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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 in order of suggested reading, putting the highest priority books (and those most accessible to the non-specialist reader) higher in the list.

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. To be determined. Please nominate additional books in email to africafocus@igc.org.




Most recent bulletins on illicit financial flows and tax justice

May 24, 2017  Nigeria: Corruption Undercuts Boko Haram Fight http://www.africafocus.org/docs17/nig1705.php
    "Nigeria's corrupt elites have profited from conflict; with oil prices at a record low, defence has provided new and lucrative opportunities for the country's corrupt kleptocrats. Former military chiefs have stolen as much as US $15 billion – a sum equivalent to half of Nigeria's foreign currency reserves – through fraudulent arms procurement deals." - new report on "Weaponizing Tranparency"

April 17, 2017  Africa/Global: New Reports Show Massive Tax Losses http://www.africafocus.org/docs17/tax1704.php
    On April 15, "tax day" in the United States, tens of thousands of demonstrators in over 200 communities around the country marched to demand that President Trump make public his tax returns ( http://taxmarch.org/home/). Protesters also denounced his use of taxpayer funds for his personal profit and military escalation while his administration continues its assault on spending for urgent public needs at home and around the world. There is no sign that the President will comply with the demand for transparency. But the award of a Pulitzer Prize last week to the international consortium that exposed the Panama Papers was only one indicator that the drive to expose tax evasion, tax avoidance, and corruption around the world will continue.

April 3, 2017  South Africa: Rising Outcry for Zuma to Go http://www.africafocus.org/docs17/sa1704.php
    "We call on Ministers and leaders of the ANC who care about the future of democracy and the Constitution to speak up and call on the President, in the best interests of the country, to step down. We call on the parliamentary leadership of the ANC, supported by all opposition parties, to insist that parliament be recalled immediately to debate a motion of no-confidence, proposed by the ANC leadership in parliament. We call on all members of Parliament to unite and support a motion of no-confidence." - Statement by the Nelson Mandela Foundation and the Ahmed Kathrada Foundation, March 31, 2017

March 28, 2017  Liberia: Mining, Displacement, and the World Bank http://www.africafocus.org/docs17/lib1703.php
    "The roots of the New Liberty Gold project stretch back before 1995, when a resource extraction license was issued by former warlord turned president Charles Taylor to a mysterious company called KAFCO. The permit changed hands a few times and, today, Avesoro holds its permit via a wholly-owned subsidiary, Bea Mountain Mining Corp – a company created in 1996 by Keikurah B. Kpoto, one of Taylor's closest associates. In 1998, foreign interests bought Bea Mountain Mining. The beneficiaries of the sale were well hidden. According to a document IRIN procured, three quarters of its capital belonged to a company incorporated in the British Virgin Islands. The rest was held by owners of bearer shares." - IRIN investigative report, March 21, 2017

February 28, 2017  Africa/Global: Open Data for Tax Justice http://www.africafocus.org/docs17/tax1702.php
    "Multinational companies typically publish global, consolidated accounts - and international accounting standards now allow these to roll into one all financial information on the substance of their economic activities, or at best to provide regional figures. This means that country-level information on profits, revenues, taxes, borrowings and employees, for example, are not provided. ... As the name suggests, the longstanding proposal for country-by-country reporting (CBCR) would make multinational companies break down and publish their results for each country. This is essential for citizens to know what companies and their affiliates are doing where they live, and what contributions they are making." - Open Data for Tax Justice announcement

February 7, 2017  Africa/Global: Transparency Setback, African Agendas http://www.africafocus.org/docs17/iff1702.php
    In the world of large multinational corporations, secrecy is more than the rule rather than exception. Despite this reality, there have been some advances in recent years, including U.S. legislation and regulations requiring disclosure of payments by U.S. oil, gas, and mining companies to foreign governments. Last week, the U.S. Congress revoked this Security and Exchange Commission rule, a year before it was actually to be implemented. Although comparatively little noticed in comparison to the tumult around White House actions, this was an indication that the Republican Congress as well was determined to reverse even modest steps to fight corporate corruption and other similar abuses.

January 23, 2017  South Africa: State Capture & Energy Policy http://www.africafocus.org/docs17/saf1701.php
    "Eskom, accused of overly cozy ties with the Guptas featured heavily in the report, with 916 mentions. ... it's Eskom's chief executive, Brian Molefe, who comes out looking the worst. According to cell phone records, Molefe had 58 phone calls with the eldest of the Gupta brothers, Ajay Gupta, between August 2015 and March 2016, just before the Guptas purchased South Africa's Optimum coal mine for 2.15 billion rand ($160 million). Eskom, which prepaid the Gupta's Tegeta Exploration and Resources 600 million rand for coal, had been accused of helping to finance the Guptas' coal mine deal through preferential treatment." - Quartz Africa

November 28, 2016  Africa/Global: Overcoming the Shadow Economy http://www.africafocus.org/docs16/iff1611.php
    "Knowledge of beneficial ownership of companies and bank accounts is fundamental, both to ensure taxation and also to prevent and prosecute crime and the money laundering that so often is associated with it. ... Corporations, trusts, and foundations are creations of the state--and as such, they have no inalienable rights. They are created to facilitate societal welfare, and to ensure that they do so, they need to be globally regulated--regulated in ways which ensure full knowledge of beneficial ownership and full compliance with all tax laws." - Joseph Stiglitz, in testimony to European Parliament Panama Papers inquiry

October 18, 2016  Ghana: New Debt Trap http://www.africafocus.org/docs16/gh1610.php
    "Ghana is in a debt crisis. Despite having had significant amounts of debt canceled a decade ago, the country is losing around 30% of government revenue in external debt payments each year. Such huge payments are only possible because Ghana has been able to take on more loans from institutions such as the International Monetary Fund (IMF), which are used to pay the interest on debts to previous lenders, whilst the overall size of the debt increases. "

September 21, 2016  USA/Africa: From #BlackLivesMatter to #StopTheBleeding Africa http://www.africafocus.org/docs16/iff1609.php
    The direct and indirect toll resulting from illicit financial flows reflects the unequal value today's world places on human lives by race and place ... Reflecting the legacy of the slave trade and colonialism, the African continent and Black people around the world are disproportionately located at the bottom of a global system that systematically sucks wealth upward, toward the top "1 percent." ... there can be no doubt that the number of deaths caused by these structural economic inequalities rivals or likely even exceeds those lost due to bombs, guns, or machetes.

September 14, 2016  Gabon: High Demand for Democracy, Short Supply http://www.africafocus.org/docs16/gab1609.php
    "Among 36 African countries surveyed in 2014/2015, Gabon ranks at or near the bottom on every indicator of election quality and fairness, according to citizen responses collected in September and October 2015. ... Gabon ranks dead last in public trust in the election commission. ... [at the same time] Gabon ranks near the top in favoring multiparty competition and term limits on presidents, as well as in disapproving of one-party and one-man rule." - Afrobarometer

June 22, 2016  Africa/Global: "Stop the Bleeding" Updates http://www.africafocus.org/docs16/stb1606.php
    "A new report by Tax Justice Network-Africa and ActionAid says that East African countries (Tanzania, Kenya, Uganda and Rwanda) are losing approximately $2 billion a year of revenue each year by granting tax incentives to multinational companies. ... According to Yaekob Metena, ActionAid Tanzania's country director, 'Though there have been improvements in recent years in addressing the issue, governments in East Africa continue to give away domestic resources in tax incentives, funds that could pay for the regions' education and health needs and meeting the development objectives.'"

Complete listing of bulletins on illicit financial flows, tax justice, and debt, 2003-present