Tag Archives: tax avoidance

Latest Developments, August 11

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In the latest news and analysis…

British Prime Minister David Cameron has said he would consider limiting social networking services such as Twitter and Blackberry Messenger in situations like the recent riots, a measure, as Reuters puts it, “widely condemned as repressive when used by other countries.” The Globe and Mail’s Ivor Tossell conveys a similar sentiment: “Cracking down on citizens’ communications in times of crisis would put Mr. Cameron in the company of a large and unsavoury bunch of autocrats.” Earlier this year, the UN’s top expert on freedom of expression, Frank La Rue called for “as little restriction as possible to the flow of information via the Internet” but warned: “Governments are using increasingly sophisticated technologies to block content, and to monitor and identify activists and critics.”

In other technology news, the US military test launched its Falcon Hypersonic Technology Vehicle 2 (HTV-2). The unmanned manoeuvrable aircraft, built to travel at 20 times the speed of sound, is part of the Pentagon’s Prompt Global Strike efforts that have involved “working for nearly a decade on an audacious plan to strike anywhere on the planet in less than an hour.” But for the second time this year, the device lost contact with ground stations and disappeared into the Pacific, a result described by the program manager as “vexing.”

Piracy is reportedly starting to become an issue off the west coast of Africa: “Piracy in the Gulf of Guinea has over the last eight months escalated from low-level armed robberies to hijackings, cargo thefts and large-scale robberies,” the Associated Press reports, citing Denmark’s Risk Intelligence. Over on the continent’s east side, piracy is old news but the Guardian’s Mark Tran reports it has become another factor complicating aid delivery to those affected by the Horn of Africa’s food shortage. To recap then, the list of problems cited since a state of famine was declared in parts of Somalia include lack of money (less than half of what the UN says it needs), lack of organization, uncooperative rebels, a government/AU offensive against said rebels, high food prices, draconian US anti-terrorism laws and a weak dollar. US Secretary of State Hillary Rodham Clinton announced an additional $17 million in emergency funding, of which $12 million will go to Somalia. Also heading from the US to Somalia is Richard “Colonel Sanders” Rouget, whom Wired describes as a “mercenary with a criminal record and possible ties to several African coups and at least one murder.” In the name of counterinsurgency, “America has endorsed, however indirectly, a man who for years has allegedly fought against stability, justice and self-governance in Africa,” according to Wired’s David Axe.

Fifteen years after Pfizer drug trials during the course of which 11 Nigerian children died, the first compensation cheques have been issued, with the families of four of the deceased each receiving $175,000. A Wikileaks document revealed Pfizer tried to dig up dirt on the attorney general in order to make him drop the case before finally agreeing in 2009 to a $75 million settlement.

The US Supreme Court may examine the question of corporate liability for overseas human rights abuses later this year in light of recent contradictory interpretations of the Alien Tort Statute by federal appeals court judges. Human rights lawyers say the majority of the rulings support their position, but US Chamber of Commerce lawyers argue international law “establishes liability for states and individuals, and not for corporations.”

Oxfam’s Emily Greenspan writes about the new social and environmental policies of the International Finance Corporation, which is “the private sector lending arm of the World Bank Group.” The new rules include a “precedent-setting requirement” that corporations looking to work on indigenous lands obtain “free prior and informed consent” from local communites, and an obligation for oil, gas and mining companies to disclose their contracts with host governments. It does not appear, however, that companies have to reveal their profits, as called for by Christian Aid’s Joseph Stead in order to discourage corporate tax avoidance as well as government corruption. Nevertheless, Greenspan hopes the new requirements “will set in motion a ripple effect among other international financial institutions, export credit agencies, companies, and governments, helping to reduce social conflict and increase transparency around large-scale development projects globally.”

