[Senate Hearing 106-873]
[From the U.S. Government Publishing Office]
S. Hrg. 106-873
ANTI-CORRUPTION EFFORTS AND AFRICAN ECONOMIC DEVELOPMENT
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PUBLIC MEETING
BEFORE THE
SUBCOMMITTEE ON AFRICAN AFFAIRS
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 21, 2000
__________
Printed for the use of the Committee on Foreign Relations
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
U.S. GOVERNMENT PRINTING OFFICE
68-756 CC WASHINGTON : 2000
COMMITTEE ON FOREIGN RELATIONS
JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana JOSEPH R. BIDEN, Jr., Delaware
CHUCK HAGEL, Nebraska PAUL S. SARBANES, Maryland
GORDON H. SMITH, Oregon CHRISTOPHER J. DODD, Connecticut
ROD GRAMS, Minnesota JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas RUSSELL D. FEINGOLD, Wisconsin
CRAIG THOMAS, Wyoming PAUL D. WELLSTONE, Minnesota
JOHN ASHCROFT, Missouri BARBARA BOXER, California
BILL FRIST, Tennessee ROBERT G. TORRICELLI, New Jersey
LINCOLN D. CHAFEE, Rhode Island
Stephen E. Biegun, Staff Director
Edwin K. Hall, Minority Staff Director
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SUBCOMMITTEE ON AFRICAN AFFAIRS
BILL FRIST, Tennessee, Chairman
ROD GRAMS, Minnesota RUSSELL D. FEINGOLD, Wisconsin
SAM BROWNBACK, Kansas PAUL S. SARBANES, Maryland
(ii)
C O N T E N T S
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Page
Lowery-Derryck, Vivian, Assistant Administrator Africa, U.S.
Agency for International Development........................... 12
Prepared statement........................................... 16
Marshall, Aileen, Senior Advisor, Global Coalition for Africa,
Washington, D.C................................................ 30
Prepared statement........................................... 32
Schloss, Miguel, Executive Director, Transparency International,
Washington, D.C................................................ 35
Prepared statement........................................... 38
Schneidman, Witney W., Deputy Assistant Secretary of State for
African Affairs................................................ 3
Prepared statement........................................... 6
Taylor, Simon, Director, Global Witness, London, England......... 21
Prepared statement........................................... 24
(iii)
ANTI-CORRUPTION EFFORTS AND AFRICAN ECONOMIC DEVELOPMENT
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THURSDAY, SEPTEMBER 21, 2000
U.S. Senate,
Subcommittee on African Affairs,
Committee on Foreign Relations,
Washington, D.C.
The subcommittee met, pursuant to notice, at 3:00 p.m. in
Room SD-419, Dirksen Senate Office Building, Hon. Russell D.
Feingold presiding.
Present: Senator Feingold.
Senator Feingold I am not opening this session with a gavel
for two reasons--one is, I am not in the majority; but the
other reason is, this was originally scheduled as a hearing,
but because of procedural reasons it is necessary for us to do
this in the format of a roundtable today, so I hope people in
the room can hear just as well, and we apologize for that, but
given all the efforts of everyone to come we certainly did not
want to delay this. In fact, Senator Frist, who of course,
intends to be here, simply cannot get here right now, and hopes
to get here as soon as possible. I want to thank Senator Frist
for convening this roundtable meeting today on a topic of great
interest to me. Senator Frist and I have been able to work
together on a number of important issues over the past year on
this subcommittee, from Zimbabwe to Sierra Leone, from Rwanda
to the AIDS crisis, and the Subcommittee on Africa has
benefitted greatly from Senator Frist's leadership and
enthusiasm for African issues. I truly appreciate his efforts,
and I know that it was difficult, given all the things that are
going on right now, for him to make it possible for us to do
this, but he did it anyway, and I am extremely grateful for
that, and I will repeat that when he comes.
I also want to thank all of the participants for being here
today, and in a few moments will ask each of you to speak for
approximately 5 minutes, or up to 5 minutes with your remarks,
and then we will get into more of a discussion.
This roundtable focuses on anticorruption efforts in
Africa, and I want to clarify at the outset that the purpose of
this meeting is not to paint an entire continent with one broad
brush, nor to engage in a round of Africa-bashing, wherein
scores of countries are blanketly accused of being corrupt,
mismanaged, hopeless places. Let us make no mistake, corruption
is not just an African problem. It is a global problem. I
believe it is a problem right here in the United States, as I
think I have made fairly clear.
