New report: food speculation in poor countries, via tax havens

From the Financial Transparency Coalition, a blog by Naomi Fowler, entitled Feeding The 1%: New Report Exposes The Disturbing World Of Agricultural Investors, Financial Secrecy And Land Grabs. It looks at a report by campaign group GRAIN, which produces evidence indicating that an avalanche of investment into agriculture after the 2008 global food crisis is predatory and that many investors have “little or no background in agriculture”. It finds

“a worrying picture emerges of what happens when speculative finance starts flowing into food production” when deals are scrutinised in detail.

GRAIN focuses on investments made by Indian billionaire Chinnakannan Sivasankaran – one of the world’s largest farmland holders. As Fowler’s blog notes:

“Through the Siva Group, the Indian tycoon is buying shipping lines, oil and gas reserves, mines and plantations. And he’s particularly big on palm oil. From Cameroon to Papua New Guinea, Indonesia and Sierra Leone, his ‘near term objective’ is apparently “to have control over a total of 200,000 hectares of plantable lands in each of at least four African countries and another 200,000 hectares in Papua New Guinea”.

A senior manager of Sivasankaran’s Siva Group is quoted in the report saying: “If you go to Liberia, the Liberian government issues you a concession, the local people don’t agree, the president of the country tells them that the government agrees so you must agree. If you go to Cameroon, again it is basically the government that gives you the land.”

According to GRAIN, many of these companies have failed to produce much food, yet curiously “have been very useful for shifting finance and debt around and paid their directors handsome salaries”.

GRAIN’s analysis suggests:

• Siva Group is structured around a web of tax havens and shell companies. The two centres of this empire are Singapore and the British Virgin Islands, numbers 5 and 20 on the Tax Justice Network’s Financial Secrecy Index respectively.

• Payment for major land concessions for oil palm development from Liberian companies equal to about 6% of the country’s entire land area was made to two offshore companies – where there is no record of who the beneficial owners are.

The report asks how the rights to such a large amount of land could have been acquired as Liberia was only just emerging from a brutal civil war and was still governed by a National Transition Government. Liberia’s Public Procurement and Concession Commission found the agreement in question contained “gross irregularities and non-compliance with the law” and the company involved had to renegotiate.

It appears that much of these complex land deals, acquisition rights and shares are more about gaining greater leverage in terms of credit and inter-company loans to expand and make even more land deals than solving the global food crisis.”

Yet another peculiar set of linkages to illustrate how distorted the world’s economy has become. This is one of those stories that indicates just how all-pervasive the tax justice agenda is. Human rights, environmental issues, economic growth, capital flight, inequality – you name it, and there’s a tax justice angle.