Sunday, 15 December 2013

CDC: questions need to be asked

The recent article in the Independent reporting the anniversary of the appointment of Diana Noble as chief executive has a traditional, rosy, view of the former Commonwealth Development Corporation. According to Lucy Tobin, it "invests taxpayer's money into poverty-stricken emerging markets" including "a scrap metal plant in Kenya, a textile business in Bangladesh and an engineering business in India".

Regular readers of Private Eye have a different picture. I cannot give a direct link to a PE article, but articles from the Tax Justice Network detail the story: just search on "CDC". Note that though this channel for possible financial rort was opened by Tony Blair, it has continued unchanged (so far as I can see) under the coalition government. A report by the Commons International Development Committee in 2011, chaired by Liberal Democrat Malcolm Bruce recommended an investigation by HM Treasury into the use of tax havens, and for CDC to adopt best practice on tax. Chancellor Osborne and Secretary Alexander, who have declared war on tax avoidance, should surely be interested. Perhaps their firms of treasury advisers have their own interests to protect and have warned ministers off an investigation.

Not only is CDC itself using tax havens, but it also, according to Private Eye, recommends the use of tax havens to companies exploiting natural resources in third world countries, thus diverting tax revenue which could help those nations in their development. Oando plc is a case in point.

One would expect that Justine Greening, the minister for International Development, after nearly eighteen months at the Treasury in her first appointment, would be ideally placed to put CDC back on the strait and narrow. At worst it could be sold off to the highest bidder, but if not, its policy on tax havens should be reversed and it should be refocused on helping the small businesses in developing nations which need it.

What is more surprising, considering how high the readership of PE in the Commons must be, is that not only has there been no debate about CDC since the IDC report, there has been only one (written and innocuous) question to minister Greening on the subject. Labour is clearly sheepish about raising yet another dubious policy which started on their watch, but why has no backbench Conservative or Liberal Democrat raised it?

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