This meeting is in part an acknowledgement of the fact that
corruption issues have been moving into the public sphere in
Africa. In Kenya, in July, a raucous argument erupted in
parliament when ruling party MP's joined with some opposition
members to strike a list of corrupt politicians from a select
committee report. These forces prevailed, but the fact that the
so-called list of shame ever existed, the very fact that this
led to real debate, seems to me to be a positive sign.
In Nigeria, President Obasanjo has made fighting corruption
one of his top priorities. Last year, the U.S. worked with 11
African countries to develop a set of principles to fight
corruption. Corruption is being discussed openly today, and the
continent is better for it.
I hope to explore three broad questions at this meeting.
First, what is the relationship between fighting corruption and
pursuing U.S. interests on the continent? I believe that
corruption stands in the way of virtually all of our United
States policy goals in Africa. It diverts resources from
desperately needed basic health and education services. It acts
as a deterrent to trade and investment, undermines the
accountability that is at the core of democratization. It
allows the few to benefit from violent conflict, while the many
suffer. I hope that the participants will help to draw out
these relationships in their remarks.
Second, I hope to explore the efforts currently underway to
combat corruption on the continent. When I was in Uganda last
December, the minister of ethics and integrity spoke to me of
her desperate need for trained auditors and investigators.
Since that time, I have been pleased to learn that the Office
of the Inspector General at USAID plans to train approximately
60 people from Uganda's Supreme Audit Institution, NGOs and
USAID personnel to improve their auditing skills.
It seems to me that this is an area where U.S. expertise
and experience can be shared to the benefit of both of our
countries, but it will also take the efforts of African
Governments themselves, of NGOs, the independent press, and the
international financial institutions to combat corruption
effectively. I hope that we can begin to examine the efforts
already underway in the meeting today.
Finally, I hope that we can begin to determine through this
roundtable discussion the extent to which the United States is
a part of the problem in Africa. For every bribe taken, there
is a bribe paid. This country ranked in the middle of
Transparency International's 1999 bribe payer's index, which
suggests to me that there is room for improvement in U.S.
business practices.
I feel particularly connected to this, because one of my
predecessors in the United States Senate, William Proxmire of
Wisconsin, wrote the Foreign Corrupt Practices Act. Press
reports have suggested that the U.S. banks were involved in the
Abacha regime's program of grand scale embezzlement. I think it
is only reasonable to ask ourselves, in the context of this
meeting, to examine these issues.
So having had a chance to give some brief remarks at the
beginning and, of course, when Senator Frist comes he will
offer his opening remarks, we can now move on to hear from each
of you, and we will begin with Mr. Witney W. Schneidman, the
Deputy Assistant Secretary of State for African Affairs.
STATEMENT OF MR. WITNEY W. SCHNEIDMAN, DEPUTY ASSISTANT
SECRETARY OF STATE FOR AFRICAN AFFAIRS
Mr. Schneidman. Senator Feingold, I would like to thank
you and Senator Frist very much for providing this opportunity
to participate in this roundtable. I am glad that we are
continuing to move forward to examine what is a very important
subject.
President Clinton, Vice President Gore, and Secretary
Albright have placed a high priority within the
administration's foreign policy on fighting corruption and
bribery, and promoting good governance and strengthening the
rule of law in Africa and globally. Your committee's continued
leadership on African issues is critical to our effort to help
the nations in Africa develop a future of peace, prosperity,
and freedom. This afternoon, in the few minutes available, I
would like to touch on some of the issues that are contained in
my more developed text, and we look forward to working with you
in this committee on these issues to share ideas and to develop
solutions to these challenges.
Now, it is well-known that corruption is a significant
obstacle to economic development and the improvement of living
conditions throughout Africa, as it is in other regions of the
world, as you just noted. Given poverty's pervasiveness in
Africa, efforts by officials to extract bribes, or the
willingness of businessmen to offer bribes, or the willingness
of officials and business representatives to engage in corrupt
practices, it is a clarion call for action.
We also need to move against the illicit trade by corrupt
officials, rebels, and criminals in oil, diamonds, and other
precious minerals. Increasingly, these ill-gotten profits are
used to fuel the conflicts which we are working so hard to end.
