Tax, Infrastructure, Anti-Corruption, Energy and the G20

Daniela Strube[42]

Introduction

At the St Petersburg summit, leaders emphasised the role of long-term investment for sustainable growth and job creation. The focus was on financing for infrastructure investment, but leaders were also concerned about the long-term financing needs of other sectors, such as small and medium-sized enterprises (SMEs). In terms of forward action, leaders committed to ‘identify and start to implement by the Brisbane summit a set of collective and country-specific actions that tangibly improve our domestic investment environments such that they are more favourable to long-term investment financing.’ They also called for an extension of the analysis of challenges associated with the availability of long-term investment financing, and requested finance ministers develop policy recommendations by the next summit. In addition, leaders endorsed the OECD’s High-level Principles of Long-term Investment Financing by Institutional Investors and asked finance ministers and central bank governors to identify updated approaches to their implementation by the next summit. Leaders also called on finance ministers to identify, before the Brisbane summit, measures to facilitate domestic capital market developments and improve the intermediation of global savings for productive long-term investments.

In determining how or whether the G20 can deliver on its commitments, the critical underlying question is ‘where can the G20 add value to the task of facilitating long-term investment financing?’ This paper concentrates on the issue of long-term infrastructure financing.

Where can the G20 add value?

The G20’s structure as an informal, high-level group enables it to assist policy-making in two broad ways, namely through advocacy and coordination. In terms of the former, it can help promote domestic policy measures in any area that the group considers important and/or urgent for its member countries – although the G20 has no power to compel countries to adopt specific policy measures. As such, while peer pressure can assist, for the G20’s advocacy role to be effective, it should be complemented by members making tangible commitments to implement specific policy changes domestically, as well as hold themselves accountable to the rest of the members in delivering on these commitments.

However, a unique advantage of the G20 lies in its second role: the capacity to generate a coordinated response to systemic issues that stem from global public goods (GPGs). Public goods are characterised by non-rivalry and non-excludability. Non-rivalry requires that even when more people start to use a good or service, the benefits from consuming it do not diminish. Non-excludability means that no one can be excluded from using the good or service. There is also an important spatial dimension to consider, as GPG’s create (unintended) effects that have global reach. Consequently, they require globally coordinated responses. The World Bank classifies the environment (climate and biodiversity), communicable diseases, international trade, the international financial architecture, and knowledge as GPGs.[43]

Infrastructure financing is a ‘cross-cutting’ issue

Infrastructure is both rival and excludable. Any immediate effects that it generates are local, or at most regional. Therefore, infrastructure is not a GPG. Nonetheless, infrastructure investment can create unintended consequences, for example, by raising land values in nearby areas or by facilitating additional pollution.[44] The G20’s work on long-term investment financing largely recognises that infrastructure is not a GPG. The G20 Study Group’s work has instead concentrated on country-specific factors that affect a country’s ability to attract long-term financing. However, to stimulate infrastructure investment, there must be a sound economic and political framework that can elicit an investor’s confidence. Because this requires policy intervention in a variety of areas, it is still appropriate and consistent to consider infrastructure financing as a ‘cross-cutting’ issue within the context of the G20, as opposed to a ‘work stream’ independent from other policy areas. Placing the cross-cutting nature of infrastructure in its proper context also ensures that two-way spillover effects with other policy areas can properly be taken into account.

As mentioned, the G20 can be effective in supporting infrastructure policy by engaging in both coordination and advocacy. ‘Collective actions’ require the development of a coherent G20 approach in areas such as macroeconomic policy coordination and financial market regulation (coordination). Raising awareness at the leaders’ level and committing to domestic policy changes also are appropriate approaches for implementing ‘country-specific actions’ (advocacy).

One of the outcomes from the St Petersburg summit on infrastructure investment issues was the endorsement of the G20/OECD High-level Principles on Long-term Investment Financing by Institutional Investors and the G20 Workplan on Financing for Investment. However, the OECD principles are very general in nature, highlighting that progress on infrastructure investment largely depends on there being improvements to a variety of economic policy areas such as financial market regulation, taxation and competition policy. These fundamental economic policy areas are already key components of the G20 agenda.

Nevertheless, consistent with the approach of viewing long-term investment financing as a ‘cross-cutting issue’, and in line with the spirit of the G20’s High-level Principles, the Study Group on Financing for Investment (SG) should focus on identifying where G20 commitments in other policy areas can be ‘infrastructure-friendly’, i.e. identifying which G20 policies are likely to affect infrastructure investment and making sure that the impact on the environment for long-term investment financing is appropriately considered. This approach avoids the unnecessary duplication of effort. Implementing the Principles will in turn require both collective and country-specific actions. Financial market regulation, for example, is an area where a coordinated global response is essential for achieving an effective policy outcome. Because of extensive international linkages via financial flows, no one country can address this issue on its own.

The Study Group’s workplan provides an overview of the large number of reports commissioned by the G20. They address a variety of specific issues, mostly regarding infrastructure financing. This work is clearly valuable in advancing an understanding of the infrastructure investment challenge. However, it does not require extensive discussion at the leader’s level. The task that officials face is to identify if there is a significant issue in the area of long-term investment financing that requires the specific attention of leaders at the next summit.

Building on the basis that the G20’s work on infrastructure should have a ‘cross-cutting’ approach across the G20 agenda, below are some suggestions on how infrastructure financing should be taken into account in advancing ‘core’ G20 work in areas such as macroeconomic policy, financial market stability and climate change.

Infrastructure financing and financial markets

Three priorities can be identified for the G20’s work on financial markets. First, the G20 should continue its efforts to promote sound and efficient financial markets. However, to date, the G20’s work in this area has been disproportionately focused on the experience of advanced countries, particularly in Europe and the US, and should pay more attention to the challenges faced by emerging economies. This refocusing is necessary if finance ministers are to meet the request put to them by leaders, to identify ways to improve the intermediation of global savings. Emerging economies hold large savings, but have predominantly invested in the advanced world while their own domestic long-term investment projects remain underfinanced. Advanced country investors are still equally hesitant to commit broadly to emerging country markets. Addressing this inconsistency should be a major objective for the G20 in 2014.

Second, consistent with placing a greater focus on long-term investment challenges faced by emerging economies, priority should be given to promoting local currency bond markets (LCBMs) and long-term investment funds (LTIFs). LCBMs have been on the G20’s agenda since the Cannes summit, where the G20 LCBM Action Plan was endorsed. The action plan triggered improvements in the coordination of technical assistance among international organisations (IOs), enhanced data availability and led to the development of a common diagnostic framework. Nevertheless, important constraints on both the demand and the supply side of LCBMs remain, and likely require dedicated government intervention before they can be resolved.

