TAX HAVENS — EIB UNDER ATTACK

By Bjarke Smith-Meyer

Originally published on POLITICO Pro Morning Exchange.

Brussels NGO Counter Balance has hit out at the European Investment Bank for signing contracts with private equity funds that are based in tax havens. The NGO launched the attack in a report out today, proposing a list of key recommendations that the EIB should follow to help crack down on tax-haven countries. “The EIB often claims that for what concerns tax, it has the best standards in place among international financial institutions,” the report said. “Should this be even true, the bank needs to acknowledge it is not enough. There is no valid excuse: The EIB needs to clean up its act on tax havens.”

Counter Balance’s report comes after the Commission published guidelines that EU institutions will have to follow when funding projects that might involve countries on the Council’s blacklist of tax havens outside the bloc. The guidelines aim to stop institutions like the EIB from using financial institutions in blacklisted countries to fund projects.

The NGO pointed to recent business the EU bank has had with private equity funds like AFIG Fund II, which is based in Mauritius (a country not on the Council blacklist) and handles small and medium-sized companies in sub-Saharan Africa. The EIB signed an €18 million operation with AFIG Fund II in 2016. “It is important to flag that the recent Paradise Papers highlighted the pivotal role of Mauritius in attracting companies willing to benefit from secrecy and tax benefits,” the report said. “Public institutions such as the EIB need to go beyond what it is strictly legally required and look into all options they have available to avoid their funding supports companies with harmful tax practices.”

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