Islamabad, June 03, 2021 (PPI-OT):
Mr. President of the General
Assembly, Distinguished Deputy
It is a pleasure to speak at this special session as President of the Economic and Social Council. I feel duty bound to speak on this issue not only because of the mandate given by the General Assembly Resolution but also because I am convinced that corruption, which leads to massive out flows of illicit finance out from developing countries, is one of the main reasons for their economic underperformance and rising inequalities across the world, says a press release received here today from New York.
Corruption stifles opportunities for the poor and marginalized and condemns them to a life of misery and inequality.
Annually, an estimated US $ 2.6 trillion – 5 percent of global GDP – is lost to corruption. The developing countries lose around US $1.26 trillion – nine times all Official Development Assistance.
The COVID-19 pandemic has further widened the existing inequalities, pushed millions of people into extreme poverty, and resulted in the loss of around 250 million jobs.
Allowing corruption and illicit financial flows to continue in these circumstances is nothing short of criminal.
Immediate and robust national and international action is needed to stop the bleeding of the developing countries. I welcome the declaration to be adopted by this special session.
The important task from the development perspective are numerous.
One: Corruption must be addressed on two sides – by the perpetrators and the enablers of corruption. The establishment of a global beneficial ownership registry would help in identifying the perpetrators of corruption. While corruption must be stopped at the national level, it is equally important to impose penalties on the enablers of corruption – lawyers, accountants, and financial entities. Global standards and guidelines must be agreed and imposed to ensure this.
Two: The absence of effective mechanisms to secure the return of stolen assets has created a sense of impunity among the corrupt and criminals, and led to the parking of over seven trillion dollars in “safe havens”. Secrecy jurisdictions and safe havens must be urgently eliminated. Nor should difficulties be created to prevent or delay the return of billions of dollars of the stolen assets of developing countries. They must be returned unconditionally and expeditiously. New legal instruments should be agreed to facilitate the obligatory return of such stolen assets.
Three: I agree with the emerging consensus that there is a need to establish standards for international companies in the extractive industries. This should include inter-State Agreements, which allow for nullification of corporate contracts in the event of corruption as well as when it is established that the contracts have been concluded on obviously unequal terms. A moratorium should be imposed on all investor-State disputes in which corruption and coercion is clearly visible. A trust fund could be established to support developing countries pursue the often lengthy and complex legal and administrative proceedings for the return of their stolen assets and investor state dispute litigations.
Four: Corruption related to tax fraud, evasion, and avoidance constitute a major portion of the overall volume of illicit financial flows. The International Monetary Fund estimates that curbing corruption could deliver an additional $1 trillion in tax revenues annually across the world, or 1.25 percent of global gross domestic product1 – money that could well be used by governments to support health, education and infrastructure. A minimum global corporate tax would be a good first step towards resolving international tax crimes and elimination of tax havens.
Today, the institutional environment of international tax cooperation is dominated by voluntary forums, bilateral tax treaties and, only recently, multilateral instruments. There is no universal international tax convention to compare with the United Nations Convention against Corruption and the United Nations Convention against Transnational Organized Crime. It is therefore urgent that the work of the UN Tax Committee is made completely intergovernmental, and negotiations initiated for a global UN tax convention.
Five: The endeavour to establish global standards and promote collective action to deal with the menace of corruption and illicit financial flows is impeded by the disparate entities, created with narrow mandates, different rules and restricted representation. I agree with the recommendation of FACTI Panel that it is urgent and important that an inclusive and legitimate global coordination mechanism is established at the United Nations.
Corruption and other forms of illicit financial flows are systemic problems. Combating them requires global efforts. No one country can succeed alone in eliminating corruption and bribery and ensuring financial integrity. International cooperation is indispensable.
I hope that the Political Declaration to be adopted by this session, together with other reports and analyses, signal the start of such international cooperation and global action.
I thank you.
For more information, contact:
Principal Information Officer,
Press Information Department (PID)
Tel: +92-51-9252323, +92-51-9252324
Fax: +92-51-9252325, +92-51-9252326
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