12.01.2011 Feature Article

Corruption in Africa: Where Does the Buck Stop?

Corruption in Africa: Where Does the Buck Stop?
12.01.2011 LISTEN

*By Lord Aikins Adusei

Corruption is an endemic cancer that has devastated African societies and impoverished millions. According to the Africa Union (AU) around $148 billion are stolen from the continent by its leaders and civil servants every year. The 2006 Forbes' list of most corrupt nations had 9 out of the first 16 countries coming from Africa. According to Global Financial Integrity (GFI) a US based anti-corruption group, the continent of Africa has lost more than 854 billion dollars in illicit financial outflows between 1970 and 2008. GFI director Raymond Baker says the amount of money that has been drained out of Africa—hundreds of billions decade after decade—is far in excess of the official development assistance going into African countries.

The illicit flow of such huge amount of money is not the work of African leaders and their associates alone but also that of multinational corporations from Europe, America and Asia doing business in Africa. It is no secrete multinational corporations with investments in Africa understate their profits and falsify profit documents in order to cheat poor African countries of money due them. The corporations also undervalue their goods, indulge in smuggling, theft and the falsification of invoicing and non-payment of taxes, as well as employing kickbacks and bribes to public officials. They also overprice projects; provide safe havens for looted funds, all of which affect the financial capability of countries in Africa to fight poverty. A 2002 UN Report into the war in Congo Kinshasa found multinational corporations working in that country to be engaging in some of the dubious practices mentioned above.

In 2002, Halliburton, a US company, was accused of establishing $180m flush fund with the intent of using it to bribe Nigeria officials in order to secure a $6billion Liquefied Gas Plant contract in Nigeria. The company fired Mr. Albert Jack Stanley, its executive. A report by the company later named a British called Jeffrey Tesler as the middleman behind the bribery. In 2010 Nigerian authorities brought charges against former US Vice President Dick Cheney and Halliburton for their role in the bribery scandal. The charges were settled out of court after the defendants agreed to pay 35 million dollars. On 17th September 2002 for example, a Canadian Engineering company called Acres International was convicted by a High Court in Lesotho for paying $260,000 bribe to secure an $8 billion dam contract in Lesotho. Achair Partners, a Swiss company and Progresso, an Italian company have been accused of bribing Somali Transition Government officials in order to secure contracts to deposit highly toxic industrial waste in the waters of Somalia.

But the corporations and foreign politicians and business executives are not the only ones in the game. The governments in Africa have been doing their best to loot their countries' coffers with impunity. The recently released US diplomatic cables by Wikileaks indicate how corruption has become part and parcel of President Ben Ali's family and his government in Tunisia. And the worse thing is that it is getting worse by the day. Part of the cable states that: “corruption in Tunisia is getting worse. Whether it is cash, services, land, property, or yes, even your yacht, President Ben Ali's family is rumoured to covet it and reportedly gets what it wants. President Ben Ali's extended family is often cited as the nexus of Tunisian corruption. Often referred to as a quasi-mafia, an oblique mention of "the Family" is enough to indicate which family you mean. Seemingly half of the Tunisian business community can claim a Ben Ali connection through marriage, and many of these relations are reported to have made the most of their lineage. Ben Ali's wife, Leila Ben Ali, and her extended family -- the Trabelsis -- provoke the greatest ire from Tunisians."

The Cables point out that the corruption at the presidency has trickled down to all aspect of Tunisian society. “Beyond the stories of the First Family's shady dealings, Tunisians report encountering low-level corruption as well in interactions with the police, customs, and a variety of government ministries. When a contact was asked about whether he thought corruption was better, worse, or the same, he exclaimed in exasperation “Of course it's getting worse!" He stated that corruption could not but increase as the culprits (Ben Ali and his cohorts) looked for more and more opportunities. Joking about Tunisia's rising inflation, he said that even the cost of bribes was up. "A traffic stop used to cost you 20 dinars and now it's up to 40 or 50!" The economic impact is clear, with Tunisian investors -- fearing the long-arm of "the Family" -- forgoing new investments [abroad and] keeping domestic investment rates low.” Tunisians openly talk about how corruption is destroying their country and bemoan the lack of effort by the authorities to tackle it. “Corruption is the elephant in the room; it is the problem everyone knows about, but no one can publicly acknowledge. The lack of transparency and accountability that characterize Tunisia's political system similarly plague the economy, damaging the investment climate and fueling the culture of corruption” says the Cable.

