German political parties criticize DEG development bank over ties to tax havens
German political parties have criticized the KfW subsidiary DEG ('Deutsche Investitions und Entwicklungsgesellschaft'), a development bank dedicated to the support of private companies in developing countries, after reports found that nearly US$900m of German development funding by flows through so-called offshore financial centers like Mauritius and the Cayman Islands. Since 2008, DEG increased the share of funds passing through tax havens by an eightfold. According to Germany's left-wing and green political parties, this practice means that development cooperation inadvertently supports shadow financial institutions.
However, DEG insisted that due to the high costs of keeping the funds in Germany, the use of tax havens is a necessary condition to maintain assistance to developing countries.