Commodity Conference: Commodities Superpower Switzerland must take responsibility

Commodity Conference: Commodities Superpower Switzerland must take responsibility

Berne / Lausanne, January 17, 2013. Pressure is growing on the Swiss commodity industry to embrace the emerging global transparency standard. Ahead of an international commodity conference in Berne SWISSAID has called on the Swiss government to take responsibility and regulate the booming sector. MP Susanne Leutenegger Oberholzer (SP/BL) has asked for binding regulations in order to fight tax evasion, corruption and money laundering in the anticipated governmental commodities report.

The trend for more transparency in the extractive industries is gaining speed. Following the US lead the EU will soon implement mandatory disclosure regulations for all industry payments to governments. “A new global standard is emerging,” said Marinke van Riet, Director of the global NGO coalition Publish What You Pay (PWYP) during a press briefing in Berne. Canada, the G8 and even China are moving in this direction as well, and a growing number of host countries are even publishing contracts and license agreements between commodity companies and its government. Switzerland must now decide, van Riet added, to either join the transparency pioneers or to be left behind with an increasingly smaller group of countries where opacity continues to reign.

SWISSAID Director Caroline Morel called on the Swiss government to present a “smart mix” in its commodities report, combining soft and hard law. “Switzerland is the largest commodity trading hub in the world,” Morel said, and would therefore have to tackle the trading sector which is still mostly shrouded in opacity. The government should insist on including oil sales into the voluntary EITI framework which is undergoing an important strategy review. Switzerland currently occupies a seat on EITI’s board. Morel has insisted, however, on ancillary binding regulations for the sector. “Switzerland must finally take responsibility. Otherwise, it will once again be pushed into international isolation.”

MP Susanne Leutenegger Oberholzer (SP/BL) has warned against Switzerland becoming a regulatory oasis and a haven for those shady companies that wish to escape US and EU regulation. She has urged the government to adopt these regulations. A parliamentary motion is calling for just that, and it would also include commodity trading. In order to stop the huge illicit financial flows out of developing and emerging countries (approx. US$ 1000 billion p.a.), she has proposed to have the money laundering laws applied to all kinds of commodity trading.

Aggressive tax evasion of copper mining companies – among them Glencore based in Switzerland – causes tax losses of approx. US$ 2 billion p.a. for Zambia, one tenth of the poor African country’s GDP. According to Leutenegger Oberholzer, this huge problem could be tackled by mandating detailed country-by-country reporting in the home states of multinational companies. This should be complemented by eliminating tax privileges for holding and shell companies in Switzerland, Leutenegger Oberholzer said, adding: “The population of resource-rich countries is entitled to a fair share of the profits in commodity trading. The Swiss commodity report must outline decisive measures to achieve this goal.”

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