We are encouraged that African Governments, leaders of the
media, civil society, and private sector have shown a new
willingness to confront these difficult problems. With respect
to issues of governance, African leaders have come to recognize
that corruption, opaque practices, and a lack of accountability
weaken democratic values, sap economic growth and key
development, and undermine new investment activities. Although
much work remains ahead, this administration has implemented
various innovative strategies to support and stimulate African
efforts to combat corruption. Under President Clinton's
partnership for economic growth and opportunity, and his
international crime control strategy for example, we are
developing key tools in the fight against corruption in an
effort to accelerate Africa's integration into the global
economy, which is one of our key foreign policy objectives in
Africa.
Senator, at every opportunity, U.S. officials underscore
the importance of promoting good governance and fighting
corruption as a means of strengthening the rule of law,
improving the investment climate, and enhancing social equity.
During his two trips to Africa, President Clinton repeatedly
raised the importance of good governance in fighting
corruption. So have the numerous members of the President's
cabinet who have traveled to Africa over the last several
years. We advanced our dialogue on corruption at every turn,
such as at the U.S.-Africa Ministerial in March 1999, when more
than 150 ministers of finance, trade, and foreign affairs came
to Washington for 3 days of discussions.
Most recently, we have raised the importance of staying
vigilant to routing out corruption through demarches both here
and in African capitals as we discussed with our African
counterparts eligibility criteria of the African Growth and
Opportunity Act.
As a result, today, in addition to the State Department and
USAID, virtually every Government agency, from Justice to the
Treasury Department, from the Office of Government Ethics to
the Commerce Department, is implementing creative new
initiatives to strengthen our partnership with Africa and in
fortifying democratic institutions on the continent to promote
better governance and halt corruption.
Now, the administration is encouraged by many indications
that governance as well as corruption have become a more
salient issue in Africa. As you noted, African leaders are more
willing to speak out on the issue. Namibia, Botswana Uganda
have set exemplary standards on promoting public integrity and
the rule of law. A newly assertive press in many African
countries has not flinched from attacking poorly managed
institutions and allegedly corrupt individuals. Laudable
efforts are underway to strengthen customs services. The
Governments of Benin, Ethiopia, Malawi, Mali, Uganda, and
Tanzania agreed to introduce no-bribery clauses in public
contracts.
As you are aware, sir, the United States cooperates with
many nations to combat all forms of corruption and to help our
businesses operate throughout the world on as level a playing
field as possible. For example, under the first-ever
international crime control strategy in United States history,
released by President Clinton in May 1998, we have broadened
our efforts to provide systematic and comprehensive support and
ASsistance to enable other nations to act against corruption
and organized crime.
In Washington in February 1999, implementing one
initiative, the international crime control strategy, Vice
President Gore hosted the first global forum on fighting
corruption. Over 500 participants from 90 nations attended,
which included participation by 15 African countries and the
Global Coalition who is represented here today.
Several days prior to this forum, Senator, I had the
personal honor to cohost with Ambassador Amadu Udubdala, who is
the executive secretary of the GCA, a day-long meeting at which
representatives at the ministerial level from 11 African
countries adopted 25 principles that we are hopeful will soon
form the basis of an African anticorruption convention. We have
shared these principles with all of our embassies in Africa,
and have encouraged them to make these principles an important
part of our bilateral dialogue.
More recently, we asked all of our ambassadors to raise
with their host Governments, as well as with leaders of the
private sector, civil society, and the media, what steps they
are taking to combat corruption, develop an African
anticorruption convention, and what they are doing to prepare
for the second global forum to be held in May 2001 in the
Netherlands, cohosted by the Netherlands and the United States.
It is important to note that through the efforts of the
Global Coalition on Africa, that Africa is keeping pace with
other regions in the world who have combined efforts to fight
corruption. The important work undertaken by GCA compliments
our anticorruption and transparency efforts in other regions,
including the OECD Antibribery Convention, the Inter-American
Convention Against Corruption, and Transparency International
of the Asian Pacific Economic Cooperation Forum.
Moreover the General Assembly of the United Nations this
fall is expected to approve procedures for the negotiation of a
new international instrument against corruption.
