A story of a north-south partnership against corruption.
Fighting corruption at all levels is a priority. Corruption is a serious barrier to effective resource mobilization and allocation, and diverts resources away from activities that are vital to poverty eradication and economic and sustainable development” – Monterrey Declaration (2002)
“The people who gave those loans knew that the money wasn’t being spent wisely. Perhaps they even took their own cut. Yet the ordinary people of Nigeria have to pay back that loan. This is the injustice of it all. I want Jubilee 2000 to go and preach it in Europe, America and Japan that the burden of our debt is immoral” – Nigeria’s President Olusegun Obasanjo (2000)
Following years of progressive struggles by civil society across the globe, the issue of corruption has been recognized as a major obstacle to development and economic activities. The September 11, 2001 incidence has further brought the issue of money laundering and illicit money transfers to the front burner in global discuss.
Interestingly, both governments and civil society are now building bridges on the path of seeking an international treaty to effectively fight a dangerous vice, which has constituted itself a spanner in the works of development efforts.
THE AFRICAN BUILD-UP
Quite a number of initiatives have been in the pipeline by civil society in Africa to tackle corruption. In 1998, West African NGOs working on debt and Structural Adjustment in collaboration with the United Nations Development Programme (UNDP) and Northern NGOs met in Djregbe, Benin Republic in a conference facilitated by African Network for Environmental and Economic Justice (ANEEJ) to review the HIPC debt initiative of the World Bank and IMF launched in 1996.
The meeting provided an opportunity for the flag off of the stolen wealth campaign in West Africa. The issue reverberated at the LOME consultation of the World Bank and IMF with West African civil society on HIPC and the impact of structural Adjustment on the West African people in 1999.
Again the issue of corruption was taken on board for campaigning by the civil society under the aegis of Econdad, a sub-regional network on debt.
Following this, the issue was adopted at the LUSAKA declaration in late 1999 and Cologne side event in June 1999. It was also adopted at the Cotonou consensus in October 1999 and at the Jubilee South Summit held in Johannesburg, South Africa in November 1999.
In consolidating the Pan-African and global coalition to campaign for a UN convention on the recovery of stolen funds, a public hearing was organized in Lagos, Nigeria in November 1999 to generate ideas and strategies to realize this goal.
In all these meetings it was stated in very clear languages that the sustainability of democracy and economic reform in Africa would largely depend on whether Africa’s new democracies are able to deliver the goods in terms of poverty alleviation and human development. Causes of Africa’s poverty were listed to include war, bad governments, and drastic decline in terms of trade, environmental degradation and some others. But massive looting of African wealth by corrupt African leaders and their northern collaborators was identified as the chief cause of poverty in the region which allegedly owes over $560 billion as external debt and over 60 per cent of its population lives on less than $1 per day.
These fora also noted clearly that the loot deposited principally in European and US banks contributes significantly to political instability in Africa and reinforces impunity and attempts made to recover the loot met a brick wall as In the following:
(a) The stolen funds are deposited in countries with strict banking secrecy and corporate confidentiality laws such as Switzerland, Luxembourg, Liechtenstein, the Cayman Islands, the Bahamas, Bermuda, Antigua, Panama, Gibraltar, and the Cook Islands etc.
(b) The depositors usually create ‘fronts’ or ‘shell’ companies of trust who are the nominal account-holders and in whose names the funds are held at the financial institution, thereby concealing the true identity of the depositor.
IS IT POSSIBLE TO RECOVER AFRICA’S STOLEN WEALTH?
Civil society in Africa believes it is very possible to trace Africa’s stolen wealth kept in the north as the difficulties in recovering Philippines assets stolen by the Marcos Family and the wealth of Nigerians stolen by the Abacha family and several others running into several billion dollars underscores the need for a comprehensive international framework for the tracing, tracking and repatriation of such fund.
A pointer to its possibility is the international network that has been developed to trace and intercept the transfer and laundering of proceeds from narcotics trafficking across the globe. Since the 1970s, an elaborate web of bilateral and multilateral treaties and reciprocal agreements has created an international framework of cooperation by law enforcement agencies worldwide to combat money laundering. Essentially, money suspected to be the proceeds of narcotics trafficking or belong to narcotics producers and dealers are monitored by national agencies which can intercept, if need be, transfer of these funds. Many countries now require by authorities all transfers or deposits of large sums of money and to cooperate with anti-narcotics investigators. The national agencies seek and obtain assistance from colleagues in other countries in tracing the movement of laundered funds as well as suspected drug dealers.
