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Africa to the West: Hold big banks to account for corruption - Githongo

Source: Thomson Reuters Foundation - Sun, 9 Dec 2012 13:09 GMT
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LONDON (TrustLaw) - The global financial crisis, by revealing the complicity of huge financial firms in fraudulent and corrupt activities, has caused anti-corruption campaigners in Africa to rethink their strategies and start demanding greater accountability from the West, John Githongo,  a leading anti-graft campaigner from Kenya has said.

Delivering the Transparency International UK annual lecture in London, Githongo sent a warning that developing countries today are less willing to accept lectures from Western institutions when they see bankers in industrialised nations go unpunished for grand corruption that caused a near global meltdown.

 For years developing nations were told to fight corruption by setting an example and “fry the big fish,” he said.  “We are now asking the same question back after Main Street has bailed out Wall Street:  When are the big fish going to be fried?”  

“We continue to wait for real accountability for action taken in this really behemoth crisis.”  When hubris and greed take hold, “we expect someone to pay the price,” Githongo said on Thursday.

His remarks echoed the calls heard from the Occupy Wall Street movement, which camped out in London and New York’s financial districts last winter demanding banker accountability.  While a number of major chief executives have resigned and their banks paid fines, none have been prosecuted for fraudulent financial engineering of derivative products that led to the 2007-2008 financial collapse.  

Githongo said the crisis woke Africans up to new perspectives -- that massive corruption is not only a Third World problem, nor is it integral to the African DNA.

This rethink coincides with two other factors -- unprecedented amounts of foreign direct investment that has started flooding into Africa and an emerging dependency by major nations on Africa’s natural resources and on the wealth of its high-growth markets.  Portugal’s finance minister, for example, came cap in hand to Angola, asking its former colony to buy its government bonds during the height of the euro-zone debt crisis.   

The result, said Githongo, is that African communities are redefining their narrative around corruption and deciding how they want to engage. This is affecting how companies from Europe to China or elsewhere do business there and what they give back in return.   

“If you want to come to us, it is on our terms,” said Githongo.  “We have this experience of slavery, we have this experience of colonisation, then extractive industries.”     

“We know you make millions. They (communities) want to see serious investment, not a clinic down the road, a few schools and pit latrines. They want serious investment,” he said.

Citizens want more transparency over the terms of investment projects, and communities want greater value for money, he said.

As part of this transparency drive, the U.S. government in August enacted new regulations requiring publicly traded mining companies to disclose details of their payments to governments for contracts to extract oil, gas and minerals. The European Union is considering similar legislation.

The size of these resource contracts is only expected to grow as more countries discover oil, such as Ghana, Uganda and Kenya.  The United Nations Conference on Trade and Development estimated in July that foreign direction investment into Africa could double by 2014 to $100 billion up from the $55-65 billion forecast for this year.

Already communities in resource-rich areas are starting to ask probing questions – such as how a major Western oil company can be allowed to buy an oil lease on their land and then sell the contract to another company without the community affected knowing, said Githongo, who is known for exposing large-scale corruption in Kenya as its former anti-corruption chief, which led to him fleeing the country.

These shifting dynamics in Africa are part of a broader wave of demands for greater transparency and accountability, which bodes well for the anti-corruption movement globally, he said.

Citizens in India have launched an anti-corruption movement demanding political change. China’s outgoing President Hu Jintao warned that left unaddressed corruption could destroy the Chinese Communist Party and the state. In Egypt, Libya and Tunisia, disgust over corruption was one factor behind the youth uprisings last year that toppled their governments.   

Githongo, who returned to Kenya in 2008 and formed Inuka Kenya Trust to promote an informed citizenry, said he also is encouraged by steps that the Group of 20 leading industrial nations are taking to address illicit fund flows by tightening money laundering laws, addressing shell companies that hide the true ownership of assets, and tax evasion techniques. 

“The momentum is unique because the wider population, especially the youth, is demanding this.  It is a call for greater transparency and value for money,” Githongo said, adding that:  “The financial crisis has led to a greater understanding of the cost of corruption.”

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