Some $779 billion in financial assets have been moved from Korea to tax havens abroad for tax evasion since the 1970s, according to a report by a U.K. expert.

The amount is the third-largest in the world, after China’s $1.19 trillion and Russia’s $798 billion, James Henry said in a report commissioned by the U.K. campaign group Tax Justice Network.

The former chief economist at consultancy McKinsey & Company and expert on tax havens has compiled the most detailed estimates yet of the size of the offshore economy in the new report titled “The Price of Offshore Revisited.”

By the end of 2010, the world’s super-rich had at least $21 trillion hidden in secret tax havens such as the Cayman Islands, equivalent to the size of the U.S. and Japanese economies combined, according to the report.

Henry said $21 trillion is actually a conservative figure and the true scale could be $32 trillion.

The economist said that the super-rich move money around the globe through an “industrious bevy of professional enablers in private banking, legal, accounting and investment industries.”

Korea was followed by Brazil ($520 billion) and Kuwait ($496 billion) in the amount of hidden assets.

A rapid capital flight took place in the political chaos after former President Park Chung-hee was assassinated in 1979, the report said.

Whereas excessive foreign borrowing led to increased capital flight in many developing nations since the 1970s, only a relatively small portion of Korea’s debt flowed out of the country, according to the report.

“Korea’s effective developmental state was able to manage its debt well, enforce strict exchange controls, limit foreign private banker activity, and even maintain some controls on official corruption,” the report said.

By Kim So-hyun (sophie@heraldcorp.com)