Voice of America quoted Eric LeCompte in an article on the G20. Read the full article here. 

UN warns poor countries at risk of 'losing a decade' due to COVID-19 debt crisis

The finance ministers of the G-20, a group of 20 industrialized countries, will begin a two-day meeting in Jakarta on Thursday (2/17), when many poor countries face a worsening debt crisis.

The coronavirus pandemic has left many developing countries piling up debt, which activists in debt relief campaigns say is undermining their ability to provide basic services such as health and education.

Eric LeCompte, executive director of Jubilee USA Network, which campaigns for debt relief for poor countries, said creditors must take action now.

“The G-20 needs to offer rapid and deep debt relief and encourage private creditors to take similar steps. History teaches us that the longer we wait for a debt crisis to be resolved, the harder it is to resolve it," he wrote in an email sent to VOA.

The G-20 also launched a debt reduction program in November 2020, known as the Common Framework. Under the program, participating countries will agree on debt restructuring with bilateral creditors and the IMF, and then seek to obtain similar debt relief on loans in the private sector.

G20 finance ministers and central bank governors begin their first meetings under the Indonesian G20 presidency on Thursday. The two-day meetings address global pandemic response, recovery and preparing for future crises. Developing country access to debt relief, aid and vaccines are high on the agenda.

“The prolonged economic crisis and new virus variants derailed global recovery projections,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. “Developing countries are in dire need of vaccines and support for economic recovery."

Developing country debts as a proportion of their economies rose last year by about five times the usual yearly rise during the preceding decade. The G20 launched a debt reduction process in November 2020. Chad, the first country to apply to the G20 debt reduction initiative, has yet to receive any relief. Zambia and Ethiopia, the other countries that applied, are further behind in the process.

“The G20 needs to offer speedy and deep debt relief and compel private creditors to match it,” added LeCompte, a United Nations finance expert. "History teaches us that the longer we wait to address a debt crisis, the more difficult it becomes to solve the crisis."

Finance ministers will review progress on aid commitments to developing countries. The World Bank projects that average incomes in 40% of developing countries will be lower next year than they were in 2019. Developing countries received about $230 billion and wealthy countries received more than $400 billion of $650 billion in emergency currency or Special Drawing Rights that the IMF created in August.

The G20 could affirm the direction of a pandemic response vehicle that could accept donations of Special Drawing Rights from wealthy countries. The IMF's Resilience and Sustainability Trust could fund long-term, affordable loans to developing countries.

“While G20 leaders are making progress, we are worried we aren't moving quickly enough to solve this crisis or prevent the next crisis from happening,” remarked LeCompte.

Federal agencies and Puerto Rico signed an agreement to speed up $12 billion in disaster recovery funds to strengthen Puerto Rico energy infrastructure. The Departments of Energy, Homeland Security and Housing and Urban Development signed a memorandum with Puerto Rico Governor Pedro Pierluisi. The island suffered more than $100 billion in estimated damages when Hurricanes Maria and Irma struck in 2017.

“The agreement supports rebuilding a Puerto Rico that can withstand future storms and other natural disasters,” said Eric LeCompte, Executive Director of Jubilee USA Network, a religious development organization that works with the island’s religious leaders to secure disaster and debt relief. “A modern power grid that meets renewable energy targets and can reduce future risks to the island's economy is critical."

In January, a judge confirmed a settlement that brought Puerto Rico's $72 billion debt to $34 billion. The judge oversees a special bankruptcy process mandated by debt crisis legislation passed by Congress in 2016.

“Puerto Rico's debt deal is based on assumptions that substantial federal aid and disaster relief will continue to reach the island,” noted LeCompte.

Read the full DHS MoU here.

Read Jubilee's press release on Puerto Rico's Debt Deal here.

Our Sunday Visitor publishes commentary from Amb. Sam Brownback and executive director Eric LeCompte on aid, medicine, vaccines and Special Drawing Rights for developing countries. Read the full article here.

The Christian case for a global pandemic response 

by Eric LeCompte, Sam Brownback

Jesus tells us in the Gospels that the greatest commandment is to love God; the second is “you shall love your neighbor as yourself.” In the midst of a still-raging global pandemic, what does it look like to love our neighbor as ourselves? Certainly, it means we should do what we can to make sure our neighbors have access to basic medicine, food and shelter.

In the United States, we have ample access to vaccines critical to addressing the COVID-19 crisis. Not all corners of the world have this opportunity. In Africa, only 11 percent of the population is fully vaccinated against COVD-19 due to a limited vaccine supply and inadequate infrastructure for distribution. For example, when Ghana received a shipment of 50,000 doses last year, they lacked the trained staff to administer them.

