Corrupted trade routes in the Pacific

Papua New Guinea, Vanuatu, Solomons and Samoa top global trade estimates for illicit financial flows

THREE of the world’s top ten most corrupted trade routes involve Pacific Islands countries. In the Pacific, Vanuatu suffers most from what a watchdog group calls “illicit financial flows”, focusing mostly on fake trade invoicing. Or as Global Financial Integrity calls it – “misinvoicing”. GFI estimates one in every three dollars generated by the Vanuatu economy flows back out of the country, at a rate of just over 35 per cent.

If taken as a part of trade alone, the percentage rises even higher – at 67.6% of all trade – in the five years between 2008 and 2012. Divided by population, GFI claims that amounts to $996 per person in Vanuatu, or nearly $200 a year. In a region actively encouraged by Australia and New Zealand to develop trade, the figures represent a disastrous level of foreign and local corruption among poor island states.

But it is in the area of foreign investment that the comparisons are most stark. According to the GFI report, Illicit Financial Flows and Development Indices: 2008–2012, Samoa suffers the most, with 3044% times the amount of corrupt dollars flowing out of the country for every dollar of foreign direct investment. Pacific Islands appear on eight of nine tables prepared by GFI, comparing corrupt trade with GDP, trade, population and foreign investment, as above, but also as a percentage of overseas aid, education, health and tax.

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