|Development faces enough barriers without having money skimmed from its trade interactions—but that’s exactly the problem caused by money laundering and monetary loopholes. An expert on illegal and illicit financial flows between countries, Ray Baker presented his book, “Capitalism’s Achilles Heel” to the World Bank on March 31, 2006, as an examination of the difficulties caused by cooked books across borders. The panel, which was sponsored by the World Bank InfoShop, was convened at Bank headquarters and chaired by Jo Marie Griesgraber, Executive Director of the New Rules for Global Finance Coalition.
Baker opened by discussing schemes for moving cash outside of domestic markets through price fixing, which sparked his investigations into corruption and money laundering. He commented on other strategies and loopholes used to move and hide financial flows, sorted into corrupt, commercial and criminal categories. Baker also detailed how these faulty transactions can cause larger financial errors, all the way up to totals of gross domestic product. In the second part of his presentation, Baker stated that money laundering is the most damaging financial condition afflicting the global poor.
In response, Mark Weisbrot, Co-director of the Center for Economic Policy Research, commented on growth and governance as related to financial abuses. Branco Milanovic, Lead Economist for the Bank, commented on the pursuit of corruption cases and lessons to be learned. The audience asked questions of the panelists regarding government secrecy, exchange laws, and the slowdown in Latin America due to money laundering.