Over the last week or so, there have been a number of articles describing last year’s passage of the Dodd-Frank Act – a piece of American legislation that includes a requirement for companies to prove the minerals they use have not exacerbated conflict in their country of origin – as a disaster  for the Democratic Republic of Congo, the very place it was ostensibly meant to help. A Businessweek article talks of a 90 percent drop in legal mineral exports over the last year and a David Aronson op-ed in the New York Times says: “Rarely do local miners, high-level traders, mining companies and civil society leaders agree on an issue. But in eastern Congo, they were unanimous in condemning Dodd-Frank.” But the Institute of Human Rights and Business’s Salil Tripathi calls these arguments “simplistic and wrong.” He says those who pushed for the kinds of measures contained in Dodd-Frank realized there would be some adverse short-term economic impacts but they see ending a protracted conflict as the ultimate goal: “Restrictions on conflict minerals alone won’t end unrest in the DRC. But not having any restrictions on products known to fuel conflict, ostensibly to preserve livelihoods for the country’s people, won’t make matters better, either.”

Given the current economic crises on both sides of the North Atlantic, UC Berkeley economist Barry Eichengreen asks: “Isn’t this a once-in-a-lifetime opportunity to move away from a world where the US Federal Reserve and the European Central Bank hold the supply of international liquidity in thrall?” He proposes “a global-GDP-linked bond, the returns on which would vary with global growth rates.”

 

Latest Developments, July 19

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In the latest news and analysis…

With the food crisis in the Horn of Africa intensifying and the United Nations expected to declare the food shortage in southern Somalia a famine as early as tomorrow, Kenya has agreed to accept imports of genetically modified maize. The decision, which came in the face of anti-GMO protests, was a first for the country. The government insists the maize will be turned into flour at the point of importation so as to prevent the seeds from getting into the market, but it is unclear at this point what additional measures, if any, it will take to ensure containment.

The Center for Global Development’s David Wheeler examines investment in renewable energy sources by 174 countries over the last two decades. His findings “contradict the conventional view of North-South conflict that has dominated global climate negotiations, because they show that developing countries, whether by intention or not, have been critical participants in reducing the carbon load all along.  Furthermore, they indicate that poor countries have borne their fair portion of global carbon alleviation expenditures, measured as shares of income per capita.”

Wheeler’s colleague Charles Kenny defends his own suggestion that $100 billion in annual cash transfers would suffice to bring about “a world free of poverty,” by which he means that amount could raise everyone living in a poor country to the World Bank’s $1.25 a day poverty line, which the institution admits is a “frugal” figure.

Nick Dearden, director of the Jubilee Debt Campaign argues Western-style free trade – currently being pushed as the key to African prosperity by British prime minister David Cameron and the business delegation accompanying him on his trip to Africa – is the last thing the continent needs. Instead, he argues, African governments should look to “protecting industries, developing alternative and complementary means of trading, control of food production and banking, progressive tax structures, controlled use of savings, and strong regulation to ensure trade and investment really benefits people.”

While speaking in Nigeria, Cameron also called for the EU to adopt “legally binding measures to require oil, gas and mining companies to publish key financial information for each country and project they work on.” He explained: “We want to disclose the payments our companies make to your governments so you can hold your governments to account for the money they receive.” According to estimates by Global Financial Integrity, Nigeria lost $130 billion dollars between 2000 and 2008 due to illicit outbound financial flows, much of it in the energy sector. And real growth of such flows during that nine-year period was 21.9 percent in Africa. Christian Aid welcomed the prime minister’s words, pointing out that poor countries lose 50 percent more to transnational corporate tax avoidance each year than rich countries provide through aid. “But EU legislation needs to go further,” the group said. “In order to ensure companies are paying the right amount of tax, we need more information on how the taxes they do pay relate to the profits they make.” Christian Aid also wants to see a political push for greater transparency in all industries, not just the extractive ones.

JKL Energy, a Ghanaian company has announced it plans to start work on a $300 million oil and gas project. The venture, which has support from investors in Malaysia and Dubai, will contribute to “ensuring that indigenous companies actively participate in the development of Ghana’s oil and gas industry, seen by many as a major driver of the economy over the next 30 years,” according to a press release.

