From Bono to Queen Elizabeth, the revelations contained in the Paradise Papers leaks reveal the shocking state of business-as-usual for the world’s rich and famous, and the companies in their control.
But as we pore over the salacious details of the shell companies and trusts known as the “getaway cars” of the world’s criminal and corrupt, it’s essential that we also pay attention to where the impact of corruption, tax dodging and money laundering is felt.
And it’s a long way from Buckingham Palace.
It’s estimated by the Tax Justice Network that up to $500 billion a year is being stolen from the public purse through tax dodging, and other estimates put it at more than $1 trillion when other practices like money laundering and corruption are factored in. The impact of this drain on public funds is felt by everyone, but most acutely by women, and especially women in the world’s poorest countries.
Women and girls affected
Tax dodging , corruption and money laundering has a disproportionate impact on lower-income countries because corporate taxes make up a bigger share of their overall public revenue compared to income tax. This results in cuts to public services like schools, hospitals, and public transport – and these cuts impact women and girls the most.
When healthcare is insufficient, it is generally women who see their burden of unpaid labour increase as they take on care for the sick and elderly. When schools become expensive, it is more likely to be girls rather than boys who have to drop out. Without accessible and affordable public transport, women and girls are at greater risk of violence. The list goes on.
Take the example of Orji Theresa, who works in a Primary Health Care Centre in Nigeria, which has one of the highest maternal mortality rates in the world. Orji provides unpaid care to pregnant women in her community. The hospital she works in has no water source, no electricity and no government funding. She teaches women how to care for themselves during pregnancy, but being so under-resourced and having no other hospital with medicine nearby means many women deliver their babies in dangerous circumstances. Often women die in the process.
Orji’s salary was previously paid for under a government scheme to tackle poverty. The scheme was scrapped in 2015 by the incoming government, partly because of Nigeria’s dwindling public funds.
This is money that could be raised by ensuring big companies pay their fair share to governments, and transparency measures to stop bribery, tax dodging, and other such practices. Earlier this year, for example, oil giant Shell and Italian Oil company Eni became mired in a billion-dollar bribery scandal over its 2011 acquisition of a vast, undeveloped oil field off the coast of the Niger Delta. Shell and Eni paid the Nigerian government US $1.3 billion, but this money was channelled to the former Nigerian oil minister rather than the public purse. This single deal amounted to 80% of Nigeria’s 2015 health budget.
From leaks like the Panama and Paradise Papers we know something of scale of the problem, and from women like Orji Theresa and the millions of people calling for something to be done we know that the impact is unacceptable. The question is whether governments will have the courage to challenge business-as-usual.
What can be done?
The cornerstone of the policy response must be transparency – measures that will lift the veil of secrecy that allows corporations and individuals to hide their identities through layers upon layers of shell companies and trusts, and also hide where they do business and the tax they pay there. One of the most important policies is transparency of beneficial ownership through a public register maintained by national governments that lists the ultimate owners of all companies and trusts. This is a bit like putting number plates on getaway cars – making the identities of those who own and control companies and trusts transparent acts as a deterrent for bad behaviour and increases accountability.
There has been some significant progress on this around the world. More than forty-five countries are working towards instituting their own public registers of beneficial ownership.
In the UK this law has already been introduced through the “Persons of Significant Control” register, and when preliminary data was released earlier this year by Companies House, analysis by Global Witness and others found that more than 3000 companies listed their owner as another company with an address in a tax haven. It also shed light on company structures of some of the UK’s biggest companies, which can often be completely opaque to the public due to mind-bogglingly complicated subsidiary structures.
The Turnbull Government has said on the world stage, including at the UK anti-corruption summit in May last year, that it intends to increase beneficial ownership transparency in Australia. And yet despite a public consultation in February of this year, commitments have still not been made – although the ATO has managed to find $8 million for an advertising campaign claiming that the job is done and multinationals are now paying their fair share.
The revelations of the Paradise Papers are a stern reminder that our Government must stop dragging its feet and bring Australia back in line with action being taken around the world. And not just because Australians are included on the list of those dodging their taxes – but because Australia has just as much responsibility for protecting the rights of women and their communities as any other global citizen.
The fight against corporations and wealthy individuals’ tax dodging is equally a fight to end gender inequality and injustice, and policy responses must keep the gendered and unequal impact of this problem front and centre.
This means, to start with, transparency measures, like a register of beneficial ownership, that will help raise public revenue here in Australia and in the low income countries that need it most.