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Date: April 29, 2024 Mon
Time: 11:19 pm
Time: 11:19 pm
Results for corrupt practices
8 results foundAuthor: Organisation for Economic Co-operation and Development. Committee on Fiscal Affairs Title: Report on Abuse of Charities for Money-Laundering and Tax Evasion Summary: Tax evasion and tax fraud through the abuse of charities is a serious and increasing risk in many countries although its impact is variable. Some countries estimate that the abuse of charities costs their treasury many hundreds of millions of dollars and is becoming more prevalent. This report summarizes the status attached to charities in the countries surveyed and compiles the common methods of the abuse of charities, the sectors at risk and the few attempts so far to quantify those risks. Details: Paris: Organisation for Economic Co-operation and Development, Centre for Tax Policy and Administration. 2008. 65p. Source: Internet Resource Year: 2008 Country: International URL: Shelf Number: 114341 Keywords: CharitiesCorrupt PracticesFraudMoney LaunderingTax Evasion |
Author: Global Financial Integrity Title: Illicit Financial Flows From Africa: Hidden Resource for Development Summary: This paper presents an analysis of the volume and pattern of illicit financial flows from African countries over a 39-year period from 1970 to 2008. The paper makes a contribution given that existing research on long-term trends in the pattern of illicit flows from African countries is rather scanty. The classification of African countries used in this paper differs from that in the IMF’s World Economic Outlook; here, Egypt and Libya (members of the African Union) are included under North Africa while the group of CFA Franc countries is distributed along a geographical basis. The paper presents estimates of illicit financial flows from Africa and its various regions and economic groupings during the 1970s, 1980s, 1990s, and the most recent nine-year period 2000-2008 for which data are available. We find that illicit flows have not only grown on a decennial basis, cumulatively they have come to far exceed the continent’s outstanding external debt at the end of 2008. The statistical analysis of long-term trends brings out some interesting regional disparities in the pattern and growth of such flows. Utilizing the World Bank Residual model and the IMF Direction of Trade Statistics, illicit outflows from Africa across the 39-year period are estimated at US$854 billion. The authors point out that data limitation significantly understates the problem. Making various adjustments to the estimate suggests that the volume of illicit flows over the period 1970 to 2008 may be closer to US$1.8 trillion. We argue that this staggering loss of capital seriously hampers Africa’s efforts at poverty alleviation and economic development. Details: Washington, DC: Global Financial Integrity, 2010. Source: Internet Resource: Accessed September 13, 2010 at: http://www.gfip.org/storage/gfip/documents/reports/gfi_africareport_web.pdf Year: 2010 Country: Africa URL: http://www.gfip.org/storage/gfip/documents/reports/gfi_africareport_web.pdf Shelf Number: 119790 Keywords: Corrupt PracticesEconomics and DevelopmentMoney Laundering |
Author: Kar, Dev Title: Illicit Financial Flows from Developing Countries Over the Decade Ending 2009 Summary: This report provides estimates of illicit financial flows (IFFs) from developing countries over the decade 2000-2009 based on balance of payments (BoP), bilateral trade, and external debt data reported by member countries to the IMF and the World Bank. It should be noted that estimates of IFFs at the developing world, regional, and country levels presented in this report could differ from those published in the 2010 report due to revisions to underlying data, reported by member countries. The most notable finding in this report is that in 2009 IFFs from developing countries, led by the top ten exporters of illicit capital, most of which are in Asia and the Middle East and North Africa (MENA) region, have declined by 41 percent over the last year. Principal components analysis seems to indicate that this decline was the result of the global economic crisis which tended to reduce the source of funds (new external loans and net foreign direct investments), increase the use of funds and reduce trade mispricing due to lower trading volumes. We find no reason to subscribe the wide-ranging reduction in IFFs to far-reaching economic reform or improvements in overall governance in major emerging markets. Details: Washington, DC: Global Financial Integrity, 2011. 100p. Source: Internet Resource: Accessed January 17, 2012 at: http://www.ciponline.org/images/uploads/publications/illicit_financial_flows_from_developing_countries_over_the_decade_ending_2009.pdf Year: 2011 Country: International URL: http://www.ciponline.org/images/uploads/publications/illicit_financial_flows_from_developing_countries_over_the_decade_ending_2009.pdf Shelf Number: 123640 Keywords: Corrupt PracticesFinancial CrimesIllicit Financial FlowsMoney LaunderingTax Evasion |
