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Why a free press is vital for exposing financial injustice.

Added 03 May 2017
As Antoine Deltour and Raphaël Halet - better known as the Luxleaks whistleblowers - prepare for the next legal battle to clear their names, it’s worth remembering that it was only thanks to the much-vilified “mainstream media” that the tax avoidance scandal was exposed. Leaked documents do not make a story by themselves - it also takes independent, determined journalism.

The two former PwC employees are appealing against revised sentences handed down by a Luxembourg court for their part in exposing how multinational corporations used secret tax deals with the Grand Duchy to dodge taxes around the world. Although the court reduced their original punishments, the pair are fighting to clear their names altogether. But the whistleblowers deserve praise – not punishment. They were prosecuted for acting in the public interest. Even Edouard Perrin, the journalist who broke the story, had to face two trials - and was acquitted in both.

Today, the UN-designated World Press Freedom Day urges us to focus on the media’s role in advancing peaceful, just and inclusive societies, and the dangers journalists face in so doing. Attacks on the media come in many forms, and it’s not always the death-threat phone call or the late-night police raid which is most chilling. For many journalists, like Perrin, simply lifting the lid on shady business practices can land them in court. Yet it is only through their dogged pursuit of the truth - with the help of courageous whistleblowers - that we have been able to read about two of the biggest financial scandals of recent times - Luxleaks and the Panama Papers.

According to the International Consortium of Investigative Journalists (ICIJ) there have been at least 150 investigations in 79 countries around the world since they broke the Panama Papers story. But, say the ICIJ, “they have also provoked pushback from individuals and governments displeased with revelations of the hidden economic holdings of the global elite. Politicians, business executives and thousands of their supporters have responded with vitriol, threats, cyberattacks and lawsuits.”

Development finance goes off the rails.

Journalists also play a vital role in exposing corruption and fraud when it comes to development finance. The World Bank and its private sector arm the International Finance Corporation (IFC) have been dragged into a story of alleged corruption and dubious loans in eastern Africa. Finance Uncovered reporters from Kenya, Belgium and the UK revealed how a much-vaunted US$287m investment - more than half of which came from six multilateral development banks including the IFC - was supposed to modernise the famous Rift Valley Railway from Nairobi to Mombasa. According to Finance Uncovered, five years on there is little evidence of improvement - either in terms of modernising the railway or positive development outcomes. There's a lack of transparency as to where the money has gone, mainly due to the network of off-shore shell companies set up by the railway’s owner, an Egyptian private equity fund. Kenyan media report that the World Bank are carrying out a “governance health check” into the IFC’s US$22m share of the investment.

Shining a light on murky deals.

Eurodad, along with other civil society organisations, has long campaigned against the secrecy which enables multinational corporations and governments to engage in a range of dodgy financial practices including government-facilitated corporate tax avoidance, tied aid and expensive, risky Public-Private Partnerships (PPPs) in developing countries. Our current campaign for country by country reporting (CBCR) would see large multinationals obliged to reveal exactly where they make their profits and where they pay their taxes - making it easier for journalists, parliamentarians, shareholders and investors to hold them to account. For example, CBCR would make a Luxleaks-style scandal much more easy to detect.

Whistleblowers and journalists enjoy a symbiotic relationship which is most effective when both sides are confident that acting in the public interest will gain them approval, not opprobrium (or worse). Deltour, Halet and Perrin - and countless other whistleblowers and reporters round the world - should be applauded for their brave stand.