Canberra, Aus: End Culture Of Secrecy That Allows Corruption To Thrive: Call: *UPDATED

CANBERRA, Australia (AP) — Anti-poverty organization ONE is urging leaders of the 20 largest economies to act decisively at an annual summit in November against money laundering, bribery, tax evasion and corruption which it estimates costs the world's poorest countries more than $1 trillion a year.
www.one.org/international/blog/trillion-dollar-scandal 

The Washington, D.C.-based advocacy group launched its report on the economic cost of corruption on the developing world on Wednesday in the Australian capital Canberra at a Parliament House event attended by diplomats from the United States, Canada, Saudi Arabia and South Africa.

ONE is lobbying Australia to use its presidency of the G20 leaders' summit in the city of Brisbane on Nov. 15-16 to end what it calls a culture of secrecy that allows corruption and criminality to thrive in many countries.

The report, The Trillion Dollar Scandal, estimates that as many as 3.6 million deaths could be prevented if money drained from the poorest economies by corruption was invested in health systems.

"Developing countries are losing a trillion dollars every year as result of money laundering, bribery and tax evasion, and the uncomfortable truth is that often the policies put in place by G20 countries are facilitating those outflows from the world's poorest countries," report author David McNair said.

McNair pointed to World Bank research that found 70 percent of major international financial scandals since 1980 involved shelf companies in which the owners were unknown. The British Virgin Islands and the U.S. state of Delaware were the most popular places for such companies to be registered.

The report found that the losses could be significantly reduced if policies were put in place to increase transparency and combat corruption in four key areas: money laundering, a public register of principals of phantom firms in which ownership structures are hidden, public disclosure of company payments made in natural resource deals and an international exchange of tax information to combat tax evasion.

McNair held meetings in Canberra this week with officials from Prime Minister Tony Abbott's office, Treasury Department and the Department of Foreign Affairs and Trade to seek support for the recommendations.

Parliamentary Secretary to the Prime Minister Alan Tudge told the launch there was "significant alignment between the aspirations of the Australian government and the G20 on the one hand, and the call to action that you (ONE) have in your report, on the other."

"In some cases, your suggestions might be running ahead of what some G20 members are currently able to achieve," Tudge said, add that "Australia, as president of the G20 and co-chair of the G20 Anti-Corruption Working Group, is absolutely determined to lead the work to improve transparency and to combat tax evasion and corruption," he added.

ONE used three methodologies to calculate the costs of secrecy and corruption to the poorest countries. All methodologies agreed that the cost was between $1 trillion and $2 trillion.

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*(Reuters) - The United Kingdom's Serious Fraud Office plans to make more arrests in its investigation against bribery allegations at jet-engine maker Rolls-Royce Holdings Plc, the agency's director David Green said in an interview to Bloomberg.

The investigation concerns "several divisions of Rolls Royce business activity," Green told Bloomberg, adding that "there will be more arrests." (http://bloom.bg/1oALibB) www.bloomberg.com  

In February, the SFO had arrested Sudhir Choudhrie, an India-born donor to one of Britain's ruling political parties, and his son Bhanu as part of a probe into Rolls-Royce's dealings in Asia.

BAE Systems, Europe's biggest defence company, was fined $450 million by the United States and Britain in 2010, following long-running corruption investigations at home and abroad into defence deals in Saudi Arabia, Tanzania, Sweden, the Czech Republic and Hungary.

(Reporting by Ankush Sharma in Bangalore; Editing by Lisa Shumaker)

Panama: Where Washington Turned The Blind-Eye To Corruption "Narco-Kleptocracy"

In 1988, a US Senate subcommittee headed by then-Senator John Kerry came up with a new word to describe Panama - "narco-kleptocracy".

It referred to the years of corruption, cronyism and theft of state coffers under the government of military strongman Manuel Noriega.

Noriega spent decades on the payroll of the CIA as an agent while simultaneously rising in importance in the powerful Medellin drug cartel.

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Panama Direct

For years, Washington turned a blind eye to the Panamanian leader's blatant drug trafficking and money-laundering until it could be ignored no longer.

The United States invaded Panama in 1989 in what it called Operation Just Cause.

Noriega was ousted from power and arrested. Since then he has served consecutive jail sentences in the US, France and now in his native Panama.

Manuel Noriega waving after seeing off one of several coup attempts during his rule

At the time, the Senate subcommittee described Washington's close ties with Noriega as the "most serious foreign policy failures for the United States".

