It’s the luxuries that give it away. To fight corruption, follow the goods
17 May 2019

By Reza Tajaddini, Swinburne University of Technology and Hassan F. Gholipour, Swinburne University of Technology

There is disquiet about the French owners of the luxury brands Luis Vuitton, Christian Dior, Givenchy and Gucci giving a whopping €300 million to the rebuilding of Notre Dame Cathedral. Such largesse, critics say, could be better used for humanitarian causes.

This is more than a rhetorical point. It is almost certain that some of the profits made by all sellers of luxury goods come from criminals who have siphoned off government funds. Rather than being spent on health, education and other social welfare programs, the money has been spent on luxury goods.

Luxury goods are used to facilitate corrupt transactions and launder dirty money. Using data for 32 high-income and emerging economies, we have found a strong correlation between luxury item expenditure and societal corruption.

Our findings confirm previous research, such as luxury car sales being substantially higher in OECD countries with higher perceived corruption levels.

We are not saying that luxury brands are doing anything criminal. Nonetheless they could make a great gift to the world by pitching in to build the institutional architecture needed to combat corruption.

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