The Tax Justice Network Africa (TJNA) and the Global Alliance for Tax Justice (GATJ) consider the West Africa Leaks an expose of complicities between corrupt political elites and international business leading in the loss of Africa’s vital resources and call for greater action by national governments and rich countries to curb illicit financial flows and corruption.
NAIROBI, 28 May 2018– The recent expose by a team of West African journalists in partnership with the International Consortium of Investigative Journalists has revealed a systematic and complicit scheme funnelling funds out of the region. The revelations dubbed ‘West Africa Leaks’ show how high-profile politicians and powerful entrepreneurs across the ECOWAS region have accumulated large amounts of money in Swiss bank accounts, mainly through tax avoidance schemes. For example Canadian engineering company SNC-Lavalin allegedly used Mauritius to dodge up to USD8.9 millions in taxes in Senegal. Chevron was involved in a very complex deal, which might have cost Nigeria over €2 million in avoided capital gains tax.
Deeply rooted corruption
“The West Africa Leaks reveal the complex and shadowy nature of the global financial architecture and how it in turn negatively impacts local economies. The leaks confirm the international nature of corruption and Illicit flows. Corrupt political elites are working in cahoots with anonymous entities in tax haven exploiting the loopholes and opaque financial system. It also shows that resulting in the loss of vital resources from countries not just across West Africa but the entire continent,” says Alvin Mosioma, TJNA’s Executive Director. Dereje Alemayehu, the Executive Coordinator, GATJ says: ‘’The leaks reveal how multinational tax abuses are major contributors to illicit financial flows, which are bleeding developing countries dry and undermines the development of the African continent.”
According to the UN Economic Commission for Africa, Africa loses approximately USD 100 billion annually in illicit financial flows resulting from illegal activities enacted by individuals and multinational companies. West Africa alone is responsible for a third of these losses, owing to the sizeable extractives sector which also happens to be most-affected by IFFs. TJNA and the GATJ views the losses due to IFFs as having a damaging impact on the affected countries starving them of much- needed resources to finance development programmes geared at structural transformation at the national level. The West Africa Leaks are a further indictment of the failure of the weak legal and politico-economic systems that govern many African economies, leaving them vulnerable to exploitation by greedy individuals and unscrupulous multinational companies.
Urge for African governments to take action
The West Africa Leaks serve to vindicate the views of TJNA and GATJ on the depth of corruption and impunity through which the global financial, political, and legal frameworks are operating to further impoverish and reinforce inequality in Africa. The West Africa Leaks come at a time when African governments through the African Union, have declared their renewed commitment to the fight against corruption. Also, with the adoption of the United Nations 2030 Agenda for Sustainable Development, African states, under Goal 16, committed to promoting and developing accountable and inclusive institutions at all levels. This is especially through the reduction of bribery and corruption. Thus, TJNA and GATJ calls on governments to intensify their efforts in addressing the causal relationship between corruption and illicit financial flows. More needs to be done to tackle the harmful role that Tax jurisdiction play in providing a safe haven to hide ill acquired wealth and governments can expand capacity to combat illicit financial flows through intergovernmental tax cooperation in the form of an inclusive and participatory mechanism.
Photo credit: Panos/ V. Garbutt