Now, I would just like briefly to touch on several of our
bilateral programs. Under the auspices of the U.S.-Africa
Bilateral Commission, the United States and South Africa have
adopted a joint action plan designed to improve the
transparency and predictability of South African Government
processes and procedures affecting foreign investment,
including ethics, licensing, procurement, and judicial
enforcement. Working through the U.S.-South Africa Justice and
Anticrime Cooperation Committee, which is part of the BNC, both
Governments together will focus on crime prevention, upholding
integrity among justice and security officials, anticorruption
and Government transparency measures, including police
accountability.
In Nigeria, the United States has taken a keen interest in
supporting the development of the rule of law, and the
Secretary of State has identified Nigeria as one of four
democracies deserving of particular attention this year. We
have developed the U.S.-Nigeria Joint Economic Partnership
Committee to support Nigeria's economic reform efforts, and I
think we are all very encouraged by President Obasanjo's strong
commitment to rooting out corruption and the steps that he has
taken from day 1, when he became president 15 months ago, and
we can go into the law later.
In Kenya, as you noted, there are two important
anticorruption bills now pending in the country's parliament.
The draft code of ethics would require financial disclosure for
top civil servants, while the economics crime bill would
strengthen the powers of arrest and prosecution for the nascent
Kenyan anticorruption authority. Approval and implementation of
this legislation is crucial to keep Kenya on track with its IMF
program, and to keep its economic reforms on track. The
economic crimes bill has been gazetted, and parliament is
expected to take up both bills when it returns in October.
In Angola, a country that we have been reading about in the
Washington Post over the last couple of days--I think there is
another picture to put forward. We have made it clear to the
Government that, aside from the ongoing civil war, a lack of
transparency poses a serious impediment to greater involvement
by U.S. firms in the nonoil sectors of the economy. On numerous
occasions and, in particular, at our meetings of the U.S.-
Angola Bilateral Consultative Commission, we have urged the
Government to work with the IMF and to take measures to stop
the widespread graft and corruption.
Senator, we were encouraged when, earlier this year, the
Angolan Government concluded a stock monitoring program with
the IMF that has as one of its key components an audit of the
oil accounts. Over the last month, the Angolan Government
awarded a contract to the international consulting firm, KPMG,
that will begin to conduct the audit, or diagnostic, as it is
referred to, of the oil sector. We are very hopeful that the
Government will continue to make progress in this most
important area.
Now, let me conclude on a more positive note. Monday, July
24, the U.S. and Botswana Government inaugurated our newest
International Law Enforcement Academy in Gaborone, Botswana. As
in other ILEA's, we will be providing over time a range of
courses for law enforcement professionals throughout southern
Africa that will focus on modern law enforcement investigative
practices and management techniques. Such training has multiple
objectives, including reforming the civil and criminal codes
and revamping procedures to enable investigators, prosecutors,
and judges alike to address criminal activity in an environment
respectful of civil rights and ethnic minorities. This last
point is a particular challenge in a region where tensions
between ethnic groups have defined political, economic, and
social structures for centuries.
I would like to thank the members of this committee for
this opportunity to participate in this roundtable this
afternoon, and to discuss the issues of corruption and our
anticorruption efforts in Africa. As I have tried to put
forward, the threats of corruption and bribery in this region
are serious impediments to social, economic, and political
development.
The United States seeks to address these threats through
bilateral and multilateral cooperation and through direct
training and technical assistance. Lasting reform can only be
built on a solid foundation of the rule of law. It means
enlisting Government, the media, civil society, nongovernmental
organizations, and the business community in joining together
to fight the culture that permits corruption to exist and
flourish.
Senator Feingold, I want to thank you and Senator Frist and
others for your concern and leadership on advancing America's
interests in Africa. We look forward again to working with you
and finding solutions to these difficult issues and challenges,
and I look forward to our discussion and answering any
questions you might have.
Thank you very much.
[The prepared statement of Mr. Schneidman follows:]
Prepared Statement of Whitney W. Schneidman
Mr. Chairman, Members of the Committee:
Thank you for providing this opportunity to testify before this
Committee and to address the impact of corruption and bribery in
Africa. President Clinton, Vice President Gore and Secretary Albright
have placed a high priority within the Administration's foreign policy
on fighting corruption and promoting good governance and strengthening
the rule of law in Africa and globally.