In recent years, European and the US governments have successfully brought pressure to bear on international financial centers with banking secrecy laws such as Switzerland, the Bahamas, Luxembourg, Panama, Antigua and a host of others, to relax legal restrictions on disclosures on financial transactions of Drug producers and dealers so as to better prosecute the war on drugs and money laundering.
Another precedent exists in the discovery by Jewish community organiszations of banking records showing deposits by the Nazi Germany of funds stolen from Jews as well as funds deposited by Holocaust victims in Swiss banks. Switzerland is reputed to have highly restrictive banking secrecy and corporate confidentiality laws but the Jewish activists were able to trace and prove the existence of these deposits. A similar framework can be established in respect of funds stolen by African leaders.
There exist yet another very recent precedent. Since September 11, tracking down terrorist and their funds has become a priority on the international agenda. Names are being published, accounts identified and assets frozen. This is the kind of attention required to recover Africa’s stolen funds. Civil society in Africa in the face of these leeway’s saw the need to deepen our lobbying and campaign strategies to the Organisation of Africa Unity (OAU), European Union, G8 summits and UN meetings.
WHAT ARE THE ACP GOVERNMENTS UP TO?
The Organisation of African Unity (OAU), African Development Bank, United Nations, Economic Community for Africa at their joint annual meeting in Burkina Faso in 1999 identified capital flight as a major obstacle of development in Africa and therefore called on the International Community to redress the imbalance of cash out-flow/inflow and declining resources in Africa.
President Olusegun Obasanjo of Nigeria shortly on assumption of office in 1999 traveled to Germany where he made a strong case for an African Renaissance. He bemoaned the transfer of vast sums of public funds that were transferred to European and American banks. He called for the establishment of an international convention on the repatriation of stolen funds as the most valuable solution to the problem of stolen funds. He criticized the European bank for refusing to cooperate with efforts made by Nigeria to recover and repatriate the stolen funds in which the convenient doctrine of confidentiality was easily cited as obstacle. Obasanjo pointed out at the five-day state visit that “the banks which received these stolen funds and Nigerians who deposited them, are equally guilty of an infringement of law” – profiting from stolen goods, he said, is just as culpable as stealing the goods in the instance.
At the ACP summit of Heads of governments held in Santo Domingo, the issue of stolen wealth was put in the agenda. The Santo Domingo Declaration mandated Ministers of Finance and Foreign Affairs in ACP countries to pursue the establishment of an international convention to facilitate the recovery and repatriation of funds illegally appropriated from national treasuries.
WORKS ON A UN CONVENTION AGAINST CORRUPTION
The President of the World Bank James Wolfensohn in 1996 acknowledged corruption as a ‘cancer’, which will be accorded priority attention by the Bank. In the same year, an international support for fighting corruption surfaced with the resolution by the UN General Assembly (AIRES/51/191), calling on states to outlaw bribery in international financial transactions and endorsed a framework code of conduct for public officials.
At the Kyushu-Okinawa, Japan G7 summit in July 2000, the governments of the rich countries welcomed and strongly endorsed the G7 Finance Minister’s report on “Action Against Abuse of the Global Financial System”. Item 5(d) of the reports deals with stolen assets and it states as follows: “International money laundering has often been used by government officials to assist the clandestine diversion of public assets. The vulnerability of government institutions to such crime can be especially substantial in countries with emerging democratic systems and developing or transitional economies. We agree that it would be useful if we could take stock of existing legal tools and the agencies that administer them in each of our countries that would be available to identify, trace, and seize such laundered assets, as a first step to enhancing international cooperation on this issue.”
In 1999, a meeting of the UN Expert Group Meeting on Corruption and its Financial Channels was convened under a mandate from the UN Economic and Social Council, the Expert group stressed the need to persuade insufficiently regulated financial centers to adopt rules that will allow them to participate in international efforts to trace and act against the proceeds of corruption. The group concluded that bank secrecy and tax provisions at the national level should not hamper international anti-corruption efforts, and urged the supervision of financial systems and activities according to internationally accepted principles. Financial institutions will be required to accurately identify their customers, to exercise vigilance and to report suspicious transactions.
The UN General Assembly has initiated work on an anti-corruption pact, issuing instructions to the Vienna-based UN Center for International Crime Prevention to help the Assembly define the scope and coverage of an international convention. The General Assembly also tasked the Center to take into account means to repatriate funds that are illicitly transferred internationally.