On the demand side, investors’ concerns about LCBM depth presents a classic ‘chicken and egg’ problem: investors are reluctant to invest because of insufficient scale, but strong investment is required before the market can ‘scale up.’ On the supply side, many emerging markets ‘have struggled to create LCBM[s] comparable to those in advanced economies, despite having sound fundamentals’[45] and scepticism with regard to foreign investment is still widespread. On their own, market forces are likely to achieve only slow growth in LCBMs.

The common diagnostic framework that has been developed as part of the G20 LCBM Action Plan highlights how ‘a strong high-level government commitment to upgrade and reform LCBM[s] is necessary to ensure sustainability of the reform efforts.’[46] Given the analytical work that has already been done in this area, the G20 is well placed to promote LCBMs as both promising and financially sensible investment opportunities. This may help to move LCBMs further into the ‘mainstream’ of what is generally considered to be a safe and financially sound investment strategy. Highlighting best practices such as the Asian Bond Fund 2 (ABF 2) could also be effective.

This promotional work could be supported by a dedicated information campaign, led by national central banks and research institutes. As part of this campaign, institutional investors should be specifically considered as suitable investors for LCBMs. Institutional investors include pension funds, life insurers, sovereign wealth funds and state-owned investment funds, as well as national development banks. Moreover, emerging markets should commit to further develop existing LCBMs like the ABF 2, including opening up to foreign investors. If MDBs and G20 members redirect technical and financial assistance towards LCBM development in future budget allocation decisions, thereby reflecting a new reprioritisation of the issue, then this may provide further momentum to existing global efforts to promote LCBMs and encourage their development in other emerging markets.

Similar efforts are required for promoting LTIFs. This includes both the promotion of existing initiatives, such as the ASEAN Infrastructure Fund , as well as enhanced support for the development of comparable funds. For the promotion of both LCBMs and LTIFs, a continued commitment by G20 member countries to foster a stable enabling macroeconomic environment is vital. For the establishment of nascent LCBMs, the common diagnostic framework suggests that ‘a broad sequencing in this context would begin with the appropriate macroeconomic reforms and establishing robust legal, regulatory, and supervisory frameworks before moving to any specific measures of market deregulation or expansion of the investor base.’[47] The common diagnostic framework also provides an assessment tool for preparing reform efforts in this area. G20 leaders should explicitly commit to apply the recommendations set out in the analytical work that emerged from the G20 LCBM Action Plan.

The St Petersburg leaders’ declaration notes that particular attention should be given to improving the design of, and conditions for, productive public-private partnerships (PPPs). In order to facilitate progress in this area, a clear PPP framework has to be developed for individual G20 member countries. There would be value in establishing a set of common principles for domestic PPP frameworks. Some harmonisation of approaches would help reduce search costs for investors and introduce greater certainty into infrastructure investment arrangements. Some of the key elements that should be covered in the development of PPP principles include: the importance of legal certainty; competitive tendering being the instrument of choice for allocating projects; the need for full transparency; and the effective devolution of competencies to other levels of government, in order to enable them to deal with the planning and implementation of infrastructure projects efficiently. Finally, the principles should also acknowledge the advantages of having an independent regulatory body that can deal with infrastructure investment and minimise political and industry capture.

Infrastructure and the environment

The G20’s work on infrastructure financing should take into account the importance of avoiding negative environmental (especially climate) impacts as much as possible. One intuitive way of highlighting the efficiency gains that can be made from infrastructure investment can be found in McKinsey’sestimate that sixteen per cent of the infrastructure investment that is required to keep energy supply in check with projected growth, could be saved by an alternative plan built around improving the efficiency of existing energy infrastructure assets. [48]

A more efficient use of existing infrastructure requires demand-side policies, whereas many countries have historically focused on the supply side, in particular on urban transport infrastructure. The G20 should promote the importance of demand-side policies and other productivity-enhanced measures, in particular regarding incentives for using mass transit modes of transport, as an effective complement to supply side interventions. Demand-side policies go beyond congestion pricing. Non-price alternatives include using traffic-monitoring technologies for optimising traffic flows. These efforts should be part of a broader strategy, including human capital development and appropriate long-term planning that allocates sufficient financial resources to infrastructure maintenance. Infrastructure development should also be embedded into a comprehensive urban plan. In particular, planning of transport infrastructure and land use should be integrated. Such productivity-enhancing policy principles ought to come under a broad commitment by G20 leaders to address these issues domestically.

One specific area that promises enormous benefits in terms of making transport infrastructure ‘greener’ is non-motorised transport (NMT) infrastructure. NMT reflects the objective of developing ‘smart infrastructure’, rather than just building more roads. Not only does NMT infrastructure reduce pollution, but it also improves transport accessibility and safety. While the environmental aspect is generally compelling, accessibility and safety are particularly important issues for emerging market G20 members. Poorer people are disproportionally affected by road hazards. Ninety per cent of all road casualties occur in low-middle-income countries, even though less than half of the global vehicle fleet operates in these countries. [49]  NMT is also more affordable for poorer people and therefore has additional equity benefits. Given that a very high number of people in emerging and developing countries have to rely on NMT,^[50] NMT infrastructure should be more sufficient and a greater policy focus. The G20 should make an explicit commitment to focus on extending NMT infrastructure domestically, ideally setting numerical targets.

Summary – A 7-point plan for advancing the G20’s infrastructure financing agenda

In summary, there are seven steps the G20 can take in advancing its work on infrastructure financing:

• View infrastructure as a cross-cutting issue on the G20’s agenda. Focus the Study Group’s work on integrating infrastructure concerns with other G20 policies, in particular in the areas of financial markets and climate policy, without compromising the overarching policy goals in these broader policy areas.
• Refocus the work on financial markets to pay more attention to the challenges facing emerging markets.
• Promote LCBMs and LTIFs as promising and financially sound investment opportunities.
• Redirect technical and financial assistance to support the development of LCBMs and LTIFs.
• Commit to developing clear PPP frameworks domestically. Agree on joint principles in order to provide an appropriate degree of harmonisation in PPP arrangements across G20 members.
• Commit to improving the productivity of existing infrastructure assets domestically, in particular by promoting demand-side policies.
• Commit to extending NMT infrastructure domestically.

Philip Anderson[74]

Introduction

Base erosion and profit shifting (BEPS) is the term currently used for all forms of tax avoidance and evasion involving tax minimisation that has been enabled by the international tax planning activities of multinational companies, unincorporated enterprises and individuals.

