Top Ten Books on Illicit Financial Flows, Tax Justice, and Africa
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This listing is not a rating, since different books have different content and
are not strictly comparable. The most accessible for the non-specialist reader
are the first, by Tom Burgis, the second, by Nicholas Shaxson, and the tenth, by Richard Murphy. List last updated September 2018.
1. Tom Burgis, The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa's Wealth. New York: Public Affairs, 2015. 330 pages.
For understanding how the connections between Africa and the international partners in the system of illicit financial flows work, this book should be your first stop.
"A rich collage of examples showing the links between corrupt companies and African elites" - The Economist. First-hand reporting from Angola, Nigeria, other African countries, and around the world where the companies, banks, and other "tax haven" facilitators hide the loot.
"The looting machine has been modernized. Where once treaties signed at gunpoint dispossessed Africa's inhabitants of their land, gold, and diamonds, today phalanxes of lawyers representing oil and mineral companies with annual revenues in the billions of dollars impose misely terms on African governments and employ tax dodges to bleed profit from destitute nations. In the place of the old empires are hidden networks of multinationals, middlemen, and African potentates."
2. Nicholas Shaxson, Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens. New York: St. Martin's, 2011. 264 pages.
Written several years ago, but still the best readable overview of how tax havens work around the world.
The story includes not only small obscure island countries but also rich countries, such as Switzerland, Luxembourg, Hong Kong, Ireland, the Netherlands, the UK, and the United States.
"I began to see how the terrible human cost of poverty and inequality in Africa, Latin America, and other parts of the world connected with the apparently impersonal world of accounting and financial regulations and tax law. Africa's supposedly natural or inevitable disasters all had one thing in commone: the movement of money out of poor countries and into parts of Europe and the United States, assisted and encouraged by the tax havens and a pinstripe army of respectable bankers, lawyers, and accountants."
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3. Léonce Ndikumana and James K. Boyce, Africa's Odious Debts: How Foreign Loans and Capital Flight Bled a Continent. London: Zed Books, 2011. 135 pages.
Pioneering study linking Africa's debts and the outflow of capital through both debt-servicing and other finanicial flows.
Africa is actually a net creditor to the rest of the world. Money borrowed by dictators on behalf of their countries has left the continent again to reside in private bank accounts in rich countries. "The subcontinent's external assets are private and in the hands of a narrow and wealthy stratum, whereas its external debts are public and therefore borne by the people as a whole through their governments."
"Africa is bleeeding money, as capital flows into the private accounts of African elites and their accomplices in Western financial centers."
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4. Bastian Obermayer and Frederik Obermaier, The Panama Papers: Breaking the Story of How the Rich & Powerful Hide Their Money. London: Oneworld 2016. 366 pages.
Fascinating story of investigative journalism with "big data," by the two German journalists who received the data from a still anonymous "john doe."
Particularly interesting is the use of new technology and collaborative research by journalists around the world, including in seven different African countries: South Africa, Zimbabwe, Namibia, Botswana, Mali, Senegal, and Tunisia. "Commercial lawyers sitting in European corporate head offices put a lot of thought into how they can use offshore companies to ensure their African subsidiaries pay as little tax as possible in those countries."
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5. Michaela Wrong, It's Our Turn to Eat: The Story of a Kenyan Whistleblower. New York: Harper, 2009. 368 pages.
Still one of the most compelling accounts of corruption within an African country. Highlights the role of whistleblower John Githongo.
The primary focus is on internal corruption at the highest levels of the Kenyan government. But it is notable that the story also includes the complicity of Kenya's bilateral donors, the World Bank, and a shell company named Anglo Leasing and Finance Ltd., which was no more than a street address in Liverpool. Notably, one of the related companies involved recently showed up in the Panama Papers.
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6. John Christensen and Dan Hind, eds. The Greatest Invention: Tax and the Campaign for a Just Society. London: Tax Justice Network, 2015. 272 pages.
Compilation of short articles from the Tax Justice Network, from 2003 to 2015. An essential source for development of the debate and the research.
The 'demand' side of 'petty' corruption (bribes) is the most visible kind of corruption. But it is far less important than the "higher level corruption of major companies and governments from the [global] North."
"International banks and other financial intermediaries have played the key role in establishing and maintaining the offshore financial systems which enable dirty money to flow from South to North with relative ease and impunity."
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7. Branko Milanovic, Global Inequality: A New Approach for the
Age of Globalization. Cambridge, MA: Harvard University Press, 2016. 299 pages.
Definitely the most significant and accessible data-based analysis of global income inequality.
