Many international development organisations hold that persistent poverty in the Global South is caused largely by corruption among local public officials. Theres only one problem with this theory: Its just not true. According to the World Bank, corruption in the form of bribery and theft by government officials, the main target of the UN Convention, costs developing countries between $20bn and $40bn each year. Thats a lot of money. But its an extremely small proportion - only about 3 percent - of the total illicit flows that leak out of public coffers. Tax avoidance, on the other hand, accounts for more than $900bn each year, money that multinational corporations steal from developing countries through practices such as trade mispricing. This enormous outflow of wealth is facilitated by a shadowy financial system that includes tax havens, paper companies, anonymous accounts, and fake foundations, with the City of London at the very heart of it. Over 30 percent of global foreign direct investment is booked through tax havens, which now collectively hide one-sixth of the worlds total private wealth.
Posted on: Sun, 02 Feb 2014 00:58:55 +0000
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