BRICS countries lead global capital flight
By Ed Stoddard
JOHANNESBURG (Reuters) – The BRICS grouping of emerging market nations is leading the flight of illicit capital from the developing world, according to data in a new report released this week.
Illicit capital incorporates such things as misinvoicing of trade whereby exports and imports are booked at different values to avoid taxes or to hide large transfers of money
The report said that between 2003 and 2012, $6.6 trillion was moved by crooked means out of emerging economies, finding its way to bank accounts in the developed world or far-flung tax havens.
Overall, the amount of capital spirited out of the world's developing countries in 2012 was 1.3 times higher than the amount of foreign direct investment they received that year and topped aid flows by over a thousand-fold.
Trade misinvoicing remained the biggest channel for illegally moving capital offshore, accounting for almost 78 percent of illicit flows.
The issue of capital flight from the developing world has been in the spotlight in recent years, as the missing funds could have been spent on education, health and other key areas.
This has lead to calls to tighten the noose on tax havens and tackle trade misinvoicing.