Date
16 December 2017
Corruption has resulted in the loss of millions of lives in the poorest nations each year because governments are deprived of the resources to fight poverty, disease and hunger. Photo: AFP
Corruption has resulted in the loss of millions of lives in the poorest nations each year because governments are deprived of the resources to fight poverty, disease and hunger. Photo: AFP

Corruption costs poorest nations US$1 trillion a year

Some US$1 trillion is taken out of poor nations and 3.5 million lives lost each year because of corruption, according to a study by anti-poverty group ONE.

Developing countries’ efforts to fight poverty, disease and hunger are being defeated by “a web of corrupt activity” that siphons hundreds of billions of dollars from their economies every year, the Guardian newspaper said, citing the advocacy group’s Trillion Dollar Scandal study, which is being released in the runup to the G20 summit in Brisbane in November.

“In developing countries, corruption is a killer,” said David McNair, ONE’s transparency and accountability policy director.

Between US$972 billion and US$2.02 trillion flows out of developing countries each year through shell companies and “shady deals” for natural resources.

The human cost of such activities is “devasting”, it said, because governments are deprived of resources to invest in infrastructure and provide essential services such as education and healthcare.

Of an estimated US$20 trillion held in offshore tax havens, about US$3.2 trillion represents undeclared assets from developing countries, according to the report.

Were it to be taxed, such money could yield revenues of US$19.5 billion a year, it said.

Not only would ending the “scandal” save 3.5 million lives a year in low-income countries between 2015 and 2025, it would also help prevent 4.3 million deaths a year in lower- to middle-income countries over the same period, the newspaper quoted the report as saying.

In sub-Saharan Africa alone, the money recovered would pay for the education of 10 million children a year, cover the cost of 500,000 primary school teachers, provide antiretroviral drugs for more than 11 million people with HIV and AIDS, and buy almost 165 million vaccines, the study said.

According to the report, illegal manipulation of cross-border trade is the biggest source of losses to poor countries. “The secrecy that allows that activity to thrive may also help to conceal financial flows related to criminal bribery and theft by government officials, human trafficking and/or the illegal sale of arms and contraband, depending on the circumstances,” it said.

ONE urges the G20 nations to remove the veil of secrecy on shell companies by making public information on who owns companies and trusts, and identifying corrupt and criminal individuals and businesses, the newspaper said.

The G20 should also introduce tough payment disclosure laws to increase transparency in the oil, gas and mining industries, while cracking down on tax evasion, the study said.

Such information will help citizens track money from “resources to results”, thereby holding governments to account for the provision of essential services, it said.

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CG

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