Russia lost more than $150bn in illegal outflow

Russia lost more than $150bn in illegal outflow
Russia lost a whopping $151bn in black money leaving the country in 2001-2010, making it the fifth largest victim of illicit capital outflow, according to a report of Global Financial Integrity (GFI), the US financial watchdog.

The GFI found out that as much as $43.6bn illegally left Russia in 2010 in addition to $84bn of official capital outflow reported by the Central Bank, while over the decade the country lost $151bn due to crime, corruption and tax evasion.

Meanwhile, the legal capital outflow from Russia is expected to reach $60bn, according to the Ministry of Economic Development. The poor investment climate and corruption are usually considered the main causes for the lower investment attractiveness of Russia. But auditors Ernst & Young estimates that capital outflow from Russia would be about $140bn, far beyond $80bn forecasted by the Central Bank.

China topped the list as it lost $602bn in 2011 and over the decade lost a total of $2.74 trillion. China accounts for almost half the $858.8bn in "tainted" or illegally obtained money that flowed out of the developing countries in 2010.

"Our report continues to demonstrate that the Chinese economy is a ticking time bomb," said Dev Kar, GFI’s lead economist, who compiled the report. "The social, political and economic order in that country is not sustainable in the long run given such massive illicit outflows."

The amount of money illegally leaving China is increasing, according to GFI, as in 2010 the country lost $420.4bn.

China is followed by Mexico and Malaysia. Mexico lost $51.17bn in illicit flows in 2010 for a total of $476bn over the past decade, which doesn’t count the cash that probably left through organized crime and drug dealing. Malaysia lost $64.38bn in 2010 and $285bn cumulatively between 2001 and 2010, the survey found out. The top 10 list of illicit outflow victims also includes India, the Philippines and Nigeria.

In total 150 developing countries lost nearly $6 trillion over the past decade with illicit outflows growing by 11% from the year before, according to the GFI survey. "Astronomical sums of dirty money continue to flow out of the developing world and into offshore tax havens and developed country banks," said GFI director Raymond Baker.

"Developing countries are haemorrhaging more and more money at a time when rich and poor nations alike are struggling to spur economic growth. This report should be a wake-up call to world leaders that more must be done to address these harmful outflows."