The Very High Cost of Global Corruption
It was $30,000,000,000,000 or in simple terms, $30 trillion (Source). That’s how much has been lost to corruption in the past 15 years. To put that in perspective, if you placed 30 trillion $1 dollar bills end-to-end, it would measure almost 1.5 billion miles. That would cover the distance from the earth to the sun for 15 round trips, and you’d have about 50 million miles left over.
Is anything being done?
There are a few governments working hard to combat the issue. For example, China’s anti-graft drive has resulted in the punishment of 180,000 members of China’s Communist Party (Source). In spite of these efforts, however, China’s corruption levels increased from 2013 to 2014, according to Transparency International. Clearly, there are other issues at work here.
The problem is that perpetrators move abroad and draw on the expertise of accountants, law firms and international banks (Source). Such organizations have extensive resources to help corrupt individuals hide wealth and local authorities are helpless against them.
As a result, corrupt individuals using such resources can hide illegally obtained funds in other countries. Thus, corrupt profits flow out of one country across multiple borders, making corruption a multi-jurisdictional issue — and that only exacerbates the problem. So while some governments may have policies in place to combat corruption in country, policies fail to account for corrupt money moved offshore where it is typically unrecoverable.
Ideally, lawyers and accountants should follow strict codes of conduct, but often they are willing to turn aside ethics for extra fees. This problem, combined with underfunded and overworked government agencies, results in an overwhelming amount of inaction.
Who is the biggest loser?
The average, tax-paying citizen is the victim in this tragedy. When funds are siphoned off, infrastructure and programs are left out to dry. Business initiatives get put on hold. Inefficiencies increase. Law enforcement ebbs. Crime increases. Health care suffers. Education levels reduce. Food programs weaken. And the list goes on.
Corruption is truly a shortsighted strategy and governments that allow it to be practiced will see the spoiled fruits of their labors. Case in point: the top three most corrupt countries include Russia, China and India. (Source). If left unchecked, countries begin to implode. Indeed, corruption is the enemy to productive societies.
What can be done?
If governments hope to fight corruption and recover any lost funds, they will have to join forces to create an international anti-corruption initiative. Although the United Nations did create the Financial Action Task Force to combat these problems, many times the task force is prevented from achieving its objectives by governments that refuse to cooperate. And why would governments refuse to cooperate? I think you know why.
An international anti-corruption agency would not only need to raise awareness about corruption, but it would also need to have the power to cross borders to arrest and seize assets.
With the advancement of technology, criminals find it easier to transfer money around the globe without detection. The chances of finding the culprits and recovering the money will be dramatically reduced.
In short, corruption cannot effectively be fought on a country-by-country basis. Governments must unite to create an objective agency that has the power to fight corruption. If nothing is done, the $30,000,000,000,000 loss will seem minimal compared to what will be lost in the future.
Note: This article and the opinions expressed here are from Russ Warner, VP of Marketing at Converus, makers of EyeDetect, an innovative, new deception detection technology.