Yesterday, Monday 2 June, the European Parliament Development Committee unanimously voted to adopt a new report calling on the EIB, EBRD and development finance institutions in member states of the European Union to monitor companies they invest in to ensure they aren’t engaging in tax avoidance through the use of tax havens.
The report from the committee of MEPs drew on an investigation last year by Finance Uncovered. Our investigation revealed that the European Investment Bank had invested hundreds of millions of euros into an Egyptian oil refinery controlled by a shell company in the British Virgin Islands.
Further research found that the EIB’s anti tax haven policy had been ineffective for several years because the EIB considered no countries in the world to be tax havens.
This meant that billions of euros of publicly funded development finance was invested in projects controlled by companies located in some of the world’s most notorious tax havens and secrecy jurisdictions.
The investigation received widespread coverage in the European media and when shown the results of our investigation, Linda McAvan MEP, the chair of the EU’s Development Committee said she would be passing on the results of our investigation to colleagues working on the report that was voted on yesterday.
We asked for a Linda for a comment following the committee voted on the report. She said:
This report adopted by the development committee on tax evasion and tax avoidance in developing countries sends a strong message that the EU should take action now. The OECD has said that a 1% increase in tax revenue would be equivalent to doubling official development aid so we now need more work at the international level in the context of the post-2015 global development framework and UN conference on Financing for Development in July in Addis Ababa. The recommendation that EU financial institutions like the EIB withhold support from companies involved in tax evasion and avoidance is something clear and concrete, and the work of projects such as Finance Uncovered has helped shed light on this problem.
The committee report will now go to a plenary session of the European Parliament in July and if approved in a full session will compel European institutions to take action.