Unmasking Illicit Financial Flows in Africa: Urgent Call for the Magnitsky Act

Financial crimes, fiscal wastages and authoritarian regimes hugely define regimes in Africa. the ubiquity of these aspects isn't even appalling, they are a unifying characteristics of African states. a Nigerian isn't appalled, not even in the least, by political happenings in Kenya nor is the South African perturbed with what is happening in Uganda. All these regimes are cut from the same cloth with a performance script from the same devil of impeded progress, the culture of incompetence and corruption is deep-seated that is enabled by a great deal of complacency from the citizenry who have normalized this weird, unbecoming culture. This has fanned the high- handedness and entitlement of the political class who see themselves as deities and sinewy. These individuals use all means to command fear and respect from the very people who gave them jobs such that nobody dares to speak about their iniquities and insatiable desires.

Africa loses about $88.6 billion dollars in revenue through illicit financial flows ( UNCTAD Development in Africa, 2020). The extractive industries carry the burden of huge illicit financial flows. between 1980 and 2018, Sub- Saharan Africa lost $1.3 Trillion dollars through illicit financial flows against $2 trillion FDI and ODA( per Global Financial Integrity Methodology). Huge emitters of IFFs include South Africa, DRC, Nigeria and Ethiopia. IFFs have been a huge impediment to African development.

The fastest way to ascend the social ladder is by joining politics or the public service. Any institution that is a beneficiary of taxes is an avenue for massive looting and self enrichment. There is no accountability whatsoever in these departments. Probity is an illegality in African governments and woe unto you of higher moral standards with an entrenched sense of accountability, yours is a ticket to the pearly gates. You better keep your peace. Institutions put in place to punish wrongdoing are held at ransom by agents of the shadow governments who are architects of effective dysfunction of institutions.

The law of the land is usually superseded by individual declarations. Constitutions are usually a tool to exploit the poor and a shoe rag for those in power. Selective application of the law is commonplace in African states. It is usually about accruing generational wealth while perpetuating oppression, human rights abuses and corruption. All these in the full glare of intergovernmental organizations such as the AU, law enforcement organs, international organizations etc who are usually the greatest beneficiaries of this systematic flaws. For how long are we going to let this go on.

Let's Debunk this

I am a consumer of the ICIJ investigative content, and in their recent release, they released a piece " Swazi Secrets". Such a ne plus ultra of investigative journalism. It takes a deep dive into suspicious money flows and how the elite exploit their close relations to the king to advance impunity through illegal gold deals while channelling funds to Dubai. This has caused a lot of uproar among those in the king's circle in Eswatini such that the lawmakers are signalling a crackdown on press freedoms. Not only that, they have done fine investigative work on the Pandora Papers, Panama Papers, Paradise Leaks, Cyprus Confidential etc. I got to learn the nexus between power and money and how illicit financial flows are engineered by the elite and the influential. The ICIJ also takes a look at Isabel dos Santos and her wealth accrued through corruption and misappropriation of funds.

Corruption and money laundering is deeply entrenched despite the existence of national and international legal frameworks to combat these transgressions. Institutions such as the AUCPCC, UNCAC, UN- OSAA that has published a recent study dubbed "intensifying the fight against corruption and money laundering in Africa that sheds light on the symbiotic relationship between corruption and illicit financial flaws among other bodies. Why do this institutions fail? Is it by design or are they dysfunctional by default? The lack of political will to fight corruption and financial crimes can be attributed to the systemic failure to combat these vices and the huge number of stakeholders who benefit from a failed system makes it insurmountable to vanquish the powers of hades.

With the growing arguments for neo- medievalism, I'll borrow Mancur Olson's analogy about the state being a stationary bandit that evolved from marauding or roaming bandits. African states are more of roaming bandits benefitting from the stationary bandit. Governments are avenues for enrichment of self and cronies. We are living in a time of odious debts, political marriages with thugs, human rights abuses among other atrocious happenings. We need dogs that can bark and bite not toothless dogs, all bark and no action. I know human nature is inherently selfish and Michael Friedman couldn't be further from the truth in his allusions. He says, everyone is greedy, no one is an angel and that's okay. This point to the insatiable appetite of the political class to amass a lot of wealth at the expense of the people whom they serve and an incessant proclivity towards unchecked excesses.

