Thursday 5th June, 2014

A Washington based organisation - Global Financial Integrity (GFI) has highlighted signifcant global invoice fraud which is hitting some of the world's poorest nations. GFI say that the money draining out of the countries add up to more than double the international aid money received, and stifles efforts to raise people out of poverty.

In the majority of cases, large multinational companies are illegally misrepresenting the value of imported or exported goods. Importers pretend to pay more for goods than they actually do, and the excess is siphoned off into offshore accounts. As The Guardian pointed out, in one notable case an American based organisation invoiced for plastic buckets at $972 each.

"We are talking about a huge drainage out of these countries," GFI president Raymond Baker said: "People are making millions and millions at the expenses of the world's poorest people."

He said trade misinvoicing takes place all over the world but Africa is particularly susceptible.The report, commissioned by the Danish government, compares the official prices paid for goods to the global market price for the same items but does not name any companies or officials.

It said: "A global shadow financial system provides measures of opacity to disguise and move illicit money throughout the world, including dozens of secrecy jurisdictions and multiple layers of confusing and concealed ownership structures.

"These outflows, and the shadow financial system in which they thrive, represent one of the most damaging conditions undermining economic growth and development, governance, and human rights in Africa and around the world."

The study concentrates on Uganda, Ghana, Mozambique, Kenya and Tanzania - but the problem is likely to affect all African countries, Baker added.