Top Ten Books on Illicit Financial Flows, Tax Justice, and Africa
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Recent AfricaFocus Bulletins | More on illicit financial flows and tax justice
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
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and wider risk-reduction measures to prevent nuclear escalation.” - The Elders, May 25, 2022
May 11, 2022 Africa/Global: Debt, IFFs, and Inequality in Africa
“43 African governments are facing expenditure cuts totalling $183 billion
(equivalent to 5.4 percent of GDP) over the next five years, reveals new
analysis from Oxfam and Development Finance International (DFI) today. If
these cuts are implemented, their chances of achieving the UN’s Sustainable
Development Goals will likely disappear.” - Oxfam International and
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December 23, 2021 USA/Africa: Pandora Papers Keep Giving
2021 was a banner year for attention to national and international tax reforms to reduce tax evasion and avoidance, with legislation in the United States spearheaded by the FACT Coalition and a global reform deal proposed by the Organization of Economic Cooperation and Development (OECD). But the Pandora Papers also demonstrated the pervasive scale of illicit financial flows that siphon off wealth into an “offshore” world of secrecy.
May 31, 2021 Mozambique/Global: Fossil Fuels, Debt, and Corruption
“The scandal of Mozambique’s “hidden debts” has already cost the
country at least 11 billion US dollars, and has plunged an
additional two million people into poverty, according to a detailed
study of the costs and consequences of the debt published on Friday
by the anti-corruption NGO, the Centre for Public Integrity (CIP),
and its Norwegian partner, the Christian Michelsen Institute. The
term “hidden debts” refers to illicit loans of over two billion US
dollars from the banks Credit Suisse and VTB of Russia in 2013 and
2014 to three fraudulent, security–linked Mozambican companies –
Proindicus, Ematum (Mozambique Tuna Company), and MAM (Mozambique
Asset Management).” - report by Centre for Public Integrity
(Mozambique) and Christian Michelsen Institute (Norway)
March 8, 2021 USA/Global: Taxing the Tech Giants
“How should we determine the corporate tax a big tech company should
pay in each country where they operate? There are many ways that this
could be calculated, but most recommendations suggest looking at
their sales, their assets and the number of employees they have in
each country. In the absence of transparent reporting, collecting
such data is not easy, but we can get a useful estimate through
looking at a proxy indicator: the number of users they have in each
country. For example, in just 20 developing countries there are
nearly 1.5 billion internet users accessing Google, about 900 million
people using Microsoft on their desktops and over 750 million
Facebook users. For these companies, the number of users is a good
indicator of both their sales and their assets.” - ActionAid
February 22, 2021 Africa/Global: The Inequality Virus
“COVID-19 has been likened to an x-ray, revealing fractures in the
fragile skeleton of the societies we have built. It is exposing
fallacies and falsehoods everywhere: The lie that free markets can
deliver healthcare for all; The fiction that unpaid care work is
not work; The delusion that we live in a post-racist world; The
myth that we are all in the same boat. While we are all floating
on the same sea, it’s clear that some are in super yachts, while
others are clinging to the drifting debris.” – António Guterres,
UN Secretary General
December 14, 2020 Africa/Global: State of Tax Justice 2020
“Of the $427 billion in tax lost each year globally to tax havens,
the State of Tax Justice 2020 reports that $245 billion is directly
lost to corporate tax abuse by multinational corporations and $182
billion to private tax evasion. Multinational corporations paid
billions less in tax than they should have by shifting $1.38
trillion worth of profit out of the countries where they were
generated and into tax havens, where corporate tax rates are
extremely low or non-existent. Private tax evaders paid less tax
than they should have by storing a total of over $10 trillion in
financial assets offshore.” - Tax Justice Network, November 2020.
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: #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