But following a presidential election in Panama earlier this year, John Kerry, now US Secretary of State, congratulated the country on its "peaceful and orderly" vote.

So has Panama genuinely moved from a "narco-kleptocracy" to a peaceful and orderly democracy in just 25 years?

Far from perfect

"It's a difficult question to answer," says Prof Orlando Perez, of Central Michigan University. "Panama's institutional system has certainly improved significantly since 1988. There is no question about that."

The credit-ratings service, Moody's Corporation, agrees. It recently described Panama's institutional strength as 'moderate' - a significant improvement on previous years and on other countries in Central America.

"[Panama] has been a success story," says Panamanian lawyer and political analyst Ebrahim Asvat.

"Since the US invasion, Panama has been able to put all the different pieces in place and try to run a country with democratic institutions and a balance of power between the different branches of government."

That said, democracy and governance in Panama are still far from perfect.

"Where I hesitate is in the question of corruption," says Prof Perez.

"Corruption is still a major problem inside Panama. To some extent it's systemic to the way Panama's economy is structured."

Corruption

Panama has a very open, dollarised, service-based economy.

In fact, more than 75% of its gross domestic product (GDP) comes from the service sector. While that has attracted significant foreign direct investment (FDI), it has also brought an undercurrent of less transparent business interests too.

"Openness can be positive in terms of trade and FDI. But it can also mean openness to drugs, money-laundering, arms-trafficking and so on," says Prof Perez.

The Russian mafia is believed to control some prime real estate in Panama City while the Sinaloa Cartel - perhaps the most powerful drug-trafficking organisation in the world - brings its cocaine from Colombia via Panama on its route north.

Panamanians celebrate the news that Manuel Noriega's rule has ended

Compared to the Noriega era, the government has made significant in-roads in terms of improving cooperation with international organisations, tracking flows of money and strengthening the local police.

But despite those advances, key structural problems still exist.

"Many Panamanians tell me, 'We want to cooperate with the United States, Interpol, Europol and others over these illicit money flows,'" says Orlando Perez.

"But they say we can't do anything to jeopardise the competitive advantage that Panamanian banks have. That would essentially destroy our 'brand'."

For Mr Asvat, an independent judiciary is also still lacking in Panama. "We still haven't been able to create a system that can work on its own and stay well away from the power politics of government," he says.

Yet despite the challenges, many observers see green shoots of optimism for Panamanian democracy, particularly in the last presidential election.

Ahead of the vote, the outgoing president, Ricardo Martinelli, appeared to be trying to cling on to power. His party's presidential candidate was a relative unknown, criticised as a puppet for Mr Martinelli, while the president's wife, Marta Linares, was also on the ticket.

Opposition politicians called it "re-election in disguise".

Crucially, though, it didn't work.

Unequal society

In the end, the Panamanian electorate rejected Mr Martinelli's overtures, and the race was won by the country's vice-president, Juan Carlos Varela, who had split acrimoniously with the governing coalition some weeks earlier.

Mr Varela ran on an anti-corruption platform and used televised advertisements to claim intellectual ownership of some of Mr Martinelli's more popular moves. They included major infrastructural projects in Panama City and social programmes, such a monthly payment of $100 to the elderly.

Mr Varela said that tackling Panama's expanding public debt will be one of his major challenges

His campaign chimed with Panamanians, and last month he took the presidential sash from Mr Martinelli.

With it, he inherited one of the region's fastest growing economies from his predecessor. Panama currently boasts much higher growth rates than the Latin American average and attracts greater levels of FDI than even Chile.

But it is also one of the most unevenly distributed economies.

While parts of Panama City are often compared to Dubai, Singapore or Miami, others have more in common with the slums of Rio de Janeiro or Caracas, and poverty levels in parts of the countryside can reach 90%.

Furthermore, Panama is also yet to throw off its reputation as a haven for international criminals, fugitives and tax exiles.

Country of contrasts

The latest case to cause controversy is that of the former head of the Colombian secret police, Maria del Pilar Hurtado, wanted on multiple charges in Colombia. Under Mr Martinelli, she was granted asylum in what was perceived as a favour to his ally, the former Colombian President Alvaro Uribe.

That decision was overturned by the Supreme Court, and it is now down to the Varela administration to find her and extradite her to Colombia.

The challenges ahead for Panama are numerous and complex. But Panamanians only need to glance in their rear-view mirror to see the corrupt "narco-kleptocracy" from whence they came, and be heartened by how far they have come.

"Panama is a country of contrasts," says Prof Perez, "truly a country of paradoxes and contrasts."