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AfricaFocus Bulletin
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.
This AfricaFocus Bulletin contains an article published today in
Praxis (
http://www.kzoo.edu/praxis/), an on-line publication of the Arcus
Center for Social
Justice Leadership at Kalamazoo College. The article, written by
Emily Williams and William Minter, seeks to do the following: 1)
introduce readers to the #StoptheBleeding campaign and make the
tremendous loss of resources from African countries via illicit
financial flows more visible; 2) begin to make the case for linking
#BlackLivesMatter and #StoptheBleeding with the understanding that
the same system of (mis)appropriation of wealth is hurting people in
Africa and elsewhere in the world including the US; and 3) offer
several domestic and global policy changes that could make a
difference on both sides of the Atlantic.
For previous AfricaFocus Bulletins on illicit financial flows and
related issues, visit http://www.africafocus.org/intro-iff.php
In addition to links in the article below, additional newly
published resources include:
"Top 10 Questions About Illicit Financial Flows and Africa"
"Resources about Illicit Financial Flows from Africa"
Top Ten Books on Illicit Financial Flows, Tax Justice, and Africa
++++++++++++++++++++++end editor's note+++++++++++++++++
By Emily Williams and William Minter
[Emily Williams is an educator and organizational development
consultant. William Minter is the editor of AfricaFocus Bulletin (
http://www.africafocus.org) and author of numerous books and other
publications on African issues and international relations. Both
authors are members of the coordinating committee of the US-Africa
Network (http://www.usafricanetwork.org). The authors are grateful
for the skillful editing of Alice Kim, which has contributed
immensely to the development of this article.]
In June 2015, a coalition of six Pan-African activist networks
launched #StoptheBleeding Africa (http://stopthebleedingafrica.org/faqs/) in Nairobi, Kenya to curb
the hemorrhage of resources from the African continent. As the
#BlackLivesMatter movement continued to gain strength in the United
States, this Pan-African coalition came together to expose and
mobilize global support to end illicit financial flows – money that
is illegally earned, transferred or used. Estimates of illegal
transactions in Africa show a loss of at least $50 billion to $80
billion in wealth every year, a figure that would be incalculably
more if transfers made legal by loopholes and unfair treaties were
included. Some flows are only seen as "legal" because the laws are
written and interpreted by those profiting from the system.
Nevertheless, even the outflow of clearly illegal funds is far
greater than the estimated $40 billion a year that Africa receives
in official development assistance. As explained in this 16-minute
video from the United Nations Economic Commission on Africa
(https://www.youtube.com/watch?v=lenH1SaOcIA), the #StoptheBleeding
campaign includes official commitments by African governments.
However, implementing these commitments depends on large-scale
mobilizations within Africa and around the world.
Unlike the pillage of Africa in earlier periods of the slave trade
and colonial rule, these illicit financial transactions are most
often hidden from public view. They happen through fraudulent
invoicing of trade, "creative accounting" by multinational
corporations, tax giveaways by African governments, and the use of
shell companies based in tax havens around the world including
Delaware, Luxembourg, Panama, the British Virgin Islands, Liberia,
and Mauritius. Despite repeated revelations, notably the recent
#PanamaPapers (https://panamapapers.icij.org/) scandal, the public
eye glazes over at billions of dollars cited alongside obscure
company names and a complex web of financial links across national
and continental borders. This article seeks to do the following: 1)
introduce readers to the #StoptheBleeding campaign and make the
tremendous loss of resources from African countries via illicit
financial flows more visible; 2) begin to make the case for linking
#BlackLivesMatter and #StoptheBleeding with the understanding that
the same system of (mis)appropriation of wealth is hurting people in
Africa and elsewhere in the world including the US; and 3) offer
several domestic and global policy changes that could make a
difference on both sides of the Atlantic.
As South African student activist Pearl Pillay noted, "it is a
common error of thought that violence is only what you can see"
(http://tinyurl.com/jtk3hzy). Violence that stems from decisions
made in boardrooms, city halls, and the offices of high-paid
international accounting and law firms can be harder to see than
violence on the streets but is deadly nonetheless.
