Driving inequality and fuelling radicalism, corruption cheats Africa’s governments of $50bn a year. We need sanctions for those who perpetuate it
By Kenya Confidential Good Governance Editor, Nairobi – September 16, 2016
Corruption is the most neglected human rights violation of our time. It fuels injustice, inequality and depravation, it is a major catalyst for human trafficking, wildlife poaching, criminal cartels and terrorism. However, it’s easier to condemn corruption than do anything about it.
Recently a former Kenya’s Inspector of Police David Kimaiyo had the temerity to publicly proclaim that only corrupt officials can survive in the current Jubilee regime under which he served for over a year. Kimaiyo headed the most corrupt wing of government agencies plagued by graft from the recruitment of police cadets to the top ranks of Commissioners of Police. He rose through the ranks of the defunct Kenya Police Force to become Director of Operations during the notorious bloodbath of 2008 post-election violence in Kenya. He therefore had first hand experience about police corruption at every grade.
When he became Inspector General he had a golden opportunity to clean up the “new” National Police Service under the reform agenda. Yet Kimaiyo cannot point at a single senior corrupt officer prosecuted for corruption under his tenure. Instead, during superficial police vetting, he presided over confessions of police officers admitting to crimes of corruption, drug trafficking, human trafficking and criminal cartels in which they made millions of shillings in short periods of their crooked careers.
With all the evidence the corrupt officers were only asked to go home and enjoy the fruits of their sins. He now says he wants to join politics and the club of many former corrupt top civil servants now in politics.He is bitter that a system that rewarded his inept performance finally got rid of him after he was fired as chairman of the highly security sensitive Kenya Airports Authority. He was sacked when it became obvious that the lucrative US direct flights would not fly to Nairobi as long as he headed Airports Authority, following a debacle of an improvised explosive device (EID) terrorist attack at Jomo Kenyatta International Airport he described as an electric bulb explosion when he was Inspector General.
On January 16, 2014, Kimaiyo dismissed the terrorist IED blast reports, saying the incident happened when a “loose bulb” fell into a dust bin, causing a sound that was “mistaken” for an explosion. “It was not a blast at JKIA but some papers caught fire after a loose light bulb fell into a dustbin that caused panic at Java coffee shop,” — David Kimaiyo (@IGkimaiyo) January 16, 2014. That was after the terrorists fled in a bullet-riddled car with one of them dead that was abandoned at Shauri Moyo shopping centre – a stone throw from a police station.
In Africa, the social and political consequences of corruption rob nations of resources and potential, and drive inequality, resentment and radicalisation. Corruption cheats the continent’s governments of some $50bn (£38bn) annually, and stymies successful cities, sustainable economies and safe societies.
In Kenya the government admits losing a third of annual budget to corruption yet allocates not a single cent to civic awareness on the social evil. The Office of President that hosts the most corrupt departments of police and defense last April in a letter signed for the Principal Secretary said it had no funds set aside for Anti-Corruption Awareness. It however expressed appreciation for the concern over corruption and service delivery to the public. That was after the government allocated over Ksh 2.7 billion to a multi-agency formation to fight corruption.
The agencies include the notoriously corrupt Judiciary, Office of the Directorate of Public Prosecutions, the police wing of Criminal Investigations Department (CID) and the dubious Ethics and Anti Corruption Commission (EACC) all of which have shown no interest in creating any public awareness against corruption. If anything the Judiciary, whose retired Chief Justice Willy Mutunga requested director of Public Affairs and Communication Naim Bilal Yaseen to initiate anti-corruption initiative waited until he left and shelved the matter. New signposts on service delivery and tiny signs proclaiming age-old cliche “Judiciary is Corruption Free Area” have been erected. Kenyans know their judiciary is yet to be corruption free.
Similarly, the Ethics and Anti Corruption Commission Deputy Director and Head of Corporate Communications Karichi Marimba is sitting on a proposal he had said he would forward to then Director Phillp Kinisu recently forced out of office for failing to disclose his family business involvement with corruption-ridden National Youth service. The Director of Public Prosecutions Keraiko Tobiko totally ignored a proposal for collaborative partnership jointly with the Judiciary.
