“Recovering Africa’s Stolen Assets; the Next Frontier in the Fight against Corruption”
Question: In a recent publication of yours entitled "Recovering Africa’s Stolen Assets; the Next Frontier in the Fight against Corruption" you indicated that the plundering of public wealth directly hampers development and undermines trust in democracy and institutions. Could you help our readers gain a better understanding of what the real issues are?
Answer: Corruption, which includes the plundering of public wealth for private gain is a pervasive character of both rich and poor countries; and persists as a key governance challenge with a direct consequence on the Bank’s Regional Member Countries’ (RMC) fight against poverty and progress towards the MDGs. Institutionalized corruption undercuts the rule of law, undermines public confidence in governance institutions and can threaten regime stability. It curbs economic growth by distorting development priorities, misdirecting public investments from productive sectors and engenders sub-standard government products and services. In the private sector, payment of speed money significantly increases the cost of doing business and reduces capital productivity and enterprise competitiveness. Beyond abstract definitions, corruption at the individual level is seen as an illegal tax exacting wanton burden and gratuitous transaction costs that hinder access to basic public services.
Question: In the same publication, you suggest that certain businesses operating from rich countries are aiding and abetting corrupt government officials in Africa to plunder the continent. Could you shed more light on this?
Answer: Corruption thrives where there is a willing giver and a willing taker. It is not unusual for foreign businesses to bribe influential officials of the Bank’s regional member countries to obtain favourable decision outcomes or to retain preferential treatment in business transactions; often against the public interest. Until recently, most global enterprises accepted bribing officials in the Bank’s regional member countries as an acceptable business practice, and most Organization for Economic Cooperation and Development (OECD) countries allowed such payments as legitimate business expense. While there has been some progress in curbing this practice with the adoption of the OECD Anti-bribery Convention, it remains a common practice, particularly in the extractive sectors of resource-rich RMCs, and in fragile and conflict environments, with weak institutions of governance and accountability. Moreover, corrupt officials that gain privately from public transactions are further aided by the larger financial houses in the OECD countries that readily assist in concealing ill-gotten wealth and dubious investments, and provide a safe heaven from detection and repatriation to RMCs.
Question: International organizations have created harmonized standards on corruption, money laundering and mutual legal assistance. Multilateral Development Banks (MDBs) like the African Development Bank Group are expected to play a key role in checking these vices. In your view, do you think these MDBs are doing enough to rid the continent of these vices?
Answer: There is still a yawning gap between the effort to fight corruption and stem money laundering and the challenge posed by these vices, the huge contribution of MDBs notwithstanding. Bridging the gap requires the joint effort of all stakeholders, including significant initiatives taken by MDBs. As you rightly pointed out, MDBs have framed their interventions around harmonized standards on corruption, money laundering and mutual legal assistance. Such interventions, however, are dependent on the commitment of the Bank’s RMCs to own and lead the effort to address these challenges, which, incidentally, are far beyond the capacity of any single institution to address. In this regard, I am encouraged by the partnership that is beginning to take shape between MDBs, governments, the private sector and the civil society, drawing on the specialized capacity and comparative advantage of each to deal with corruption and money laundering. However, I also believe that there is room for more work in nurturing a stronger partnership between governments of rich countries where stolen wealth is often destined to, and poor countries which are often the source of plundered wealth. Repatriation of ill-gotten assets has to be the final frontier in fighting corruption, denying the corrupt a safe-heaven for their ill-gotten wealth. In this regard, MDB and UN interventions are exercising some leverage on the demand side through effective institution and capacity building, and impacting the supply-side through black-listing and cross debarment of corrupt firms.
Question: What role is the Bank Group currently playing in this fight to recover Africa’s stolen assets?
Answer: The Bank recognizes the negative consequences of corruption and money laundering on development in the Bank’s RMCs. Fighting corruption, preventing money laundering and assisting in the recovery of stolen assets are seen as key pillars of the Bank’s mandate to promote good governance and development. The Bank’s new Strategic Focus on Governance in Africa is on fighting corruption by promoting accountability and transparency in the management of public resources. The Bank is implementing this strategy by collaborating with key development partners to strengthen leadership, support institutions and build capacity at national, regional and international levels. Such support is anchored in the Bank’s own guidelines on fraud and corruption, the recent Bank Group Anti-money Laundering Strategy, and other elements of its fiduciary framework. Recent Bank support to national and international institutions working to recover stolen assets include funding support to build the capacity of the Tanzania Prevention of Corruption Bureau to efficiently trace and recover stolen assets hidden in foreign financial institutions; capacity building of national Financial Intelligence Units (FIUs) through support to sub-regional Anti-money Laundering bodies such as GIABA (West Africa) and ESAAMLG (Eastern and Southern Africa).
Question: African Countries themselves seem not to be doing enough in this regard. In many cases, some people argue, African government officials turn a blind eye to corruption and fraud. How true is this assertion?
Answer: Fighting corruption is a daunting challenge, particularly in African countries characterized by fragile and ruptured governance and accountability institutions. Hence, this fight must been seen as a process and not a destination. What matters most are the trajectory of change and the direction of travel. Here the progress is encouraging. Moreover, RMCs are making measured progress in fighting corruption. Collectively, the initiative undertaken by African leaders, particularly through NEPAD/APRM (African Peer Review Mechanism) to improve governance conditions on the continent and to address corruption challenges in particular, is a major step in the right direction. At the national level, a decade and half of democratic resurgence is producing a favourable environment where many African governments now willingly hold themselves accountable to their citizens. Today cases of mega corruption are investigated and reported by a vibrant national media and impunity is the exception and not the rule. Let us also not forget that when all is said and done, it is a vibrant African media, not CNN or BBC, which is exposing mega cases of corruption and bringing an end to impunity.