Author: Kar, Dev Title: Illicit Financial Flows from China and the Role of Trade Misinvoicing Summary: The Chinese economy hemorrhaged US$3.79 trillion in illicit financial outflows from 2000 through 2011, according to a new report [PDF] released today by Global Financial Integrity (GFI), a Washington, DC-based research and advocacy organization. Amidst increased domestic concern over inequality and corruption, GFI’s study raises serious questions about the stability of the Chinese economy merely two weeks before the once-in-a-decade leadership transition. The research, conducted by GFI Lead Economist Dev Kar and GFI Economist Sarah Freitas, found that the illegal outflows—the proceeds of crime, corruption, and tax evasion—were largely due to a trade-based money laundering technique known as ‘trade misinvoicing ,’ which accounted for US$3.2 trillion, or 86.2%, of the total outflow of illegal capital over the 11 years studied. The trade misinvoicing figures were provided exclusively to The Economist, and appear in the latest edition of the magazine which hits newsstands tomorrow. Details: Washington, DC: Global Financial Integrity, 2012. 26p. Source: Internet Resource: Accessed December 17, 2012 at http://www.gfintegrity.org/storage/gfip/documents/reports/ChinaOct2012/gfi-china-oct2012-report-web.pdf Year: 2012 Country: International URL: http://www.gfintegrity.org/storage/gfip/documents/reports/ChinaOct2012/gfi-china-oct2012-report-web.pdf Shelf Number: 127237 Keywords: Corporate CrimeCorrupt Practices Financial Crimes Illicit Financial Flows Money Laundering Tax Evasion |
Author: Baker, Raymond Title: Hiding in Plain Sight: Trade Misinvoicing and the Impact of Revenue Loss in Ghana, Kenya, Mozambique, Tanzania, and Uganda: 2002-2011 Summary: Illicit flows of capital through developing countries due to trade misinvoicing is one of the most pressing challenges facing policymakers in these countries. The global figure for illicit financial outflows from developing countries is approximately $542 billion per year on average (over a 10-year time series), and trade misinvoicing makes up close to 80 percent of this or $424 billion. Capital flight, facilitated by a global network of secrecy jurisdictions and complex, opaque corporate and account structures, robs governments and societies of needed revenue for domestic investment in the private sector, infrastructure development, and the provision of vital social services. This translates into lost opportunities, lost jobs, and lost potential. This study explores the economic and the policy side of the issue of trade misinvoicing using case studies of Ghana, Kenya, Mozambique, Tanzania, and Uganda. Data on illicit flows for these five countries demonstrate the varying magnitudes, sources, and consequences of trade misinvoicing at the country level and provide hope and warning to other developing countries. We find that trade misinvoicing is a significant source of illicit outflows and inflows of capital in each country, resulting in billions of dollars of lost investment and hundreds of millions of dollars in unrealized domestic resource mobilization. The sources of trade misinvoicing varied across the cases, as did the policy environment in which this misinvoicing occurs. However, we also find significant facets of this issue that apply to all the countries, particularly with regards to customs invoice review procedures and access to on-the-spot information. These challenges represent opportunities for the five countries to improve their economic systems and accountability mechanisms through greater transparency. Details: Washington, DC: Global Financial Integrity, 2014. 72p. Source: Internet Resource: Accessed June 26, 2014 at: http://www.gfintegrity.org/wp-content/uploads/2014/05/Hiding_In_Plain_Sight_Report-Final.pdf Year: 2014 Country: Africa URL: http://www.gfintegrity.org/wp-content/uploads/2014/05/Hiding_In_Plain_Sight_Report-Final.pdf Shelf Number: 132540 Keywords: Corporate CrimeCorrupt Practices Financial Crimes Illicit Financial Flows Money Laundering Tax Evasion |
