Tag: Global Financial Integrity

India Stole $ 344 Billions From The World
In a sensational News Global Financial Integrity reported that India stole 343.93 Billion US $ from the World during the period 2002 to 2011, by way of illicit financial outflows.

It is not clear to me whether this information is biased as it is from a source being funded by Ford Foundation , which is suspect.

Does India Steal from the World?

”

he developing world lost US$946.7 billion in illicit outflows in 2011, an increase of 13.7% over 2010. The capital outflows stem from crime, corruption, tax evasion, and other illicit activity.

The report finds that from 2002 to 2011, developing countries lost US$5.9 trillion to illicit outflows. The outflows increased at an average rate of 10.2% per year over the decade—significantly outpacing GDP growth.
As a percentage of GDP, Sub-Saharan Africa suffered the biggest loss of illicit capital. Illicit outflows from the region averaged 5.7% of GDP annually. Globally, illicit financial outflows averaged 4% of GDP.
China leads the world over the 10-year period with US$1.08 trillion in illicit outflows. However, 2011 marked the first time that Russia’s illicit outflows exceeded China’s, with a loss of US$191.14 billion against China’s US$151.35 billion. The previous methodology had significantly understated Russia’s illicit outflows, while it overstated China’s illicit outflows.’

The List.
1. 1. China: US$1.08tn
2. 2. Russia: US$880.96bn
3. 3. Mexico: US$461.86bn
4. 4. Malaysia: US$370.38bn
5. 5. India: US$343.93bn
6. 6. Saudi Arabia: US$266.43bn
7. 7. Brazil: US$192.69bn
8. 8. Indonesia: US$181.83bn
9. 9. Iraq: US$78.79bn¹
10. 10. Nigeria: US$142.27bn
11. 11. Thailand: US$140.88bn
12. 12. United Arab Emirates: US$114.64bn²
13. 13. South Africa: US$100.73bn
14. 14. Philippines: US$88.87bn
15. 15. Costa Rica: US$80.65bn
16. 16. Belarus: US$75.09bn
17. 17. Qatar: US$62.82bn²
18. 18. Poland: US$49.39bn
19. 19. Serbia: US$49.37bn
20. 20. Chile: US$45.20bn
21. 21. Paraguay: US$40.12bn
22. 22. Venezuela: US$38.97bn
23. 23. Brunei: US$38.37bn²
24. 24. Panama: US$38.09bn
25. 25. Turkey: US$37.28bn
Well ,it is a welcome change after nearly hundreds of years of India being looted.

By the way,where is this Money?

Swiss Banks?

Source:

http://iff.gfintegrity.org/iff2013/2013report.html

Related Articles
- High Level Panel On Illicit Financial Flows From Africa Holds Regional Consultation In Accra (modernghana.com)
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12 Dec 2013
Indian Black Money Sources,Processes Estimates Detail
It is new that one hears about Black Money running a parallel Economy in India.

It assumes such proportions that The Central Board of Direct Taxes The Voluntary Disclosure Scheme on June 18, 1997. It continued till December 31, 1997 and it netted a revenue of Rs 7800 Crore to the Government of India.

In January 2011 , there were reports that The amount in the Swiss Banks was in the order of $ 14400 Billion !

Indian Black Money.

The recent information from Kejriwal of IAC is that the amount of black money of 700 Indians, lying in Swiss Banks is 5000 Crore which is very close to the Revenue netted by The Government under Voluntary Disclosure Scheme.

Sample the Finance Ministry’s White Paper on Black Money.

