The Trillion Dollar Scandal You've Probably Never Heard Of

 The Trillion Dollar Scandal You’ve Probably Never Heard Of

f you’d spent a million dollars every day since Socrates lectured on the steps of the Parthenon in the 5th century BC, you still would not have spent the amount of money that leaves developing countries illicitly each year: $1 trillion.

The Trillion Dollar Scandal, a ONE transparency report published today, reveals that developing countries lose at least $1 trillion every year as the result of corrupt activities. This is not foreign aid, which is making a tangible difference, but rather money that goes missing as the result of shady deals for countries’ natural resources, the use of anonymous shell companies, money laundering, and tax evasion. The report calls on governments – particularly the members of the G20 – to take concrete actions that will help put an end to the hemorrhaging of funds out of the developing world.

To put the trillion dollar scandal into perspective, $1 trillion could buy a Grande Starbucks latte for every person on the planet, every day, for an entire month. Put another way, an amount equivalent to the combined GDPs of Austria, Denmark, and Finland goes missing from developing countries every year.

This missing money far surpasses the total foreign direct investment that developing countries receive each year. This financial loss not only acts as a damper on economic growth, but also puts at risk the gains made globally over the last 20 years to cut extreme poverty by half.

Corruption is a killer. When developing countries lose finite resources that could have otherwise been invested to improve healthcare systems, food security, or basic infrastructure, people die.

In Guinea, for instance, one of the countries hardest hit by the recent Ebola outbreak, lost tax revenues resulting from just one form of corruption – trade mispricing – are an estimated $125 million per year, more than the Guinean government’s entire health budget in 2012. In the midst of a crisis in which even basic medical equipment such as rubber gloves are in short supply, it’s not hard to imagine the very tangible impact that missing revenue could be making.

latte for every person on the planet, every day, for an entire month. Put another way, an amount equivalent to the combined GDPs of Austria, Denmark, and Finland goes missing from developing countries every year.

This missing money far surpasses the total foreign direct investment that developing countries receive each year. This financial loss not only acts as a damper on economic growth, but also puts at risk the gains made globally over the last 20 years to cut extreme poverty by half.

Corruption is a killer. When developing countries lose finite resources that could have otherwise been invested to improve healthcare systems, food security, or basic infrastructure, people die.

In Guinea, for instance, one of the countries hardest hit by the recent Ebola outbreak, lost tax revenues resulting from just one form of corruption – trade mispricing – are an estimated $125 million per year, more than the Guinean government’s entire health budget in 2012. In the midst of a crisis in which even basic medical equipment such as rubber gloves are in short supply, it’s not hard to imagine the very tangible impact that missing revenue could be making.

Where is the missing trillion going? There is a lot of blame to go around. In part, this is a story about bad actors – corrupt individuals and irresponsible businesses preying on the poor for the sake of private gain. Examples abound of corrupt government officials that have treated the public purse like personal bank accounts. Like recently deposed Ukrainian president, Viktor Yanukovych, whose alleged corruption led to his downfall, or former Nigerian president, Sani Abacha, who reportedly stole $3–$5 billion during his five year tenure.

There are dodgy businesses too, such as the five anonymous shell companies used to buy valuable mining rights in the Democratic Republic of the Congo at a fraction of their value under suspicious circumstances before “flipping” them and pocketing substantial profits that should instead have accrued to the people of a country plagued by decades of poverty and conflict.

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