Case Studies

An investigation by Argentine TV show Periodismo Para Todos (PPT) revealed significant smuggling of soy from Argentina to Paraguay. This illicit trade exploits the same cross-border blindspots that are used for drug trafficking. Smugglers transport soy into Paraguay to circumvent Argentina’s hefty 30% export tariffs. The soy are transported via the Paraná River, where Paraguayan boats either collect soy loads from Argentine boats or dock at clandestine ports to await truck deliveries. Once in Paraguay, the soy are recorded as Paraguayan produce and exported. This contraband trade has been fuelled by rising production costs in Argentina and falling global soy prices, making smuggling a more profitable option for many farmers. The impact of this illicit trade is evident in industry statistics. Between 2011 and 2015, while Argentina’s soy production increased by 8%, exports fell by 6%. In contrast, Paraguay saw a 10% rise in production but a dramatic 62% increase in exports, indicating the scale of the contraband operation. 

Source: https://insightcrime.org/news/brief/argentina-paraguay-smugglers-use-drug-routes-for-contraband-soybeans/ 

Keywords: Latin America, Argentina, soy, trade and transport, tax evasion, smuggling

A study found that tax havens offer a major conduit through which investors can fund agribusiness in tropical areas; 68% of all investigated foreign capital flowing into nine of the top companies in the soy and beef sectors in the Brazilian Amazon was transferred through tax havens between 2000 and 2011. A large proportion of this was through the Cayman Islands. The report noted that the secrecy and transparency offered by such havens appear to be important to those investing large sums in agribusiness companies responsible for significant land conversion in the Amazon, likely because it protects them and allows them to more thoroughly conceal their involvement. 

Keywords: Latin America, Brazil, cattle, soy, primary production, tax evasion

Source: https://www.nature.com/articles/s41559-018-0497-3  

A joint investigation by InSight Crime and the Igarapé Institute has revealed that illegal timber harvesting is rampant in the forests of the Amazon’s tri-border regions, covering Peru, Brazil and Colombia. The investigation highlights how multinational networks target valuable hardwood species, falsifying logging and transport permits to legitimise the timber and export it. In order to further conceal the illicit activity, the timber may also be transported to places such as Leticia, Colombia, where traffickers are able to avoid certain taxes and controls. The scale of this illegal timber trafficking is extensive, with a 2012 World Bank report finding that about 80% of Peru’s timber is illegally extracted. Another aspect of this illegal trade is the exploitation of Indigenous community members by timber bosses, or "patrones,". The latter will promise jobs and earnings that almost always fail to materialise. For example, the Matsés Indigenous community entered into an agreement with timber patron Teodulfo Palomino Ludeña, who falsified documents and harvested excess timber, leading to fines and permits for the community. Timber brokers are also involved in laundering illegal timber, using their companies to legitimise illegal wood from the Amazon. 

Keywords: Latin America, Brazil, timber, primary production, trade and transport, tax evasion, fraudulent documentation, Indigenous rights

Sources:  https://insightcrime.org/investigations/beneath-surface-timber-trafficking-peru-colombia-brazil-border/ 

A report by the United Nations Office on Drugs and Crime details how the illicit gold trade in Burkina Faso has played a critical role in financing conflicts. Artisanal and small-scale gold mining (ASGM), a focal point for the country’s economy, provides resources to non-state armed groups, and contributing to instability in the region. In Burkina Faso, ASGM produced approximately 49.5 tons of gold in 2018, valued at around $2.7 billion in 2022. The artisanal gold mining market is a significant source of income for many communities, but a big portion of this gold is smuggled out of the country, avoiding formal channels and taxation. The revenue derived from this illicit trade is often reinvested in weapons and vehicles, providing increased economic prosperity for armed groups, such as those affiliated with Jama'a Nusrat ul-Islam wa al-Muslimin (JNIM), during conflicts. The influx of weapons into the region, especially after the 2011 Libyan revolution, has made arms readily available to different groups, contributing to the weaponisation of existing trafficking routes. In addition, the smuggling networks also play a role in supplying armed groups with recruits. Migrant smugglers, for instance, liaise with armed groups and pay taxes for safe passage through territories controlled by these groups.  

