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Issue #002- Club Afrika Newsletter
Featured Article
The Looting
of Africa Corruption is certainly not a social
vice unique to Africa or the Third World. Corruption prevails in one form or
another in practically all countries, Western and communist alike.
Nevertheless, there are several reasons why we must not discount the grave
consequences of corruption in developing countries. First, corruption has
detrimental effects on economic development. It decreases the efficiency of
the civil service and its ability to formulate and implement government
development policies, and it robs the country of vast sums of foreign exchange
needed for investment. Second, the seriousness of corruption is relative.
Developed countries can afford the embezzlement of a sum that would spell
economic disaster for a developing country. Third, it is relatively easy for
corruption to get out of control and become self-reinforcing because the
administrative, political, and constitutional institutions of a developing
country may possess insufficient checks to deal with the problem effectively.
Witness the African political system whereby a president can confer upon
himself such titles as "president-for-life," can manipulate the constitution,
and can embezzle millions of dollars for deposit in Swiss bank accounts with
impunity. Fourth, a corrupt government loses its legitimacy and its subjects'
respect, making it difficult to elicit the sacrifices, initiatives, and
enterprise necessary for development. This is not the appropriate place to propose a reform of the "system" to rid an African country of corruption. However, a corrective system must have what I call O-IDEA: Organization, Incentive, Discipline, Efficiency and Accountability. For accountability, in particular, freedom of statement and freedom of the press are necessary for citizens to demand an accounting of public monies appropriated by officials and for the press to expose malpractices. Finally, the following development should be of interest to African kleptocrats: On May 4, 1991, Switzerland announced that it will lift the 57-year-old iron-clad secrecy that enshrouded its "Form B" bank accounts. This designation allowed clients to conduct bank transactions through a lawyer, notary or trust administrator without ever revealing their own identities. At the end of 1989, Swiss banks held 30,000 "Form B" accounts holding about $135 billion. Most of those accounts are owned by Western tax evaders, drug money launderers and corrupt Third World dictators, including African. After September 30, 1991, the accounts will be replaced with a written statement on the identity of the real owner (Washington Post, May 4, 1991; p. A20). The Swiss have actually gone beyond disclosing the identities of real owners of these accounts: The Swiss Justice Ministry extradited to Russia a former Soviet citizen accused of embezzling 85 million rubles from Soviet companies and banks between 1988 and 1990. Gregory Lerner, a 40-year-old financier, who became an Israeli citizen after emigrating from the Soviet Union in 1989, was arrested at the request of Soviet authorities during a visit to Switzerland in 1991. He lost an appeal to the Swiss Supreme Court (Washington Times, April 6, 1992; p. A2). Africans will be making similar requests. As Ekoue Teko demanded: "It is time the West helped Africa to retrieve the money our politicians have stashed in Western banks. If this is done, Africa will cut down on the requests for Western loans. Everyone will be happy -- the West will have some peace of mind, we will have enough to live on without borrowing (New African, Dec 1991; p. 43). When President Mobutu Sese Seko was routed from Congo, the new government of Laurent Kabila seized Mobutu's assets reportedly held in Switzerland. Swiss authorities responded by seizing Mobutu's 30-room villa near Lausanne and clamped a freeze on all family assets. The Swiss government then ordered the country's 400 banks to report by end of May, 1997, all holding by Mobutu or any people and companies associated with him. But, Swiss authorities say an initial search of the country's 12 leading banks turned up no trace of Mobutu's money. They surmise that Mobutu moved large portions of his wealth out of the country after Switzerland introduced new laws in 1990 making it more difficult to launder the fortunes of drug smugglers and dictators . . . Jean Ziegler, a Socialist member of parliament and longtime critic of Swiss banking secrecy, says he doubts the claim that none of Mobutu's money is left in Switzerland. "Swiss banks are world champions in building empires for crooks and then protecting them behind smoke screens," said Ziegler. "We are talking about companies owned by Mobutu's family, with very complicated structures and accounts of the whole clan" (The Washington Post, May 26, 1997; p.A21). The Swiss have made some efforts to return stolen money, however. In April, 1997, "Switzerland agreed to return $2.2 million to the West African state of Mali, which had pressed for the repatriation of funds taken by former dictator Gen. Moussa Traore, who was ousted in 1991" (The Washington Post, May 26, 1997; p.A25). Part 2 - The Rape and Plunder of Africa In 1988 there was much outrage over the discovery of toxic waste dumps in
