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	Ongoing need for greater transparency of company ownership by Global Witness,Tax Justice Network, agencies   May 2019   US House of Representatives set to make history with bill on company ownership transparency. (Global Witness)   The US Congress is finally moving to advance legislation that could put an end to anonymously-owned companies used by criminals, the corrupt and kleptocrats to launder money in the US. Global Witness welcomes this bill and the bipartisan effort to advance this critical piece of legislation.   Similar bills seeking to bring transparency to the real owners of companies have been introduced in previous sessions of Congress however, the Corporate Transparency Act (H.R. 2513) would be the first version of this bill to be voted out of committee.   The bill, sponsored by Representative Carolyn B. Maloney (D-NY), Representative Peter King (R-NY) and Representative Tom Malinowski (D-NJ), requires companies to disclose their true, beneficial owners at the time the company is formed and to keep the information updated whenever it changes.   'Time and again, we see anonymous companies used as vehicles by criminals and the corrupt who seek to launder and stash their dirty money in the US', said Alexandria Robins, an anti-money laundering campaigner at Global Witness.   'In just the past few weeks alone, anonymously-owned companies appeared in a $1.2 billion Medicare fraud scam pursued by the DOJ and served as vehicles for global sex-trafficking rings exposed in Texas, Florida and elsewhere', warned Robins. 'Nearly every day we see the risks we face if the US continues to allow anonymous companies to serve as getaway cars for the criminal and the corrupt'.   A wide array of diverse voices support legislation to end anonymously-owned companies, including law enforcement organizations such as the the National District Attorneys Association and 24 State Attorneys General; anti-human trafficking organizations such as Polaris; national security scholars from business organizations such as the Coalition Against Insurance Fraud and the National Foreign Trade Council; anti-poverty and human rights organizations such as the ONE Campaign, Oxfam America and Human Rights Watch, and many more.   Global Witness has shown how anonymously-owned American companies allow a wide range of criminals to cheat justice, hurt Americans, and rip off ordinary people from drug trafficking to multi-million dollar insurance fraud and schemes that rob the elderly of their life-savings.   We encourage the full House to pass the Corporate Transparency Act and Senate to act swiftly and decisively to end the abuse of anonymous shell companies.   http://www.globalwitness.org/en-gb/press-releases/congress-anonymous-companies-historic-bill/ http://www.business-humanrights.org/en/usa-house-of-representatives-passes-landmark-bipartisan-bill-to-put-an-end-to-corruption-crime-enabled-by-anonymous-companies http://bit.ly/2M9oPJO http://www.business-humanrights.org/en/mandatory-due-diligence/latest-news-on-mandatory-human-rights-due-diligence   May 2019   UK Government's 'no-questions-asked' approach to companies gives money launderers a free pass.   One year since Global Witness biggest-ever analysis of the UK company register, we did it again and found thousands of companies can still avoid revealing their real owners or have money laundering risks associated with them. The root of the problem? Companies House doesn't actually have the powers or resources to ask questions.   UK companies and partnerships have been at the heart of some of the worst money laundering scandals of recent years involving hundreds of billions of pounds. While the Government created the first fully open register of the real owners behind companies in 2016, it hasn't finished the job by ensuring the information is checked and that the rules are enforced.   But it doesn't have to be this way. The Government should change the law and give more resource so that Companies House can do its job properly. There has never been a better time to empower Companies House and fix the register. So what did we find?   There is a continued problem with potential loopholes through which the real owners of companies (also known as beneficial owners) can remain anonymous, which include:   336,224 companies simply say they have no beneficial owner - which is allowed if no individual holds more than 25% of the shares of the company; 6,711 companies are controlled by a beneficial owner who themselves control over 100 companies, 487 companies are part of circular ownership structures, where they appear to control themselves; 8,872 companies name another foreign company as their ultimate owner which is unlikely to be listed on a recognised stock exchange (and therefore be compliant with the rules).   We also looked at red flags for money laundering and corruption and found thousands of companies have red flags associated with them.   We found: 2,083 company owners are disqualified directors - people who previously failed in their responsibilities and are banned from being a director in future; 1,519 company officers or beneficial owners are politicians - who as a result of their public positions may be at greater risk of corruption; 136,682 officers or beneficial owners are based in secrecy jurisdictions e.g. British Virgin Islands; 228,295 companies are registered at a company factory or mailbox address, with little or no connection to the actual place of business or owner.   There will be people who will want to use these findings to undermine the validity of this type of transparency in the first place (i.e. public registers of beneficial ownership). But this would be the wrong conclusion. The only reason we know anything about the weaknesses of the UK register is because it is available as open data.   