Viewing SwissLeaks differently

When ICIJ launched their landmark investigation into more than 100,000 leaked HSBC Switzerland client accounts, most of the media speculation that followed centered on the absolute values of money connected to individual countries, and the potential crimes of tax evasion and money laundering. We heard about the $21 billion associated with the United Kingdom, or the $12 billion connected to France. Little was said, however, about the money moving out of some of the most impoverished countries in the world. When you use the same data, but look at the hidden bank accounts as a percentage of a country's GDP, the problem really begins to take shape.

GDP or absolute figures: what's more telling?

While the undetected movement of money and assets to offshore banks is a problem for many governments, countries that already have little to begin with stand to lose much more. So viewing the SwissLeaks money as a percentage of GDP actually matters a great deal more than viewing the data in absolute dollar amounts. The problem of illicit financial flows is one that affects developing countries at an alarmingly disproportionate rate. It's estimated that almost $1 trillion leaves developing countries illicitly every single year. This deprives developing countries of capital for investment, and of taxes on that capital for government investment. But with increased domestic revenue streams, developing country governments could invest in the drivers of development, like roads, schools, and health care.

It's difficult to quantify just how much increased revenue a particular country could see based on their citizens' money stashed abroad. But some countries, like Spain, have begun to provide information on how much in taxes and fees they've already started to recoup from the leaked HSBC Swiss accounts. Spain has said that it's recovered roughly $340 million from its citizens' accounts, roughly 15% of the total amount linked to the country in the leaks. If we apply Spain's rate of return to the money connected to Sierra Leone, for example, the potential revenue could be about $4.95 million. Though $5 million may sound paltry at the onset, the fact that the potential tax revenue from just one bank in just one secrecy jurisdiction could equate to roughly 19% of the country's health budget is simply shocking.