Learn About Illicit Financial Flows
Key Terms

Latest

Jan
30

How the Groenewald Gang Made Millions off Illicit Wildlife Trafficking

Regina Morales

flickr / Dane Larsen

Dawie Groenewald of South Africa and 11 conspirators were arrested in September of 2010 on 1,872 counts of racketeering, including illegal trade of rhino horns. Among those arrested are two veterinarians, Karel Toet and Manie Du Plessis, as well as several professional hunters. This case is one of the biggest wildlife cases seen in South Africa and has been postponed several times since 2010. It is currently scheduled for early May 2013.

Groenewald owns a big game farm in Polokwane, South Africa as well as Out Of Africa Adventurous Safaris. A burial site of over a dozen horn-less rhinos was found on his property in 2010. Investigators show that these rhinos are thought to have been purchased from the South African National Parks in 2007-2010. In order to increase his profit margin, Groenewald decided to slaughter the rhinos after removing their horns; thus eliminating any upkeep costs associated with live rhinos.

Rhino horns are worth up to $60,000 per kilo in parts of East Asia, namely China and Vietnam. They are thought to possess medicinal value, including curing cancer and small ailments such as fevers and headaches.  Rhino poaching in South Africa has been rising steadily over the past several years. According to South Africa’s Department of Environmental Affairs, approximately 588 rhinos were poached in 2012. One could point to China and Vietnam’s increased affluence as having increased this demand.

Investigators have so far seized $6.8 million in assets from Groenewald, Toet, and Du Plessis. They also uncovered Valinor Trading CC, a “closed company” Groenewald used to launder money. However, this was not Groenewald’s first run in with the law. Groenewald is a former police officer and was discharged because of his ties to a car smuggling ring allegedly outfitted by ZANU PF, the ruling party of Zimbabwe’s notorious Robert Mugabe. Groenewald was arrested in Alabama in April 2010 for importing an unlawfully hunted leopard trophy. He was banned from the U.S. and ordered to pay a $30,000 fine as well as a $7,500 fee to the buyer in Alabama.

Continue Reading »

Jan
28

Event: Global Corruption: Money, Power and Ethics in the Modern World

EJ Fagan

Global Financial Integrity will be holding a panel discussion about the new book, Global Corruption: Money, Power and Ethics in the Modern World, by Transparency International’s Laurence Cockcroft. All are invited to attend. If you are outside the Washington, DC area, the event will be filmed and posted online shortly afterwards.

Date:

Tuesday, February 12th, 2013, 11:00am – 12:30am

Location:

Carnegie Endowment for International Peace
Choate Room
1779 Massachusetts Ave. NW
Washington, DC, USA, 20036

Speakers:

Laurence Cockcroft, Author
Michael Hershman, President & CEO of The Fairfax Group, former federal fraud and financial crime investigator
Claudia Dumas, President & CEO of Transparency International USA
Raymond Baker, Director of Global Financial Integrity

RSVP:           Send RSVPs to Patrick Benson at pbenson@gfintegrity.org

Note: This event was previously scheduled for October 29th, 2012, but was postponed due to Hurricane Sandy.

Corruption is a key factor in sustaining appallingly high levels of poverty in many developing countries, particularly in relation to the provision of basic services such as education and health. It is also a major reason why increases in the growth rate in Africa and South Asia have failed to benefit large segments of the population. Corruption drives the over-exploitation of natural resources, capturing their value for a small elite – whether timber from Indonesia or coltan from the Congo. In the developed world, corrupt party funding undermines political systems and lays policy open to heavy financial lobbying.

Continue Reading »

Jan
28

Global Witness: The Price for Helping Cyprus

Robert Palmer and Rosie Sharp

This op-ed was originally published in the European Voice on January 24th.

flickr / Dan…

Cyprus’s teetering economy needs a significant injection of bail-out cash from its European Union partners. However, a group of countries, led by Germany, is baulking at the prospect of propping up what many regard as a money-laundering haven. A bail-out package, it is argued, could see eurozone taxpayers footing the bill for protecting the offshore banking deposits of criminals. European leaders are arguing that Cyprus should have to beef up its anti-money laundering controls in order to qualify for any bail-out package.

The Cypriot government insists that it runs a clean financial centre. In fact, EU ambassadors to Nicosia have been told that Cyprus has a better anti-money laundering record than many other EU member states.