Keywords: Sub-Saharan Africa, Burkina Faso, minerals, gold, primary production, illegal mining, terrorist and conflict financing, tax evasion 

Sources:  https://www.unodc.org/documents/data-and-analysis/tocta_sahel/TOCTA_Sahel_Transversal_2024.pdf 

A report commissioned by the government of Burkina Faso revealed that extremist political groups frequently attacked gold mines in order to access gold as a source of funding. Since 2016, armed extremist groups have accumulated 70 billion CFA francs ($126 million) following attacks on mining sites. These extremists, often linked to Islamic State and al-Qaeda, target gold mines in order to seize control and extort taxes. The central governments' limited control over mining regions leaves communities vulnerable, and struggling to defend themselves from these well-armed groups. Extremist groups not only target gold mines in the aims of conflict financing, but also to supply explosives for terrorist activities. Terrorist groups view the control of gold mines and transport routes as crucial for legitimacy and power over local populations. This control leads to violence as groups compete for profits and dominance. Lastly, the loss of governmental tax revenue from gold smuggling undermines funding for social programs and counter-terrorism efforts.  

Keywords: Sub-Saharan Africa, Burkina Faso, minerals, gold, primary production, illegal mining, terrorist and conflict financing, tax evasion

Sources:  https://www.state.gov/wp-content/uploads/2021/10/BURKINA-FASO-2020-HUMAN-RIGHTS-REPORT.pdf 

https://adf-magazine.com/2023/10/terrorists-target-the-sahels-gold-mines-as-a-source-of-financing/ 

In Chile, trade misinvoicing, which occurs when export or import invoices are falsified in the final goal of tax evasion or money laundering, remains prevalent. This practice is particularly significant in the copper industry, which accounted for 48.2% of the nation’s total exports in 2018. By underreporting the value of copper exports, companies have minimised their taxable revenue. Conversely, overreporting import values has allowed companies to reduce their tax burdens by inflating deductible costs. For instance, this practice was employed by Chile’s state-owned copper corporation, CODELCO, in its agreement with China Minmetals Corporation to supply copper at below-market rates. This has raised concerns about potential tax evasion and undervaluation. Trade misinvoicing also allows for money laundering, as falsely reported trade transactions are used to conceal illicit proceeds. Money can notably be moved across borders, as has been found to be the case for Caso Yaupel, a fruit importer and distributor that laundered money digitally across Colombia, Germany, Ecuador, and Chile. Trade misinvoicing is not just an economic problem but also affects public welfare and security. The practice is often linked with other criminal activities like drug trafficking and human trafficking.  

Keywords: Latin America, Chile, minerals, copper, trade and transport, tax evasion, money laundering, trade misinvoicing

Sources:  https://gfintegrity.org/trade-misinvoicing-in-chile/ 

In an article by Presna Libre, it is reported that Miguel Ángel Turcios Pineda is facing a legal process for money laundering in the case known as Fedecocagua, which involves a structure for laundering Q1 billion. The Public Ministry (MP) reported that Turcios Pineda will face trial as part of phase 2 of the Fedecocagua case. He was granted a substitute measure and the payment of a Q200,000 bail. The investigation by the Special Prosecutor’s Office against Impunity (Feci) of the MP indicated that in the first phase of the case, the manager of the Federation of Agricultural Cooperatives of Coffee Producers of Guatemala (Fedecocagua), Ulrich Gurtner Kappeler, was also arrested for money laundering. It was determined that a series of non-existent companies were generating invoices and through which the Superintendency of Tax Administration (SAT) returned the Value Added Tax that they had obtained at the time. It was referred that more than Q1 billion were benefited by these companies. It was established that Fedecocagua directors simulated coffee purchase and sale operations using front companies, who invoiced the coffee that the cooperatives and small producers delivered to Fedecocagua, who in turn simulated the payment of invoices, money that later returned to accounts through a series of transfers.

