The 2010 annual conference of the Task Force on Financial Integrity and Economic Development will take place at the Radisson Blu Hotel Norge in Bergen, Norway from September 28-29, 2010. Register now to reserve your place.
Illicit financial inflows and illicit financial outflows must be added together in order to accurately measure the adverse impact of these flows on developing economies, explains Dr. Dev Kar.
Denmark, Italy and United Kingdom Advance Toward Active Enforcement; 20 of 36 Signatories Doing Little to Nothing to Enforce Ban on Foreign Bribery
A number of countries were applauded for their efforts to enforce a ban on foreign bribery in a report released yesterday by Transparency International (TI). Yet many countries are still not doing enough, if anything at all. The report looks at how well the 32 OECD member countries and non-members are complying with the OECD Anti-Bribery Convention, which establishes legally binding standards and measures to deter foreign bribery of officials through international business transactions.
The report classifies countries into three categories: active, moderate and little to no enforcement. Placement is based on the number and importance of criminal prosecutions, civil actions and judicial investigations that have been carried out by each country.
Seven countries, which represent about 30 percent of world exports, are reported as having substantially deterred foreign bribery. Denmark, Germany, Italy, Norway, Switzerland, the United Kingdom and the United States make up this group, which increased by three countries from the previous year.
U.S. President Applauds New SEC Reporting Requirement, Vows to Campaign for Adoption of Similar Global Regulation
Last Wednesday, as President Obama’s signature graced the Dodd-Frank Wall Street Reform and Consumer Protection Act, the long-awaited overhaul of the financial regulatory system finally became the law of the land. This included a small but important provision, the Energy Security Through Transparency (ESTT) amendment, which is designed to increase transparency in extractive industries by requiring oil, gas, and mining companies registered with the Securities and Exchange Commission (SEC) to disclose material payments made to governments on a country-by-country basis. Now, with the White House recently applauding the ESTT amendment and expressing its commitment to establish similar reporting standards on a global scale, this small provision has ballooned into a tremendous opportunity to transform international transparency principles.
Since the passage of the Dodd-Frank bill by the Senate two weeks ago, numerous groups have praised the ESTT amendment’s passage. Radhika Sarin, the International Coordinator for Publish What You Pay, heralded it as “a reliable tool to ensure the wealth created by natural resource extraction is used for essential social services such as health and education, and economic development opportunities.” Oxfam described the provision as an important tool to aid the fight against corruption. Ann Hollingshead, in a previous Task Force blog post, called the provision an important step to “increase predictability and investors’ ability to calculate risks associated with investing in certain companies.” Even some major news outlets like the Washington Times reported on the ESTT amendment’s passage.
This Tuesday hundreds of U.S. businesses announced a campaign against tax evasion.
Let me say that again, in case it didn’t fully sink in.
Businesses are against tax evasion.
Geez. Just when I got used to hearing that cracking down on tax havens will be bad for U.S. businesses. According to that argument it’s the politicians that “hate” tax havens because the jurisdictions “offer an escape hatch for oppressed taxpayers.” Tax havens are a blessing because individuals and businesses can use those “jurisdictions…against excessive taxation.”
Turns out, those oppressed businesses don’t agree.
WASHINGTON, D.C.—A May 2010 report from Global Financial Integrity (GFI) examines where trillions of dollars in illicit finances—the proceeds of crime, corruption, and tax evasion—are being deposited.
LONDON—Christian Aid has teamed up with football supporter groups to highlight the damage caused by the secrecy offered by tax havens – and demand that the rules be changed.
Blowing the Whistle: Time’s Up for Financial Secrecy, reveals how the same tax-haven secrecy that allows football club owners to hide their business practices – and even their identities – is also facilitating massive tax dodging in developing countries.
And while such practices are threatening to ruin the beautiful game, for people in the world’s poorest countries they are a matter of life and death.
Top of the league
Christian Aid has worked with the Football Supporters Federation and fan ownership group Supporters Direct to compile Blowing the Whistle.
Global Financial Integrity Lead Economist Dev Kar examines the role of illicit financial flows (IFFs) in the Greek debt crisis. IFFs cost Greece an estimated US$160 billion over the last decade.
Greece has been in the news a lot lately and as we all know, it has not been good news. By all accounts, the austerity measures being imposed on the population as a condition for bailing Greece out of the financial crisis, is severe. As Walter Mead points out in a recent blog, investors are worried that the Greeks may not stand for them. He rightly notes that ordinary Greeks feel that the rich should pay the costs of the economic crisis and not them. They are right. According to an article in the Washington Post (Is austerity a Greek myth? By David Ignatius, May 3, 2010), Prime Minister Papandreou admits that corruption now robs the Greek economy by US$20-30 billion and “graft” (probably meaning bribery and kickbacks) accounts for some 8-12 percent of GDP. If, as I suspect, the Prime Minister is talking of graft and corruption as separate components, the size of Greece’s underground works out to some 18-21 percent of GDP. The result still falls short of the 25-30 percent of GDP estimated by most economists.
