrorism, can’t be resolved without resolving the issue of corruption itself.’

During the Summit 29 countries, including the Cayman Islands, Jersey, Bermuda and the United Arab Emirates, agreed to share information about beneficial owners between governments.

However, Maria Knapp, director of compliance, forensics and investigations for Africa at Control Risks and a former lawyer at Clifford Chance, believes the absence of certain offshore jurisdictions such as Panama and the British Virgin Islands (BVI) raises questions as to how such a scheme will work in practice.

‘I don’t see how the beneficial ownership register can work without the cooperation of Panama and the BVI – it’s not very clear whether they were invited to the Summit or not,’ she says.

‘The beneficial ownership register could be a great initiative, but I’m not sure if it could work without full subscription by all offshore jurisdictions. Of course somewhere like the BVI would have to consider the business impact of doing that given a considerable amount of its revenue is based on tourism and being an offshore tax jurisdiction…but it would have been a more interesting debate if they had been there.’

Maria Knapp

Afghanistan, Kenya, France, the Netherlands and Nigeria confirmed they would follow the UK’s lead in establishing a public register of beneficial ownership, which includes the ownership details of any foreign company that owns assets in their country or bids for central government contracts.

However, Knapp suggests the UK’s intention to only include details of those with 25 per cent or more shares or voting rights in a company may limit the register’s impact.

‘The 25 per cent threshold is going to be pretty easy to circumvent, taken on its own,’ she says. ‘The crucial part of the beneficial ownership register will be the other criteria which are about exercising full control in a company, including through a trust. Fraudsters will find a way around it but it may make it more complicated for them to get around. The onus rests on companies and business themselves to act properly, but this is not really dealt with in these laws. It’s going to have to come from elsewhere.’

Call for change

Robert Wyld, chair of the IBA Anti-Corruption Committee and partner at Johnson, Winter & Slattery in Sydney, says stronger political will is required to implement these and other initiatives to eradicate corruption altogether.

‘Where I think the focus needs to be is not on the individual role of certain private entities – lawyers being just one example – but on governments that need the political will to not only promote the changes set out in the Communiqué [issued by the UK Prime Minister’s Office] and the Country Statements, but the ongoing political leadership to see the changes implemented,’ he says.

‘While I would like to believe the Summit is clear evidence of a new international political resolve, I remain sceptical until we see real concrete changes not just in countries like the US and the UK, but across the world – and by changes I mean changes in law, in culture and in attitude that permits and encourages transparency and the rule of law rather than token statements and then back to domestic business as usual once the cameras have stopped rolling.’

Mia Wellfare, director of compliance, forensics and investigations at Control Risks agrees the Summit must bring about real change.

‘It’s not a knee-jerk reaction and I wouldn’t say these aren’t valid tools, but the Summit was very crowd-pleasing because the focus was on tax havens, the recovery of stolen assets and the UK property beneficial ownership register,’ she says. ‘This is looking at combatting the concealment of the fruits of those crimes, which goes some way towards preventing corruption of course, but it does little to deter the initial illegal behaviour.’

‘These may act as a deterrent, but I believe resources would be better focused on treating the causes through education and prosecution rather than the way that was discussed at the Summit. But it’s a great start and it’s certainly a tool to raise public consciousness about the problem and has made sure this issue is on the global agenda.’

Both Knapp and Wellfare believe the lack of businesses attending the Summit was a missed opportunity.

‘Business wasn’t very well-represented in either the panel discussions or the audience, but the accountability and responsibility for defending corruption flows down to business,’ says Knapp.

Pointing to Control Risks’ most recent annual business attitudes to corruption survey, which revealed that 30 per cent of respondents from 800 companies worldwide reported losing contracts to corrupt competitors, Knapp says it is incumbent on business to put an end to corruption. 

‘A lot of companies say they’re losing out on business as a result of competitors’ corrupt practices and when businesses are faced with losing market share they are very interested in how to avoid that,’ she says. ‘Businesses are often the main victims of corruption at one end and the ones that will be sanctioned, fined and suffer from it in a very immediate way, so they have a vested interest in making sure that these initiatives are rolled out in a way that they can work with.’

David Rivkin took the opportunity to address assertions by UK Prime Minister David Cameron and others during the Summit that lawyers ‘enable’ corruption.

‘It is important to remember that lawyers play a vital role in investigating, prosecuting and bringing to justice those who are engaged in corruption,’ he told the audience at Lancaster House, and pointed to the IBA’s Judicial Integrity Initiative, which is specifically aimed at eliminating judicial corruption.

Speaking after the Summit, Rivkin told Global Insight: ‘Lawyers are crucial to the global fight against corruption and unless you have a corruption-free judiciary corruption will continue.’

 ‘The fact that the Panama Papers occurred after the Summit had already been announced but before it had actually happened was interesting of course, but it also brought attention to these issues. Sometimes it takes something like the Panama Papers for the scale of the problem to be realised. As regards the issue of ownership of companies, now there is much greater public awareness of why this is important.’