Economic crimes – what are they?
For Sherpa, economic crime comes in two main forms. Each is covered by a specific programme:
- Human rights violations and environmental damage perpetrated by economic actors, covered by the globalization and human rights program
- Illicit financial flows from developing countries, covered by the illicit financial flows and development program
The means of action remain the same for both of these programs:
- A multi-year campaign that aims to develop law in a particular domain
- Working groups in which Sherpa develops and promotes its advocacy areas
- Publications in the form of investigative reports, situation studies or legal studies—these different publications are subsequently used to support Sherpa’s advocacy work and legal actions
- Legal or extrajudicial actions (link to legal pages) intended to right an injustice
Sherpa does not meet the classic criteria of an NGO. In certain aspects, the association looks like a law firm; in other aspects it evokes a think tank. We are in fact a combination of these three structures, which makes SHERPA a unique organization in the French association landscape.Further reading: William Bourdon, Face aux crimes du marché, quelles armes juridiques pour les citoyens? [Translation: what legal weapons can be used by citizens in response to financial crimes?], published by La Découverte, Paris, 2010.
Globalization and human rights
Industrial disasters, such as that of the Probo Koala oil tanker, which spilled 600 tonnes of toxic waste in the city of Abidjan in the Ivory Coast in 2006, have been occurring at an alarmingly more frequent rate in recent years, causing sometimes irreversible social and environmental damage.
Globalization has disrupted the way of life of indigenous peoples around the world. As industrial operations develop, many communities are expelled or see their traditional means of subsistence disappear. To cite as proof the staggering number of indigenous languages that are endangered, a recent United Nations report shows that almost 90% of languages spoken by indigenous peoples could become extinct over the next 100 years. (Source: State of the World’s Indigenous Peoples, United Nations, January 2010). Workers’ fundamental rights are continuously being neglected in favour of systematically reducing costs and maintaining an ever-increasing production rates. In some countries, labour strikes are often brutally repressed, sometimes with outright murder.
This same concern for productivity has also trumped concerns about the quality of finished products; as a result, consumers are not immune to this kind of market logic. The example of lead-contaminated toys from the Mattel toy factory in China is enough to prove this point.
Humans and the environment are too often the victims of the activities of multinationals, especially in developing countries. Yet the lack of a regulatory framework adapted to globalization prevents us from establishing liability or obtaining compensation for damages.
Sherpa is a member of the following coalitions:
- Le Forum Citoyen pour la RSE (FCRSE)
The Forum Citoyen pour la RSE is a French coalition of civil society actors advocating for corporate social responsibility.
- The European Coalition for Corporate Justice (ECCJ)
The ECCJ includes NGOs, unions, consumers’ associations and research institutes working toward corporate social and environmental responsibility throughout Europe. ECCJ brings together more than 250 organizations in 15 European countries.
- OECD Watch
Sherpa is also a member of the coordinating committee of OECD Watch, an international network of NGOs that advocates for reinforcing the OECD Guidelines for Multinational Enterprises.
Illicit financial flows and development
How can we explain the fact that the wealth of the current president of Equatorial Guinea is estimated by Forbes to be $600 million, while half of the country’s 600,000 citizens have no access to drinking water?
How can we explain the fact that between 1993 and 2002, mining companies in Chile paid only $1.7 billion in taxes when they extracted and exported 20.8 million tonnes of copper, the equivalent of two years’ worth of world consumption? (Source: Perspectives on Corporate Taxation and Social Responsibility in the Chilean Mining Industry, 2005.)
According to ONE estimates, developing countries are losing at least a trillion dollars (€750 billion) each year due to illicit financial flows (Source: “Trillion Dollar Scandal”, ONE, 2014). While there is no international definition for illicit financial flows, the definition proposed by Global Financial Integrity is used across the board: an illicit flow is the movement of funds that are “illegally earned, transferred, and/or utilized.”
It includes funds from acts of:
– Corruption: for example, an extractive industry offers a bribe to obtain an operating permit, or a government representative seeks a bribe.
– Transfer mispricing: for example, a company falsifying the prices or quantities of imports in order to transfer capital to other jurisdictions, especially to avoid taxes.
– Money laundering: for example, a company or an individual committing criminal acts and concealing gains by turning them into assets (money, moveable property, real estate, investments, etc.) that appear legitimate.
– Tax evasion: for example, an extractive industry underreporting its export volumes and increasing production costs in order to artificially lower its revenues so it can pay fewer taxes in the country of extraction.
Illicit financial flows are a major issue for development, since they reduce the amount of resources available for essential public services, such as education and health, and worsen the debt burden for developing countries. Often, countries rich in natural resources have a low human development index. Activities in the natural resources sector (oil, gas, minerals, forestry, etc.) generate significant revenue, which tends to breed corruption, tax evasion, inequality and conflict, impeding poverty reduction in these countries.
Sherpa is currently focusing on ill-gotten gains, the fight against tax havens, transparency in extractive industries and, more generally, the struggle against illicit financial flows in natural resources.
Sherpa is a member of:
- The UNCAC Coalition
In partnership with the UNCAC Coalition, Sherpa is pushing for ratification of the Merida Convention (114 signatory countries) and the effective implementation of its provisions.
The convention considers all forms of corruption (laundering, abuse of power, influence peddling, etc.) by public or private figures, and also compels signatory countries to make the different forms it takes into criminal offences. The convention has provisions that are preventative and punitive to fight corruption. It organizes procedures in order to facilitate international cooperation and technical assistance. But above all, it is the first convention to expressly establish restitution of illegal assets as a fundamental principal.
- The Publish What You Pay coalition
Sherpa wants to reverse this paradigm and advocates for transparency in the extractive sector through Publish What You Pay, an international campaign that pushes extractive businesses to publish the amount of taxes and fees they pay to governments of countries in which they operate.
- Plateforme Paradis Fiscaux et Judiciaires
Tax havens are so attractive because of banking secrecy, impenetrable legal structures and the lack of judicial cooperation. They are the preferred locations to hide and/or launder criminal assets.
The fight against illicit financial flows will remain in vain as long as the scandal of offshore financial areas continues. Therein lies the importance of the struggle led by Plateforme Paradis Fiscaux et Judiciaires.Last modified: 8 December 2014