Tuesday, April 19, 2016

My thoughts on the Panama Papers

Panic in panama
 A scandal rocks the world. The usual scandal mix - money, power, crime and influential people (sadly no sex…yet). This is a classic case of the top 1 per centum of the world’s population showing off their wealth and their way of life. The facts of the scandal; A whistle blower provides 2.6 terabytes of information from one law firm based in Panama. This information uncovers a secret labyrinth of anonymity stretching over almost four decades and across 50 countries where tax havens have been expertly utilised to siphon, steal and/or hide large sums of monies by people in powerful places. Scandal rocks countries in all continents. Russia, Mexico, Iceland, Syria, the United Kingdom, Canada, China and many more countries. Africa is also not left out. Former Presidents, their close relations and the leaders of large, powerful public corporations are implicated. Oh! And by the way, I still cannot wrap my head around what a terabyte is.

Global effects
Europe-Citizens in Europe are scandalised (as they should be). Citizens rally to demand accountability and transparency from their leaders. Presidents, prime ministers and high ranking officials are implicated. Some resign (as they should rightly do), some are questioned about their dealings and may yet resign (that would be interesting to watch) and some defend their actions as not illegal (duh!). Kudos to citizen’s movements. Change happens rapidly. 

Africa-citizens wake up to the news of politicians, their families and people in high and influential places of power implicated in the Panama papers. Some newspapers report on it, some media houses run with it on the 6am news, most of it is covered in the ‘entertainment’ section of the news. Then silence. No change in the status quo. Citizens go about their business as usual. Man must eat.

The question is; why aren’t African citizens or even African civil society organisations working on corruption concerned with the scandal? First of all, no African politician has resigned, nobody has explained how their monies got to Panama, no press conferences or communiqués to throw more light on the named individual. Nada. Nothing. Rien. There has been no citizens movements asking for any such thing. This in itself is a shock.

 My answer is that Africans are so used to corrupt practices by their politicians and influential people that the Panama papers is just another one of those things.  A drop in the bucket. Nothing will change anyway. Most revealing to me is that fact that nothing will change whether or not some noise is made about this event, after all, they have more important things to do, such as looking for their daily bread.

Illicit financial flows and Africa
The facts on illicit financial flows, tax evasion, the use of tax havens to route monies from Africa are staggering. Permit me to share a few figures here:
  •   Tax Justice Network, an international research and advocacy organization, says the as of 2010, there was between $21 and $32 trillion kept in offshore holdings. This represents between 8 and 13 per cent of total global wealth. 

  • According to latest research from GFI, Sub-Saharan Africa lost an annual average of $52.9 billion—roughly 5.5% of GDP—in illicit financial outflows from 2003-2012 (the most recent year for which data is available), taking an enormous toll on African economies. Trade misinvoicing, the deliberate over- and under-invoicing of trade transactions, accounted for 68.8% of all outflows from the continent over the decade.

  • According to the AU-UN report on illicit financial flows in Africa, Africa lost approximately $850 billion in illicit financial outflows between 1970 and 2008 and the report goes ahead to conclude that Africa loses more than $50 billion every year to illicit financial flows.
  • Bringing this to reality, Christian Aid, a British Aid Agency,  estimates that for every $10 given in aid to the developing world, $15 slips out through tax dodging.

It is refreshing to note that the chairman of the AU/UNECA High Level Panel On Illicit Financial Flows in Africa, Mr. Thabo Mbeki, has issued a report in the wake of this expose. In his press release, Mr. Mbeki makes mention of the need for African countries to take this information seriously and to put in place measures to punish citizens found to have breached any financial misconduct laws. Sadly, so far, only South Africa has put out such a call.

Tax Justice Campaign
A friend of mine once commented that contrary to the recurring anti corruption reports that Switzerland is one of the least corrupt country in the world, it is rather the reverse, that Switzerland is the most corrupt country in the world. In that they have created all these Chinese walls and codes of secrecy that make them able to ensure that wealth (some legitimate, most not) is stored within its borders without any transparency.

Tax justice campaigners, myself included, have since the early 2000s been campaigning to throw light on the grave developmental losses that continuously accrue to developing countries who lose income from taxation as a result of these huge financial leakages. Monies that could have been used to build schools, provide basic services such as clean water and toilets are rather siphoned into the bank accounts of faceless and nameless individuals who use their monies and influences and of course, the advice of lawyers and accountants to deprive legal states from their hard earned tax incomes.

Infact, tax campaigners have gone as far as to infer to the value of taxation as a crucial instrument for the realisation of human rights. This is based on the rationale that taxes enable governments to mobilise resources needed for providing essential public goods and services and tax policies also help in redistributing the wealth preventing inequality and allowing realization of human rights. Unfair tax incentive, regressive tax systems and weak tax authorities give rise to leakages that could have been used to fund much needed public goods and services.

In June 2011, The UN Council on Human Rights adopted the Guiding Principles on Business and Human Rights. The principles form a framework that comprises the duty of states to prevent against violations of human rights, corporate responsibility for respect for human rights and better access for victims to effective remedy.

People power and the future

I sincerely look forward to more African countries looking into the information provided by the panama papers and working jointly together to help block the leakages from our shores. It is not only immoral, it is impudent! As I applaud the work of the High Panel On Illicit Financial Flows as well as the ongoing work being done by economic justice campaigners in Africa, we must of a right , percolate the gravity of this to local citizens to take action against their leaders. This is the only sustainable action in a democratic environment.

I end with one of my favourite quotes "Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has." - Margaret Mead.

Power to the People!!!

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