Re:common and Counterbalance, NGOs based in Italy and Belgium, have published a report that calls on the European Investment Bank and other international finance institutions to take more action to tackle tax havens.
The EIB was once a leader in this area, as it was one of the first banks to have a policy on tax havens. But the report identifies several failings and incidences where public money from the EIB has ended up in tax havens despite these policies.
The report draws on the Finance Uncovered investigation of Qalaa, an Egyptian Private Equity fund, to demonstrate how EIB rules are still allowing companies receiving loans to use tax havens.
Last year Finance Uncovered revealed that the company received hundreds of millions of dollars in loans from the EIB, despite the fact it was managing its projects from companies based in the British Virgin Islands.
Re:common and Counterbalance recommends that the bank takes steps to improve its policies in this area.
At Finance Uncovered we are really pleased to see the report take on a key failing discovered by our investigation. One of the problems identified by the Qalaa case was that the EIB tax haven policy used the OECD list to define what is and isn’t a tax haven. This list was for a couple of years empty, giving the all clear to well known tax havens such as the British Virgin Islands. Billions of dollars of public money was able to flow to lightly regulated secrecy jurisdictions.
The report recommends that the EIB should make their own assessments of secrecy jurisdictions. These assessments should draw on work from NGOs such as the Tax Justice Network’s Financial Secrecy Index.
The report is available on Counter-Balance’s website.