• PH ranks 14th on list of illicit fund flows


    WITH $8.887 billion in illicit fund flows  (IFF) between 2002 and 2011, the Philippines ranked 14th on the list of IFF recipients, according to Washington-based Global Financial Integrity.

    The 13 other recipients were: China (with $107.557 billion); Russian Federation ($88.096 billion); Mexico ($46.186 billion); Malaysia ($37.038 billion); India ($34.393 billion); Saudi Arabia ($26.643 billion); Brazil ($19.269 billion); Indonesia ($17.183 billion); Iraq ($15.756 billion); Nigeria ($14.227 billion); Thailand ($14.098 billion); United Arab Emirates ($11.464 billion); and South Africa (10.073 billion).

    Within the 10-year period, the GFI said that the Philippines has been receiving an average of $8.887 billion a year in IFFs of goods, guns, people and natural resources.

    Though data is scarce and experts are constantly debating the relative merits and weaknesses of every new study, it is generally accepted that illicit drug trafficking and counterfeiting are the two most valuable markets, the GFI said.

    The GFI reported that illicit drug trade is worth roughly $320 billion and counterfeiting $250 billion. These numbers reflect the potential for huge profits, the fundamental driver of criminal trade.

    The second key finding, it said, is that profits from illicit markets are funneled mainly to the transnational crime syndicates who establish and maintain vast trade networks. In source countries, though forced labor is known to occur, laborers are generally paid.

    Their rates, however, make up only a tiny fraction of the overall profits derived from the trade, the GFI said.

    The sources of IFF are: drugs with $320 billion; counterfeiting, $250 billion; human trafficking, $31.6 billion; oil smuggling, $10.6 billion; wildlife trafficking, $7.8 billion to $10 billion; timber, $7 billion; fish, $4.2 to $9.5 billion; art and cultural property, $3.4 to $6.3 billion; gold, $2.3 billion; human organs trafficking, $23 billion; small arms and light weapons, $300 million to $1 billion; and diamonds and colored gemstones, $860 million.

    The GFI said that in supplying cocaine to the United States, for example, coca farmers in South America make get than 2 percent of the final retail value.

    In the case of organ trafficking, a kidney donor often makes less than $5,000, while the trafficker could net as much as 10 times that amount. These traffickers operate in complex networks that includes everyone associated with the production, transport and sale of an illicit good; from the laborer, to the corrupt customs official, to the migrant worker who offers illicit goods or services in New York City or London.

    In some cases, like gold, diamonds and cultural property, the origins of a good must be obscured so it can enter the legitimate market. This often involves the falsification of paperwork and a buyer who is either complicit or simply avoids asking too many questions.

    The final and most critical point is that criminal networks, which function most easily where there is a certain level of underdevelopment and state weakness, have very little incentive to bolster the legitimate economies in the countries where they operate, it added.

    Unregulated, they minimize overhead in developing source countries by exploiting local labor forces, often resorting to force or child labor, dodging environmental and safety regulations, and evading trade tariffs. Any improvements in economic development and governance would usually hinder their illegal activities, so it is in their best interest to actively prevent their profits from flowing into legitimate developing economies.

    In this way, transnational crime and underdevelopment have a mutually perpetuating relationship.


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