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DEVELOPMENT: What the Panama Papers Mean for Global Development

By Tharanga Yakupitiyage     IPS

Tax justice campaigners in Kenya. Credit: Zahra Moloo/IPS

Tax justice campaigners in Kenya. Credit: Zahra Moloo/IPS

UNITED NATIONS, Apr 12 2016 (IPS) – The financial secrecy and tax evasion revealed by the Panama Papers has an extraordinary human cost in developing countries and threatens the realisation of the UN’s ambitious Sustainable Development Goals.

The ongoing leak — made public by media outlets including German newspaper Süddeutsche Zeitung, theInternational Consortium of Investigative Journalists (ICIJ) – has already prompted protests and investigations around the world. The papers connect thousands of prominent figures to secretive offshore companies in 21 tax havens and reveal the inner workings of the offshore finance industry.

The documents focus on Panamanian law firm Mossack Fonseca, with its 210,000 entities, and has led to allegations that the firm aided public officials and multinational corporations to avoid taxes. Mossack Fonseca say that media reports have misrepresented the nature of their work and its role in global financial markets.

In one case, leaked emails contained in the Panama Papers suggest that the Heritage Oil and Gas Ltd Company (HOGL), sought help from Mossack Fonseca to sidestep tax laws in Uganda. According to ICIJ, upon the sale of an oil field, the company received a tax bill of $404 million. In an effort to avoid paying the taxes, the entity fought the Ugandan courts and meanwhile tried to relocate to Mauritius, according to the leaked emails.

Mauritius has a double tax agreement with Uganda, allowing companies such as HOGL to only pay taxes in one of the two countries. In 2000, the International Monetary Fund (IMF) listed Mauritius as a preferred location for companies due to its minimal tax laws.

These havens deny developing countries such as Uganda of much needed tax revenue for essential services, Oxfam’s Senior Tax Policy Advisor Tatu Ilunga told IPS.

“Tax havens are at the heart of a global system that allows large corporations and wealthy individuals to avoid paying their fair share, depriving governments – rich and poor – of the resources they need to provide vital public services and tackle rising inequality,” said Ilunga.

In Uganda, approximately 37 percent live on less than $1.25 per day. The East African nation also has one of the highest rates of maternal and under-five mortality rates in the world. According to the World Health Organisation(WHO), Uganda is one of the top ten countries that account for the majority of global maternal deaths.

In a country that lacks access to health services, HOGL’s $404 million in taxes represents more than the country’s health budget.

Former governor of Nigeria’s oil-rich Delta State James Ibori was also implicated in the Panama Papers,allegedly using Mossack Fonseca as an agent for four offshore companies in Panama and Seychelles. These entities provide anonymity, hiding true owners’ names and actions and thus allowing for finances and assets to be undeclared and untaxed. 

Though he was detained in 2012 for diverting up to $75 million out of the country, Nigerian authorities estimate that Ibori stole and stored over $290 million in tax havens.

Like Uganda, Nigeria ranks low in health indicators, contributing to some 10 percent of global maternal, infant and child deaths. Poverty has increased in the country with 61 percent living below the poverty line, according to the most recent Nigerian Bureau of Statistics report.

The Niger Delta region in particular, despite being a significant contributor to the country’s economy through oil production, remains the poorest and least developed region in Nigeria. In Ibori’s Delta state alone, 45 percent of people live in poverty. The UN Development Programme (UNDP) report found that the majority of people in the region lack access to potable water, electricity, health facilities and infrastructure including roads and telecommunications.

“Have you seen any taps here?…Water used to run in public taps, but that had stopped 20 years ago. We basically drink from the river and creeks…hygiene is secondary,” a Niger Delta Resident told UNDP.

Though Ibori’s stashed money represents only a slice of Nigeria’s budget, it is indicative of a global and pervasive problem that goes beyond Mossack Fonseca.

Transparency International’s Senior Policy Coordinator Craig Fagan told IPS: “If you think about the millions of files that have been released and the number of high profile individuals [in the Panama Papers], this is just one law firm in Panama.” .

“We can be certain that there are many other law firms whether in London, Hong Kong, New York, Miami that are operating similar structures,” he said.

According to Oxfam estimates, at least $18.5 trillion is hidden in tax havens worldwide. The organisation found that two thirds of this offshore wealth is hidden in European Union related tax havens while a third is in UK-linked sites where it is left undeclared and untaxed.  Oxfam said that their estimate is a conservative one.

