PH 15th biggest source of illicit capital in 2012 – Global Financial Integrity report

MANILA, Philippines — The Philippines was the 15th biggest source of illegal capital in 2012, with $9.16 billion in illicit financial outflows recorded during the period, the latest report of Global Financial Integrity (GFI) showed.

In a report released by the Washington, D.C.-based research and advisory organization this month, the Philippines was also the 15th largest exporter of illicit financial flows between the 2003 and 2012 period.

During the decade, the Philippines was the source of an average of $9.35 billion in illicit outflows per year. The cumulative illegal capital that flowed through the country during the 10-year period totaled $93.49 billion, the report showed.

The illicit flows per year were as follows: $8.255 billion in 2003; $9.214 billion in 2004; $13.499 billion in 2005; $10.001 billion in 2006; $7.982 billion in 2007; $6.899 billion in 2008; $8.650 billion in 2009; $8.871 billion in 2010; $10.965 billion in 2011; and $9.157 billion in 2012.

From 2003 to 2012, the Philippines was also the seventh biggest export under-invoicer, with $72.2-billion worth during the period.

In 2012 alone, trade mis-invoicing outflows from the Philippines reached $4.601 billion—the lowest amount since 2003. A total of $77.825 billion in trade mis-invoicing outflows were registered from 2003 up to 2012.

Illicit hot money outflows, meanwhile, amounted $4.556 billion in 2012—the highest during the decade. A total of $15.688 billion in illicit hot money were recorded to have come from the country during the 10-year period.

In the report, GFI noted that “governance issues and corruption in particular tend to be a major driver of illicit flows.”

“In case studies on Brazil, the Philippines, and Russia, GFI found that the link between purely illicit flows and governance tends to be even stronger than the link between capital flight and governance,” it said.

In 2012 alone as well as the 2003 to 2012 period, the top five exporters of illegal capital were consistently China, Russia, Mexico, India, and Malaysia.

In a statement issued on Dec. 16, GFI said “[a] record $991.2 billion in illicit capital flowed out of developing and emerging economies in 2012—facilitating crime, corruption, and tax evasion.”

The report, which was the GFI’s latest update for 2014, also showed that “illicit outflows are growing at an inflation-adjusted 9.4 percent per year—roughly double global GDP [gross domestic product] growth over the same period.”

“[I]llicit financial flows are the most damaging economic problem plaguing the world’s developing and emerging economies. These outflows—already greater than the combined sum of all FDI [foreign direct investment] and ODA [official development assistance] flowing into these countries—are sapping roughly a trillion dollars per year from the world’s poor and middle-income economies,” GFI president Raymond Baker pointed out.

“It is simply impossible to achieve sustainable global development unless world leaders agree to address this issue head-on. That’s why it is essential for the United Nations to include a specific target next year to halve all trade-related illicit flows by 2030 as part of post-2015 Sustainable Development Agenda,” he added.