World Bank aid payments to the neediest countries appear to trigger money flows to offshore bank accounts, suggesting funds are siphoned off from the nations they are meant to help, according to a study published Tuesday.
Data showed these aid payments are mirrored by rising deposits in tax havens such as Switzerland, Luxembourg, Cayman Islands and Singapore, with no increase in non-haven countries, according to the report issued by the World Bank.
“We document that aid disbursements to the most aid-dependent countries coincide with significant increases in deposits held in offshore financial centers known for bank secrecy and private wealth management,” the authors said.
“Our estimates suggest a leakage rate of around 7.5 percent for the average highly aid-dependent country,” the study concluded.
The report, which looked at 22 of the most aid-dependent countries — mostly in Africa — compared data on aid disbursements from the World Bank with foreign deposits from the Bank for International Settlements (BIS).
The study created a bit of an uproar after The Economist last week alleged the bank was suppressing the report, and implied that may have been behind the early departure of chief economist Penny Goldberg, who announced this month she would return to academia.
The World Bank defended its support of independent research, including studies of corruption, and indicated the delay in publishing was simply due to the review process.
“The draft paper, ‘Elite Capture of Foreign Aid’ underwent several reviews, and it was improved as a result,” the Bank said in a statement. “The revised paper, now published as a World Bank Working Paper addresses a number of comments raised during the review process.”
The statement did not specify what changes were made, but an earlier draft of the study concluded that aid payments “cause” increased deposits in offshore accounts, but that was changed in the final version to say “coincide with.”
While the study said other explanations for the aid leakage were possible, it ruled out most options.
“Aid capture by ruling politicians, bureaucrats and their cronies is consistent with the totality of observed patterns,” it said, adding that the effects “are larger for more corrupt countries.”
The study was written by Jorgen Juel Andersen of BI Norwegian Business School, Niels Johannesen of the University of Copenhagen, and Bob Rijkers of The World Bank.
© 2020 AFP
This Europe country is housing quarantined coronavirus patients in a five-star hotel
An ambulance driver wearing a white protective gown enters a Barcelona hotel and announces the arrival of three new "customers" -- a trio of coronavirus patients discharged from hospital into luxury quarantine.
"Good morning! How are you? My name is Enrique Aranda and I am probably the first non health care worker you see in several days," says the director of the five-star Melia Sarria hotel, peering into the ambulance.
It took just three days to convert the hotel, which features contemporary decor and bathrooms with marble finishing, into a clinic.
"Some patients arrive thinking that they were taken out of hospital to be left to die, many people are frightened. I try to make them forget all that," said Aranda, wearing mask and gloves.
UK Labour to unveil new leader to replace Jeremy Corbyn
Britain's main opposition Labour party on Saturday unveils a new leader who will take the helm of a defeated and divided party in the midst of the coronavirus crisis.
Keir Starmer, a former director of state prosecutions and Labour's Brexit spokesman, is the runaway favourite to win the ballot of around 500,000 party members and succeed Jeremy Corbyn.
The announcement will be a low-key affair, with a planned special conference cancelled due to restrictions on social gatherings imposed to stem the spread of COVID-19.
Instead, the result will be put out in a press release mid-morning -- and candidates have been asked to pre-record their victory speeches.
‘Trump fires people for telling the truth’: President blasted for ‘dead of night decision’ to fire intel watchdog
President Donald Trump was harshly criticized on Friday for firing intelligence community Inspector General Michael Atkinson.
House Intel Chair Adam Schiff (D-CA) and Senate Intel Ranking Member Mark Warner (D-VA) were among the lawmakers who took to Twitter to criticize Trump on his favorite social media platform.
Here's some of what people were saying about Trump's decision:
Trump’s dead of night decision to fire ICIG Michael Atkinson is another blatant attempt to gut the independence of the Intelligence Community and retaliate against those who dare to expose presidential wrongdoing.