WASHINGTON: More than $410bn in illicit money crossed the borders of the Philippines from 1960 to 2011, with customs fraud related to imported goods surging in recent years, according to a study by a US-based anti-graft watchdog group released on Monday.
Global Financial Integrity (GFI) said a record high of $25.8bn came into the Southeast Asian archipelago nation illegally in 2011, the most recent year for which data was available.
That was up from $22.9bn in 2010, marking back-to-back years of record illicit inflows.
About $14.2bn of illicit inflows was reported for 2009, the study said.
These illicit inflows are typically the result of under-reported merchandise that is shipped into the country, said GFI economist Brian LeBlanc, one of the report’s authors.
“This is mostly importers trying to avoid VAT taxes or import tariffs,” LeBlanc said. “Customs corruption is a huge issue in the Philippines,” he said.
Over the 42-year period, about $277.6bn was illegally transferred into the country, and $132.9bn in illicit funds went out of the country from crime, corruption, and tax evasion, the report said.
The Philippine Treasury has lost at least $19.3bn in tax revenue since 1990 due to customs duties evasion, GFI said.
“It is our view that trade-related fraud has reached an epidemic proportion in the Philippines,” Tom Cardamone, managing director of GFI, told reporters in Manila. He added about a fourth of all goods imported into the country were not reported to the customs bureau.
Weak governance and rising levels of corruption in the Philippines were aiding illicit money flows, Cardamone said, adding he hopes the study will spur the government to consider legislative and regulatory measures to curb the illicit flows.
The report, based on trade statistics data from the International Monetary Fund, reflects conservative numbers on illicit flows as it does not capture undocumented cash and services, Cardamone said. The study was financed by the Ford Foundation, a donor to GFI, which also receives funding from governments and individuals.
Reuters
