The global charity Oxfam has criticised the World Bank's private
lending arm for financing multinationals who then channel funds through tax
havens.
A report by Oxfam says 51 of 68 companies funded by the World Bank's
International Finance Corporation in 2015 to finance projects in sub-Saharan
Africa used the tax haven of Mauritius to hide wealth and to dodge tax.
Oxfam claims the use of tax havens by multinationals had "no
apparent link" with their core businesses of building infrastructure and
providing service in some of the world's poorest nations.
The allegations from Oxfam come in the midst of a global crackdown on
multinational tax evasion and the shady practices revealed in the Panama Papers
by the law firm Mossack Fonseca.
Oxfam Australia's chief executive Dr Helen Szoke says the channelling
of World Bank finance to tax havens is more evidence that the international tax
system is broken.
""At
a time when the Australian Government is also increasing its engagement with
the private sector through the Australian aid program, the government's focus
must be on responsible investment and sustainable development," Dr Szoke
told The World Today.
"These
companies could be cheating poor countries out of tax revenues that are needed
to fight poverty and inequality.
"The World Bank Group should not risk
funding companies that are dodging taxes in Sub-Saharan Africa and across the
globe. It must put safeguards in place to ensure that its clients can prove
they are paying their fair
share of tax."
The Oxfam report claims that over the past five years, the
International Finance Corporation has doubled its investments in companies that
use tax havens from US$1.2 billion in 2010 to US$2.87 billion in 2015.
Dr Szoke said Mauritius is also a destination for the practice of
"round-tripping" where a company shifts money offshore before
returning it disguised as direct foreign investment.
Instead, Dr Szoke says the World Bank should be ensuring that its
financing is used to fund infrastructure and health services to poor nations in
sub-Saharan Africa.
"The
region lacks money to provide enough skilled birth attendants, clean water or
mosquito nets, for example, resulting in high rates of child mortality; one
child in 12 dies before their fifth birthday."
The International Finance Corporation has
dismissed the Oxfam report as "flawed".
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