The war on corruption is being fought on many fronts. One where victory is especially critical is the battle to prevent leaders of poor countries from robbing their citizens blind, and nowhere will a victory be more welcome or more hard-fought than in Africa. Seventy percent of the world’s poor live on the continent while, thanks first to colonialism and then to Cold War machinations, Africans are saddled with governments ill-equipped to keep greedy leaders in check. Courts, legislatures, and other accountability institutions are weak; the media and civil society hobbled by repressive, non-democratic measures.
Not that in recent years there have not been promising developments. South Africa’s once powerful leader Jacob Zuma was forced to resign the presidency over corruption allegations for which he is now on trial. Former Guinea Minister of Mines Mahmoud Thiam forfeited $8.5 million and was sentenced to seven years in prison for corruptly granting virtually the whole of his nation’s mineral sector to a Chinese conglomerate. The son of former Mozambique President Armando Guebuza is one of over a dozen members of the country’s ruling circle facing trial for his role in the “hidden debt” scandal.
What will be required to continue this progress is the theme of John Hatchard’s latest book, Combating Money Laundering in Africa: Dealing with the Problem of PEPs. Like his earlier ones on African anticorruption laws and institutions (here, here, and here), it’s a must have for African corruption fighters.
Hatchard doesn’t shy away from the obvious: investigating, prosecuting, and convicting African “PEPs,” money laundering lingo for a nation’s senior leaders, is an uphill fight. But his careful, methodical explanation of the Thiam prosecution, Malawi’s “Cashgate” scandal, and other recent cases shows that it can be done. Along the way, he reviews African statutes, recent court decisions, and provides a primer on anti-money laundering laws, FATF, and the Egmont Group that anyone new to the subject will want to read. The section on the power African constitutions give presidents to grant pardons in the national interest will interest citizens of a certain non-African state whose president, if media reports are to be believed, is scheming to abuse his pardon power on his way out of office.
Hatchard argues that putting an end to senior leaders’ ability to launder the proceeds of corruption and thus bringing grand corruption on the continent under control takes well-drafted anti-money laundering laws robustly enforced together with effective curbs on the source of the money to be laundered, the private sector. In 15 chapters describing different schemes senior leaders have hatched to steal citizens’ money wholesale and how national and international laws can be used to prosecute them, Hatchard makes several important points.
First, successful enforcement depends both upon the continued strengthening of African anticorruption agencies and prosecution services and close cooperation with law enforcement authorities in wealthier nations. While highlighting recent convictions national enforcers have secured against senior officials, he points to a lack of resources that hamper their efforts. On high-profile, politically sensitive cases involving powerful PEPs, he explains that offshore prosecutions are critical. He cites not only celebrated cases like the French money laundering prosecution of Equatorial Guinean Vice President and world-renowned kleptocrat Teodoro Obiang, but lesser known but equally critical cases such as the money laundering convictions in an English court of former state governor and Nigerian power broker James Ibori and the U.K. solicitor who helped him buy a private jet and a tony London flat with stolen funds.
A second important point observers often overlook. Much of the impetus for better laws and better enforcement is coming from Africans themselves. A key if underappreciated source has been the reports produced by ESAAMLG, GABACA, and GIABA — the regional anti-money laundering bodies responsible for Eastern, Central and Western Africa respectively. The three periodically assess their member governments’ efforts in fighting money laundering and, where governments fall short, include hard-hitting recommendations for change in the resulting Mutual Evaluation Review or MER. MERs are made public and, as Hatchard documents, generate pressure both within the country and internationally for reform.
A third point Hatchard stresses is that the corruption fight cannot be won without the private sector’s cooperation. Companies that do business in Africa must admit their past wrongdoing and commit to preventing future wrongdoing. As examples he cites the successful prosecutions of Alstom and Airbus. To resolve the charges, the companies admitted to past bribery offenses and put in place programs to prevent their employees from paying bribes in the future.
Hatchard is no pollyanna about anticorruption compliance programs. He explains that throughout the period Airbus executives were countenancing the payment of large bribes to foreign leaders, the company had a Business Ethics Policy that forbid bribery of any kind and an anticorruption compliance program that had received a certificate of compliance by a well-known independent certification body. What makes more recent programs different, he argues, is the pressure the companies face thanks to stepped up enforcement by the now 44 countries party to the OECD Antibribery Convention. Companies subject to their laws can no longer afford to have programs that look good on paper but are of no effect. Hatchard urges the international community to persuade China, whose companies are rapidly expanding operations across the continent, to join the convention.
Together with his 2016 volume, Combating Corruption: Legal Approaches to Supporting Good Governance and Integrity in Africa, African law enforcement authorities can find advice and precedent on many criminal justice issues that arise in anticorruption and anti-money laundering cases: Do defense counsel have a right to be present during an investigative interview; How to reconcile constitutionally-guaranteed privacy rights with requests for a suspect’s financial information; Whether the statement of a whistleblower later murdered under suspicious circumstances is admissible at trial.
As the fight against corruption in Africa intensifies, investigators, prosecutors, defense lawyers, and judges will confront many such questions for which they need and want African answers. Until a savvy publisher realizes money can be earned from producing a treatise on African anticorruption and anti-money laundering laws, Hatchard’s volumes remain the best substitute on offer. No one engaged in the fight against corruption and money laundering in Africa should be without them.
If the first requirement of successful enforcement of anticorruption includes close cooperation with law enforcement agencies in wealthy nations to what extent does this include action to prevent money laundering through the City of London? Is progress being made in this area?
Good question. The answer is yes, progress is being made. In 2006 the Department for International Development entered into an agreement with the Metropolitan Police to fund a unit within the Met to help developing states find and repatriate stolen assets hidden in the United Kingdom. Today the program stretches across several agencies and covers activities from intelligence to investigation to bringing proceedings in U.K. courts to confiscate assets. DfID provides roughly £21million annually to support the program with the remainder coming from the budgets of participating agencies. While scheduled to end in 2020, given its success, the U.K. government is expected to extend it. For more on the program, see Phil Mason’s “Twenty years with Anticorruption. Part 5 Money Laundering and Illicit Financial Flows –The ‘Getaway Car’ of Corruption,” U4 Practitioner Experience Note 5.
At the same time, the U.K. is making harder to hide money either in it or in Overseas Territories and Crown Dependencies (CDs). In 2018, Parliament passed the Financial Services (Implementation of Legislation) Bill requiring the government of any British overseas territory to have public registers of companies organized under their laws. The Bill was also supposed to cover the CDs, but that was later changed given the CDs’ different constitutional relationship with the UK. The CDs are now looking to make their central registers public once the EU’s implementation review is conducted, ideally by 2023.
The registry for companies organized under U.K. law just completed a consultation on how to verify verification the directors and beneficial owners of companies listed in the registry. https://www.gov.uk/government/consultations/corporate-transparency-and-register-reform
I am sure friends in U.K. civil society could point to more that needs to be done, but I would be happy if other OECD countries were as far along in fighting money laundering as Her Majesty’s Government is.