How Europe’s Investment Bank flouts its own tax haven policies

   0   0 Blog
Qalaa chair and CEO Ahmed Heikal with former EU President José Manuel Barroso, March 2013

Qalaa chair and CEO Ahmed Heikal with former EU President José Manuel Barroso, March 2013

The European Commission has launched a series of investigations into the tax structures of companies like Google, Apple and Amazon, for fear that they are siphoning off tax revenue from Europe.

Far less attention has been paid to the role of institutions like the EU-backed European Investment Bank (EIB) in financing this offshore trade, particularly when it comes to developing countries.

Could this change? The Tax Justice Network’s Illicit Finance Journalism Programme has discovered that hundreds of millions of euros have flowed to companies linked to the secretive British Virgin Islands (BVI) though an Egyptian private equity fund, Qalaa Holdings.

The full investigation was published in a number of European and African publications, and it reveals some worrying loopholes in the EIB’s policy on offshore finance.

According to the EIB, the bank was able to knowingly send hundreds of millions of tax payer backed funds to companies controlled from the British Virgin Islands, because in 2010 when the investments were approved they didn’t consider the BVIs a tax haven.

The EIB was using the OECD’s famous ’empty list’ of tax havens, which by 2012 had just two tiny Pacific islands on it. This opened up potentially hundreds of billions of euros of tax payer funds being invested in loosely regulated tax havens across the world.

How many other investments like this the EIB made before the publication of the (slightly better but still deficient) Global Forum analysis of jurisdictions is a question the European Parliament may want to consider. The European Parliament’s International Development Committee has recently started putting together a report on tax havens and Linda McAvan, the chair, has promised to pass the TJN’s investigation onto the report authors.

There is also another question to consider here too. As Eurodad has noted, over 50% of funds that go to the private sector from DFIs go to the finance industry.

We all know that the finance sector is addicted to offshore – so why isnt the EIB and other institutions using some of that huge leverage they have to do something about it?

It was published today in the EU Observer here.  It is running as the front page splash in Germany’s Tagesspiegel today in both its print and online version here. The piece is also expected to be published on a progressive Egyptian news magazine, Mada Masr later, as well as De Correspondent in the Netherlands, and in  The Observer, Uganda on Monday.

Related Posts

Swiss Politicians seek to block automatic exchange of banking information with developing countries

Photo by Pedro SzekelyCould we be seeing a return to the bad old days of Swiss Banking? A right wing party in Switzerland, the Swiss People’s Party, has launched an assault on the automatic exchange of banking information, according to Swiss Daily Newspaper Tages Anzeiger.


The Offshore Wrapper – Data havens and new crackdowns on tax avoidance

Gorgeous Computer FixingsBelow is the text of the offshore wrapper,  a weekly roundup of news from the world of tax justice sent out to our mailing list. If you haven’t signed up yet and would like to receive the wrapper in your inbox every week – you can do so here.


Open data for tax justice – designing a new CbCR database

OD4TJlogoThis week, TJN participated in a design sprint in London organised by Open Knowledge International. The purpose of the sprint was to bring together coders and tax justice advocates to start work on building a database for the new country by country reporting data that we hope will be released in the future, if public […]


New research on key role major economies play in global tax avoidance

offshore-network_colorcorrectedAn important new study on Offshore Financial Centres (OFCs) from the University of Amsterdam has made some fascinating discoveries, challenging, as the Financial Secrecy Index has, the popular misconception that tax havens are only palm fringed little islands and exposing that in fact major economies play a key role in global tax avoidance. Specifically they’ve […]


Launch of international research collaboration, #AltAusterity

alt austerityToday is the launch of #AltAusterity, a new, international research collaboration of which Tax Justice Network is a partner.  The project aims to stimulate public debate on the subject of austerity though high quality research. It is a response to the lack of evidence which has underpinned the current policy agenda on austerity. The project […]


About The Author

Nicholas Shaxson is a journalist and writer on the staff of Tax Justice Network. He is author of the book Poisoned Wells about the oil industry in Africa, published in 2007, and the more recent Treasure Islands: Tax havens and the Men who Stole the World, published by Random House in January 2011. He lives in Berlin
View all posts by

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top