 Felly, dywed ditod ar agorau Gwyrdd Llywodraeth a'r Brif, sy'n ddigwydd yn y Gwyrdd Llywodraeth, mae'n gweithio am amddangos eich cynnig o'ch gweithio. Mae'n gyfeithio gyd i'r gweithio gwahanol iddyn nhw, followed byddai gwybod a'r fawr a'r fawr yn y Gweithgrifostri Gwyrdd Llywodraeth oeis yn y Gwyrdd Llywodraeth. Efallai, mae'n gofyn ni'n tu o'r fawr mewn gafrydd o mor unrhyw o'r newlyrref ar ei ffost. Mae gyda unrhyw gwaith ar gyfer y F clownis. allegedly... here at the 41th annual meeting the World Economic Forum. Is your briefings a quite unique beast, they're 30 minutes which isn't actualt a lot of time to discuss something as broad as corruption but we're going to do our best in the middle of it, in the midst of it not withstanding the time constraints. We encourage you to be as active as possible so I encourage dissent, I encourage a little bit scandal, a little bit of disagreement, please get your hands up and yell if you have any comments or questions to put to I'm going to talk for no more time at all, hopefully, I'm going to introduce my panel. The description of this panel with pariah and rogue states secrecy facilitating crime, corruption and tax evasion and money laundering, what sanctions should be imposed on those that violate international norms. So we're looking to try to get to the heart of this issue. In a year after a couple of notable events, one was a London conference sponsored by the then UK Prime Minister, David Cameron, and, of course, the Panama Papers, which were so effective and powerful at raising this issue back right up to the top of the agenda. First of all, I'd like to introduce my first speaker. We'll have a short round of questions with the panel here before we open it up. Professor Mark Pieth, Chairman of the Board of the Basel Institute on Governance, and explain a little bit from your perspective, your unique perspective on the significance of both those events. Let me start with David Cameron. He was actually quite impressive. He was spot on when he demanded that company registers, and he shocked his own constituency, that company registers should actually contain names of real people, the people who actually own a company. He said that and all the heads of overseas territories were standing around him, but somewhat awkward had to react. The second point you're mentioning. In that year, we have seen Lux Leeks, Swiss Leeks, Bahamas Leeks, and, of course, the Panama Papers. What do they tell us? Well, basically something we always knew. This is how crooks of this world, and, you know, it's organized criminals, kleptocrats, it's tax evaders of all kinds, tax defrauders. They stash away their money. The big issue for me is why do we tolerate it? Why are we allowing this to happen? Because we could stop it easily. By the way, there's a report that we've piled up looking this way. We'll talk about it later on that we invite you to take. In that report, we are trying to tell the world community how to get rid of the shadow economy. And you've seen more of those Panama Papers. Let's talk a little bit about that. I imagine we've scratched the surface with what we've read in the press. I can just give you a bit of an idea why I'm saying this so strongly. I've been in 25 years now working on economic and organized crime. I've seen literally hundreds, if not thousands, of cases where offshore companies and constructions have been used. One was this case Oil for Food. I was with Paul Volcker in this committee. 2000 companies had been paying bribes, most of them using offshore constructions. But this is just one small example and you see this all over again. The only difference is if you look at the Panama Papers, you are shocked because you see how really it becomes. For me, to see how a child prostitution ring in St Petersburg filters its money and the people who actually help them know full well who the people are helping. I think that's dramatic and has no explanation. Sorry, one final question. As a practitioner, were you still shocked by the scale and severity of the papers that you saw? Yes, even though I've seen hundreds or thousands of cases, they were more or less abstract. To give you an example, it's not uncommon that four Russian or former Soviet directors of a state-owned company sell off the company at the moment of privatization. And now in the papers we find 600 millions that they have been receiving on such a company. That's kind of coup normal if you want. What is the more shocking part is when people help the organized criminals to commit these horrific crimes. Professor Joseph Stiglitz from the School of International Public Affairs at Columbia, you're an economist. You've devoted a lot of your time and energy towards this problem over other economic disciplines. What is your perspective on how we can do anything about it? Maybe quantifying the scale of the problem from an economic perspective. It's obviously very important in a way that you can put it in the context of one of the big issues being discussed here in Davos this year is the backlash against globalization, the darker side of globalization. One of the things that we emphasize in our report on overcoming the shadow economy and that this kind of corruption is that the lack of transparency in global financial markets, the secrecy havens, the Panama Papers exposed but have been well known in a way for a long time that just reinforced what we already knew has meant that there is a global framework for both corruption and tax evasion and tax avoidance. The title of this session is corruption and the fact that you can hide the ill-gotten gains so easily in the secrecy havens really provides incentives for people to engage in this activity because they can get the economic returns and then enjoy the benefits of those returns. If there were not these secrecy havens, the benefits from engaging in these kinds of illicit activities would be much diminished. Have you done any work on the specific policy response to this? That's really the main thrust of this report, which grew out of work that Mark and I, we were invited by Panama in the immediate aftermath of the Panama Papers. Panama not surprisingly felt that its image had been tarnished and that it needed to do something to rejuvenate its image and they asked Mark and me to work on a committee. I was co-chair of the committee to put forward a set of recommendations that would show that they were committed to transparency. But at the very beginning of our work, we said, well, if we're