The plunder of national resources is not new in African autocracies. Rich individuals and large companies hide income and assets from
public scrutiny and from taxation by transferring them across borders.
A study published by the Association of Concerned Africa Scholars details how the illicit siphoning of billions of dollars abroad by foreign investors and African leaders has impoverished Africans for 40 years. Estimates of illicit capital outflows range from U.S. $854 billion to $1.8 trillion between 1970 and 2008. (This number happens to tally closely with industry estimates of the
holdings of African High Net Worth Individuals at $800-1,000 billion.) From an average of $17.8 billion per year in the 1990s, illicit financial flows shot to $50.3 billion per year on average during the period from 2000 to 2008. From 1970 to 2008, Nigeria lost a staggering $296 billion to capital
flight. About $71 billion went 'missing' from Angola between 1985 and
2008 . Other oil-exporting countries also
suffered substantial capital flight in the last four decades: Côte
d'Ivoire ($45 billion), the DRC ($31 billion), Cameroon ($24 billion),
the Republic of Congo ($24 billion), and Sudan ($18 billion).
The two main mechanisms are outright embezzlement of export revenues by
government officials entrusted with the management of public resource
exploitation and commercialization, and the under-invoicing of oil
exports. In 2002, for example, the IMF reported that as much as $4
billion of Angolan oil sale proceeds had not been accounted for over a
period of four years. This missing money finances private
wealth accumulation by the political elite and their associates.
Out of the six countries with the highest average capital flight over the period 2000 to 2008, namely Angola, the Democratic Republic of Congo, Côte d’Ivoire, Nigeria, South Africa, and Zimbabwe, four had poverty rates above the African average in 2008.
On-going investigations in France and USA into fraudulent acquisition of assets by some African political elites have revealed that they have embezzled large sums of money used to buy mansions costing hundreds of millions of dollars apiece, luxury goods such as expensive cars, jewelry, paintings, memorabilia, private jets, yachts, etc., mostly in Western countries. French judges have been investigating illicit wealth accumulation by
the presidents of the Republic of Congo, Gabon, and Equatorial Guinea,
all of whom are accused of embezzlement of public funds, money
laundering, and plundering national wealth. In July 2012, Judge Roger Le Loire issued an arrest warrant against
Teodoro Ngema Obiang, nicknamed Teodorin, the son of the president of
Equatorial Guinea, on the basis of evidence of illicit wealth
accumulation through embezzlement of public resources. The stylish
president's son has amassed a portfolio that includes
multi-million-dollar real estate in France, luxury cars, designer
watches, and art objects. His personal financial transactions are
handled through his forestry company, Somagui Forestal, and bank
accounts in offshore centers.
The culprits in African capital flight include not only corrupt leaders
but many others who gain from illicit financial flows. These include
natural resource exploitation companies, trading partners who facilitate
misinvoicing, banks in safe havens, and middlemen and "deal makers" who
facilitate transactions. The corruption is perpetuated by the complicity of foreign
special interests
and a shadow international financial system that enables financial
criminals to walk free thanks to banking secrecy. It is also facilitated
by the willful blindness of Western financial
institutions and governments that have tolerated this illicit
accumulation of wealth over the years. Tax havens help wealthy individuals and large corporations escape from
criminal laws, from financial regulation, from transparency and
disclosure, from inheritance rules, from professional liability, and
more. Private bankers from London, Geneva and New York. They have been
ruthlessly 'efficient' in shifting the assets to Africa's wealthy elites
and the liabilities to the African public.
