Culture
No place to hide: What reformed Swiss banking law and monitoring of local funds transfers means for grand corruption in Africa
Over the years, Africans have watched helplessly as large sums – sometimes in the billions of US dollars – were stolen with impunity from public coffers. This money then seemed to just vanish into thin air. However, as veteran Kenyan journalist Wycliffe Muga reports from Nairobi, without much fanfare, the noose has steadily been tightening on all such beneficiaries of official corruption.
NAIROBI, Kenya, May 4, 2017 – A top National Lands Commission official was…found with a whopping Sh17 million (163,540 USD) in his house during a raid by detectives from the Ethics and Anti-Corruption Commission (EACC).
A senior EACC official told Capital FM News that they found $160,000 and Sh1 million in local currencies – in what they described as a major breakthrough in their investigation of skewed compensation of land for the Standard Gauge Railway.
“In total, Sh17 million was found in the house of the NLC official,” the EACC official said, but declined to name the individual…. Our source at EACC said could not disclose the suspect’s identity for fear of jeopardising the ongoing investigation because the money seized is considered crucial evidence in prosecuting the case.
The man on the ground, leading Kenya’s war on corruption. Ethics and Anti-Corruption Deputy CEO Operations, Michael Mubea. (Photo: Ethics and Anti-Corruption Commission (EACC)/Facebook)
When this revelation of large sums of cash being found in the private residence of a public servant was first made, the question on the lips of many Kenyans was not “Where on earth did a public servant get that much money?” Kenyans have long been accustomed to revelations about massive thefts of public funds, by officials at various levels, and one more such theft was not really a surprise.
The more pertinent question was, “Why would anyone take the risk of keeping such large sums in their own house in cash?”
Why indeed?
VERY SMALL TIP OF A VERY LARGE ICEBERG
This revelation was just the very small tip of a very large iceberg. For years, Kenyans have watched helplessly as far larger sums – sometimes in the billions of Kenyan shillings, and hundreds of millions of US dollars – were stolen with impunity from public coffers. And this money then seemed to just vanish into thin air.
However, without much fanfare, the noose has steadily been tightening on all such beneficiaries of official corruption. First, thanks to much-improved monitoring by the Central Bank of Kenya, the option of just depositing such funds in a personal account was no longer an option. One local bank had already landed in hot soup for not reporting faithfully on the large cash withdrawals from certain accounts linked to the fraudulent procurements at the National Youth Service.
But local banks have not been the only institutions involved in facilitating such fraud. International banks have also had a conspicuous role in helping to conceal the proceeds of large-scale theft of public funds.
KENYA’S LONGSTANDING “CULTURE OF IMPUNITY”
Traditionally, Kenyans who wanted to conceal the large bribes they had received insisted that their money be deposited in offshore accounts. A fine example of this kind of thing is Messrs Samuel Gichuru and Chris Okemo, whose shenaniganry was reported as follows in the Nation media website on the 7th of March 2016:
“…More than Sh380 million that was stashed abroad would be returned to Kenya in a deal signed by the government and the UK. The two countries signed an agreement on March 3 this year paving the way for the return of the money. The agreement is the latest step taken by both governments to secure the return of the funds, which were confiscated by the Royal Court of Jersey in February 2016.
This is after defendant company Windward Trading Limited, associated with former Kenya Power boss Samuel Gichuru, pleaded guilty to four counts of laundering the proceeds of corruption. The corrupt activities took place in Kenya and in May 2011, the UK issued a warrant of arrest against Mr Gichuru and former Nambale MP Chris Okemo over alleged corruption and money laundering….”
Chris Okemo and Samuel Gichuru in court. The former kingpins of Kenya’s energy sector are now fighting extradition tooth and nail.
In the dock: Chamanlal Kamani, Deepak Kamani and Rashmi Kamani during a mention of the case against them over the Anglo Leasing Scandal.
But this is just the beginning of a trend that seems set to make it possible that an end may be on the horizon, for Kenya’s longstanding “culture of impunity” when it comes to grand corruption.
Top Kenyan officials may yet continue to use their positions to collect large bribes, or to profit from fraudulent procurement, as has been done since the 1960s. But, unlike in past years, they will no longer find it that easy to conceal the proceeds of their grand theft.
At the forefront of this new trend are two countries: The UK and Switzerland.
MEMORANDUM OF UNDERSTANDING
The Ambassador of Switzerland to Kenya, Dr Ralf Heckner, and the Attorney General of Kenya, Prof Githu Muigai, signed a Memorandum of Understanding on mutual legal assistance in criminal matters, on April 28, this year.
According to Ambassador Heckner, this was intended to “bring about an improved and enhanced co-operation between Switzerland and Kenya when it comes to fighting corruption and to facilitating the repatriation of stolen funds to the people it belongs to.”
