Haiti relief: corruption, fraud & laundering?
A disaster earthquake hit Haiti. Over a 110.000 people lost their lives. A lot more are homeless and without all basic needs. The world is helping by donating food. And money. Life has always been tough in Haiti, except for the lucky few.
Corruption is a big issue in Haiti. In 2006 it was rated as the most corrupt country in the world. In the 2009 Transparancy International ‘Corruption Perception Index’ Haiti ranked 168 on the list of 180 countries tested for corruption. It at least got out of the top 10 of most corrupt countries.
In the money laundering community there have been lots of warnings about the risk of fraud and money laundering during the scramble to assist Haiti. By the way: Haiti has been a major drug transit country for a while (any relation to the corruption?).
“..these tragedies can also be a boon to laundrymen. As massive sums of legitimate funds pour into Haiti to help earthquake victims, laundrymen armed with shell company “charities” will no doubt use the disaster to disguise the source of dirty funds generated elsewhere. Anti-money laundering personnel would therefore be well advised to apply their own “critical eye” when reviewing alerts related to funds transfers bound for Haiti.”
‘Past tragedies and natural disasters have prompted individuals with criminal intent to solicit contributions purportedly for a charitable organization and/or a good cause’
We get the fraud piece; why not go around gathering funds for a socalled ‘relief fund’ and enjoy the proceeds yourself? That will be a recurring theme in fraud investigations to come. But large scale money laundering by either sending large sums to Haiti or using shell companies to wire funds across the globe for socalled relief efforts?
How about getting to the main financial crime risk; corruption. What happens with all the millions that we have raised for Haiti? Anyone making sure the money is actually used to aid people that need it most? An interesting study by the West Virginia University led to the conclusion that for each $100 of FEMA provided disaster relief, the average state’s corruption increased by nearly 102 percent. The UN has experience in balancing corruption and financial aid to developing countries and is fully aware of the corruption angle when allocating funds. Guess what will happen in Haiti with all these millions waiting to be allocated. A difficult task; we need to act quick and get the funds/goods quickly to the ones that are in need. That is probably more important now than worrying about the related corruption in the short run. But it will surely have its impact. Anyone really knows what happens with the dollar you gave to Haiti relief funds?
http://www.state.gov/p/inl/rls/nrcrpt/2009/vol2/116554.htm
http://www.fbi.gov/cyberinvest/escams.htm
http://www.complinet.com/global/news/news/article.html?ref=128171
http://www.fcpablog.com/blog/2009/12/8/five-indicted-for-haiti-telco-bribes.html
