Ghana ranks 95th in the global Financial Secrecy Index (FSI) 2018 report polling a secrecy score of 62 in a study published by the Tax Justice Network in conjunction with Transparency International, a global coalition against corruption.
A total of 112 ‘Secrecy Jurisdictions’ were sampled – a term alternate to the more widely used term tax havens – use secrecy to attract illicit and illegitimate or abusive financial flows, a release available to the Ghana News Agency said.
It said Ghana scored more than average in ownership registration, integrity of tax and financial regulation, international standards and cooperation but performed abysmally under legal entity transparency, which entails public company ownership, public company accounts, country-by-country reporting, corporate tax disclosure and legal entity identifier, scoring “exceptionally secretive.”
The report is puzzled that government is positioning to re-establish an International Financial Services Centre (IFSC), a secrecy jurisdiction, knowing it failed in its quest to become one a decade ago.
It said beyond the dangers of IFSCs in facilitating money laundering and other illicit financial flows it added the ability of the central bank to effectively regulate the financial system was questionable.
The report said given the secretive nature of IFSC and the inability of government and Parliament to pass the Right to Information Bill – to access reliable and timely information – in addition to the failure of the Central Bank to carry out a rigorous impact assessment on how the economy fared when the Barclays Bank Ghana Limited (BBGL) was granted offshore banking license, leave much to be desired.
Topping the list is Switzerland, followed by US, Cayman Islands, Hong Kong, Singapore, Luxembourg, Germany, Taiwan, United Arab Emirates and Guernsey, in the first 10 ranking.
Kenya occupies the 27 position, Liberia 38, Mauritius 49, South Africa 50, Tanzania 75, Botswana 103 and the Gambia ranking 106, as part of the African showing in the global league.
The report estimates $21 to $32 trillion of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world.
It said illicit cross-border financial flows have been estimated at $1-$1.6 trillion per year, dwarfing the $135 billion or so in global foreign aid noting African countries alone since the 1970s have jointly lost over $1 trillion in capital flight, while combined external debts are less than $200 billion.
So Africa is a major net creditor to the world – but its assets are in the hands of a wealthy élite, protected by offshore secrecy; while the debts are shouldered by broad African populations making all poor and rich countries like Greece, Italy and Portugal, for example, suffering state loot via offshore secrecy.
It said a global industry has evolved involving the world’s biggest banks, law practices, accounting firms and specialist providers who design and market secretive offshore structures for their tax- and law-dodging clients.
The report said in providing secrecy, the offshore world corrupts and distorts markets and investments, shaping them in ways that have nothing to do with efficiency.
“The secrecy world creates a criminogenic hothouse for multiple evils including fraud, tax cheating, escape from financial regulations, embezzlement, insider dealing, bribery, money laundering, and plenty more. It provides multiple ways for insiders to extract wealth at the expense of societies, creating political impunity and undermining the healthy ‘no taxation without representation’ bargain that has underpinned the growth of accountable modern nation states. Many poorer countries, deprived of tax and haemorrhaging capital into secrecy jurisdictions, rely on foreign aid handouts,” it said.
The edifice of global financial secrecy has been weakened by advocacy and as mandated by the G20 countries for Organisation for Economic Cooperation Development (OECD)to fashion modalities – but it remains fully alive and hugely destructive. Despite what you may have read in the media, Swiss banking secrecy is far from dead. Without sustained political pressure from millions of people, the momentum could be lost.
The only realistic way to address these problems comprehensively is to tackle the menace directly by confronting offshore secrecy and the global infrastructure that creates it, the report said.