In the US, economic violence is carried out through systemic public
disinvestment in health and education as we've seen in Flint,
Michigan's water crisis and the closure of public schools in Chicago
and Detroit, not to mention below-poverty-level wages paid by
corporations such as Wal-Mart and McDonald's.
In African countries, capitalist enterprises suck resources out of
the continent via traditional industries like oil and minerals and
rapidly expanding economic sectors like telecommunications and
retail:
These financial practices can be as, if not more, deadly than police
violence due to the sheer number of people impacted as resources
needed for health, education, and other public services, as well as
for private and public investment in development, are siphoned out
to multinational corporations and overseas bank accounts. The
ensuing competition for scarce resources fuels local and national
conflicts, often heightened by demagogues channeling the frustration
into hostility toward ethnic "others."
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; and, in fact, not only parallels the violence of
terrorism but also reflects its disproportionate toll on the Middle
East, Africa, and Asia than in Europe and the Americas (http://tinyurl.com/hlsbj8b). 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." Whether this system is best called capitalism,
neoliberalism, global apartheid, white supremacy, kleptocracy, or
something else, 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.
Stop the Bleeding (4-minute music video)
With the #PanamaPapers leak in April 2016, illicit financial flows momentarily gained international media attention. This is in part
because rich as well as poor countries are affected. A recent
calculation (http://tinyurl.com/holnnc5) estimated that illegal
tax evasion costs US taxpayers $35 billion a year, with an
additional $130 billion a year lost to technically legal "tax
avoidance." Even without any changes in tax rates for the rich,
these "lost" funds could add $165 billion a year more in public
funds and be invested in health, education, and other public goods
that benefit Americans.
The losses to sub-Saharan Africa from illicit flows, however, have
an even more significant impact given the smaller size of African
economies and the urgent need for investment in basic services.
According to World Bank estimates (http://tinyurl.com/hw7b8t3) for
2014, while the United States and other rich countries on average
spend over $9,000 a year per person on public health, South Africa
spends a little less than $600 a year per person. Meanwhile the
average for all African countries together is less than $100 per
person per year. As the wealthy evade taxes in both richer and
poorer countries, it is always the most vulnerable in society who
suffer most from budget cuts. On a global scale, African countries
and African people suffer disproportionately, reflecting the global
hierarchy of wealth and power (
http://www.africafocus.org/iff-inequality.php).
Watch this 3.5 minute video on how Zambia Sugar evades taxes.
Although #BlackLivesMatter and #StoptheBleeding were born out of
distinct geographic contexts, highlight apparently different social
problems, call for varying solutions, and have diverging levels of
visibility in the global media, they are inextricably and deeply
linked.
Thanks to #BlackLivesMatter the pervasive systemic violence against
Black people by police and the criminal justice system in the US is
now more visible. Names like Trayvon Martin, Mike Brown, Sandra
Bland, Rekia Boyd, Eric Garner, Tamir Rice, Alton Sterling, and
Philando Castile have not been forgotten because activists have
strategically used social media, street protests, and behind-thescenes
organizing to force the media, the public, and politicians to
pay attention.
In the U.S., increasing economic inequality has led to the
criminalization of the poor and can be directly connected to police
violence. For example, in the cases of Alton Sterling and Eric
Garner, their attempts to make money in the street economy (selling
cd's and loose cigarettes respectively) is what preceded their
interaction with police that ultimately ended in the loss of their
lives. U.S. activists are intentionally making economic justice fundamental to the message of #BlackLivesMatter in initiatives like the Agenda to Build Black Futures (http://agendatobuildblackfutures.org/) released by Black Youth
Project in January 2016 and the Vision for Black Lives (https://policy.m4bl.org/) released by a coalition of Black
organizations in August 2016. Notably, #BlackLivesMatter
interventions in numerous cities were integral to pushing Bernie
Sanders' presidential campaign, which appealed to a growing segment
of the American population because it called for a more progressive
and populist economic agenda, to (belatedly) acknowledge the
relationship between racial justice, gender justice, and economic
justice.
