Naomi Fowler ■ Veils of secrecy: enhancing tax and ownership transparency in development projects


We’re sharing here new research from the Egyptian Initiative for Personal Rights which evaluates the role played by a member of the World Bank Group, the International Finance Corporation (IFC) in development projects. The full title of their research is Veils of secrecy: evaluating the IFC’s role in enhancing tax and ownership transparency in development projects.

On their website the IFC say since 1956 they have “leveraged $2.6 billion in capital to deliver more than $265 billion in financing for businesses in developing countries”. It’s big. It’s the largest development institution in the world focusing exclusively on private-sector operations in developing countries. This new Egyptian Initiative for Personal Rights research focuses particularly on the IFC’s role in Egypt, where it’s been operating since 1995. They say,

We have found through our research that the IFC invests in operations that are deeply involved with some of the most secretive offshore jurisdictions in the world, where information about the real owners of these companies is in many cases obscured. The use of such secrecy jurisdictions normally goes hand in hand with aggressive tax-planning schemes used to circumvent the law (without necessarily breaking it) to significantly reduce corporate tax bills and conceal the identity of the owners of the enterprise.”


we have identified and detected many cases of aggressive tax avoidance by IFC investee companies during all time periods and across various sectors using a wide variety of techniques.”

Among their findings,

  • More than half of the companies in which the World Bank invests or owns for development purposes have branches in tax havens and secrecy jurisdictions, and one-third of the portfolio of the International Finance Corporation (IFC), which is subordinate to the World Bank, is invested in firms owned by politically connected persons.
  • The EIPR report aims to evaluate in part the developmental role played by the IFC in Egypt. The report is based on an analysis of every project financed by the IFC since it began operating in Egypt in 1995 through mid-2017, relying on documents published on the IFC website, information found on the financed firms’ websites, and data from websites that monitor the activities of companies in tax havens. The researchers also interviewed an IFC official to discuss the findings of the report.
  • The researchers found that the IFC website does not disclose information about the true, beneficial ownership of 40 percent of the companies it finances. Moreover, 50.5 percent of these firms have branches in tax havens, 21.5 percent operate in domestic free zones, 37 percent are owned by politically connected persons, and 30 percent have been involved in corruption cases in or outside Egypt. Some of these cases ended in conviction, others in acquittal, and some are still pending.
  • In conclusion, the EIPR calls on the IFC to amend its June 2014 policy to combat tax avoidance to require the IFC to disclose full information about the beneficial owners of companies it finances, to encourage firms to publish more information on their websites, and to adopt a more stringent definition of tax havens.
  • The EIPR also believes that the IFC should focus more heavily on supporting small and medium enterprises that contribute to achieving developmental goals and creating jobs than on supporting politically connected persons.
  • The EIPR further stresses the need to cease financing or partnering with any politically connected investor or any person previously involved in corruption cases in connection with their business in Egypt.

You can read their full report here.

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