The Swiss Leaks, also released by ICIJ in 2015, revealed how over 106,000 clients from Venezuela to Sri Lanka hid more than $100 billion in Swiss HSBC bank accounts.

Another analysis from Tax Justice Network (TJN) reveals that between $21 to $32 trillion is being diverted into offshore companies.

This has enormous effects in developing countries, costing poor nations over $100 billion in lost tax revenues every year, according to Oxfam. The charity also found that tax dodging by multinational corporations alone costs the developing world between $100 billion and $160 billion per year. Added with profit shifting, approximately $250 billion and $300 billion is lost.

This “missing” money could lift every person above the $1.25 per day poverty threshold three times over, according to Brookings Institution calculations.

Oxfam added that for every $1 billion lost through commercial tax evasion, 11 million people at risk across the Sahel region could have enough to eat, 400,000 midwives could be paid in Sub-Saharan Africa which has the highest maternal mortality rates, and 200 million insecticide-treated mosquito nets could be purchased to reduce child mortality from malaria.

In addition to lost development finance, Ilunga also noted to IPS that such actions have exacerbated inequality in the world, stating: “This is the same rigged system that has created the situation where…the wealth of the richest 1% surpasses the combined wealth of the rest of the world.”

Though the use offshore companies is not illegal, Ilunga asserted that the legality of such actions is precisely the issue.

“Tax dodging exists in a legal gray area with some activities clearly violating the spirit of the law even though those activities are not technically illegal. But the fact that these activities are legal is precisely the scandal we are most concerned with,” Ilunga said.

Fagan told IPS that it does not matter whether it is legally acceptable to have tax avoidance schemes.

“Just because it’s not illegal does not mean it is not a form of manipulation, form of corruption,” he said.

Ilunga and Fagan noted that the Panama Papers are a wake-up call and urged governments to end harmful tax practices and close loopholes. They highlighted the need to institute a public registry which lists companies’ true owners, where money is being earned and how much is being earned.

Ahead of the United Kingdom’s anti-corruption summit to be held in May 2016, Oxfam and TJN also called on the U.K. to lead the fight by halting their large network of tax havens including in the British Virgin Islands and the Cayman Islands.

“The anti-corruption summit provides an opportunity to dismantle the financial secrecy that threatens the [Sustainable Development Goals’] progress against poverty before it even begins,” said Oxfam Policy Advisor Luke Gibson and TJN’s Director of Research Alex Cobham in a briefing paper.

Cobham told IPS that though global reforms are essential, domestic stakeholders must ensure that tax revenues will be used to help meet the recently adopted Sustainable Development Goals (SDGs).

Included in the SDGs are commitments to reduce illicit financial flows and corruption by 2030 and to strengthen domestic resource mobilization including improving capacity for tax and revenue collection.

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ON THE MEDIA: What If African Media Reported US Elections Like Western Media Report on Africa?

By: Ndesanjo Macha            21 April 2016         GlobalVoices

 

A screenshot of footage, uploaded to YouTube by Storyful, of a protester who was assaulted by a Donald Trump supporter being restrained by police at a rally in North Carolina.

A screenshot of footage, uploaded to YouTube by Storyful, of a protester who was assaulted by a Donald Trump supporter being restrained by police at a rally in North Carolina.

Coverage of Africa by Western media often portray the continent in a negative light or in a simplistic manner, placing emphasis on conflict, corruption and tribal divisions. But Western media don’t adopt that same tone when they report on their own countries.

Following in the footsteps of Joshua Keating’s “If it happened there” series on US news magazine Slate, Tumblr user Ragamberi asked himself, “How would it sound, if African media reported US elections in the same tone as Western media report on polls in Africa and elsewhere?”

His answer became a post titled, “If It had Happened Over Here”. Here are a few excerpts of how he imagined African coverage of the contentious presidential race in the US might read.

Tribal violence

Pressure is mounting on the Obama regime to allow international observers and peacekeepers after tribal violence marred election campaigns in the troubled north American nation.

In Addis Ababa, an emergency meeting was called by African leaders to demand a return to rule of law in America, after pro-regime militants attacked a rally addressed by popular opposition leader Donald Trump in Chicago.

“Unless America allows independent international groups to monitor the poll and for peacekeepers to move in and restore order, the poll is a sham and cannot be declared free and fair,” the African Union said.

[…]

Explaining the weekend’s clashes, America experts – based at Eduardo Mondlane University in Maputo, Mozambique, Southern Africa – say Illinois has longstanding, deep-seated ethnic and sectarian tensions that are sure to boil over if the Obama regime does not allow UN peacekeepers before the hotly contested polls in November.