But the violence plaguing Africa remains far too invisible to most
Americans. It is more difficult to #saytheirnames when the report is
of 44 killed at the #Marikana mine in South Africa, 147 students at
#Garissa in Kenya, or hundreds of men, women, and children at #Baga
in northeastern Nigeria, places most Americans have never visited
and can't find on a map.
Although the Nigerian-launched campaign to #BringBackOurGirls won
international fame, few Americans (beyond African immigrants and
others with close personal links to the continent) are attentive to
other struggles in Africa. Hashtags like #StoptheBleeding,
#OccupyNigeria, #MinersShotDown, #FeesMustFall, and #RhodesMustFall
echo faintly, if at all, across the Atlantic.
Making the connections between what is happening "here" and what is
happening "there" is not easy – #StoptheBleeding can feel less
tangible because the violence being contested is hidden in a tangle
of economic statistics, anonymous shell companies, and accounting
tricks – but it is fundamental to addressing the obstacles that must
be overcome to make a different world possible. It is imperative to
address the roots of injustice that connect #BlackLivesMatter and
#StoptheBleeding by fostering a collective process that builds
solidarity between movement forces in the US and Africa.
When policymakers—in Chicago, Washington, Pretoria, Nairobi, or
anywhere else —ask "Where is the money?" to pay for health,
education, and infrastructure, the answer should be, in the words of
the African Union Panel on Illicit Financial Flows: "Track it! Stop
it! Get it!" (http://tinyurl.com/zvwn5p5) The debate must go beyond
the very real issues of setting different budget priorities to
raising the basic question of who pays and who is evading their duty
to pay their fair share. The first step is to ensure that there is
full information available on income and wealth of those who have
the most money, including the ultra-rich, the well-known giant
companies, and also the obscure shell companies that both use to
hide their wealth from public view.
The United States and other rich countries are the home countries
for the majority of multinational corporations involved in the
looting of the African continent. They also provide convenient
facilities for African elites to hide their riches. In a report
published in January 2016, Global Witness documented with video
interviews their undercover investigation of 13 leading New York law
firms (https://www.globalwitness.org/shadyinc/). "We said we were
advising an African minister who had accumulated millions of
dollars, and we wanted to buy a Gulfstream Jet, a brownstone and a
yacht. We said we needed to get the money into the U.S. without
detection. ... the results were shocking; all but one of the lawyers
had suggestions on how to move the funds."
On the African continent, #StoptheBleeding activist groups and many
public officials at continental and national level are working to
identify the money that pours out of the continent. They have
identified specific measures to improve tracking of fraud in trade
invoices and are campaigning against tax treaties with foreign
investors with massive giveaways. They are working with
international partners to train journalists in investigations such
as those in the Panama Paper, and with tax specialists to improve
capacity to track overseas bank accounts. Implementation depends on
mobilization of public pressure and political will in each
individual country. Since the system is global, however, it also
depends on international collaboration, particularly from the
countries where the money is hidden.
And that's where the connection to the United States becomes
essential, and the agendas of #BlackLivesMatter and #StoptheBleeding
Africa potentially converge. The ultra-rich and multinational
corporations operate on a global playing field. Using secret bank
accounts, lawyers, and accountants spread around the world, money
can be transferred with a click of a mouse from Nairobi or Chicago
to the British Virgin Islands to London, with stops along the way in
Panama, the Seychelles in the Indian Ocean, Singapore, and Samoa in
the Pacific. If tax authorities are going to track down the money
they should be getting, activists and honest public officials around
the world must also find ways to collaborate to change the laws and
implement them (see the text box for a few examples of key policies
that could make a difference).
++++++++++++++++
1. Beneficial ownership in the US
Over two million corporations, LLCs, and other business entities are
formed in the United States every year—and almost every state
collects less identifying information from the individuals forming
these entities than from people applying for a driver's license or
registering to vote. Indeed, many states rank among the easiest
places in the world in which to form "anonymous shell companies" or
"phantom firms" - business entities that exist solely on paper with
no obligation to list the real people who actually own or control
them, otherwise known as the "beneficial owners." If they remain
hidden, it is not possible to find and to tax the assets, whether
they come from drug dealing or simply from rich people trying to
avoid paying taxes.