One form of tax minimisation is straight-out tax evasion, which is generally regarded as activity that is inconsistent with existing taxation laws. Clearly this type of activity is important to tax agencies throughout the world and requires a response with a strong emphasis on tax enforcement and improved collection processes. It is worth noting that large multinational corporations, particularly those that are publicly listed, do not generally engage in this type of activity since the reputational risks are too great.

Tax avoidance, on the other hand is usually regarded as the minimisation of global tax liabilities by exploiting particular features of the tax laws of particular countries, especially where the incentive and ability to do so is enhanced by differing approaches to taxation in different countries. This type of minimisation activity is very common amongst multinational corporations. Indeed, most financial and legal commentators would argue that it is entirely appropriate for companies to take steps to minimise their tax liabilities, in the same way that they should act to minimise their operating costs. Despite this, it is clear that some of the more high-profile corporations that have recently received adverse publicity about their avoidance activities have become more sensitive to public criticism of their tax minimisation strategies.

This article focuses on the so-called tax avoidance activity that arises when multinational corporations, enabled by the international nature of their business models, take advantage of tax system differences between countries to realise a reduction in their effective tax rates, well below the nominal rates of the countries in which they predominately operate. This type of activity has received a great deal of recent attention: in international forums, in the international press, in the work of the OECD, from fiscal departments within specific countries (including the Australian Treasury) and through investigations by parliamentary bodies, such as in the UK and the USA. There is now an increased sense of urgency that action needs to be taken to reduce tax minimisation activity. Governments are concerned that multinational corporations should not be able to reduce their tax liability in this way, both because of unfair advantages that multinational corporations enjoy compared with their purely domestic counterparts, and because of the view that everyone should be contributing their fair share of taxes.

Nature of the Problem

The world has spent almost one hundred years defining international tax rules that were originally intended to reduce the incidence of double or multiple taxation for businesses that operated over multiple jurisdictions. Because of the international nature of these issues, the rules had to be developed within a multilateral framework. The first work in this area was undertaken by the League of Nations in the 1920s.

A further milestone was the OECD Model Tax Convention, held in 1963. The OECD model has been maintained over subsequent decades and still forms the basis, with some variation, for most of the Double Tax Agreements (DTAs) that have been entered into by developed countries since that time. Developing countries have generally pushed for additional variations to the OECD model, but the underlying principles are evident in virtually all of the three thousand or so DTAs currently in existence.

The OECD has also led the way in developing transfer pricing guidelines which, while not binding on individual countries, are now widely accepted by member and non-member countries alike.[75] These guidelines provide a framework that allows for the pricing of transactions between related companies to be evaluated, so as to ensure that the allocation of profits arising from such transactions is fair and reasonable given the nature of the economic factors related to the transactions.

The important single factor linking all of these processes over almost a century is that they have involved the development of multilateral frameworks, within which countries could still frame their own taxation laws. Some of the key features of these multilateral frameworks include the following:

• definitions of the place of residence of companies, so that wherever possible the place of residence of a company can be uniquely defined;
• the concept of ‘source’ – the jurisdiction where income from a transaction is thought to be derived;
• the concept of a ‘permanent establishment’ – part of an entity which is regarded as being resident in a certain jurisdiction, allowing that jurisdiction to exercise its right to tax the business profits of that permanent establishment – to help further clarify residence and source;[76]
• DTAs typically contains substantial definitions of what is and what is not a permanent establishment; and
• transfer pricing guidelines based around the ‘arm’s length’ principle, which strives to ensure that the pricing of transactions between related parties matches as closely as possible to what would have occurred between unrelated parties dealing at ‘arm’s length’ with each other.

As a result of these multilateral frameworks, the taxation systems of individual countries are interrelated; an outcome that has both advantages and disadvantages. The advantage is that business can be carried out internationally with little risk of double taxation, as profits are taxed only in a single jurisdiction (or at least are maintained via credits for taxes paid in other jurisdictions).

The disadvantage is that taxpayers can exploit different interpretations of these multilateral frameworks within different jurisdictions so as to reduce their tax liabilities substantially, in some cases achieving what is referred to as ‘double non-taxation’. The current debate on tax avoidance by multilateral corporations centres around a view that weaknesses in these multilateral frameworks, combined with modern business models, have contributed to an unacceptable level of tax avoidance that needs to be addressed.

The avoidance activities of increasingly globalised businesses have highlighted the weaknesses in existing international tax agreements. Yet having been placed under the spotlight for most of the past year, there is some tendency to view the mounting problems as specific to the information technology industry. However, this categorisation is misleading, as the avoidance problems that are under consideration touch on a much wider spectrum of industries – essentially, any business where global supply chains, intangible property and related party transactions are significant. In this sense, the problems are not necessarily new, but have merely garnered more attention due to several high-profile avoidance cases surfacing in the media at a time when countries are highly focused on weakening government revenue positions. Moreover, there is a concern that if action is not taken now, the situation will deteriorate further.

Recent work by both the OECD and the Australian Treasury has pointed to the difficulty of measuring the overall impact that base erosion and profit shifting have had on government tax revenues around the world. [77]Other studies have been more definitive, finding that there has been significant erosion in tax revenue, at least in the US.[78] From the perspective of both equity and economic neutrality, the issue of BEPS needs to be resolved, largely to restore integrity to the tax system, and to head off the possible further leakage of revenue as global business models continue to expand. Nevertheless, the contribution of this to revenue collections and economic activity must be kept in perspective.

Dealing with the problem

There is little doubt that some of the existing bilateral and multilateral approaches to international taxation need overhauling in order to adequately adapt to modern business practices. The OECD has recently proposed a comprehensive fifteen-point action plan[79] to tackle this problem. The advantage of an OECD/G20 sponsored approach is that it provides for changes to international taxation within a multilateral framework, which will both facilitate improved tax compliance by corporations and increase the effectiveness of the tax system in minimising tax avoidance.

Nevertheless, it is important not to underestimate the problems that lie ahead in completing and implementing the OECD action plan. Many of the fifteen points in the plan require multilateral agreements in order to be effective, and experience has shown the difficulties in developing, negotiating and implementing such agreements. A number of countries have used aspects of their tax systems to attract certain types of international business, such as regional headquarters, financial centres, logistics centres, etc. If the OECD action plan proposes to neutralise the effectiveness of these arrangements, there is likely to be considerable opposition that will delay implementation of the plan. In addition, combined OECD and G20 membership represents only twenty per cent of the countries in the world. Even though this group contains most of the largest economies in the world, it is clear from the current situation that small economies can play a major role in international tax planning. It will be important to ensure that the interests of other countries are taken into account if proposed changes are to be effective. As noted earlier, there are over three thousand DTAs in force around the world. The OECD would like to obviate the need to renegotiate all of these agreements in order to implement changes, but this can only be achieved if all countries with DTAs in force are able to accept the terms of the proposed multilateral instrument. Past experience with such international instruments is that they can take several years to develop, and an even longer period to be validated by a workable majority of countries.