Author: New Jersey Commission of Investigation Title: Gaming the System: Abuse and Influence Peddling in New Jersey's Used-Car Industry Summary: The sign out front says "New Jersey Dealers Auto Mall," but there are no dealers in sight, no mall to speak of and, most notably, no cars for sale. Indeed, surrounded as it is by barbed‐ wired chain‐link fencing and an expanse of empty pavement sprouting weeds, the low brick structure that forms the centerpiece of this place has the feel of an abandoned factory or warehouse. Even on a Saturday when business in the used‐car trade typically is brisk, the hundreds of small "dealer" cubicles packed in rows inside the main building are silent behind locked doors, no phones ringing, no sales personnel, no customers. But that's not to say nothing is going on here. The State Commission of Investigation has found that, beneath a veneer of apparent legitimacy, this compound off East Commerce Street in Bridgeton, Cumberland County, is a sham that serves as the foundation for an amalgam of consumer and bank fraud, unpaid taxes,suspicious-financial transactions and other questionable, unscrupulous and possibly illegal activities. The owner of record – an individual with familial and financial ties to members and associates of organized crime – leases space and provides other services to absentee tenants, enabling them to meet minimum requirements for obtaining official used‐car dealer licenses from the State of New Jersey. Many actually are based elsewhere and conduct business from out‐of‐state locations, mainly in New York but as far away as California and Florida, where stricter licensing rules make it difficult, if not impossible, for them to qualify for certified dealer credentials. Known by the acronym NJDAM, the Bridgeton operation is the largest of 11 multi‐dealer "complexes" or "locations" (MDLs) identified by the Commission in New Jersey. Over the years efforts have been undertaken to crack down on questionable and unscrupulous activity at these entities, most notably starting more than a decade ago when NJDAM was the target of a State Police investigation into allegations of consumer fraud and other untoward conduct by dealers with criminal records. The findings of that inquiry, including sales of stolen vehicles with "washed" titles, misuse of dealer plates, forgery of official documents and other issues, prompted the state Motor Vehicle Commission (MVC) in 2006 to take action aimed at curtailing abuses by what it termed "phantom dealerships." At the time, the agency boasted its new regulations not only would protect consumers but also would enhance security "essential to the collective fight against terrorism." More recently, MVC investigators found additional violations at NJDAM and sought remedial action, including suspension and/or revocation of licenses held by various dealers registered there. Ultimately, however, such efforts often fizzled with little positive effect. That is because, over time, the MVC's role as a regulator of business in this corner of the used‐car world devolved into that of an enabler of some very troubling business as usual. During this investigation, the SCI found that the hundreds of dealers based at Bridgeton and at other MDLs exist and function largely beyond the reach of basic rules governing licensure and oversight of car dealer sin New Jersey. Instead, they occupy a loosely regulated niche framed by a history of weak and inconsistent enforcement, aggressive legal challenges and bureaucratic receptiveness to behind‐the‐scenes pressure from Trenton lobbyists, including an individual who served for six years as Director of MVC's precursor, the New Jersey Division of Motor Vehicles. In sworn testimony, MVC personnel assigned to the agency’s Business Licensing Services Bureau described circumstances in which efforts to scrutinize these dealers and enforceherence to official regulations were frustrated, delayed or derailed by questionable or inappropriate intervention. Dealer license applications were ordered approved over the objections of line staff. Violation notices were interfered with, lessened or waived. In one instance, officials anxious to avoid litigation circumvented the MVC's statutory administrative rule‐making process, including the requirement for public comment, by crafting shadow regulations known internally as "alternative guidelines." Less stringent than the officially adopted rules, these were used exclusively for matters involving multi‐dealer locations. MVC officials also agreed to recognize clerical personnel of the landlord NJDAM as "employees" of each of its more than 300 tenant‐dealers. These individuals could then be designated as on‐site business representatives, or "signatories," clearing the way for those dealers to transact business in absentia and thus thwart a central condition of state licensure. This was allowed to occur even though, as NJDAM's office manager testified, it was plain that posing as an employee of the tenant‐ dealers was nothing but a ruse. Meanwhile, random on‐site inspections, routine for other kinds of vehicle dealerships in New Jersey, were set aside for those in MDLs. They also were exempted from random examination and auditing of their current sales and transaction records, which must be kept in their offices and made available there for MVC review, a rule rendered moot in any event because they have been allowed to flagrantly misrepresent compliance with the MVC’s requirement that dealers be present at their licensed locations and open for business a minimum of 20 hours every