Banks and tax havens: The French regions are better at implementing transparency than the G20

Added 18 Jul 2012

Eurodad member CCFD-Terre Solidaire have a new report

What happened since 2009, when the G20 countries declared war on tax havens and French banks announced their withdrawal from these territories?

Officially, the problem has been solved as banks gradually close their subsidiaries in the territories blacklisted by the French government (although this list only contained eight territories which accounted for less than 0, 1% of global offshore finance in 2012). 

In a new report released on July 12, 2012, CCFD-Terre Solidaire shows that, unlike what these sensational announcements suggested, the presence of French banks in tax havens has increased, in terms of absolute numbers, especially for BNP-Paribas and Société Générale  and as a percentage of subsidiaries for Crédit Agricole. The seven French banks studied have 547 subsidiaries (nearly 21% of all their subsidiaries) in tax havens, as defined by the the Tax Justice Network's 2009 Financial Secrecy Index . For example, they have 24 subsidiaries in the Cayman Islands, 12 in Bermuda, 19 in Switzerland, 29 in Hong Kong and 99 in Luxembourg.

Rather than endlessly debating which list of tax havens should be used, banks should explain this disturbing concentration of subsidiaries in those secrective, poorly regulated and low tax jurisdictions. If they have nothing to hide then they should be able to publish accurate information about their activities, in each country where they operate, such as a full list of subsidiaries, the number of employees, turnover, profits and taxes paid. This way, tax administrations would be able to detect shadow companies and empty shells that record profits artificially made in normal-tax countries, particularly in France or developing countries.

With the exception of the Credit Coopératif, banks did not respond precisely to questions raised by CCFD-Terre Solidaire in the letters sent in preparation of this report. They also pretend to ignore the requests of French regional authorities that have adopted more ambitious transparency rules than the G20 or the French State. Eighteen of the regions are indeed involved in the fight against tax havens and eleven require disclosure of detailed information on the activities of all subsidiaries on a country-by-country basis.

Even more worrying, executives of BNP-Paribas and Société Générale have remained very elusive not to say contradictory during their hearings before the Senate Investigating Committee on tax evasion last April.

CCFD-Terre Solidaire expects the report of the Senate inquiry - to be published in a few days – to recommend concrete measures to require transparency from the main users of tax havens.

To be more effective in the fight against tax avoidance, CCFD-Terre Solidaire also relies on the mobilisation of a growing number of local authorities and on the 70 newly elected MP’s as well as the President who have all made commitments in response to the “Pacte pour une Terre solidaire” carried by the Association during the 2012 election campaign.  

Read the full report: Banques et Paradis Fiscaux Quand les régions françaises font mieux que le G20 pour imposer la transparence (in French)