Tax evasion: campaigners claim watchdog is 'ignoring' them

Charities and NGOs berate accounting standard-setters over lack of transparency in multinationals' reports
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The Independent Online

The Publish What You Pay (PWYP) alliance of campaign groups has hit out at the body that sets international accounting standards in a battle for greater transparency in the way multinationals report.

PWYP is a coalition of more than 300 charities, non-governmental organisations and lobby groups from more than 50 countries.

It wants multinationals to have to disclose the amount of tax they pay in individual countries. PWYP - which includes the Save the Children charity, development agency Cafod and Global Witness, the human rights group - argues that corruption and tax evasion by multinationals, and the government officials they deal with, would become far more difficult as a result.

PWYP has lobbied the London-based International Accounting Standards Board over the matter. The influential IASB - which is backed by many of the world's big accountancy firms, banks and institutions - sets accounting standards and is currently holding a series of meetings about revising company reports. But PWYP says its initial approach to the IASB was ignored, and accuses the body of failing to meet its duty to consult.

PWYP co-ordinator Henry Parham has written to the IASB's chairman, Sir David Tweedie, informing him of the coalition's anger over the lack of consultation.

Mr Parham said that PWYP had offered to meet with project managers to explain and discuss their concerns. "These have been declined despite the IASB's handbook stating that it undertakes consultations with a wide range of interested parties," added Mr Parham. "We also offered to facilitate the public hearings and field visits outlined in the handbook. It appears the IASB is not acting in accordance with due process, and the accountability ostensibly sought by the board is being undermined."

Since the group's first approach, the IASB has agreed to discuss the proposals at a meeting later this week. Sir David has also written to PWYP to assure it that the board "will be giving full and proper consideration to your proposals for country-by country disclosure of certain items".

But PWYP remains sceptical. It wants a country-by-country approach to financial reporting but the IASB has outlined a "management approach", normally based on segments rather than countries, to the numbers.

Accountant Richard Murphy, who wrote PWYP's submission to the board, said: "We think it is strange that the IASB is only going to discuss our submission after it has already made its policy decision about what it's going to do, and without seeking to engage with us in any way. Why is that? We know they meet other groups."

He added: "The IASB say they recognise stakeholder concerns, but here we have a lot of stakeholders saying we need a particular type of information and we're being ignored. What does it say about their accountability?"

Liz Hickey, director of technical activities for the IASB, confirmed the group's proposals would be considered this week. "We need to discuss the proposal before we can characterise what action to take," she added. "We took the decision in July to proceed with management account reporting, but that does not preclude that additional information can be required to be disclosed."

PWYP believes its plan will help developing countries to collect the tax due to them, and so reduce their dependency on aid. PWYP also argues that if companies were required to report on a country-by-country basis , that would make it hard for them to divert profits into low-tax countries where they have little more than a "brass plate" presence.

The coalition fears the IASB's preference for a "management approach", however, undermines attempts by stakeholders to understand what companies are doing in resource-rich nations in the developing world.