Despite years of exports of oil, gold, diamond, bauxite, tin, coltan, uranium, manganese timber and other minerals, the continent is ranked the poorest. Revenue from the minerals finds its way into the bank accounts of corrupt government officials, civil servants and their allies.

Nigeria has consistently featured in the top 1% of the most corrupt nation on the planet. The nation has also featured on the Foreign Policy Failed States Index. The index shows that Nigeria has featured consecutively over the last four years among the top 20 failed states on earth. Since oil was first discovered in Nigeria about 50 years ago, over $400 billion have been realised from its sale but today more than 70% of Nigerians continue to live in abject poverty. The country has nothing to show for its petro-dollars except poverty, corruption, and recently violence and anarchy. Only corrupt the politicians and the big oil companies such as Shell, Mobil, BP, and Chevron have benefited. As a result, able men and women are battling dangerous seas to enter Europe and try their luck. Others have resorted to 419, a popular scam used to trick people into giving out their money and valuables. A visit to the Niger Delta region of Nigeria shows that majority of the people especially the youth are unemployed. According to Nigeria's National Population Commission 2000 about 44% of young men between the ages of 20 and 24 are unemployed. The Niger Delta region which produces about 90% of the total 2.2 million barrels produce everyday, but over the past 30 years, poverty rate has been rising steadily and living conditions remain one of the poorest in the country. Life expectancy, literacy, and infant mortality all compare unfavourably with the national average. According to Okechukwu Ibeanu only about 27 per cent of households in the Niger Delta have access to safe drinking water. At the same time only 30 per cent have access to electricity and both are below the national average. There are 82,000 people per doctor rising to 132,000 in some areas more than three times the national average of 40,000. While 76 per cent of Nigerian children attend primary school only 30-40 do so in parts of the delta. Thus despite being the goose that lays the golden egg, the Niger Delta remains one of the most deprived areas in Nigeria.

In 2010 Sanusi Lamido, governor of Nigeria's Central Bank lamented over the corruption and economic mismanagement in his country saying:

“As an economist, I have done and looked at the input and output content of the Nigerian economy, and I have never seen an economy with a kind of black hole like that of Nigeria. We produced cotton, yet our textile plants are not working; we produce crude oil, we import petroleum products; we produce gas and export, yet we don't have power plant. We have iron ore, we don't have steel plant; and we have hide and skin, we don't have leader products”.

Sanusi was right. According to Paul Collier of Oxford University's Centre for the Study of African Economies, past and present leaders in Nigeria have managed to steal about 280 billion dollars of the country's oil proceeds, stashing it in abroad with the help of financial firms like, Barclays, Lloyds, and UBS. Between 2005 and 2007, several state governors and their immediate families were arrested by Scotland Yard in London on corruption and money laundering charges. Among them are James Ibori of oil rich Delta State and his wife Theresa who had their $35m asset frozen by the English court. Mr. Ibori earns about a thousand dollars a month but during his eight years as a state governor, he acquired wealth to the tune of $35m, and was able to finance the election campaign of late President Umaru Yar'Dua. He also owns a private jet and a lavish London home.

