Multinationals Siphon $50B in African Capital

Former South African President Thabo Mbeki

Former South African President Thabo Mbeki says multinational corporations are responsible for much of the illegal transfer of money out of Africa that is costing the continent tens of billions annually.
 
Mbeki, chairman of the U.N.-mandated High-Level Panel on Illicit Financial Flows from Africa, told reporters the group has begun looking into the illegal export of capital from the continent after meeting in Kenya's capital on Wednesday.
 
"It's clear that part of this illicit flow comes from activities that are carried out by multi-national corporations," he said, explaining that the transfer of such large quantities of revenue must involve international corporations.
 
According to panel estimates, up to $50 billion is lost annually to illicit activities such as drug smuggling, tax evasion, over-invoicing and under-pricing - roughly twice the total amount of development assistance the entire continent receives each year.
 
A recent report by the U.S.-based research organization Global Financial Integrity (GFI) found the most common way illicit money is moved across borders is through international trade and money laundering, which accounts for about 60 percent of this illicit activity.
 
According to GFI's study, corruption by government officials only amounts to about three percent of illegal transfers.
 
The panel met with Kenyan President Mwai Kibaki and top officials from the Finance Ministry Tuesday to discuss ways to engage the government in the effort to stop the money flows.
 
Mbeki said he has faith that African governments will take action.
 
“And I'm sure that we'll be able to sort this matter out because, in the end, the problem is of such a size and such a nature that it has to be dealt with," he said.
 
This was the third meeting of the high-level panel, which was formed in February with the support of the United Nations Economic Commission for Africa and the African Union, and is tasked with investigating "methods and channels of illicit financial outflows."
 
Their next meeting will be held in Tunis, Tunisia. A report from the panel is expected sometime next year.

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