Der Spiegel: Hundreds of Billions Flowing Illicitly Out of Greece

Wednesday, September 5, 2012

From the Task Force Blog:

Der Spiegel: Hundreds of Billions Flowing Illicitly Out of Greece

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Clips

Illicit Financial Flows from Greece

Euro Crisis ‘Perfect Opportunity to Launder Money’
Der Spiegel, September 3, 2012
By Jörg Schmitt

In a SPIEGEL interview, Raymond Baker, the head of the NGO Global Financial Integrity, says the Greek government doesn’t have illicit financial flows in and out of the country under control and that the crisis is aiding money laundering in ailing countries.

SPIEGEL: Mr. Baker, wealthy indidivuals in the crisis-stricken countries of the euro zone have moved billions of euros abroad. Would the money have been enough to pay off these countries’ debts?

Raymond Baker: Certainly not, but many countries would be doing somewhat better today if the money had remained in the country — and not just because of lost tax revenues. If they had used that money to buy cars, clothes and washing machines, then the sales tax and part of the value chain would have stayed in the respective countries. Hence every euro that leaves the country illegally weakens the national economy in several ways.;

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Greece Lost $261 Billion in Illicit Financial Outflows from 2003-2011, GFI?s Baker Tells Der Spiegel
Global Financial Integrity Press Release, September 4, 2012

Nearly US$200 Billion in Illicit Inflows to Greece from 2010-2011, fueling 2nd Largest Underground Economy in the OECD, GFI Director Tells German Magazine

WASHINGTON, DC ? The Greek economy lost US$261 billion to crime, corruption, and tax evasion from 2003-2011, Global Financial Integrity (GFI) Director Raymond Baker told Der Spiegel in an exclusive interview published yesterday in the German news magazine. Interestingly, while Greece experienced heavy illicit outflows for 6 of the first 7 years in that time series, Greece experienced massive inflows of illicit money in 2010 and 2011.

The research, compiled by Dr. Dev Kar, GFI?s lead economist, and Ms. Sarah Freitas, a GFI economist, revealed massive illicit inflows of US$90 billion in 2010 and US$109 billion in 2011. On the whole, Greece was found to have suffered US$509 Billion in both illicit in-and-outflows over the time period.

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Greece?s Underground Economy Grows
24/7 Wall Street (blog), September 5, 2012
By Douglas A. McIntyre

Greece does not have the means to police its underground economy, which is considered very large compared to the size of the country. Austerity measures that cut the size of government will make enforcement of tax laws even more difficult. That is too bad because there is a lot of money to be had if only Greece could get cash from parts of its economy that are largely hidden from sight.

A new study by accounting firm Global Financial Integrity (GFI) claims:

The Greek economy lost US$261 billion to crime, corruption, and tax evasion from 2003-2011.

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Study: Most Germans anticipate a Greek euro exit
Deutsche Welle, September 3, 2012

According to a Financial Times poll, only a minority of ordinary Germans want Greece to stay in the eurozone. There’s not much optimism left that the government in Athens will push through required reforms.

Only about a quarter of ordinary Germans are in favor of debt-stricken Greece remaining in the euro area, a poll published by the Financial Times on Monday indicated. It revealed strong reluctance to grant Greece yet another bailout installment.

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GFI in the News

Secretive Shell Corporations
The New York Times (Letter to the Editor), September 3, 2012
By Heather A. Lowe

?A French Shift on Africa Strips a Dictator?s Son of His Treasures? (Paris Journal, Aug. 24) highlights the need for Congress to take action to abolish anonymous shell corporations. These secretive entities helped enable President Teodoro Obiang Nguema Mbasogo?s son to launder more than $100 million of ill-gotten gains through American banks to finance his lavish lifestyle while ordinary Equatorial Guineans remain mired in poverty.