And even despite the lack of checks on the data, the register has already had an important positive impact. Not only has it made it possible for people everywhere to know more about the real people behind the UK businesses they interact with (with information on beneficial owners being accessed over 0.5 million times a month), it has already made a tangible difference in the fight against money laundering and other crime.   Continued foot dragging by Government will only risk UK companies being implicated in the next major money laundering scandal, and do nothing to address the UK's reputation as an enabler of global corruption. While the flaws of the company register are serious, the UK Government has every opportunity to fix these now.   http://www.globalwitness.org/en-gb/blog/uk-governments-no-questions-asked-approach-to-companies/ http://www.globalwitness.org/en/campaigns/corruption-and-money-laundering/anonymous-company-owners/ http://www.globalwitness.org/en/blog/eu-leads-way-corporate-accountability/ http://www.taxjustice.net/2019/05/28/new-ranking-reveals-corporate-tax-havens-behind-breakdown-of-global-corporate-tax-system-toll-of-uks-tax-war-exposed/ http://www.taxjustice.net/2019/05/16/no-corporate-tax-avoidance-is-not-legal/ http://www.taxjustice.net/category/tjn/financial-secrecy-index/ Visit the related web page
	History RePPPeated - How public private partnerships are failing by Eurodad, Heinrich Boll Siftung, agencies   Oct. 2018   Public-Private Partnerships (PPPs) are increasingly being promoted as the solution to the shortfall in financing needed to achieve the Sustainable Development Goals (SDGs). Economic infrastructure, such as railways, roads, airports and ports, but also key services such as health, education, water and electricity are being delivered through PPPs in both the global north and south.   Although the involvement of the private sector in public service provision is not new, there is currently keen political interest in PPPs as an important way to leverage private finance. Donor governments and financial institutions, such as the World Bank Group (WBG) and other multilateral development banks (MDBs), have set up multiple initiatives to promote changes in national regulatory frameworks to allow for PPPs, as well as to provide advice and finance for PPP projects.   Since 2004 there has been a rapid growth in the amount of money invested in PPPs in the developing world. Although the trend has been volatile since 2012, efforts by MDBs to leverage private finance in both emerging and low-income economies have continued - for example, through the 'Cascade' approach developed by the WBG, whereby the use of private finance is prioritised over public or concessional finance. This indicates a more determined push to reduce the risk so private investors come in.   Many projects have been procured as PPPs simply to circumvent budget constraints and to postpone the recording of fiscal costs. Some accounting practices allow governments to keep the cost of the project and its contingent liabilities 'off balance sheet'. This ends up exposing public finances to excessive fiscal risks. Current austerity measures and orthodox policy prescriptions that encourage a low fiscal deficit also create a perverse incentive in favour of PPPs.   This report gives an in-depth, evidence-based analysis of the impact of 10 PPP projects that have taken place across four continents, in both developed and developing countries. These case studies build on research conducted by civil society experts in recent years and have been written by the people who often work with and around the communities affected by these projects.   The countries included are: Colombia, France, India, Indonesia, Lesotho, Liberia, Peru, Spain and Sweden. The sectors they cover are: education, energy, healthcare, transport, and water and sanitation.   Although we do not intend to generalise our conclusions in the vast and complex universe of PPPs, these 10 cases illustrate the most common problems encountered by PPPs. Therefore, they challenge the capacity of PPPs to deliver results in the public interest.   We found that:   All 10 projects came with a high cost for the public purse, an excessive level of risk for the public sector and, therefore, a heavy burden for citizens. For example, the Queen Mamohato Hospital in Lesotho has had significant adverse and unpredictable financial consequences on public funds. Latest figures suggest that in 2016 the private partner Tsepong's invoiced fees amount to two times the 'affordability threshold' set by the Government and the WB at the outset of the PPP. Contributing factors to cost escalation include flawed indexation of the annual fee paid by the government to Tsepong (unitary fee) and poor forecasting. In Sweden, the total construction cost of Nya Karolinska Solna (NKS) hospital has rocketed from $1.4 billion to $2.4 billion and has been beset by technical failures. It is now known as the 'most expensive hospital in the world'.   Every single PPP studied was riskier for the state than for the private companies involved, as the public sector was required to step in and assume the costs when things went wrong. A significant example is the case of Jakarta Water in Indonesia, where two PPP contracts resulted in significant losses for the public water utility, PAM Jaya. In 2011, it reported a financial loss of US$18 million. Estimates suggest that losses will eventually total US$2.4 billion if the cooperation agreement continues as planned until its expiry date in 2022.   Five of the 10 PPPs reviewed impacted negatively on the poor, and contributed to an increase in the divide between rich and poor. For instance, in the case of the Queen Mamohato Hospital in Lesotho, the increasing and inflexible cost of the PPP hospital compromised necessary investment in primary and secondary healthcare in rural areas where mortality rates are rising and where three-quarters of the population live. In Jakarta, the provision of water through private operators (Jakarta Water) resulted in a radical increase in monthly bills, which are unaffordable for many poor families. Residents often rely on groundwater from community wedge wells, or have to buy water in jerry cans, which can cost as much as half a person's daily income.   