In August 2001, the center hosted a meeting of the Intergovernmental open-ended Expert Group. The Group recommended that United Nations member states should draft by the end of 2003 a broad anti-corruption treaty that defines preventive measures and criminalization sanctions and remedies. More specifically, the Expert Group envisioned provisions on difficult and complex issues, such as jurisdiction, seizures of property or funds, witness protection, liability of legal persons, the return of illegally transferred funds and international cooperation.
The issue of stolen wealth surfaced at the intergovernmental meetings in preparation for the international conference on financing for development, which took place in Monterrey Mexico in March 2002. Broad support was indicated for moving ahead on a comprehensive and legally binding international instrument on corruption.
A United Nations General Assembly Ad Hoc Committee on the elaboration of an anti-corruption convention convened for the first time in Vienna form 21 January to 2 February 2002, to begin work on drawing up a draft treaty. The committee is meeting again in Vienna in June 2002.
NGOs SIDE EVENT AT THE FINANCING FOR DEVELOPMENT MEETING IN MONTERREY, MEXICO, MARCH 2002
The side event held on Tuesday 19 March 2002 was organised by African Network for Environmental and Economic Justice (ANEEHJ), Norwegian Forum for Environment and Development and African Caucus.
The event with the theme: “The Proposed United Nations Comprehensive Convention on Corruption and the Repatriation of Illicit Fund to Countries of Origin” was chaired by Professor Yash Tandon, Director, Southern and Eastern African Trade, Information and Negotiations Initiative (SEATINI) had representatives of World Bank, IMF, Nigeria, United States and Financing for Development Secretariat in attendance.
The Panelists include Mr. Sugeng Bahagijo, Deputy Executive Secretary INFID – Indonesia, Mr. Bruno Gurtner, Senior Economist, Switzerland, Rev. David Ugolor, President ANEEJ – Nigeria, Mrs. Kaara Wahu, Director, Kenya Debt Relief Network – Kenya and Pa Babou Njie – Coordinator, Gambia Workers Confederation – Gambia.
The event witnessed frank talks on corruption form both sides of the globe – north and south and they sent out warning signals to perpetrators of corruption. The speakers named companies, banks, rich and poor countries and leaders.
In an unusual presence at such a meeting, Switzerland, the US and the World Bank sent senior officials to hear the Panelists’ views and to respond. They also received applause.
Both sides agreed that new instruments to track the funds of international terrorists and money lauders in the post-September 11, weather could be coordinated as part of a broader fight against corruption.
Panelists and participant pointed that both governments and businessmen were involved in corruption while African diplomats in Monterrey were saddened by the action against Zimbabwe.
The US expressed joy at the meeting and said it was pleased to note that the UN now was also moving towards an international treaty against corruption.
The Monterrey Declaration reads in part:
“Fighting corruption at all levels is a priority. Corruption is a serious barrier to effective resource mobilization and allocation, and diverts resources away from activities that are vital for poverty eradication and economic and sustainable development”
EXPECTATIONS IN VIENNA
The general expectations of the civil society in the June 2002 meeting of the UN General Assembly Ad Hoc Committee drawing up the draft treaty are high.
Essentially, measures to recover funds illicitly exported by corrupt leaders would need to address a series of practical difficulties. This is because such transfers generally involve huge sums and a high level of uncertainly as to their sources, current locations and who the legitimate beneficiary of repatriation should be. Also, a government seeking repatriation may not have the necessary expertise or resources to trace funds that have passed through a series of multiple jurisdictions, electronic transfers and other sophisticated money laundering maneuvers.
In all these we expect a straightforward treaty, which will not be selective in application. There should also not be unnecessary conditionalities, which will favour a section of the globe to the detriment of the other.
The recent out-of-court settlement in the case of the Abacha family involving over $4 billion makes mockery of loot blocking and repatriation. It was a settlement in which the Nigerian government was to get $1 billion while the Abachas will get 100 million US dollars, which; according to the report was what the family acquired prior to Abacha’s term of office. The rest (over $2 billion) are to be transferred to the Bank for International Settlement in Basel.
The question there is who facilitated this process? Why should a huge part of the recovered loot be transferred to the Bank for International Settlement and why drop the criminal charge against the Abacha family? Does this not fuel impunity and the $100 million set aside for the Abacha family is far more than his entitlements from the day he joined the army till the day he died in power. Aren’t there contradictory decisions in such settlement? These are some of the problems the treaty must address.
All loot should be repatriated to the country of its origin and kept in the public till for poverty alleviation programmes. This is one sure way the millennium development goals and targets can be realized.
Reverend David Ugolor, ANEEJ