Chad is one of the world's poorest countries and routinely receives some of the worst marks for corruption from anti-corruption groups like Transparency International.

Public funds leaking out of developing countries has long been a concern, perpetuated by innovative strategies, such as shell companies, offshore tax havens and false pricing of trade transactions, which circumvent anti-corruption laws.

An estimated $500 billion to $800 billion flows out of developing countries each year -- nearly 10 times what they receive -- to the detriment of the world's poorest people. Most leakage is the result of commercial transactions and the rest from criminality and corruption, according to Raymond Baker, director of Global Financial Integrity, a program of the Center for International Policy.

Some of these funds might support extravagant lifestyles or even illegal activities of a given benefactor, particularly children of the kleptocrats.

Denis Christel Sassou-Nguesso, son of Congo President Denis Sassou-Nguesso and head of Cotrade, a part of the state oil company, ran up a $35,000 credit card bill on designer clothes in August 2006. The bill was paid off by offshore tax-sheltered companies which receive money from shell companies related to the state oil company. A recent trial on similar shell company operations suggests that the money may have come from Congo oil sales, the corruption watch-dog group Global Witness reported.

Speaking at a conference at the Center for Strategic and International Studies last week, experts highlighted the enormous costs from these activities -- from undermining trade and development assistance to stifling the fight against the drug trade -- and called for greater efforts to combat it.

While tough anti-money-laundering laws are in place, enhanced by the USA Patriot Act, these laws still allow "dirty" money to enter the United States, derived from such activities as racketeering, human trafficking and smuggling, Baker said.

Baker argues that data is necessary to persuade everyone to take action, proposing a comprehensive study by the World Bank or similar organizations that will show the magnitude of the problem.

"Numbers will drive policy," he believes. "The legislation is easy, but what we lack is the political will."

The government of Norway will be leading the way toward generating that will. A Norwegian Embassy official announced last week that Norway is requesting that the World Bank conduct a study on illicit financial flows, a study which Norway has agreed to fund.

Anthea Lawson of Global Witness emphasized that while more information could be useful, there is much than can be done now. Immediate, tougher regulations have been proposed by a coalition of over 300 NGOs called Publish What You Pay, which aims to help hold governments accountable for the management of revenues from extractive industries.

The new regulations would require independent audits for any oil-backed loans and, under the Extractive Industries Transparency Initiative, greater accountability for oil, gas and mining activities, Lawson explained.

Currently, the voluntary Anti-Money Laundering Principles among the Wolfsberg Group, which comprises 12 of the world's largest financial institutions, presses for greater "know your customer" rules to prevent handling funds from shell corporations or charities, which usually exist on paper only and are designed to funnel illegally acquired assets

But, Jack Blum, Counsel for Baker Hostetler and a frequent Congressional witness on money-laundering issues, is skeptical of voluntary arrangements.

"I'd feel much more comfortable if it's non-voluntary. It's a way to provide cover without any enforcement mechanism," he said.

Lawson told United Press International that such agreements are beneficial in that they begin the process of developing standards, but are not enough.

A simpler strategy -- comparing a public servant's known assets with official salary figures -- has led to French investigations of two sitting presidents in Africa: Denis Sassou-Nguesso of Congo and Omar Bongo of Gabon, experts noted.

Besides pushing for stronger laws and enforcement, some emphasize the need to more carefully monitor development aid and debt forgiveness.

For example, the World Bank forgave a portion of Congo's debt under the Highly Indebted Poor Countries program, despite "serious concerns about governance and financial transparency," Global Witness reported.

While the World Bank and government agencies sound more serious about conditionality, or tying aid to specific benchmarks of governance, openness and economic development, Blum doubts whether it will happen.

"The World Bank doesn't want to take on independent governments and to track down governments. They don't want to fund recovery (of assets)," he said.

The World Bank's spokesman for corruption issues was unavailable for comment, but another spokeswoman pointed to a new strategy to improve governance and fight corruption in client countries, which was unanimously endorsed by the bank's board of governors in March.

Other actors tend to be complicit in corruption, however, including commercial banks that fear losing competitiveness if they strictly enforce the rules and legal businesses that don't want to give up tax havens.

Baker emphasized that the goal is to curtail these activities -- not to stop them altogether.

And even if it can't be stopped, Lord Daniel Brennan, counsel for Matrix Chambers, argued that recovery of lost funds is possible, pointing to the $84 million paid to Kazakhstan's President Nursultan Nazarbayev that was redeemed for public works projects. The case against James Giffen, a U.S. merchant banker, who allegedly bribed Kazakh officials to secure oil contracts with western companies, is on hold in New York federal courts. Meanwhile Nazarbayev's Swiss account was frozen and the funds slated for projects to aid children in Kazakhstan, newspapers reported.

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