Africa. Since this waste came from both the East and the West, the issue was
immediately couched in a North-South paradigm. Headlines screamed, accusing
the North of turning the South into a dump site. Of course, irresponsible and
unethical disposal of deadly chemicals anywhere should be condemned, and
Africans had a right to be incensed. But what most African radicals ignored
was the fact that foreign companies, whether of Eastern or Western origin,
could not dump hazardous materials in Africa without the knowledge and
cooperation of some of its leaders and officials. Indeed, when Benin accepted
radioactive nuclear waste from France, President Ahmed Kerekou "decided that
waste will be buried on the outskirts of Abomey, one of the centers of
opposition to Kerekou" (West Africa, June 20, 1988; p. 1109). On many other issues, such as the Third World debt crisis, one encounters similar diatribe. Africa's total foreign debt had reached a staggering $270 billion in 1991, exerting a drag on its rate of development and frustrating efforts to alleviate widespread squalor and poverty. But nobody talked about helping to repay Africa's foreign debt by repatriating the loot corrupt African elites had stashed abroad. For decades, African radicals railed against colonial plunder, American economic imperialism, the avaricious propensities of Western banks, the predatory practices of multinational corporations, and the tight-fisted International Monetary Fund as the causes of Africa's economic crisis. For example, it was incessantly argued that Western banks, acting as monopolists, cornered credit markets and callously extracted exorbitant interest charges from destitute, problem-plagued African countries that could ill afford to pay them. To be sure, the practices of some foreign commercial banks were of a questionable nature, and one could justifiably draw up a lengthy list of charges and dubious financial transactions. For example, overzealous Western bankers routinely neglected checks on creditworthiness, financial controls, and supervision in extending loans. Moreover, the international financial system, dominated by Western banks, can be said to have operated to the pernicious disadvantage of many Third World countries. Further, the collapse of the oil and copper markets and the slump in the prices of cash crops imperiled government finances in a number of countries. But unethical practices by foreign banks and defects in the international economic system and other external factors alone are insufficient to explain Africa's economic crisis. Nor could foreign companies exploit African economies without the connivance or active encouragement of corrupt government officials. CORRUPTION: THE EVIDENCE An investigation of the causes of Africa's financial crisis cannot be complete without a consideration of the behavior of the other party to a financial transaction--the borrower, in this case African governments. While a lender seeks the maximum return possible, it is the borrower's responsibility to seek the best possible terms for the loan. In the majority of cases the African borrowers were the educated elites. Thus, it is unrealistic to argue that these government officials did not know or understand the loan agreements they were signing. Vincent Mensah, a Ghanaian, placed the blame exactly where it belonged: Some Ghanaian intellectuals still cling to the notion that our current problems are the deliberate attempts by imperialism to thwart our efforts at development. The "imperialism and neocolonialism" rhetoric belongs to the 1950s and 1960s. The real problem is the way we run our own affairs. At the 25th anniversary of Ghana's independence, ironically, J. J. Rawlings said: "Ghanaians must be their own masters." We have been our own masters, mismanaging our affairs for 25 years, that is why he is now Ghana's head of state, purportedly to "correct things." Corruption inevitably results as people try to circumvent the controls and regulations, and take advantage of the loopholes. The ruling class, comprising the exploitative capitalists, and the corrupt public servants (more often than not including our soldiers of "fortune") emerge as the winners. Our myopic intellectuals then supply the rhetoric to divert the people's attention from the class struggle, and blame imperialism and aliens who, they claim, cheat us and sign dubious contracts with