 On behalf of global financial integrity and minds, we thank you very much for coming today to talk about our new report on illicit financial flows in Brazil and with the help of our panelists, see how this issue is impacting other countries with which Brazil deals, what the consequences are, why we should be caring about this issue, and finally at the end of the day what we might be able to start doing about it. The timing is very good with Brazil having the exciting election coming up in just a couple of weeks and then the presumably second election and it's, we're very happy to be here, to be talking about this and we look forward to this issue hopefully continuing with the help of all of you with further conversations and further research and analysis going forward. My name is Christine Clow, I'm a senior program officer at Global Financial Integrity in Washington DC. You have hopefully gotten a copy of the agenda for today, if not we have copies out on the registration table, we will go through our morning sessions and then we have lunch at noon and that will be up on the first floor in the restaurant up there, you can take the stairs or there are elevators over near the stairs around the corner. We also have copies of our report out on the table for you, again near the registration we have copies in English and we have copies in Portuguese. Please feel free to take extra copies if you would like to bring them to colleagues and you can also always download the report from our website gfintegrity.org and in Portuguese and in English. For those of you who are on Twitter, we have set up the hashtag IFF Brazil, so that's I-F-F-S-B-R-A-Z-I-L, sorry we used our American spelling. And we will also be on Facebook and we encourage you to follow along and engage with us there if you would like and put out your comments in English Portuguese or whatever language you may wish. Just another couple of housekeeping notes, the bathrooms if you need them are just around the corner to the left and then the left again and for any reason we have to leave the building for an emergency please use the stairs that you probably used to get down here this morning. So without further ado I will introduce our opening speaker, Raymond Baker is the President of Global Financial Integrity and the author of Capitalism's Achilles Heal, Dirty Money and How to Renew the Free Market System which was published by John Wiley and Sons and is cited by the Financial Times as one of the best business books of 2005 when it was released. He has for many years been an internationally respected authority on corruption, money laundering, growth and foreign policy issues particularly as they concerned developing countries and emerging economies and impact upon western economies and foreign interests. He's written and spoken extensively he's testified often before legislative committees in the US and Europe and elsewhere and he's frequently appears on television and radio and newspaper interviews. Mr. Baker is a member of the high-level panel on illicit financial flows from Africa which was chaired by the former president of South Africa, Tableau Mbeki. This committee for those of you who have been following it will be releasing a report on their findings of their process very soon and I encourage you to look out for that. He also serves on the World Economic Forum's Council on Transparency and Anti-Corruption and he serves on the Board of Directors, the Center of Concern and the Policy Advisory Board of Transparency International USA. He previously served as a guest scholar at the Brookings Institution and at the Center for International Policy. Mr. Baker's previous experience for many decades or for several decades was in business particularly in Nigeria and Africa but he has also had much experience in Latin America and Asia and he founded Global Financial Integrity in 2006 as a follow-on from the successful publication of his book in 2005. So without further words I will bring up Raymond to welcome you all with more formal remarks this morning. Thank you. Thank you Christy and good morning ladies and gentlemen. Let me add my welcome to you. Thanks for joining us. We've been looking forward to this and we're delighted that we have finally been able to add Brazil to the countries that we have studied concerning our subject matter. Let me begin with a story. I got off the airplane in Lagos, Nigeria in 1961. Lagos incidentally was named by Portuguese traders who were growing up and down the west coast of Africa. I was taking over the management of a company. I didn't have any idea about Africa so I fairly early got into a conversation with a gentleman that had been in Nigeria for many years. He was somebody we call an old coaster, had been there for a long time. He was British. He was the managing director of a company called John Holt Trading Company. John Holt had been active up and down the west coast of Africa since the late 1800s. And I asked this gentleman, how do you do business in Africa? And he looked at me and was not very forthcoming. I got the distinct impression that he did not like Americans showing up in his ex-British colony. Nigeria had become independent just the year before. He didn't like us showing up so quickly after independence so he wasn't ready to answer the question but I pressed on as is my American manner and I asked him, okay, well how do you price your imported cars and building materials and textiles to sell in the Nigerian market? And he looked at me again and he said, price? Price is not a problem. I'm not trying to make a profit. And I thought to myself, I had just finished two years at Harvard Business School learning all about how to make a profit. And here the first person that I meet in West Africa or one of the early people that I meet in West Africa says, I'm not trying to earn a profit. What is going on here? It took me a while to figure out that he was talking about transfer pricing. He was talking about overpricing what he was importing from the parent company in the UK in order that all profits were transferred out within the invoice of what he was bringing into the country. He was using the pricing mechanism to shift his profits abroad. It took me a little longer to realize that a great many foreign companies were doing the same thing and it took me longer yet to understand that a great many Africans