By Casey Sahadath (special to CDHR)
In the 2013-2014 Union Budget of India, the Government of India allocated 80,194 crore ($13.6bn USD) for rural development. In the US, the President’s budget request for 2014 calls for $647 billion in national security spending. The UK’s budget anticipates that the government will receive £167 billion ($280bn USD) in income tax revenue for the 2014-15 fiscal year. Consider if that money were to disappear; India’s funds allocated for rural development, the entire defense budget of the United States, and all the tax revenue collected in the UK. These figures make an approximate total of $940 billion, a substantial amount of funds. In 2010, Global Financial Integrity (GFI) estimated that developing countries lost between $859 billion to $1.06 trillion annually to illicit financial flows (IFFs) between 2002 and 2006. To put things into perspective consider what would happen if India, the US, and UK lost $940 billion annually for four consecutive years. What would be the effects on infrastructure, development, national security, and social services? Would these countries be able to meet debt obligations to their creditors, would they be able to reduce their deficits? What would be the effects of this asset loss on their citizens?
For many in Africa, this has been a reality for decades. Despots, corrupt government officials and corrupt heads of state move billions of dollars from government coffers into lucrative, opaque bank accounts in jurisdictions which provide ironclad secrecy from nosy citizens and special rapporteurs tasked with monitoring corruption. Wealthy elites and corporations uninterested in paying tax on their incomes or revenue often incorporate themselves or their businesses in jurisdictions which provide a more favourable tax structure, stealing potential tax revenue away from countries that need it the most. As Mick Moore writes in the book Draining Development, IFFs diminish economic growth, reduce and stagnate state capacity, and ultimately exacerbate income inequality. Instances of this theft in Africa, particularly among heads of state, have been well documented over the years; General Sani Abacha of Nigeria stole approximately $1.8 billion in cash from Nigeria’s central bank during his reign, 35 year incumbent President of Equatorial Guinea, Teodoro Obiang Nguema Mbasogo, took personal control over the national treasury in 2003 to fight corruption from corrupt bureaucrats and subsequently deposited $700 million into American banks, and deceased ruler of Libya Muammar Gaddafi has assets hidden globally at a conservative estimate of $200 billion.