Take your money to a tax haven, and your home rules no longer bind
you. In other words, tax havens help wealth elites escape from the
rules of civilized society, whether by illegal means or not. The secrecy facilities or tax loopholes provided by the 600,000-odd
International Business Companies in the British Virgin Islands are not
for the benefit of local islanders: they are for foreigners. The City of London
financial center) runs a series of satellite tax havens, spread across
the world in concentric rings. In the inner ring are Britain's Crown
Dependencies: Jersey, Guernsey and the Isle of Man. The next ring out
are the 14 Overseas Territories: the last remnants of the British
Empire, which include some of the world's most important small island
tax havens: the Cayman Islands, the British Virgin Islands, Bermuda,
Turks and Caicos, Anguilla and Gibraltar. These two offshore networks,
which are essentially the last remnants of the British Empire, are
partly British, and partly independent. Each has its own political system with its own independent politics,
but each has a Governor (or Lieutenant Governor) appointed by the Queen. Britain is officially responsible for their foreign relations and
defense, and for their good governance. The last court of appeal is the
Privy Council in London.
Further out in the web are a number of other tax havens with ongoing
strong historical or commercial ties to the UK: Hong Kong, Mauritius,
the Bahamas, and others. From Britain's point of view, this network operates along the lines
of a spider's web, with the City of London at the center. Each haven
tends to have something of a geographical focus: the Caribbean havens
focus most heavily on North, Central and South America, while the Crown
Dependencies will focus most heavily on European business, as well as
Africa and the Middle East. They capture huge amounts of money (and the
business of handling money) up to the City of London. Just in the second quarter of 2009 the UK received net financing of
US$332.billion just from its three Crown Dependencies.5 Martyn Scriven,
secretary of the Jersey Bankers' Association, describes the
relationship: "If I have money to spare, I pass it to the father. Great
dollops of money go into London from here." Promotional literature for
Jersey Finance, says it plainly: 'Jersey represents an extension of the
City of London" .
The biggest tax havens, it turns out, are not the small islands of the popular imagination, but the world's biggest economies.It may surprise some people to discover that the United States is also a
gigantic tax haven in its own right, thanks to state-level laws that allow the
formation of anonymous corporations providing bullet-proof secrecy, and
federal laws that for decades have deliberately turned a blind eye to
dirty foreign money, often fed into Wall Street by foreign 'feeder' tax
havens. The Tax Justice Network's Financial Secrecy Index or FSI which combines a
jurisdiction's secrecy score with a weighting for the size of its
offshore financial sector, reckoned in 2009 that the world's five most
important providers of offshore financial secrecy were the United
States, Luxembourg, Switzerland, the Cayman Islands and the United
States, in that order. Another study gave Switzerland the top rank, followed by the Cayman Islands,
Luxembourg, Hong Kong, and the USA. In both cases, however, Britain
would have ranked head and shoulders above the others if included were the British Overseas Territories and
Crown Dependencies as part of Britain.
In 2008, 47.5% of Africa’s population were poor. This proportion is more than twice the average poverty level of all developing regions combined, which stood at 22.4% of the population. Africa’s poverty ratio was more than three times the figure in the East Asia and Pacific region where poor people represented 14.3% of the population in 2008. In absolute numbers, Africa had the second highest number of poor people with 386 million against 571 million in South Asia in 2008.
Equatorial Guinea, Gabon, and the Republic of Congo are among the
richest countries in Africa with per capita incomes of $8,649 (second),
$4,176 (5th), and $1,253 (15th), respectively. They have massive oil
reserves, ranking 7th (Gabon), 8th (Congo), and 10th (Equatorial Guinea)
in the continent. While their presidents and other members of the
political elite are amassing fortunes abroad, the majority of their
fellow citizens live in abject poverty, lacking access to basic social
services such as decent sanitation, clean drinking water, elementary
school, and health care. Despite Equatorial Guinea's large oil revenues, a baby born there has
less chance of living to his or her fifth birthday than the average
sub-Saharan African infant. Gabon and Equatorial Guinea rank second and
third to last in their rate of immunization against measles, at 55% and
51%, respectively.
In Nigeria, more than two-thirds of the population live below the
national poverty line, meaning that they do not have enough income to
meet basic daily needs . In the Democratic Republic of
Congo, a country plagued by both institutional decay and civil strife,
more than seven out of ten citizens are classified as poor.
