NGO Another Way (Stichting Bakens Verzet), 1018 AM Amsterdam, Netherlands.


Edition 03: 22 April, 2010.

Edition 10 : 03 December, 2014.


01. E-course : Diploma in Integrated Development (Dip. Int. Dev)


Quarter 1.






Study value : 04 points out of 18.

Indicative study time: 112 hours out of 504.


Study points are awarded only after the consolidated exam for Section A : Development Problems has been passed.



First block : Poverty and quality of life.


Study value : 02 points out of 18.

Indicative study time: 57 hours out of 504.


Study points are awarded only after the consolidated exam for Section A : Development Problems has been passed.



First block : Poverty and quality of life.


First Block : Section 1. Analysis of the causes of poverty. [26.50 hours]

First Block : Section 2. Services needed for a good quality of life.

First Block : Exam. [ 4 hours each attempt]



Block 1 of Section 1. Analysis of the causes of poverty. [26.50 hours]


Part 2 : In depth analysis of the causes of poverty. [14.00 hours]


01. In depth : definition of poverty.

02. In depth : some factors linked with poverty.

03. In depth : debts and subsidies.

04. In depth : financial leakages : food and water industries.

05. In depth : financial leakage : energy.

06. In depth : financial leakage : means of communication..

07. In depth : financial leakage : health and education.

08. In depth : financial leakage : theft of resources.

09. In depth : financial leakage : corruption.

10. In depth : the industry of poverty.


Report on Section 1 of Block 1 : [06.00 Hours]



Part 2 : In depth analysis of the causes of poverty. [14.00 hours]



09. In depth : Financial leakage : corruption. (At least one hour).


Consider this slide :


09. Financial leakage: corruption, export of financial means, tax havens.




In the light of their personal experiences, students may be surprised to know there is a special United Nations Convention against Corruption (Médida (Mexico) September, 2003 – United Nations Resolution New York 58/4 31st October, 2003) ratified by most of the countries in the world. Since jurisdiction under the Convention is limited to the national level where existing constitutions and/or laws covering corruption already existed, the added value of the convention is far from clear.


The very few foreign corruption cases (just 427 of them) that have been brought before courts in industrialised countries are discussed in L. Ambler and others, OECD Foreign Bribery Report : An Analysis of the Crime of Bribery  of Public Officials, OECD publishing, Paris, 2014. Not surprisingly, nearly 50% of those cases involved corruption in industrialised countries and involved state-owned enterprises (80,11%), heads of state (6,97%), ministers (4.08%) and defence and customs officials. The most corrupt were the extractive, construction, transport and storage, and Communications sectors. Average bribes were 10.9% of transaction values and 34,5% of profits with highs of 21% in the extractive and 19% in the wholesale and retail trading sectors.  However, “the true social cost of corruption cannot be measured by the amount of bribes paid or the amount of state property stolen. Rather, it is the loss of output due to the misallocation of resources, distortions of incentives and other inefficiencies caused by corruption that represent its real cost to society.” (p. 26)


Foreign accounts in industrialised countries, especially those in tax havens (secrecy jurisdictions).


“Recent estimates put the amount held in offshore centres at between US$6 and US$7 trillion, which is approximately equivalent to the annual world trade in goods and services or about one third of total global GDP.  Much of this, perhaps between US$3 and US$4 trillion, consists of savings held abroad by wealthy individuals.” (Source :  Tax Havens : Releasing Hidden Billions for Poverty Eradication, Oxfam, Policy Paper, London, 2000 p.3).


Reference is made to the situation in 2000. The amount referred to is world-wide. It includes financial leakage in all its forms from both rich and poor countries. It includes, for example, illegal profits from drug-dealing and other organised criminal activities.


“It is impossible to calculate the financial losses to developing countries associated with offshore activity. Secrecy, electronic commerce and the growing mobility of capital have left all governments facing problems in revenue collection. The borderline between tax evasion and tax avoidance is becoming increasingly blurred. But at a conservative estimate, tax havens have contributed to revenue losses for developing countries of at least US$50 billion a year. To put this figure in context, it is roughly equivalent to annual aid flows to developing countries. We stress that the estimate is a conservative one. It is derived from the effects of tax competition and the non-payment of tax on flight capital.  It does not take into account outright tax evasion, corporate practices such as transfer pricing, or the use of havens to under-report profit.”  (Source :  Tax Havens : Releasing Hidden Billions for Poverty Eradication,  Oxfam, Policy Paper, London, 2000, executive summary).


The following report is from 17 April 2009.


“A consensus is also emerging that the vast capital outflows from developing countries need to be tackled through measures on tax havens and trans-national company reporting practices. The latest report by Global Financial Integrity estimates that "illicit financial flows out of developing countries are $850 billion to $1 trillion a year." The volumes are staggering and they dwarf the $100 billion of aid flowing every year from Northern to Southern countries. (Source: Molina Nura, “Not much on offer for poor countries to counter the crisis”, Bretton Woods Project Update 65 – article 564208).


Warning! The total amount refers to «illicit financial flows » from developing countries. It includes both illicit profits from corruption and those from tax evasion, drugs trafficking and other organised criminal activities.


Read at least section 2 of resource : Tax Havens : Releasing Hidden Billions for Poverty Eradication, , Oxfam, Policy Paper, London, 2000


In The Price of Offshore  Revisited, Tax Justice Network,  (Brussels) and London  July, 2012, p. 5, author J. S.  Henry goes much further still:


“A significant fraction of global private financial wealth - by our estimates, at least $21 to $32 trillion as of 2010 - has been invested virtually tax-free through the world’s still-expanding black hole of more than 80 “offshore” secrecy jurisdictions. We believe this range to be conservative, for reasons discussed below.


