The European Parliament is set to vote on landmark corporate transparency rules known as "country-by-country" reporting. Under the new law all major multinational corporations, including US businesses that work in Europe, will publicly disclose taxes and other payments made to governments in countries where they operate. The European Union (EU) Parliament likely will vote in favor of the regulations before Wednesday and then the EU Council will make the final decision.
“This is exciting news. Europe is moving forward the most comprehensive rules to date to stop bribery and encourage corporations to pay taxes where they operate,” noted Eric LeCompte, Executive Director of the religious development group Jubilee USA. LeCompte served on United Nations expert groups that focused on these new rules. “Unfortunately as we are making progress in Europe less comprehensive transparency regulations are threatened with repeal in the United States.”
As new transparency regulations in Europe move forward, similar US provisions are under attack. Section 1504 of the US Dodd-Frank Act requires oil, gas and mining industries to perform similar US reporting to the European measure. Congress slowed the US provision from moving forward earlier this year and then the US House of Representatives voted to repeal Section 1504 entirely. Jubilee USA leads a campaign to prevent the Senate from repealing the transparency meassure.
“Corporate transparency rules are vital for combatting corruption and ensuring that our economy protects vulnerable communities,” said LeCompte.
The EU legislation includes an exemption for corporations to not disclose information if the disclosure would threaten commercial interests.
Puerto Rico's oversight board is holding its eighth public meeting in San Juan at the Sheraton Hotel Convention Center. In executive session on Tuesday, the board rejected a debt restructuring deal between bond holders and Puerto Rico's power company known as PREPA.
“The PREPA deal was a bad deal and the board was right to reject it,” noted Eric LeCompte, Executive Director of Jubilee USA. LeCompte testified to Congress and the oversight board on the island's debt crisis. "Puerto Rico needs significant debt relief and the PREPA deal fell short of a serious debt haircut."
The PREPA restructuring now likely moves to the Title III bankruptcy process. The process was created by Puerto Rico debt crisis legislation.
“The Title III bankruptcy process is important because it can deal with all of Puerto Rico's debt. All of the island's debt should be restructured in this one comprehensive process that can deeply cut the debt,” said LeCompte.
This week, Judge Laura Taylor Swain continued the Title III bankruptcy proceedings and earlier this month appointed a team of federal judges to act as mediators in the bankruptcy process. The team will meet with representatives of Puerto Rico and its creditors for the first time on July 12.
“Puerto Rico's debt has a human cost. Nearly 60% of kids on the island live in poverty,” noted LeCompte who serves on United Nations debt expert groups. "Congress made a promise to reduce child poverty on the island and the debt needs to be restructured in ways that will lift kids out of poverty."
The oversight board meets on the one year anniversary of President Obama signing a law that created the board and established a Congressional task force to make recommendations to reduce child poverty. The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) established the Title III bankruptcy process and protections for Puerto Rico from debt lawsuits.
Representatives Carolyn Maloney (D-NY) and Peter King (R-NY) heralded the House introduction of the Corporate Transparency Act at press conference at the House Triangle. The bill aims to prevent shell companies from hiding corrupt and criminal activity.
“Dictators use financial secrecy to steal money from their people and human traffickers use shell companies," said Eric LeCompte Executive Director of the religious development group Jubilee USA. "We need Congressional action that protects vulnerable communities from being exploited through financial secrecy."
The legislation requires US corporations to disclose in a private registry that is available to law enforcement, the names of the owners who benefit from a business.
"The leadership of Representatives Maloney and King is critical as we work to promote a more transparent financial system,” noted LeCompte.
The House passed the Financial Choice Act repealing multiple measures enacted by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.
“This legislation erodes protections that are meant to prevent future financial crisis. It also encourages high-risk speculative investment, a cause of financial crisis,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA. “This act removes oversight of payday lending and too big to fail banks."
The legislation that passed the House weakens the regulatory power of the Consumer Financial Protection Bureau (CFPB) over big banks and payday lending.
Another section of Dodd-Frank repealed by the legislation is Section 1504 or the "Cardin-Lugar" measure. Section 1504 requires reporting by oil, gas and mining companies of payments they make to governments in countries where they operate. Earlier in the year, Congress voted to delay implementation of Section 1504.
“I'm deeply concerned by attacks on transparency measures that protect vulnerable populations both at home and abroad,” noted LeCompte who serves on United Nations expert groups that focus on responsible finance. “While it's unlikely this legislation will pass the Senate, the Senate must reject any measure that fuels predatory lending, corruption and speculative risky investment."
As G7 leaders continue to meet in Taormina, Italy, relief groups like Oxfam International are intensifying calls for aid monies to address famine. Twenty million people are suffering the affects of famine and the UN calls for $6.3 billion in aid. While the G7 discusses the crisis, a religious development group says debt relief and promoting transparency could be important aspects of dealing with the crisis in both the short and long term.
“We all have a moral responsibility to stop starvation, no one should die of hunger," said Eric LeCompte, Executive Director of the religious development group Jubilee USA. LeCompte's organization won debt relief for the three countries impacted by the Ebola crisis to provide financing for health care. “President Trump and the G7 must provide the moral leadership to stop people dying from hunger. They have a lot of tools at their disposal.”
The UN declared South Sudan, Nigeria, Somalia and Yemen as famine-affected countries. Somalia has debt from loans borrowed decades ago that has ballooned to a debt burden of over $5 billion. A large portion of that debt is held by G7 countries.
“The G7 should again turn to debt relief to provide monies to deal with hunger and malnutrition,” continued LeCompte, who advises UN groups, religious leaders, and government officials on resolving financial crises. “Somalia is a country that benefits from debt relief."