Setting priorities

If the fifteen point OECD action plan experiences delays because of inherent difficulties in overcoming differences, it will be important for both individual countries and the OECD/G20 to look at ways of dealing more effectively with international tax avoidance using tools already available to them. Two approaches are available.

First, tax authorities around the world already have a considerable array of powers to collect taxes from multilateral corporations. Some of the problems that have been apparent in individual countries could be dealt with, at least partly, by a combination of modest changes to domestic laws and through more efficient tax enforcement. Even without changes to existing international agreements, many countries could achieve better outcomes by improving enforcement procedures in areas such as: fees charged for the provision of services, payment of interest on intercompany loans, and payment for intangibles. All of these areas are already covered by existing OECD transfer pricing guidelines, thereby enabling countries to achieve more without imposing the burden of double taxation on multilateral corporations.

Second, within the proposed OECD action plan, there are some steps that will be easier to negotiate than others. Some of the steps will be best achieved by updating or refining the existing transfer pricing guidelines and the OECD Model Tax Convention, both of which already have support from the OECD and many other countries. Thus, proposals relating to documentation, disclosure of aggressive tax planning arrangements, allocation of risks and capital, dispute resolution mechanisms, and treaty abuse should attract a sufficient level of support that enables substantial progress in a relatively short space of time.

One objective particularly worth pursuing is the facilitation of a more effective exchange of tax information between jurisdictions. Most DTAs include a clause allowing for the exchange of information between the treaty partners, but this has not been well used in the past and is often bogged down in administrative delays. Reform is required, but for the process to work effectively and efficiently, it will probably be necessary to develop internationally accepted templates for requesting the cross-border exchange of information. Even at a domestic level, information requests from corporations typically proceed very slowly. If the process is to work at the international level, the way in which information can be requested will need to be more clearly defined.

Some of the more challenging issues

A number of points within the OECD action plan are likely to prove particularly challenging to certain countries. These include possible changes to the definition of permanent establishments (PEs), proposals to neutralise the effects of hybrid mismatch arrangements and the strengthening of rules relating to the activities of Controlled Foreign Corporations (CFCs). Not only are these technically difficult areas of taxation law, certain countries have used these areas to achieve positive policy outcomes that encourage (or at least do not discourage) business activity. In the case of CFC rules, only a limited number of countries have such rules in place, as the tendency over the past decade has been to relax the impact of these rules out of a concern that they may discourage the international expansion of domestic business. However, by way of countering the effects of BEPS, there is likely to be considerable resistance to an expansion of CFC rules, particularly by those countries that have not sought to adopt such measures in the past.

The reforms under consideration have come at a time when the practice of corporate taxation is being challenged by the international mobility of capital. Over the past decade, corporate tax rates have declined across the board, and no apparent reversal of this trend is in sight. Most countries have responded to this competitive environment by lowering the nominal rate of tax, but tax incentives for such things as capital investment, R&D and employment creation remain important. Hence, as countries are gearing up to deal with international tax avoidance, they are simultaneously facing leakage from the corporate tax base through other channels. Thus, international tax reform should not be seen in a vacuum. Governments need to look at reforms in this area against the backdrop of their overall policies for raising taxation revenue and on tax reform in general.

Most of the focus of the debate on international tax avoidance has been on corporate income tax. However, the OECD has noted that indirect taxes also need to be considered. The OECD has mentioned the challenge of imposing value-added taxes (VAT/GST) on cross border transactions involving the digital supply of goods and services.[80] This has become an increasingly important issue, as customers are able to order goods online and return them if unsuitable at virtually zero cost. Such developments are beginning to foster a significant leakage of indirect tax revenue, as well as pose a challenge to the competitive position of domestic businesses that are required to charge the relevant rate of VAT/GST on equivalent transactions.[81] Governments already have the capacity to act in this area by updating domestic legislation, but tax collection remains a problem and it is likely that some international cooperation would improve affairs.

Proposals to tidy up international taxation are also likely to encounter problems in determining which jurisdiction is entitled to the taxation revenue currently being avoided. For example, consider the recently highly publicised usage of the ‘Irish structure’, apparently utilised by some US companies that market goods and services, particularly throughout Europe. The structure involves two parallel Irish companies, one of which is not officially a resident in either Ireland or the USA, such that its income is untaxed in either jurisdiction. By exploiting weaknesses in the legal definition of a ‘permanent establishment’, the company is also able to avoid paying taxes in the countries where the goods and services are being marketed and sold (normally a group of European countries).

This type of avoidance could be countered in a number of different ways, but there would be  different impacts depending on where the income is taxed. In one scenario, the US could change its tax laws, either by modifying its definition of residence, or by tightening its CFC rules – either way, the profits that are currently untaxed would be taxed within the US. Similarly, Ireland could change its definition of residence so as to tax the profits of the company in Ireland. Finally, the European countries in which the goods and services are actually sold could also tighten their rules relating to permanent establishments, thereby allowing for the taxation of any relevant profits. There may already be some scope for doing this under existing laws. If not, international cooperation would be needed to override any obstructions currently embedded in DTAs. In any event, the potential for different outcomes highlights the array of challenges that must be overcome for these problems to be resolved.

Conclusion

International tax avoidance is now perceived as a problem that must be dealt with as a matter of priority. To the extent that reforms are necessary, it is essential that they be carried out within a framework of arrangements supported by most countries. If this does not happen, the problems will not be resolved and international business will be beset with the problems of double taxation and costly compliance. As such, the action plan proposed by the OECD appears to provide the best way forward.

Nevertheless, there is considerable scope for countries to do more, either by increased enforcement of existing measures, or by modest domestic tax reforms that are consistent with existing international protocols, such as the OECD guidelines on transfer pricing or the Model Tax Convention. Each country needs to look closely at their existing tax laws and collection procedures to see if they are achieving the best possible outcomes within the limitations of these existing international protocols.

The process involved in getting multilateral support for changes to international protocols will be challenging and potentially protracted. For this reason, the OECD/G20 group charged with taking this process forward will need to segment tasks, so that areas of reform where achieving an international agreement will be less problematic are not held up by those issues where country differences run deep.