”

A chain Email, which first started circulating on the Internet in early 2009, states that Indians have
more money in the Swiss banks than all other countries combined. It claims that as per a Swiss Banking
Association report in 2006, bank deposits in the territory of Switzerland by nationals of a few countries are
as under: India, US$1456 billion, Russia, US $470 billion, UK, US$390 billion, Ukraine, US$100 billion,
China, US$96 billion.
2.6.2 It is now evident that there is no organization by the name of Swiss Banking Association,
7
although
there is a Swiss Bankers Association (SBA). On 13 September 2009 Zeenews.com reported a statement
from James Nason, Head of International Communications of the SBA, in which, referring to figures being
quoted based on the alleged SBA report, he asserted that the SBA had never published any such report
and that the story about Indian deposits was a complete fabrication. Thus these figures appear to be a
figment of the imagination and the email circulating them baseless and mischievous in intent.
2.6.3 Another report which was circulated in the media stating that Indian nationals held around US$ 1.4
trillion abroad in illicit external assets was based on the 2008 report of Global Financial Integrity (GFI),
‘Illicit Financial Flows from Developing Countries: 2002-2006’. In its November 2010 report, ‘The Drivers
and Dynamics of Illicit Financial Flows from India: 1948-2008’, however, it accepted on page 9 that the
back-of-the-envelope method used to derive the figure was flawed – the figure was based on GFI’s estimated
average illicit outflows of US$ 22.7 billion per annum (over the period 2002-06) multiplied by the 61 years
since independence and it is erroneous to apply annual averages to a long time series when illicit flows are
fluctuating sharply from one year to the next.
8
2.6.4 It is however useful to mention here one estimate of the amount of Indian deposits in Swiss banks
(located in Switzerland) which has been made by the Swiss National Bank. Its spokesperson stated that at
the end of 2010, the total liabilities of Swiss Banks towards Indians were 1.945 billion Swiss Francs (about
` 9,295 crore). The Swiss Ministry of External Affairs confirmed these figures when a reference was made
by the Indian Ministry of External Affairs to them. Since the information was publicly available on the
website of the Swiss National Bank, the figures of earlier years were also taken and are tabulated in
Annexure Table 1. ”

http://finmin.nic.in/reports/WhitePaper_BackMoney2012.pdf

Note that the Government is keen on discrediting the figures on Black Money.

Yet it also states that Black money constitutes between 19-21 5 of GDP.

Indian Black Money

GFI estimates are as under.

India occupies the pride of place among developing countries as the Fifteenth among the Top Twenty countries of Illicit Fund flows.

Where does this money go and Which Institutions are responsible?

The Government admits it knows the Sources and has the mechanisms in place.

Obviously the Political will from all the parties are absent.

http://www.gfintegrity.org/storage/gfip/documents/reports/IFFDec2011/illicit_financial_flows_from_developing_countries_over_the_decade_ending_2009.pdf

http://finmin.nic.in/reports/WhitePaper_BackMoney2012.pdf

http://en.wikipedia.org/wiki/Voluntary_Disclosure_of_Income_Scheme

http://ramanisblog.in/2011/01/23/indian-black-money-in-swiss-banks1400-billion-dollars-inr-63000000000000/

Firstpost.com contains an excellent article on this subject.
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13 Nov 2012
Lost $3.79 Trillion in Illicit Financial Outflow- China.
The illicit making of money by a Class called Politicians are bleeding the Countries, irrespective of the Systems they follow.

China”Wen Jiabao’s familyand ,Bo Xilai have been caught and been disgraced.

The implications of this is brought out by Global Financial integrity in its latest report.

Bon voyage, billions! The wealth of Chinese Premier Wen Jiabao’s family includes lucrative cross-border investment.AP Photo/Andy Wong

‘ The bulk of its estimate, 86.2%, comes from alleged trade mispricing, as Chinese exporters massage reported sales figures with help from their foreign partners to hide profits abroad. But there are many ways for funds to find their way overseas, from art to gambling. Over the last six years, GFI believes some $596 billion in Chinese funds have been moved to tax havens.

While GFI’s estimates are large, it’s clear this is a very real phenomenon: A more conservative figure for outflows from a Standard Chartered bank economist relying only on public data suggests that at least $71 billion left China just this past summer. Another recent estimate suggests some $225 billion left in the year leading up to September 2012(http://qz.com)

Mispricing.

