human rights & business (and a few other things)

The Panama Papers – a Business and Human Rights Reading

Panama’s flag. Source: Wikipedia

Yesterday, the International Consortium of Investigative Journalists (ICIJ) revealed the Panama Papers. The Panama Papers is a leak of unprecedented scale, more than 150 times larger than US diplomatic cables released by WikiLeaks in 2010.

The Guardian has published a short, useful guide to the Panama Papers. In a nutshell, the Panama Papers expose how some prominent individuals, including politicians, business leaders and celebrities from around the world have hidden money and avoided tax, using the services of Mossack Fonseca, a Panama-based law firm specializing in the incorporation of offshore companies.

As I was reading about this, one point particularly attracted my attention. As noted in The Guardian, “using offshore structures is entirely legal”. And this, I think, is the biggest challenge for those of us working in the field of  business and human rights, a field which explores the negative human rights impacts of business and seeks to address and prevent those impacts.

The problem with the use of offshore structures is that it quickly becomes difficult to distinguish between what is legitimate business and what is in reality a convenient way to break the law, hide assets illegally obtained, pay less or no tax, etc. The human rights implications of those activities are well documented. Criminal organizations, by definition, are involved in crimes with human rights impact, from sex trafficking to murder of civilians. Allowing them to hide their money means they can keep doing just that. With regard to legitimate companies and individual leaders, the millions in unpaid taxes which are hidden in offshore companies could be used to improve access to public services and avoid devastating spending cuts, hence fulfilling human rights to health, education, etc. (see the page on tax avoidance of the Business and Human Rights Resource Centre here).

Reading about the Panama Papers reminded me of an article published in the French magazine Marianne after the terrorist attacks in Paris in November 2015. In the article, titled “Facebook, Google, Apple : merci, mais la solidarité, c’est payer ses impôts en France”, the journalist, commenting on Google, Facebook and Apple’s various online displays of solidarity with the French, thanked those companies for their concern but noted that if they really want to help they should fully pay their taxes in France, which would allow the country to better protect itself and prevent terrorist attacks.

The business and human rights field has made important progress, for example with the adoption of the UN Guiding Principles on Business and Human Rights (UNGPs) in 2011, and the ensuing adoption of National Action Plans by certain countries, as well as the inclusion of the UNGPs in some companies’ human rights policies. But tax avoidance is not being given as prominent a place as other issues. This is not to say that I believe we should create a hierarchy among those issues, but simply to highlight that more attention should be given to tax matters.

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