This Committee's continued leadership in African issues is critical
to our effort to help the nations in Africa develop a future of peace,
prosperity and freedom. This morning, I would like to discuss the
Administration's initiatives and programs in combating corruption in
Africa. We look forward to working with you on these issues, to share
ideas, and to develop solutions to these challenges.
WHY ANTI-CORRUPTION IS VITAL IN AFRICA?
Corruption in Africa is of particular concern because it undermines
the emerging political and economic institutions in these countries and
threatens the ongoing political and economic reforms in the region. It
corrodes democratic institutions, weakens the rule of law, and
undermines the confidence of people in democracy.
Corruption, as illustrated by the illicit trade of national
resources, is also theft from a nation. It robs citizens in Africa of
their future and has a debilitating impact on their quality of life. As
a consequence, poorly managed resources, embezzlement, and corruption
result in fewer funds allocated to government programs in education,
healthcare, housing, physical infrastructure (such as, water and
sanitary systems, roads) and other social services.
Effective responses to the challenges of corruption must come from
each individual government. A nation's ability to confront and surmount
corruption and organized crime depends on political will. Policy
encouragement and material support offered by other nations can be
invaluable, but they cannot substitute for the determination and
capability of each nation to act within its own borders.
Corruption flourishes behind closed doors and where bureaucratic
control is unchecked. Transparency and accountability, by opening up
government to the bright light of public view, reduce the opportunity
for corrupt acts by public officials. Transparency complements strong
law enforcement by using management and policy reforms. It also
complements democratic principles such as freedom of speech and a free
media, freedom of information, open procurement and contracting
measures, public access to decision-making, and public education as
ways to replace a culture of corruption with a culture of integrity.
PROMOTING ANTI-CORRUPTION AND GOOD GOVERNANCE IN AFRICA
The problems facing Africa today are enormous. Persistent conflict,
HIV/AIDS, poverty, and environmental degradation are some of the
greatest threats to Africa's security, stability, and prosperity.
Corruption is another obstacle to Africa's economic and political
development. It takes many forms. The illicit trades by corrupt
officials, rebels and criminals in oil, diamonds and other precious
minerals and resources, are part and parcel of corruption.
Notwithstanding these challenges, many African governments and
private sector leaders have shown a new willingness to confront these
difficult issues. With respect to issues of governance, African leaders
have come to recognize that corruption, opaque practices and a lack of
accountability weaken democratic values, sap economic growth, impede
development, increase vulnerability to financial crises, and undermine
new investment activities.
Corruption problems are not unique to Africa. Corruption played a
large role in the recent Asian financial crisis. Wherever it occurs,
corruption hinders the rule of law, impedes economic growth and slows
entry into the global marketplace.
Although much work remains ahead, the Administration has
implemented various innovative strategies for minimizing corruption in
Africa. Under the President's Partnership for Economic Growth and
Opportunity and International Crime Control Strategy, we are
accelerating Africa's integration into the global economy and
developing key tools in the fight against corruption.
The President and many members of his cabinet have traveled to
Africa on numerous occasions. At every opportunity, U.S. officials have
underscored the importance of promoting good governance and fighting
corruption as a means of strengthening the rule of law, improving the
investment climate, democratization, conflict resolution and social
equity. We have also advanced our dialogue on anti-corruption with
African countries through discussions at the U.S.-African Ministerial
(March 1999), two meetings of the U.S.-SADC Forum (1999, 2000), and
most recently through demarches both here and in African capitals as we
discuss with our African counterparts, the eligibility criteria of the
Africa Growth and Opportunity Act.
As a result, today, in addition to the State Department and USAID,
virtually every government agency--from Justice to the Treasury
Department, from the Office of Government Ethics (OGE) to the Commerce
Department is implementing creative new initiatives to strengthen our
partnership with Africa and in fortifying its democratic institutions
to promote better governance and halt corruption.
THE ADMINISTRATION'S ANTI-CORRUPTION EFFORTS IN AFRICA
The Administration is encouraged by the many indications that
African leaders and civil society have taken up the campaign for good
governance and against corruption. Namibia, Botswana, and Uganda have
set exemplary standards on promoting public integrity and the rule of
law. A newly assertive press in many African countries has not flinched
from attacking poorly managed institutions and allegedly corrupt
individuals. Laudable efforts are underway to strengthen customs
services. The governments of Benin, Ethiopia, Malawi, Mali, Uganda and
Tanzania have agreed to introduce no-bribery clauses in public
contracts. World Bank President Wolfensohn has received letters from
several African heads of state requesting World Bank assistance to
establish or strengthen anti-corruption programs.
