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It’s Time to Seriously Tackle the Money Behind the Drug Cartels

By Raymond Baker and Dr. Rafael Espada
Various Outlets
July 18, 2012

Several Latin American leaders have proposed legalizing aspects of the drug trade in recent months, clearly acknowledging that the current strategy in the war on drugs is not working. They are correct in highlighting the flaws in the traditional approach to battling illicit narcotics, but do we really need to wave the white flag? Or do alternative approaches still exist to curtail the illicit drug trade?

The United Nations Office on Drugs and Crime in Vienna estimates that globally more than forty percent of cocaine is seized somewhere between production and consumption. It also estimates, however, that less than one half of one percent of laundered criminal money is interdicted worldwide. For too long, the focus of the Drug Enforcement Administration and other law enforcement bodies has been on drug busts, while remarkably little has been done to curtail the money financing these illicit operations. We’ve been battling the symptoms without truly addressing the underlying cause. Curtail the money behind drug smuggling and we will curtail the crime itself.

Black money, white paper

By Dev Kar and Sarah Freitas
The Financial Express
June 5, 2012

In his forward to the government’s white paper released on May 16, the finance minister acknowledged that black money has a “debilitating effect” on governance and the conduct of public policy in India. The paper’s review of the work done at Global Financial Integrity (GFI) on illicit financial flows from the country is clear and comprehensive and we commend the government’s efforts to develop policy measures to curtail the generation and cross-border transmission of these flows. Ongoing discussions among and between various stakeholders in the world’s largest democracy can in time coalesce public opinion on the required policy measures.

In the meantime, there are differing viewpoints on how to curtail the generation and cross-border transmission of black money. By their very nature, outflows of illicit capital are not directly observable. That is the reason why our study provides a range of possible values rather than a specific number. But even the higher end of the range of estimates cannot capture the myriad ways through which black money can be generated, let alone sent abroad in a clandestine manner. This general caveat applies to all countries, not just India. Data limitations exist not only on strictly illegal activities like drug or human trafficking, but also on legitimate economic activities such as international trade in services which can facilitate mispricing for the purposes of shifting profits. Anecdotal evidence on the volume of capital generated from these activities (for example, the rising volume of services trade in a globalised world) give credence to the view that the understatement of black money outflows due to data limitations is far more likely to outstrip illicit inflows, whether recorded or unrecorded.

By Raymond Baker
The Economic Times (India)
January 7, 2012

It is encouraging to see the zealous enthusiasm that has surfaced in India over the past few years on eliminating black money or illicit financial flows. While many other countries are taking modest steps to curtail illicit flows, India has gone ahead to make the issue one of pressing national importance. Applause is due to the nation, while more work remains tobe done.

India has acted strongly to pressurise foreign banks into accounting for and in the future returning illicitly-acquired assets to the country. This is a worthwhile goal. But any asset recovery will be a long-drawn process and is likely to result only in a fraction of illicit dollars being returned. A more productive outcome can be to focus on stemming future illicit financial flows, both domestically through mechanisms such as anti- corruption legislation and by applying pressure on the international community.

By Heather Lowe
The Hill
December 9, 2011

Last week, Reuters reported that Teodorin Obiang, son of the autocratic leader of Equatorial Guinea, will challenge the U.S. Department of Justice’s asset forfeiture claim against his $30 million Malibu estate, $38.5 million Gulfstream jet, millions of dollars in Michael Jackson memorabilia, and other property. The Department of Justice alleges that the assets were bought with the proceeds of corruption.

The United Nations has dedicated today, December 9th, to be International Anti-Corruption Day. Teodorin Obiang, who officially makes just $60,000 in his job as the Equatorial Guinea Minister of Agriculture and Forestry, was in possession of over $70 million dollars of property in the U.S. alone. He had plans also, reportedly, to build a $380 million yacht.

Keeping Commitments

By Raymond Baker

The Huffington Post

December 9, 2010

This year's International Anti-Corruption Day is marred by a U.S. Chamber of Commerce attempt to weaken the Foreign Corrupt Practices Act (FCPA), our nation's flagship anti-corruption legislation. Passed in 1977, the FCPA was a response to eroded public trust in government following the Watergate scandal and the admission by Lockheed and some 400 other American companies that bribery to foreign officials was a commonplace practice in international commerce.

The U.S. FCPA stood virtually alone on the global stage in the fight against corruption until the late 1990s, when other nations began adopting similar prohibitions. Today, the FCPA is buttressed by the UN Convention Against Corruption, a similar document binding members of the Organization for Economic Cooperation and Development, regional commitments, and a significant focus on the issue by the G20.