Another corrupt governor is Diepreye Alamieyeseigha, governor of oil-rich state of Bayelsa who was also arrested in London for money laundering. When Police conducted a search in his London home, they found one million pounds worth of cash. Former Vice President Atiku Abubakar has been linked to a corruption scandal involving former US Congressman William Jefferson who is serving terms in prison in US. In 2007 Atiku Abubakar was accused of diverting $125m from Petroleum Development Trust Fund into his personal businesses. Okey Ibeanu and Robin Luckham note that a mechanism that was devised by Nigerian leaders for stealing oil revenue included: “diversion into special funds controlled by the president; bribes or taxation paid on oil contracts; extensive smuggling across Nigeria's borders called bunkering; as well secrete account held by the Nigeria National Petroleum Corporation (NNPC) (six such accounts were uncovered in 1997)”.

Years of oil spills have made the soil unfit for any agricultural activity. Their streams and wells are polluted and the people have no access to basic necessities of life because their leaders have enriched themselves with the money. In the 1990s, abject poverty and destruction of the environment forced the people of Ogoniland in Nigeria to demand a say in Shell operations but the Abacha regime repulsed them and had Ken Saro-Wiwa and eight Ogoni activists executed. According to available data, Abacha stole between $3 and $4 billion of Nigeria's oil money and stashed it in several secret bank accounts in Switzerland, Britain, Luxemburg, Jersey Island and Liechtenstein.

Effort by the people of Niger Delta to get the Nigerian government to develop the oil rich areas fell on death ears until the unemployed youth took up arms against the government and the oil companies, kidnapping foreign oil workers; demanding ransom and disrupting oil production. Eventually, the companies had to reduce their output by 25% in 2007-8. These disruptions seriously affected supply of oil on the world market forcing the price to skyrocket to $140 a barrel in the summer of 2008. The situation has not changed much.

In Equatorial Guinea for example oil export has earned the country billions of dollars since 1990 yet most of the 600,000 people living in the country continue to live in poverty while Teodoro Obiang Nguema and his cronies continue to siphon the oil revenue with no accountability. His looting of Equatorial Guinea's assets became public when it was discovered that the US banking firm Riggs had written to him encouraging him to loot his oil rich but economically impoverished country. Teodoro Nguema Obiang, son of Teodoro Obiang Nguema has made news headlines about how he and his associates steal and misuse E. Guinea's oil funds.

Obiang Jr (the son) once hired Microsoft billionaire Paul Allen's 300-foot yacht Tatoosh for $700,000. His property portfolio includes a $35m estate in Malibu, California, purchased with cash, as well as a couple of estates in Cape Town, South Africa. His fleet of cars includes Bentley and a Lamborghini. The New York Times reports that "the boy king" also owns a Gulfstream V jet. Riggs Bank a US based bank is known to have helped the Obiangs steal their country's oil proceeds and hid it in US. A 2004 US Senate investigation into the activities of Riggs Bank found that President Obiang's family had received huge payments from US oil companies such as Exxon Mobil and Amerada Hess and laundered the money in US.

In 2004, President Bush Jr issued Presidential Proclamation 7750, barring corrupt leaders and their associates from entering the US but the Obiangs have been able to travel freely to the United States in spite of their massive corruption. John Bennett, the United States former ambassador to Equatorial Guinea from 1991 to 1994, told the New York Times that "Washington has turned a blind eye to the Obiangs' corruption because of US dependence on the country for natural resources".

One might think that given the history of corruption, poverty, instability and violence in oil producing countries (like Nigeria, Equatorial Guinea, Gabon, Congo and Cameroon), incoming oil producing nations like Uganda would take time to make sure there is complete transparency and zero tolerance for corruption in the oil sector. If what is happening in Uganda's young oil sector continues unchecked then there is no doubt that the country will end up being labelled another resource curse country. The US diplomatic cables released by Wikilieaks indicate that the country's leaders are engaging in massive corruption and back door dealings that are slowly adding to the dire corruption situation in the country. One case involves Security Minister and National Resistance Movement (NRM) Secretary General Amama Mbabazi and Energy and Mineral Development Minister Hilary Onek who the report says have “benefited from the sale of production rights by Heritage Oil and Gas to Italian oil giant ENI”. Security Minister Mbabazi and Energy Minister Onek “received payments from Heritage and/or ENI in exchange for their support”. According to the diplomatic cable the Italian multinational firm “ENI created a shell company in London called TKL Holdings - through Mark Christian and Moses Seruje (who acted as frontmen) to funnel money to Mbabazi.