week. Much of this occurred at the behest of MVC managers who took it upon themselves to effectuate what amounted to substantive policy and regulatory changes that benefited a narrow private interest – all without the knowledge or authorization of the agency’s Chief Administrator and governing Board. In similar fashion, line personnel, including investigators responsible for regulatory enforcement, were left in the dark even when decisions affecting multi‐dealer locations impacted the performance of their jobs. Thus, with the agency's top and lower ranks cut out at significant junctures on matters involving these dealers, the MVC essentially was a government entity run by mid‐level bureaucrats accountable to no one. Besides calling into question the integrity and trustworthiness of the State's top motor‐ vehicle regulatory agency, the favored treatment given this narrow segment of the dealership community carried other deleterious consequences. These include the untold cost of wasted time and resources of MVC investigators who, having devoted considerable work to identify and address regulatory violations, submitted enforcement recommendations only to see them ignored, reversed or summarily dismissed. Moreover, the wholesale exemption of MDL dealers from the prevailing rules has distorted the commercial playing field by putting legitimate competitors around the State at an operational and economic disadvantage. Perhaps the most egregious consequence of the events and circumstances detailed in this report, however, is that a range of consumer and other fraud and abuse was allowed to persist for years even after credible authorities had blown the whistle on it. With regard to the future, the SCI is cognizant of significant changes occurring in the marketplace with the advent and proliferation of internet‐based car sales and other virtual means of transacting such business outside the conventional realm of showrooms and fixed‐lot vehicle inventories. These new alternative business models carry the promise of efficiencies and savings for buyers and sellers alike. But such innovation does not diminish the need for effective oversight, transparency and accountability. If anything, given the loosely regulated world of e‐ commerce, it demands more. One of the great gaps in oversight and accountability in the present case is that the ownership and operations of MDLs themselves – not the tenant‐dealers but the landlords, locations, etc. – are subject to no scrutiny or control by the MVC or any agency of government beyond municipal entities concerned primarily with local matters of zoning, building code and fire‐ and public‐safety compliance. Ironically, although the MVC has become closely involved with New Jersey's largest MDL, the New Jersey Dealers Auto Mall, this has occurred primarily in response to pressure from that entity and its lobbyists to relax oversight and enforcement, not to increase it. As the findings of this investigation amply demonstrate, that approach poorly serves the public interest, a conclusion the MVC itself had reached back in 2006 before largely retreating from its own efforts to bolster the State’s control in this area. The SCI also recognizes the need to strike a meaningful balance between proper and effective regulation of the State’s business community and legitimate efforts to sustain and spur economic development. With regard to MDLs, this balance is thoroughly out of order. For example, despite its founder's assurances that NJDAM would produce hundreds of jobs, it has employed a grand total of 25 individuals over the years, not including the owners' relatives. This outcome is unfortunate given the fact that Bridgeton is one of New Jersey's 32 designated Urban Enterprise Zones, which were created in an effort to revitalize economically distressed communities by providing businesses with tax breaks and other incentives to develop and create private‐sector jobs. Furthermore, MDLs have become notorious as havens for unpaid taxes. NJDAM’s used‐car tenant‐dealers lead the way on this score, accounting for more than $4.2 million – nearly half – of an estimated $10 million due to the New Jersey Division of Taxation from dealers registered at all of the State's MDLs. Based on the findings of this investigation, the SCI recommends a series of statutory and regulatory changes, outlined in detail at the conclusion of this report, to provide better oversight and control of individuals and entities engaged in commercial activity centered on the wholesaling and retailing of used vehicles. To some extent, even the MVC itself seems to have finally recognized the need for action. During the latter stages of this inquiry, for example, the agency proposed new regulations to limit access to temporary tags and dealer plates and to define and scrutinize who can act as an authorized signatory in a dealer's absence. But these are only first steps toward achieving a broader base of necessary systemic reform in this area – an effort that, to be meaningful and effective, will require significant structural adjustments. Details: Trenton, NJ: The Commission, 2015. 178p. Source: Internet Resource: Accessed February 15, 2017 at: http://www.nj.gov/sci/pdf/SCI%20Cars%20Report.pdf Year: 2015 Country: United States URL: http://www.nj.gov/sci/pdf/SCI%20Cars%20Report.pdf Shelf Number: 141040 Keywords: Automobile Industry Consumer Fraud and Abuse Corrupt PracticesMotor Vehicles Stolen Vehicles |
