Leaders of the G8 countries will gather in Lough Erne, County Fermanagh, Northern Ireland between 17–18 June 2013 for the 39th G8 summit. In January this year David Cameron announced that trade, tax and transparency would be at the top of the G8 agenda.

- Press Release: Read the Global Witness press release: G8 leaders must seize historic opportunity to end corporate secrecy and usher in an age of transparency

- UPDATE: Breakthrough commitment from UK to roll back corporate secrecy; the G8 and offshore havens should follow suit

- UPDATE 2: The beginning of the end of corporate secrecy? G8 strikes a blow against corruption – but still more to do Transparency & Accountability

The agenda focuses on a drive for greater transparency and accountability in the global economy. It includes:

Global Witness believes these are some of the fundamental issues that global leaders must tackle if they are to back up their rhetoric on development and deliver solutions that would bring lasting improvements to the lives of the world’s poorest people.

Tackling anonymous shell companies

Those who loot state funds through corruption or deprive their state of revenues through tax evasion need more than a bank: they need to hide their identity behind a corporate front.  It is so easy to set up such a company that criminals, terrorists and corrupt politicians can easily move money around the world with impunity.

Tackling the issue of anonymous company ownership would remove a key tool used by the corrupt to divert billions of dollars from state accounts – often from the poorest countries on the planet.

Global Witness reaction to G8:

The G8 has started a rollback in corporate secrecy by beginning the process of eradicating anonymous shell companies that enable corruption, tax evasion and state looting.

The UK and US have committed to creating registries of the ultimate owners of companies, with the UK having a clear preference for making these public. A public register would be cheap, have minimal impact on businesses and would deliver the most benefits to developing countries. However, other G8 countries did not match this ambitious approach.  France, Italy and Canada, are likely to consult over having a central registry, while Germany, Japan and Russia have rejected the idea.

Ultimately, every single country – and their offshore tax havens – must commit to making company ownership a matter of public record. Only then will dirty money and hidden identities be properly exposed to daylight, helping to curb the corruption that keeps poor countries poor. In absence of making registries public there should be an explicit commitment for developing countries to access them, as they are the ones that suffer most from corporate secrecy.

“Anonymous shell companies are the getaway car for crime and corruption: the G8 haven’t taken away the keys yet, but they are starting to let down the tires,” said Gavin Hayman, Director of Campaigns at Global Witness. “The Prime Minister has said that his ambition is to make information about who owns and controls companies public and we’ll be holding him to that. Other countries must follow suit. We will be watching.”

The US has also taken the welcome step of committing to regulate company incorporation agents – the middlemen who set up shell companies, and often provide sham nominee services.

Links to the action plans, and a summary of their contents

Transparency in the oil, gas and mining industry

Payments for oil, minerals, and other natural resources will be the largest inflow of wealth to Africa for the foreseeable future. This huge transfer of wealth could be one of the best chances in a generation to lift many of the world’s poorest out of poverty. And yet citizens are often kept in the dark about who is doing business with who and where the money is going.

It’s therefore vital that big oil, gas and mining companies open up their books to scrutiny and publish the payments they make to governments around the world. For this information to be useful, they must do this on a project-by-project basis.

Momentum towards a global consensus on extractive sector transparency is now unstoppable. Around 75% of global extractive companies are now covered by transparency laws in the U.S. and EU. Other key markets now need to follow suit. Canada has recently announced it will enact a mandatory transparency standard for Canadian companies.

Global Witness welcomes G8 call for extractive sector transparency to be a global requirement

But Russia and Japan commitments weak

The G8 Communiqué states their commitment to “common global standards” in which extractive companies “would be required” to report payments to governments for the resources they exploit. It also notes that the G8’s EU members have committed to “quickly implement” the new EU Directives which were passed into law earlier this month and require extractive companies to publish the payments they make.