going to have a committee on transparency, we insist that our report be transparent and that our recommendations, no matter what they were, would be open. You can decide what you want to do with them, but we wanted to make sure that there was transparency in a report on transparency. It's not a bad place to start. The government thought that this was too big of a stretch for them. So Mark and I had to resign, but having done a lot of work at that point, we said, well, it would be useful to write up a set of recommendations and just to highlight two things from it. Obviously there are some issues that the global community has emphasized, automatic exchange of information, but one issue that's really important that Mark just mentioned was beneficial ownership, disclosure, automatic access, public registries on beneficial ownership. So you know who owns these trusts, these corporations through which all the secret money goes. The second is that this has to be attacked globally because if there's any pocket of secrecy, those engaged in these ill-gotten behaviors will find those secrecy havens, and so they'll find their way through. So this has to be, if we're going to make globalization work, we have to have a global commitment to root out these secrecy havens wherever they exist and to have a global commitment to beneficial ownership. One of the countries that has not done its job is the United States. So it's not just offshore centers, it's onshore centers. A good point, we'll come back to that one, because you mentioned globalization, and we're in a year where globalization isn't particularly working all that well, so how are we going to get that started? On the opportunity cost of not complying, I just happened to be watching the Panama Foreign Minister on CNBC this morning saying that that was a bad for the nation's reputation, so they acknowledge it, so maybe come back to that as well. First of all, we've been very much focused on secrecy. Marjorie Crouse, you're the founder and executive chairman of APCO Worldwide. I'd love the business perspective on what kind of commitment there is in the private sector to fighting corruption. It's not always easy. No, it's not always easy, and we see it from two places. We see our own expansion as we go around the world and also through our client size, and Mark and I have been partners at the Global Agenda Council for the Forum on anti-corruption. One of the things, you know, is that from a business point of view, obviously there's a huge cost to the business of trying to pick markets based on where there is a chance of doing business in an ethical way and avoiding markets where there's going to be problems. So sometimes there's a whole disparity for the people who need services who can't get them because of the way in which their societies work, and that's really a detriment. I think for some of the companies, it's the cost of compliance that goes from the nth degree because you have to enforce as much as you can. And we were discussing a lot of the countries that we're talking about have laws. It's not the laws. It's enforcing the laws in a way that does root out corruption. But I think ultimately from what we have discussed, the best way to, you know, this gets to the subject of the forum on leadership and ethics and values. And I think one reason there's so much outrage going on is that people feel there's this great disparity between words and action, and this is certainly one area where that reigns true. And I think the companies that have the right value system, it starts at the top, that have zero tolerance, that know how they need to operate are the companies that show up on the most admired list as well. And so we've played particular emphasis on what could you do to encourage the good behavior of the companies so that companies are doing the right thing and people start learning those skills early on. And so we did a study of millennials through the forum, and corruption was one of the biggest indicators for them of an inhibitor on their future. And so we tried to think of ways in which you could begin teaching the importance of living in a society free of corruption starting in the youngest grades so that by the time they got into business and they were working, they knew right from wrong intuitively and you didn't have to rely just on compliance that a lot of this was built into the system as a purposeful way of operating and of creating ethical behaviors. And I think the biggest value to business of getting this right aside from all the things we've been talking about is also that today's young workers want to work for companies where they think the companies are on the right path doing the right thing. And so the companies that adopt these practices are the ones that are getting the best employees and that are proceeding in ways that are, you know, I think very purposeful. Just one follow-up question from me before we have questions. How high up on the boardroom agenda is this issue? Is it even on the boardroom agenda? Oh, I think it's on the boardroom agenda. I think it starts with risk and compliance because there are heat maps in all the boardrooms of where you do work and what countries are most at risk. And I think a lot of companies have in place mandatory requirements to have people go through training processes. And I know from work in certain markets that even with all the things in place that you do and even with the best of intentions, it's still very hard to be able to oversee every single thing. And that's why the zero tolerance is really important because if people see an example of what happens when something goes wrong and it's definitive, then the next person is going to think twice about doing that. But in some of these societies, corruption has been around all the time. And if you're hiring local employees, sometimes they really don't see corruption the same way we all see it. And so it's important to make sure that education's in place. Let's have a quick show of hands for who wants to ask questions. You have to compete with our global audience so they get your hands up quickly. Take this gentleman in the front row whilst the rest of you gather your thoughts. Can you just remind us your name where you're from? Ali Koch from Turkey. Thank you for your thoughts. I want to ask you a question of education in the workplace. I had my first ethical when I was 27 in business school. Is there any work to bring this down to elementary school and not just only