Author: Global Financial Integrity Title: Kenya: Potential Revenue Losses Associated with Trade Misinvoicing Summary: Trade misinvoicing is a reality impacting Kenya and every other country of the world. Imports coming into a country can be over-invoiced in order to shift money abroad. Or imports can be under-invoiced in order to evade or avoid customs duties or VAT taxes. Similarly, exports going out of a country can be under-invoiced in order to shift money abroad. And exports are occasionally over-invoiced, for example in order to reclaim VAT taxes. Global Financial Integrity finds that trade misinvoicing is the most frequently utilized mechanism facilitating measurable illicit financial flows. Misstating import and export values has become normalized in much of commercial trade, and the same facilitating shadow financial system is used to move money of criminal and corrupt origin. We are dealing with a systemic problem that merits serious concerted attention. Parties to trade who engage in misinvoicing do so because it is profitable to them. That is, they will incur some costs (including the expected cost of getting caught) but do so because the expected benefits to them of misinvoicing are larger than their expected costs. While those parties benefit from misinvoicing, there are additional social costs to nations affected by such activity. Trade misinvoicing redirects economic resources away from their most productive use (i.e., it is a type of "rent-seeking" activity) and that can result in social inefficiencies in the allocation and distribution of resources. While any country may be affected by misinvoicing, the problem is particularly acute for developing countries where productive capacities may already be limited. The social costs of misinvoicing can undermine sustainable growth in living standards in developing countries as well as exacerbate already pronounced inequities in the distribution of income and wealth. Moreover, by depressing government revenues and exacerbating inequality, those social costs can also impede progress in the developing world on important social goals, such as poverty reduction. In this analysis we seek to provide an approximate measure of revenues lost to the Kenyan government due to trade misinvoicing. We illustrate this in the first section of the report for 2013 (the last year for which comprehensive data for Kenya are available). For that year, we can reasonably identify potential revenue losses in excess of US$907 million, or about 8 percent of total Kenyan government revenues. That is a conservative figure, as it does not encompass many aspects of trade misinvoicing and other illicit financial flows that do not show up in official statistics. Moreover, the detailed data available for estimating trade misinvoicing in Kenya comprise a fraction of all of that country's trade flows. Furthermore, we take one aspect of this problem - import under-invoicing - and subject it to detailed analysis utilizing detailed bilateral trade data. We find that Kenyan imports of cereal from Pakistan, mineral fuels from India and, more generally, imports from China to be particularly prone to potential revenue loss to the government of Kenya due to under-invoicing. All researchers on this issue of trade misinvoicing are constantly seeking better data and better analytical methodologies. Even as we work toward these goals, what is most important is to appreciate the order of magnitude of the problem and the potential for development revenues if the problem is curtailed. Recognizing the shortcomings in data, Global Financial Integrity has developed GFTrade, a database of current world market prices of 80,000 categories of goods in the Harmonized System, as traded by 30 of the largest global economies. This enables emerging market and developing country customs and revenue authorities to assess instantly the risk that trade misinvoicing may be a reality in transactions as they are coming in or going out. GFTrade is in use in Africa now. Details: Washington, DC: Global Financial Integrity, 2018. 32p. Source: Internet Resource: Accessed October 10, 2018 at: https://www.gfintegrity.org/wp-content/uploads/2018/10/GFI-Kenya-Potential-Revenue-Losses-Associated-with-Trade-Misinvoicing.pdf Year: 2018 Country: Kenya URL: https://www.gfintegrity.org/wp-content/uploads/2018/10/GFI-Kenya-Potential-Revenue-Losses-Associated-with-Trade-Misinvoicing.pdf Shelf Number: 152890 Keywords: Corporate CrimeCorrupt Practices Financial Crimes Illicit Financial Flows Money Laundering Tax Evasion |
