While the Government of Liberia continues to boast that the establishment of several anti-graft institutions including the General Auditing Commission, Liberia Anti-Corruption Commission, Public Procurement and Concession Commission amongst others is an indication that the country is exercising high level of transparency including openness in dealings, an international report has indicated that the country is amongst top countries in the world where financial secrecy is at it peak.
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Liberia amongst top countries operating in financial secrecy
In a report leased by the international group Financial Secrecy, the group that carries out analysis of how far the legal systems of countries facilitate financial secrecy, Liberia is ranked amongst the top 30 countries in the world that deals in secrecy.
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With information dating back from October 2013 the report indicates that Liberia has served as a flag state providing corporate and maritime tax haven services to vessel owners and operators.
"Since 1940 it has served as a 'flag state' providing corporate and maritime 'tax haven' services to vessel owners and operators. In practice, Liberia's shipping registry is administered from offices in Virginia in the United States, and also has offices in Germany.
By 2008, the Liberian-flagged fleet consisted of 2,600 vessels of more than 80 million gross tons. Moreover, Lowtax.net reported that 'aged shelf corporations are available.' The registry also offers the formation of companies whose directors may be foreign corporations".
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Taking into account financial flows Liberia features in the top 30, and is the highest mainland African country according to the report.
The report which is published every two years takes into account two components, secrecy and the amount of financial flows. Liberia is ranked amongst countries that are secretive and have large financial flows going through its system, a situation the report notes is causing damage to the global financial system.
The report looked at several areas of secrecy including banking, recorded company ownership, public company ownership, country-by-country reporting, efficiency of Tax Administration and other variables. For banking secrecy, the report states that Liberia partly curtails banking secrecy while it is also stated that Liberia does not disclose or prevent trusts and private foundations
It is also indicated in the report that Liberia does not maintain company ownership details in official records. As an indication of operating in secrecy, the Financial Secrecy report states that Liberia does not require that company ownership details are publicly available online. "Liberia does not require that company accounts be available on public record", the report furthered. According to the report, Liberia does not require public country-by-country financial reporting by companies.
On tax and financial regulations issues, the report disclosed that Liberia does not require resident paying agents to tell the domestic tax authorities about payments to non-residents and the country does not use appropriate tools for efficiently analysing tax related information. Regarding the country cooperation on international standards, the report noted that Liberia partly complies with international anti-money laundering standards. On commitment to Transparency, the report states that Liberia has ratified less than five of the most relevant international treaties relating to financial transparency.
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"Most countries' secrecy scores have improved. Real action is being taken to curb financial secrecy, as the OECD rolls out a system of automatic information exchange (AIE) where countries share relevant information to tackle tax evasion. The EU is starting to crack open shell companies by creating central registers of beneficial owners and making that information available to anyone with a legitimate interest. The EU is also requiring multinationals to provide country-by-country financial data" stated the group.
But the group states that these global and regional initiatives are flawed and face sabotage by lobbies that have already weakened them. "Secrecy-related financial activity risks being shifted to other areas such as the all-important trusts sector, where no serious action is being taken despite promises made by the G8 in 2013, and shell companies, where many secrecy jurisdictions such as Dubai, the British Virgin Islands or Nevada in the U.S. are refusing to open up" Financial Secrecy observed.
In the report, the top 10 countries include Switzerland, Hong Kong, USA, Singapore, Cayman, Luxembourg, Lebanon, Germany, Bahrain and Dubai / UAE. The report observed that since the global financial crisis emerged in 2008, governments have sought to curb budget deficits by cracking down on offshore corporate and individual tax cheating and financial crimes by the world's wealthiest citizens. Accordingly, campaigners have shown them the way and the sea change in the political climate has been remarkable. Progress has come in three main areas.
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