Averil Power (Fianna Fail) | Oireachtas source

I tabled this matter to highlight the need for a public register of the beneficial owners of companies. Arguments for such a register were set very eloquently in The Irish Times last week in an article by Sorley McCaughey, the head of policy and advocacy with Christian Aid. The problem is that currently companies are able to use complex legal structures to separate their legal and beneficial ownership is such a way as to make it impossible for anybody to know who is the beneficial owner of the company, who is getting the money and who is pocketing the profits from the company.

The European Union is considering introducing measures in this regard. Discussions are ongoing in Brussels on the anti-money laundering directive and the Union is looking at the possibility of introducing a requirement across the Union for all member states to maintain public registers of the beneficial owners of companies. The reason I have tabled this debate is to ascertain from the Minister for Finance whether it is Ireland's intention to support that process and whether, in the interim, the Government will consider taking a step to introduce such a register ahead of any EU requirement.

The difficulty is that under the current system, money launderers, tax evaders and terrorist groups are able to rely on the secrecy that is provided by the complex network of trusts and shell companies to hide money and to hide the beneficiaries of profits. Christian Aid has pointed out the damage that this is doing to African economies. The African progress panel that was led by Kofi Annan estimated in its 2013 report that Africa loses twice as much in listed financial flows as it receives in international aid. Some estimates put capital flight at as high as €850 billion a year, depriving countries of vital capital and revenues. Much of this money flows out into shell or phantom companies. In the Democratic Republic of the Congo, for example, five mining contracts were awarded to anonymous companies in the British Virgin Islands, at a vastly under market rate and then sold on at market rate to major extractive companies. The estimated cost to the DRC was €1.35 billion, or twice the entire health and education budget of that country. The identities of those who own and benefited from the British Virgin Islands companies remain unknown to this day.

Public registers of the real and beneficial owners will address this problem. Not only will they provide a way to identify those who are profiting and hold them to account, but will also deter such practices. From Ireland's point of view, the introduction of such a requirement before it is enforced on us from Brussels would be another way for us to demonstrate our commitment as a country to promoting the highest levels of transparency in the areas of international finance and taxation and would seem to be a sensible position for us to adopt. The Department of Finance's recent publication on Ireland's international tax strategy talks at some length about our commitment to transparency and tackling tax evasion and justifiably points to some of the successes achieved in that regard under the European Presidency.

Taking this step now and introducing a public register of beneficial owners would be consistent with that policy and show we are serious about taking on the issue of tax transparency. The measure would only affect a small number of companies as the majority of companies in Ireland are small, family-owned companies with simple structures and where they are listed on the stock exchange, it is very clear who are their major shareholders. The issue I am concerned about affects approximately 1% or 2% of companies that use complicated structures to separate their legal and beneficial ownership. This is the type of practice we should not tolerate and should try to stop. France and Britain have already indicated that they support the introduction of a public register, regardless of whether it is introduced in the new EU money laundering directive. I urge that we do the same here.

I look forward to hearing the response from the Minister of State and hope he can indicate whether the Minister supports the proposal for this requirement at European level and whether Ireland will, like France and Britain, take the step of going ahead and doing it anyway, in the absence of any European requirement. We should do this as part of our overall commitment to showing we are serious about transparency in international finance and taxation.