Today’s Top Stories from GFI: African dream ‘held back by illicit outflow of capital’

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African dream ‘held back by illicit outflow of capital’
BD Live, May 7, 2013

By Linda Ensor

Africa has been tipped as one of the world hot spots for foreign direct investment (FDI) and economic growth, but there are concerns that the development of the continent is being held back by a massive, illicit outflow of capital.

The concern was flagged on Monday by aid organisation Oxfam International ahead of the World Economic Forum on Africa, which takes place in Cape Town this week and which brings together political, corporate and civil society leaders to discuss the opportunities and challenges on the continent.

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To sustain high growth rates, Africa must have inclusive policies in place
The Daily Monitor (Uganda), May 7, 2013

By Winnie Byanyima

Several African countries are amongst today’s fastest growing economies in the world, boosted in many instances by new discoveries of oil, natural gas and strategic mineral reserves.

Extreme poverty on the continent is in decline, and progress towards meeting the Millennium Development Goals has accelerated. A number of very poor African countries, including Malawi, Sierra Leone, and Ethiopia have made recent and substantial improvements in their levels of income equality.

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Money Laundering

India: bank money-laundering claims spread to more than 20 institutions
The Financial Times (blog), May 7, 2013

By Avantika Chikoti

In March, the online magazine Cobrapost claimed it had evidence that officials at India’s three leading non-state banks were facilitating money laundering. Probes were initiated, staff were suspended and the local press was abuzz.

Now, in the second part of the sting operation, Cobrapost levelled similar allegations against 23 more financial services companies, including public sector banks and insurance companies. Many say the news is less exciting this time. But are they missing something?

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Money Laundering and The Drug Trade: The Role of the Banks
Center for Research on Globalization

By Dylan Murphy

Mexico is in the grip of a murderous drug war that has killed over 150,000 people since 2006. It is one of the most violent countries on earth. This drug war is a product of the transnational drug trade which is worth up to $400 billion a year and accounts for about 8% of all international trade.

The American government maintains that there is no alternative but to vigorously prosecute their zero tolerance policy of arresting drug users and their dealers. This has led to the incarceration of over 500,000 Americans. Meanwhile the flood of illegal drugs into America continues unabated.

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Automatic Exchange of Tax Information

Swiss bankers drop opposition to information exchange
Reuters, May 6, 2013

By Emma Thomasson

The Swiss Bankers Association has dropped its outright rejection of the exchange of bank client data with foreign tax authorities, its head was quoted as saying on Monday.

Swiss bank secrecy has come under heavy fire from the United States, France and Germany since the financial crisis. Switzerland agreed in 2009 to share more information with foreign authorities hunting tax cheats on request, but it has consistently rejected an automatic exchange of data.

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Tax havens invaded: UK offshores open up their databanks
RT, May 6, 2013

As president of the G8 summit this year, Britain has headed the crusade against those who they don’t feel are paying their fair share of taxes, both individuals and corporations.

“This may be the beginning of the end of bank secrecy havens,” Charles Intriago, the head of the Association of Certified Financial Crime Specialists, said at a G20 meeting in April.

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Tax evasion shows EU’s shortcomings
Bangkok Post, May 7, 2013

No one could be happier these days than Algirdas Semeta. A former Lithuanian finance minister, sidelined until recently by his lack of charisma and continuous obstruction by some European governments, the EU Commissioner for Taxation will be leading the discussions during the European Finance Ministers Meeting onMay 14th, specially focused on the delicate questions of banking secrecy and tax fraud.

Mr Semeta, nowadays courted by the media, hopes to then be in a position to get unanimous approval for his longtime proposal: an automatic exchange of tax information between the EU’s 27 member states. After overcoming the latest obstacles from Luxembourg and Austria, the plan will also be negotiated with neighbouring non-EU countries like Switzerland, Monaco or Liechtenstein. If the Lithuanian Commissioner has his way, any bank account held by an EU citizen in those countries will be, from January 2015 onwards, immediately reported to the tax authority of its country of origin.

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IMF tells Greece to step up fight on tax evasion
The Telegraph, May 6, 2013

By Szu Ping Chan

Although the IMF praised the debt-laden nation for making “exceptional” progress in improving its finances, it added that “insufficient” structural reforms had meant deficit cutting had been achieved primarily through slashing jobs and wages, bringing “unequal distribution” of the burden of adjustment.

“Very little progress has been made in tackling Greece’s notorious tax evasion,” the IMF said in a report on Monday. “The rich and self-employed are simply not paying their fair share, which has forced an excessive reliance on across-the-board expenditure cuts and higher taxes on those earning a salary or a pension.”

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Corruption: the great equaliser in Indian politics
Business Standard, May 7, 2013

By Shantanu Bhattacharji

The skeletons of corruption have not stopped tumbling out of the United Progressive Alliance (UPA) government’s closet. With every passing year, the charge that Prime Minister Manmohan Singh has lost his midas touch — the force with which he led the UPA government in the first term, scoring one success after another — has gained a lot of intensity.

The question arises why the Prime Minister — who is known as the architect of the economic reforms in India — lost control over the wheels. Political pundits say the answer is simple: lack of political management. Each new day seems to bring fresh charges against one or another minister with the Prime Minister barely escaping the heat. If the UPA does not recognise the public anger against corruption, respect the ideals and values of democracy, and take concrete steps that inspire confidence, there will quite likely be a heavy political price to pay in the next general elections.

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Toy company co-owner sentenced for role in drug money laundering
The Los Angeles Times, May 7, 2013

By Adolfo Flores

The co-owner of a City of Industry toy company was sentenced to 14 months in custody for her role in laundering money for Colombian and Mexican drug traffickers in a scheme known as the black market peso exchange.

Dan “Daisy” Xin Li, 44, co-owner of Woody Toys Inc., was sentenced Monday to eight months in prison, followed by six months of home detention. The sentencing for Jia “Gary” Hui Zhou, 44, her husband, was delayed until Jan. 6.

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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.

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