Thursday, March 5, 2015

Bohoslavsky: Illicit Financial Flows, Human Rights and the Post-2015 Development Agenda / Report on Financial Complicity: Lending to States Engaged in Gross Human Rights Violations

Juan Pablo Bohoslavsky (Independent Expert on the Effects of Foreign Debt and Other Related International Financial Obligations of States on the Full Enjoyment of All Human Rights, Human Rights Council) has posted his interim study on Illicit Financial Flows, Human Rights and the Post-2015 Development Agenda (UN Doc. A/HRC/28/60) and his Report on Financial Complicity: Lending to States Engaged in Gross Human Rights Violations (UN Doc. A/HRC/28/59). Here are the summaries:

Illicit financial flows generated from crime, corruption, embezzlement and tax evasion represent a major drain on the resources of developing countries, reducing tax revenues and the scope for progressive taxation, hindering development and the rule of law, exacerbating poverty and inequality, and undermining the enjoyment of human rights. Tax evasion and abuse are considered to be responsible for the majority of all illicit financial outflows, followed by illicit financial flows relating to criminal activities, such as drug and human trafficking, the illicit arms trade, terrorism and corruption-based illicit financial flows. According to some estimations developing countries lost US$ 991 billion in illicit financial outflows in 2012 and those flows increased in real terms at a rate of 9.4 per cent per annum over the period 2003–2012. The annual loss is substantially more than the estimated yearly costs of achieving the Millennium Development Goals.

The present interim study is submitted pursuant to Human Rights Council resolution 25/9, and updates earlier reports by the previous Independent Expert. It outlines how illicit financial flows undermine the enjoyment of economic, social, cultural, civil and political rights and emphasizes the need for due diligence and due process in the fight against illicit financial flows, for better protection of witnesses and whistle-blowers and for incorporating human rights considerations in the management of returned stolen assets. It concludes with recommendations on how the goal of curbing illicit financial flows could be operationalized within the post-2015 development agenda of the United Nations.


The present report, submitted in accordance with Human Rights Council resolution 25/16, focuses on the question of lending to States engaged in gross human rights violations. It is intended to contribute to a better understanding of when financial support may contribute to, or sustain the commission of, large-scale gross human rights violations by sketching a rational choice framework premised on the incentives of authoritarian Gov¬ernments and private and official lenders. In the report, the Independent Expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights, reviews the existing empirical evidence of the relationship between sovereign financing, human rights practices and the consolidation of Governments engaged in gross violations of human rights. In the report, the Independent Expert presents some interim conclusions and invites stakeholders to discuss them. The legal and policy implications of financial complicity will be discussed in a future study.