By Michelle Price
HONG KONG (Reuters) - China suspended an international anti-corruption task force earlier this year after taking over the G20 presidency, according to six individuals in the group, who called it a setback to global efforts to crack down on shell companies used to conceal assets.
The so-called "Business 20" Anti-Corruption Taskforce, comprising businesses and civil society groups, had been drawing up G20 policies for increasing transparency of offshore financial structures, among other work, but the body was scrapped in late January because Chinese companies declined to participate, according to the sources.
China is one of several countries under pressure to share data on paper companies after the "Panama Papers", documents from Panamanian law firm Mossack Fonseca, revealed how the rich and powerful use such structures to avoid taxes and in some cases conceal ill-gotten gains. They were published by German newspaper Sueddeutsche Zeitung and more than 100 other international news outlets.
The B20, the G20's business outreach arm, and its various task forces are by convention led by companies from the nation holding the presidency.
The state-run China Council for the Promotion of International Trade (CCPIT), this year's head of the B20, did not provide an explanation for suspending the anti-corruption task force and did not respond to several emails, faxes and phone calls requesting comment.
But three people who had worked on the task force, who represented international, U.S. and European institutions, said the trade group could not persuade a Chinese company to take on the role of leading the task force, even though around 150,000 Chinese businesses are effectively state-run.
The sources cited the CCPIT as saying a one-off anti-corruption convention to be held later this month would be a sufficient substitute, despite strong counter-lobbying from international businesses and NGOs.
"It's a disappointing indictment on the environment in China that no company was willing to step forward," said one of the sources. "This is a critical agenda and we had built up momentum, and this decision has taken the wind out of the sails."
Chinese Foreign Ministry spokeswoman Hua Chunying did not answer directly when asked why China had suspended the task force, but said China attached a lot of importance to G20 anti-corruption cooperation and had held meetings on this.
"At the same time, China will, at the G20 business summit, which is under the framework of the B20 you mention, hold an anti-corruption forum, to promote and create a sound and clean business environment," she told a daily news briefing, without elaborating.
The forum is scheduled to be held on April 27 in Beijing.
RELUCTANT TO HELP
China has been trying to get increased international cooperation to hunt down suspected corrupt officials who have fled overseas since President Xi Jinping began a war against deeply-rooted graft more than three years ago.
But Western countries have been reluctant to help, not wanting to send people back to a country where rights groups say mistreatment of criminal suspects remains a problem, and also complaining China is unwilling to provide proof of their crimes.
Some of the participants on the task force however said they believed the Chinese government wanted to sharpen its focus this year, and remained committed to clamping down on corruption.
"We are very happy with the functioning of the anti-corruption work-stream within the B20 process," said Andrew Wilson, global communications director at the International Chamber of Commerce (ICC), which had several executives on the task force.
According to the B20 2016 official web site, anti-corruption efforts would comprise the forum, which would "continue previous efforts toward enhancing anti-corruption international cooperation, assisting anti-corruption efforts at enterprises and increasing anti-corruption dialogue between G20 and B20."
A section on the page called "Taskforce Structure" was left blank.
The three sources and three other people on the task force said they had continued their work behind the scenes in the expectation Germany, the next G20 president, will revive the body. A spokesman for Germany's finance ministry who deals with G20 matters declined to comment. A spokesman for Bundesverband der Deutschen Industrie, Germany's representative body within the B20, also did not comment.
(Additional reporting by Ben Blanchard in Beijing; Editing by Raju Gopalakrishnan)