Financial Transparency Coalition

According to Global Financial Integrity, in 2009, importers and exporters sent $569 billion out of developing countries through trade mispricing. Trade mispricing, in case you’re not already aware, is a process by which individuals can transfer money abroad without detection. By over-invoicing imports and under-invoicing exports, individuals can evade taxes and avert capital controls through routine trade. Here’s how it works: Suppose a Mexican furniture manufacturer, who wants to send money abroad illegally, imports $100 worth of timber from the United States. Instead of paying $100, the furniture company reports and pays $200. The company’s U.S. trading partner...

On Wednesday, the SEC announced a $16 million settlement in an FCPA case filed against Diageo, Inc. The company, which dominates the global liquor market, was accused of spending at least $2.7 million on bribes through its Asian subsidiaries, and omitting or mislabeling those funds in SEC filings. These bribes were given to government and military officials in South Korea, India, and Thailand in order to gain a variety of advantages, from tax breaks to more beneficial policies in transfer pricing negotiations. Bribes included trips to Europe, while one Thai bureaucrat received $12,000 a month for helping...

In Thailand, corruption in customs enforcement is a fact of life.  The Bangkok Post notes that customs officials almost universally demand “tea money,” or bribes, and bonuses to customs officials based on a percentage of a confiscated shipment’s value cause the length of inspections to stretch out interminably.  These specific customs procedures and rules, along with the flawed incentive structures they create, have led to an increase in illicit financial flows (IFFs) from Thailand due to trade mispricing. Illicit financial outflows due to trade mispricing occur when individuals or companies use export under-invoicing and import over-invoicing to transfer funds...

Panel to Address the Immediate Civil Society Response to the G20 Seoul Summit Outcome BANGKOK, THAILAND – Several representatives from the Task Force on Financial Integrity & Economic Development will appear on a panel Saturday at the 14th International Anti-Corruption Conference (IACC). The four day gathering of world leaders, academics, civil society representatives and private-sector business executives--all addressing the issue of international corruption--comes to a close Saturday evening in Bangkok. Task Force representatives François Valérian of Transparency International (TI), Raymond Baker of Global Financial Integrity (GFI), and Robert Palmer of Global Witness will join a few other representatives of...