News and Views
New data reveals Zambia’s £5.4 billion capital flight
US Watchdog Global Financial Integrity (GFI) has released details of corruption in Zambia ahead of publishing the full report next week. The data shows that over the last decade around £5.4 billion – almost half of the country’s total GDP – has been extracted from Zambia through ‘crime, corruption and tax evasion’.
Over the last decade, Zambia has been Africa’s top copper producer and most of the lost money can be traced back to the large multinational mining companies controlling this copper. Zambia’s deputy finance minister Miles Sampa states that only a couple of the mining companies have declared that they’re profiting from Zambian copper mines.
Around £3 billion of the lost money can be attributed to trade misinvoicing, a type of trade fraud where importers state that they’re paying more to foreign companies than they are. They then pocket the difference and hide it in banks or assets abroad. The rest of the money is thought to have been illegally siphoned to offshore accounts.
The GFI reports that in 2010 alone, illicit capital flight cost developing countries £537 million. Dev Kar, who co-authored the report, stresses the need for change, stating that the mining companies are ‘robbing the opportunities for the countries to advance’ by illegally taking money out of these developing areas.
By Cali Mackrill