This argument is disingenuous and ignores crucial holes in Cyprus’s attempts to fight the movement of dirty money. Indeed, last year, a leaked report from Germany’s Federal Intelligence Service declared Cyprus to be a “gateway for money laundering activities in the EU”.

Although Cyprus has made commendable efforts to improve its financial crime laws since joining the EU in 2004, there are serious questions about how well these rules are enforced in practice, and the apparent ease with which criminals can abuse Cypriot companies to hide their identity and their ill-gotten gains.

Continue Reading »

Jan
24

Audio: Taxcast January 2013 Edition

EJ Fagan

In January 2013′s Taxcast: A significant ruling against Dell in Spain, India shelves rules that would have tackled corporate tax abuse until 2016, the EU threatens to blacklist Switzerland and Naomi takes a look at ‘Google Capitalism.’ (An extended edition to kick off 2013 – just under 20 mins). For more episodes, click here.

On mobile? 

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

.

Continue Reading »

Jan
23

Four Questions for Jack Lew, Obama’s Pick for Treasury Secretary

Ann Hollingshead

flickr / azipaybarah

With his inauguration only a few minutes behind him, President Obama officially submitted his initial round of Cabinet nominations to the Senate on Monday. Among them is Jacob “Jack” Lew, the current White House Chief of Staff and Obama’s pick to replace Timothy Geithner as the next Secretary of the Treasury. Before getting the post, though, Mr. Lew will face a tough round of questioning from the Senate Finance Committee, which is in charge of vetting his nomination.

The next Secretary of the Treasury will have enormous influence nationally, and globally, on issues important to the Task Force, including the combating of terrorist financing, offshore tax haven abuse, and money laundering. Below, I outline four questions I would ask Mr. Lew at his confirmation hearing, if I could. Below each, I describe why it’s important and what I’d like to hear in Mr. Lew’s response.

1. Can you describe your approach to preventing Iran from avoiding international financial sanctions as part of its larger objective to obtain a nuclear weapon?

The U.S. Department of the Treasury plays an integral role in enforcing U.S. (and the world’s) financial sanctions against Iran by sharing information with key financial actors globally and investigating offshore front companies.

For example, in 2010 Treasury found 37 front companies based in Germany, Malta, and Cyprus which were acting for or on behalf of the Islamic Republic of Iran Shipping Lines (IRISL) and its affiliates. Iran uses IRISL, its national maritime carrier, and its complex network of shipping and holding companies to advance its nuclear weapon program and to carry military cargoes. Other Treasury actions have included an investigation into Great Britain’s Lloyd’s Bank, which agreed to a fine of $350 million for its illegal handling of financial transactions for Iran and the determination that a large office building on Fifth Avenue was held by a firm that served as a front for an Iranian bank barred from business with the United States.

Continue Reading »

Jan
23

Announcing the “Enough Food For Everyone – IF” Campaign

Joseph Stead

This week more than 100 organisation have joined together to launch the biggest campaign since Make Poverty History. ENOUGH FOOD FOR EVERYONE – IF aims to tackle hunger which grips our world.

1 in 8 people on the planet go to bed hungry every night and more than 2 million children die from malnutrition annually.

At a time when progress is being made in many key areas of the development of poor countries these are shocking statistics. It highlights that our global food system is broken and it’s why Christian Aid, Action Aid, Oxfam and dozens of other organisations are joining together to say there is ENOUGH FOOD FOR EVERYONE – IF we tackle the causes of hunger.

The campaign focuses on addressing four key issues which could ensure that everyone has the food they need to live from.

  • If aid is invested in the right places small-scale farmers will have the support they need to grow food.
  • If we tackle tax dodging in poor countries governments could have the money they need to ensure their citizens are fed.
  • If farmers are not forced from their land they can grow the crops needed to feed people
  • If governments and big companies are honest and open about their actions that currently prevent people getting enough food.

This campaign will not end hunger in 2013, but it could start the process that does end hunger, if we address these issues. With the UK hosting the G8 in June we have the opportunity to press world leaders to make these changes happen and ensure there is enough food for everyone. It’s a hugely ambitious and exciting campaign. For it to be a success we must come together and speak as one to those in power to push for a just world.

To find out more and to get involved visit christianaid.org.uk/if or enoughfoodif.org.

Continue Reading »

Jan
22

Video: Stealing Africa by Why Poverty?

