International development is a key part of foreign aid, reaching over $132 billion in 2015, according to the Organization for Economic Co-operation and Development’s (OECD). Fraud is, unfortunately, responsible for an estimated loss of thirty percent of aid. This means an estimated $40 billion was lost in 2015. The United States gives the largest portion at $22.7 billion for 2017, which amounts for 6.9% of development. The net official development assistance (ODA) has increased by 83% in real terms since 2000.

Waste, fraud, and corruption combine to lower the efficiency of aid sent to developing countries. Delaying or stopping projects, money being pulled out and misused, and decreasing the amount that can be completed in a project are some of the ways that hurt international aid.

In this year more than 900 aid projects worth £11.5 billion are either significantly delayed or will fail to achieve their objectives. Meanwhile, at least $1 trillion is being taken out of developing countries through corruption, money laundering, and illegal tax evasion. In 2011, a study showed that in 150 developing countries a total of $946.7 billion was lost in 2011, an increase of 13.7 percent from the prior year.

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One way that fraud can be accomplished is through an anonymous shell corporation where the profits from illegal dealings can be sent to corrupt officials. Anonymous shell companies accounted for 70% of over 200 of the biggest corruption cases between 1980 and 2010.

The illegal nature of fraud makes it impossible to get a firm estimate of what is lost. Data collected from 12 of the largest 25 humanitarian non-government organizations showed that the greatest annual loss was $2.7 million. Experts estimated that the true figure would be far higher and could be up to $18 billion.

The False Claims Act, which allows whistleblowers to file lawsuits in the name of the United States government and receive a percentage of the recovery, had over 700 cases in 2014. From those cases, a total of $4.23 billion was
defrauded from the United States government.

It is estimated that the global construction market will reach $17.5 trillion per year by 2030, which will amount to $60.75 trillion lost over this period. Construction is the most at risk for fraud. The size and uniqueness of the projects, the government involvement, combined with poor project and industry oversight and ineffective project monitoring lead to construction being ripe for fraud and corruption.

Fraud leads to a massive cost to the countries and the world. It affects the economy and the stability of the government, as well as discoursing investments and competiveness. It also stalls growth and development and puts a disproportionately heavy burden on the poor. This all leads to erosion of public trust, safety, and health.

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