Mispricing China.

Global Financial Integrity (GFI), an American research group that campaigns against illicit financial flows, believes this mis-invoicing is rampant. In a new study Dev Kar and Sarah Freitas of GFI compared China’s reported exports to the world with the world’s stated imports from China. They also juxtaposed China’s purchases from the world, with the world’s exports to China. In principle the figures should match. But the two economists found huge discrepancies between them (see chart). If, as Mr Kar and Ms Freitas recommend, China’s trade with Hong Kong and Macau is excluded, the country appears to have understated its exports and overstated its imports by a combined $430 billion in 2011.

These estimates are hard to take at face value. They imply that China’s true current-account surplus (which includes its trade surplus plus one or two other things) was almost 20% of GDP at its peak in 2007 (officially it was about 10%). But even if the figures are illustrative, rather than definitive, they highlight the difficulty of curbing the cross-border flow of capital in a country with such a heavy cross-border flow of goods.”(economist.com).

Here is the Report fro GFI.

Click the Link.

http://www.gfintegrity.org/storage/gfip/documents/reports/ChinaOct2012/gfi-china-oct2012-report-web.pdf
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29 Oct 2012
How To Deal With Tax Havens – Learn from India?
Image via Wikipedia

Intentions are on paper.Even with out these current measures, the Government could have taken action against the holders of slush funds.

In Bofors case,Rajiv Gandhi Family was implicated,his intermediary Quottrocchi was allowed to go scot-free.

There are many more instances where the government chose to look the other way.

Further information is available under’Corruption,India,Radia Tapes at the site.

Politicians the world over form a club of their own.

Nothing will come out of these pronouncements.

Despite Commissions of Enquiry fixing Corrupt politicians , not a single politician has been put behind bars,for instance Tamil Nadu Chief Minister Karunanidhi who was indicted by Sarkaria Commission and his party DMK was described by the Commission as having made ‘corruption scientific the leading figure behind the federal Government in India.

How naive can we be!

Richard Murphy is a founder of the Tax Justice Network and director of Tax Research LLP. An expert on tax policy, he writes a daily blog which provides regular news on his activities and opinions at www.taxresearch.org.uk/Blog/

India is beginning to take the threat tax havens pose to it very seriously, partly because of the work my friends at Global Financial Integrity have done in exposing the enormous costs to India of tax haven abuse.

The Hindu Business Line reports just how seriously the issue is being taken in the 2011 budget:

Transactions with entities in ‘non-cooperative’ jurisdictions that do not effectively exchange information with India may soon attract TDS (tax deduction at source) of at least 30 per cent.

This is one of the several ‘anti-avoidance’ measures that the Finance Minister, Mr Pranab Mukherjee, has proposed in Budget 2011-12, to discourage residents from transacting with entities in ‘non-cooperative’ jurisdictions.

Through the Budget, Mr Mukherjee has sought to put in place a “toolbox of counter measures,” against those jurisdictions that hesitate or do not want to enter into tax information exchange agreement (TIEA) with India. The Budget empowers the Centre to notify such jurisdictions.

Besides stipulating a stiff TDS rate, the Budget has also proposed that such transactions would be deemed to be an international transaction and attract transfer pricing regulations.

Also, payments made to any financial institution in such jurisdictions would be allowed as deduction for tax purposes only if an assessee furnishes an authorisation to the tax department to allow the Indian tax authorities seek relevant information from the financial institution.

The Finance Bill, 2011 has also proposed that no deduction (for tax purposes) in respect of any other expenditure or allowance (including depreciation) arising from a transaction with a person located in that jurisdiction would be allowed unless the assessee maintains other documents and furnishes information as may be prescribed.

Moreover, if a resident were to receive money from such jurisdiction, then the onus is on the assessee to explain “satisfactorily” the source of such money. Otherwise, the amount would be deemed as income of the assessee.

