In April the Panama-based law firm, Mossack Fonesca, made
international headlines after thousands of its clients’ confidential documents
were made public.
Recently, another release of the Panama Papers by the
International Consortium of Investigative Journalists revealed a scandal
involving officials from the Algerian government and an Italian energy company,
Saipem. The leaked documents allege the energy company won contracts worth more
than US $10 billion to build oil and gas pipelines from the North African
desert to the shores of the Mediterranean after moving US $275 million in
bribes through offshore companies. The
offshore companies were created by Mossak Fonesca.
Other leaked documents revealed more than 1,400 companies
who have mining or resource extraction interests in 44 African countries. These
companies own, hold or do business with petroleum, natural gas and mining
operations and show how tax havens are being used to exploit Africa’s natural
wealth. The documents also named former Mossack Fonseca clients from Africa’s
largest economy, Nigeria, including three oil ministers, senior national oil
company employees, and two former state governors who have been convicted of
laundering oil-tainted wealth.
Why does this matter? Because the United Nations Economic
Commission for Africa (UNECA) estimates that the continent is losing US$50
billion to illicit dealings like the ones that Mossack Fonseca facilitates.
This is money that Africa desperately needs to build schools, hospitals,
provide clean water and sanitation. Millions of Africans still live in extreme
poverty with the United Nations estimating that more than half of the adult
population in Sub-Saharan Africa is experiencing food insecurity.
Africa alone cannot solve this challenge, it is a cancer
that has affected the whole global system and needs a global approach to
address. The recent London Anti-Corruption Summit was a good building block in
trying to find solutions to corruption and illicit deals. Several countries
including Nigeria, Ghana, United Kingdom, France, Brazil and South Africa made
commitments to implement anti-corruption and anti-money laundering mechanisms.
This is a decent start to the efforts needed.
Transparency in private and public transactions is critical
to bring light to opaque and secret dealing being facilitated by firms like
Mossack Fonseca. Hidden company ownership has broader ramifications. The Panama
Papers show the use of anonymous company structures to hide the true ownership
of natural resource concessions, opening up the possibility of conflict of
interest or outright bribery. Knowing who actually owns and controls a company
not only ends secrecy but also creates a level playing field for businesses and
law enforcement agencies are able to follow unscrupulous money.
What the Panama Papers provide is just a snippet of the
secret dealings individuals and companies are carrying out to syphon Africa’s
resources. The global community and all of its institutions must take the
necessary steps to eliminate secrecy jurisdictions, introduce transparency in
financial transfers and crack down on money laundering. Until all countries
begin to work together to combat this problem in all its forms there will
always be a cavernous opportunity for the exploitation of tax laws at all
levels and in all countries for negative purposes.
source: One.org
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