…SwissLeaks investigation reveals
October 1, 2015 By Gabriel Benjamin
Investigation into more than 100,000 leaked HSBC Switzerland client accounts by Financial Transparency Coalition and Christian Aid reveals that Sierra Leone and other poor countries account for huge illicit financial flows (IFFs).
The SwissLeaks scandal [leaked HSBC Swiss account information] centered on the absolute values of money connected to individual countries around the world and the potential crimes of tax evasion and money laundering their citizens’ foreign bank accounts.
But the joint Financial Transparency Coalition and Christian Aid report states that, “It’s difficult to quantify just how much increased revenue a particular country could see based on their citizens’ money stashed abroad. But some countries, like Spain, have begun to provide information on how much in taxes and fees they’ve already started to recoup from the leaked HSBC Swiss accounts. Spain has said that it has recovered roughly US$340 million from its citizens’ accounts, roughly 15% of the total amount linked to the country in the leaks. If we apply Spain’s rate of return to the money connected to Sierra Leone, for example, the potential revenue could be about US$4.95 million. Though US$5 million may sound paltry at the onset, the fact that the potential tax revenue from just one bank in just one secrecy jurisdiction could equate to roughly 19% of the country’s health budget is simply shocking.”
Sierra Leone was hit by a deadly Ebola in 2014, with its GDP expected to decline by more than 21 percent this year. Yet the country reportedly has a whopping US$33 million in HSBC bank in Switzerland, stashed by anonymous individuals.
This amount is significant in that the country allocated just US$26 million to its ailing healthcare sector in 2012.
In 2001, African countries set a target of allocating at least 15% of the annual budget to healthcare, at a summit in the Nigerian capital, Abuja. Sierra Leone is among majority of African countries which have still not fulfilled the promise in the Abuja Declaration.
Neighbouring Liberia, which was also devastated by the Ebola outbreak in the region, is one of six countries in the continent to have fulfilled the Abuja pledge. The others are Madagascar, Togo, Malawi, Zambia and Rwanda, according to a recent report by Mamaye titled ‘Crunching the Abuja numbers: Why countries should keep their Abuja promise’.
While the lack of political will may be blamed for Sierra Leone’s failure to allocate at least 15% of its annual budget, corruption within government is arguably the primary factor why even limited resources allocated to the health sector does not reach beneficiaries, especially those in rural communities.
On percentage of GDP, SwissLeaks money connected to Sierra Leone is 3.6% larger than the money connected to Denmark, according to the report. Thus, developing countries should be concerned about this trend of secret financial inflow to rich western banks.
“Viewing the SwissLeaks money as a percentage of GDP shows just how much more low and middle income countries have at stake compared with their high income counterparts, making their inclusion in any system absolutely imperative. The U.S., UK, and France are rightfully concerned about money leaving their borders undetected for secrecy jurisdictions, but the money leaving countries like Pakistan, Mali, and Sierra Leone should be viewed with even more immediacy,” the report adds.
“SwissLeaks investigation was monumental to the broader discussion on IFFs and tax evasion, but much of the initial media coverage centered around money in places like the U.S., France, and Spain,” said Christian Freymeyer, Press & Digital Media Coordinator for the Financial Transparency Coalition. “We wanted to use the same data, but visualize it differently, to help demonstrate the scale of the problem for developing countries, and why the fact that they don’t have a say in the global standard setting process is cause for concern.”
Freymeyer said: “In short, rich countries will continue to be a part of – and profit from – IFFs until developing countries fix a problem that doesn’t exist. We heard about the US$21 billion associated with the United States, or the US$12 billion connected to France. Little was said, however, about the money moving out of some of the most impoverished countries in the world. When you use the same data, but look at the hidden bank accounts as a percentage of a country’s GDP, the problem really begins to take shape.”