US$ 1.5Trn Siphoned Off Annually By Foreigners
By Hwaa Irfan
It should be of no surpriese given the extent of corruption at the top level in all ‘credible’ global institutions around the world as revealed by the layer of fear removed by the growing reaction to the irrational and corrupt global economic system. This is, and has been after all its true nature. Unfortunately, quite a few of us are falling asleep again in response to the almost daily news of high level corruption by people who run the world in our names.
In this case the US$ 1.5Trn siphoned off annually (since the 1960s) by foreigners is from the continent that everyone else likes to rape, exploit, and impoverish with a dwindling sense of consciousness as the profit margins do little to improve the lot of recipient countries.
Under the leadership of former South African President Thabo Mbeki, the High-Level Panel on Illicit Financial that was formed in 2011 by African finance ministers discovered that by means of
- wiring funds back to rich states
- Draining hard currency reserves in Africa
But according to the report, this also takes place by:
- Trade mis-pricing
- Bulk cash movements
- Hawala’ transactions
The result is:
- A drain on hard currency reserves
- Heighten inflation
- Reduce tax collection
- Canceling of investment
- Undermine trade
- Worsen poverty
- Widen income gaps
The money is siphoned out to places, and by means which that lays an invisible trail. The channels Mbeki informs involves:
- 60 international tax havens
- Secrecy jurisdictions created
- Operating disguised corporations
- Shell companies numbering in the millions
- Anonymous trust accounts
- Fake charitable foundations
- Money laundering techniques
- Trade mis-pricing
The study carried out by the Global Financial Integrity (GFI) entitled ‘Illicit Financial Flows from Africa: Hidden Resource for Development’ found:
- Total illicit financial outflows approximately U.S.$854bn from 1970 – 2008
- Total illicit outflows as high as U.S$1.8trn
- The top five countries with the highest outflow
- Nigeria (U.S$89.5bn)
- Egypt (U.S$70.5bn)
- Algeria (U.S$25.7bn)
- Morocco (U.S$25bn)
- South Africa (U.S$24.9bn)
Illicit financial outflows from the entire region outpaced official development assistance at a ratio of at least 2 to 1
- Illicit financial outflows from Africa grew at an average rate of 11.9% per year.
“According to UNCTAD (2009) estimates that Africa’s cumulated stock of capital flight for the period 1970–2004 was $607 billion, which is almost as much as three times the region’s external debt.”
Some of this illegal outflow pertains to decolonization and lack of security in the region, and therefore seeking a safe haven to stash funds! However, the detailed report found only 3% was a result of corrupt public officials.
Long term a High-Level Panel on Illicit Financial Flows from Africa was established last in 2011 after resolution of the 4th Joint Annual Meetings of the ECA/AU Ministers of Finance, Planning and Economic Development in Africa in March 2011. What long term benefit can be served with more in-depth studies without practical measures put in place to prevent the illegal flow of money can not be ascertained at this point, which involves establishing time frames, and working systems in place that can work at putting in place functional structures, which will mean reviewing current trade, and related agreements.
Inagurated in South Africa, in February 2012, the panel consists of:
- Chaired by H.E. Mr. Thabo Mbeki, former president of South Africa
- Vice Chair: Mr. Abdoulie Janneh, Under-Secretary General and Executive Secretary of ECA;
- Ambassador. Olusegun Apata- Chairman, Coca Cola Bottling Company, Nigeria;
- Mr. Raymond Baker- Director, Global Financial Integrity, Washington DC;
- Dr. Zeinab Bashir el Bakri-former Vice President of the African Development Bank, Tunisia;
- Mr. Abdoulaye Bio-Tchane-former Minister of Finance and Economy of Benin
- H.E. Mrs. Ingrid Fiskaa- State Secretary for Environment and International Development, Norway
- Professor. El Hadi Makboul- Director, National Centre for the Study and Analysis of Population and Development (CENEAP), Algeria
- Barrister Akere Muna- President, Pan-African Lawyers Union, President, ECOSOC, Member, Eminent Persons Panel of the APRM, and Vice President, Transparency International
- Ms. Irene Ovonji-Odida- Human rights lawyer and activist for over 21 years and elected member of the East African Regional Parliament for five years
However, when it comes to establishing mechanisms that are to the benefit of one’s region, and not to the ‘benefit’ of others then whose interest does one serve… a stupid question maybe,
GFI, the creator of the report, states:
“Both global financial and economic crises, intertwined and inseparable, have brought in a new era of international financial cooperation with new and existing international agencies, being reorganized and equipped with new powers, to orchestrate increased global regulation, oversight and enforcement across national financial centers and jurisdictions. The World Bank, the International Monetary Fund, the OECD and the Financial Stability Board, to name but the most recognized bodies, are about to impact profoundly the global financial sector and its national financial centers and jurisdictions.”
However, how much does “increased global regulation” have to do with
- Libya’s Central Bank, which during Al-Qathafi was the one of three central banks left in the world that was state owned, and joined the rest as a private entity within 2 weeks of Al-Qathafi’s death!
- The World Bank assisted land grab in the re-scramble for Africa where multinational companies that exploit, and impoverish local communities at massive profits
- The commissioning entity for the High-Level Panel on Illicit Financial Flows from Africa is the UN (United Nations Economic Commission for Africa (UNECA)).
In other words global regulation in the favor of what for whom, especially when the global leading G20 is only interested in garnering most if not all of the world’s natural resources towards the benefit of not of the member countries, but the global financial elite.
Mbeki, T. “Tackling Illicit Capital Flows for Economic Transformation.” http://www.thabombekifoundation.org.za/Pages/Tackling-Illicit-Capital-Flows-for-Economic-Transformation.aspx
“The Challenges Facing the Global Financial Sector, National Financial Centers and Jurisdictions” http://www.ligfi.org/global-financial-intefroty
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