Hugh Jorgensen[82]

Introduction

The annual detrimental cost of corruption on international economic growth and fiscal sustainability has been conservatively placed at over US$1 trillion.[83] This represents a substantial amount of lost potential, in terms of both global public and private investment activity. Moreover, as the largest share of the corruption burden generally lies with the ‘poorest of the global poor’,[84] it is difficult to conceive of a truly inclusive G20 agenda that does not engage with the problem in some way. As such, corruption has officially been a component of the G20 leaders’ agenda since 2009, with three two-year ‘anti-corruption’ action plans released since the Seoul summit in 2010. By way of accountability on its action-plan commitments, the fourth annual ‘monitoring report’ on ‘the individual and collective progress made by G20 countries’ in fighting corruption’, prepared by the G20 Anti-Corruption Working Group (ACWG), is scheduled for release towards the end of Australia’s 2014 G20 presidency. The fourth monitoring report will provide a summary of the ACWG’s work and on progress made in counteracting corruption within and between G20 countries for 2013-2014. However, as the mandates of the ACWG and the most recent G20 anti-corruption action plan are set to expire under Australia’s presidency, leaders at the Brisbane summit will have to decide whether to extend the G20’s current approach to anti-corruption, to place its anti-corruption objectives on hiatus, or to reformulate its approach to combating corruption.

Accordingly, with its presidential prerogative to oversee the G20’s 2014 agenda, Australia will have to form a view on what the G20’s future position on anti-corruption should be. If G20 leaders have a clear sense of ownership over their stated objectives for and outcomes on anti-corruption, as well as a plan for how the G20 can provide a unique ‘value-add’ to anti-corruption efforts that other multilateral institutions cannot, then the case for renewing the G20’s anti-corruption commitments is strong. On the other hand, if leaders believe the ACWG’s work does not meet these requirements, or that its work on anti-corruption is not sufficiently complementary to the G20’s core focus on reinvigorating economic growth, then renewing the group’s mandate without proper critical appraisal would compound perceptions about the G20’s ‘bloated’ agenda.

This paper reviews the G20’s work on anti-corruption. It suggests that given the useful contribution that the G20 has made to galvanising pre-existing anti-corruption initiatives between 2009-2013,[85] there remain key areas where G20 leaders could, , continue to help to close the gap between commitment and implementation on anti-corruption. The paper concludes with suggestions for how the G20 could better structure its work on anti-corruption.

A brief history of the G20’s anti-corruption agenda

The G20’s first reference to anti-corruption within a communiqué occurred in 2000, when the G20 was still only a forum for finance ministers and central bank governors (it was also only the second ever G20 meeting). However, the allusion was really only part of a scattershot statement against ‘financial abuse’ that vaguely called for members to ‘strengthen … efforts to combat … money laundering, tax evasion and corruption…’, and that ‘looked forward’ to a joint paper by the IMF and World Bank on the subject. A similarly abstruse statement was made in 2004, with corruption not featuring in another G20 communiqué until 2009.

The omission of corruption from the earlier G20 agenda is not so surprising; between 2000 and 2003, the anti-corruption community was focused on resolving and ratifying the United Nations Convention against Corruption – the first global legally binding anti-corruption instrument. In deference to the UN’s universal precedence, the G20 limited itself to other more pressing forms of financial abuse, such as money laundering and terrorist financing. Nevertheless, while both of these latter forms of criminal activity were subject to commendable attention from the G20 after the September 11 terrorist attacks,[86] they are, in practice, distinct (albeit often interlinked) or ‘post facto’ crimes to corruption – loosely defined here as ‘the abuse of entrusted power for private gain.’[87]

As such, the first set of G20 commitments that specifically target corruption can be found in the Pittsburgh leaders’ communiqué from September 2009. The commitments reside within the ‘framework for strong, sustainable and balanced growth’ (FSSBG), a document that has increasingly come to be seen as the thematic centrepiece of the G20’s post-crisis economic recovery agenda.[88] Within the FSSBG, G20 members committed to:

• work with the World Bank’s Stolen Assets Recovery (StAR) program to secure the return of stolen assets to developing countries;
• ask the Financial Action Task Force (FATF) to help detect and deter the proceeds of corruption by prioritising work to strengthen standards on customer due diligence, beneficial ownership and transparency;
• work to increase the transparency of international aid flows by 2010; and
• adopt and enforce laws against transnational bribery, such as the OECD Anti-Bribery Convention, and the UNCAC.

The latter commitment was significant in that it garnered the consent of four G20 members (Germany, India, Japan and Saudi Arabia) that had, up to that point, failed to ratify UNCAC, as well as five non-OECD members (China, India, Indonesia, Russia, Saudi Arabia) that, unsurprisingly, had not signed up to the OECD Anti-Bribery Convention. Less compellingly, leaders also supported ‘voluntary participation in the Extractive Industries Transparency Initiative’ (EITI), which calls for ‘regular public disclosure of payments by extractive industries to governments and reconciliation against recorded receipt of those funds by governments.’[89]

However, while the anti-graft policies outlined at Pittsburgh embodied a greater appreciation for the negative economic effects of corruption than any previous G20 communiqué, it was not until 2010 that leaders’ consciously sought to articulate a link between anti-corruption and the FSSBG’s raison d’etre: reinvigorating global economic growth. The establishment of this ‘link’ occurred in two stages. First, leaders at the Toronto summit in June 2010 identified corruption as a threat to ‘the integrity of markets, [that] undermines fair competition, distorts resource allocation, destroys public trust and undermines the rule of law.’[90] Concomitantly, leaders established an ‘Anti-Corruption Working Group’[91] and tasked it with delivering ‘comprehensive recommendations’ to the next leaders’ summit in Seoul on how the G20 could ‘lead by example’ via ‘practical and valuable contributions’ to the fight against corruption. Leaders requested the ACWG to focus on ‘areas that include, but are not limited to:

adopting and enforcing strong and effective anti-bribery rules, fighting corruption in the public and private sectors, preventing access of corrupt persons to global financial systems, cooperation in visa denial, extradition and asset recovery, and protecting whistleblowers who stand-up against corruption.’[92]

Five months later, the ACWG produced a two-year ‘G20 Anti-Corruption Action Plan’ that was adopted by leaders and included in the annex of the official ‘Seoul summit document.’ The introduction to the action plan clarified the link between anti-corruption and the G20’s leader-driven objective of achieving strong, sustainable and balanced growth:

‘Corruption is a severe impediment to economic growth … As leaders of major trading nations, we have a special responsibility to prevent and tackle corruption …’ [93]

True to the G20’s now well-established penchant for appropriating architectural terminology, the plan rested on ‘three pillars’:[94]

• establishing a common approach to building an effective global anti-corruption regime, the principles of which are enshrined in the provisions of the UNCAC;
• committing to taking action in high priority areas that affect global economic growth; and
• committing to directly engage with private sector stakeholders in the formation of anti-corruption policy.