EJ Fagan

Stealing Africa, a documentary in the series Why Poverty that focuses on the case of the international mining giant Glencore in Zambia, is a must-watch for anyone concerned with domestic resource mobilization, global poverty, the resource curse, or illicit financial flows. These topics mesh together to one simple idea: money that should be staying in Africa’s poorest nations is in fact fleeing at an astounding rate, and something needs to be done about it.

Task Force Director Raymond Baker and Tax Justice Network’s John Christensen and Nick Shaxson appear at length in the documentary. It runs for 58:27 below:

Continue Reading »

Jan
22

Shruti Shah: A case for more integrity in the financial sector

EJ Fagan
null

flickr / Pablo Manriquez

Shruti Shah of Transparency International-USA wrote a great op-ed on Devex last week. Ms. Shah connects the dots between the crimes committed at HSBC, the influx of money to the United States from kleptocrats like Teodorin Obiang, and the hundreds of thousands of anonymous shell corporations created every year in the United States. The result? Individuals are able to use the United States and its institutions to, “export, launder and conceal ill-gotten gains” derived from corruption.

Her point is important: there is a causal connection between the facilitation of corruption and corruption itself, in the sense that facilitation is necessary for much of the grand corruption that occurs to exist. Without the ability to easily move money out of the home country, it becomes a lot more difficult to perpetually conceal what you are doing. When you decrease incentives – the potential for dynastic wealth that can be spent with impunity – you decrease the activity.

Shah writes,

2011 BBC poll surveying more than 11,000 people across 23 countries showed that corruption was the most talked about global issue. In the same survey, 69 percent of respondents rated corruption as a “very serious” global issue.

This is not surprising, as corruption underpins many of the main global challenges. Corruption undermines economic growth, erodes trust in institutions, diverts scare resources that could be used for development, subverts open markets and is perceived to have played a significant role in the recent financial crisis. The continuing discontent of ordinary people – whether in the Middle East, India or even the United States – shows that tackling corruption will continue to be front and center in 2013.

An important issue often missing from discussions on corruption is that preventing the ability of individuals to export, launder and conceal ill-gotten gains can significantly reduce corruption.

It is difficult to reliably estimate how much money is laundered globally. The managing director of the International Monetary Fund in 1998 estimated that the aggregate size of money laundering in the world could be somewhere between 2 percent and 5 percent of the world’s gross domestic product. Even the lower end of the scale of this rather old estimate is staggering. It would be equally if not more difficult to understand the true effect of this leakage on developing countries. The true cost exceeds the value of the stolen assets – siphoning funds away from important development goals, undermining the rule of law.

You can read the entire op-ed on Devex here.

Continue Reading »

Jan
18

Resource Revenue Management 101

Katherine Lay

Cross posted from The ONE Campaign.

flickr / deep_schismic

Say that your country is blessed with natural resources. Oil, gas, minerals – it has it all. The future looks good. But deep down you worry that the bonanza could turn into a bust – maybe you live in Africa and have seen how windfalls have been wasted before. How do you know that’s not going to happen now? Are there any tell-tale signs of sound management of “commodity wealth”?

Marcelo Giugale, the World Bank’s Director of Economic Policy and Poverty Reduction Programs for Africa, recently asked these questions and, in response, offers us a combination of measures that every government should have in place to help citizens get a good deal from their resources.

We’ve looked at four of these measures and how they’re playing out in Africa.

First Measure: Governments publish their extractives contracts

Extractive resources are public assets and decisions about their use should be subject to public oversight. But many African governments are keeping their oil, gas and mining contracts firmly under wraps. This is a problem because confidential contracts prevent citizens from holding political and corporate leaders to account for the deals they’ve struck. Closed contracts may contain unreasonable tax breaks, terms that contravene national legislation or clauses that allow companies to ignore changes in national law. By contrast open contracts help maximize gains for citizens, and are a deterrent to self-serving actions on the part of government leaders. They also increase investment stability for companies by securing balanced deals from the outset.

Continue Reading »

Jan
17

Stephen Colbert on HSBC

EJ Fagan

Satirist Stephen Colbert dismantled HSBC on his show last night. He criticizes both HSBC for helping to launder tremendous amounts of drug money, helping to finance murder, and the U.S. government for treating them as “Too Big to Jail.” Below are two videos: the first shows Colbert directly addressing HSBC, and the second is an interview with Rolling Stone’s Matt Taibbi on the scandal.