Author: Global Financial Integrity Title: Nigeria: Potential Revenue Losses Associated with Trade Misinvoicing Summary: Analysis of trade misinvoicing in Nigeria in 2014 shows that the potential loss of revenue to the government was approximately $2.2 billion for the year, according to a new study by Global Financial Integrity. To put this figure in context, this amount represents four percent of total annual government revenue as reported to the International Monetary Fund. Put still another way, the estimated value gap of all imports and exports represents approximately 15 percent of the country's total trade. The report, titled Nigeria: Potential Revenue Losses Associated with Trade Misinvoicing, analyzes Nigeria's bilateral trade statistics for 2014 (the most recent year for which sufficient data are available) which are published by the United Nations Comtrade. The detailed breakdown of bilateral Nigerian trade flows in Comtrade allowed for the computation of trade value gaps that are the basis for trade misinvoicing estimates. Import gaps represent the difference between the value of goods Nigeria reports having imported from its partner countries and the corresponding export reports by Nigeria's trade partners. Export gaps represent the difference in value between what Nigeria reports as having exported and what its partners report as imported. The portion of revenue lost due to the misinvoicing of exports was $1.3 billion during the year which was related to a reduction in corporate income taxes. The portion of revenue lost due to the misinvoicing of imports was $880 million. This amount can be further divided into its component parts: uncollected VAT tax ($100 million), customs duties ($365 million), and corporate income tax ($415 million). Lost revenue due to misinvoiced exports was $1.3 billion for the year which is related to lower than expected corporate income and royalties. "The practice of trade misinvoicing has become normalized in many categories of international trade" according to GFI President Raymond Baker. "It is a major contributor to poverty, inequality, and insecurity in emerging market and developing economies. The social cost attendant to trade misinvoicing undermines sustainable growth in living standards and exacerbates inequities and social divisions, issues which are critical in Nigeria today." Examination of the underlying commodity groups which comprise Nigeria's global trade show that a large amount of lost revenue ($200 million) was related to import under-invoicing of just five product types. Those products and the related estimated revenue losses include: vehicles ($100 million), iron and steel products ($40 million), electrical machinery ($20 million), ceramics ($20 million), and aluminum products ($20 million). Lost revenue due to mispriced exports ($1.3 billion) may be related to the mineral fuels trade given this category of goods makes up over 90 percent of all exports. Trade misinvoicing occurs in four ways: under-invoicing of imports or exports, and over-invoicing of imports or exports. In the case of import under-invoicing fewer VAT taxes and customs duties are collected due to the lower valuation of goods. When import over-invoicing occurs (i.e. when companies pay more than would normally be expected for a product), corporate revenues are lower and therefore less income tax is paid. In export under-invoicing the exporting company collects less revenue than would be anticipated and therefore reports lower income. Thus, it pays less income tax. Corporate royalties are also lower. Total misinvoicing gaps related to imports can be broken down by under-invoicing ($2.4 billion) and over-invoicing ($1.9 billion). It should be noted that these figures represent the estimated value of the gap between what was reported by Nigeria and its trading partners. The loss in government revenue is a subset of these amounts and is based on VAT tax rates (5 percent), customs duties (15.2 percent), corporate income taxes (22.4 percent), and royalties (.2 percent) which are then applied to the value gap. Export misinvoicing gaps were a massive $5.9 billion for export under-invoicing and $5.6 billion for export over-invoicing. Lost corporate income taxes and royalties are then applied to export under-invoicing amounts to calculate lost government revenue. Details: Washington, DC: GFI, 2018. 32p. Source: Internet Resource: Accessed November 3, 2018 at: https://www.gfintegrity.org/wp-content/uploads/2018/10/Nigeria-Report-2018.pdf Year: 2018 Country: Nigeria URL: https://www.gfintegrity.org/wp-content/uploads/2018/10/Nigeria-Report-2018.pdf Shelf Number: 153244 Keywords: Corporate CrimeCorrupt PracticesFinancial CrimesIllicit Financial FlowsMoney LaunderingTax Evasion |