Prime Minister Imran Khan on Tuesday reiterated his concern regarding the illicit flow of $1 trillion from developing countries to tax havens, stressing on the need to halt these outflows.
The prime minister’s remarks came during the World Leaders Summit Dialogue organised by the United Nations Conference on Trade and Development (UNCTAD) during its on-going 15th Quadrennial Meeting, hosted by Barbados.
“According to the FACTI panel (UN High Level Panel on International Financial Accountability, Transparency and Integrity) $7 trillion are parked in these tax havens and haven destinations,” he said.
“This plunder is taking place because of the corrupt ruling elite of the developing world,” the premier added.
He termed the challenge a “huge crisis”, which he predicted will “only get worse” in the coming years.
PM Imran Khan said the only way this will stop is if the recommendations made by the FACTI panel are implemented, while also acknowledging that “unfortunately the richer countries which can do something about it [have] no incentive to do anything”.
The premier said that the illicit outflows are “crushing” the people of the developing world, not just because the money is being siphoned off to the developed world — which could instead be spent on human development — but also because resultantly, when the money leaves the country, it affects the local currency which devalues, leading to inflation, and then more poverty.
He said an unseen effect which even the developed world will see in the days to come is economic migrants, which are barely a “trickle” right now.
“I urge you madam secretary general to do everything to raise awareness that this huge injustice which is being done to the people of the developing world, has to stop.”
Earlier, PM Imran Khan also spoke of prioritising vaccine equity, debt relief, and climate finance, as part of global economic recovery from the devastating effects of COVID-19 pandemic.
Expressing concerns over vaccine inequity, the prime minister called for a more equitable distribution. Also, recalling his campaign for debt relief, the prime minister advocated for debt relief until the end of the pandemic.
Furthermore, he reaffirmed the urgent need for mobilisation of and contribution by richer countries to climate finance in view of the vulnerability and existential challenges faced by Small Island Developing Countries (SIDS) and other developing countries, including Pakistan.
The Prime Minister was invited to the Leaders Dialogue along with Presidents of Kenya, and Guyana, Secretary General UNCTAD and heads of other UN agencies, under the theme of “Building a more prosperous development path: Matching the scale of the moment”.
The Quadrennial Conference, hosted virtually by Barbados from 4-7 October 2021, is taking place in the backdrop of unprecedented economic, public health and social effects, induced and exacerbated by COVID-19 pandemic.
FACTI panel recommendations
In February, the FACTI panel had released a report with 14 recommendations “to reform, redesign and revitalise the global architecture, so it can effectively foster financial integrity for sustainable development”.
1A: All countries should enact legislation providing for the widest possible range of legal tools to pursue cross-border financial crimes.
1B: The international community should develop and agree on common international standards for settlements in cross-border corruption cases.
1C: Businesses should hold accountable all executives, staff and board members who foster or tolerate illicit financial flows in the name of their businesses.
International tax norms, particularly tax-transparency standards, should be established through an open and inclusive legal instrument with universal participation; to that end, the international community should initiate a process for a UN Tax Convention.
3A: International anti-money-laundering standards should require that all countries create a centralised registry for holding beneficial ownership information on all legal vehicles. The standards should encourage countries to make the information public.
3B: Improve tax transparency by having all private multinational entities publish accounting and financial information on a country-by-country basis.
3C: Building on existing voluntary efforts, all countries should strengthen public procurement and contracting transparency, including transparency of emergency measures taken to respond to COVID-19.
4A: Taxpayers, especially multinational corporations, should pay their fair share of taxes. The UN Tax Convention should provide for effective capital gains taxation. Taxation must be equitably applied on services delivered digitally. This requires taxing multinational corporations based on group global profit.
4B: Create fairer rules and stronger incentives to combat tax competition, tax avoidance and tax evasion, starting with an agreement on a global minimum corporate tax.
4C: Create an impartial and fair mechanism to resolve international tax disputes, under the UN Tax Convention.
5A: Create a multilateral mediation mechanism to fairly assist countries in resolving difficulties on international asset recovery and return, and to strengthen compensation .
5B: Escrow accounts, managed by regional development banks, should be used to manage frozen/seized assets until they can be legally returned .
6A: Governments should develop and agree global standards/guidelines for financial, legal, accounting and other relevant professionals, with input of the international community.
6B: Governments should adapt global standards for professionals into appropriate national regulation and supervision frameworks .
7: NON-STATE ACTORS
7A: The international community should develop minimum standards of protection for human right defenders, anti-corruption advocates, investigative journalists and whistle-blowers. States should consider incorporating these standards in a legally binding international instrument.
7B: Civil society should be included in international policy making forums in an effective and efficient manner.
8: INTERNATIONAL COOPERATION
8A: End information sharing asymmetries in relation to information shared for tax purposes, so that all countries can receive information.
8B: Enable free exchange of information at the national level as standard practice to combat all varieties of illicit flows.
8C: Promote exchange of information internationally among law enforcement, customs and other authorities.
9A: International organizations must provide timely advice related to IFFs, so that procedures, norms and policies can be updated regularly.
9B: Governments must dynamically adjust their national and international systems in response to new risks.
10: CAPACITY BUILDING
10A: Create an International Compact on Implementing Financial Integrity for Sustainable Development to coordinate capacity building. Extend existing capacity building that tackles tax abuse, corruption, money-laundering, financial crime and asset recovery.
10B: The international community should finance the creation and maintenance of public goods that can lessen the cost of implementing financial integrity commitments.
10C: Strengthen the capacity of United Nations Office on Drugs and Crime (UNODC) to do research on anti-corruption, including in collaboration with other international organizations, with the strategic aim of improving the effectiveness of capacity building and technical assistance.
11A: Establish a Centre for Monitoring Taxing Rights to collect and disseminate national aggregate and detailed data about taxation and tax cooperation on a global basis.
11B: Designate an entity to collect and disseminate data about mutual legal assistance and asset recovery efforts.
11C: Designate an entity to collect and disseminate data on enforcement of money-laundering standards, including beneficial ownership information.
12: IMPLEMENTATION REVIEW
12A: Update the United Nations Convention against Corruption (UNCAC) implementation review mechanism to improve comprehensiveness, inclusiveness, impartiality, transparency and especially monitoring.
12B: Update UNCAC and other peer review mechanisms to reduce duplication and increase efficiency.
13: NATIONAL GOVERNANCE
Governments should create robust and coordinated national governance mechanisms that efficiently reinforce financial integrity for sustainable development and publish national reviews evaluating their own performance.
14: GLOBAL GOVERNANCE
14A: Establish an inclusive and legitimate global coordination mechanism at United Nations Economic and Social Council (ECOSOC) to address financial integrity on a systemic level.
14B: Building up on existing structures, create an inclusive intergovernmental body on tax matters under the United Nations.
14C: Starting with the existing FATF Plenary, create the legal foundation for an inclusive intergovernmental body on money-laundering.
14D: Design a mechanism to integrate the UNCAC COSP into the coordination body under the auspices of ECOSOC.