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G20 deal on shell companies "only discussion":China

Thursday, November 13, 2014 - 16:53

[BEIJING] A G20 deal aimed at cracking down on companies masking their ownership is "only at the discussion stage", China said on Thursday, dealing a blow to hopes an agreement will be signed off by world leaders this weekend.

A working group at the Group of 20, under host Australia's Attorney-General's Department, has been seeking agreement on how to improve beneficial ownership transparency and combat the use of shell companies that can hide ill-gotten money or avoid taxation.

"Right back in February, Attorney-General (George) Brandis said that beneficial ownership transparency was one of the top priorities for Australia this year when it came to tackling corruption at the G20 level," said Maggie Murphy, senior programme coordinator at Transparency International, which had raised concerns that China appeared to be blocking a final adoption of the measures.

"We're disappointed because obviously beneficial ownership transparency is really fundamental to their Operation Fox Hunt that is going on at the moment".

Chinese President Xi Jinping is undertaking a sweeping crackdown on corruption in Operation Fox Hunt, targeting suspects from government and company officials both at home and abroad.

Zhang Jun, the head of the Chinese Foreign Ministry's department of international economic affairs, rejected suggestions China was blocking any G20 discussion on corruption, saying it did not have the power of veto and "resolutely supports increasing anti-corruption cooperation within the framework of G20".

However, Mr Zhang said the issue of transparency over beneficial ownership had only just been put on the agenda. "The relevant issue is only at the discussion stage. Because, on the issue of company registration, every country has different legal rules and different methods," he said. "To have an identical policy needs to balance every country's actual national conditions."

An unpublished draft, seen by Reuters, of the G20's Principles on Beneficial Ownership Transparency included a 10-point plan for tackling issues of ownership transparency. "These principles build on existing international instruments and standards, and allow sufficient flexibility ... for our different constitutional and legal frameworks," read the draft, agreed by officials earlier in the year.

Having highlighted the beneficial ownership as a priority and shepherded swiftly through initial negotiations, not reaching a final agreement with leaders would be a major failing for hosts Australia, Transparency International's Mr Murphy said.

"Where's the leadership? If these principles don't get passed, I think that's an incredible blow for Australian leadership." The Attorney-General's Department did not immediately respond to requests for comment.

REUTERS

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