The impact of the pandemic on African nations has been devastating. Beyond the tragedy of hundreds of thousands of COVID-19 fatalities, hospitals have been so overwhelmed that it severely impacted patients’ access to other life-saving medical treatments, resulting in worrying trends like an increased number of tuberculosis deaths across the continent. Over the last year, 46 million more people fell into hunger there. Ending hunger requires ending the pandemic.

Last year, Congress passed the Corporate Transparency Act to reveal the real owners of so-called anonymous shell companies to authorities. Treasury is responsible for implementing the law to curb corruption, tax evasion and criminal activity. Jubilee USA Network, a religious development coalition that worked for 10 years to pass the law, answered Treasury's call to send feedback on the draft enforcement rule.

“The Corporate Transparency Act is a historic, bipartisan effort to stop public officials from stealing money and prevent crimes like human trafficking,” said Eric LeCompte, the Executive Director of Jubilee USA Network. “We responded to Treasury's call for feedback because we want the strongest law possible to stop aid theft in developing countries.”

Jubilee USA organized a letter signed by more than 100 religious organizations, congregations and faith-based communities urging Congress to pass the act. For more than a decade, the religious development group generated tens of thousands of phone calls, e-mails and letters to Congress calling for the transparency legislation.

"We've seen how these shell companies helped dictators take and hide debt relief and other vital forms of aid in poor countries," noted Aldo Caliari who serves as Jubilee USA's Senior Director of Policy and Strategy. Caliari submitted the feedback to Treasury. "The law is progress and there is more we need to do to bring some of these bad actors into the light."

Last May, Jubilee USA offered initial feedback on the same enforcement rule to Treasury's Financial Crimes Enforcement Network.

"The White House supports financial transparency as a national security priority and the enforcement of this law is critical to that priority,” added LeCompte. “We reiterated support for points that we hope stay in the final rule, but there are also some loopholes that we want to close.”

Read Jubilee USA's Comments on Corporate Transparency Act Proposed Rulemaking here.

Read Jubilee USA's Corporate Transparency Act letter supported by over a hundred groups here.

Read Jubilee USA's Comments on Corporate Transparency Act Advanced Proposed Rulemaking here.

Jubilee USA's comment submission on the Proposed Rulemaking on Beneficial Ownership Information Reporting Requirements.

Click here to read this submission on the official consultation website. 

February 7, 2022

Acting Director Himamauli Das
Financial Crimes Enforcement Network (FinCEN)
U.S. Department of Treasury
P.O. Box 39
Vienna, VA 22183

Re: Notice of Proposed Rulemaking on Beneficial Ownership Information Reporting Requirements (RIN 1506-AB49 / Docket Number FINCEN-2021-0005)

Jubilee USA Network appreciates the opportunity to comment on the notice of proposed rulemaking, “Beneficial Ownership Information Reporting Requirements.”

We are an alliance of more than 75 US organizations and 750 faith communities working with 50 Jubilee global partners to build an economy that serves, protects and promotes the participation of the most vulnerable. We are concerned with how financial secrecy, corruption and tax evasion are connected to poverty in the United States and abroad. In particular, we have witnessed how anonymous shell companies have facilitated exploitation of vulnerable communities and supported corrupt regimes in the developing world.

The Corporate Transparency Act introduces transparency into otherwise anonymous corporate structures by requiring companies to report their true, “beneficial” owners to a secure directory housed at FinCEN.

We promoted and worked towards passage of this legislation for more than 10 years. During that time we built support with members of Congress, senators and Administrations from both parties. We made this investment because our members1 consider this legislation essential to: 1) stop ways that human traffickers hide and make profits, 2) prevent the exploitation of vulnerable communities in the United States through Medicaid and Medicare fraud, 3) curb the theft of development and debt relief aid, 4) reveal theft from corrupt foreign governments of public monies, and 5) help raise revenue in the developing world.

Our members have an interest in seeing strong, effective rules that maximize the law’s potential to contribute to such purposes. This is the spirit that informs our formulation of responses to this call for comments.

Reporting companies: Inclusive definition and exemptions

The CTA requires reporting from LLCs, corporations, and “other similar entities” formed or registered to do business in the United States that file a document with a secretary of state or similar office. We urged a broad interpretation of “other similar entities.”

FinCEN’s proposed approach, to focus on the act of filing to create the entity as the determinative factor in defining entities besides corporations and limited liability companies that are also reporting companies, is a faithful interpretation of the statute.

