‘Blacklisting a wake-up call’

MANILA, Philippines – Malacañang said the Philippines’ inclusion in the Organization of Economic Cooperation and Development (OECD) list of “uncooperative tax havens” is a wake-up call for officials, and called for prompt legislative action to get the country off the list.

Press Secretary Cerge Remonde, in an interview with state-run radio station dzRB, said the government is committed to have the country removed from the blacklist.

He said it was unfortunate that the country failed to meet the timetable for review and implementation of the internationally agreed taxation standard.

“We are committed to compliance with those standards and we are confident that we will meet the requirements for removal from this list,” he said.

“We should consider this a wake-up call and I hope that this will motivate other branches of government, especially Congress, to also take appropriate action,” he added.

At the behest of the Group of 20 leaders meeting in London, the OECD named the Philippines, Uruguay, Costa Rica and the Malaysian territory of Labuan as the worst offenders, saying they had refused to adopt new rules on financial openness.

The list was made public as G20 leaders from rich and developing nations declared at their summit Thursday that the age of banking secrecy was over, saying they would no longer tolerate shady havens draining away badly needed tax revenue.

Remonde said one of the issues that Congress should address is the proposal of Finance Secretary Margarito Teves for a review of the laws on banking secrecy and tax information secrecy in view of the “perceived limitation of the country’s compliance with international agreements.”

“Maybe it’s about time to refocus on this issue so that we can remove this stain on our country,” Remonde said.

Remonde said there are systems in place against money laundering and other illegal activities but they need fine-tuning and “President Arroyo is fully committed to that.”

“We are asking for the understanding, support and cooperation of the legislators,” Remonde said.

Necessary steps

“The Philippine government would take the necessary steps to ensure we meet their expectations,” said Trade and Industry Secretary Peter Favila, also a member of the central bank’s policy-making Monetary Board. “It is really up to us to prove them wrong.”

Teves said the government has a strong record of compliance with international financial and governance standards but international commitments “should always be seen with respect to the local laws presently enforced in a sovereign country such as the Philippines.”

Existing domestic laws may have limitations that need to be reviewed by Congress, he said.

The move by the G20 reflects mounting concern that banking secrecy in tax havens has helped to worsen the economic crisis by disguising the true value of some global assets. Anti-poverty activists say such places provide corrupt officials places to stash illicit funds, often depriving poor nations of needed resources.

The G20 leaders said nations that refuse to exchange tax information could in the future face tough sanctions – including the withdrawal of financing by the World Bank or IMF.

Look who’s talking

For Speaker Prospero Nograles, it’s the rich countries that need to mind their way of doing business.

“They’ve always made the Philippines the punching bag as if we are not doing any correct things here. But it’s them who point to us who caused the massive global crisis and not the Philippines,” Nograles said.

“Yes, Congress will certainly look into our tax laws and try to conform to their standards. But instead of finger pointing they should examine themselves first and answer why they caused this economic meltdown which has affected the entire world,” he said.

Senators said there’s a need for the executive branch and Congress to immediately work together to craft the needed laws to remove the Philippines from the list.

But they called the OECD findings unfair because they made a “scapegoat” of the Philippines, since developed countries developed the idea of bank secrecy.

Sen. Francis Escudero, chairman of the Senate committee on banks, financial institutions and currencies, chided central bank and finance officials as well as the Anti-Money Laundering Council for failing to raise the warning on the OECD findings.

He said government agencies are jolted into action only after an adverse decision has been made against the Philippines.

But he also took a jab at the G20 for its “unfair” judgment. “If they want to talk about commitment to transparency, let us start with those US banks that definitely cannot be held up as paragons of fiduciary responsibility,” he stressed.

“If remedial action legislation is needed to further ironclad the Anti-Money Laundering Law, the AMLC should draw up one based on lessons learned from the actual implementation of the law, and not because a conclave of those responsible for the global economic mess, in absolving themselves of any liability, is shifting the blame to others,” Escudero said.

“Banking practices that contaminated the world of toxic debt cannot be models of discretion. It’s like making a junk vehicle the car of the year,” he said.

“The G20 concerns should be independently verified if they have any basis at all, or if they were hurriedly inserted as a filler in their standard communiqué,” he added.

For her part, Sen. Loren Legarda said, “The government must move swiftly to cause our country’s removal from this so-called G20 blacklist of alleged tax havens before this blacklisting causes deleterious effects on our economy.”

But Legarda added: “One wonders though why the Philippines, despite expressing willingness to comply with new international standards on the exchange of tax and banking information, had been blacklisted when other countries, like Switzerland, had not been included in the list on the strength of a similar expression to comply.”

“Is it because ours is a developing country perceived to be a pushover?” Legarda asked. “I find it unfair because the concept of bank secrecy was not a creation of the Philippines and, until money laundering became prevalent, was an acknowledged necessity to protect the money of honest banking clients.”

“Likewise, it’s not like the financial, tax and banking systems of well-off countries are perfect and foolproof. For if they are, how come the many scandals rocking their own systems?” Legarda argued. –-Marvin Sy And Aurea Calica with Delon Porcalla and AP