The Luanda Leaks are just one example of a much broader phenomenon.
Citizens for Financial Justice partner Christian Aid highlights the need for a broader definition of IFFs.
Steal from the poor to give to the rich. Sadly, this reversed Robin Hood logic is all too prevalent in today’s world.
Days ago, it was revealed that Isabel dos Santos, Africa’s richest woman and daughter of Angola’s former president, made her fortune by exploiting her own country.
In Angola – Ms Dos Santos’ home country – over half of the population are classed as poor or deemed to live in poverty. What’s more, a child in Angola is approximately twice as likely to die before age of five than in Ghana or Kenya, despite Angola’s economy on per capita basis being three times as large than either of these countries.
However, apparently happy to disregard the plight of her fellow citizens, Ms Dos Santos siphoned hundreds of millions of dollars of public money into offshore accounts, according to more than 700,000 leaked papers obtained by the Platform to Protect Whistle-blowers in Africa.
As troubling as they are, the revelations – the so-called Luanda Leaks – are just one example of a much broader phenomenon: illicit financial flows (IFFs).
IFFs are illegal or abusive movements of money or capital from one country to another. Interpreted broadly, IFFs include everything from outright theft to tax avoidance and evasion.
According to Christian Aid’s recent Trapped in Illicit Finance report, public revenue losses from IFFs in developing countries alone amount to around $416bn. Globally, this figure is much, much higher.
At a time when many countries are in debt distress, implementing austerity measures, failing to invest in public services and neglecting calls to reduce inequalities, address climate change and ensure social protection, the losses associated with IFFs are unforgivable.
All too often, citing financial constraints, our governments claim they are effectively helpless in their ability to deal with the multiple crises facing our societies and economies.
The fact that the very same governments pleading poverty are simultaneously turning a blind eye to the staggering losses from IFFs raises serious questions with this narrative.
Perhaps unsurprisingly, a robust definition of IFFs has historically been hard to come by. Governments of the global North have insisted on a legalistic definition that only captures flows of money universally accepted as illegal – and thus omitting money lost through loopholes and other borderline cases.
However, to begin tackling this issue, we cannot afford to ignore the grey areas. As such, a broader definition of IFFs is needed – one which includes all flows of money or tax practices which are abusive, harmful or limit governments’ ability to deliver on their human rights obligations. Only with this in place can we hope to prevent more cases like Ms Dos Santos’.
To find out more about IFFs, see Christian Aid’s Trapped in Illicit Finance report.