Three of the PPPs resulted in serious social and environmental impacts. Poor planning and due diligence accounts for some of these. For example, on the Mundra coast in Gujarat, India, where a thermal power station project has taken place, there were serious social and environmental violations from the outset.   Following flawed impact assessments, there has been a deterioration in water quality and fish populations; community health impacts are evident due to air emissions; access to fishing and drying sites has been blocked; forced displacement of fishermen has taken place. This has also impacted on the life of women. Girls in particular have also been pulled out of school to perform physical and domestic labour to survive.   In Colombia, the PPP project designed to improve the navigability of the Magdalena River suffered from poor planning. Although the project never went into the construction phase - it collapsed due to the failure of the company to get the financing needed to implement it - the preliminary works carried out have already negatively affected the environment in and around the river.   Nine out of 10 of the projects lacked transparency and/or failed to consult with affected communities, and undermined democratic accountability. The failure to publish contract details does not chime well with the risks that the public sector is forced to take on. In the small Indian town of Khadwa, for example, where a PPP was launched to provide municipal water, it took four years to finally inform the population about what was happening. More than 10,000 households filed objections against the project within a period of 30 days. This was in a town where regular domestic water connections totalled 15,000.   In Liberia, where the government outsourced its public pre-primary and primary schools, initially to Bridge International Academies Ltd (BIA), the process was not competitive, local communities were not properly consulted, and there was not full transparency.   All cases showed PPPs were complex to negotiate and implement, and that they required specific state capacities to negotiate in the public interest, including during the renegotiation process.   In Peru, the renegotiation process to build a new airport through a PPP in Chinchero resulted in a change to the entire funding structure of the project. After a strong report from the Comptroller General referring to economic damages for the state, and in the midst of a national scandal over the project, the Peruvian government finally had to cancel the contract on the grounds of national interest.   The construction of a courthouse in Paris proved so complex, costly and controversial that the new French Justice Minister has decided that her Ministry will never engage in a PPP again.   Three of the PPP contracts had to be cancelled due to an evident failure in the process, including proper due diligence to identify the possible impacts of the project. For example, the Castor Project 'feted as Spain's biggest offshore gas storage plant' was halted after gas injections caused more than 1,000 earthquakes. Despite never being used, the Castor project has so far cost the public $3.28 billion, which is currently set to be paid through increased gas bills.   This joint CSO report makes the following recommendations to the WBG, the International Monetary Fund (IMF) and other public development banks, together with the governments of wealthy countries that play a leading role in these institutions:   Halt the aggressive promotion and incentivising of PPPs for social and economic infrastructure financing, and publicly recognise the financial and other significant risks that PPPs entail.   Support countries in finding the best financing method for public services in social and economic infrastructure, which are responsible, transparent, environmentally and fiscally sustainable, and in line with their human rights obligations. Prioritise tax revenues, whilst augmenting them with long-term external, and domestic, concessional and non- concessional finance, where appropriate.   Ensure good and democratic governance is in place before pursuing large-scale infrastructure or service developments. This should be done through informed consultation and broad civil society participation and monitoring, including by local communities, trade unions, and other stakeholders.   Uphold the right to free, prior and informed consent, and ensure the right to redress for any affected communities. The rights of affected communities should be taken into account.   Ensure that rigorous transparency standards apply, particularly with regard to accounting for public funds - the contract value of the PPP and its long-term fiscal implications must be included in national accounts.   Contracts and performance reports of social and economic infrastructure projects should be proactively disclosed. The public interest ranks higher than commercial interests.   Finally, we urge all those concerned with justice, equality, sustainability and human rights to resist the encroachment of PPPs and to push instead for high-quality, publicly-funded, democratically-controlled, accountable public services. The wellbeing of our communities and societies depends on it.   * Access the 44pp report via the link below. Eurodad (the European Network on Debt and Development) is a network of 47 civil society organisations (CSOs) from 20 European countries.   http://eurodad.org/HistoryRePPPeated http://www.gi-escr.org/private-actors-social-services http://www.ipsnews.net/2019/01/hospital-ppps-undermine-healthcare/ http://www.world-psi.org/en/issue/privatisation http://www.reflectiongroup.org/en http://www.2030spotlight.org/en http://www.globalpolicy.org/ Visit the related web page
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