NGOs fight EIB loans to tax haven based firms

| 10/06/2009

(CNS): A coalition of international non-government organisations it going all out to campaign against the European Investment Bank’s (EIB) move to give loans to firms which the NGOs say are tax haven based multinationals. The Counter Balance coalition together with Eurodad, Tax Justice Network and Friends of the Earth said it will rally in front of the Council of the in Brussels in a symbolic action and has published a study on the EIB and its shadowy relationship with Tax Haven- based companies.


In a pres release yesterday the group said that the research reveals that there is a long list of EIB clients and projects in developing countries which use tax havens and similar secrecy jurisdictions. “One of the most used tax havens in the African region is Mauritius. This is particularly contradictory to the development purposes the EIB claims to have in poor countries because secrecy jurisdictions foster tax competition, allow bank secrecy and therefore corruption, and facilitate tax evasion and tax avoidance,” the NGOs stated.

The coalition said that the fight against tax evasion and tax avoidance, as facilitated by tax havens, has been put at the forefront of the political agenda in Europe in the aftermath of the global financial and economic crisis. European leaders have increased the public pressure on tax havens and offshore financial centres. French Prime minister François Fillon has said that tax havens are “black holes that should no longer exist”. Swedish Finance Minister Anders Borg has said “tax parasites” must be seriously dealt with. The release noted that the principles of transparency have been ratified by the European Parliament’s report on tax fraud saying that Europe should take the lead and make the elimination of tax havens worldwide a priority.

 The coalition said that the EIB should comply with these commitments and implement clear
regulations in order to prevent tax evasion and foster good governance in tax matters.Yet the study shows that many projects and beneficiaries funded by EIB money involve tax havens and
transnational companies that use them for tax purposes.

“Despite the strong statements from some EU leaders and commitments from EU institutions, action on tax havens is moving much more slowly than the political rhetoric would imply,” the NGOs said adding that the EIB remains an obscure institution little known to parliamentarians, NGOs and others who track development spending.

The coalition noted that the EIB as a public bank should not facilitate private tax avoidance and ensure that recipients of its loans do not avail themselves of tax havens or use other practices such as abusive transfer pricing which may lead to tax evasion or avoidance.

“Yet in the last five years the EIB has loaned EUR 5.66 billion to the top tax haven users from the UK, France and the Netherlands, while EUR 210 million has gone to African funds using tax havens in their strategies. Furthermore, some of the major infrastructure projects financed by the EIB in the name of development happen to have close links with tax havens, which is also the case with financial intermediaries benefiting via the EIB’s Global loans,” it said.

Combined with the dramatic lack of transparency in the EIB which prevents concerned citizens’ groups checking up on the due diligence procedures or the evidence that is used, the EIB fails to make a convincing case that its money is all well-used according to its policy on fraud and corruption the NGOs added.

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