draining development.pdf - Khazar University

Introduction and Overview: The Dynamics of Illicit Flows 15judgments that facilitate the collection of such assets. They provide aparticularly detailed and compelling account of the recovery of assetsfrom the estate and family of Sani Abache, the military ruler of Nigeriain the 1990s. The experience in recent cases suggests that the use ofsecrecy jurisdictions to hide beneficial ownership is often only a modestobstacle to recovery. More often, the problem lies in the home country,where the successor government may be unwilling to provide the legaland evidentiary support for effective recovery or where the local courtsthwart overseas suits; the case against Tommy Suharto in Indonesia,whereby a Guernsey court froze assets while waiting for action by theIndonesian government, which is still not forthcoming years later, providesone illustration of the problem.ConclusionsMick Moore, a tax economist at the Institute of Development Studies atthe University of Sussex, assesses some of the consequences of IFFs in“The Practical Political Economy of Illicit Flows” (chapter 14). Theincreasing scope to expatriate capital illicitly exacerbates problems ofcorruption, low investment, the unequal sharing of tax burdens acrossdifferent parts of the private sector, the low legitimacy of private enterprise,and relatively authoritarian and exclusionary governance. Theinternational community is already developing a range of interlockingtools to deal with the nexus of problems around illicit capital flows,capital flight, corruption, money laundering, tax avoidance, tax havens,and transfer mispricing. Improvements in the design of these tools andgreater vigor in implementation should have especially beneficial effectswithin many of the poorest countries, notably, in increasing privateinvestment and economic growth, reducing the popular mistrust ofprivate enterprise, and providing more space for more democratic governance.More effective international action against illicit capital flowswould be complementary rather than competitive with attempts toimprove from within the quality of public institutions in the poorestcountries.The final chapter (15) presents the editor’s overview of the topic andhow the issues should be dealt with in terms of future research. Thechapter argues that illegal markets, though significant in absolute terms,