When President Uhuru Kenyatta calls on the police and other corruption fighting agencies to stop corruption, they all laugh all the way to their banks and MPesa accounts wondering whether he is a dreamer to expect them to kill the goose that lays their golden egg. Police and judicial officers vetting has revealed how lucrative the corruption industry is for the actors to ignore Uhuru’s calls. Some police officers have opted to retire early and enjoy their corruption proceeds rather than face the vetting board. In a few years they have accumulated more money than a 30-year service would yield in retirement benefits.
Corruption is shaping up to be a major issue in August 8, 2017 General Election in Kenya and the opposition leader Raila Odinga has already hit the road repeatedly painting the ruling Jubilee government as corrupt beyond redemption. He loses no opportunity in public rallies to drive home numerous accounts of grand corruption topped by unsubstantiated Eurobond, National Youth Service Ksh 791 million scandal, the SGR Railway, Lapset project among others. Read http://www.businessdailyafrica.com/Anti-graft-agency-reveals-how-NYS-cash-is-stolen/539546-2930998-ojneob/index.html
Meanwhile, a joint report by the African Development Bank and Global Financial Integrity found that up to 65% of this lost revenue in African nations, disappeared in commercial transactions by multinational companies. According to Oxfam, as much as 30% of African financial wealth is estimated to be held offshore, costing an estimated $14bn (£10bn) in lost tax revenues every year.
This corruption discourages donors and destroys investor confidence, strangling development, progress and prosperity. Read, Kenya’s Politics of Poverty series.
Added to that, across the continent, sociopolitical dissatisfaction at corruption provides fertile ground for radicalization, and some extremist organisations are adept at portraying Islamism as the solution to such injustice. Corruption also stimulates recruitment of young Nigerians into the ranks of Boko Haram. In a recent study, 70% of those interviewed in the state of Sokoto cited corruption as a factor driving radicalization.
Kenya has a fair share of radicalized youths joining the terrorist group of Al Shabaab, who now include young women. Many Kenyan youths also consider corruption as a way of life because all their lives they have never seen any minister or senior government official punished for involvement in corruption.
By understanding corruption’s full impact and seeing it through the eyes of its victims, we can create new weapons to combat it. This is worth considering as we approach the first-year review of the sustainable development goals. Among them is SDG 16, which aims to reduce bribery and corruption, develop accountable institutions, cut the flow of illicit money and weapons, and strengthen the recovery and return of stolen assets.
More can be done at a global level to support these ambitions. Bilateral trade agreements should be based on commitments to end corruption and protect human rights, and protocols to prevent corruption should be built into development aid and loans.
There are some encouraging signs on the continent. When leaders from countries such as Kenya, Rwanda, Nigeria and Tanzania highlight corruption as a major threat to their countries, then we might just be seeing the final days of impunity. The test now is whether they deliver on these fresh anti-corruption promises in credible ways that take account of human rights.
Human rights are enforced by international treaties, backed by judicial bodies with teeth such as the international criminal court, the international court of justice and regional bodies such as the African court on human and people’s rights. The UN security council and the African Union’s peace and security council can impose sanctions in response to violations of political, economic, social or cultural rights, or to deal with torture, genocide and war crimes. On top of that, countries and international bodies have an obligation to act when human rights are breached.
Yet there is no such obligation to act against endemic corruption. International agreements define various corrupt practices as a crime, but not corruption itself. Instead, it is passively defined as a technical flaw in governance, its horrors disguised in legalese. Corruption’s victims get little mention.
That’s why so little progress has been made by the UN convention against corruption (Uncac). This global agreement elevated anti-corruption action to the world stage. But Uncac relies on states for implementation, and – unlike global protocols governing human rights – there is no effective sanction for those in breach. An absence of enforcement creates space for corrupt officials and businesspeople to hide without fear of pursuit or prosecution. And there is little political will to change things.
We need to give Uncac muscle by joining the moral and legal dots between corruption, human rights abuses and international crimes. Acknowledging the negative human rights impact of corruption makes it imperative for African states to provide better protection to their citizens. Africans have the most at stake in getting anti-corruption efforts to work, because corruption disproportionately affects poor people.
A more rights-based approach to corruption is a good strategy for both African and European governments. It would mean greater political stability, and provide an environment for sustained social and economic development. This, in turn, would have a positive effect on the drivers of conflict, terrorism and migration.
The human rights community built an arsenal to protect people. Now anti-corruption activists need to do the same.
A clear Schoolchildren message to President Uhuru as they flee tear gas in Nairobi after police break up a protest of their play field grabbing.
