ILLICIT financial flows and tax avoidance during the pandemic caused millions to become poor, according to a new United Nations (UN) report.
In a report titled “Financial Integrity for Sustainable Development,” the Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (Facti Panel) said 2.7 percent of the global GDP is laundered annually.
The panel added that while corporations were looking for tax-free jurisdictions, this has led governments to lose around $600 billion a year.
“A corrupt and failing financial system robs the poor and deprives the whole world of the resources needed to eradicate poverty, recover from Covid and tackle the climate crisis,” Dalia Grybauskaitė, Facti cochairman and former president of Lithuania, said.
The report said that six months into the pandemic, Transparency International found documented cases of corruption and malfeasance across 17 countries, involving public funds amounting to $1.1 billion—a sum that could purchase 50,000 ventilators.
The Facti Panel said inequality across the globe has risen sharply because of the pandemic. While there was an estimated 7-percent increase in extreme poverty, billionaires’ wealth surged 27.5 percent at the peak of the crisis or between April and July 2020.
“Even if this result cannot be traced solely to illegal corruption and fraud, it is an alarming testament to the way the international financial system is presently skewed in favor of the wealthy, even during a pandemic,” the report stated.
In a statement, the panel said recovering the annual loss to tax avoidance and evasion would be beneficial, especially in efforts to achieve the Sustainable Development Goals (SDGs).
In the case of Bangladesh, recovering its losses could expand its social safety net to 9 million more elderly. In Chad, the panel said, the losses could pay for 38,000 classrooms, while in Germany, it could build 8,000 wind turbines.
“Closing loopholes that allow money laundering, corruption and tax abuse and stopping wrongdoing by bankers, accountants and lawyers are steps in transforming the global economy for the universal good,” Ibrahim Mayaki, Facti cochairman and former prime minister of Niger, said.
The report called for greater transparency around company ownership and public spending as well as on international cooperation to prosecute bribery, international efforts to create a minimum corporate tax and the taxing of digital giants, and global governance of tax abuse and money-laundering.
The panel was convened by the 74th President of the United Nations General Assembly and the 75th President of the Economic and Social Council on March 2, 2020.
The panel reviews financial accountability, transparency and integrity, and makes evidence-based recommendations to close remaining gaps in the international system as a means to achieve the 2030 Agenda and the SDGs.
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