There is no question that Greece is caught between the proverbial rock and a hard place. To understand how the country got there, I shall try to trace the road map with the help of some basic economic data for the decade ending 2009. The first striking thing is that Greece ran a sizable current account deficit that grew from 6.6% of GDP in 2000 to 15.5% of GDP with most of the increase coming in the second half of the decade. A current account deficit basically arises from increases in import costs over export earnings. It is symptomatic of an excess of consumption over income. Greece financed this consumption boom not by drawing down domestic (public and private) savings or gross foreign exchange reserves of the central bank but through the contracting of external debt which swelled from a manageable 73% of GDP in 2000 to close to 160% of GDP by the end of the decade.
Well, what a surprise. In the much-publicised fraud case involving a lawsuit filed by the Securities and Exchange Commission against Goldman Sachs, it is absolutely no surprise to us to find that this deal, known as Abacus 2007-AC1, involves:
Issuer: Abacus 2007-AC1, Ltd., Incorporated with limited liability in the Cayman Islands
Co-Issuer: Abacus 2007-AC1, Ltd., Incorporated with limited liability in Delaware
The issuer of this $2bn CDO is a Cayman Islands Special Purpose Vehicle. You can see the structure of the thing on page 51. Note also an earlier story from McClatchy’s, the only one we’re aware of which focused strongly on the offshore aspect, and which notes that Goldman had 148 of these kinds of deals in the Cayman Islands.
“These Cayman Islands deals, which Goldman assembled through the British territory in the Caribbean, a haven from U.S. taxes and regulation, became key links in a chain of exotic insurance-like bets called credit-default swaps that worsened the global economic collapse by enabling major financial institutions to take bigger and bigger risks without counting them on their balance sheets.
. . .
WASHINGTON, DC — Africa lost $854 billion in illicit financial outflows from 1970 through 2008, according to a new report to be released today from Global Financial Integrity (GFI). Illicit Financial Flows from Africa: Hidden Resource for Development debuts new estimates for volume and patterns of illicit financial outflows from Africa, building upon GFI’s ground-breaking 2009 report, Illicit Financial Flows from Developing Countries: 2002-2006, which estimated that developing countries were losing as much as $1 trillion every year in illicit outflows. The new Africa illicit flows report is expected to feature prominently at the 3rd Annual Conference of African finance ministers in Malawi, which is currently underway.
“The amount of money that has been drained out of Africa—hundreds of billions decade after decade—is far in excess of the official development assistance going into African countries,” said GFI director Raymond Baker. “Staunching this devastating outflow of much-needed capital is essential to achieving economic development and poverty alleviation goals in these countries.”
Washington — A new report released today from Global Financial Integrity (GFI) on private, non-resident deposits in secrecy jurisdictions finds that the United States, United Kingdom, and the Cayman Islands are the most popular destinations for financial deposits by non-residents. Switzerland, Luxembourg, and Hong Kong also make the top 10 list of destinations.
“This report looks at deposits held offshore by private entities on a country-by-country basis, achieving a level of specificity previously unavailable to the public,” explained GFI director Raymond Baker. “With overall deposits in secrecy jurisdictions currently approaching US$10 trillion, this report measures a sizable chunk of global wealth and helps us to better understand where individuals and corporations are putting their money.”
Washington, DC — Developing country treasuries are losing approximately $100 billion dollars every year due to trade mispricing, according to a new report available today from Global Financial Integrity (GFI).
“Every year crime, corruption, and tax evasion drain $1 trillion out of developing countries,” said GFI director Raymond Baker. “This report more closely examines one particular form of financial outflow and shows how illicit financial practices—in this case trade mispricing—deprive developing country governments of tax revenue.”
Report findings include:
WASHINGTON, DC – Global Financial Integrity (GFI) launched its “G20 Transparency” campaign today, an international grassroots sign-on drive to collect 100,000 signatures on a petition calling for greater transparency in the global financial system. The petition will be delivered to Canadian Prime Minister Stephen Harper prior to the G20 meeting in Toronto at the end of June.
The campaign kicked off with the debut of www.G20transparency.com, a Web site devoted to the campaign where supporters may read and sign the petition, which will be available in Arabic, Chinese, French, Russian and Spanish. The Web site will also allow supporters to share the petition with others via peer-to-peer and social networking tools.
WASHINGTON, DC — The European Network on Debt and Development (EURODAD), comprised of 59 non-governmental organizations (NGOs) from 18 European countries working on debt, development finance, and poverty reduction, has joined the Task Force on Financial Integrity and Economic Development, Global Financial Integrity (GFI) announced today.
A new Global Witness report, ‘The Secret Life of a Shopaholic: How an African dictator’s playboy son went on a multi-million dollar shopping spree in the US’, strongly suggests that Teodorin Obiang, son of the dictator of oil-rich Equatorial Guinea, purchased a $33 million private jet, a $35 million Malibu mansion, speedboats and a fleet of fast cars using corruptly acquired funds. The report goes on to explain how, despite the ample evidence against him, the investigation is going nowhere and Teodorin continues to be allowed into the U.S.
The Task Force on Financial Integrity & Economic Development
1319 18th Street, NW Suite 200 Washington, DC 20036
Email: info@financialtaskforce.org
Telephone: +1 (202) 293-0740 Fax: +1 (202) 293-1720
