Globally, extreme poverty has been halved in 20 years, and could be virtually wiped out by 2030. But much of the progress that has been made is at risk – not because of natural disasters or new diseases, but because of something far more insidious.
Analysis by the ONE Campaign suggests that at least $1 trillion is being taken out of developing countries each year through a web of corrupt activity that involves shady deals for natural resources, the use of anonymous shell companies, money laundering and illegal tax evasion.
This is not international aid – which is making a tangible difference. Massive sums are being taken out of developing countries’ own economies, preventing them from financing their own fight against extreme poverty, disease and hunger. It is nothing short of a trillion-dollar scandal.
In this report, we show the true human cost of this scandal, and how it can be dramatically reduced. If specific policies are put in place to increase transparency and combat corruption in three key areas – financial secrecy, natural resource deals and money laundering – these massive financial losses could be significantly reduced. This would bring a host of benefits to developing countries, including increasing foreign direct investment (FDI) and boosting gross domestic product (GDP) by as much as 0.6% annually.
Wherever corruption is allowed to thrive, it inhibits private investment, reduces economic growth, increases the cost of doing business, and can lead to political instability.4 But in developing countries, corruption is a killer. When governments are deprived of their own resources to invest in health care, food security or essential infrastructure, it costs lives, and the biggest toll is on children.
ONE estimates that as many as 3.6 million deaths could be prevented each year in the world’s developing countries if action is taken to end the secrecy that allows corruption and criminality to thrive and the recovered revenues were invested in health systems.
The central problem with corruption is corrupt people, living in both developed and developing countries. But bad policy can facilitate corruption, and making policy changes can dramatically reduce that enabling role. G20 leaders, meeting in Brisbane, Australia in November have the power to change this situation. ONE is calling on them to take action.
The Trillion Dollar Scandal report launched on 3rd September 2014, referred to a claim reported in the Sydney Morning Herald relating to Glencore’s Australian tax affairs. This claim has been retracted by the Sydney Morning Herald as being false. We have therefore amended the report to remove this reference and apologised to Glencore for this error.