draining development.pdf - Khazar University

Illicit Capital Flows and Money Laundering in Colombia 16718. For example, see Naí m (2005), who covers the main cases of kleptocracy in developingcountries; Colombia is not included. Jorge (2008) shows the significantwealth stashed away by Montesinos in Peru during the Fujimori administration.19. The International Coffee Agreement was signed in 1962 and modified severaltimes. Until 1994, it provided for export quotas for the producing countries, andthis induced contraband.20. Tax amnesties became almost routine as part of the tax reforms enacted by everyadministration. They were implemented by the López (1974), Turbay (1979),Betancur (1982), and Barco (1986) administrations (Thoumi 1995).21. Disaggregated data on these investments are not public, but well-informed financialsector professionals agree that this was a period during which people soughtways to take capital out of the country and that it was possible to do so legallythrough outward FDI in financial services.22. Author interviews with Fiscalía staff, March 2009.23. “Más de US$ 200.000 millones hallados en caletas en Bogotá, a manos del Estado,”El Espectador, March 31, 2011.24. The physical weight and size of the dollars from sales abroad exceed the volumeand weight of the cocaine itself.25. Since the mid-1970s, the Central Bank has frequently changed its foreign exchangepurchasing policies. These changes were particularly important before 1991 whenthe country had strict foreign exchange controls. Since then, under a system inwhich there is legal parallel market, a bank policy of easing purchasing requirementshas lost importance.26. Estimates of Colombian GDP in U.S. dollars vary. In the early 1990s, they werearound the US$100 billion level. The estimates have increased substantially inrecent years.27. The origin of this term is consistent with the gap in Colombia between legal andsocial norms. In the mid-1950s, during his presidency, General Rojas-Pinillawished to develop the Archipelago of San Andrés and Providencia in the Caribbeannear Nicaragua, but he decided against a program to attract foreign touristsand promoted tourism by Colombians instead, given that the vast majority couldnot afford vacations in other Caribbean resorts. To make it attractive for Colombiansto visit San Andrés and Providencia, Rojas-Pinilla allowed Colombianswho spent a few days there to purchase certain articles tax free while vacationing.This was a time of strict foreign exchange controls, high tariffs, import quotas,and prohibitions. San Andrés became a de facto smuggling-tourism center. Storeowners underinvoiced their sales, and tourists brought back expensive and prohibitedgoods, particularly home appliances: thus, the name San Andresitos.28. Interview with Miguel Fadul Jr., director of the Colombian Commercial Office inWashington, DC, August 1998.29. The leaders of the Cali cartel were known for their investments in a large drugstore chain, real estate management agencies, several factories, and, at one point,a bank.