Positive thinking

They are as common as muck in Ukraine. And often as dirty. Foreign shell firms – ‘offshores’ in the jargon – litter the country’s politics and economy. They are used to conceal ownership, avoid tax, make illicit payments and launder dirty money. Their abuse, say anti-corruption campaigners, help keep Ukraine poor. Many are British, especially Scottish. Now an analysis of Ukrainian government public records by openDemocracy gives another glimpse at just how often UK corporate entities are being red-flagged in the country. We found that more than 700 Scottish, English, Welsh and Northern Irish firms are ‘blacklisted’ in Ukraine. Transparency International said this was “a stark reminder of Britain’s role as a global hub for financial crime”. The Scottish National Party, which has been campaigning for tighter corporate governance, said Scottish limited partnerships – or SLPs, one of the most common ‘offshores’ used in Ukraine – had left a “toxic” legacy. The busi...

Bernhard Reinsberg, University of Glasgow and Thomas Stubbs, Royal Holloway   Corruption is one of the greatest obstacles to economic development. It deprives nations of income to invest into public services, with adverse implications for education, health, well-being, and prosperity. The Global Economic Forum estimates that corruption costs the public coffers US$2.6 trillion a year. Why is corruption so difficult to control? Scholars have long blamed factors intrinsic to corrupt countries. For example, countries with a wealth of natural resources – like diamonds and oil – are corrupt because political leaders are unaccountable to their citizens. They can rely on natural resource income, rather than taxation, to finance their expenses. Undemocratic governance is also seen as a cause. A lack of checks and balances on leaders fosters corruption, as does the suppression of political rights, civil liberties, and free media. But researchers have paid less attention...