In Ghana, officials illegally charge 15 and 150 Ghana cedis for a birth certificate and a passport respectively. Police officers openly solicit bribes from bus and taxi drivers before they are allowed to cross mounted road blocks. Customs officials adopt all manner of tactics in order to collect money from importers and exporters before their goods are allowed to leave the ports.

Africa's political parties pledge to combat corruption with deadly force but when elected, change nothing. Ghana's former president John Kuffour pledged "zero tolerance for corruption" in his government but his party lost power for failure to tame corrupt officials.

In South Africa, Jacob Zuma battled it out for his part in the multi-billion arms deal in South Africa in 2001 until he was cleared by the court on the grounds of technicalities. In 2006, former president of Malawi Bakili Muluzi was arrested for pocketing $12m donated to his country by foreign governments. Former Zambian president Frederick Chiluba was arrested and charged with 11 counts of stealing money meant for the Zambia's development.

Guinea has large deposits of gold diamond, iron, nickel and uranium yet poverty is so severe that the country was ranked among the top 1% of most corrupt countries in Africa and 160th out of 177 in the UN's Development scale.

Gabon and Angola are no different. The late Omar Bongo of Gabon is known in the world for the way he and his family looted Gabon's oil revenue and used the proceeds to buy expensive and luxury properties in France. French Police investigation into the Bongo's illegal looting of Gabon's oil revenue established that the Bongo have 39 expensive apartment, fleet of luxury cars and owned 70 bank accounts in France. Similarly Denis Sassou Nguesso of Congo Brazzaville also has 112 bank accounts in France with hundreds of millions of euros stashed in them. He also has mansions and fleet of cars similar to his father-in-law (Omar Bongo) all with the full knowledge of French authorities.

On Friday 31, 2007, the Guardian newspaper in Britain published a report by Kroll, an international risk consultancy firm, that Daniel Arap Moi, Kenya's former president and his family banked £1 billion in 28 countries including Britain. The family used shell Companies, secret trusts, front men and his entourage to siphon the money away. Moi's family also bought multimillion pound properties in London, New York, South Africa including 10,000-hectare ranch in Australia.

In Sudan the recently released US diplomatic cables by Wikileaks show that Omar Al Bashir has been able to loot 9 billion dollars of the country's oil proceeds and stashed it in UK and other jurisdictions with the help of British banks especially the Lloyds Banking Group. According to the US cable leaked by Wikileaks Luis Moreno-Ocampo, the International Criminal Court prosecutor contemplated going public with Bashir's loots which has turned Sudan into a desert of poverty. "Ocampo reported Lloyds bank in London may be holding or knowledgeable of the whereabouts of his money".

In Egypt for instance there are reports that over the 30 year period in which Mubarak has been president, Mubarak, his wife, Suzanne, and his two sons (Gamal and Alaa) have amassed wealth to the tune of $70bn. Swiss Bank UBS and the Bank of Scotland in Britain are reputed to be hosting much of the money they have acquired, while New York, London, Los Angeles also play host to the many properties owned by the family, not to mention the countless properties they own in Egypt itself including lands and hotels in Alexandra,Cairo, Sharm el-Sheikh and Suez.

Christopher Davidson, professor of Middle East politics at Durham University, told the Guardian newspaper in UK that "Much of Mubarak's money is in Swiss bank accounts and London property. These are the favourites of Middle Eastern leaders and there is no reason to think Mubarak is any different. Gamal's Wilton Place home in London is likely to be the tip of the iceberg." Meanwhile there are one million children roaming the streets of Cairo and other cities without home, education and future.