“Remember: this is just financial wealth. A big share of the real estate, yachts, racehorses, gold bricks - and many other things that count as non-financial wealth -are also owned via offshore structures where it is impossible to identify the owners.”




“”So in total, by way of the offshore system, these supposedly indebted “source countries” - including all key developing countries - are not debtors at all: they are net lenders, to the tune of $10.1 to $13.1 trillion at end-2010.


“The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments.” (p. 6)




“…once we take into account the growth of hidden offshore assets and the earnings they produce into account, many erstwhile “debtor countries” are in fact

revealed to be net creditors of the wealthy OECD countries where much of this private financial wealth has been parked, off the books.” (p. 42).




“The “global pirate banking” industry… has basically been designed and operated for decades, not by shady no-­name banks located in island paradises, but by the world’s largest private banks, as well as leading law firms and accounting firms. All of these institutions are based, not in island paradises, but in major First World capitals like New York, London, Geneva, Frankfurt, and Singapore.  … of the top 10 players in global private banking-­ all ten received substantial injections of government loans and capital during the 2008-­2012 period. In effect, ordinary taxpayers have been subsidizing the world’s largest banks to keep them afloat, even as they help their wealthiest clients slash taxes.” (p.43)


“the accounts and financial statements [ of multinationals ] end up providing no meaningful information at all on transfer pricing issues. The information is excluded from consolidated accounts and financial statements because related-party trades between parents and their subsidiaries and between fellow subsidiaries are always excluded from these accounts, while the disclosure requirement on individual group members is so limited that forming a view on transfer pricing is almost impossible in most cases: it is rare for the other party to any transaction to be disclosed, especially within a large and complex group.” (Murphy, R., Accounting for the Missing Billions, Reuter R. (Ed), Draining Development? Controlling Flows of Illicit Funds from Developing Countries, Chapter 9, pp. 265-307, World Bank, Washington, 2012, ISBN : 978-0-8213-8869-3, p. 293.) 


The same report continues on p. 302 : “First, it is apparent that there is a stronger incentive to transfer misprice than the existing literature has suggested. Second, developing countries are particularly susceptible to this activity. Third, this activity can be hidden from view in accounts. Fourth, secrecy jurisdictions provide an additional layer of opacity to disguise this activity. Fifth, the combination of the secrecy inherent in accounting rules and secrecy jurisdiction legislation provides a deep opacity that limits the possibility of discovering transfer mispricing activity. As a result …that transfer mispricing may be taking place undetected [and that] substantial transfer mispricing by major corporations contributing to a loss of at least US$ 160 billion a year to developing countries is plausible…..”


American Multinationals openly seek to influence federal legislation in the United States to further extend tax loopholes for their own benefit. “The Fix the Debt” campaign is a heavily funded lobby group pushing for cuts to Social Security and Medicare and more corporate tax breaks. One of the main goals is a “territorial” tax system that would permanently exempt U.S. Corporations’ foreign earnings from U.S. federal income taxes.” Of the 93 companies financing the Fix the Debt campaign, 59 multinational companies reporting together a total of US$ 544 billion of offshore profits would receive an immediate benefit of up to US$ 173 billion in tax windfalls. (Anderson, S., Klinger, S. Corporate Pirates of the Caribbean : Pro-Austerity CEOs Seek to Widen Tax Haven Loophole, Institute for Policy Studies, Washington, 12 June, 2013, Key Findings p. 4). This is exactly how developing countries world-wide are robbed of their tax incomes.


1. Opinion.


What do you think about this problem ?


How far do you think the problem applies to your country and to your project area ?


Purchases of luxury goods situated abroad.


The consequences of illegal funds and cash in relation to corruption have been discussed  The consequences also cover their  «legalisation » (white-washing) through the purchase of goods abroad.


Many residents in developing countries, such as business people and some politicians possess real and personal property abroad, for an example a villa on the French Riviera, or a yacht complete with crew in the Bahamas. These investments may represent a form of  legalisation («white-washing ») of illegal funds. Some examples of this are world renowned.


2. Research.


Do you know of some examples ?


Purchase of luxury goods abroad may be a perfectly legal investment, outside of any discussion of corruption.


On the other hand, even legal investments abroad can have a negative effect on local development in poor countries. The investments might otherwise have been invested and recycled locally.


3. Opinion.


Who benefit from the construction or manufacture of goods purchased abroad ? How long does such an investment last ?


What would it be possible to do with the same amount invested locally ?


How could an end be made to this form of “legal” financial leakage?


Importation of luxury items into developing countries.


A third level of financial leakage is caused by the importation of luxury items into developing countries. Funds used for this purpose may be either legal or illegal.


4. Opinion.


Who benefit from the construction or manufacture of goods imported from abroad?


Read the notes you made in part 03. In depth : debts and subsidies.


5. Opinion.


Where luxury goods are imported from abroad, how much of the price may be attributed to interest?


Payment for these goods may be made directly from a foreign bank account. In that case, the funds used may be illicit. The payment can also be made through a legal bank account in a developing country. In that case the funds are transferred abroad.


6. Opinion.


What likelihood is there that the amounts in question ever return to the developing country?


How do these “lost” amounts contribute to the local quality of life of people  in the developing  country ?


Banks and their investments.


Some members of local populations in developing countries have bank accounts. In that case they put their (meagre) savings into their bank accounts.


7. Opinion.


Where do the banks invest this money ?  What do they invest it on ?


8. Research.


Suppose you wanted to set up a local development bank in your project area ? Which form would it take?



 First  block : Poverty and quality of life.

Index : Diploma in Integrated Development  (Dip.Int.Dev)

 List of key words.

 List of references.

  Course chart.

  Courses available.

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