The cancer of corruption

With the recent release of the ‘Pandora Papers’ – 12 million pages recounting how high profile people from all over the world hide their wealth and avoid tax – there is no longer any doubt that corruption is pervasive throughout the world, including Australia.

How does this affect us? In a great number of ways! But let me deal with one area: Africa. Many would say, ‘who cares about Africa, let them do what they like, what they get up to doesn’t matter to us and won’t have any influence on us.’

Wrong.

The BBC and CNN put out all sorts of positive stories about developments in Africa, which are all true, and I wish there were more – but this hides what is really going on.

More funds leave impoverished Africa than are sent there. Some of the funds remitted externally are for legitimate purposes, but a much larger proportion of the funds are the result of corrupt elites hiding their ill-gotten gains offshore.

This occurs year after year. In 2017, USD$203 billion was sent out of Africa and only US$162 billion was remitted to Africa (ref: Karen McVeigh-The Guardian). About one third of those incoming funds were in the form of aid; the rest consisted of either investment capital or, more significantly, funds being remitted from African diaspora living in developed countries. Thus only a small amount is only ever destined for real investment. Meanwhile, the outgoing funds are corrupt elites shovelling funds offshore (ref: ‘Pandora Papers’). Undoubtedly this trend has continued since 2017.

The reasons for this are complicated. Most countries in Africa have a ‘pretend’ or ‘partial’ democracy. There has been enormous population growth throughout Africa, meaning that the provision of services, schools, hospitals, roads, etc, is seen by the elite as a virtually impossible task. Truly independent judiciaries are rare. In many cases the military play a large role in governing the country. Voting systems are often compromised. Many countries are poorly managed. This all results in an almost complete lack of faith in the country; so in order to protect themselves the so-called elites steal what they can to send funds offshore.

Instead of investing money in their own country, African elites thus end up investing funds in the developed world and aiding growth in those countries, not their own. The developed world makes it so easy to transfer funds to innumerable ‘tax havens’ such as Swiss bank accounts, banks in Panama, the Cayman Islands, British Virgin Islands, Luxembourg, and many more.

Meanwhile, the Transparency International’s Corruption Index, which measures corruption in 180 countries around the world, offers the following statistics (the higher number having the worse corruption):

South Sudan 179, Nigeria 149, Kenya 124, Ethiopia 94, South Africa 69, Botswana 35.

USA 25.

Australia 11, New Zealand 1.