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FTSEcrecy: the culture of concealment throughout the FTSE

Added 22 May 2014
A new report by Eurodad member Christian Aid, entitled "FTSEcrecy: the culture of concealment throughout the FTSE", warns that the secrecy surrounding thousands of subsidiaries created in tax havens by leading UK companies has created a black hole at the heart of London’s FTSE100. The report reveals an information void which threatens investors, customers and government regulators, because it leaves them without the facts they need to make good decisions about FTSE100 companies.

More specifically, the report found that:

  • 14% of the FTSE 100 subsidiaries outside the UK are based in highly secretive jurisdictions. All sectors of the FTSE 100 companies have subsidiaries in such places.
  • Investment and finance (37%), banks (28%) and mining (19%) have the highest percentage of subsidiaries in highly secretive jurisdictions.
  • Mining (46%), oil and gas (40%), insurance (30%), banks (27%), and media (25%) are the sectors that show the largest proportion of subsidiaries in nontransparent jurisdictions for which no data at all is available.
  • Data on turnover, assets, employees or shareholders’ funds could only be accessed at no cost for 26% of all FTSE subsidiaries. For the remaining 74%, either data was not available (21% of all subsidiaries) or data was available but could only be accessed after payment of a fee (53% of all subsidiaries).
  • In 35 of the FTSE 100 companies, the percentage of subsidiaries for which data can be obtained at no cost is lower than 10%.
  • According to a secrecy score that takes into consideration both the location of all subsidiaries and the level of control of those subsidiaries by FTSE 100 companies, mining, oil and gas, travel and leisure, banks, and engineering are the top five most opaque sectors of the FTSE 100.
The report recommends that the UK and other governments require all companies to report their accounts on a public country-by-country basis, requiring them to publish data such as profits made and taxes paid separately for each country in which they operate. Such a rolling back of secrecy would help governments to ensure that companies are paying the right amount of tax. 

FTSEcrecy also calls for all jurisdictions to require all companies registered in their territory to submit annual statutory accounts, including audited balance sheets, profit and loss accounts, cash flow statements and directors’ report or annual returns. Governments should enforce the requirements.

Further recommendations are that companies’ statutory accounts should be publicly accessible at no cost and that governments in Europe and G20 countries should establish public registers of the real (or ‘beneficial’) owners of companies, foundations and trusts.

Read the full report here or click on the download button below.