who were involved in imports and exports were doing the same thing. And then it took me a lot more years to realize that this is a phenomenon that is typical in Latin America, Asia, the Middle East, and so forth. It's a global phenomenon. But nevertheless, thus began my education on the movement of money across borders in an unrecorded and a hidden manner. Now, fast forward, I spent 35 years in business all over the globe. Then as Christie said, moved into the think tank world at the Brookings Institution, wrote a book, and we established GFI in 2006. Global financial integrity does basically four things. We analyze unrecorded financial flows across borders. In doing this kind of macroeconomic analysis, we utilize data filed by governments with the World Bank and the IMF. We do not pull numbers out of the air. In order to be credible, we limit our analysis to data filed by governments with the World Bank and the IMF. Every once in a while, the government will tell us. For example, the attorney general of a country came to us not long ago with a dozen of his government officials and he says to us, this data can't be right. And we said to him, sir, it's your data. It's data that you file with the World Bank and the IMF. We didn't invent the mechanisms for analyzing this data. We use models that have been around for 20 years or so. What we did do, what GFI did do, we were the first country to take those analytical models and that data and apply it to all developing countries in order to come up with an estimate of how much money drains out of all developing countries. Currently, that figure is about a trillion dollars a year that moves unrecorded out of developing countries. Compare that to foreign aid. Foreign aid is running about $135 billion a year. We're talking about an outflow that is seven or eight times the amount of foreign aid inflow. This makes no sense for the richer countries or for the countries that are receiving foreign aid. Macroeconomic analysis is a key part of what GFI does. The second thing that we do is policy advisory work. We work with governments to curtail this reality. We work in confidence with governments. We bring together a team of experts in law, economics, accounting, auditing, corruption, money laundering and so forth in customs policy and so forth. We work with governments counterpart teams in order to address this unrecorded flow of money and what you can do to curtail it. A third part of what we do is advocate for greater transparency in the global financial system. We work with a number of other non-profit organizations around the world to promote financial transparency, to promote the ideas of financial transparency's contribution to curtailing these unrecorded financial flows. We'll talk more about that later today. Another part of our work, a fourth part of our work, is specialized economic analysis of particularly serious problems that developing countries are facing. You can call it economic intelligence work. We do this for governments. We don't do it again. We do this for developing country governments. It's certainly not against developing country governments. Let me give you an example of a study that we have done and this much was made public by the government for which we did this. Nigeria. The government of Nigeria. Nigeria is a country that I continue to stay very close to. Nigeria asked us to do a study of the theft of oil in the Niger Delta, what's called bunkering. How much oil is stolen out of the pipelines of the Niger Delta? What we did in that piece of work was to triangulate the problem, to use three different approaches to the development of information and insight and data on this in order to come up with an estimate. The first element was satellite imagery. Millions of satellite images were analyzed. The result was we conveyed to the Nigerian government the latitude and the longitude of every point in the Niger Delta from which oil was being stolen. The second part of the analysis was interviews with the criminals themselves. How do you do that? Well, you go in without a cell phone. You do not ask them to identify themselves by name. You go through a long series of questions in which you're asking about problems in their area. We're poor building questions and finally you get to the point that you're asking about what they're doing. We conducted 60 interviews with the criminals every one of whom told us exactly what they were doing. We had no problem whatsoever in getting them to tell us exactly what they were doing. The third part of the triangulation exercise was interviews with oil industry executives to get their take on the problem. The oil industry executives were less forthcoming than the criminals because this theft gets mixed up with corruption in Nigeria and they didn't want to talk about it very much. But nevertheless, having done that triangulation process, we were able to tell the government of Nigeria that the best estimate is six to twelve billion dollars a year of oil being stolen straight out of the pipelines of the Niger Delta. This is an example of addressing the biggest aspects of illicit financial flows in order to help governments figure out how to address those kinds of problems. The study that we have done concerning Brazil is the fifth study in a series that has been funded by the Ford Foundation. Leonardo Berla-Makwe who is here has generously funded this work over a period of five or six years, Leonardo. We have done studies of India, Russia, Mexico, the Philippines and now Brazil. There will be a book coming out from this process that will summarize what we have learned from just the study of these five countries. We have had funding from other sources and have done smaller studies of great many other countries. But Leonardo, thank you very, very much for your funding of this. Most appreciated. We will go on today into much greater detail concerning the results of this study as they have impacted Brazil. And we will also get more deeply into how do you address this problem? What do you do about this? Okay, we've got a problem. How do we go about trying to curtail this reality? So I think by the end of the afternoon you will have a good idea of what's the magnitude of this problem and what can be done to address it. Again, thank you for joining us. We're looking forward to getting to interacting with all of you. Thank you.