Relevant federal legislation proposed: The Incorporation
Transparency and Law Enforcement Assistance Act (S. 2489 and H.R.
4450)
2. Public Country-by-Country Reporting
Currently, multinationals are able to exploit loopholes in domestic
and international tax laws to shift profits from one country to the
next, often through tax havens (or "secrecy jurisdictions"), with
the end goal of reducing or even eliminating the tax they pay to
governments. Without leaks and whistleblowers, even governments only
see a small window into the inner workings of companies, which makes
proving tax avoidance or evasion nearly impossible. Although MNCs
report on their profits, revenue, taxes paid, and number of
employees, the global numbers they provide are for the operations of
all of their subsidiaries bundled together.
Multinational corporations should be required to submit individual
reports with basic financial information such as revenue, profits,
taxes, and number of employees for each jurisdiction in which they
operate. These country by country reports should be made available
to the public. Public country-by-country reporting strengthens the
financial system for everyone.
New regulations on country-by-country reporting by corporations were
issued this year by the Treasury and the IRS, and are also under
consideration by the Security and Exchange Commission. However,
these do not yet meet the standard of public disclosure demanded by
tax justice advocates.
3. Financial Transaction (Robin Hood) Tax
Simply put, the big idea behind the Robin Hood Tax is to generate
hundreds of billions of dollars, through a small tax of 0.5% on all
financial transactions such as sales of stocks and bonds. That money
could provide funding for jobs to kickstart the economy and get
America back on its feet. It could help save the social safety net
here and around the world, and it will come from fair taxation of
the finance sector. The revenue raised would be enough to protect
American schools, housing, local governments and hospitals, to pay
for lifesaving AIDS medicines, to support people and communities
around the world, and to deal with the climate challenges we're
facing.
Relevant federal legislation proposed: The Inclusive Prosperity Act
(H.R. 1464), introduced in the House of Representatives by Rep.
Keith Ellison and 36 co-sponsors and in the Senate (S. 1371) by Sen.
Bernie Sanders, with 1 co-sponsor.
+++++++++++
Action at the federal level can have the widest effect, given the
size of the U. S. economy and the impact of U.S. policy on
international action. But given that corporations are registered at
the state level and also pay corporate taxes at the state level,
states also have the capacity to take the lead and set a precedent
for national action. If the political will and the technical legal
and financial expertise are available, similar laws could possibly
even be implemented at city levels, as were divestment measures in
the anti-apartheid era.
Solidarity between #BlackLivesMatter and #StoptheBleedingAfrica is
crucial. Via weak corporate tax law, the U.S. gives license to
corporations to hoard profits and withhold their fair share of taxes
from the societies and countries which allow them to become
prosperous. By standing in opposition to tax injustice, activists
can push back against an aspect of U.S. capitalism that contributes
to increasing wealth inequality. By staying informed, building
relationships, and working in solidarity, we begin to create better
conditions for Black lives across the globe.
Incremental policy change will not be enough. We must confront the
legacy of centuries of systemic injustice and end society's denial
that this past still shapes the present. The violent inequality of
today's world is not new, despite dramatic changes in the
technologies of both physical and economic violence. Making that
violence visible also requires making full use of new technologies,
from cellphone videos to big-data journalism. But above all, it
depends on forging links between activists engaged on these
different fronts in different places, who together can build the
political will to act and thus make new futures possible.
Africa-specific
Tax Justice Network - Africa AfricaFocus Bulletin US-Africa Network USA and Global
FACT (Financial Accountability and Corporate Transparency) Coalition
ActionAid International Global Alliance for Tax Justice Tax Justice Network AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with a
particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
AfricaFocus Bulletin can be reached at africafocus@igc.org. Please
write to this address to subscribe or unsubscribe to the bulletin,
or to suggest material for inclusion. For more information about
reposted material, please contact directly the original source
mentioned. For a full archive and other resources, see
http://www.africafocus.org
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