draining development.pdf - Khazar University

384 Draining Development?countries. However, the significance of informal value transfer systemsfor the proceeds of corruption has received scant attention. Perhapsthis is because grand corruption payments from multinationals seemunlikely to be sent in this way—though there is no reason, in principle,why they cannot be so sent—and partly because they seem an implausibleconduit for payment into the large international banks in the Weston which the substantial legal actions and popular protests have focused.There is no evidence from published investigations such as the case ofthe French Elf-Aquitaine frigates purchased by Taiwan, China, and similarcases in which informal transfer channels have been used (beyond thecash smuggled in diplomatic bags and containers or on private planes).Large corporations would have to unlaunder the money, turning it fromwhite to black money, prior to sending it over informal channels (as theymight also have to do with cash bribes). To the extent that informal valuetransfer is unattractive for grand corruption, its significance for moneylaundering generally is reduced.One reason this area is important is the fact that, to maintain power,corrupt leaders may have to engage in patron-client deals to purchasesupport locally or regionally (Wrong 2000). There is no motive, in principle,why such formal or informal political funding should have to comefrom the money laundering circuit in the developed or the financialhaven world. What can we learn from cases such as Abacha, Marcos,Mobutu, Montesinos, and Suharto about this local distribution andabout the extent to which the existence of local FIU regimes and legislationtargeting the proceeds of crime might be drivers for internationaloutflows of corrupt finance now or in the future? Logically, for the internalproceeds of corruption regimes to drive funds to leave countriesbecause these countries reject accounts or actively share information,the regimes would have to be more draconian than the regimes existingin money centers elsewhere. 17This chapter focuses on the flows of corrupt funds into and circulatingaround developing countries, rather than the more usual issue ofestimates of the amount of money stored overseas in major financialcenters. One component is the question of how funds obtained throughcorruption are spent. This has not received much systematic attention inresearch; the inference in high-profile cases is that corrupt funds arespent on affluent lifestyles in the West, including homes and so on, and