African development money ends up in tax havens

| 02/12/2010

(The Telegraph): A new report alleges that the European Investment Bank’s lending practices in Africa facilitate tax evasion and corruption. Counter Balance, a coalition of NGOs has issued the report, entitled Hit and run development: some things the EIB would rather you didn’t know about its lending practices in Africa, and some things that can no longer be covered up last week. In it, the organisation claims that millions of pounds earmarked by the EIB last year for funding development in Africa ended up in tax havens and African banks, one of whose managing directors was being investigated for fraud at the time.

Counter Balance claims that the EIB is neglecting its traditional role in financing small- to medium-sized enterprises (SMEs) to concentrate on large loans to private banks which then are expected to lend to SMEs.

The group says that these practices not only “prioritise profit maximisation over concerns about sustainable development”, they make it difficult to trace what happens to the money, and can facilitate “sinister practices such as tax evasion, money laundering and personal enrichment".

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