Amount of dirty money leaving developing world jumped 14 percent in 2011: report
By Stella Dawson
WASHINGTON, Dec 11 (Thomson Reuters Foundation) - Developing countries lost nearly $1 trillion to fraud, corruption and shady business transactions in 2011, vastly outpacing the foreign aid they received and the pace of dirty money leaving emerging nations is accelerating, a new report found.
Illicit finance leaving the 150 developing countries totaled $946.7 billion in 2011, up 13.7 percent from the prior year and the largest amount in a decade, according to Global Financial Integrity, the Washington-based group that exposes financial corruption.
This means that for every $1 in economic development assistance going into a developing country, $10 are lost via these illicit outflows.
"As the world economy sputters along in the wake of the global financial crisis, the illicit underworld is thriving - siphoning more and more money from developing countries each year," said GFI President Raymond Baker.
The issue has caught the attention of G20 global leaders, who are struggling to repair their economies after the 2008-2009 recession and face a widening gap between rich and poor citizens. They are cracking down on tax evasion and the corporate structures used to launder money and hide criminal wealth.
The Middle East and North Africa saw the most rapid increase in dirty money, which is the proceeds from illicit business, crime and corruption. Illicit outflows rose 31.5 percent between 2002 and 2011, the decade leading up to the Arab Spring uprisings during which a rallying cry was fighting corruption in the regimes. It was followed by sub-Saharan Africa, up 20.2 percent in the decade ended 2011, the latest period for which data are available.
Asia lost the largest amount of money accounting for 40 percent of the $5.9 trillion of illicit financial outflows from the developing world in the 10-year period, and the vast bulk of that came from China at $1.08 trillion, GFI said.
But when outflows are measured as a percentage of annual growth, sub-Saharan Africa faces the biggest problem. GFI said 5.7 percent of its Gross Domestic Product left each year on average over the decade, compared with 4 percent globally. Nigeria topped the list at $142.3 billion, followed by South Africa at $100.7 billion. Continued...