Money quote: “”[HSBC was] slammed with a $1.9 billion fine. Do you know how long it would take HSBC to earn that back? Four weeks. You could do the Special K challenge twice!”

Second video below the fold:

Continue Reading »

Jan
16

German Pot, Meet Cypriot Kettle

Ann Hollingshead

flickr / …Tim

Over the last few months, an aid program (read: bailout) for Cyprus’ banks put together by EU rescuers has met mounting resistance among Europeans. The reason? Money laundering… and the alleged ties of Russian oligarchs to Cyprus’ banks.

There does seem to be a questionable relationship there. Last fall, Der Spiegel reported on Germany’s Federal Intelligence Service’s (BND) secret report on money laundering in Cyprus. According to Der Spiegel, the report finds that the people who would benefit most from a European bailout of Cyprus banks are Russian oligarchs, mafiosi, and businesspeople who have parked illegal earnings in the small Mediterranean nation. Even the simplest of facts are pretty compelling: the list of Russian investors in Cyprus is almost identical to the list of the country’s richest men and almost every well-known oligarch in Russia has at least one offshore company in the nation.

The reports have thrown the future of an aid program that would deliver $22.7 billion to Cyprus’ failing banks into confusion and uncertainty. On the one hand, Cyprus really does need the money. If the plan doesn’t pass, it would be a bit of a disaster, at least for the island nation, and likely also for its neighbors. On the other hand, opposition to bailing out tax evading Russian oligarchs is mounting.

Continue Reading »

Jan
16

Flashback: Russians Take To The Street Over More Than Just A Fraudulent Election

Sarah Freitas

Editors note: Global Financial Integrity will release a new report, titled, “Russia: Illicit Financial Flows and the Underground Economy” later this month. To help preview the report, and the relevant issues that Russia and the global economy are dealing with, below is a December 2011 post on corruption in Russia from GFI Lead Economist Dev Kar, who is co-author of the new report. The post has been updated to include the latest data from the report, Illicit Financial Flows from Developing Countries 2001-2010, to avoid confusion.

[Paragraph Updated: 1/16/2013] 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.

statement released by the Organization for Security and Cooperation in Europe (OSCE) described the contest as “slanted in favor of the ruling party,” pointing to “several serious indications of ballot box stuffing.” By Tuesday, police arrested around 800 protesters across Russia, including those defying the rally ban in Moscow, and were bracing for a potential protest of 14,000 this coming Saturday in what could be the decade’s largest opposition demonstration in Moscow.

However, I doubt that the average Russian protester on the street is simply unhappy with Vladimir Putin. They are looking to their left and their right and seeing Russia’s enormously wealthy ruling class prosper through corruption, tax evasion, and crony capitalism. Indeed, wealthy Russian officials and businessmen have been transferring massive amounts of capital out of the country.

Continue Reading »

Pg 20 of 174 First...10...19202122...3040...Last
Latest Press Releases

TED Prize Winner Charmian Gooch Announces Global Campaign to Abolish Anonymous Companies

Global Witness · March 19, 2014

Vancouver, Canada, March 18, 2014 –This year’s TED Prize winner – Charmian Gooch of Global Witness – has announced that she will use the prestigious million-dollar award “to make it impossible for criminals and corrupt dictators to hide behind anonymous companies.” The announcement was made live and online from the TED stage in Vancouver, with support from leading members of the business, political, law enforcement and campaigning community.

European Parliament Gives Overwhelming ‘yes’ Vote to End Secret Corporate Ownership

Financial Transparency Coalition · March 11, 2014

Joint NGO Media Reaction Financial Transparency Coalition – Eurodad – Global Witness – Transparency International EU Office – Oxfam Brussels, March 11, 2014 – Today, the European Parliament endorsed the creation of public registers of who really owns companies, trusts and other legal structures. This will make it much harder for criminals, tax evaders, corrupt politicians and other money launderers to hide their identity, and their illicitly-acquired assets, behind anonymous companies and trusts.

NGOs welcome MEPs’ vote for ground-breaking changes to fight money laundering

Financial Transparency Coalition · February 20, 2014

Joint NGO media reaction Financial Transparency Coalition – Eurodad - Global Witness - Oxfam A cross political party agreement in the European Parliament ...