This is a very welcome range of measures. They look robust. The messaging is clear. Cheats will be tackled.

I warmly welcome this approach. It should be adopted in the UK and elsewhere. If it was, then tax haven cheating would reduce in scale, rapidly, if (and it’s a big if) sufficient resource was dedicated to policing the activity and banks were made liable for facilitating transactions that may be in breach of the regulations.

http://www.financialtaskforce.org/2011/03/02/how-to-deal-with-tax-havens-indian-style-from-which-we-should-take-lessons/comment-page-1/#comment-35960
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3 Mar 2011
$ 462 Billions Indian Black money abroad.
The truth is visible to everybody except the Government of India.

Instead of taking action it is hiding behind euphemisms like ‘secret, ‘bilateral arrangements,diplomatic relations’ etc.’

Story:

India’s underground economy is closely tied to illicit financial outflows. The total present value of India’s illicit assets held abroad ($462 billion) accounts for approximately 72 percent of India’s underground economy. This means that almost three-quarters of the illicit assets comprising India’s underground economy—which has been estimated to account for 50 percent of India’s GDP (approximately $640 billion at the end of 2008)—ends up outside of the country. (vii, 19)

The finding that only 27.8 percent of India’s illicit assets are held domestically support arguments that the desire to amass wealth illegally without attracting government attention is one of the primary motivations behind the cross-border transfer of illicit capital. (vii, 19)

In the post-reform period of 1991-2008, deregulation and trade liberalization accelerated the outflow of illicit money from the Indian economy. Opportunities for trade mispricing grew and expansion of the global shadow financial system—particularly island tax havens—accommodated the increased outflow of India’s illicit capital flight. (Introduction)

There is a statistical correlation between larger volumes of illicit flows and deteriorating income distribution. (35)

Recommendations.

Tax evasion is a major component of the underground economy, which in turn is a primary driver of India’s illicit outflows. Expanding India’s tax base and improving tax collection has high potential to curtail illicit flows.

Illicit financial flows cannot be curtailed without the collaborative effort of both developing and developed countries. Economic reforms key to stemming the outflow of illicit money from India and the developing world in general include:
- curtail trade mispricing (a widely utilized tax avoidance technique of international businesses);
- require country-by-country reporting of sales, profits and taxes paid by multinational corporations;
- require confirmation of beneficial ownership in all banking and securities accounts;
- require automatic cross-border exchange of tax information on personal and business accounts; and
harmonize predicate offenses under anti-money laundering laws across all countries that cooperate on the Financial Action Task Force

http://india.gfip.org/

Related:

New York —Nigeria might have lost $130 billion from 2000-2008 to illicit financial flows, a new report issued by US-based group, Global Financial Integrity, GFI, said.

The report entitled “Illicit Financial Flows from Developing Countries: 2000-2009,” said Nigeria had the 10th highest measured illicit outflows in the developing world, an average of $15 billion per year.

The North America Correspondent of the News Agency of Nigeria, NAN, reports that the GFI report ranks countries according to magnitude of illicit outflows.

According to the report, China is ranked the highest country of measured illicit outflows in the developing world with 2.18 trillion dollars, followed by Russia; 427 billion dollars and Mexico, 416 billon dollars.

The report also shows the annual outflows for each country and breaks outflows down into two categories of drivers: trade mispricing and “other,” which includes “kickbacks, bribes, embezzlement, and other forms of official corruption.”

Others in the top 10 are Saudi Arabia $302 billion; Malaysia $291 billion; United Arab Emirates $276 billion; Kuwait $242 billion; Venezuela $157 billion and Qatar $138 billion.

Primary findings from the report said illicit outflows increased from $1.06 trillion in 2006 to approximately $1.26 trillion in 2008.

http://www.vanguardngr.com/2011/01/illicit-financial-flows-cost-nigeria-130bn-in-8-years-report/
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16 Feb 2011