The CTA contains numerous exemptions from the definition of “reporting companies.” We are among the many ANPRM commenters that considered consistency with the intention of the CTA requires that FinCEN interpret exemptions narrowly. Therefore, we appreciate that there are no new exemptions and reiterate our caution not to open any new exemptions until FinCEN has gotten an understanding of the current impact of existing ones.

In regards to the “subsidiary exemption,” we support FinCEN’s justification in Section IV.D that the exemption should apply to subsidiaries whose ownership interests are “wholly” owned by one or more of certain identified exempt entities. We believe the same reasoning extends to subsidiaries “wholly” controlled by such entities. However, the text defining the exemption in the proposed rule reads “Any entity of which the ownership interests of such entity are controlled or wholly owned...” We believe the omission of “wholly” as a qualifier before “controlled” is inadvertent, as it is not consistent with the explanation offered in IV.D. Thus, we request ensuring “wholly” applies to both “owned” and “controlled,” to prevent the emergence of a damaging loophole.

Beneficial owners

We strongly support FinCEN’s proposal that every reporting company must report at least one beneficial owner.

The CTA defines a beneficial owner of an entity as an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise (i) exercises substantial control over the entity, or (ii) owns or controls not less than 25 percent of the ownership interests of the entity.

FinCEN’s proposed definition on “substantial control” strikes the right balance between specificity for the regulated community and flexibility. In particular, we appreciate the vigilance about the need to interpret this requirement always in ways that prevent individuals from “evading identification as beneficial owners by hiding behind formalisms such as job descriptions, job titles, and nominal lack of authority.” In this regard, maintaining the catch-all provision in recognition that substantial control might take forms that are not specifically listed, is important.

Information to be reported

We are in favor of the requirement to report residential address of beneficial owners that is used for tax purposes and the requirement to report a domestic business address for reporting entities. We further call for this to be the entity’s principal place of business address. Additionally, foreign entities doing business in the US should report the country where they were formed.

We urge FinCEN to consider requiring reporting entities to provide a legal entity identifier (LEI). By ensuring the companies report a unique ID globally, such requirement would enhance the value of this information in efforts to contribute to international cooperation efforts to promote transparency.

We have strong concerns that, without some amendments in the current proposed rule, FinCEN identifiers could be misconstrued as an acceptable way for beneficial owners to hide their identities. Such use of FinCEN identifiers would profoundly contradict the history, spirit and letter of the CTA. At a minimum, the rule should: a) guarantee all registry users easy access to the identifying information about the person assigned to each FinCEN identifies, and b) clarify that entities applying for a FinCEN identifier must disclose all of their direct and indirect beneficial owners in the application submitted to FinCEN.

Access, disclosure and customer due diligence

We understand that future rulemakings will address access and disclosure of beneficial ownership information. We want to take this opportunity to reiterate our comments on these aspects of CTA implementation.

The CTA includes a mandate that the database provide “highly useful” information to law enforcement. We believe that such mandate should inform the approach to all questions under this section of the ANPRM. Law enforcement – federal, state, local, tribal, and, in appropriate cases, foreign – and financial institutions with anti-money laundering obligations should have simple, comprehensive, and timely access to this information. We encourage FinCEN to devote resources into the design of the database, such that its searchability and data quality yield the “highly useful” results for law enforcement the CTA intended. FinCEN may consider adding steps to verify data, e.g. driver’s license numbers, before it is entered into the database to ensure accuracy.

Properly trained law enforcement – whether a local police officer, tax investigator, or a national security official – should be able to access companies’ full records in the database in a timely manner. FinCEN should not unnecessarily complicate access protocols for law enforcement, and should likewise allow authorized use of the database for a wide range of enforcement purposes. Such purposes could include pursuing initial inquiries or open investigations, analyses, reviews, or other national security and intelligence matters. FinCEN should also allow use of the database for civil and administrative cases.

FinCEN should not require state and local law enforcement to overcome unnecessary hurdles to get authorization to access the database. FinCEN should allow these agencies to seek authorization from any “court of competent jurisdiction” – to include a federal, state, or local court.

Likewise, the CTA allows U.S. government agencies to make requests of the database on behalf of foreign law enforcement officials for countries that have existing information sharing agreements or that are “trusted foreign countries.” FinCEN should define the term “trusted foreign countries” with a view to foster multilateral law enforcement collaboration.

