In July 2010, the US took serious steps to rescue African government coffers. First she warned 23 African Heads of State at an African Union summit in Munyonyo Uganda that she would no longer be a safe haven for corrupt politicians’ dirt money. Second, Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act which obligates all energy and mining companies registered with the U.S. Stock Exchanges to disclose not only what they pay to U.S. government but also to foreign oil, gas and mineral producing countries like Tanzania. The two measures (though belated) are a right dose in fostering transparency in third world countries, Tanzania in particular.
The US stance is a clear statement that she is ready to work hand in hand with African State institutions mandated to curb corruption and money laundering. Such institutions include the Prevention and Combating of Corruption Bureau (PCCB) of Tanzania that has long been rendered ineffective due to lack of cooperation from their Western counterparts on providing necessary evidence or repatriating alleged corrupt Africans.
America’s stand deviates from the UK’s Serious Fraud Office move of providing immunity to Sailesh Vithlani, a Tanzanian alleged to have linked the BAE System of UK to corruptly deprive Tanzanian government $ 40 Million for the controversial military radar in cahoots with over six top Tanzanian government officials in 2002.
In an exclusive interview with Transparency International the Director General of PCCB Dr. Edward Hosea, complained about the low cooperation Tanzania has been receiving from the Western world.
“It is easier for developed countries to access the information in, for instance, Swiss bank accounts, and offshore accounts. They have the means to access this information. It is important through the mutual legal assistance and international cooperation provisions of the UN Convention that developed countries assist developing countries in this respect…….. In the developed world, there are pending cases that, if they wished, they could prosecute quite easily,” said Dr. Hosea.
To assure Africa that America would not only act within but also across its borders, Obama’s Secretary General said that Washington would seize money stolen by corrupt leaders and hidden in America and the West. He further added that US was also willing to support the development of African judiciaries to deal with the monster of corruption.
“…The efforts would target large-scale corruption perpetrated by foreign nationals……I have assembled a team of prosecutors (to deal exclusively with this),” Holder said.
Tanzanians are getting used to having their leaders hoard money in offshore accounts. In 2008, the former Minister for Infrastructure, Mr. Andrew Chenge, was quoted dismissing more than a million dollars found in his private offshore account as ‘peanuts.’ This amount has never been accounted for by Mr. Chenge contrary to the Public Leadership Code of Ethics Act of 1995 as amended from time to time.
The Dodd-Frank Wall Street Reform and Consumer Protection Act will champion transparency and accountability in handling revenues from oil, gas and minerals in resource rich countries thus sweeping out corruption and political instability that have been dominating such countries for decades now.
Over 90% of world’s largest internationally operating oil and gas companies and eight of the world’s ten largest mining companies are to be covered by the legislation. In Tanzania, very few companies will be affected if any, due to the fact that most companies operating here are not registered with US Stock Exchanges. However, in future, companies such as: Gallery Gold and Tanzania Royalty Exploration Corporation (TRE) among others are going to be covered.
These companies will be forced to furnish information relating to what they pay to resource rich countries to the Securities and Exchange Commission (SEC) of US where interested groups and CSOs such as members of Publish What You Pay (PWYP) can get that information and compare it with what the resource rich governments declared to have received.
On the other hand, it is not clear whether subsidiary companies such as African Barrick Gold (ABG) whose 75% of its shares are held by the mother company Barrick which also hold shares of its other subsidiary Barrick Gold Corporation of US that is listed in the New York Stock Exchange will be covered by the legislation.
The force towards making investments socially responsible and transactions with governments transparent and available to public scrutiny is spreading like bush fire. The Hong Kong Stock Exchange in June ordered all companies registered with it to disclose not only what they pay to foreign governments but also, all social and environmental liabilities they have wherever they operate.
Efforts directed towards ending the resource curse in many resource rich countries mostly in Africa are numerous. Such measures include; Publish What You Pay (PWYP) Global Coalition, Extractive Industry Transparency Initiative among others.
When defending the legislation, Senator Cardin said, “this provision is a critical part of the increased transparency and corporate responsibility we are striving to achieve in the financial industry, given the catastrophic events in the Gulf of Mexico, oil companies, in particular, should well understand that secrecy fosters instability, corruption and greater risk. We now have the tools to help people in resource-rich countries hold their leaders accountable for the money made from their oil, gas and minerals.”
According to the Transparency International (TI) 2009 report, oil and mineral exports from Africa in 2006 were over $249 Billion. This amount is eight times the value of farm exports which amounted to only $32 Billions and six times the value of international aid going towards Africa of $43 Billions.
Therefore, it is valid to say that Africa does not need aid if its wealth from oil, gas and minerals will be rightfully tapped to its government coffers. As manifested above, the value of exports from oil and minerals is far much greater than that coming from agricultural exports. This mocks the fact that only a minute part of this value is received by African governments as revenue while the greater part goes to selfish African politicians and foreign companies and their governments.
In 2007, mineral exports in Tanzania accounted for 44.2% of all exports but despite such percentage, it contributed to the GDP by 3.5% only. Tanzania despite being ranked the fourth in gold production in Africa last year (2009) has been loosing a lot of revenue from the sector due to numerous and unnecessary incentives accorded to foreign companies coupled with tax evasion and avoidance by these companies. In Tanzania, mining contracts are still held as classified even to the parliament and some of them were entered into under dubious circumstances.
It is high time countries like Canada, UK, Australia and major Stock Exchanges called for transparency to enable third world countries benefit from the extractive industry. Such efforts should not only cover the monitoring of home companies abroad but also denounce the laundering of money by developed countries.
By Stephen W. Msechu
Program Officer, Agenda Participation 2000
Dar es Salaam, Tanzania.
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