• Countries lost $1 trillion to corruption in 2012


    WASHINGTON D.C.: A global anti-corruption group said on Monday (Tuesday in Manila) that nearly $1 trillion was illicitly drained from developing countries in 2012, representing a record level of corruption, money laundering and false trade documentation.

    The Washington-based group Global Financial Integrity (GFI) said illicit financial flows around the world grew at 9.4 percent a year in the decade to 2012, around double the pace of economic growth, draining funds especially from impoverished countries.

    The largest outflows came from giant, still poorly-regulated economies like Brazil, China, India and Russia, GFI’s new report said.

    Money illicitly streamed out of China at a rate of about $125 billion annually over that period, for instance.

    But also in the top 10 country sources of illegal capital outflows are a number of dynamic middle-sized economies: Malaysia, Mexico, Saudi Arabia and Thailand.

    Mexico is third on the list of largest outflows at an average $54 billion a year.

    In total, the report put the total illegal capital movements from developing and emerging economies in 2012 at $991.2 billion, greater than the combined sum of incoming foreign investment and foreign aid in those countries.

    “Emerging and developing countries hemorrhaged a trillion dollars from their economies in 2012 that could have been invested in local businesses, healthcare, education, or infrastructure,” said the study’s co-author, economist Joseph Spanjers.

    “This is a trillion dollars that could have contributed to inclusive economic growth, legitimate private-sector job creation and sound public budgets,” he added.

    Over a decade, the total was $6.6 trillion, the equivalent of nearly 4 percent of the entire global economy. In terms of the relative size of the impact, the countries most hurt by the flows were in the Middle East and North Africa and in Sub-Saharan Africa.

    The main way the money flows out of the countries is misinvoicing in trade transactions, which can allow exporters and imports to keep money out of the country.

    GFI said individual countries and the United Nations need to focus on cutting down such flows to fight poverty and boost growth.

    “It is simply impossible to achieve sustainable global development unless world leaders agree to address this issue head-on,” said GFI president Raymond Baker.

    “That’s why it is essential for the United Nations to include a specific target next year to halve all trade-related illicit flows by 2030 as part of post-2015 Sustainable Development Agenda,” he added.

    The top 10 developing countries for illicit capital outflows in 2012: China, $249.57 billion; Russia, $122.86 billion; India, $94.76 billion; Mexico, $59.66 billion; Malaysia, $48.93 billion; Saudi Arabia, $46.53 billion; Thailand, $35.56 billion; Brazil, $33.93 billion; South Africa, $29.13 billion; and Costa Rica, $21.55 billion.



    Please follow our commenting guidelines.

    Comments are closed.