The United States has been active in this area through our
bilateral efforts, the multilateral development banks, the Global
Coalition for Africa (GCA), and non-governmental and civil society
organizations such as Transparency International.
The United States cooperates with other nations to combat all forms
of corruption and to help our international businesses operate without
the baneful effects of corruption. Under the first-ever International
Crime Control Strategy in United States history, released by President
Clinton in Nay 1998, we have broadened our efforts to provide
systematic and comprehensive support and assistance to enable other
nations to act against corruption and organized crime. In global and
regional diplomatic processes, we are seeking to define comprehensive,
objective statements of practices governments should employ to control
and combat corruption and organized crime. We are working to increase
the public commitment of governments and political leaders to adopt and
implement such practices.
In Washington in February 1999, Vice President Gore hosted and
chaired the First Global Forum on Fighting Corruption, one of the
initiatives contained in the International Crime Control Strategy. Over
five hundred participants from ninety nations attended, this included
participation by 15 African countries and the Global Coalition for
Africa (GCA). Participants extensively discussed a comprehensive set of
principles and practices that are effective to promote public integrity
and to combat official corruption. In their final Declaration, the
participants called for governments to adopt practices appropriate to
each nation's particular circumstances and requirements and to assist
each other in fighting corruption.
GLOBAL COALITION FOR AFRICA (GCA)
Since the Global Forum, the State Department has continued to
develop and coordinate the Vice President's comprehensive international
initiative against corruption in Africa and elsewhere. We have also
worked with other governmental partners to encourage the political will
to establish or improve their institutional capacities to define and
implement national regimes based on the ``Guiding Principles for Fight
Corruption and Safeguarding Integrity among Justice and Security
Officials.''
As a part of the follow-up to President Clinton's trips to Africa,
and on the margins of the Vice President's Global Forum on official
corruption, I co-chaired several meetings between the GCA and the
United States to discuss collaboration between African countries to
address corruption. Countries invited included those visited by
President Clinton and countries that had participated in a Maputo
Conference in 1997 to develop effective anti-corruption mechanisms:
Benin, Botswana, Ethiopia, Ghana, Malawi, Mali, Mozambique, Senegal,
South Africa, Tanzania, and Uganda.
As a result of this meeting, Ministers and senior policy makers
from these 11 African countries, along with senior officials from some
donor countries and organizations, adopted 25 anti-corruption
principles to facilitate greater cooperation among regional or sub-
regional groups of African countries. These African countries also
agreed to adopt anti-corruption principles that would encourage
implementation of common standards at the national level, as well as
joint action between and among countries. These principles could also
form the basis of more formal cooperative frameworks at the sub-
regional or regional levels.
The important work undertaken by the GCA complements our anti-
corruption and transparency efforts in other regions. These efforts
include the Organization on Economic Cooperation for Development (OECD)
Anti-bribery Convention, which obliges major exporting countries to
make it a criminal offense for individuals or enterprises to bribe
officials of foreign governments to secure or retain business; the
Inter-American Convention Against Corruption; the Council of Europe
Criminal Law Convention Against Corruption; the U.S. initiative against
corruption in the Organization for Security and Cooperation in Europe
(OSCE); the Stability Pact Anti-corruption Initiative; and the
transparency initiative of the Asia-Pacific Economic Cooperation (APEC)
forum. The General Assembly of the United Nations in the fall of 2000
is expected to approve procedures for the negotiation of a new
international instrument against corruption.
At the 9th International Anti-corruption Conference (IACC) held
last fall in Durban, South Africa, the State Department and USAID
sponsored a workshop to further build awareness and support for the GCA
regional anti-corruption initiative for Africa, as an important element
of our international strategy against corruption. The United States
urged that the countries concerned also consider an appropriate
mechanism for mutual evaluation of implementation of such commitments
(such as currently exists in the OECD Anti-Bribery Convention), to
assist governments in implementing effective practices. The GCA and the
11 African countries are expected later this year to approve at Summit
level in Abuja, Nigeria, a declaration of anti-corruption principles
agreed to in 1999.
