Corporate leaders from Europe, Japan and India met at Caux, Switzerland from 11 - 16 July at the The Trust and Integrity in the Global Economy (TIGE): Cultivating Knowledge - Generating Action conference. There they announced their deep concern about the demand for quarterly results which made managers too focused on share prices and short term outcomes.

Dr Jamshed Irani

The group included Dr Jamshed Irani, board member of Tata Sons Ltd in India, Toru Hashimoto, Chairman of Deutsche Securities in Japan, and Dr Jean-Pierre Mean, group general council and chief compliance officer of SGS Ltd, Geneva, the world’s leading inspection, testing and certification company.

Presenting their report to the Trust & Integrity in the Global Economy conference, the business leaders called for long-term thinking and the need for CEOs to remain in office for longer terms than the current three to five year cycle, prevalent in some countries.

Dr Mean who delivered the report added that ‘we have to restore human rights as an absolute and intangible value for the whole of humanity’. He deplored investors hunger for on-going short term gains on the share market. ‘This has contributed a lot to the current financial crisis,’ he said.

Proposed Action

The Corporate leaders listed a series of steps to increase the responsibility of corporations in the global economy as follows –

Raymond W Baker, author of Capitalism’s Achilles Heel, was delivering a public Caux Lecture on ‘Financing a secure world’. Baker, a leading anti corruption campaigner from the US said that illicit international transfers amounted on conservative estimates to 1-1.6 trillion dollars, about half of which was funds leaving poor countries and going to rich countries.

An entire structure now existed to move money from the poor to the rich, Baker continued, ‘cutting the heart out of foreign aid. 50-80 billion dollars a year in official foreign aid was outweighed ten-fold by some 500-800 billion coming back in the other direction. ‘This cannot work for the poor countries, and it cannot work for the rich,’ Baker said.

Russia in recent years had seen the greatest theft of resources in human history, and China was rapidly following in the same game. Nigeria had seen the greatest percentage of GDP stolen in any one country, where 70% of the population lives on between one and two dollars a day. The Congo had seen the longest rip-off in history and, since the year 2000, some 4.5 million people had been killed there: ‘economic deprivation kills’ Baker emphasised. ‘What would happen if a large part of these funds stayed in the poor countries?’ he asked.

Baker said that Illicit money transfers took three forms - bribery and theft of local elites, the proceeds of criminal activities, and commercial tax evasion. ‘Corrupt countries’ contribute about 3% of the total, he noted, while 30-35% was criminal, the largest part, 60-65% was commercial tax evasion.

This international system has been largely developed since the 1960s, driven by two forces: ‘the desire of economic and political elites in poor countries wanting to move capital out – and we in the West helped them – and the spread of multi-national business’. There were now 91 tax havens, and millions of disguised corporations. Drug dealers and criminals didn’t need to invent any new ways or new channels. This constituted ‘the biggest loophole in the global economic system,’ he asserted.

‘We in the West are not innocent victims,’ he said. ‘We developed techniques and structures for illicit international money transfers – and now they come back to bite us.’ ‘What part of our standard of living do we in the West want to owe to slave trading, trafficking in women, counterfeiting?’ he asked. ‘We just don’t want to know,’ he suggested.