Up to $40 billion stolen from developing countries each year through bribery, misappropriation, corrupt practices.
At Paris conference, Bank Group Managing Director joins Ministers from France, Switzerland, and South Africa to discuss solutions.
Participants call for more transparency, effective customer due diligence among financial institutions.
June 9, 2010—At a time of global economic hardship, corruption fighters from around the world convened this week in Paris to work against further plundering of developing countries, by supporting efforts against asset theft and safe havens for ill-gotten gains.
“Each year, through acts of corruption, developing countries lose billions of dollars that find safe haven in international financial centers,” said the World Bank Group’s Managing Director, Ngozi Okonjo-Iweala. “This enables and promotes the globalization of corruption.”
By conservative estimates, every year an estimated $20-$40 billion is stolen from developing countries through bribery, misappropriation of funds and other corrupt practices. The lost opportunities are enormous. According to the World Bank, developing countries could use $20 billion to finance 48,000 km of two-lane paved roads; first-line treatment for 120 million people with HIV/AIDS for a full year; or some 50 million water connections for households.
“Corruption, like violence and barbaric acts, must be eradicated,” said Christine Lagarde, France’s Minister for the Economy, Industry and Employment. “It is an issue of economic development.”
Lagarde and Okonjo-Iweala spoke at a special session of the conference, No Safe Havens: A Global Forum for Stolen Asset Recovery and Development,convenedJune 8 -9 in Paris. The event was co-sponsored by the Stolen Asset Recovery Initiative (StAR) —a partnership between the World Bank and the United Nations Office on Drugs and Crime (UNODC) —and the government of Switzerland.
“Never give up, keep up the fight,” said Lagarde referring to stolen asset recovery and the need for civil society to “keep watching” to ensure transparency and accountability. She also called for more transparency and regulation of the financial sector, an issue that was widely discussed during the conference.
Several participants stressed the need for financial institutions to ensure effective customer due diligence measures and take more proactive steps to stop corrupt funds from being laundered. Participants noted that corruption is a major impediment to investment and, therefore, responsible businesses should eliminate corrupt practices.
Micheline Calmy-Rey, Switzerland's Foreign Minister (left); Ngozi Okonjo-Iweala, World Bank Group Managing Director (center); and Jeffrey Thamsanqa Radebe, South Africa's Justice Minister (right), confer at the Paris conference.
There were also calls for the issues of corruption and stolen asset recovery to be at the center of the international agenda, especially as the G-20 leaders are meeting at the end of June 2010 in Toronto, Canada, to discuss the global economy and development.
“As world leaders convene at the G-20 meetings and other fora in the coming weeks to discuss the economic crisis, stimulus plans and financial regulation, the fight against corruption and asset theft should be at the top of their agenda,” said Okonjo-Iweala at the kick-off of the two-day conference.
Solving the problem of asset theft “is very important for developing countries because it is diverting resources that could otherwise be used for good purposes,” said the Minister of Justice of South Africa, Jeffrey Thamsanqa Radebe. “We need collective action to ensure there are no safe havens for criminals.”
Several experts said corruption is not an issue circumscribed to developing nations, since the proceeds of corruption often find safe havens in the financial centers of developed countries. They stressed the need to act in a coordinated way.
“For corruption, you need at least two people. You cannot do corruption with yourself,” said Mo Ibrahim, Founder of the Mo Ibrahim Foundation, which works on governance issues in Africa.
The Foreign Minister of Switzerland, Micheline Calmy-Rey agreed. “Because we are all part of the problem, we must also all be part of the solution,” she said. “We have to work together to ensure that corruption does no longer undermine development.”
Both Okonjo-Iweala and Calmy-Rey called for the ratification of the United Nations Convention against Corruption (UNCAC) by all countries.