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 email@example.com.
Most recent bulletins on illicit financial flows and tax justice
July 17, 2017 Congo (Kinshasa): Inga Dam Mirage Recedes, Again
The latest projections for the Inga 3 hydroelectric project on the Congo River to
become operational, cited in press reports last week, are 2024 or 2025. But even if
the project is financed and constructed, says a new report, the project will likely
provide only minimal electric power for the people of Democratic Republic of the
Congo and burden the country with more unsustainable debt.
July 10, 2017 Africa/Global: Following the Money
"As an important tool in our fight against corruption, tax evasion, terrorist
financing and money laundering, we will advance the effective implementation of the
international standards on transparency and beneficial ownership of legal persons and
legal arrangements, including the availability of information in the domestic and
crossborder context." - G20 Summit Communiqué, Hamburg, July 8, 2017
June 6, 2017 South Africa: #Guptaleaks - Will Heads Roll?
"The Guptas have until now escaped investigation from the state agencies because they
have purchased indemnity. You have to hand it to the Guptas; the way they went about
capturing the state is quite impressive. Not only did they buy the president and his
son, they targeted key people in government that could act as their minions. When
people were resistant to their agenda, they scouted for bootlickers and had them
appointed. They paid off people in the security agencies to make sure they would not
be bothered with criminal investigations." - Daily Maverick, June 5, 2017
May 24, 2017 Nigeria: Corruption Undercuts Boko Haram Fight
"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
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
"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
March 28, 2017 Liberia: Mining, Displacement, and the World Bank
"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
February 28, 2017 Africa/Global: Open Data for Tax Justice
"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
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
"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
"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
"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. "