Secrecy “the norm” among FTSE100 companies – Christian Aid

by Luke Balleny | | Thomson Reuters Foundation
Tuesday, 13 May 2014 14:41 GMT

A man walks past the London Stock Exchange in the City of London October 11, 2013. REUTERS/Stefan Wermuth

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"The secrecy is so deep and widespread that it is like a blindfold on everyone who has financial dealings with these companies,” says report author

By Luke Balleny

LONDON (Thomson Reuters Foundation) – Information on the subsidiaries of the 100 largest publicly traded companies on the London Stock Exchange is difficult to uncover and sometimes impossible, with mining, oil and gas, and insurance among the hardest sectors to get data for, according to a report published by Christian Aid on Tuesday.

FTSE100 companies have created 29,891 subsidiaries but information on turnover, assets, shareholder funds and number of employees is freely available for just 26 percent of them, the report by the aid group said.

Information on 21 percent of the FTSE100 subsidiaries (6,396 companies) is entirely hidden, even for a fee, while information on the remaining 53 percent of companies is available for a fee, the report said.

Mining (46 percent), oil and gas (40 percent), insurance (30 percent) and banking (27 percent) are the sectors most likely to have subsidiaries about which no data at all is available, the report said.

“We were shocked by how little information is freely available about most companies’ subsidiaries,” Katharine Teague, co-author of the report, said in a statement.

“What our findings show is that secrecy is not the exception but the norm, even among the largest 100 companies whose shares are traded on the London Stock Exchange.”

“These are household-name firms in which millions of people invest, through their pension funds and savings. But the secrecy is so deep and widespread that it is like a blindfold on everyone who has financial dealings with these companies,” Teague added.

The subsidiaries’ lack of transparency threatens investors, customers and government regulators as company risk cannot be easily identified, Christian Aid said.

Also, government tax departments may struggle to assess the correct taxes for the subsidiary, a particular worry when numerous countries are still struggling with the effects of the global financial crisis, the aid agency added.

Corporate tax avoidance has risen to the top of the international political agenda, partly as a result of public anger at the tax affairs of major multinational companies such as Starbucks, Google and Apple.

The report also analysed the extent to which the subsidiaries were based in ‘secrecy jurisdictions’, also known as tax havens, as defined by the Financial Secrecy Index.

Over 90 percent of the subsidiaries were found to be based in ‘secrecy jurisdictions’ of which the UK is defined as ‘moderately secretive’. However, 14 percent of the subsidiaries are in ‘highly secretive’ tax havens such as Switzerland, Luxembourg, Hong Kong, Bermuda and the Cayman Islands, the report said.

Investment and finance (37 percent), banks (28 percent) and mining (19 percent) have the highest percentage of subsidiaries in highly secretive jurisdictions, the report added.

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