President Muhammadu Buhari claims to be fighting corruption and has said a lot during his frequent foreign junkets about needing the help of foreign governments to recover stolen funds. But he has said very little about the role of foreign players in Nigerian corruption.
This United Nations report argues that foreign influences should not be ignored. The article was originally published in Public Finance International.
African corruption measures ‘should capture foreign influences’
By Emma Rumney
5 Apr 16
Substantial levels of corruption tied to foreign interests are flying too far under the radar in Africa, according to a United Nations report, which calls for new forms of measurement to capture the role played by international interests.
In the fourth edition of its Africa Governance Report, the UN’s Economic Commission for Africa said there was a need for measures that take better stock of the role played by external private interests, and even overseas aid money, in corruption on the continent.
In the report’s foreword, Carlos Lopes, UN under secretary general and executive secretary of the UNECA, noted that many of the corrupt practices taking place in Africa are generated and abetted by non-African players.
For example, there is “ample evidence” that the operations of foreign parties are causing significant financial outflows, he said, but this international dimension of corruption is completely ignored by current approaches, representing “serious gaps” in measurement.
The report details a number of forms of international corruption that are not picked up by current methods, which often focus on individuals’ view of the extent of corruption, such as the Corruption Perceptions Index.
“Many powerful domestic and foreign private firms engage in undue influence to shape state policies, laws and regulations for their own benefit,” Lopes explained, adding they can also undermine democracy through campaign contributions.
Other practices include private or commercial efforts to hide wealth and dodge taxes and multinational corporations taking advantage of weak governance and regulations to repatriate hefty sums of wealth overseas without paying their dues, especially in the extractives sector.
The report notes that, according to UNECA data, in 2010 a third (34%) of illicit financial outflows emanated from the oil industry.
Secretive production-sharing agreements, which stipulate the revenue-sharing arrangement between African governments and oil and mining companies, are often a vehicle for illegal or unfair deals to be brokered, it added.
Developing nations, such as those throughout Africa, are often the biggest losers of the international tax system, with millions in lost revenues funnelled away from the continent by wealthy individuals or companies.
The Panama Papers – a massive leak revealed on Sunday, which shone a light on how the world’s powerful are taking advantage of the darkest corners of the global financial system – implicated numerous African leaders or their associates.
Cross-border corruption, such as foreign firms paying bribes to public officials to secure a contract or encourage a certain helpful law, is also rife, it noted.
Late last year, an investigation by the BBC’s Panorama unearthed how tobacco giant British American Tobacco paid bribes to civil servants in Burundi to undermine anti-smoking legislation. BAT also paid bribes to officials in Comoros Islands and Rwanda.
Even foreign aid money, which makes up a significant portion of many African governments’ revenues, can be directed by vested interests, tied to rigid conditionality dictated by political and strategic considerations and inadvertently increase domestic corruption.
The report argues that these are not effectively captured by the indicators used to measure corruption in Africa, including influential measures like World Governance Indicators and the Ibrahim Index of African Governance.
Definitions of corruption as the “abuse of public office for private gain” are also too narrow, it argues, “neglecting the corrupt tendencies prevalent in the private and non-state sectors”, said Lopes.
The report makes the case for a rethink, away from perception-based measures to broader, alternative approaches.
“It is important not to neglect the existence and significance of the international dimension of corruption in Africa, driven primarily by the behaviour of foreign firms and other international stakeholders,” it argues.