In most states, less information is required to create a corporation than to obtain a driver?s license, and there is no requirement to disclose who owns or controls it. Such secrecy enables terrorist cells, drug traffickers and corrupt government leaders to launder money through the United States to finance illicit activities.

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Illegal wildlife trading in internet’s deepest, darkest corners
The Guardian, September 3, 2012
By Nic Fleming

Bashful and skittish, the Kaiser’s spotted newt is intriguing and beautiful. With only around 1,000 adults left in the wild in just four mountain streams in Iran, it is also critically endangered.

But the black, white and orange salamanders are openly on sale for as little as £65 on numerous websites. While these may have been bred in captivity, they are descended from rare individuals taken from the wild, and investigators have identified dealers who say their stocks come from Iran.

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Oil, Gas, and Mining Transparency Rules

A Huge Victory for Global Justice
The Nation, September 4, 2012
By James North

Normally, the courageous democratic movement in the West African dictatorship of Equatorial Guinea does not pay attention to the activities of the US Securities and Exchange Commission. But a recent landmark SEC decision will have prompted discreet but enthusiastic celebrations in the opposition?s headquarters, a simple white frame building in the ramshackle Equatoguinean capital.

On August 22, the SEC issued regulations that will force oil, gas and mining companies that are listed on US stock exchanges to publish what they pay to foreign governments. The new regulations will finally enforce an anti-corruption section of the 2010 Dodd-Frank financial reform law, known as the Cardin-Lugar amendment, which requires some 1,100 resource companies to break down their payments and report them in revealing detail. In the more than two years since the law passed, Big Oil lobbyists tried ferociously?and failed?to water down the new transparency regulations.

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FCPA

Foreign Firms Most Affected by a U.S. Law Barring Bribes
The New York Times, September 3, 2012
By Leslie Wayne

A law intended to prohibit the payment of bribes to foreign officials by United States businesses has produced more than $3 billion in settlements. But a list of the top companies making these settlements is notable in one respect: its lack of American names.

The companies that have reached the biggest settlements under the law, known as the Foreign Corrupt Practices Act, include Siemens, the German engineering giant; Daimler, the maker of Mercedes-Benz vehicles; Alcatel-Lucent, the French telecommunications company; and the JGC Corporation, a Japanese consulting company. The lone American company in the top 10 is KBR, the former Kellogg Brown & Root, a subsidiary of Halliburton, the Texas oil services company. As a group, they have paid nearly $3.2 billion in settlements.

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Corruption

Corrupt officials beware: China’s Twitter empowers citizen-vigilantes
The Christian Science Monitor, September 4, 2012
By Peter Ford

For years he has been able to get away with almost any kind of behavior, unaccountable to the public and rarely held to account by his superiors.

Suddenly, as two mid-ranking bureaucrats are discovering to their chagrin, he practically cannot even hitch up his shirt cuffs in public, let alone throw his weight around, without the public jumping on his case and possibly getting him fired.

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Are conflict minerals making war less profitable?
The Guatemala Times, September 4, 2012
By Mark Taylor

At the end of August, the US Securities and Exchange Commission (SEC) issued new regulations governing the trade in conflict minerals from the Democratic Republic of the Congo. The new rules, known commonly as Provision 1502 of the Dodd-Frank Wall Street Reform Act, seem to have made nobody happy: business has long complained the rules are too onerous, civil society is irritated that traders have been given a two-to-four year grace period, and artisanal miners are none the wiser as to when they will get their livelihoods back.

What few seem to have realized is that the conflict minerals law may be a harbinger of a new approach to the way in which the global system relates to economies of armed violence.

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Global Financial Integrity (GFI) promotes national and multilateral policies, safeguards, and agreements aimed at curtailing the cross-border flow of illegal money. In putting forward solutions, facilitating strategic partnerships, and conducting groundbreaking research, GFI is leading the way in efforts to curtail illicit financial flows and enhance global development and security.

For additional information please visit http://www.gfintegrity.org.

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