The levels of corruption surpass the national jurisdictions and are transnational and involve a number of actors both state and non- state actors. quoting Rosalyn Higgins the former ICJ president that said, "the state can no longer protect itself by claiming domestic jurisdiction" and to add on that neither can individuals acting in lieu of the state.

"....We hang the petty thieves and appoint the great ones to public office..."- Aesop.

Why Magnitsky?

The other day, there were allegations that a certain Kenyan governor was stranded in the UK after failing to explain the source of over Ksh. 600 million that they were seeking to deposit citing flimsy reasons. This shed a negative light on the Kenyan leadership while illuminating the kind of systemic theft ongoing in various levels of government. This is a shame especially for a country whose president is advocating for a change in the global financial systems to favour the developing world. It is a further shame for countries seeking a permanent seat in the UNSC. That's why I need the discourse on the Magnitsky Act to take shape.

The Magnitsky Act or the Global Magnitsky Act, is a tool in the fight against global human rights abuses and corruption. Initially targeting Russian officials involved in the torture and murder of Russian tax lawyer Sergei Magnitsky, it has morphed into something robust especially after its inclusion in the National Defence Authorisation Act for 2017 that expanded its scope to include ability to sanction individuals involved in corruption. The US government under the treasury department can impose sanctions on any individual or entity thought of to have violated human rights or is corrupt world over. In Africa, Emerson Mnagangwa, Zimbabwe's president and few others have been sanctioned under this Act.

This is a progressive step but I think it would matter if the pious of states wasn't at the centre of the execution of this beautiful piece of legal discourse. This is beyond a single states jurisdiction. In as much as sanctions against visiting the USA might work, this means that they have an option to visit the remaining 194 states. Also the mushrooming of safe havens for illicit finances has proven problematic. Countries such as Switzerland, Panama, Cayman Islands, British Virgin Islands, Luxembourg, UAE, Mauritius, and Singapore have enabled the global fight against IFFs. To truly achieve victory on this front, great cooperation is required among states and CSOs. Magnitsky Act requires the multilateral ratification to make it international law enforceable by any state but the strongarming that comes with global power politics, allegiances among states and geopolitics might also pose a great challenge.

One way to realise greater success of the Magnitsky Act is the harmonisation of the various legal instruments and institutions to combat corruption and illicit financial flows so that we don't have an over the place kind of focus. The duplication of roles creates loopholes for misbehaviour as states don't know what laws to adhere to and in a matter where international law seems to be inconvenient, countries might claim primacy of national laws, case in point, the threat to withdraw from the Rome Statute by African states.

Secondly, the various intergovernmental institutions in Africa, need to adopt it into their legal frameworks. The AU for example, needs to adopt it into the African Union Convention on Preventing Combating Corruption to make it robust. the AUCPCC is somewhat vague and doesn't stipulate clearly what it sets out to do to combat corruption. Use of generalisations, hedges tacitly implies a level of indecisiveness. African leaders of all cadres have it easy and utilise these legal loop holes in their national laws and AUCPCC to perpetuate financial crimes. This made me think about the push for open borders in Africa albeit good for trade and commerce, it might create legal porosity and create avenues for moving about financial assets within African states illegally.

Lastly, the CSOs in Africa and citizens need to push for reforms of obsolete, ceremonial legal frameworks that condone the selfish interests of African leaders. The awakening that has begun in Africa should not wane rather rejuvenate a rather docile Pan- Africanism that's been replaced by excessive kleptocracy. The Gen Z movement in Kenya, decolonisation efforts in West Africa are so promising to Africa's future. we just need to be keen for our objectives not to be lost in the struggle or co-opted by greedy politicians in dire need of street cred.

In conclusion...

We need to reimagine how our public finances are handled while also setting stronger regulations to curb tax evasions, pilferage, and money laundering. The present systems are flawed by design. The illicit financial flows in Africa emanate greatly from the proceeds of corruption: illegal mining, misappropriation of public funds, conflict of interest deals. We need not rely on the first world to impose blanket sanctions that end up scarring our economic situation rather than saving the problem. We need to target individuals and their illegally acquired assets. A change in the frameworks to govern financial expenditures in African states is long overdue. Also a culture change is needed. Accountability needs to be embedded deep in our fibres. The Global Magnitsky Act can propel us towards that direction only if there is a political will to truly transform Africa.