Date: Mon, 12 May 2014 23:29:03 +0200
African invoice fraud hampers development of poorest nations
Over past 10 years, more than $60bn has been moved in and out of developing
nations and hidden in tax havens, according to study
* Rupert Neate <http://www.theguardian.com/profile/rupertneate>
*
* The Guardian <http://www.guardian.co.uk/theguardian> ,
* Monday 11 May 2014 23.00 BST
More than $60bn (£36bn) has been illegally moved in and out of Uganda,
Ghana, Mozambique, Kenya and Tanzania over 10 years, with most of it passing
through tax havens, according to a report by financial
<http://www.theguardian.com/global-development/transparency-and-development>
transparency campaigners.
Washington-based group <http://www.gfintegrity.org/> Global Financial
Integrity (GFI) said the "enormous amounts of money" drained out of the
countries equates to more than double the international
<http://www.theguardian.com/global-development/aid> aid money they receive
and is stymieing efforts to lift millions of people out of poverty.
GFI's report, published on Monday, said much of the funds are lost through
multinational companies illegal misinvoicing the value of imported or
exported goods. It means that importers pretend to pay more for goods than
they actually pay and the extra money is slipped into offshore bank
accounts. In one notable case an American company invoiced for plastic
buckets at $972 each.
"We are talking about a huge drainage out of these countries," GFI president
Raymond Baker said: "People are making millions and millions at the expenses
of the world's poorest people."
Baker said virtually all household name companies dealing in
<http://www.theguardian.com/world/africa> Africa have used the scheme, which
he said is effectively "stealing from African governments".
He said trade misinvoicing takes place all over the world but Africa is
particularly susceptible as local officials are more likely to be
corruptible. Baker said some government officials have also siphoned off
large chunks of cash. The report, commissioned by the Danish government,
compares the official prices paid for goods to the global market price for
the same items but does not name any companies or officials.
It said: "A global shadow financial system provides measures of opacity to
disguise and move illicit money throughout the world, including dozens of
secrecy jurisdictions and multiple layers of confusing and concealed
ownership structures.
"These outflows, and the shadow financial system in which they thrive,
represent one of the most damaging conditions undermining economic growth
and development, governance, and human rights in Africa and around the
world."
Mogens Jensen, <http://www.theguardian.com/world/denmark> Denmark's trade
minister, said he commissioned the study because he was concerned the "shady
trade transactions" are holding back Africa's development.
"I am convinced that increased trade and foreign investments are the way
forward in the fight against poverty," he said. "But it must take place in
line with responsible business conduct and prevailing laws and regulations
so developing countries are not cheated of revenue that could have been used
to fund much-needed public services such as schools, roads and hospitals."
The study concentrates on Uganda, Ghana, Mozambique, Kenya and Tanzania as
they are longstanding recipients of Danish development aid, but the problem
is likely to affect all African countries, Baker added.
Children play in a Kenya slum
Kenyan children play at the sprawling Mathare slum, one of the largest and
poorest in Africa. Photograph: Antony Njuguna/Reuters
(image/jpeg attachment: image001.jpg)