Republican candidate Donald Trump has seen violence break out several times at his rallies. Trump in turn has used violent rhetoric in speeches and on social media:

Bernie Sanders is lying when he says his disruptors aren’t told to go to my events. Be careful Bernie, or my supporters will go to yours!

Voter fraud

The election has also been marred by reports of widespread voter fraud. Sanders has complained of voter fraud after a controversial narrow loss in the Iowa region to party rival Hillary Clinton, wife of former regime leader Bill.

Trump himself has claimed voter fraud in the region of Florida, raising serious concern in the international community about the credibility of the forthcoming poll.

Throughout the primaries race, which determines the candidate who will represent the Democratic and Republican parties in the presidential elections, accusations of fraud have been tossed around on both sides of the aisle, and voters have complained the system is unfair.

Attacks on media freedom

There are also concerns over blatant attacks on media freedom. The International Committee for the Protection of Journalists condemned attacks on journalists during the campaign.

A journalist for CBS News was arrested while reporting on clashes at a rally for Donald Trump in Chicago in March. A charge of resisting arrest was eventually dropped.

Read the full post here.

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AFGHANISTAN: Interview- Don’t let Afghanistan become forgotten crisis – Red Cross official

By: Emma Batha           22 Apr 2016          Reuters 

Afghan men clear the rubble of their damaged house after yesterday's suicide car bomb attack on a government security building in Kabul, Afghanistan, April 20, 2016. REUTERS/Mohammad Ismail

Afghan men clear the rubble of their damaged house after yesterday’s suicide car bomb attack on a government security building in Kabul, Afghanistan, April 20, 2016. REUTERS/Mohammad Ismail

LONDON, April 22 (Thomson Reuters Foundation) – The world must not let Afghanistan become a forgotten crisis, a senior Red Cross official said on Friday as he warned of spiralling violence, donor fatigue and a worrying “brain drain” of educated professionals.

“The international community must keep their attention on Afghanistan. It’s far from being over. It’s not the time to switch off,” said Jean-Nicolas Marti, outgoing head of the International Committee of the Red Cross (ICRC) in Afghanistan.

He warned that violence – which is at levels not seen since 2001 – would likely escalate in the coming year.

“The security situation has really deteriorated … and my prediction is a further deterioration,” Marti said. “Potentially the 18 months ahead of us will be much tougher.”

Marti is meeting government officials in European capitals and Washington to press for greater political, financial and humanitarian support.

“The message is (we need) to make sure that Afghanistan doesn’t become a forgotten or ignored conflict,” he told the Thomson Reuters Foundation in London.

Marti was speaking just days after a suicide attack in Kabul killed 64 people and injured hundreds more in the deadliest single incident of its kind in the capital since 2011.

The Taliban, which claimed responsibility, is believed to be stronger than at any point since it was ousted by U.S.-backed forces in 2001. Fighters loyal to Islamic State have also emerged in pockets of the country.

Marti said the ICRC had evacuated 600 war-wounded in the first three months of the year – a high number given that fighting usually tails off in winter when mountain passes are snowed in.

“It … demonstrates that the fighting season is going to be tough this year and the humanitarian response needs to be up to it,” he said.

The Taliban, which wants to drive Afghanistan’s Western-backed government from power, announced the start of their spring offensive on April 12.

BRAIN DRAIN

The ICRC said it was particularly alarmed by the rising number of civilian casualties which hit a record high for the seventh successive year in 2015, with over 11,000 non-combatants killed or injured.

Attacks against medical facilities and staff have also risen 50 percent in the last year, making it more difficult for civilians to access healthcare.

Marti said the ICRC was launching a flying surgical team which will tour hospitals in provincial capitals around Afghanistan, training medical staff to respond to emergencies.

An estimated one million people are displaced within Afghanistan and others have fled abroad. Afghans are the second largest group of refugees and migrants arriving in Europe behind Syrians.

Marti warned of a “brain drain” as middle class professionals pack their bags in an exodus which could have serious implications for the country.

“What makes me pretty worried about the future of this country is that I know Afghans … who were here 10 years ago hoping to create a future for Afghanistan and who are now picking up their belongings and fleeing to Europe or to Canada.

“(This) illustrates for me that they are losing hope for the future of this country.”

Afghanistan is suffering from donor fatigue, partly because international attention was focused on Syria and Iraq, he said.

“We’ve seen a decrease in general interest for Afghanistan, but the situation is actually getting worse. It’s dangerous.”

