‘Web of corrupt activity’ costs poorest countries a trillion dollars a year
Anonymous shell companies and shady natural resources deals targeted in
report that calls on G20 to drive for transparency
* Sam Jones <
http://www.theguardian.com/profile/samjones>
* Wednesday 3 September 2014 00.01 BST
More than 3.5 million lives a year could be saved if the G20 cracked down on
the corrupt business practices, money laundering and tax evasion that cost
the world’s poorest countries at least a trillion dollars a year, according
to a new report.
The <
http://www.one.org/scandal/en/report/> Trillion Dollar Scandal study,
by the campaigning and advocacy group <
http://www.one.org/international/>
ONE, says developing countries’ efforts to fight poverty, disease and hunger
are being damaged by “a web of corrupt activity” that siphons hundreds of
billions of dollars from their economies every year.
ONE’s report stresses that the sums involved are not international aid money
– “which is making a tangible difference” – but money that is stealthily
drained off through anonymous shell companies and “shady deals” for natural
resources.
The consequences, it says, can be measured in human lives.
“In developing countries, corruption is a killer,” said David McNair, ONE’s
transparency and accountability policy director. “Up to 3.6 million lives
could be saved if we end the web of secrecy that helps the criminal and
corrupt. When governments are deprived of their own resources to invest in
the essentials – like nurses and teachers – the human cost is devastating.”
ONE estimates that such practices result in between $972bn (£585bn) and
$2.02tn flowing out of developing countries each year. According to the
report, $20tn is held in offshore tax havens – including $3.2tn in
undeclared assets thought to have come from developing countries. Were the
latter sum to be taxed, it says, it could yield revenues of $19.5bn a year.
Not only would ending the “scandal” save 3.6 million lives a year in
low-income countries between 2015 and 2025, it would also help prevent 4.3
million deaths a year in lower-middle-income countries over the same period.
In sub-Saharan Africa alone, it says, the money recovered would pay for the
education of 10 million children a year; cover the cost of 500,000 primary
school teachers; provide antiretroviral drugs for more than 11 million
people with HIV and Aids, and buy almost 165m vaccines.
The report, which is being launched in the runup to
<
https://www.g20.org/community_information/brisbane_locals/faqs> November’s
G20 summit in Brisbane, urges the group’s members to “shine a light on
anonymous shell companies” by making public information on who owns
companies and trusts, and identifying corrupt and criminal individuals and
businesses.
The report says the illegal manipulation of cross-border trade is the
biggest source of losses to poor countries, adding: “The secrecy that allows
that activity to thrive may also help to conceal financial flows related to
criminal bribery and theft by government officials, human trafficking and/or
the illegal sale of arms and contraband, depending on the circumstances.”
The G20, it suggests, should also introduce tough payment disclosure laws to
increase transparency in the oil, gas and mining industries; crack down on
tax evasion and publish open data so that citizens can track money from
“resources to results” thereby holding governments to account for the
provision of essential services.
It focuses on the use of shell companies, citing a case in which a licensing
payment that the Nigerian subsidiaries of Shell and Italy’s ENI made in 2011
to develop a lucrative, offshore oil block
<
http://www.theguardian.com/sustainable-business/shell-nigeria-oil-payment-c
orruption-scandal> allegedly ended up in the bank account of a private firm
owned by Nigeria’s former oil minister. The British-Dutch company insists it
paid the Nigerian government, not the private firm, adding that it has acted
lawfully “at all times”.
The report also mentions
<
http://www.theguardian.com/global-development/2014/apr/03/european-investme
nt-bank-inquiry-zambian-miner> allegations of tax evasion levelled against a
mining firm in Zambia that is controlled by the Swiss commodity trader
Glencore Xstrata – allegations the companies have always denied.
The Kenyan anti-corruption campaigner,
<
http://www.theguardian.com/global-development/2014/jul/03/john-githongo-ken
ya-corruption-politics> John Githongo, said the time had come for the
world’s richest nations to act.
“For too long, G20 countries have turned a blind eye to massive financial
outflows from developing countries, which are channelled through offshore
bank accounts and secret companies,” he said.
“Introducing smart policies could help end this scandal and reap massive
benefits for our people at virtually no cost. The G20 should make those
changes now.”
Received on Thu Sep 04 2014 - 15:44:03 EDT