Fifa and Panama the pariahs as UK leads push against graft

[LONDON] British Prime Minister David Cameron sat down with the leaders of "some fantastically corrupt countries" at a summit against graft in London on Thursday knowing that those at the center of recent scandals have been left outside the door.

The invitation list was drawn up to reward leaders who are attempting to tackle corruption in their countries, Mr Cameron's office said. They are sharing best practice while denying a platform to those who steal and hide some of the US$4 trillion the Organisation for Economic Cooperation and Development estimates is lost to graft each year.

The presidents of Afghanistan and Nigeria were at the table while soccer's scandal-hit world governing body Fifa was not invited. Panama and the British Virgin Islands, which were at the center of a leak last month that revealed 215,000 companies set up to hide from tax authorities, were also left off the list.

"Corruption is the cancer at the heart of so many of our problems in the world today," Mr Cameron wrote in the foreword to a book of essays published to coincide with the summit. "It destroys jobs and holds back growth, costing the world economy billions of pounds every year."

Representatives of 50 countries are at the summit, which Cameron called last year as he sought to put corruption at the top of the agenda for multinational bodies including the Group of Seven industrialized countries and the United Nations. Leaders from the International Monetary Fund, the World Bank, the OECD and pressure groups joined with 11 prime ministers and presidents at the discussions, which were broadcast over the Internet.

US Secretary of State John Kerry said the international community must unite against corruption to choke off funds for extremism and to promote the rule of law.

"We have to say no safe harbor anywhere, we need to get the global community together and have no impunity for corruption," Mr Kerry said at the summit's opening session. "It's the beginning of something that can help us in the battle against extremism, help us in the battle for strengthening commitment to the rule of law."

Mr Cameron's office defended the attendance list, saying it was not intended to be "exhaustive" and should be seen as the beginning of a process. The International Olympic and Paralympic Committees will be there and will create "momentum" for change at sporting organizations such as Fifa, Mr Cameron's spokesman said.

"It's a representative list that covers countries where there are issues with corruption but governments that are committed to tackling it as well as countries with a better record on corruption that have something to teach," spokesman Dan York-Smith told reporters on Wednesday. "This is the start, not the end."

Plenary sessions were scheduled on exposing and tackling graft and one specifically focused on corruption in sport, Mr Cameron's office said. The premier, who has legislated to try to slow the amount of money being laundered through expensive homes in London, was keen to stress it is not only a problem for the developing world.

"Action is necessary by developed countries as well as developing countries," Mr Cameron told lawmakers in the House of Commons in London on Wednesday. "One of the steps we are taking, to make sure that foreign companies that own UK property have to declare who the beneficial owner is, will be one of the ways we make sure that plundered money from African countries cannot be hidden in London."

Foreign companies own about 100,000 properties in England and Wales and 44,000 of them are in the capital.

On Monday, a group of 300 leading economists called on the British government to use the anti-corruption summit to crack down on offshore tax havens like the British Virgin Islands and the Cayman Islands. IMF Managing Director Christine Lagarde also highlighted the broader economic consequences of graft in her essay to mark the event.

"Corruption has a pernicious effect on the economy," she wrote. "Pervasive corruption makes it harder to conduct sound fiscal policy."

The BVI, one of 14 British overseas territories, was thrown into the spotlight last month following the enormous leak of documents from Mossack Fonseca, the Panamanian law firm. About 113,000 out of 215,000 companies it exposed were set up on the tiny Caribbean island. BVI was not invited to the summit while the Cayman Islands is sending a three-person delegation headed by its premier, Alden McLaughlin.

So far both the Cayman Islands and the BVI have resisted pressure from Cameron to set up public records of beneficial owners of companies registered there. They agreed to share information with the UK on beneficial owners but refused to make the information public.

Afghanistan, France, Kenya, the Netherlands and Nigeria told the summit they will set up public registers of company ownership while Australia, Georgia, Indonesia, Ireland, New Zealand and Norway committed to exploring doing so.

BLOOMBERG