In countries such as Cameroon, The Gambia and Libya, a kleptocracy class of people have replaced anything democracy. Leaders amass wealth at the expense of their poor countries and continue to mismanage whatever remains of their corrupt activities. Because most of the leaders are former military officers or former rebels with no grasp of economics and management, they are unable to formulate any good economic policies that will transform and grow their economies hence poverty has become a part of the people but their leaders know not what poverty is.

In DR Congo it is estimated that gold and diamond deposits alone could fetch the country 23 trillion dollars not to mention the abundance of timber and other several minerals that are found in large quantities such as columbo-tantalite (coltan) and cassiterite (tin ore) yet years of corruption, mismanagement, conflicts and foreign involvement have made this resource rich nation one of the poorest in the world. Western nations cannot maintain their current level of lifestyle without Congo. Most corporations in the west can easily go bust without Congo. If Congo is the bloodline of the west and the west is rich because of Congo, why is Congo so poor?

Where are the billions of dollars from the sale of these minerals? The answer lies in the history of the nation which is endemic corruption, armed conflict and foreign involvement. Mobutu in his 32 year reign is believed to have taken several billions of dollars from the treasury and deposited it in his numerous Swiss bank accounts.

Everyday in Walikale, about 16 aircraft fly out of the city with loads of minerals bound for Rwanda. These stolen minerals further find their way in the western mineral markets in London and Switzerland. The proceeds are shared by the Generals, politicians, western companies the businessmen in Rwanda, the warlords in Congo who use part of their share to acquire weapons that are used to terrorise the people and prolong the war.

Western governments are quick to preach good governance to Africa but they fail to preach the same message to their banks who act as save havens for these corrupt leaders. Even though these countries like to portray themselves as civilised and cultured, they have failed to recognise that keeping monies that are dishonestly obtained from the poor people on earth taints whatever reputation they might have. How can a continent develop when monies meant for her development are stolen by her leaders and kept by countries who praise themselves as civilised, cultured, loving and democratic?

Africa is poor today because Swiss and other western banks collude with African kleptocrats to loot the continent. Corruption is rife on the continent because those who steal the money never lack a place to hide it. The dictators are able to steal so much because Western governments particularly France, Britain, Switzerland and the United States often turn a blind eye to the adulterous relationship between their governments, MNCs and the dictators in Africa. On 21 June 2010 Christine Lagarde, French Finance Minister and Ngozi Okonjo-Iweala of World Bank wrote an article titled “No Safe Havens for Dirty Money”. In their article they urged all countries to play by the rules, fight corruption and end safe haven practices. They argued for “better regulation, good governance, and accountability. “No safe havens for tax evasion. No safe havens for money laundering and terrorism financing, and no safe havens for cozy financial regulation” so they wrote but Ms Lagarde and her government have done little if not nothing to practice what they preach. Ben Ali of Tunisia, the Bongos in Gabon, Paul Biya of Cameroon, Nguesso and Dos Santos have become very corrupt because of their closeness with successive French governments, politicians and the business elite in France.

The impact of the large scale rampant corruption is that people who should not live in poverty are living in poverty. Roads, hospitals, schools, electricity and other social and economic infrastructures that should be provided with the money are never provided. Children die because of lack of food and lack of essential medicine in the hospitals. Unemployment becomes high because money does not circulate for people to have access to loans that could be used to establish their own businesses. Inflation becomes high and prices of food are put beyond the limit of the ordinary people. In the end the entire economy suffers. People harbouring grievances are no longer willing to sit quietly. Their frustration turned into despair and demonstration and sometimes violence uprising become the order of the day as current situation in the Niger Delta shows with consequences for everyone. Vandalism and looting of properties built with the stolen money becomes the target of the people who have been denied the opportunity to benefit from the economy.

Fighting corruption should not be left to the poor countries alone. Western countries have a duty to stop their nations being used as safe havens for stolen monies from the African continent. They should return all looted money put there by corrupt African leaders to the African people. There must be an international coalition dedicated to tracking all stolen monies on the face of the earth with Africa given to priority.

*The author is anti-corruption campaigner and the author of "Switzerland: A parasite feeding on poor African and Third World countries?"

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