Countries vow to get tough on graft

A demonstrator dressed as a businessman protesting against tax avoidance at a "tropical tax haven" near the global anti-corruption summit venue. Critics said the proposed public registers of company ownership might not make a meaningful impact unless
A demonstrator dressed as a businessman protesting against tax avoidance at a "tropical tax haven" near the global anti-corruption summit venue. Critics said the proposed public registers of company ownership might not make a meaningful impact unless tax havens ended secrecy as well.PHOTO: AGENCE FRANCE-PRESSE

Public registers of company ownership soon to make money laundering difficult

LONDON • Countries from Britain to Afghanistan pledged yesterday to set up public registers of company ownership in a collective effort to make it harder to launder the proceeds of corruption around the globe.

Prime Minister David Cameron announced the measure at the start of a global anti-corruption summit he is hosting in London. Critics said the proposed registers might not make a meaningful impact unless tax havens ended secrecy as well.

The release of the Panama Papers, leaked documents from law firm Mossack Fonseca, put tax avoidance at the top of the global agenda by showing the extent to which tax havens were used by politicians and business people from around the world.

The build-up to the event was marred by Mr Cameron being caught on camera describing Nigeria and Afghanistan, which are both taking part, as "fantastically corrupt", but he later said that the leaders of both countries were tackling the problem.

US Secretary of State John Kerry, addressing a plenary session at the summit, said that corruption was as much of an enemy as some of the militants Washington was fighting. "It is a contributor to terrorism in many different ways and the extremism that we see in the world today comes to no small degree from the utter exasperation that people have with the sense that the system is rigged," Mr Kerry said.

  • Move unlikely to hit UK property sales

    Britain's plans to create a public register listing foreign firms that own property in Britain are not expected to affect demand much.

    The move announced yesterday is part of a wider global shift towards transparency surrounding wealth and property holdings.

    Mr Liam Bailey, Knight Frank's global head of research, told The Straits Times that the vast majority of transactions in Britain are made by individuals rather than through corporate entities.

    "The tax advantages of buying through corporate vehicles have been eroded over recent years," he added. So while some buyers may be deterred from buying in Britain due to the new rules, it is unlikely this will be anything other than a small number of individuals, he said.

    A spokesman for Singapore property firm City Developments Limited, which counts Britain as one of its five core overseas markets, called the move "a positive step towards greater transparency, which is conducive for business". CDL has acquired nine properties in the country since 2013 and continues to seek deals there.

    Individuals here buying property in Britain initially need to have their identity and address verified, noted Mr Alan Cheong, Savills Singapore's research head. "If the buyer is from Singapore or the money is remitted from Singapore, fewer questions are asked as Singapore's checks and balances are considered sound." 

    Rennie Whang

France, the Netherlands, Nigeria and Afghanistan would join Britain in launching public registers of true company ownership, Mr Cameron's office said. Mr Kerry said the United States had already announced steps to improve transparency on business ownership.

Mr Cameron's office said that any foreign company that owns a property in Britain or wants to buy one or to bid for a central government contract would have to join the new register. The aim was to expose those who hide behind obscure shell companies to own properties, a particularly acute problem in London which has been hit by repeated scandals involving luxury homes owned by corrupt foreign politicians and business people.

"I can't tell until I've seen the detail whether this is a PR stunt or a serious policy which will reveal the true ownership of properties here in the UK," said Ms Margaret Hodge, a Member of Parliament from the opposition Labour Party who specialises in these issues.

Anti-graft protesters who gathered near the summit venue called for tax havens to be abolished.

The British Virgin Islands, a British overseas territory that the Panama Papers suggested was home to more than half of the 200,000 companies set up by Mossack Fonseca, was not represented at the summit.

Separately, Australian Prime Minister Malcolm Turnbull yesterday denied any wrongdoing after being named in the Panama Papers as a former director of a British Virgin Islands company set up to exploit a Siberian gold prospect.

Mr Turnbull and former New South Wales Premier Neville Wran joined the board of Australian-listed Star Mining in 1993. The company hoped to develop a A$20 billion (S$20.1 billion) Siberian gold mine called Sukhoi Log, according to the Australian Financial Review.

Both Mr Turnbull and Mr Wran were subsequently appointed directors of Star Technology Services, a subsidiary of Star Mining in the British Virgin Islands which had been incorporated by Mossack Fonseca.

"The company of which Neville Wran and I were directors was an Australian-listed company and had it made any profits - which it did not, regrettably - it certainly would have paid tax in Australia," Mr Turnbull told reporters.

REUTERS

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A version of this article appeared in the print edition of The Straits Times on May 13, 2016, with the headline 'Countries vow to get tough on graft'. Print Edition | Subscribe