us. No foreigner can exploit us without the cooperation of some Ghanaians (West Africa, June 21, 1982; p. 1657). Another factor to consider in determining the cause of Africa's economic crisis is to what use the foreign loans were put. The painful truth is that African governments squandered, wasted, and consumed many of the loaned funds. Thus, there is little to show for the enormous African debt. True, there was colonial exploitation in the past but, today, the real exploiters and oppressors of the African peasants are often the African elites. It is common knowledge that highly placed African government officials extort commissions on foreign loan contracts and deposit them in overseas banks. The very people who are supposed to defend and protect the peasants' interests have instead been responsible for the institutionalized looting and capital flight that have plagued the African economy. An estimated $20 billion--more than what Africa receives in foreign aid--flees Africa annually. Said Herman Cohen, former U.S. assistant secretary of state for African Affairs in 1991: "Over the last 10 years, Africans themselves have exported $20 billion a year into bank accounts in Europe [and the U.S.] buying real estate. So if Africans don't have confidence in their own continent, why should the rest of the world?" (Africa Insider, July 1994; p.4). In 1988, for example, France sent $2,591 million in aid to Africa, but in the same year, according to the Independent, "[n]early CFA 3.5 billion--47 percent of the total issue--was exchanged in Europe by the Bank of France, some of it exported in suitcases" (June 19, 1990). In Kenya, "critics of the Moi government say that many of the people in government have the biggest accounts in foreign banks and that there is more money from Kenyans in foreign banks than the entire Kenyan foreign debt, which is about $8 billion" (The Washington Times, August 3, 1995; p.A18). The Economist (Jan 18, 1992) asked: "What Arab country has $50 billion in private savings stashed abroad? Where do customers fight over Mercedes sports cars that sell for $400,000? . . . This is not some gilt-edged petro-sheikhdom. It is Egypt, a country of 58 million people whose foreign debt of $35 billion nearly equals its Gross Domestic Product, where a typical monthly wage is $50, and rubbish is collected by small dirty children in rickety donkey-carts" (p. 42). Some of this capital flight from Africa represents wealth legitimately earned by Africans who have no faith in their countries' futures because of economic and political instability. But the rest is booty, wealth illegally acquired and transferred by the African elite. Shamefully, educated African officials amass their wealth by stealing it from the labor of poor peasants. Corrupt African officials looted billions of dollars from their countries in the late 1970s and early 1980s, and the financial drain continues. In Algeria a "former prime minister, Mr. Abdelhamid Brahimi, said recently that officials of the ruling Front de Liberation National had pocketed $26 billion in bribes and commissions on foreign contracts. The present prime minister, Mr. Mouloud Hamrouche, called the charge `grossly exaggerated' but did not deny its gist" (The Economist, April 14, 1990; p. 51). Libya should have one of the highest per capita incomes in the world with a population of only 5 million and vast oil wealth. Libya earns $10 billion a year from its 1.4 million barrels of oil a day. But "mismanagement and corruption so eroded the country's economic base that Libya sometimes fails to pay its foreign bills on time and some government employees go without a paycheck for months" (The Washington Post, Feb 15, 1992; p. A23). And the people see little of the oil wealth: "Libyans have to go to Tunisia for health care . . . The country's infrastructure is a shambles. The richest state in the region has the most antiquated communications" (The Economist, Sept 16, 2000; p.53). In November 1988 The Gambia launched a presidential inquiry into allegations of corruption and embezzlement against the telecommunications minister and other high government officials (West Africa, Nov 28, 1988; p. 2264). In Guinea President Lansana Conte admitted that "generalized corruption, incessant embezzlement, laxity in implementing budget estimates and malfunctioning of our administrative system have created a situation that has finally paralysed all the recovery programs that have been launched" (West Africa, Oct 17-23, 1988; p. 1974). In Mali former head of state, Moussa Traore, looted the country to amass a personal fortune worth over $2 billion--an amount equal to the size of Mali's foreign debt. This was the gist of a January 1992 article entitled le sang des pauvres (the blood of the poor) written by Swiss MP, Mr. Jean Ziegler, in the French newspaper Liberation (cited in West