African nations set on waging a war against
illegal capital flight have long bemoaned the geographical disparity
shown by the West in the recovery of these funds.
illegal capital flight have long bemoaned the geographical disparity
shown by the West in the recovery of these funds.
As the recovery of funds
continues elsewhere in the world, including Europe and Asia, the leaders
of the African countries spearheading the battle against corruption may
be forgiven for wishing for more influence on the geopolitical
chessboard.
continues elsewhere in the world, including Europe and Asia, the leaders
of the African countries spearheading the battle against corruption may
be forgiven for wishing for more influence on the geopolitical
chessboard.
This is not how it should be.
Taking action against a crime that deepens a country’s income
inequality, perpetuates high unemployment rates and weakens its social
fabric should be a priority for Western governments, regardless of
political gain.
Taking action against a crime that deepens a country’s income
inequality, perpetuates high unemployment rates and weakens its social
fabric should be a priority for Western governments, regardless of
political gain.
In Africa illegal capital flight through the misappropriation of funds is an increasing problem.
No let-up in efforts to bring back Africa’s wealth | GulfNews.comFrom 1970 to 2010, illegal capital flight
from Africa increased from about $2.6 billion to more than $1.7
trillion, an increase of over 650 times over the four decades, through
embezzlement of natural resource exports, tax evasion, corruption,
transfer pricing, and outright smuggling of capital. Staggeringly, this
exceeds the region’s total external debt outstanding of around $293.8
billion at end of December 20101.
from Africa increased from about $2.6 billion to more than $1.7
trillion, an increase of over 650 times over the four decades, through
embezzlement of natural resource exports, tax evasion, corruption,
transfer pricing, and outright smuggling of capital. Staggeringly, this
exceeds the region’s total external debt outstanding of around $293.8
billion at end of December 20101.
So who has all the money? All
too often it’s the political and private elites that perpetrate the
illegal transactions. For example, estimates of the combined amount of
wealth siphoned out of the economy by the former officials of some
African countries have reached billions.
too often it’s the political and private elites that perpetrate the
illegal transactions. For example, estimates of the combined amount of
wealth siphoned out of the economy by the former officials of some
African countries have reached billions.
This however
pales into insignificance compared to the $7.3 trillion that the Tax
Justice Network conservatively estimates is stashed in secret offshore
accounts held by residents of developing world countries. These private
and political elites seem unaffected that their nations continue to
borrow themselves into bankruptcy as they enjoy an opulent lifestyle of
private jets, superyachts and pink champagne.
pales into insignificance compared to the $7.3 trillion that the Tax
Justice Network conservatively estimates is stashed in secret offshore
accounts held by residents of developing world countries. These private
and political elites seem unaffected that their nations continue to
borrow themselves into bankruptcy as they enjoy an opulent lifestyle of
private jets, superyachts and pink champagne.
Sadly, the existing
international financial architecture and global trading systems favour
the dominant stakeholders whose interests are to preserve the status
quo. Furthermore the offshore world of tax havens — home to a
substantial portion of the illicit capital — does not make life easy for
prosecutors pursuing complex financial crimes to follow the money.
international financial architecture and global trading systems favour
the dominant stakeholders whose interests are to preserve the status
quo. Furthermore the offshore world of tax havens — home to a
substantial portion of the illicit capital — does not make life easy for
prosecutors pursuing complex financial crimes to follow the money.
Many offshore jurisdictions
refuse to recognise international subpoenas and account information is
hidden under layers of corporate shells.
refuse to recognise international subpoenas and account information is
hidden under layers of corporate shells.
Therefore the likelihood of
misappropriated funds being recovered remains low; over the past 15
years only $5 billion has been retrieved.
misappropriated funds being recovered remains low; over the past 15
years only $5 billion has been retrieved.
