With the headlines full of Typhoon Haiyan, people’s minds turn inevitably – and rightly – to aid donations. But when a country like the Philippines is involved, AML people’s minds turn inevitably to questions about corruption: bluntly, is it safe to send money to such a regime? With its history of spectacularly corrupt politicians (Ferdinand and Imelda Marcos, Joseph Estrada and Gloria Arroyo spring to mind) who seem to have no compunction about dipping their paws into the public till and stealing money from their very poorest citizens, it is not surprising if even our own government is taking things carefully when it comes to handing over large donations.
Of course, this is not a new dilemma. The key elements that have made the impact of Typhoon Haiyan so terrible often go together: corrupt leaders abusing their positions for personal gain rather than public good, laissez-faire financial systems facilitating dodgy deals of all stripes, poor building controls, and chaotic and underfunded public and emergency services. The International Centre for Asset Recovery (part of the Basel Institute of Governance) published a paper on a similar problem in 2011; “Development Assistance, Asset Recovery and Money Laundering: Making the Connection” reminds us that “Official Development Assistance (ODA), a fundamental tool of development policy, is prone to corruption, embezzlement and abuse — to the extent that up to 30% of disbursements may be siphoned off by corrupt actors and criminal organisations”. This is an ongoing conundrum for all of us, as highlighted in a November 2011 report put out by the Independent Commission for Aid Impact, looking at how the UK’s Department for International Development responds to the challenge of providing aid (both development and emergency relief) in countries with high risk of corruption. As heartbreaking as the news stories may be, when donors – whether individual, corporate or state – are choosing where to spend their charity dollars, they will wisely be wary of jurisdictions where a third of the money will go to further line the already sumptuously fur-lined pockets of corrupt PEPs and others.