Africa, May 4-10, 1992; p. 746). In Sierra Leone scores of ghost workers were added to the government payroll and their salaries collected by workers, defrauding the government of millions of leones. "In one government department 75 percent of the staff were found to be nonexistent" (West Africa, Sept 5-11, 1988; p. 1648). In almost all cases such practices are indicative of corruption at the top. Indeed, in March 1989 Dr. Shamsu Mustapha, the former minister of state in the Ministry of Economic and Development Planning, was charged with financial impropriety. That brought to three the number of ministers charged with such offenses (New African, April 1988; p. 36). In 1992, according to West Africa, "The Criminal Investigation Department (began) examining documents pertaining to a $500 million loan contract entered into by former foreign minister, Dr. Abdul Karim Koroma and the Sierra Leone ambassador to Saudi Arabia on behalf of the government, and arranged by an oil company in Houston, Texas, on the understanding that the company would be paid a consultancy fee of $12 million" (Dec 16-22, 1991; p. 2115). (The Houston firm complained it never received its fee, fueling speculation as to what happened to the $12 million.) One irate African in Kano, P. F. U. Taylor, wrote: Any observer who knew Sierra Leone two decades ago can bear witness that it has been reduced to a country where there is virtually no medical facility; a country where portable water is a rare luxury; a country where pothole-free roads only exist in history; a country where a monthly salary is not sufficient to feed oneself. Given the present economic state of the country, which is considered as one of the poorest in the world, I refuse to believe that a national can contemplate an act that is, to say the least, worse than trading in slaves. Because while slave traders sold human beings who were not related to them, those under investigation, if guilty, have knowingly sold the whole population, including their own relations, generations yet unborn and the country itself . . . Those who rip off an African country should be put in the zoo. That is where they belong! (West Africa, March 16-22, 1992; p. 444). Outlining his reasons why he overthrew the Momoh regime in Sierra Leone on April 29, 1992, Captain Valentine Strasser declared: The nation as a whole was in a state of virtual collapse. Corruption, indiscipline, mismanagement, tribalism, nepotism, injustice, and thuggery were rampant. Members of government were engaged in the plundering of the state's resources to enrich themselves . . To indicate the depth to which our country had declined under the APC (All People's Congress) misrule, only 22 percent of all classes of roads are motorable; only one-third of cash crops were exported in the last few yeas. Infant and under-5 mortality rates are among the highest in the world. Life expectancy of 42 years is among the lowest in the world. Health services and infrastructure have been in a state of decay for a prolonged period. Recording exports of diamonds are now only a fraction of what they were a decade ago (West Africa, May 18-24, 1992; p. 840). The Liberian government initiated a number of probes to recover public funds expended for personal use by several officials in both the private and public sectors. The managing director of the National Ports Authority, his deputy, and the acting controller were dismissed for reportedly embezzling $1.5 million (West Africa, April 12, 1982; p. 969). In April 1986 the government's own newspaper, New Liberian, reported that "$13 million had allegedly been stolen through manipulation of customs receipts. The paper linked several top finance ministry officials with the scandal, including a deputy minister, a deputy commissioner of customs and an assistant minister" (West Africa, April 28, 1986; p. 908). The World Bank estimates that every year $60 million are diverted from state corporations to private pockets. In 1988 $3 million in U.S. aid funds simply vanished. That same year President Samuel Doe "fired the entire staff of the government's cheque printing and general auditing bureau for alleged corruption" (West Africa, March 21, 1988; p. 529). Declaring corruption as the scourge of Ghanaian society, the military government of Ghana embarked in 1982 on a crusade against corruption. After eight years of imposing stiff sentences and executing the guilty by firing squad, the government learned that it could not even clean up its own house. Top government officials were found to have fraudulently purchased equipment (West Africa, Dec 4-10, 1989; p. 2036), to have demanded and collected bribes (West Africa, April 5-15, 1990; p. 598), and to have embezzled government funds (West Africa, April 9-15, 1990; p. 598). In Togo the manager of the National Agricultural Fund was sentenced to 20 years in