By Kathleen Brophy – From Oxfam America
The ugly stereotype of Africa’s “big man” normally shows a corrupt leader walking out of a negotiation with briefcases full of dollar bills and gold rings on every finger, grinning from ear to ear. It is the all too familiar story of African corruption, portrayed as a uniquely African problem. However, this depiction is as crude as it is wrong and incomplete.
New investigative stories released this week by the International Consortium of Investigative Journalists (ICIJ) and media partners in Africa – based on the treasure-trove of “Panama Papers” from the Mossack Fonseca law firm – provides insight into the methods, techniques and tricks that politicians, politically-connected elites and their cadre of offshore middlemen and trusted lawyers use to rob African governments of public tax revenues.
While much is alleged of Africa’s notoriously corrupt “big men” caricatures, the stories released this week provide concrete examples of how these swindles happen; revealing details of a diverse and lesser known set of shadowy characters responsible for shifting millions of taxable dollars offshore. The leaked internal records from Panamanian law firm Mossack Fonseca shed light on the role that legal and accountancy firms play in the global offshore tax havens game.
The stories highlight high-level schemes of complex embezzlement, bribery and money laundering resulting in millions of dollars diverted from government treasuries into the offshore bank accounts of the global elite. Helping the rich in Africa and those that do business there avoid taxes and hide their assets is a big business opportunity. The richest ten people in Africa now have a combined wealth equivalent to the GDP of Kenya. According to the World Bank, the number of African billionaires has doubled since 2010 while the number of people living in poverty across the continent has increased by 50 million since 1990.
Almost one third of rich Africans’ wealth is held offshore in tax havens amounting to $14 billion in lost tax revenues from African countries every year. This loss in tax revenue helps to entrench endemic poverty while increasing extreme inequality. Today, seven of the most unequal countries in the world are in Africa.
Lost tax revenues are desperately needed to invest in healthcare, education and jobs on a continent where 1 in 12 children die before their fifth birthday, 34 million children are not in primary school and 40 million young Africans are out of work.
Read more at Oxfam America
