This Week in Markets and Democracy: UK Anticorruption Summit

British Prime Minister David Cameron gathered government officials, civil society advocates, and business leaders in London for a one-day summit on corruption, a global “cancer” hindering economic development and growth. Forty countries signed a Global Declaration Against Corruption, promising to prevent, uncover, and punish corruption “wherever it exists.” Many countries followed up the lofty rhetoric with concrete commitments: twenty-one pledged stronger legislation for returning stolen assets, fourteen will open public contracts to scrutiny for the first time, and the UK and five other countries will jointly launch a new anticorruption center to help investigate and prosecute cross-border cases.

Yet even with the Panama Papers as a backdrop, pledges to rein in shell companies and tax havens fell short, facing resistance from UK territories and the United States.

In the lead up to the event, three hundred prominent economists issued a demand to end the use of tax havens, jurisdictions that legally enable financial secrecy. The biggest resistance came from British overseas territories, home to hundreds of thousands of shell companies; over 450,000 based in the British Virgin Islands alone. The territories snubbed Cameron on publicizing ownership, though the Cayman Islands, Bermuda, the Isle of Man, and others acquiesced to sharing their lists with British and other authorities.

The summit made more progress on bringing greater transparency to real estate. Cameron announced the UK will create a public registry for all properties owned or purchased there, requiring companies to reveal the true or ‘beneficial’ owners. The move will affect the 100,000 properties in the UK—40,000 in London alone—owned by foreign-registered companies, making it less amenable to stashing ill-gotten gains. Afghanistan, France, Kenya, Nigeria, and the Netherlands promised to set up similar public registries of company owners, while six other countries are considering it. That is too few for transparency advocates, and one of the biggest enablers of corporate secrecy—the United States—declined entreaties to join.