“Global Witness is very pleased to see such a strong commitment from the G8 to legal requirements which will force oil and mining companies to disclose the payments they make. This commitment underpins progress made at the EU and within the U.S. on this issue, and confirms yet again that momentum towards a global transparency standard is now unstoppable”, says Brendan O’Donnell, who leads Global Witness’ Oil Campaign.

“It is significant and encouraging that the G8 is pushing for companies to be required to disclose in all countries of operation – without exception. There are no opt-outs and the statement makes no mention of any claims about competitive disadvantage, contrary to claims made by big oil.”

The Communique also issued a call to countries outside the G8 to implement mandatory standards, in particular “project-level reporting.” “This is a clear call by the G8 to Australia, China, India and other G20 countries to join the global standard by introducing their own legislation.”

Given the strength of the G8 commitment to mandatory disclosure standards, Russia and Japan’s ‘to do’ list is very weak indeed, with the two countries only yet pledging to support existing voluntary initiatives. “Russia and Japan need to go further and adopt revenue disclosure laws for their companies”, said O’Donnell.

Last week the Canadian government announced that they will create regulations that match the EU and US laws, meaning that about three-quarters of the global extractive industry are now covered by transparency laws. Over the weekend mining giant Rio Tinto urged the Australian and other governments to join.

Land deals

Since 2008, the rush to buy up land in developing countries has rapidly intensified, pushing millions of people deeper into poverty and leading to widespread environmental destruction.

Despite this growing problem, the land sector remains largely unregulated and deals are frequently agreed in secret between governments and investors, allowing corruption and impunity to flourish.

Making land deals more transparent is high up on the political agenda but the political will to introduce mandatory regulation remains absent. Only through forcing companies to disclose information around their large-scale land acquisitions will citizens be able to access the information they need to hold investors and governments to account.

Recognition of problems associated with large-scale land investments is welcome, but the G8 has missed a critical opportunity to end secrecy in land deals

The Communique stated that G8 governments will “support greater transparency in land transactions including at early states, and increased capacity to develop good land governance systems in developing countries. The Communique also proposed partnerships between G8 and developing country governments with the aim of improving land governance and implementing the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests (VGGTs) in the Context of National Food Security.

“Global Witness wants G8 countries to commit themselves to the robust implementation of voluntary guidelines to govern their overseas land investments, and ultimately specific and targeted regulation in the land sector in order to tackle the current climate of secrecy,". said Megan McInnes, who leads Global Witness' campaign on land.

Conflict resources / diamonds

In countries like the Democratic Republic of Congo, Sierra Leone and Côte d’Ivoire, the trade in diamonds and minerals has funded brutal civil wars that have resulted in the death and displacement of millions of people. Revenues from diamond mining ventures in Zimbabwe’s Marange area are providing off-budget support to abusive security forces loyal to Robert Mugabe’s Zanu-PF party.

US legislation passed in 2010 to tackle the trade in Congolese conflict minerals and voluntary due diligence standards developed by the OECD have led to some improvements in how companies in the tin, tantalum, tungsten and gold sectors manage their supply chains. However, efforts to stem the flow of conflict diamonds have stalled as a result of fundamental shortcomings in the Kimberley Process, the international certification scheme established for this purpose.

Global Witness is calling on governments to take concrete steps to prevent diamonds and minerals from financing conflict and human rights abuses by making supply chain checks – known as due diligence – mandatory for companies sourcing from conflict-affected and high-risk areas.

Global Witness Reaction to G8:

G8’s position on conflict diamonds disappointing

The G8 communiqué today expressed support for responsible, conflict-free sourcing of minerals, diamonds and precious stones from conflict-affected regions, and reaffirmed the group’s backing of the OECD due diligence guidance.

“G8 leaders’ support for tackling the trade in conflict resources is welcome. But disappointingly, the communiqué fell short of a clear call for OECD due diligence to be applied to diamonds, and included a regrettably strong endorsement of the flawed Kimberley Process,” said Global Witness Senior Campaigner Emily Armistead.
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