prison for embezzling $8.7 million (West Africa, March 28, 1988; p. 569). In the following year the former minister of justice and his associates were charged with involvement in swindling approximately CFA 15 million from Togo's lottery. In addition, the former minister of commerce was removed from office and fined because he had continued to draw his salary as a managing director of the Union of Togolese Banks (West Africa, April 17-23, 1989; p. 622). But the worst offender was the head of state, Gen. Gnassingbe Eyadema, himself: Another delegate [to the national conference] alleged that Eyadema's personal fortune was 800 billion CFA francs ($2.8 billion) most of which has been put into foreign banks. He said that the Nangbeto dam project which was costed at CFA 8 billion, was then increased to CFA 48 billion, so that funds could be "diverted" into the wrong pockets. Eyadema spent CFA 50 billion to build a chateau at Pya his home town in northern Togo. When Togo's phosphate mines were nationalized in 1974, Kabassema alleged that Eyadema had diverted 150,000 tonnes of phosphates valued at CFA 2.05 billion into the account of his adviser Maurice Assor. He also gave Assor exclusive monopolies on the export of 12 agricultural crops and later established SONACOM a central procurement agency for the purchase of imports. SONACOM became the conduit for all kinds of deals masterminded by Assor on behalf of President Eyadema. He bought Presidential jets, a Fokker 28, Grumman helicopters, a DC-8, various Boeing jets and an arsenal of arms. The construction of Niamtougu airport in the north and Hotel 2 Fevrier were also handled by Assor. On all these deals, Kabassema alleged, there were massive kickbacks banked overseas. The price of the Hotel 2 Fevrier jumped from CFA 17.5 billion to CFA 35 billion and yet the hotel only reached 26 floors high, compared with the 35 storeys originally specified (New African, Oct 1991; p. 12). Mr. Kabassema also alleged that "President Eyadema distributed largesse among some African Heads of State including Mobutu Sese Seko of Zaire, who received 150,000 tonnes of phosphates valued at CFA 3.3 billion while the late Sekou Toure of Guinea received a gift of CFA 125 million in 1970" (West Africa, Sept 2-8, 1991; p.1453). In 1988 Benin was rocked by a series of corruption scandals involving its military ruler, Mathieu Kerekou, and his cronies (New Africa, March 1988; p. 14).That same year President Paul Biya of Cameroon decided to wage a merciless war against corruption and the misappropriation of funds in his government. Although 115 high-ranking officials were arrested (New African, Nov 1988; p. 43), the government's investigators made little progress, and corruption increased. Minister of Public Service and State Control Haman Garga Adji "reported funds missing totalling CFA 357 million ($1.3 million) owed by top level civil servants and politicians" (New African, Jan 1992; p. 18). Within a year of taking office, Niger's President, Mahamane Ousmane, tripled his personal fortune. As required by law, President Ousmane declared a fortune of 51 million CFA ($89,000) and 10 houses when he took office in April, 1993. A year later, "The poor West African country's Supreme Court said on April 28, 1994, that Mahamane had declared 160 million CFA ($280,000), with 57 million CFA held in cash and the rest in a local bank. Mahamane's list of property was 10 houses in Niger, livestock and poultry, three cars, two television sets, two video recorders and two gold watches" (African News Weekly, May 20, 1994; p.8). State firms in Kenya were similarly looted. In 1990, for example, the auditor of state corporations reported that "fraudulent behavior in the management of Kenya's parastatal organizations caused a loss of $25 million; the losses were due to gross mismanagement and embezzlement of public funds" (The African Letter, Dec 16-31, 1991; p. 9). In Angola, theft of the country's wealth by members of the ruling MPLA administration accelerated in 1992, after the peace accords were signed in May 1991 to end the country's civil war: The law banning possession of diamonds [was] revoked to allow senior members to take stolen and smuggled diamonds out of the country. The proceeds of the sale of a 10-percent share in an oilfield which President Eduardo dos Santos said raised $312 million have apparently disappeared. Many diplomats in Luanda think much of the money has gone into private pockets. Several of the leaders of the MPLA, particularly those who have been in the oil sector, now own property in Europe and the United States (The Independent, London, Feb 19, 1992). Said Chester Crocker, former U.S. Assistant Secretary of State for African Affairs from 1981 to 1989, in a BBC World Service interview: "The MPLA is a bunch of rather sophisticated European-style Marxists who have been living