A friend stated recently that Africa would never have the amount of wealth Europe has because Europe has both Africa’s wealth and its own.
This was said in a debate on the recent loss of a Constitutional Court challenge by the billionaire entrepreneur, Mark Shuttleworth.
In the Shuttleworth case, the dispute was over the imposition of a 10% exit charge to be paid by all South African citizens wanting to move more than R750000 offshore.
In making his finding, Deputy Chief Justice Dikgang Moseneke noted that the levy was “not to raise revenue, but to regulate conduct and to protect the domestic economy”.
Had Shuttleworth won his court challenge, the South African Reserve Bank would have had to reimburse him R250-million with interest on an initial amount of R2.5-billion that was to be invested in the Isle of Man – a self-governing British Crown dependency.
Moseneke’s Constitutional Court decision should go a long way to discouraging capital flight.
While Shuttleworth complied with the regulations regarding the transfer of capital out of the country, not everyone does.
According to a study by Global Financial Integrity, illicit financial outflows from the entire region outpaced official development assistance into Africa at a ratio of at least two to one, and they grew at an average rate of 11.9% per year.
Total illicit financial outflows from the continent, conservatively estimated at $854-billion during the period 1970 to 2008, may be as high as $1.8-trillion.
African countries with the highest outflows measured included Nigeria $89.5-billion, Egypt $70.5-billion, Algeria $25.7-billion, Morocco $25-billion, and South Africa $24.9-billion.
Former president Thabo Mbeki, chairperson of the high level panel on illicit financial flows, warned the African Union: “It is clear that illicit financial flows from Africa are large and increasing. They are also particularly prevalent in the extractive and natural resources sector which is a key contributor to our national economies.”
He went on to say that, “through trade mispricing alone, Africa loses more than $50-billion annually… Large corporations are by far the biggest culprits of illicit outflows, especially given their ability to retain the best available professional legal, accountancy, banking and other expertise.”
Mbeki also pointed out the “new and innovative ways of generating illicit financial flows, particularly through the digital economy and the opportunity afforded for ‘opacity’ by intangibles such as intra-company loans and other transactions”.
In order to curb such outflows, Mbeki recommended that the international community ensure “public availability of information on the finances and ownership of multinational companies”.
Furthermore, he stressed the need for “greater transparency in the international banking system, including elimination of financial secrecy jurisdictions.”
And he highlighted “the need to establish or strengthen the capacities of institutions and agencies of government such as the financial intelligence units, anti-fraud agencies, customs and border agencies, revenue agencies, anti-corruption agencies and financial crime agencies”.
Though all agree that illicit financial outflows are an “African problem with a global solution”, the reluctance of European institutions and players to aggressively assist the continent address the problem speaks volumes.
Whereas, Swiss banks cooperated with the US department of justice in pursuing US citizens who had unlawfully evaded taxes through depositing money in Swiss bank accounts, to the point of Credit Suisse pleading guilty to conspiracy to aid tax evasion and agreeing to pay about $2.6-billion in penalties, it would seem that few European or American banks have shown willingness to aid an investigation into African monies illegally landing up in overseas coffers.
Yet again, developed countries of the north who are quick to define standards and ways of being, are willing to police and find corruption anywhere around the world, but refuse to assist the developing countries of the south in recovering their loot and punishing the culprits.
Rationale for marathon alliance forum a mystery
This was said in a debate on the recent loss of a Constitutional Court challenge by the billionaire entrepreneur, Mark Shuttleworth.
In the Shuttleworth case, the dispute was over the imposition of a 10% exit charge to be paid by all South African citizens wanting to move more than R750000 offshore.
In making his finding, Deputy Chief Justice Dikgang Moseneke noted that the levy was “not to raise revenue, but to regulate conduct and to protect the domestic economy”.
Had Shuttleworth won his court challenge, the South African Reserve Bank would have had to reimburse him R250-million with interest on an initial amount of R2.5-billion that was to be invested in the Isle of Man – a self-governing British Crown dependency.
Moseneke’s Constitutional Court decision should go a long way to discouraging capital flight.
While Shuttleworth complied with the regulations regarding the transfer of capital out of the country, not everyone does.
According to a study by Global Financial Integrity, illicit financial outflows from the entire region outpaced official development assistance into Africa at a ratio of at least two to one, and they grew at an average rate of 11.9% per year.
Total illicit financial outflows from the continent, conservatively estimated at $854-billion during the period 1970 to 2008, may be as high as $1.8-trillion.
African countries with the highest outflows measured included Nigeria $89.5-billion, Egypt $70.5-billion, Algeria $25.7-billion, Morocco $25-billion, and South Africa $24.9-billion.
Former president Thabo Mbeki, chairperson of the high level panel on illicit financial flows, warned the African Union: “It is clear that illicit financial flows from Africa are large and increasing. They are also particularly prevalent in the extractive and natural resources sector which is a key contributor to our national economies.”
He went on to say that, “through trade mispricing alone, Africa loses more than $50-billion annually… Large corporations are by far the biggest culprits of illicit outflows, especially given their ability to retain the best available professional legal, accountancy, banking and other expertise.”
Mbeki also pointed out the “new and innovative ways of generating illicit financial flows, particularly through the digital economy and the opportunity afforded for ‘opacity’ by intangibles such as intra-company loans and other transactions”.
In order to curb such outflows, Mbeki recommended that the international community ensure “public availability of information on the finances and ownership of multinational companies”.
Furthermore, he stressed the need for “greater transparency in the international banking system, including elimination of financial secrecy jurisdictions.”
And he highlighted “the need to establish or strengthen the capacities of institutions and agencies of government such as the financial intelligence units, anti-fraud agencies, customs and border agencies, revenue agencies, anti-corruption agencies and financial crime agencies”.
Though all agree that illicit financial outflows are an “African problem with a global solution”, the reluctance of European institutions and players to aggressively assist the continent address the problem speaks volumes.
Whereas, Swiss banks cooperated with the US department of justice in pursuing US citizens who had unlawfully evaded taxes through depositing money in Swiss bank accounts, to the point of Credit Suisse pleading guilty to conspiracy to aid tax evasion and agreeing to pay about $2.6-billion in penalties, it would seem that few European or American banks have shown willingness to aid an investigation into African monies illegally landing up in overseas coffers.
Yet again, developed countries of the north who are quick to define standards and ways of being, are willing to police and find corruption anywhere around the world, but refuse to assist the developing countries of the south in recovering their loot and punishing the culprits.
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