Financial Transparency Coalition

As tremors of distrust resonate throughout Russia due to widely-believed allegations of fraud in Sunday’s Parliamentary elections, new research reveals that US$152 billion in illicit money has left the country in the ten years (2001-2010) following Vladimir Putin’s rise to power. The report, Illicit Financial Flows from Developing Countries 2001-2010, was published in December by Global Financial Integrity (GFI). To make matters worse, The Wall Street Journal reports that Finance Minister Anton Siluanov has predicted net capital flight upwards of US$85 billion for this year, further adding to the illicit component of GFI’s estimates.

In our newest report, Illicit Financial Flows from Developing Countries 2001-2010, we look at illicit financial flows--the proceeds of crime, corruption, and tax evasion--leaving the developing world. Illicit financial flows are a type of capital flight, and have been a persistent plague on the developing world for some time now. Our new report will be released on Tuesday morning. But for today, I want to focus more narrowly on Zambia, one of the poorest nations on earth and one of the clearest examples of the damage caused by both illicit and licit capital flight.

Gu Kailai, the wife of Bo Xilai, a rising star in the Chinese Communist Party, has been arrested by Chinese police on suspicion of ordering or arranging the murder of Neil Heywood. Heywood was poisoned this past November. Until now no clear motive for the crime had surfaced.

Today, Global Financial Integrity released our newest report, Illicit Financial Flows from Developing Countries Over the Decade Ending 2009. In the report, we found that despite the global financial crisis and subsequent drop in international trade and foreign direct investment, illicit financial flows still approached US$1 trillion out of the developing world. This represents a decline from the US$1.55 trillion we estimated flowed out of the developing world in 2008, but still represents a horrible tragedy for developing countries.