off the cash cow of the petroleum industry and stashing away large fortunes in European banks." According to The New York Times (Sept 21, 1993), "The breakdown of ordinary commerce is compounded by pervasive corruption that diverts much of the food and medicine intended for the needy, and by the skewed priorities of the Marxist Government, which recently spent $500 million of its desperately scarce cash importing Volkswagen and Audis to sell to its generals and ministers at a fraction of their cost . . . The waste is so brazen that even the state television took to describing the Parliament as the `Audi-torium'" (p.A1). The Angolan Government earns around $3.5 billion from oil sales but what happens to the revenue is a closely guarded secret. "The bulk of the money bypasses the budget, disappearing straight into the hands of the presidency. Angolans, who have long suspected something of the kind, call the nexus of the presidency, the Central Bank and Sonangol, the state oil company, the Bermuda Triangle: the place where money vanishes without a trace" (The Economist, Jan 15, 2000; p.48). Much of the money is used to finance a war that has devastated the country and to finance the lifestyles of the super-rich, "oiligarchy," which the president has surrounded himself with. When the cash runs out, the powers-that-be take out short-term, high-interest loans, guaranteed against future oil production. Thus, the entire profits from Angola's oil production for the next three years are said to have already been spent" (The Economist, Jan 15, 2000; p.48). While it is true that the war, which started in 1974, has drained government coffers, analysts, diplomats and this country's exhausted population are increasingly questioning whether the formerly Marxist governing party, the Popular Movement for the Liberation of Angola (MPLA), is using the war's resumption as a ruse to skim oil revenues through phony arms deals and other corrupt schemes. "In 1999, after international petroleum companies paid Angola $900 million for exploration rights, the government devoted half the money to a military offensive that has pushed UNITA into the bush. It's anyone's guess what happened to the other $450 million since the bonus was not included in the government's published budget. But suspicions are as abundant as oil in Angola, which two years ago spent more on cars for cabinet ministers, legislators and their wives than it did on health and education for its citizens. An economist here estimated that corruption costs Angola $800 million annually. Global Witness, an international human rights and environmental organization, accused high-ranking government officials last year of using oil revenue to buy arms from Russian mobsters, then selling them to the government through bogus companies at inflated prices. Oil company officials working in Africa say it's impossible to operate in Angola without bribing top officials. Oil executives in Luanda, the capital, carry not only the cell phone numbers but the Swiss bank account numbers of key government ministers, an oil executive said (The Washington Post, Sept 18, 2000; p.A1). Even socialist Tanzania suffered from corruption. Prime Minister Joseph Warioba was moved enough to speak out with scathing frankness: "Everywhere you go even in hospitals and schools, corrupting and corrupt people seem to rule the day." Corruption has become institutionalized at the top among those who handle big money. As New African reported: "Ordinary Tanzanians are complaining bitterly that they have been let down by their leadership. Even essential services such as education, hospitals, and police are up to their necks in corrupt practices. People who use government hospitals expect to have to bribe doctors and nurses before they can be treated" (April 1990; p. 16). In Zimbabwe top government officials used their influence to buy trucks and cars at the artificially low official price from the state-owned vehicle assembly company and quickly sold them on the black market for enormous profit (Africa Report, Jan-Feb 1989; p. 37). Meanwhile, in Zambia President Kenneth Kaunda, the architect of Zambia's socialist ideology of humanism, dismissed as "a big lie" recent allegations that he had transferred $6 billion in state funds to personal bank accounts abroad (New York Times, Aug 15, 1990; p. A6). Civil servants who had retired ten years earlier from Zambia's Ministry of Power, Transport and Communications were found to be drawing their salaries on a regular basis. "A snap survey carried out on various public service departments found that 3 percent of the names on the government payroll were counterfeit . . . It was estimated that the government was losing 500 million kwachas ($12.5 million) a year in fraud of this kind (New African, Dec 1991; p. 33).
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