US Lawsuit against Swiss Bank: Lessons for Africa

Published on 24th February 2009

Reports that American Federal Authorities are allegedly demanding that Switzerland’s UBS AG bank expose 52 000 American nationals who hold secret bank accounts in the bank with a view of evading tax are of keen interest to Africa. Africans should emulate this move and demand that money stolen from Africa be returned to develop the continent.

Capital flight from Africa exceeds incoming foreign aid. The ruling elite loot the national treasury and invest the booty in foreign banks. According to a United Nation’s estimate, in 1991 alone, more than $200 billion in capital was siphoned out of Africa by the ruling elite – equivalent to more than half of Africa’s total foreign debt (which stood at $320 billion in 1991).

Western governments who are quick to preach good governance to Africa ought to preach the same message to their banks who act as safe havens for corrupt leaders. Bank secrecy laws in Switzerland, Jersey Island, Britain, Liechtenstein, Luxemburg and Austria have encouraged Africa’s vampire states to bank away monies meant for their countries' development. Offshore centres have become avenues to launder the proceeds of crime and corruption.

In 1996, the IMF estimated that $500 billion -- between 2-5 per cent of global GDP -- is laundered offshore every year. The World Bank’s Stolen Asset Recovery initiative reports that cross-border flow of proceeds from criminal activities, corruption and tax evasion amounts to between US$1 trillion and US$1.6 trillion a year: approximately half of this flow originates from developing and transitional economies.

A 1999 US Senate inquiry revealed that 350 of Citibank's 40,000 clients were senior foreign government officials such as President Omar Bongo of Gabon, who transferred $100 million through personal accounts in Citibank's New York branches. Bongo had two private accounts in the name of shell (or dummy) corporations as well as a special account to receive payments from oil companies (which included alleged bribes or "donations" from the French government's oil company Elf-Aquitaine). Citibank made more than $1 million a year net from Bongo's accounts. Three sons of Nigeria's General Sani Abacha held some $110 million in Citibank accounts. Two of them were lent $39 million to deposit in another bank account in Switzerland after the new Nigerian government began investigations into corruption in 1998.

It makes no sense for Africa to bear the brunt of starvation, poverty and beg for foreign aid when it has huge sums of money secretly deposited in foreign banks, sums that owing to their secrecy cannot be withdrawn by the countries of origin upon the demise of the account holders.


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