PoliticsPolicy & GovernanceAfrica Escapes Accountability in Relation to the Panama Papers

Kennnedy MuturiOctober 3, 202228112 min
source: unsplash.com

The tiny country of República de Panamá (Panama) is separated from the African continent by a large water body. Many, if not most Africans, are unaware of Panama, a little country that connects Central and South America and has four million people.

Some Africans may recall learning about the Panama Canal in school, built by the American Military Corps of Engineers during ten years beginning in 1904. The Canal creates a vital artificial link between the Atlantic and Pacific Oceans.

Other politicians in Africans may recall the US invasion of Panama on December 20, 1989. President George H. W. Bush’s orders in Operation Just Cause deposed the country’s military ruler, President Manuel Noriega. They brought him to the United States to face drug trafficking, racketeering, and money laundering charges, among others. He’d been a trusted CIA hand for about 40 years, supplying information and assisting in the passage of weapons for US interests in counterinsurgency activities in Central and South America.

 Such friendships are temporary and only last until the interests of the parties involved change. Noriega was sentenced to 40 years in prison. Still, his term was reduced to 17 years for good behavior, and he was extradited to France, where he was sentenced to seven years in prison for crimes comparable to those committed in the United States. Before completing his sentence in the French prison, he negotiated a return to Panama to serve his sentence in his own country to assassinate a political opponent. He had been imprisoned in absentia in 1995. On May 29, 2017, he died in Panama City.

However, a small number of African political and economic figures are familiar with Panama beyond its Canal and political past, as they employed Mossack Fonseca, a Panama-based legal company, to hide funds abroad allegedly.  Mossack Fonseca is the fourth biggest organizer discovering safe havens for questionable money invested in various countries via offshore companies. On behalf of elevated thieves who have betrayed the duty of loyalty duty of care for public funds in their corresponding trusts or who have avoided paying taxes.

Putting money in clandestine offshore bank accounts maintained by Mossack Fonseca of Panama shows a high possibility of criminal activity, regardless of how one looks. The Panama Papers, which were alleged to have been leaked in 2015 but were made public on April 3, 2016, in a cache of over 11.5 million files or 2.6 TB of data by the International Consortium of Investigative Journalists, exposed the covert tucking away of unlawfully earned money (ICIJ).

Numerous former Heads of State, serving Heads of State and Government, other serving or retired civil officials in a variety of jurisdictions, and, of course, businessmen/women, as well as family members of these elite few, were exposed as a result of this leak. In total, 143 people are said to have been exposed around worldwide.

Sigmundur Davio Gunnlaugsson, Iceland’s Prime Minister, was the first victim of the enormous Panama Papers leak. However, there was no evidence that he and his wife had evaded taxes or committed other crimes. The fact that he did not declare his desires as he entered parliament and that his wife had interests in bank bonds that her husband, as Prime Minister, had negotiated with banks on behalf of Iceland sparked a massive public outcry. As a result, over 22,000 protesters crowded at the parliament to hold people accountable. On April 5, 2016, he had no alternative but to quit his position.

On July 28, 2017, the Supreme Court of Pakistan ousted Nawaz Sharif, Pakistan’s former Prime Minister, from office and barred him from holding public office for ten years. His demise was precipitated by a lawsuit demanding prosecution for Nawaz Sharif’s family’s involvement in the Panama Papers. Imran Khan Niaz v. Mian Muhammad is the name of the lawsuit. Imran Khan, a former famous cricket player, who turned into a politician and party leader, filed a petition against Nawaz Sharif in the Supreme Court of Pakistan between November 1, 2016 and February 23, 2017, alleging financial fraud, corruption, and conflicting statements about Sharif’s family’s ties to eight offshore companies.

The name of Ian Cameron (father of David Cameron, former Prime Minister of the United Kingdom) and members of the Houses of Lords and Commons in the Panama Papers drew a lot of attention from the international media. As Juliette Garside pointed out on April 4, 2016, Ian was believed to have maintained a clandestine financial arrangement: Blairmore Holdings Inc managing tens of millions of pounds of assets on behalf of his family without paying a dime in tax on profits in the United Kingdom for over 30 years. Some have said that the father’s crimes were visited on the son as a further reason for David’s demise as the British people voted against him in the Brexit referendum.

According to the Panama Papers, Africa has a fair proportion of politicians and corporate executives who have hidden money stolen or participated in tax fraud through a network of offshore corporations. About three-quarters of the African Union’s member countries are involved in this secret stashing of resources from Africa by a chosen minority. The list of African names allegedly on the leaked documents is a Who’s Who that Google can readily provide. Large wealth nations like Nigeria and Angola and those with fewer resources, such as Ghana and Sierra Leone, are prominently featured on the list.

Unlike in Iceland, there has been no public reaction to reports that criminally inclined African political and commercial elites are stashing much-needed development monies, as revealed by the Panama Papers. There haven’t been any private lawsuits demanding accountability, as there were in Pakistan. Prosecutions by the government have likewise proven mainly ineffective. In certain countries, however, ongoing investigations are said to be ongoing. The international and African media have paid little attention to the situation. When it comes to corruption in Africa, it appears that the bar for raising a stir is relatively low.

Or how does one describe the sporadic media campaign in general, or the pitiful attempt by a few journalists to delve deeper into what had been published about African countries and peoples in the Panama papers of Mossack Fonseca under the guise of reportage?

Is it because Africans do not understand the significance of corruption as a cause of the continent’s economic stagnation?

Winnie Byanyima, Executive Director of Oxfam International, criticized the weak response in Africa to the Panama Papers in her August 2016 speech, “A powerful and corrupt elite is plundering Africa of its riches.” “One in every 12 African children dies before their fifth birthday,” she wrote in that post, highlighting some of the consequences of the corruption plague. Thirty-four million children lack access to elementary education, and Africa has the lowest secondary school enrollment rates globally. On our continent, forty million youths are unemployed. Being a young African in these times is difficult.

Corrupt-thieving African politicians and tax cheating leaders enjoy the same impunity in business or public life. High popular tolerance and apathy to stealing and greed have resulted in this condition on the African continent.

Kennnedy Muturi

Ken is a Quantitative Trader with experience in investments, quantitative finance, financial modelling and algorithmic trading in Global Investable Markets (GIM). He enjoys using Bayesian Statistics, Time Series and Machine Learning in developing Robust consistent Alphas in Equities Market, FX, ETPs and Derivatives instruments. He enjoys deep dives in understanding High Frequency Trading infrastructures and improving how the African financial markets work. He holds a Bachelor's in Actuarial Science from Strathmore Institute of Mathematical Sciences : An Executive Program in Algorithmic Trading (EPAT) certificate in Algo Trading from QuantInsti : A current MSc student in Financial Engineering at World Quant University.

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