News / Economy

Report: Corruption Cheats Developing Countries of Needed Money

Report: Corruption Cheats Developing Countries of Needed Moneyi
X
December 16, 2013
Global Financial Integrity says China tops list from 2002 to 2011, with slightly more than $1 trillion in illegal outflows; Russia is second, with $880 billion
TEXT SIZE - +
Jeffrey Young
— The developing world needs huge sums of money to address its many problems with health, housing, education, and more. A new report says corrupt practices by multinational companies, their government enablers, and others, however, are depriving people of a better life.

A financial watchdog group, Washington-based Global Financial Integrity [GFI], reports astounding sums of money are extracted every year from African, Asian, and Latin American nations. GFI’s new report says that in 2011, some $947 billion was taken out of these countries through what it calls illicit capital outflows.

GFI Director Raymond Baker said the 10-year total is even more staggering. “Over the decade from 2002 to 2011, we’re talking about $5.9 trillion that have moved out of the developing countries. Nothing is as harmful as this loss of capital to the poorer countries of the world.”

GFI’s report says China tops the list for that decade, with slightly more than $1 trillion in illegal outflows. Russia was second, with $880 billion. Mexico came in third with nearly $462 billion extracted. The highest ranked African nation was Nigeria, at 10th on the list, with more than $142 billion.

Different corrupt practices contribute to these illicit capital outflows, according to Alex Cobham of the Center for Global Development in London.  

“Partly, it’s about the proceeds of crime.  It’s the laundering, particularly, of drugs, of drug proceeds, and the proceeds of human trafficking," said Cobham. "But it’s also corruption itself, the theft of state assets - but that tends to be a small component. The largest component, from almost all of the estimates that we have, for almost all of the countries, is commercial tax evasion.”

Both Baker and Cobham say that tax evasion is largely accomplished through something called mispricing of trade - undervaluing minerals, goods, and other exports to tax authorities. Mispricing of trade also provides an avenue of corruption through false invoices providing kickbacks.

Sub-Saharan Africa is especially hit hard by illicit capital extraction. GFI’s report says in 2011, that region lost 5.7 percent of its gross domestic product, largely through tax avoidance done by mispricing natural resources and manufactured goods.

Global Financial Integrity’s director says developed nations must take the lead to reduce the massive extraction of capital that keeps some states and their people impoverished.

“The short answer to curtailing the problem of illicit financial flows is transparency - greater transparency in the global financial system. This means getting rid of disguised corporations, this means exchanging tax information across borders, this means companies automatically reporting their sales and profits and taxes paid in every jurisdiction where they’re in business,” said Baker.

Baker and others say that if developing nations could get their fair share from what is produced and extracted, they would have much more money to spend on public health, schools, housing, and other essential needs.

You May Like

Algerians Vote in Presidential Election

There were few media reports of protests and clashes around the country, but so far no significant violence More

Sharks More Evolved than Previously Thought

The discovery could “profoundly affect our understanding of evolutionary history” More

Pakistan Military Asked to Protect Polio Workers

Request comes as authorities say a Taliban ban on vaccinations in 2012 and deadly attacks on anti-polio teams have prevented thousands of children from getting inoculated More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Google Buys Drone Companyi
|| 0:00:00
...
 
🔇
X
George Putic
April 15, 2014
In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Ray Bonneville Sings the Blues and More on New CD

Singer/songwriter Ray Bonneville has released a new CD called “Easy Gone” with music that reflects his musical and personal journey from French-speaking Canada to his current home in Austin,Texas. The eclectic artist’s fan base extends from Texas to various parts of North America and Europe. VOA’s Greg Flakus reports from Austin.
Video

Video Millions Labor in Pakistan's Informal Economy

The World Bank says that in Pakistan, roughly 70 percent work in the so-called informal sector, a part of the economy that is unregulated and untaxed. VOA's Sharon Behn reports from Islamabad on how the informal sector impact's the Pakistani economy.
Video

Video Passover Celebrates Liberation from Bondage

Jewish people around the world are celebrating Passover, a commemoration of their liberation from slavery in Egypt more than 3,300 years ago. According to scripture, God helped the Jews, led by Moses, escape bondage in Egypt and cross the Red Sea into the desert. Zlatica Hoke reports that the story of the Jewish Exodus resonates with other people trying to escape slave-like conditions.
Video

Video Police Pursue Hate Crime Charges Against Kansas Shooting Suspect

Prosecutors are sifting through the evidence in the wake of Sunday’s shootings in a suburb of Kansas City, Missouri that left three people dead. A suspect in the shootings taken into custody is a white supremacist. As VOA’s Kane Farabaugh reports, he was well-known to law enforcement agencies and human rights groups alike.
Video

Video In Eastern Ukraine, Pro-unity Activists Emerge from Shadows

Amid the pro-Russian uprisings in eastern Ukraine, there is a large body of activists who support Ukrainian unity and reject Russian intervention. Their activities have remained largely underground, but they are preparing to take on their pro-Moscow opponents, as Henry Ridgwell reports from the eastern city of Donetsk.
Video

Video Basket Maker’s Skills Have World Reach

A prestigious craft show in the U.S. capital offers one-of-a-kind creations by more than 120 artists working in a variety of media. As VOA’s Julie Taboh reports from Washington, one artist lucky enough to be selected says sharing her skills with women overseas is just as significant.
Video

Video UN Report Urges Speedier Action to Avoid Climate Disaster

A new United Nations report says the world must switch from fossil fuels to cleaner energy sources to control the effects of climate change. The Intergovernmental Panel on Climate Change released the report (Sunday) following a meeting of scientists and government representatives in Berlin. The comprehensive review follows two recent IPCC reports that detail the certainty of climate change, its impacts and in this most recent report what to do about it. VOA’s Rosanne Skirble has the details.
AppleAndroid

World Currencies

EUR
USD
0.7225
JPY
USD
102.27
GBP
USD
0.5953
CAD
USD
1.0982
INR
USD
60.349

Rates may not be current.