(Editing by Ros Russell; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, which covers humanitarian news, women’s rights, trafficking, corruption and climate change. Visit news.trust.org to see more stories.)

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ON THE MEDIA: 2016 World Press Freedom Index: a “deep and disturbing” decline in media freedom

April 13, 2016      RSF

The 2016 edition of the World Press Freedom Index, which Reporters Without Borders (RSF) will publish on 20 April, shows that there has been a deep and disturbing decline in respect for media freedom at both the global and regional levels.

The 2016 edition of the World Press Freedom Index, which Reporters Without Borders (RSF) will publish on 20 April, shows that there has been a deep and disturbing decline in respect for media freedom at both the global and regional levels. Ever since the 2013 index, Reporters Without Borders has been calculating indicators of the overall level of media freedom violations in each of the world’s regions and worldwide. The higher the figure, the worse the situation. The global indicator has gone from 3719 points last year to 3857 points this year, a 3.71% deterioration. The decline since 2013 is 13.6%.

The many reasons for this decline in freedom of information include the increasingly authoritarian tendencies of governments in countries such as Turkey and Egypt, tighter government control of state-owned media, even in some European countries such as Poland, and security situations that have become more and more fraught, in Libya and Burundi, for example, or that are completely disastrous, as in Yemen.

The survival of independent news coverage is becoming increasingly precarious in both the state and privately-owned media because of the threat from ideologies, especially religious ideologies, that are hostile to media freedom, and from large-scale propaganda machines. Throughout the world, “oligarchs” are buying up media outlets and are exercising pressure that compounds the pressure already coming from governments.

All of the Index’s indicators show a decline from 2013 to 2016. This is especially the case for infrastructure. Some governments do not hesitate to suspend access to the Internet or even to destroy the premises, broadcast equipment or printing presses of media outlets they dislike. The infrastructure indicator fell 16% from 2013 to 2016.

The legislative framework has registered an equally marked decline. Many laws have been adopted penalizing journalists on such spurious charges as “insulting the president,” “blasphemy” or “supporting terrorism.” Growing self-censorship is the knock-on effect of this alarming situation. The “media environment and self-censorship” indicator has fallen by more than 10% from 2013 to 2016.

Every continent has seen its score decline. The Americas have plunged 20.5%, above all as a result of the impact of physical attacks and murders targeting journalists in Mexico and Central America. Europe and the Balkans declined 6.5%, above all because of the growing influence of extremist movements and ultraconservative governments.

The Central Asia/Eastern Europe region’s already bad score deteriorated by 5% as a result of the increasingly glacial environment for media freedom and free speech in countries with authoritarian regimes.

Published by Reporters Without Borders annually since 2002, the World Press Freedom Index measures the level of freedom available to journalists in 180 countries using the following criteria – pluralism, media independence, media environment and self-censorship, legislative environment, transparency, infrastructure, and abuses.

See the 2016 World Press Freedom Index on the RSF.org website from 20 April onwards.

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HAITI: Haiti will miss election deadline, no date for new president

15 Apr 2016      By: Joseph Guyler Delva     Reuters

PORT-AU-PRINCE, April 14 (Reuters) – Haiti will not meet a deadline to complete its presidential election by April 24, the top election official said on Thursday, without giving a new date to hold the already delayed vote in the impoverished Caribbean country.

The election was postponed in January after sometimes violent protests over allegations of fraud in the first round. An interim government has been running the country since the last president’s term ended in February.

“It is clear that the elections won’t take place on April 24, but we are still assessing the election machinery as we make decisions about the way forward,” the head of a newly appointed electoral council, Leopold Berlanger, told Reuters.

He said the delay, which comes after political battles over the formation of the interim government, meant that temporary President Jocelerme Privert would not hand over to an elected successor by May 14, as agreed in a cross-party deal to overcome the crisis.

“It is also clear that the fact that the elections won’t take place this month means it is impossible to have a new elected president by May 14,” Berlanger said.

The results of the first round in October put Jovenel Moise in first place and Jude Celestin in second for a runoff, but Celestin and several more of the 52 losing candidates rejected the outcome.

Before completing the process, the election council is overseeing a second evaluation of the results to test the claims of fraud and decide which candidates should take part.

Supporters of former president Michel Martelly and his favoured candidate, Moise, have protested in recent days, claiming Privert is dragging his feet so his allies can cling on to power. The protesters demand the election be held as soon as possible. (Editing by Frank Jack Daniel)

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