While the 2012-2013 action plan makes it clear that the G20’s contribution to anti-corruption is grounded within UNCAC principles, there is a clear underlying assumption that because of the sheer scale of the G20’s global economic footprint, anti-corruption policies implemented within the G20 are expected to have positive ‘UNCAC plus’ effects beyond the G20 economies. As such, the nine areas in which G20 leaders initially elected to ‘lead by example’ on anti-corruption are:

• prompt and full ratification of the UNCAC by all G20 members, as well as participation in individual reviews of each country’s anti-corruption policies in accordance with UNCAC requirements;
• the criminalisation of bribery of foreign public officials, as well as providing support to other international anti-bribery instruments outlined by the OECD and UNCAC;
• the prevention of corrupt officials from accessing the global financial system, in addition to increased cooperation with the Financial Action Task Force (FATF) and the implementation of FATF standards for ‘transparency of cross-border wires, beneficial ownership, customer due diligence, and due diligence for “politically exposed persons;”’
• the denial of entry and safe haven to corrupt officials, through bilateral cooperation;
• the particular promotion of UNCAC provisions related to extradition, mutual legal assistance and asset recovery, and the provision of technical assistance on these matters where needed;
• the adoption of measures ‘related to, inter alia, preventing and detecting transfers of proceeds of crime’, including the establishment or designation of an appropriate authority or agency that can provide international mutual legal assistance on matters related to corruption and asset recovery;
• the preparation and implementation of corruption whistle-blower protection legislation by the end of 2012;
• the establishment of anti-corruption agencies with law enforcement power, replete with the necessary independence to fulfill their duties free from undue influence;
• the promotion of ‘integrity, transparency, accountability and the prevention of corruption, in the public sector, including in the management of public finances.’

The action plan also advocates for greater dialogue with and between international organisations so as ‘to encourage that they operate with transparency,’ as well as for greater involvement of the private sector in the work of the ACWG.

The G20’s anti-corruption commitments have not fundamentally changed in intent throughout the Cannes, Los Cabos and St Petersburg summits, held in 2011, 2012 and 2013 respectively. However, further details to the G20’s anti-corruption action plans have been added at these summits, mostly clarifying how the G20 would seek to realise its objectives in the nine areas listed above, and how civil society and the business community were encouraged to work with the ACWG. Essentially, the updates called for greater cooperation between the designated anti-corruption law enforcement agencies in G20 jurisdictions, and the creation and sharing of best-practice guides on fighting corruption. Of particular note, though, the Los Cabos summit extended the ACWG’s mandate for an additional two years until 2014, and released an updated action plan that, although somewhat longer than the original, was substantively a reaffirmation of the commitments outlined in the previous version.

Despite dedicating eleven clauses to the topic of anti-corruption, the most recent St Petersburg leaders’ communiqué offered no discernably unique contribution beyond reiterating previous G20 commitments. And although eleven clauses is a distinct increase in ‘volume’ from the two sentences dedicated at Cannes, that the clauses themselves numbered 103-113 out of a communiqué total of 114, tends to suggest anti-corruption remained a low-level priority at St Petersburg. However, St Petersburg did at least see the delivery of a ‘Strategic Framework for the G20 Anti-Corruption Working Group,’ which does attempt to demarcate a space for the ACWG that does not involve a duplication of other ongoing global anti-corruption work. It also raises the status of the ACWG to that of the G20’s other working groups and prioritises implementation of the UNCAC and cooperation with the OECD Working Group on Bribery.[95]

The next section examines the actual impact that the G20’s anti-corruption commitments have had on the global movement to stymie corruption.

Achievements, outcomes and problems with the G20’s anti-corruption plan

While the G20 can lay some claim to having contributed to the global anti-corruption movement, its work in the area has been mostly incremental, frequently piece-meal, and sometimes haphazard. Hence, as has been acknowledged by the G20, its current priority on anti-corruption must be to close the gap between the rhetoric and actual implementation of its commitments in the Seoul and Los Cabos G20 anti-corruption action plans. Failure to do so will undermine the legitimacy of the G20 as an anti-corruption actor and, more damagingly, will give further succour to critics looking to paint the G20 as ‘invertebrate, flabby and toothless.’[96] Yet before offering suggestions on how the G20 can close the rhetoric-implementation gap in the lead-up to the Brisbane summit, this section offers a review of outcomes from the G20’s anti-corruption workplan to date, which could potentially provide a platform for future G20 work in the area.

By way of accountability on their anti-corruption commitments, G20 members consented in 2010 to provide annual individual and collective progress reports on the implementation of the anti-corruption action plan. At the time of writing, three self-assessment reports have been prepared and released by the ACWG, under the French, Mexican and Russian presidencies respectively. The self-assessments contain a summary of ongoing work occurring within the ACWG. As the remainder of this section shows, some of the ‘outcomes’ listed within the self-assessments justify a continuation of the G20’s work on anti-corruption, while a far greater number are of dubious consequence, or simply applaud activities whose provenance and responsibility for implementation lies outside of the G20 process.

Examples of useful outcomes from the G20’s anti-corruption work

The G20’s most valuable contribution to the global anti-corruption agenda has been in alleviating any ‘silo-mentality’ from compartmentalising anti-corruption initiatives undertaken by institutions like the UN, IMF, World Bank, OECD or the FATF. The call for greater inter-agency dialogue was a key component of the 2010 action plan, and as the G20’s own self-assessment reports show, the aforementioned agencies not only cooperated on providing technical input and assistance to the ACWG, but they have also begun to integrate their anti-corruption work with one another in a more collegial way. Indeed, as Jason Sharman has noted in an earlier G20 Monitor, galvanising and integrating pre-existing global initiatives is something to which the G20 is particularly well-suited; G20 leaders do not have to ‘reinvent the wheel’ in order to make a meaningful contribution to global economic stability, as their collective political weight can generate a sufficient amount of pressure on multilateral bodies to produce results in an accelerated timeframe of ‘weeks or months’, as opposed to years or decades.[97]

For example, spurred on by the political uprisings in the Middle East and North Africa (MENA) region in early 2011, the French and Indonesian co-chairs of the ACWG called upon a number of multilateral agencies to work on freezing and/or repatriating the assets of corrupt leaders. The FATF immediately commenced work on reconciling its guidance on anti-money laundering policy to better encompass the task of exposing funds ‘secreted away’ by corrupt governments and ‘politically exposed persons’ (PEPs), while the World Bank and the UN Office on Drugs and Crime (UNODC – the designated ‘guardian’ of the UNCAC) quickly moved to provide practical assistance and expertise to officials from the MENA region on ‘tracing and repatriating the proceeds of corruption held abroad.’[98] The near-immediate impact that G20 leaders had in pressuring tax havens ‘black-listed’ by the OECD into implementing internationally agreed tax standards, discussed elsewhere in this Monitor by Callaghan and Harris, further points to the unique ‘weight’ that G20 leaders’ can bear in exposing irregular financial activity.

