draining development.pdf - Khazar University

382 Draining Development?Wrong 2000, 2009). The same is true of the privatization of public assetsat below value. 11 The 18 contracts that were awarded by the Kenyan governmentto Anglo-Leasing totaled US$751 million (Wrong 2009). Manyof the contracts were for illusory supplies, but the literature does notdiscuss what proportion of the bribes (or the marginal differencebetween the purchase price and the proper market price) reached thedomestic parties locally. 12Some definitional discussion may be helpful in illuminating thedimensions of the phenomenon. There are at least two significantly differentways in which people use the term money laundering. The first wayrefers to the act of hiding the illicit origins of funds so as to make taintedwealth look sufficiently legitimate to withstand significant scrutiny(which it may never receive). This plausibly is what most people whoencounter the term would expect money laundering to mean. The secondway refers to the act of acquiring, possessing, using, or disposing ofthe proceeds of crime and covers all acts that fall within the criminallaws and regulations against money laundering. These laws and regulationsare intentionally framed broadly to stimulate business, finance,and the professions to develop and report their suspicions, thereby makingit more difficult for criminals to legitimize their wealth in the firstsense above. It also penalizes broadly defined self-laundering by thosewho commit the primary money-generating crimes (in this case, giving,receiving, or extorting bribes, locally and transnationally) to such anextent that almost anything the offenders do with the proceeds constituteslaundering. This can generate some legal complexities if, as is commonin developing and many developed countries, successful mutuallegal assistance and prosecution depend on an act being criminal in bothcountries in which the money laundering process occurs. 13A figure one might consider using is the total assets available for assetrecovery, which would be a combination of the saved proceeds of corruption,the total value of the contract (under English law, for example),and the criminal and regulatory fines imposed on the financial intermediaries(though such fines are not usually available as compensation forthe developing country). Here, to avoid confusion, we examine only thetotal proceeds of corruption. We divide these into PC (E), representingthe total paid and stored or spent outside the developing country, andPC (I), representing the total internally stored or spent, though PC (I)