Finally, financial institutions should have full, immediate access to ownership records in the database following appropriate protocols, like is available to law enforcement. This should include, for instance, companies’ chain of current ownership and related parents, affiliates, and subsidiaries. Slowing access to the database for financial institutions with due diligence requirements would render the registry less useful in combating illicit activity and create restrictions that have no statutory basis.

The National Catholic Reporter quoted Eric LeCompte on the significance of Puerto Rico's new debt deal. Read more here.

Religious Leaders Critical to Success of Puerto Rico Debt Restructuring

By Michael Sean Winters

Last week (Jan. 18), Judge Laura Taylor Swain approved a debt restructuring plan for Puerto Rico that was the culmination of five years of negotiations and legal challenges. The deal, which was overseen by a federal oversight board first appointed in 2016, dwarfs earlier bankruptcy cases and navigates the especially fraught legal and political terrain caused by Puerto Rico's status as a U.S. territory.

Eric LeCompte, executive director at Jubilee USA, which advocates for debt relief for developing countries, concurs with Skeel's assessment as to the significance of the deal. "While some smaller portions of Puerto Rico's debt still need to be restructured, roughly out of the $72 billion in debt about 55% of the debt was cut," LeCompte said. "In comparison, the previous largest municipal bankruptcy was Detroit and the city saw its debt cut by 38%. We also saw innovations that protect Puerto Rico, its pensioners and people living in poverty."

LeCompte also agreed with Skeel about the pivotal role played by religious leaders, both on the island and in the states. "At Jubilee USA we were privileged to walk with Archbishop Gonzalez and Reverend Martinez on this journey, and we saw a historic mobilization of U.S. and Puerto Rico religious groups aid the people of Puerto Rico," LeCompte said.

Aldo Caliari comments on the need to reform the common framework for debt. Read the full article here.

Fix the Common Framework for Debt Before It Is Too Late

By Masood Ahmed and Hannah Brown

To address the problem of unsustainable debt levels, the G20 reached agreement in November 2020 on a Common Framework for Debt Treatments which aimed to deal with insolvency and protracted liquidity problems in the DSSI-eligible countries by providing debt relief consistent with the debtor’s capacity to pay and maintain essential spending needs. The value added by the Common Framework was to bring the newer official creditors, notably China which had become the largest official creditor for many developing countries, into a process that was akin to that used to restructure the debt owed to the—mostly OECD—members of the Paris Club. It also stipulated that private creditors would have to provide comparable relief on the debt owed to them but without clarity on how this was to be enforced.

A year later, the Common Framework is struggling to maintain its credibility. Agreement on general principles has proved much harder to translate into operational outcomes. Despite its name, the Common Framework is essentially designed to operate case-by-case. But of the three countries—Chad, Ethiopia, and Zambia—that have so far asked for their debt to be treated, none have been able to complete the process. In the interim, they have continued to service their debt to private creditors and their access to financial markets has been hampered by uncertainty regarding future debt relief. This long, drawn-out process with a vague and uncertain end and no interim relief is both challenging for participating countries and discouraging for other countries with serious debt problems.

Development Group Releases Statement

El Nuevo Dia quoted Eric LeCompte in an article about the Puerto Rico Adjustment Plan. Read the article here.

They fear that the Adjustment Plan will impose “unsustainable payments” on the central government of Puerto Rico

The Power4PuertoRico coalition affirmed today, Wednesday, that the central government's Adjustment Plan imposes on the island government "unsustainable payments for decades with few or no reforms to improve service delivery."

Meanwhile, the Jubilee USA network indicated that they remain "concerned about some of the assumptions of the debt agreement." “The island's ability to resume growth and avoid cuts in anti-poverty programs are of primary concern,” said Eric LeCompte, executive director of JubileeUSA.

For LeCompte, "although there is room for optimism, only time can tell if the debt cuts were deep enough to prevent Puerto Rico from needing another debt restructuring in a few years."

Common Dreams quoted Eric LeCompte in an article regarding the Puerto Rico Debt Plan. Read an excerpt and the full article here.

Critics Warn Puerto Rico Debt Plan Will Lead to More Austerity

By Julia Conley

Progressives and anti-austerity campaigners on Wednesday were wary of a federal judge's ruling which wiped out 80% of Puerto Rico's debt—the product of four years of negotiations between the U.S. territory's government, creditors, and a fiscal control board that Puerto Ricans derisively call "la junta."

Executive Director Eric LeCompte comments "We remain concerned by some of the assumptions of the debt deal. The island's ability to resume growth and avoid cuts in anti-poverty programs are both chief concerns".