The focus is on understanding the extent and changes in income inequality, using a unique dataset compiled from household income surveys from 1988 to 2008, as well as the author's previous research and analysis of changes over last several hundred years. The greatest emphasis is on the "global plutocracy" (1% and above) and on the global middle classes.
The methodology takes account of both inequality within countries and inequality between countries. The data shows, for example, that the lowest 10% in the United States has roughly the same average income as the average income for South Africa as a whole, which is in turn much higher than the average income in most other African countries.
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8. Gabriel Zucman, The Hidden Wealth of Nations: The Scourge of
Tax Havens. Chicago: University of Chicago Press, 2015. 129 pages.
According to Thomas Piketty (see below), this book "is the best book that has ever been written on tax havens and what we can do about them."
It includes a history of tax havens, beginning with the role of Switzerland in the period between World Wars I and II. It also provides a quantitative estimate of the amount of money involved, and proposes as the key to a solution the politically difficult creation of a worldwide register of financial wealth as the basis for just taxation.
Zucman estimates that the share of financial wealth in Africa held "offshore" in tax havens at about 30%, as compared to above 50% in Russia and the Middle East. The percentage is much less in the United States (4%). But there is still about $130 billion a year lost to the U.S. treasury by "profit-shifting" to lower-tax jurisdicions.
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9. Thomas Piketty, Capital in the Twenty-First Century. Cambridge,
MA: Harvard University Press, 2014. 685 pages.
A best-selling and fundamental work that has been more praised than read, which has had enormous impact in bringing greater attention to the issue of economic inequality.
Notable for its proposal (in Chapter 15) of "a progressive global tax on capital, coupled with a very high level of international financial transparency," in order for democracy to "gain control over the globalized financial capitalism of this century."
For a much shorter presentation of Piketty's views, see his speech in South Africa (2015 Nelson Mandela lecture).
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10. Richard Murphy, Dirty Secrets: How Tax Havens Destroy the Economy. Lnndon: Verso, 2017. 224 pages.
Focuses primarily on what actions can be taken, and why efforts to date have
failed to curb tax avoidance and evasion in the global economy.
“Backed by years of experience and fired by relentless energy and a burning sense of anger at what the offshore system of tax havens is doing to our fragile world, Richard Murphy’s tireless work at the leading edge of the tax justice campaigns has helped open the world’s eyes to the scale and nature of this growing, metastatising threat to our democracies and our economies. Dirty Secrets makes essential reading for those wanting to understand where it all went wrong.”
—Nicholas Shaxson, author of Treasure Islands
Most recent bulletins on illicit financial flows and tax justice
June 8, 2020 Africa/Global: Thinking Post-Covid-19
“Calls for debt relief—or more timid debt service moratorium—are
drops in the ocean. Something much more ambitious and radical
should be envisaged. This crisis allows us to think big. … [F]or
these exceptional times, we need exceptional solutions. This virus
does offer Africa an opportunity to exercise agency and embark on a
more robust structural transformation process. Building on the
gains of the last few years and the resilience of its population,
there will probably be no better time to fast-track change.” -
Carlos Lopes, former Executive Secretary of the United Nations
Economic Commission for Africa
February 24, 2020 USA/Global: National and Global Inequalities Are Intertwined
The recession that began in 2008 brought new life to the public debate on class and racial inequality in the United States. The #OccupyWallStreet demonstrations in 2011 may have left no institutional legacy, but they shined a spotlight on a yawning wealth gap and the role of the “one percent.” #BlackLivesMatter and related movements challenged complacency on entrenched racism … Public awareness of inequality, like awareness of climate change, was rising even before President Trump took office. But his administration’s sharp turn toward denial and regression on both issues has spurred active opposition and cut into the complacency of conventional Democratic Party politics.
October 9, 2019 Africa/Global: Targeting Corporate Shell Games
“Across the world, citizens who want their governments to implement
policies to reduce inequalities, address climate change and looming
ecological disaster, provide better public services and amenities,
ensure social protection, generate quality employment and so on,
are always confronted with one question: where is the money? We are
constantly told that governments cannot afford the necessary
expenditure; that running fiscal deficits will lead to financial
chaos and crisis; and that raising taxes will simply drive away
investment. But this is not just misleading; it is simply wrong.
Governments are constrained in their resources because they tolerate widespread tax evasion and avoidance. ” - Professor Jayati
Ghosh, Jawaharlal Nehru University
August 12, 2019 Africa/Global: Tax Avoidance 101
Aircastle Ltd., a Connecticut-based global company specialized in
leasing airplanes, is not alone among large American companies
lowering their taxes through creative accounting, which also
include well-known giants such as Amazon and Apple.
