By Samuel Rubenfield
The Wall Street Journal
January 18, 2011
Developing nations lost almost $800 billion a year from 2000 through 2009, according to an updated report from Global Financial Integrity.
In 2008 alone, illicit outflows from developing nations totaled $1.26 trillion, up from the $1.06 trillion found in 2006. Overall, 44.4% of the $6.5 trillion lost came from Asia, followed by the Middle East and North Africa with 17.9%, developing parts of Europe with 17.8%, the Western Hemisphere with 15.4%, and Africa with 4.5%.
The Washington D.C.-based research group estimates in its latest analysis, which is an update of a report originally released in 2008, that more than half the funds lost were a result of trade mispricing, which is the deliberate mislabeling of prices of goods or services in order to gain advantage on a trading partner. On average, almost 90% of the illicit outflow each year came from trade mispricing in Asia.
Global Financial Integrity said trade mispricing is the major channel for illicit financial flows from China, which lost $2.18 trillion between 2000 and 2008, by far the most of any nation surveyed.
Bribery, theft, kickbacks and tax evasion were the greatest conduit for the illicit financial flows from
the major exporters of oil such as Kuwait, Nigeria, Qatar, Russia, Saudi Arabia, the United Arab Emirates and Venezuela, the group found. Taken together, these countries lost $1.7 trillion between 2000 and 2008, according to Global Financial Integrity's figures.
The group projects illicit outflows to have totaled $1.3 trillion in 2009, a significantly smaller figure it says is a result of the economic slowdown caused by the financial crisis.
Click here to read the report.