Africa losing billions from fraud and tax avoidance
First African initiative to address illicit outflows says governments, multinationals and crime deprive poor countries of crucial services
A party political billboard along a Lagos highway. Nigeria’s crude oil exports are often mispriced, according to a new report. Photograph: Pius Utomi Ekpei/AFP/Getty Images
Africa is losing more than $50bn (£33bn) every year in illicit financial outflows as governments and multinational companies engage in fraudulent schemes aimed at avoiding tax payments to some of the world’s poorest countries, impeding development projects and denying poor people access to crucial services.
Illegal transfers from African countries have tripled since 2001, when $20bn was siphoned off, according to a report released by the African Union’s (AU) high-level panel on illicit financial flows and the UN economic commission for Africa (Uneca).
The report was praised by civil society groups as the first African initiative to address illicit outflows from the continent.
In total, the continent lost about $850bn between 1970 and 2008, the report said. An estimated $217.7bn was illegally transferred out of Nigeria over that period, while Egypt lost $105.2bn and South Africa more than $81.8bn.
Trade mispricing, payments between parent companies and their subsidiaries, and profit-shifting mechanisms designed to hide revenues are all common practices by companies hoping to maximise profits, the study said.
Keep your eyes open, speak out: we can fight the menace of corruption in Nigeria Billboards yet to be seen in Kenya despite losing billions of shillings in corruption
Nigeria’s crude oil exports, mineral production in the Democratic Republic of the Congo and South Africa, and timber sales from Liberia and Mozambique are all sectors where trade mispricing occurs.
Former South African president Thabo Mbeki, who chairs the panel, said: “The information available to us has convinced our panel that large commercial corporations are by far the biggest culprits of illicit outflows, followed by organised crime. We are also convinced that corrupt practices in Africa are facilitating these outflows, apart from and in addition to the related problem of weak governance capacity.”
Criminal networks engaged in drugs and human trafficking, animal poaching, and theft of oil and minerals also contributed to money leaving the continent.
This is the first time African countries have spoken out so strongly about how these crimes are hurting their people
Reducing these losses requires urgent and coordinated action, the report said, calling for renewed political interest in fighting corruption, increased transparency in extractive sector transactions and a crackdown on banks that aid fraudulent transfers.
African and non-African governments and the private sector – including oil, mining, banking, legal and accountancy firms – were all involved in schemes designed to launder money and avoid paying corporate tax, according to the study.
More than $1tn was siphoned off globally through illegal schemes between 2007 and 2009, the report said, noting that lost African revenues comprised 6% of that total. But the authors cautioned that poor data and complicated laundering networks could make the amount much higher.
“Illicit financial flows from Africa range from at least $30bn to $60bn a year,” the report said. “These lower-end figures indicated to us that in reality Africa is a net creditor to the world rather than a net debtor, as is often assumed.”
But efforts to stop funds reaching terrorist groups, such as Nigeria’s Boko Haram and Somalia’s al-Shabaab, have led to improved anti-money laundering institutions in many African countries, the report said. This includes passing legislation designed to stop illicit flows, creating financial intelligence units and monitoring banking activities.
The report called for the UN to crack down on European and US firms that engage in tax avoidance and money laundering.
Joseph Stead, senior economic justice adviser at Christian Aid, said: “This is the first time that African countries have spoken out so strongly and in unison about how these financial crimes are hurting their people. That is a big deal.
“From now on, it will be much harder for the Organisation for Economic Co-operation and Development and other rich country groupings to argue that tax dodging, corruption, money laundering and so on are not a top priority for African governments.”
Governments that “turn a blind eye” to illicit outflows are forcing their poorest citizens to forgo hospitals, schools and environmental protection, said Sipho Mthathi, Oxfam’s executive director for South Africa.
“Oxfam estimates that Africa alone is losing almost half of the global $100bn of annual illicit financial flows,” she said.
The bulk of Africa’s illicit transfers originated from west Africa, where 38% of all funds leaving the continent were generated. Profit-making activities in north Africa accounted for 28% of the flows, while southern Africa, central Africa and eastern Africa each made up about 10%, the report showed.
Global Financial Integrity president Raymond Baker said the report represented a historic moment in the effort to fight Africa’s “most pernicious economic problem”. “This is a turning point in the movement to curtail illicit financial flows and promote financial transparency, both within Africa and globally,” he said.
The high level panel was founded by the AU and Uneca in 2012.