corruption, to be a decent person, fair person, ethical person? Why can't this be curriculum at the young age? We teach a lot of things to children, non-academic at the young ages. Why can't this be one another? I totally agree with you and that's one of the things we're looking at. We even talked about can you create a character the way cartoon characters are created about somebody that children can look at who do the right thing? And there are some things going on right now. There's actually an integrity Olympics going on online for younger people. There are a number of things that we've been working with business on and with some other organizations to try to push this at a younger age. It will not work if it's only done when you're 27. Professor Stiglitz, let's go back to your comments on global cooperation. We're an organization that prides itself on having a positive stand on the need for close cooperation between nations and stakeholder groups. But the landscape has changed since last year when the then Prime Minister David Cameron was heading a summit. He's no longer in power. We have a new generation of leaders and we may have more. So it's getting more difficult to get global agreement on anything. Is corruption any different? I think corruption is one area where it should be clear that it's in the benefit of all the countries or almost all the countries, although you might say above the board countries that they want to get rid of it. I think there's been a big change in mindset since I did some work on this when I was in the Clinton administration more than 20 years ago and we introduced, I'm representing the United States in the beginning of the discussions on bribery. One of the issues was a simple one should bribes be tax deductible. The United States position was bribes should not be tax deductible. But there were several countries who argued that bribes should be tax deductible. They were a legitimate business expense. Now some of you laughed and said that's absurd and that represents the fact that we've gotten further. Now I think there is a broad consensus that OECD has taken a lot of initiative that corruption bribes are a really bad thing. Now we understand not only that bribery is a bad thing but that there have to be mechanisms for getting back the money that's being stolen and put into London and being held there. We have to have transparency that it is having a major effect in development because all this money is leaving poor countries and going being stolen and money that could have gone for development. And that it is undermining the developed countries as well. So it's both a developed and a developing countries problem. And we actually know, and one of the things we emphasize here, we actually know a lot about how to do a lot to combat it to bring out more transparency. So in a sense over the last 20 years as the agenda has gotten more refined we've come to better understand what are the loopholes, what are the vehicles through which that have facilitated some of the bad practices. You know I just wanted to tie on to that. For these countries where the money is leaving it's also money not coming in because you go back to the boardroom and you have that discussion about investing in certain countries and there are certain countries that are definitely avoided because of their practices so it's a double impact on those countries. Mark, let's come back to you but first of all I want to bring in Ngozi Akonjo-Waila. A pleasure to be on the panel with her only one hour ago talking about something completely different. But you've got experience at international governance level and of course in Nigeria. I'd love to hear your question please. Microphone coming. Thank you very much. I just couldn't help but follow. We've got such a great panel and when Joe mentioned the issue of returning the money I think this is really critical. If you think about the fact that we had a study for the African continent led by Tabor and Becky at the behest of the finance ministers that showed that about 50 billion dollars is leaving the continent. Think of how this compares to the aid that comes in. But over time in spite of all the work done it's still not very easy to get the money's returned. So I really wanted to get your view in the work you're doing what has to be done to crack this knot of getting the money back to the countries faster. And then my second question is a lot of countries now find companies that they find have behaved in a corrupt fashion. The U.S. finds very heavily. But it tends to keep all the money that it obtains from the finds to itself. And when I was in government we started to broach the subject that look if someone has taken you know committed this act in say my country and you find them two billion dollars or something could we also get a share of those finds because we are the victim. That is the country of that act. Of course we ought to do our homework take the necessary steps to be blocking it. But how can we share this because it's painful to see the developed countries collecting you find. And then the countries from which the money has been taken getting nothing. Can you comment on that and can we have a movement to make this up. How to get the money back in the first place and then how to actually have some of the returns go back to the rightful place. Mark you have. I feel tempted to jump in having had the honor of being called a friend of star the initiative that you spearheaded in the World Bank stolen asset recovery. And I think you're perfectly right to draw our attention. The point where off shoreism and lack of transparency comes in is making it difficult to trace the money in the first place. All this off shoreism helps to hide. But there's something more. Take the financial centers off the north takes Switzerland but the place where I where I originate from. The difficulty there is that the laws are such that you can waste 10 years easily. And I think you've experienced that to actually get to the money even if the money is blocked. You still won't get it because you have to go through the rigmarole of all the legal steps and I'm experiencing new cases where exactly the same game is being played. There are countries in a worse state. I mean if you take Liechtenstein you have not only one appeal but you have about four appeals in one row which just means time time consuming and loss. So I think you're perfectly right. There is a mix of technical difficulties and lack of political will that