And Liberia could be the next African country to deal with the double-edged sword of oil production as Chevron is set to start offshore exploration later this year. The US expects a quarter of its oil imports to come from West Africa by 2015 and Liberian President Ellen Johnson-Sirleaf has said she hopes her country can avoid the “oil curse.”

A day after a call for a new Marshall Plan in South Sudan, a week after an argument for a Greek Marshall Plan and 18 months after a plea for a Haitian Marshall Plan, a Modernizing Foreign Assistance Network blog post asks if it is time for a “21st Century Marshall Plan” in the Arab world.

Al Jazeera’s Sebastian Walker investigates the debates and motives behind American military involvement in Libya, which he describes as “a victory for the so-called humanitarian interventionists,” such as secretary of state Hillary Clinton, ambassador to the UN Susan Rice and National Security Council advisor Samantha Power.

An online fundraising plan is set to kick off this week to cover the costs of enacting Arizona state legislation calling for prisoners to build 130 km of fence along the US-Mexico border to keep out would-be illegal migrants. The MSNBC article portrays opposition to the planned construction as being largely practical and logistical – one county sheriff considers it “well intentioned” though ultimately futile – but it also mentions one group taking a moral stand. While Defenders of Wildlife “are in support of effective border security,” they believe in freedom of cross-border movement for imperilled species, such as the Chiricahua leopard frog and the Sonoran pronghorn.

Latest Developments, June 29

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In today’s news…

Two World Bank economists argue the best way to reduce corruption and ensure Africa benefits from the current commodity boom is for governments to transfer portions of the resulting revenues directly to their citizens. Of course, government corruption is not the only obstacle to translating mineral wealth into societal benefits. After a three-year dispute, Canada’s First Quantum Minerals has just agreed to pay $224 million in tax arrears to Zambia. The Reuters piece says: “According to the World Bank, copper is responsible for 70 to 75 percent of export earnings but the mining industry as a whole only contributes about 10 percent of Zambia’s tax revenue.”

In the wake of last week’s guilty plea by  another Canadian company, Niko Resources, for bribing a Bangladeshi official, Transparency International finds itself in the unusual position of praising Canada…sort of. In the same breath, the organization points out that Canadian law defines prosecutable foreign bribery cases excessively narrowly and calls for the revival of proposed improvements that died in 2009 when the minority government ended the parliamentary session prematurely.

As the US and Switzerland struggle to come to an agreement on dealing with tax avoidance, the Tax Justice Network suggests some Swiss media and banks are too cozy to allow a meaningful public discussion on the impacts of tax evasion. Perhaps a quick trip to Vienna is in order.

As things stand, US sanctions on Sudanese oil exports will not apply to South Sudan when it officially declares independence on July 9. Unless South Sudanese oil exports, which account for 98 percent of the government’s budget, pass north through Sudan. Which is the only way the pipelines run.

Le Monde Diplomatique’s Serge Halimi argues the current debt crisis represents a threat to democracy as much as the economy and asks (in French) if there is an alternative to “shock therapy.” Another article in the same publication provides the example of Ecuador’s 2008 constitution which stipulates public debt must not impact national sovereignty, human rights or environmental protection; public debt can only be incurred to improve infrastructure or to invest in projects that will pay for themselves; public debt refinancing is only an option if the new terms are advantageous to Ecuador; and the nationalization of private debt is prohibited.

The World Bank tweets: “The time to act is now. The world’s poor will suffer first and most from #climatechange. http://t.co/hPuEYUF,” while the UK House of Commons environmental audit committee slams the global lending institution’s energy policies, which may actually be making climate change worse.

Andrea Wechsler argues in Global Policy that “global governance arrangements must reach beyond the limited concept of intellectual property to knowledge as such and, thus, address global knowledge governance.” But a number of civil society organizations worry a new set of principles on Internet policymaking raises “cybersecurity and intellectual property rights to a level of importance that is comparable with internationally recognized individual human rights such as freedom of expression.”