By Lola Ololade Durodola, Centre for Financial and Corporate Integrity
On the 29th of January 2021, a VIRTEU Roundtable Discussion session was held on Zoom. It focused on “CSR, Business Ethics, and Human Rights in the Area of Taxation“. VIRTEU (Vat fraud: Interdisciplinary Research on Tax crimes in the European Union – Grant Agreement no: 878619) is a high-profile legal research project funded by the European Union, which aims at exploring the interconnections between tax crimes and corruption to unravel the relationships between fraud and corrupt practices in the area of taxation.
This Roundtable is part of a series organised by VIRTEU Principal Investigator, Dr Costantino Grasso, Assistant Professor of Law at Coventry University, together with VIRTEU Special Adviser and Chair of the session Prof Diane Ring, Associate Dean of Faculty, Professor of Law and Dr. Thomas F. Carney Distinguished Scholar at Boston College Law School, and VIRTEU Co-Investigator, Dr Lorenzo Pasculli, Associate Head for Research at Coventry Law School.
The Roundtable convened the following distinguished panel of experts to discuss issues within the fields of Law and Human Rights, Business Ethics and Corporate Social Responsibility:
- Prof Ann E Tenbrunsel – Professor of Business Ethics, College of Business Administration, University of Notre Dame;
- Prof Kish Parella – Associate Professor of Law at Washington and Lee University; and
- Dr Dawn Carpenter – Practitioner Fellow at Georgetown University Kalmanovitch Initiative for Labour and the Working Poor, Host of the business ethics What Does It Profit Podcast? And Lecturer of Finance at the Catholic University of America. The VIRTEU Research Expert in the area of Business Ethics.
The panel discussion started after an introduction by Prof Panos Andrikopoulos, with Prof. Diane requesting the panellists to make an assessment of the biggest challenges in Corporate Social Responsibility (CSR), business ethics and human rights have for the corporate world generally, and their links to taxation in particular.
Dr Carpenter, who noted that her career started in finance, highlighted that taxes are the lifeblood of the social contract of any society. Therefore, for the world to work as it should, people and companies need to pay their taxes. Prof Tenbrunsel agreed and analysed the issue from a more individual perspective, where she showed how individuals in firms do not necessarily see it as in their own best interests to notice any unethical behaviours, whether of themselves or of their colleagues – a phenomenon termed ‘motivated blindness’. For an individual to behave in immoral ways and deviate from their values would mean that a company could be having tax problems and it may not be detected until the company is experiencing significant problems, as a result of this behaviour. She observed that tax evasion and corruption has ethical components that may then impact the whole of society, linking back to positions held by Prof Andrikopoulos and Dr Carpenter. Prof Parella brought the issue of how an individual may behave within a company together with how they may be incentivised. She proposed that regulation may help to incentivise people and firms for the ‘right’ behaviours, either using an information disclosure regime, adopting a mandatory regulatory regime or even a combination of both.
The VIRTEU roundtable brought to the fore the issues about the roles of key players in the tax industry such as financial advisers, tax advisers and other tax decision makers. Some of these stakeholders are of the mindset that whatever is legal must be ‘okay’. The panellists agreed that this way of thinking needs to be discarded. Some tax practitioners also have a conflict of interest that have to be remedied, not just at a marginal level but, at a fundamental level. Stakeholders in the area of taxation were admonished to uphold both ethics and the law, to not keep looking for grey areas but to actually champion change within the tax industry. This is so that they are not complicit in helping their clients contribute to tax crimes and corruption within society, which would be detrimental to the society and could potentially cut its lifeblood.
The panel recommended integrating the CSR Environmental, Social and Governance (ESG) agenda into market levels, as well as policies. It was also recognised that companies are not monoliths and their actions impact many people on a global scale, therefore there was a need for companies, individuals within them and societies to work together to solve taxation issues. These connections and the collaboration required are even more important in a global community where the proceeds of corruption in taxation and tax crimes can cross borders seamlessly.
Many brilliant questions were asked by a global audience, which included one on whether the panel thought that there may be concerns that the scales of taxation as discussed was being tilted too much in favour of CSR and business ethics rather the long-standing tax laws. The panellists raised current taxation issues to educate on this and many other topical questions asked on such a very global issue.
In conclusion, VIRTEU’s second Roundtable seminar series session highlighted that tax issues are hard to solve, and more work needs to be done to ensure there is a global consensus in tackling the rather unacceptable taxation corruption issues.
The video recording of the session is available here.
You can find out more about Lola’s research through her Pure profile, Costantino’s research through his Pure Profile, and Lorenzo’s research through his Pure profile, which set out their research interests, publications, and contact details. You can also find out more about Coventry University’s research through our dedicated research pages.