Keywords: Latin America, Guatemala, coffee, primary production, tax evasion, money laundering

Source: https://www.prensalibre.com/guatemala/justicia/caso-fedecocagua-miguel-angel-turcios-pineda-enfrenara-proceso-judicial-por-lavado-de-dinero-breaking/

According to Mongabay, two major Indonesian pulp and paper producers allegedly engaged in fraudulent activities to evade taxes. The companies, PT Toba Pulp Lestari (TPL) and Asia Pacific Resources International Holdings (APRIL), are accused of mislabeling exports to China, falsely declaring high-value dissolving pulp as lower-value paper-grade pulp. This misclassification enabled them to report lower revenues and reduce their tax liabilities in Indonesia. Mongabay details how, from 2016 to 2018, APRIL produced 830,000 tons of dissolving pulp and exported 90% of it to China. However, none of these exports were recorded in Indonesian customs as dissolving pulp. This alleged misclassification may have reduced APRIL’s revenue by up to $242 million and avoided $60 million in taxes. Ultimately, the fraudulent activities contributed to significant tax revenue losses for Indonesia, amounting to $168 million between 2007 and 2018. 

Keywords: South East Asia & Pacific, Indonesia, timber, trade and transport, tax evasion, trade misinvoicing  

Sources:  https://news.mongabay.com/2020/12/pulp-paper-toba-pulp-lestari-april-tax-export-report/#:~:text=TPL%20and%20APRIL%2C%20two%20major,China%2C%20a%20new%20investigation%20alleges 

Chinese national Gao Feng has been indicted by Liberian authorities for leading a large-scale illegal mining operation, depriving the Liberian government of over US$29 million in revenue. The indictment accuses Gao Feng and several associates of economic sabotage, tax evasion, and criminal conspiracy.

In response to complaints, the Ministry of Mines and Energy launched investigations, resulting in raids on Gao Feng’s mining sites. While seven associates were apprehended, Gao Feng and many others managed to escape. A writ of arrest has been issued alongside a travel ban to prevent them from fleeing the country.

However, the case faces challenges due to alleged corruption and interference from some government officials. Illegal mining has had a devastating impact on Liberia’s environment and economy, with unregulated mining practices leading to deforestation, soil erosion, and water pollution.

Keywords: Sub-Saharan Africa, Liberia, minerals, illegal mining, tax evasion, corruption and bribery, environmental crime

Source: https://www.liberianobserver.com/news/cartel-leader-gao-feng-indicted-for-illicit-mining-tax-evasion/article_6cf617a6-4288-11ef-8b4b-3b9fa771583e.html

According to the Star, the government of the Malaysian state of Sabah is pursuing taxes owed by companies involved in the evasion of the crude palm oil sales tax. In collaboration with the Malaysian Anti-Corruption Commission (MACC), the government has introduced a voluntary scheme allowing companies to pay their taxes by the end of 2023 without penalty. One notable case of tax evasion involved a former public servant arrested in May 2022 for allegedly evading millions of ringgit in crude palm oil sales tax. The suspect was detained following the arrests of two state government officials. These officials were implicated in receiving RM700,000 (approximately US$154,000) in bribes from a palm oil mill in Lahad Datu. The bribes were reportedly given to overlook the falsification of crude palm oil production quantities, resulting in an estimated tax evasion of RM2 million (approximately US$440,000) per month since 2015.  

Keywords: South East Asia & Pacific, Malaysia, palm oil, primary production, tax evasion, fraudulent documentation, forgery, corruption and bribery

Sources: https://www.thestar.com.my/news/nation/2023/08/18/sabah-working-with-macc-to-claim-sums-owed-in-tax-evasion-cases