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Voice of America Investigates Global Corruption, Features Work by GFI, Transparency International

February 22, 2013

By Clark Gascoigne

Clark Gascoigne is the Communications Director at Global Financial Integrity in Washington, DC.

Voice of America (VOA) has begun an investigation into global corruption, the first segment of which aired this week, featuring the work of Task Force members Global Financial Integrity and Transparency International. You can watch the full segment below:

Citing GFI, the piece explains:

Corruption is so vast, and so pervasive, that the numbers are staggering. An international anti-corruption monitoring group called Global Financial Integrity says that in the years from 2001 through 2010, developing nations experienced a total of $5.86 trillion in illicit funds leaving those countries.

The leading nation among them was China, where the total that decade hit $2.75 trillion. Mexico was second on the list, with $476 billion in illicit outflows. Russia was fifth at $152 billion. Nigeria was the top African nation on the GFI list, at number seven, with an illicit outflow of $129 billion.

The video continues to interview GFI Director Raymond Baker:

The typical image of an official corrupted by bribes represents only a small part of the picture, according to Global Financial Integrity’s Director, Raymond Baker.

“The corrupt component that stems from bribery and theft from government officials is really quite small-it’s only about three percent, or four percent, or five percent of the global total,” says Baker.

“The larger parts of these cross-border flows are the criminal component, which in our estimation is about 30-35 percent of the global total. But the commercially tax avoiding component-at about 60-65 percent of the total is by far the biggest part of this problem.”

Global Financial Integrity says that more recently, the illicit outflow from developing nations is nearing a trillion dollars a year.

Moving veritable mountains of money requires a vast and global shadow financial system.

“The essential elements of the system are secrecy, jurisdictions, disguised corporations, anonymous trust accounts, fake charitable foundations,” says the GFI director. “The mispricing of trade is part of this system; various money laundering techniques are a part of this system. Quite frankly another part is holes left in the laws of western countries that facilitate the movement of money through this shadow financial system and ultimately into our own Western economies.”

GFI says one of the biggest financial “black holes” in the world is actually the United States, where individual states handle the legal process of incorporations, often with little oversight. It says this allows creation of anonymous companies that can then serve as shells and conduits for illicit money.

Corruption monitoring groups say banking secrecy in some western nations such as Switzerland, and islands in the Caribbean, attracts corrupt cash and facilitates its movement. In recent years, Switzerland has bowed to pressures from other nations and international law enforcement agencies and somewhat loosened its secrecy laws.

It also highlights the work of Transparency International saying:

Since its founding in 1993, the watchdog group Transparency International has worked to get nations to put more of their government activities in the public light. And along with that effort, the advance of technology and other developments have given citizens everywhere better tools to press for that openness. Transparency International co-founder Frank Vogl lists the broad-based efforts underway.

“Thanks to the Internet,” Vogl says, “Thanks to the really enormous growth of civil society across the world, thanks to social media, thanks to investigative journalism, thanks to courageous public prosecutors, the public at large knows more about abuse of public office than ever before. It is better informed about corruption.”

You can read the full article and more on the VOA website here.

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Disclaimer: Unless specifically stated to be the views of the Financial Transparency Coalition, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Financial Transparency Coalition.

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