Posted by News Express | 12 May 2014 | 3,261 times
More than $60bn (£36bn) has been illegally siphoned out of Uganda, Ghana, Mozambique, Kenya and Tanzania over 10 years, with most of it squirrelled away in tax havens, according to a report by financial transparency campaigners.
Washington-based group Global Financial Integrity (GFI) said the “enormous amounts of money” drained out of the countries equates to more than double the international aid money they receive and is stymieing efforts to lift millions of people out of poverty.
GFI’s report, published on Monday, said most of the funds are lost through multinational companies illegal misinvoicing the value of imported or exported goods. It means that importers pretend to pay more for goods than they actually pay and the extra money is slipped into offshore bank accounts. In one notable case an American company invoiced for plastic buckets at $972 each.
“We are talking about a huge drainage out of these countries,” GFI president Raymond Baker said: “People are making millions and millions at the expenses of the world’s poorest people.”
Baker said virtually all household name companies dealing in Africa have used the scheme, which he said is effectively “stealing from African governments”.
He said trade misinvoicing takes place all over the world but Africa is particularly susceptible as local officials are more likely to be corruptible. Baker said some government officials have also siphoned off large chunks of cash. The report, commissioned by the Danish government, compares the official prices paid for goods to the global market price for the same items but does not name any companies or officials.
It said: “A global shadow financial system provides measures of opacity to disguise and move illicit money throughout the world, including dozens of secrecy jurisdictions and multiple layers of confusing and concealed ownership structures.
“These outflows, and the shadow financial system in which they thrive, represent one of the most damaging conditions undermining economic growth and development, governance, and human rights in Africa and around the world.”
Mogens Jensen, Denmark’s trade minister, said he commissioned the study because he was concerned the “shady trade transactions” are holding back Africa’s development.
“I am convinced that increased trade and foreign investments are the way forward in the fight against poverty,” he said. “But it must take place in line with responsible business conduct and prevailing laws and regulations so developing countries are not cheated of revenue that could have been used to fund much-needed public services such as schools, roads and hospitals.”
The study concentrates on Uganda, Ghana, Mozambique, Kenya and Tanzania as they are longstanding recipients of Danish development aid, but the problem is likely to affect all African countries, Baker added.
•Text courtesy of The Guardian of London. Photo shows an African slum.
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