Africa: policy recommendations
Preventing the looting of the public purse will require Africa and the West to work together
By Ola Bello
David Cameron, the UK’s Prime Minister, was revealed in a leaked video to have referred to Nigeria and Afghanistan as “possibly two of the most corrupt countries in the world”. Nigerians on social media objected to this sweeping categorisation. His comment had inadvertently downplayed the serious anti-corruption push of Nigeria’s current government, and even reveals ambiguities in the UK’s own global anti-corruption efforts. Cameron’s comment came just as Nigerian President Muhammadu Buhari headed to London for the May 12 2016 anti-corruption summit hosted by the UK. Mr Buhari must undoubtedly feel awkward hearing some home truths on corruption from the leader of a steadfast anti-corruption ally, which itself had received some of Nigeria’s looted funds into its financial system in recent years.
Many would sympathise with Mr Buhari’s deliberately understated reaction, which sought not apologies for Mr Cameron’s comments but concrete help in repatriating Nigeria’s stolen wealth from the UK and other British-controlled jurisdictions. The British PM’s interjection on how the cankerworm of corruption badly hobbles Nigeria’s potential is on point. Mr Buhari himself has, if anything, gone much further in repeatedly characterising corruption as a menace likely to kill Nigeria unless the country moves drastically to curtail it. However, what seemingly sets Nigerian and African corruption apart from its subtler manifestation in matured western democracies is the vile manner in which politicians and their ilk go about the business of pilfering from the public purse. In truth, the cruder forms of stealing by officials, which is routine in countries from Malawi to Kenya, will be inconceivable in countries with well-entrenched oversight mechanisms and a functioning rule of law.
In Nigeria, billions of dollars have disappeared from the accounts of public bodies like the Nigerian National Petroleum Company. In other instances, funds allocated for public works have simply disappeared into private pockets without any of the planned public infrastructure projects being delivered. Even then, this hardly justifies the lack of nuance in Cameron’s pronouncement on the state of corruption in Nigeria. The effort of the Buhari government over the past year has arguably added an unprecedented bite to Nigeria’s war on corruption. For a start, the UK itself is hardly above reproach. This is evident in examples such as the decision by the UK’s Serious Fraud Office (SFO) in 2006 to discontinue a corruption investigation into a deal involving BAE Systems and some members of the Saudi royal family. This was widely criticised, given that BAE is one of the leading UK-based military and aeronautic suppliers.
On another level, Mr Cameron’s choice of words was irreverent, caricaturing one of the countries at the vanguard of tackling corruption in Africa in recent time as corruption personified. He essentially jumbled Nigeria together with Afghanistan, which was second from bottom in Transparency International’s latest corruption ranking. Nigeria was ranked 136th out of 168 countries in the same survey. Corruption is not unique to developing countries, and certainly does not define the Nigerian essence. The description of a brash, “Nigerian-style” corruption is a well-worn cliché in international news coverages of the country, even though Africa as a whole largely featured as a footnote in the recently leaked Panama Papers. Outside Africa too, corruption can be pervasive and endemic to electioneering campaigns and the broader political system of supposedly matured western democracies like France, and is also evident in the way that some western businesses have long operated in Africa.
In many Western countries, it is not unusual for politicians to avoid public scrutiny by simply awarding lucrative contracts to their close business associates, along with stealth and routine circumvention of established procurement rules. Some questionable tactics employed by US politicians are also not dissimilar to the constituency or “pork barrel” projects recently trimmed down from an earlier iteration of Nigeria’s draft 2016 budget. These have oftentimes provided a backdoor route to siphon public funds into opaque corruption schemes. However, in the US, France and much of the advanced democracies, regardless of the chicaneries of corrupt power elites, earmarked public infrastructure projects often get delivered. That’s a crucial distinction from the outright looting that is pervasive in parts of Africa.
During their London summit, Mr Buhari conceded Mr Cameron’s steadfastness in their shared determination to discourage corruption with impunity. Left unchecked, this undoubtedly damages society’s long-term prospects. The Nigerian president also rightly demanded the return of looted funds. Going forward, the more cogent point to reiterate to Mr Cameron and other developed country leaders is that the worst anti-development form of corruption is not localised in Africa. In truth, few who have stolen anything substantial in Africa have gotten away with it without major Western accomplices. To discourage the scourge of looting from some of the poorest countries on earth, promising shifts have been discernible in the actions of some Western governments. Equatorial Guinea and Congo-Brazzaville are among countries that have come under intense judicial scrutiny in places such as the US and France, for example.
Investigations have been launched in recent years into properties allegedly procured with proceeds of corruption by sitting African presidents, their offspring or associates. Even then, these corrective measures can too often seem geared to addressing only a tiny tip of the iceberg. Of relevance here is the distinction some have tried to draw between “productive” corruption, which occurs as part of creating economic value, and destructive corruption that nullifies and destroys value-creation. The latter is synonymous with contexts where blatant diversion of public and other developmental resources have simply caused retrogression, marked by looting on an industrial scale, with much of the diverted funds ending up in banks abroad and in the acquisition of foreign assets.
Here, the UK has acquitted itself well in recent years, helping Nigeria prosecute officials who spirited stolen funds abroad, from Diepriye Alameseigha through Joshua Dariye to James Ibori. In a broader perspective, the campaign to promote wider transparency is badly circumscribed. Only particular types of corruption are given serious international attention, informed partly by narrow readings of national economic and other interests as well as the balance of geopolitical influence. For example, the sometimes equivocal stance of some Western governments in the debate on illicit financial flows (IFFs) is something that has long riled activists in Africa, the majority of whom struggle to understand why global powers in Washington, Berlin and London have not devoted more muscular effort to addressing IFFs and questions of opaqueness around the beneficial ownership of economic assets.
Africa alone lost more than $854 billion to illicit outflows between 1970 and 2008, with Nigeria accounting for the biggest share of $89.5 billion. Many of the so-called offshore tax havens which act in ways detrimental to Africa’s development interests are British-controlled or British overseas territories, including the Cayman Islands and the British Virgin Islands. Rather than dealing with these head-on, as David Cameron himself proposed during the UK’s Presidency of the G8 in 2013, much obfuscation has prevailed. The initially strong resolutions on these issues proposed by Cameron were significantly watered down in the final summit outcome, apparently on the strength of opposition mounted by some of the British Overseas Territories. Britain’s and others’ pledge at the London summit to establish registers for beneficial ownership augurs well.
Campaigners have long wondered why the question of IFFs and other misdemeanors are not entrusted to the UN, but rather left to the club of advanced western countries represented within the Organization for Economic Cooperation and Development (OECD). And instead of prioritising IFFs and the much vexed question of beneficial ownership, the West has focused too disproportionately on the narrower issue of Base Erosion and Profit Shifting (BEPS), which directly affects the potential tax takes of treasuries in the developed economies. In conclusion, Mr Buhari is undoubtedly one of the few African leaders that can confidently tout their anti-corruption credentials. He should remind Cameron as his chief host, and the other London summiteers, of the mutual accountability, joint responsibility and collective commitment needed to comprehensively address corruption.
Unless they focus on a wider-ranging set of transparency challenges, their collective anti-corruption effort will come to naught. This includes IFFs and beneficial ownership, BEPS and tax transparency, expanded rules on disclosure, and the standardisation of approaches to procurement and transfer-pricing, among others. The London conference announcement on a proposed agency on corruption and transparency to be based in London can be of practical help.