In a jointly-authored op-ed published in The Star, on the day of the signing ceremony, the two wrote:
“…Corruption literally kills – because there is a lack of money for health, sanitation, infrastructure and education. …The Memorandum of Understanding is more than a piece of paper, it is a demonstration that Switzerland and Kenya are committed to taking all steps within their own legislation to stamp out corruption and organised crime…”
The signing of this MoU was the culmination of a decade of continuing effort – on the Swiss side, by three different Ambassadors over that period.
And to fully appreciate the significance of this MoU, we first need to take a detour into African history:
THE ‘AFRICAN BIG MAN’
Perhaps one of the most widely read books written about Africa is Blaine Harden’s Africa: Dispatches from A Fragile Continent.
This is what he had to say about the ‘African Big Man’ – the type of African leaders who were dominant in the 1980s, the period just before the fall of the Berlin Wall marked the end of the Cold War, and a wave of democratisation swept over Africa:
“…His face is on the money. His photograph hangs in every office in the realm…He names streets, football stadiums, hospitals and universities after himself…His every pronouncement is reported on the front page…His off-the-cuff remarks have the power of law…He awards uncompetitive, overpriced contracts to foreign companies which grant him, his family and his associates large kickbacks…”
All this may seem exaggerated and maybe even a misrepresentation, given the changes that have occurred in African politics since the early 1990s. But if anything, it is a somewhat toned-down account of the kind of shenanigans that African Big Men routinely got up to, in their days of glory when they could play off global Eastern and Western bloc interests against each other, and continue to pile up vast personal fortunes even as their people sunk deeper and deeper into poverty.
THE PREEMINENT DESTINATION FOR ILL-GOTTEN WEALTH
One thing Blaine Harden did not give enough thought to, however, was the role that European banks – and in particular, Swiss banks, famous for their extreme secrecy – played in sustaining the rule of African Big Men.
When you are busy looting your nation’s treasury at every opportunity, you need to identify a safe place where all that stolen money can be deposited. And back then, the preeminent destination for such ill-gotten wealth, was the “Swiss numbered account”: So termed because such accounts officially had no names attached to them at all. There was only a number.
According to a Wikipedia entry:
“A numbered bank account is a type of bank account where the name of the account holder is kept secret, and they identify themselves to the bank by means of a code word known only by the account holder and a restricted number of bank employees, thus providing accountholders with a degree of bank privacy in their financial transactions.
It is in this context then that Félix Houphouet-Boigny, the founding president of Cote D’Ivoire (who ruled his country for 33 years) once posed, reportedly with no humour intended, the question, “Is there a serious man on earth today who does not own a Swiss bank account?
Birds of a feather: Félix Houphouët-Boigny with then Romanian dictator Nicolae Ceausescu in 1977.
IN THE FOOTSTEPS OF MR KURTZ
And yet, although a dollar billionaire by the last decade of his rule, Félix Houphouët-Boigny was by no means the most rapacious of Africa’s Big Men. That title goes to the late “Field Marshal” Mobutu Sese Seko, who even had his country’s name changed from Congo to Zaire – though it is now again Congo, and colloquially known as “Congo DRC”.
Mobutu is generally regarded as having had no peers among African Big Men, as much in how ruthlessly he dealt with political opponents, as in his ability to gather unto himself much of his country’s wealth (even intercepting, for personal use, the loans that the country received from multilateral lending agencies).
Cover of “In the footsteps of Mr Kurtz” by Michela Wrong
Michela Wrong, in her book, In the Footsteps of Mr Kurtz: Living on the Brink of Disaster in the Congo gives an account of the efforts to trace Mobutu’s fabulous fortune after his death:
“Mobutu’s name features near the top of a list which embraces Marcos and Bhutto, Noriega and Suharto: Third World leaders whose swollen assets serve as shameful indictments of a bankrupt Western policy based on indulgence and appeasement. For the campaigners, the paltry $4 million unearthed by the Swiss banks is a sign of either institutional hypocrisy or wilful naivety. An operator as wily and as well connected as Mobutu, they argue, would never make the basic mistake of depositing the bulk of his takings in his own name.
‘They launch an electronic search for “Mobutu” or for “Bobi Ladawa”. But you’d have to be crazy to keep accounts in those names!’ scoffs Jean Ziegler, a writer and socialist Swiss MP who has dedicated his career to exposing the moral duplicity of the Swiss banking system. ‘If you set up an off-shore society, which sets up a trust fund, which opens an account in a fictional name, then that’s not going to show up on the computers.”
The “Mr Kurtz” in the title of this book is the extraordinarily sinister figure in Joseph Conrad’s Heart of Darkness. This book was published in 1889, and was written after Conrad had sailed up the River Congo and observed for himself the excesses of the mostly Belgian “traders” who dealt primarily in ivory.
Cover of “Heart of Darkness” by Joseph Conrad.
The suggestion here is that just as the Belgians had mercilessly plundered the “Congo Free State” (as it was known at the time)