draining development.pdf - Khazar University

ForewordThe subject of Draining Development? is one that we feel very stronglyabout.Estimates on the magnitude of illicit financial flows from developingcountries vary enormously, but even the most conservative suggest that thetotal outflow exceeds significantly the amount of official development assistancefrom the Organisation of Economic Co-operation and Developmentcountries. When we look at the financing needs of the developing world—what it will take to achieve the Millennium Development Goals—it is clearthat development aid alone is insufficient. To have any hope of reaching theMillennium Development Goals, poor countries must attack the illicit outflowof monies and recover what is now illegally held abroad.Nigeria’s experience illustrates the challenges. In the early 2000s, theNigerian government made a concerted push to recover the funds that illegallyfled their country. They encountered problems both in Nigeria andabroad: outdated rules and poorly trained staff at home, and overseas therewas bank secrecy, opaque corporate and trust vehicles, and time consumingprocedures precluding cooperation. The playing field was tilted againstNigeria’s national interests.No developing country should have to repeat what Nigeria had to gothrough to recover funds that rightly belong to its citizens. The effortrequired thousands of hours of investigative work to locate where the moneywas hidden, and then the government had to pay millions of dollars in legalfees to recover just a portion of it.Although recovery is becoming easier, too many obstacles remain. Lawsgoverning trusts and corporations in many countries still provide anonymityto asset holders. Even where the laws are up to date, enforcement oftenix