Reactive Statement: Outcome of High Level Forum on Aid Effectiveness

November 30th, 2011

WASHINGTON D.C. / BUSAN, SOUTH KOREA – The Task Force on Financial Integrity and Economic Development applauds donor-groups who met at the High Level Forum on Aid Effectiveness in Busan, South Korea this week for recognizing the role illicit financial flows play in diminishing aid effectiveness and for taking steps to prevent corruption and create stronger aid governance framework.

“We applaud all measure that help ensure funds stay where they are needed instead of being syphoned off via corrupt means,” said Raymond Baker, director of the Task Force on Financial Integrity and Economic Development. “Aid can mean the difference between education and illiteracy, between freedom and slavery, even between life and death yet we estimate that for every one dollar of aid that goes into the developing world, 10 dollars leave via illicit means. Clearly this is unacceptable.”

We believe that outcomes from this meeting will encourage transparency and increase accountability, but only to a certain extent. Unfortunately, the final agreement couches the term transparency with specific inclusions that would make it possible for backers to avoid reporting the commercial flows from a donors’ development activities. These donor funds could go to countries in the form of export/import credits and investment loans.

“It really raises the question whether all aid actors are only paying lip service to transparency or are really committed to the principle which means opening up all of their books”, said Craig Fagan, Senior Policy Director at Task Force member Transparency International. This double standard is evident on the issue of illicit flows. We are disappointed to note the removal of a key clause on freezing and recovering illegal assets in the absence of a request for help from the victim country. Without this important clause, the ability of international crime agencies to trace and return the proceeds of graft is severely damaged.

Finally, we regret that there are no calls in the agreement for increased transparency in natural resources industries. These resources represent the biggest source of potential income for many of the world’s poorest countries, yet the current status quo means money often goes missing before it reaches national coffers. At this time of international financial crisis, when sources of aid are threatened around the globe, it is more important than ever that developing countries are able to count on their own wealth.



Dietlind Lerner
+1 202.577.3455

Nick Mathiason
+44 7799.3486.19

In Busan: Craig Fagan
+82 (0) 10 8679 0837

Written by admin

Follow @FinTrCo