Puerto Rico's debt exceeded $70 billion and it owed $55 billion in unfunded pensions when it entered bankruptcy in 2017. Its debts were partially brought on by decades of lost tax revenue after the U.S. Congress repealed a tax break for businesses on the island in 1976.

Jubilee USA said while "there is room for optimism, only time can tell if the debt cuts were deep enough to prevent Puerto Rico from needing another debt restructuring in a few years."

Against the backdrop of pandemic-caused economic shocks and social disruptions, the World Economic Forum hosts world and business leaders for its annual meeting. Headquartered in Davos, Switzerland the mission of the forum is to foster global economic cooperation. The January 17th through 21st meetings take place virtually for the second year in a row.

“As new virus variants emerge, the global economy faces increasing uncertainty," noted Eric LeCompte, a United Nations finance expert and Executive Director of the religious development group Jubilee USA Network. Jubilee USA Network monitors the work of the World Economic Forum. “Inflation, supply chain disruptions, growing social discontent and the lack of recovery in developing countries are all big concerns at this year's forum."

The World Bank projects half of developing countries will spend less in 2023 than they did in 2019. On January 1st, 46 countries benefiting from a G20 pandemic-related debt payment suspension initiative had to resume debt payments.

"Developing countries are struggling with rising debt levels and revenue loss," stated LeCompte. "With no certain recovery in sight, parts of the private sector are wrestling with economic losses during the Davos meetings."

The judge in charge of Puerto Rico's bankruptcy, Laura Taylor Swain approved a debt restructuring settling $35 billion in debt. Negotiations involved the island's government, its creditors and a federal oversight body over the past four years.

“Puerto Rico's debt payments are now reduced by two-thirds,” said Eric LeCompte, Executive Director of Jubilee USA Network. With Puerto Rico religious leaders, Jubilee USA advocated for debt and disaster relief for the island since 2015. “We remain concerned by some of the assumptions of the debt deal. The island’s ability to resume growth and avoid cuts in anti-poverty programs are both chief concerns."

The $35 billion Puerto Rico debt deal means that bondholders receive $7 billion in cash and other benefits.

“While there is room for optimism, only time can tell if the debt cuts were deep enough to prevent Puerto Rico from needing another debt restructuring in a few years,” cautioned LeCompte. 

An act of Congress put in place a federal oversight board in 2016 that worked on the bankruptcy process. The oversight board remains on the island until Puerto Rico can show four years of balanced budgets.

Dear Friend,

Thanks to your partnership, Jubilee USA's campaigns on student loans, Puerto Rico and global pandemic aid and debt relief are moving forward. I'm writing to update you on these campaigns and ask you to take urgent action. 

As part of upcoming budget votes, Congress decides on Jubilee USA requests for $22 billion in pandemic response aid and debt relief for developing countries. Please call your Senators and ask them to support pandemic debt relief and aid so vulnerable communities can get through the crisis.

As we continue to move Congress on debt relief and IMF Special Drawing Rights aid, we won new action on student loans from President Biden. In the last days of 2021, Biden extended the pandemic freeze on student loan payments and interest. This happened because of the thousands of messages you sent to Congress and the Biden and Trump White Houses. We continue to work for student debt cancellation for the vulnerable and those facing economic hardship.

The news is not as good for our Puerto Rico efforts. 

We had hoped the Senate would vote in December on action passed for Puerto Rico by the House of Representatives. In the last days of the year, Senate negotiations failed to pass disability payments for 300,000 low-income people, $3.6 billion in healthcare aid and measures to increase jobs for the island. As we push for a Puerto Rico deal in the Senate, your thousands of phone calls are pushing Senators to take action as the island struggles with debt crisis, natural disasters and the pandemic.

Your partnership is critical in the coming months as some of the most consequential decisions on Jubilee USA's pandemic response campaigns will be made by the G20, IMF, G7, World Trade Organization, Congress and White House.

Lack of vaccines and the COVID-spurred health and economic crisis continue to push hundreds of millions into hunger and poverty around the world. Please take action and leave a message for your Senators as they prepare to vote on $22 billion in pandemic debt relief and aid. The Capitol Switchboard is open 7 days a week and 24 hours a day.

Thanks for taking a moment to call your Senators ahead of important budget votes.

In partnership,

Aldo

Aldo Caliari
Senior Director of Policy and Campaigns
Jubilee USA Network
www.jubileeusa.org/support-us

Religious Group Urges Additional Student Debt Relief for Borrowers Facing Pandemic Hardship