STEP And ITIO Issue Report Critical Of OECD

Tax-News.com, London

24 September 2002

As Commonwealth Finance Ministers prepare to meet in London, a major new study warns that, by focusing on small states and overlooking their own membership, the 30 countries which make up the Organisation for Economic Cooperation and Development (OECD) may fail in their latest bid to stop corporate crime. Instead, some dominant OECD countries may simply get a further commercial advantage over small and developing economies and even over their OECD partners.

The study, Towards a Level Playing Field, undertaken by law firm Stikeman Elliott for the International Tax and Investment Organisation (ITIO) and the Society of Trust and Estate Practitioners (STEP), reveals that, while arguing for tighter regulation of “corporate vehicles” in small countries, the OECD is excusing large OECD corporate domiciles such as Delaware and Nevada in the USA from compliance with new rules to regulate service providers and track beneficial ownership.

Launching the report on the eve of the Commonwealth Finance Ministers meeting, Rt Hon. Owen Arthur, Prime Minister of Barbados, an ITIO member country, said, “This report is a constructive contribution to the debate on how states should interact on international economic matters. OECD members should recognise that the problem of international corporate crime needs to be addressed in all countries, including themselves.

“As this report shows, times have changed and many small and developing countries are very well regulated. To avoid seeming protectionist in a world where free trade agreements are proliferating, the OECD must insist that all finance centres improve regulation to the same degree and at the same time.”

Colin Sharp, STEP Worldwide Chairman, added, “International crime is a global problem which requires global solutions. Our members worldwide find it incomprehensible that they have to bear more onerous and costly obligations than competitors in some US states. Unless corrected this partial approach will only achieve partial results and business will flow from well regulated centres to less stringent ones.”

Richard Hay, who headed Stikeman Elliott’s report team, said, “The OECD has made important contributions to improving the regulation of companies. However, service providers in the US still sell corporate shells around the world with no questions asked about beneficial ownership and no requirements to track financial statements. The study shows that OECD countries must focus on implementing their ideas at home to catch up with developments in non-member states.”

Towards a Level Playing Field provides a first-ever, comprehensive review of the regulation of corporations, trusts and limited partnerships in 15 OECD and non-OECD countries.

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