LIBERIA LEAKS MILLIONS, RANKS HIGH IN TAX EVASION
“In Liberia for example, illicit financial outflows reached 61.6 percent of gross domestic product on average between 2008 and 2012, and 80.6 percent of total trade volume. The money lost could have funded its health budget four and half times over, in a country where 63.8 percent of the population lives in poverty”, Global Financial Integrity
Monrovia – Liberia is one of the most undeveloped countries in the world according to international reports with the country’s capital; Monrovia named one of the poorest cities in the world by the UN Habitat 2012/2013 State of World Cities Report. The government of Liberia has put in place several institutions all intended to ensure protection of public funds against fraud, waste and abuse but it seems all the measures have not been able to close the leakages with millions still slipping from the poor country, findings its way to developed countries.
In a latest report released by the international group, Global Financial Integrity (GFI) covering data gathered during the period 2008 to 2012 with 82 counties that are highly indebted and less developed, Liberia is ranked the second country in the world with the most illicit outflows of money. The report released this week states that from the period 2008 to 2012 covering four of the first six years of President Ellen Johnson Sirleaf and another one during her second term of office, the report disclosed that the country has been losing millions in illicit outflows.
Liberia is ranked a staggering second next to fellow West African country-Togo on the list of countries with huge illicit outflows. “In Liberia for example, illicit financial outflows reached 61.6 percent of gross domestic product on average between 2008 and 2012, and 80.6 percent of total trade volume”, the global financial body reports.
Global Integrity believes the money lost could have funded Liberia’s health budget four and half times over, in a country where 63.8 percent of the population lives in poverty, and income inequality as measured by the Gini index – with zero meaning equality, and 100 inequalities – is high at 38, according to World Bank data. “Togo had the worst illicit outflows, at 76.3 percent of its GDP, followed by Liberia”, Global Integrity states.
Money could finance development
It has been estimated that nearly US$1 trillion in illicit finance estimated to leave poor countries each year, money world leaders say could help replace the shrinking amounts of foreign aid and support ambitious new development goals. A senior official of Global integrity says illicit financial flows are pervasive in developing countries.
“This study highlights that illicit financial flows are pervasive and pernicious in the developing world,” said Tom Cardamone, GFI Managing Director. The report declared that illicit financial flow is becoming alarming that G7 leaders meeting at a summit next week are expected to discuss tax evasion.
Sub-Saharan African countries are ranked high based on total tax revenues, appearing in the top 25 at a rate higher than it appears in the overall group while Asia and the Western Hemisphere appear at their typical rate, and Developing Europe and MENA are more significantly represented beyond the top 25 ranking.
More outflows, more poverty
The GFI study reveals a positive correlation between higher levels of poverty and larger illicit outflows, meaning countries with higher levels of illicit financial flows (relative to GDP) tend to struggle with higher levels of poverty. Sources of money to support these illicit financial flows are said to be generated through illegal means including corruption, tax evasion and other criminal means.
Global Integrity reports that the more illicit finance flowing out of a country relative to its output, the higher its levels of poverty and economic inequality and the lower its development. Amongst the sources of illicit money, tax evasion has been seen as one of the best means and Anti-poverty groups are calling for a crackdown on this form of tax evasion.
In Liberia corruption is high as reports from the various anti-graft institutions indicate massive abuse of laws and other regulations which result in lack of accountability for public expenditure. Concrete actions on the findings of these reports have not been forth coming as in many instances the President defends her officials in one instance citing emergency as a justification for failure to adhere to transparency measures.
A large number senior Liberian government officials were recruited from abroad, mainly the United States of America where their families still reside, creating the conduit for these officials to transfer money monthly for the upkeep of their families. In such situations, paying for expensive mortgages, costly education, health and other basic needs create huge financial burden for many of these officials whose meager public servant salaries cannot cover these costs.
In a new salary structure which came into place in January 2014, senior ministers in Liberia are now earning US$6,000 monthly, while their deputies and ambassadors are earning US$4,500; and assistant ministers, US$3,000. With the meager salary structured approved by the government it remains debatable how these government officials are catering to their personal welfares in Liberia and at the same time supporting their families abroad who are living in expensive countries.
According to the international fraud manual, for fraud to be committed an individual should have pressure, the opportunity and rationalize before committing fraud. Vast majority of Liberian government officials look to have all the characteristics that an individual must possess before committing fraud as the weak system in prosecution people for corruption provides that opportunity for these officials to get millions out of the country.
During the early days of the Sirleaf led regime, her first Public Works Minister Luseni Donzo left the country after wasting millions of dollars on failed Jallah Town road project. Several other officials who were accused of corruption either resigned or were dismissed and left the country and are currently living abroad. Liberia’s dual currency regime has also been blamed for helping to make the country an ideal place for money laundering and transfer of illicit funds.
Using the United States dollars which is a widely used international currency as legal tender is making the country to be suitable where millions can be deposited in a bank account here in Liberia and withdrawn using Automated tellers Machines (ATMs) cards any other part of the world. The financial system of the country has proven to be very weak where individuals can walk to the bank and withdraw thousands of United States dollars against banking regulations on huge withdrawals.