However of all the multilateral-body initiatives that the G20 has sought to invigorate, it is the UNCAC that has garnered the most attention. Of the four G20 members that had not yet ratified the UNCAC, but that committed to do so at Seoul, half remain. India ratified the convention in May 2011, thereby setting in train the implementation of UNCAC requirements such as: establishing specific anti-corruption law enforcement agencies, developing public service codes of conduct and creating more stringent standards for procurement.[99] Saudi Arabia commenced the process of ratifying the convention in January 2013, having accepted the recommendations of its own ‘National Anti-corruption Commission’ that it had established in May 2011, in line with its G20 commitments.[100] Should the G20 be able to pressure the two recalcitrants, Japan and Germany (a curious anomaly, as both regularly feature at the top of ‘least corrupt’ indexes), to ratify the convention in the near future, and commence work on fulfilling its requirements, this would be a legitimate and commendable ‘win’ for the G20, and its anti-corruption agenda. This would also allow the G20 to genuinely ‘lead by example’ on anti-corruption, and speak with a unified voice in pressuring the fifty countries that have not yet ratified the convention, to do so.

Countries that have ratified the UNCAC have also taken further steps in line with their G20 commitment to ‘lead by example’ on better fulfilling the obligations and overall intent of the convention. In line with the UNCAC schedule for undertaking peer-reviewed self-assessments of progress in implementation of the convention, thirteen G20 countries will have completed an in-country review by end-2013, with the remaining four UNCAC signatories expected to conclude their first review by end-2014.[101] A number of valuable pieces of anti-corruption legislation have since been introduced within G20 countries in order to redress identified legal gaps, a summary of which are included in the monitoring report from 2012.[102]

The criminalisation of foreign bribery, a core tenet of the OECD Anti-Bribery Convention, has also received a significant lift courtesy of G20 support. As stated in the 2012 monitoring report:

‘By criminalising foreign bribery we show that we are ready to take responsibility for the action of our citizens and companies overseas as we do in our own countries. Alongside the requirement in UNCAC to criminalise foreign bribery, the Anti-Bribery Convention … is the benchmark.’

As indicated earlier, this is particularly striking in that non-OECD countries in China, India, Indonesia and Russia have begun to work with the OECD Working Group on Bribery on this issue – and on anti-corruption more generally – with Russia fully acceding to the OECD convention in April 2012. As per the requirements of the OECD convention, Russia, alongside other signatories, must now participate in the OECD Working Group on anti-bribery’s ‘three-phase’ peer review monitoring system. Phase one and two reviews involve the evaluation of the adequacy of a country’s legislative capacity to implement the convention, and whether it is applying this legislation effectively, while a phase three review focuses on remedying identified gaps in the overall enforcement of the convention. For example, as a current phase one participant, Russia must now consider removing or modifying legislation that currently incentivises foreign bribery – such as tax deductions for foreign bribes, as well as establish legal penalties for companies or individuals that participate in foreign bribery. Fifteen G20 countries have undergone phase one and two reviews, with a further ten advancing to phase three. As far as non-signatories to the OECD convention are concerned, China amended its criminal code in 2011 to make the bribery of foreign officials an offence,[103] and India has begun the process of passing such legislation.[104]

The third major ‘value-add’ that the G20 has brought to the global anti-corruption effort, is in establishing more effective links between anti-corruption law enforcement agencies within G20 jurisdictions. This theoretically eases the path towards exposing and recovering assets and funds siphoned off through corruption, as well as enabling the legal sanctioning and pursuit of individuals and entities engaging in foreign corruption – outcomes that are positive for more than the just the G20 countries. In terms of institutional collaboration, this has involved the G20 working with the World Bank’s stolen asset and recovery (StaR) initiative, as well as the FATF, to better identify the sources of money laundering operations and whether they are linked to corrupt behaviour. The likely adoption by the G20 of an automatic tax information exchange will further boost the G20’s cross-country cooperation in exposing corrupt activity.[105]

The G20 has also adopted ‘a set of principles’ with a view to denying visa entry and financial system access, within G20 countries, to ‘corrupt officials and those who corrupt them.’[106] However, although these principles extend beyond the requirements of the OECD Anti-Bribery Convention or the UNCAC, they are yet to have an impact outside of the ‘expert panel’ currently tasked with designing a plan for their implementation. Nevertheless, the UK and Canada have recently begun to implement some of the most stringent anti-foreign-bribery legislation in the world (the UK more-so, but both have outlawed ‘facilitation payments’[107]) and, alongside the US, have moved to combat the payment of bribes to both public and private foreign entities, as well as authorise the legal pursuit of any parties involved. These three countries, alongside Australia, have also established a joint ‘International Foreign Bribery Taskforce’ (IFBT), that allows key anti-corruption law enforcement agencies in each country to cooperate on exposing acts of foreign bribery by domestic entities. [108] ­The IBFT is in part an outcome stemming from the G20’s commitment to establish better channels of mutual legal assistance with one another in dealing with corruption.[109]

Problems with the G20’s approach to anti-corruption, and what to do about it

Despite the positive progress outlined above, there are questions as to how uniquely valuable the G20’s contribution to anti-corruption actually is, and whether the G20’s anti-corruption workplan has been integrated into the G20’s agenda in a sufficiently coherent way, such that it does not diminish the forum’s claim to be a ‘leader-driven’ process for confronting systemic challenges to stable global economic growth.

For example, a recent Transparency International progress report on enforcing the OECD Anti-Bribery Convention suggests only four of the eleven G20 countries that are party to it are actively enforcing their stated obligations.[110] In other words, just because the G20 has galvanised its members that are not OECD convention signatories into sending participants to OECD anti-bribery workgroup meetings, or passing OECD-compliant legislation, does not mean anti-corruption laws are actually going to be any more strictly enforced within G20 countries that suffer from corruption. That Japan and Germany rate so low on Transparency International’s corruptions perception index, despite not being signatories to the UNCAC, highlights the difficulty of implementing meaningful anti-corruption reform beyond signing agreements or conventions.

