Big men, bankers and the stench of corruption
Published in The Independent (August 18th, 2009)
Frederick Chiluba is a sharp dresser. The one-time bus conductor who rose to become President of Zambia has a fondness for expensive designer suits, his monogrammed shirts set off by matching silk ties and handkerchiefs. While the majority of his fellow countrymen struggled to survive on less than a dollar a day, he would think nothing of jetting off to Geneva and dropping £300,000 in his favourite clothes shop.
But like Imelda Marcos, it is the shoes that seem the most insulting. This diminutive and vain man, who stands little over five foot and was on an official salary of £52,000 a year, had more than 100 pairs made with two-inch heels, many displaying his initials in brass. These size-six shoes, together with dozens of shirts and suits, are now in battered metal trunks in the offices of Zambia’s anti-corruption task force.
Yesterday, Chiluba escaped jail, when the first African leader to be prosecuted in his own nation for embezzling public funds was cleared in Lusaka. It is a huge setback for those fighting graft in Africa, who were preparing to celebrate the moment a Big Man was felled by the courts after gorging on his nation’s lifeblood. It marked the culmination of a six-year battle, which saw Chiluba lose a civil case in London and uncovered the usual shady arms deals and bogus accounting, with payments of $20m here and $52m there.
Many in the West will shrug their shoulders, dismissing this as just another typical example of African corruption. Instead, we should reflect on our own complicity. For many of the trails in this case – as with so many of Africa’s most loathsome despots, dictators and thieves – led to the UK, with two legal firms identified and vast sums swashing about in British bank accounts. Our bankers, lawyers and accountants should stop living off these immoral earnings. And if they won’t clean up their act, they should be forced to stop acting like pimps, as one leading economist calls them.
The post-colonial history of Africa is pockmarked by corruption. According to the United Nations, political and business leaders steal more than £90bn a year, much of it siphoned into Western bank accounts, businesses and properties. When President Sani Abacha of Nigeria died, he had stashed at least £2.5bn into banks dotted around the globe. A sizeable chunk was found in 23 banks in London. The names of the institutions involved read like a roll-call of blue-chips, including Barclays, Merrill Lynch, National Westminster and Royal Bank of Scotland.
Daniel Arap Moi, the former president of Kenya, banked £1bn in Britain and elsewhere, enabling his family to buy multi-million pound properties in London, Surrey, New York and Australia while his country calcified. Omar Bongo, the gruesome leader of Gabon who died two months ago, owned at least 33 luxury homes worth £115m in France alone, including one bought for £16m two years ago near the Elysée Palace.
A report by Global Witness highlighted the case of Teodorin Obiang, who supposedly earns $4,000 a month as minister of Agriculture and Forests in his father’s government in Equatorial Guinea. Three years ago he bought a £20m mansion in Malibu, complete with private golf course, while his car collection includes several Ferraris and a couple of limited-edition Bugattis, which cost more than a million euros apiece. He has held accounts with Barclays, BNP Paribas and an offshoot of HSBC.
All these countries suffer from desperate poverty, with low life expectancy and painfully high rates of infant mortality. For the cost of just one of those Bugattis, every child in Equatorial Guinea could be given an insecticide-treated malaria net, which would cut deaths from the disease by nearly half. The US ambassador to Kenya calculated that money stolen in the Anglo-Leasing scandal – in which billions went missing under Moi’s supposedly anti-corruption successor and, rather inevitably, involved front companies in Britain – could have supplied every HIV-positive Kenyan with anti-retrovirals for a decade.
When occasionally the lid is lifted on these dealings, the stench is overpowering. Five years ago Riggs Bank, a venerable American institution that once employed Abraham Lincoln, collapsed after a Senate probe uncovered its relaxed approach to funds held there by the likes of President Obiang and General Pinochet. The inquiry even turned up an obsequious letter from a bank official to Obiang, perhaps the vilest despot in Africa, which “thanked the president for his establishment of several bank accounts, and encouraged a working relationship to help establish and secure the stable reign of his country”.
Our public officials are little better. When the newly elected government of Nigeria tried to get back the money looted by Abacha, the British government hindered its recovery. (The Swiss went even further, attempting to hold on to the money despite court rulings insisting on its repatriation). Earlier this year, the Serious Fraud Office suspended a belated investigation into the Anglo-Leasing heist, blaming lack of help from the Kenyan authorities. And most shamefully of all, when our man in Nairobi publicly condemned this huge fraud, he ran into heavy flak in Whitehall.
If we are serious about fighting poverty, we need to do much more. We have cracked down on illegal movements of cash for terrorism, so why not for this massive larceny, which is leading to the deaths of far more people? “We have circumscribed the use of bank secrecy for terrorism, and thus shown it can be done,” said Joseph Stiglitz, the Nobel prize-winning economist. “But we have chosen not to deal with the problems of corruption and tax evasion which are so enervating to the developing countries and deprive them of so much money.”
Regulatory failures of the financial sector pitched the world into its worst economic crisis for decades. Similar failures allow banks to do business with some of the world’s biggest thieves, keeping entire nations in poverty and dependant on aid. The global banking system, much of it based in Britain and its offshore territories, must start to trace, freeze and return Africa’s stolen money. Attitudes should change, making it unacceptable to handle this vast plunder. And those behind the looting should not be allowed to swan around the world buying designer clothes, expensive homes and education for their children.
Ultimately, it is in our own self-interest. Otherwise, what is the point in pouring so much money into Africa in aid when so much capital comes back into secretive accounts in the West and offshore tax havens? The aid agencies and, increasingly, the Government have a vested interest in keeping the aid flowing, but it is not in the long-term interest of either western taxpayers or, more importantly, the people of Africa. And it is poverty and corruption that drives so many out of Africa, risking their lives to seek new homes in the West.
Africa is a young continent, with an estimated two-thirds of the population under the age of 30. The era of the Big Men such as Chiluba, their attitudes fossilised in the days of empire and Cold War, is coming to an end. An emerging middle-class which is educated, entrepreneurial and empowered by new technology is leading calls for change across the continent. We should be supporting them and helping the crusaders against corruption rather than aiding the thieves, murderers and warlords who have held back progress for so long.