But the recent revelations on Aircastle´s use of Mauritius as a
tax haven provide a helpful window into how such tax dodges can
make use of off-shore companies set up primarily for that purpose.
August 12, 2019 Africa/Global: #MauritiusLeaks Reveals Tax Dodges
“Based on a cache of 200,000 confidential records from the
Mauritius office of the Bermuda-based offshore law firm Conyers
Dill & Pearman, the investigation reveals how a sophisticated
financial system based on the island is designed to divert tax
revenue from poor nations back to the coffers of Western
corporations and African oligarchs, with Mauritius getting a share.
The files date from the early 1990s to 2017.” - International
Consortium of Investigative Journalists
April 30, 2019 Africa/Global: Fighting Tax Evasion and Tax Avoidance
The UN Economic Commission for Africa (ECA), in its annual
Economic Report on Africa, focused on financing development in
Africa, highlighted the urgency to curb what it termed “revenue
leaks” through tax evasion and tax avoidance, as well as through
misguided government policies. Multinational corporations, corrupt
officials, and financial intermediaries around the world siphon
off African wealth, leaving national budgets starved for resources
to invest in health, education, and sustainable economic growth.
January 8, 2019 Mozambique/Global: Who Pays for Transnational Corruption?
The line-up of those involved in this $2.2 billion fraudulent loan deal, now
implicated in a case in the U.S. District Court of the Eastern District of New York,
is multinational. The five named individuals indicted include the former Minister of
Finance of Mozambique, a Lebanese businessman representing Privinvest (an
international shipping conglomerate in Abu Dhabi), and three London-based bankers,
citizens of New Zealand, Great Britain, and Bulgaria, employed at the time of the
loans by the giant Swiss bank Credit Suisse. Three more names are redacted in the
indictment and 5 others, three Mozambicans and two additional employees of
Privinvest, are cited but not named in the text of the indictment.
November 12, 2018 Africa: Africa Mining Vision
The Africa Mining Vision (AMV) was adopted by Heads of State at the February 2009
African Union summit following the October 2008 meeting of African Ministers
responsible for Mineral Resources Development. An action plan was adopted in December
2011, and the African Minerals Development Centre (https://www.uneca.org/amdc)
launched in December 2013. The lead role in developing the vision was taken by
African professional staff at the United Nations Economic Commission for Africa
(UNECA), in consultation not only with African governments but also with civil
society organizations and specialists on the mining sector.
November 12, 2018 Africa: Why Mining is Hard to Tax
"In Africa as elsewhere in the world, while energy companies might be somewhat undertaxed,
mining companies typically are greatly under-taxed. Indeed, it is only a
slight exaggeration to say that, with a few significant exceptions, notably
Botswana’s diamond mines, mining in Africa is barely taxed at all. One reliable
source indicates that contemporary African governments collect about 55% of the total
value of energy production in tax revenue, but only 3% of the value of mining
production." - Taxing Africa
October 16, 2018 Africa/Global: Drug Company Profits vs. Public Health
"Oxfam examined publicly available data on subsidiaries of four of the largest US
drug companies and found a striking pattern. In the countries analyzed that have
standard corporate tax rates, rich or poor, the corporations’ pretax profits were
low. In eight advanced economies, drug company profits averaged 7 percent, while in
seven developing countries they averaged 5 percent. Yet globally, these corporations
reported annual global profits of up to 30 percent. So where were the high profits?
Tax havens. In four countries that charge low or no corporate tax rates, these
companies posted skyrocketing 31 percent profit margins." - Oxfam, September 2018
October 1, 2018 Africa/Global: Professionals Enabling Corruption
"Lifting the veil of corporate secrecy reveals a simple principle: Offshore is
actually a set of professional services that specialize in enabling businesses and
individuals to effectively retreat from legal, regulatory, and public scrutiny,
empowering them vis-a-vis those who have remained 'onshore' without access to such
services." - Hudson Institute
June 4, 2018 West Africa/Global: Tax Evasion without Borders
"On paper, the company that engineered and built the [$50 million mineral sands]
processing plant [in Senegal] was SNC Lavalin-Mauritius Ltd, a local division of SNC
Lavalin [Canada]. In reality, SNC Lavalin-Mauritius wasn’t involved. It was a shell,
created for the specific purpose of helping the engineering giant avoid tax payments.
The company had no construction equipment and no office of its own. It operated from
inside the Mauritius office of the offshoring law firm Appleby, which helped SNCLavalin
create the shell company." - West Africa Leaks