David Cameron will hail the beginning of a new global crackdown on corruption when he hosts world leaders and officials from more than 50 countries for an unprecedented summit in London.
But the Prime Minister faced growing calls for the UK to get its own house in order and reform the offshore tax havens operating on its own Crown Dependencies and Overseas Territories.
The Anti-Corruption Summit, the first of its kind, will see new commitments to transparency from a number of countries in a bid to degrade the kind of shadowy tax avoidance networks that were exposed by the Panama Papers.
Senior Government officials said that research by the OECD indicated that $4 trillion each year is now lost to corruption worldwide.
Announcing its own new measures, the Government claimed that money launderers would no longer be able to move and hide illicit funds in the UK property market, as all foreign companies holding or buying property will now have to join a new public register revealing who their ultimate beneficiaries are.
However, Mr Cameron faced potential embarrassment over comments made to the Queen earlier this week, and caught on camera, in which he described Afghanistan and Nigeria, whose leaders are key guest at the summit, as “fantastically corrupt”.
However, he was boosted by Nigeria’s President Muhammadu Buhari, who accepted the description of his country. Mr Buhari, who was elected on a promise to crackdown on corruption, said he would not be seeking an apology from Mr Cameron. However, the Afghan embassy in London said that Mr Cameron’s comments had been “unfair”, saying that its president, Ashraf Ghani had taken “major steps” to combat corruption.
There was also renewed criticism for the Government over its failure to secure agreements on transparency measures from all of its Crown Dependencies and Overseas Territories, as it emerged that the British Virgin Islands, one of the most popular offshore tax havens among those individuals exposed by the Panama Papers, had not been invited and would not be attending the summit.
A cross-party group of MPs sent a letter to Mr Cameron warning the Prime Minister that he urgently needs to get Britain’s own house in order on global tax evasion by ending corporate secrecy in British Overseas Territories and Crown Dependencies.
“We respectfully submit that if territories under British authority are left free to give harbour to publicly anonymous corporations, then Britain’s achievements and credibility in the global anti-corruption movement will be undermined” said the letter from the Global Organisation of Parliamentarians Against Corruption. It was signed by the MPs Margaret Hodge, David Davis, Nigel Mills and Catherine McKinnell.
While the Prime Minister has pledged to strip away corporate secrecy in relation to the ownership of companies in Britain, he has stopped short of exerting pressure on UK overseas territories and dependencies such as the British Virgin Islands and the Bahamas to meet the same standard of transparency. A recent agreement between the Government and the territories enabled them to retain the option of keeping registers of the beneficial ownership of companies closed to public inspection.
Campaigners say this loophole will continue to enable tax evaders and corrupt politicians from all around the world to stash their money offshore, hidden from the sight of tax and legal authorities.
In a clear warning to Mr Cameron, the authors of the letter said that substantive proposals to close this loophole would determine whether the summit is ultimately seen as “an exercise in words or on deeds”.
A number of countries and territories sending representatives are due to announce further crackdowns on corruption. Forty jurisdictions, including some of the UK’s Overseas Territories and Crown Dependencies with major financial centres, have signed up to a deal to automatically share beneficial ownership registers with other countries.
Mr Cameron said ahead of the summit: “The evil of corruption reaches into every corner of the world. It lies at the heart of the most urgent problems we face – from economic uncertainty, to endemic poverty, to the ever-present threat of radicalisation and extremism.
“A global problem needs a truly global solution. It needs an unprecedented, courageous commitment from world leaders to stand united, to speak into the silence, and to demand change.”
Fifty countries will be represented at the summit, alongside international organisations including the IMF, OECD and World Bank. The leaders of 11 countries, including Norway, Sri Lanka and Tanzania will attend, while Secretary of State John Kerry will represent the United States.
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