In addition, a simple investigation of the G20’s own action plans and ACWG monitoring reports reveals an ambiguity even in the strength and intent of the G20’s anti-corruption commitments, with a number of clauses failing to call for anything more strident than ‘examine the possibility of’, ‘explore areas of overlap in’, ‘propose best practice guides on’, ‘call for dialogue over’ or ‘welcome voluntary participation in’ whatever (otherwise) noble objective is being addressed.[111] As has been observed many times within G20 Monitor papers, for the G20 to credibly claim to be the ‘premier forum for economic cooperation’ between its members, it must actually produce meaningful and tangible outcomes that go beyond writing endless reports and commissioning investigations – a requirement that the bulk of limpid pronouncements within the G20’s anti-corruption action plans, and in the leaders’ declarations, currently do not meet.

There is also the question of how strongly G20 leaders are interested in, or feel they have ownership over, the ACWG and the anti-corruption action plans. The G20’s institutional comparative advantage is, after all, that it brings together the preeminent political leaders from twenty of the world’s most powerful economies. It is doubtful that analysing and honing the finer details of domestic anti-corruption legislation within G20 countries is an appropriate use of the extremely limited time that G20 leaders’ have together at summits. This ‘ownership’ problem is compounded in that the G20 anti-corruption self-assessment reports are not even necessarily presented to leaders for their review, or even finalised by the time of the leaders’ summits. In 2012 the report was presented to sherpas after the Los Cabos summit, for example.

In other words, the G20 would likely be more effective as an anti-corruption actor, if it undertook to critically appraise its approach to anti-corruption and whether its anti-corruption work appropriately reflects the G20’s comparative advantage as a leader-driven process. In particular, whether the biennial release of ACWG-prepared anti-corruption action plans, and the associated renewal of the ACWG’s mandate, is an approach that maximises the political authority of twenty of the world’s most powerful leaders. For example, the anti-corruption clauses contained within the recent St Petersburg communiqué are arguably little more than a summary of the third monitoring report, and thus reveal little of the ‘breakthrough’ capacity that G20 leaders wield. Is it really worth assembling world leaders once a year so they can endorse the timid findings of working groups?

If the leaders’ communiqués are to have any clout on any issue, they must become more concise and outcome-oriented, and reflect a willingness to confront systemic challenges. Sizable roadblocks to fighting anti-corruption, like full ratification of the UNCAC and the OECD Anti-Bribery Convention by all G20 members, as well as the implementation of a credible ‘denial of entry and safe haven to corrupt persons in G20 countries’ initiative, are matters worthy of leaders’ attention, and of being included in the leaders’ agenda for Brisbane. A serious commitment to implementing the EITI, that demands more than voluntary participation, is another area potentially worth pursuing.

Lower-level ‘policy refinement’ issues, especially those that are now primarily a matter for G20 members’ legislatures, are better fitted to the work of sherpas and similarly ranked officials or ministers, rather than being forced up to the leaders’ agenda and communiqué. However, any potential redistribution of ongoing anti-corruption work to a ‘lower-level’ should not be seen as an indication that the relevant issue is no longer of value. Rather, by restricting the elevation of anti-corruption measures to the leaders’ agenda to only those systemic, deadlock items that are worthy of their limited time, the saliency of anti-corruption policy within the G20 would hopefully receive a boost, as would the coherency of the G20’s overall organisational structure and modus operandi. In the same way, future G20 anti-corruption action plans should be made more concise and accessible, by ensuring outlined commitments are limited to systemic problems that either go beyond, or are not being dealt with by other institutions.

As such, the G20 might be best placed to direct the ACWG to more effectively integrate its work into the G20’s overall ‘framework for strong sustainable and balanced growth,’ and to produce a more limited set of recommendations for submission to the actual leaders’ agenda. Indeed, it is unfortunate that there is not more cross-pollination of ideas between the various G20 working groups in the first place. By pursuing more collaboration and consultation between the G20 streams that have been tasked with pursuing the various components of ‘the framework’, the ACWG would likely be able to attain greater clarity of purpose on why its objectives were worth pursuing in the overall context of the G20’s agenda, and how they could be best pursued.

For example, commitments around exposing money laundering and bringing greater transparency to illicit financial flows might be better dealt with at finance ministers’ and central bank governors’ meetings, as these matters lie within the purview of financial regulators and would benefit from the added financial expertise. The prosecution and sanctioning of politically exposed persons and corporate entities that are involved in corruption, and the recovery of stolen assets, are areas that would likely benefit from input from the development working group, as these are essentially matters of good governance and fiscal sustainability. Yet whatever the mode of ‘mainstreaming’ or ‘diffusing’ the G20’s corruption-focused responsibilities into the most appropriate G20 work-streams looks like, the point is that Australia has an important opportunity and incentive to align anti-corruption more effectively with the overall G20 agenda.

Naturally, any decision to ‘mainstream’ anti-corruption within the G20 process should be done with care and consideration for ensuring the G20’s work on anti-corruption is not diminished. Certainly, the G20’s working groups are not created with the intention of lasting until perpetuity (and given they are created to help resolve a global challenge, nor should they be). But in so far as the G20 is able to make a unique leader-driven contribution to the global anti-corruption agenda, there is a case for the ACWG to retain a place within the G20 process, so as to ensure the G20’s commitments are being pursued at some level, and to lay the groundwork for future anti-corruption action plans. Regardless, The Strategic Framework for the G20 Anti-Corruption Working Group released in St Petersburg appears to have bolstered the ACWG’s status by noting that ‘G20 leaders hereby agree … that the Anti-Corruption Working Group will have the same status of other G20 working groups.’[112]

One way to help ensure the anti-corruption work of the ACWG and the G20 as a whole remains on track is to make its work program more transparent to, and inclusive of, NGOs and business interests who have an interest in engaging with the working group. Essentially, working with stakeholders to collectively ensure any ‘mainstreaming’ of anti-corruption work in the G20 does not result in the issue being prematurely abandoned, and that the G20 remains accountable for its commitments on anti-corruption, is essential. Fortunately, The Strategic Framework does also suggest a more inclusive-outreach process is at least on the agenda for the ACWG.

In short, the G20 has brought value to the anti-corruption agenda. Yet whether it can continue to do so will require leaders to push for a more specific and outcome-oriented set of objectives, that will have a tangible and meaningful effect within (and preferably beyond) G20 countries. The positive contribution that the G20 has made in invigorating its own members’ efforts in meeting their UNCAC and OECD Anti-Bribery Convention obligations, as well as the potential delivery of a framework for denying visa and financial system access to corrupt persons and entities, all indicate that the G20 can play a role in hampering corruption. These achievements can also provide a basis for future work. The challenge for G20 leaders, officials, business stakeholders and those in the broader global anti-corruption community, will be in articulating a clear explanation as to why the political capital of leaders is required to pursue new and other ongoing anti-corruption policy objectives, specifically within the context of the G20’s already large agenda in bringing about strong, sustainable and balanced growth.