Famine-affected countries are also losing substantial monies to tax evasion and corruption. Global Financial Integrity reports that Yemen is losing roughly $307mn and Nigeria is losing more than $17mn annually to these "illicit financial flows".
“Tackling corruption and tax evasion is critical for poor countries to harness revenue to deal with crisis and find a path to growth,” expressed LeCompte.
World leaders head to Taormina, Italy for the G7 Summit. The May 26-27 gathering includes Heads of State from United States, Japan, Canada, Italy, United Kingdom, France and Germany. "Building the Foundations of Renewed Trust" is this year's theme. G7 observers wonder if agreement can be found in their annual joint communiqué.
"We have new G7 leaders and the question on everyone's mind is whether or not there will be agreement to continue to combat climate change," noted Eric LeCompte, Executive Director of the religious development coalition Jubilee USA. "European leaders and Pope Francis are encouraging President Trump to not turn away from commitments to protect our planet and people."
The G7 meets in Italy just after the United Nations Financing for Development Forum concludes in New York. During the UN development gathering the US spokesperson noted the super power could be reevaluating it's position on the climate agreement reached in Paris.
The G7 agenda is set to discuss "economic, environmental and social sustainability and the reduction of inequalities." New leaders on the scene this year include's Britain's Theresa May, France's Emmanuel Macron, Italy's Paolo Gentiloni and U.S. President Donald Trump.
"Inequality and concerns about financial crisis continue to be important focuses for these meetings," stated LeCompte, who has monitored the meetings for most of the last decade. "We hope to see progress on anti-corruption and transparency efforts."
United Nations Deputy Secretary-General Amina Mohammed and the IMF's Christine Lagarde join world leaders for the Financing for Development (FfD) Forum at UN Headquarters. The meetings come almost two years after the Addis Ababa FfD Summit to implement the global SDGs or Sustainable Development Goals
"Two years ago, world leaders made promises through the Addis Ababa Action Agenda to build a more responsible global financial system," notes Eric LeCompte who helped negotiate the outcomes and gave remarks during the closing sessions. LeCompte leads the religious development group Jubilee USA. "We must follow through on the commitments we made together in Addis Ababa."
The agreement in Addis Ababa two years ago expressed concern about predatory financial actors or so-called "vulture" funds. Commitments were made to promote responsible lending and borrowing and curb tax evasion and corruption.
"The developing world loses more than a trillion dollars a year due to irresponsible lending, tax evasion and corruption," said LeCompte, "The success of these efforts at the United Nations will be judged on what practical ways we can move an agenda forward that supports the developing world to harness these revenues."
Puerto Rico religious leaders sent a letter to Judge Laura Taylor Swain as she presides over the first bankruptcy proceeding in San Juan to restructure more than $70 billion in debt.
“We are grateful you are here and we hold you in prayer as you arbitrate this crisis impacting nearly 60% of our children who live in poverty,” write San Juan's Catholic Archbishop González and Reverend Heriberto Martínez, the Evangelical head of the Puerto Rico Bible Society. "You are in our prayers as you take on this important task to help restructure our debt, prevent austerity and protect our people."
The Title lll bankruptcy process was signed into law last summer by President Obama as a part of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA).
“Puerto Rico has a comprehensive bankruptcy process that can restructure all of the debt and protect essential services,” noted Eric LeCompte the Executive Director of the religious development group Jubilee USA. LeCompte is in San Juan today to observe the proceeding and he helped create the PROMESA legislation. “Congress designed this process to ensure that Puerto Rico could emerge from debt crises and not be held hostage by predatory vulture funds who prevented Argentina from restructuring their debt.”
A small group of "holdout" investors prevented Argentina from returning to the markets for nearly 15 years. LeCompte argues that the Puerto Rico process could be a model for both states and countries who need to work their way out of financial crisis.
"It is important that the venue for this trial is here in Puerto Rico, Nuestra Patria. Our people who are most affected by this crisis need to be able to monitor these proceedings,” said the religious leaders in their letter to the judge. “We hope you will be able to hear their stories and their struggles.”
Link to religious leader’s letter in English and en español.
Puerto Rico bankruptcy proceedings to restructure an over $70 billion debt begin on Wednesday in San Juan. The Title III debt restructuring process was created as a part of debt crisis legislation that was signed into law last summer.
"This is a historic process," notes Eric LeCompte, the Executive Director of Jubilee USA who is in San Juan to monitor the process. "The legislation and process is unique among bankruptcy processes because it can restructure all of Puerto Rico's debt and ensures that all creditors participate in the process."
LeCompte monitored the case involving Argentina versus NML Capital and organized nearly 80 development and religious organizations to file an Amicus Brief to the Supreme Court in 2014. Because Argentina was required to pay a small group of "holdout" creditors, the country was not able restructure all of its debt or return to the international capital markets for almost 15 years. LeCompte worked with Congressional leadership to create and pass legislation that would prevent so-called "vulture" funds from taking advantage of Puerto Rico as they did to Argentina. The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) was designed to prevent predatory and "holdout" behavior.
"Puerto Rico's bankruptcy process could be a model for better, more comprehensive bankruptcy processes for states and other countries," explained LeCompte who advised the United Nations General Assembly on the creation of a global bankruptcy process. "Current debt restructuring processes available for U.S. states and countries can not restructure all of their debt, but the process for Puerto Rico can."
Overseeing the hearings is Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York. The process will likely last a year and a half or more.
"In the coming years, Puerto Rico will still have a lot of obstacles to overcome but if this process is done right, Puerto Rico will have a clear path for recovery and economic growth," says LeCompte.