Complicity between powerful
bankers and countries, the fact foreign investment interests often
override the need to support a campaign for justice and funds recovery
in the developing world, collusion among politicians and private sector
operators, and absence of sanctions or punitive measures for
perpetrators who violate international conventions are all contributing
factors.
bankers and countries, the fact foreign investment interests often
override the need to support a campaign for justice and funds recovery
in the developing world, collusion among politicians and private sector
operators, and absence of sanctions or punitive measures for
perpetrators who violate international conventions are all contributing
factors.
Yet it does not justify inaction.
A number of African countries
have begun to tackle the problem of misappropriation of funds head-on.
One such country has been Djibouti, a smallest, yet strategically
important country in the Horn of Africa.
have begun to tackle the problem of misappropriation of funds head-on.
One such country has been Djibouti, a smallest, yet strategically
important country in the Horn of Africa.
The nation’s democratically
elected President, Ismaïl Omar Guelleh, has long been committed to
improving governance and transparency with regards to the management of
public funds — the heart of any effective fight against corruption.
elected President, Ismaïl Omar Guelleh, has long been committed to
improving governance and transparency with regards to the management of
public funds — the heart of any effective fight against corruption.
The country has made notable
progress over the past decade. A raft of legislative reforms targeting
anticorruption and improving transparency has been passed. Institutional
and administrative practices have evolved.
progress over the past decade. A raft of legislative reforms targeting
anticorruption and improving transparency has been passed. Institutional
and administrative practices have evolved.
A number of new institutions
charged with regulation, including an ombudsman to strengthen the tools
used to monitor government action and a court of accounts to ensure
judicial review of public accounts have been established.
charged with regulation, including an ombudsman to strengthen the tools
used to monitor government action and a court of accounts to ensure
judicial review of public accounts have been established.
Djibouti has made significant
strides; today the country offers a strong regulatory framework and a
safe and stable political environment for investors.
strides; today the country offers a strong regulatory framework and a
safe and stable political environment for investors.
The Office of the State
Inspector General (IGE) has driven forward efforts to promote good
governance and transparency in Djibouti as well as pass on their
knowledge to other African institutions.
Inspector General (IGE) has driven forward efforts to promote good
governance and transparency in Djibouti as well as pass on their
knowledge to other African institutions.
The IGE helped establish the
Federation of State Inspectorate Generals of Africa (FIGE), which has
grown to include 22 institutions across Africa dedicated to the fight
against corruption.
Federation of State Inspectorate Generals of Africa (FIGE), which has
grown to include 22 institutions across Africa dedicated to the fight
against corruption.
The fight against corruption
also requires sending a clear message to all private operators who may
be tempted to bribe public officials to negotiate on behalf of the
government that any contract obtained by corrupt means may be
terminated.
also requires sending a clear message to all private operators who may
be tempted to bribe public officials to negotiate on behalf of the
government that any contract obtained by corrupt means may be
terminated.
Political will to repatriate
misappropriated funds is strong in Djibouti. Indeed, the willingness and
ability to introduce legislative reforms and prosecute corrupt
officials despite the power and influence they might wield demonstrates
the progress the made by the African gateway.
misappropriated funds is strong in Djibouti. Indeed, the willingness and
ability to introduce legislative reforms and prosecute corrupt
officials despite the power and influence they might wield demonstrates
the progress the made by the African gateway.
Yet neither an individual
country nor a group of developing nations can win the campaign against
corruption. The problem is global and must be addressed as such.
country nor a group of developing nations can win the campaign against
corruption. The problem is global and must be addressed as such.
Djibouti and the other
African nations’ success in fighting illegal capital flight requires
strong cooperation from their partners in the developed world where most
of the wealth is domiciled, including in tax havens.
African nations’ success in fighting illegal capital flight requires
strong cooperation from their partners in the developed world where most
of the wealth is domiciled, including in tax havens.
Only when developing
countries are offered the same levels of access and support enjoyed by
developed countries and the multimillion dollar fraud seen for what it
is, direct theft from an emerging nation, will the battle be won.
countries are offered the same levels of access and support enjoyed by
developed countries and the multimillion dollar fraud seen for what it
is, direct theft from an emerging nation, will the battle be won.
The writer is State Inspector-General for Djibouti.
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