impedes this speedy asset recovery. And it's very closely interlinked with the off shoreism issue the shadow economy. If you allow me one minute on the topic that you had raised the issue. Well what about business. They're in a mess. They're in difficult markets. They're mostly small SMEs and they can't really they're outnumbered. What do they do. I think there are some positive ways of going forward. One would be that you team up in something called collective action. It's something I think we'll be talking about in the second half of this week quite a bit. How can you actually get your act together collectively and joining right joining forces with government. The only word I would like to mention there is for instance in Colombia something called high level reporting mechanism has been created a business ombudsman. You can approach if you're being extorted. So that's for me something that is new horizon. There is actually positive. Can you speak one one mark very briefly about the importance of transparency and changing the legal frameworks in some countries. It's actually illegal to disclose information and so where where if somebody knows somebody has a deposit from the stolen money and he reports it. It's the person who discloses it that goes to jail not the person who has done the illegal money. So one of the things we emphasize in the in our report is is the thorough changes in the legal structure that have to be done to make sure that transparency is facilitated and going back to this beneficial ownership. So you know who really put the money into the account. That clearly has a change. I like what you said there. We sometimes get criticized here for not thinking about the livelihoods of small medium size enterprises. So it's a very good initiative. Very little amount of time but we've got two people. Let's take both those questions. We have microphones on both sides of the room and let's try to cover both of those questions off. Monique Villan. I run the Thomson Raiders Foundation and I'm very interested by the view of the panel on a radical move that the Prime Minister of India took to fight corruption which was to suppress the bank notes and change them. What do you think about that demonetization? Great question. Really good question. The gentleman. So it's you sir. Thank you. So I'm Javier Arreola from Mexico and I've lived in both Mexico and the US. So I've seen the difference between a country that places more transparency than corruption. So the question is like the recent movements of Donald Trump might undermine this transparency or enhance corruption somehow. OK. So the Trump effect and the Modi effect. Which one do you want to tackle first? Let me say on the first question. Actually I believe very strongly that for countries like the United States we could and should move to a digital currency and get rid of currency. And I have a paper and NBR paper coming out on using digitalizing and electronic money so that you would have the ability to trace this kind of corruption. There are important issues of privacy and issues of cyber security but it would have certainly very big advantages. Actually it's two accounts. Actually knowing and I think you could attack some of the cyber issues because of the transparency. Just where they've done it actually they've demonstrated that there's there's less seepage from in the transfer of those accounts. But it's also likely to have a short term at least impact on the economy as well. So is it the most effective way. I think over the long term the benefits will exceed the cost. And so yes there are transitional issues and they may not have done those transitional issues carried out in the best possible way. But I think over the long term it's a move in the right direction because I think the corruption is very innervating in many of these societies very innervating. The other point is on Trump just if I recall correctly he actually opposed the foreign practices act because he said you know it's one of the dimensions in which you compete is by corruption. I think that represents exactly the kind of stance that we should be against as so many of his other stances and that this is not the way to do business. And my experience at the World Bank is businesses actually valued countries where there was strict enforcement of anti-corruption and value the Foreign Correct Practices Act because they could say I'm sorry we can't pay bribes because we'll go to jail. And that made it easier for them to work in some environments that were actually more difficult. Marjorie you come from business. Business is where deals get done. Trump is a deal maker. Do you think you can work with this new regime? It's a little beyond the corruption. You're representing your community here. The fact is we have a president that will be inaugurated on Friday and he will be president in the next four years and we have to learn how to work with that. We should have our standards and I totally could not agree more about having not only rules but having vigilance in place for any regime whether it's our own or somebody else's. We can't go around the world and complain about this if at home we don't take care of it ourselves. Wonderful. We covered so much ground. Before we leave I'm going to risk the wrath of my Swiss overlords and go over time by asking one final question. I'm going to ask each of you for a prediction for the year ahead in this relatively fast moving business. Bearing in mind Ken Rogoff's comments we've seen in the papers all week about everybody at Davos always gets things wrong. Don't be put off by that. I'm going to ask you to make a prediction for what's going to happen in the year ahead. Maybe Mark will start with you. On corruption. I'm pretty optimistic I've been this for 25 years now. I think we are making progress. It's just slow and we have to keep fighting without despairing. I agree. I think that this is an issue that the Panama Papers brought it out and open and made people realize it's so pervasive and so invidious that I think it cannot be ignored. I think there's enough you might say meat here for the media to chew over that even though there's a lot of things to divert people's attention I think this is going to be an important issue for the coming year. Marjorie. I think we'll see progress on two things. One will be transparency and the other will be technology. Thank you very much indeed. Thank you for joining us. Thank you for watching us live online. This session is now closed.