GOOD GOVERNANCE IN AFRICA
On a parallel track, the Administration continues to promote policy
dialogue through increased consultations with the OECD Development
Assistance Committee (DAC), UN Economic Commission for Africa (ECA),
the World Bank, the IMF, and the African Development Bank (AFDB) on
transparency and accountability, governance, and anti-corruption issues
and programs in Africa. The Administration has worked closely with
African regional economic groupings including the Economic Community of
West African States (ECOWAS) and West African Economic and Monetary
Union. (UEMOA).
As an example of this approach, the Administration supported the.
recent ``Good Governance and Sustainable Development in Africa''
initiative organized by the Federal Republic of Nigeria, the West
African Economic Association (WAEA), the African Development Bank
(AFDB), the Organization of African Unity (OAU), the World Bank, UNDP,
GCA, and other international organizations.
The initiative's goals are to bring together African and
international anti-corruption practitioners and experts, scholars,
civil society representatives, and decision-makers from governments and
international donors to discuss the state of governance in Africa and
to establish a mechanism to monitor the progress of good governance
(integrity, transparency, efficiency and accountability) in Africa.
Although this initiative is still in its infancy, it will serve to
complement the anti-corruption efforts by the GCA and other African
organizations.
U.S. BILATERAL PROGRAMS
With respect to our anti-corruption and rule of law programs, our
approach is consistent in all the African states. We consider anti-
corruption and good governance to be related and mutually reinforcing
goals. The cornerstone of our policy is to build, through training and
technical assistance, strong and democratic institutions to combat the
problem of corruption.
Our Anti-Crime Training and Technical Assistance Program (ACTTA)
uses Foreign Assistance Act monies to support U.S.-African law
enforcement cooperation in addressing international organized crime,
financial crimes, narcotics trafficking, trafficking in persons, and
border security. Fighting corruption is a significant goal of these
programs. United States federal agencies receiving funding to implement
training and technical assistance include the Federal Bureau of
Investigation (FBI), the Drug Enforcement Administration (DEA), the
International Criminal Investigative Training Assistance Program (DOJ/
ICITAP), the Office of Overseas Prosecutorial Development, Assistance
and Training (DOJ/OPDAT), the Secret Service, the Internal Revenue
Service (IRS), the Customs Service, the Bureau of Alcohol, Tobacco and
Firearms (ATF), the Financial Crimes Enforcement. Network (FinCEN), the
Department of State, Bureau of Diplomatic Security (DS), the Coast
Guard; the Federal Law Enforcement Training Center (FLETC), and the
Office of Government Ethics (OGE).
I would like at this time to address several particular countries
in which this Committee may have a specific interest on the
implementation of the Administration's regional training and technical
assistance programs for fighting corruption and improving governance in
Africa.
SOUTH AFRICA
Since 1994, we have engaged the South Africans on a wide range of
issues in the U.S.-South Africa Law Enforcement Working Group. Under
the auspices of the U.S.-South Africa Bi-national Commission (BNC), the
United States and South Africa have adopted a joint action plan
designed to improve the transparency and predictability of South
African government processes and procedures affecting foreign
investment, including ethics, licensing, procurement and judicial
enforcement. Encouraging the establishment of a culture of transparency
and good governance in South Africa is a key objective.
Under the U.S.-Africa Justice and Anti-Crime Cooperation Committee
(JACC), both countries are cooperating on a broad range of law
enforcement issues, especially crime prevention, upholding integrity
among justice and security officials, anti-corruption and government
transparency measures (including police accountability), and
government-community relations concerning crimes. Most recently, U.S.
Attorney General Reno met with South African Minister of Justice Naduna
to discuss further cooperation on joint law enforcement and crime
issues including corruption.
Through USAID's Administration of Justice Project, the United
States will have provided $16.4 million (from 1994-2001) in total
support to the South African Justice Department in such areas as
policy/regulatory reform, institutional development and human rights
education. USAID is presently planning a new six-year $15 million
program that will continue to support South Africa's criminal justice
program with an emphasis on improving management of justice
institutions; improving case processing and court efficiency, including
prosecutorial and judicial training; and NGO implementation of selected
crime prevention strategies. The U.S. Department of Justice, through
OPDAT, will continue to consult with South Africa's National
Directorate of Public Prosecutions (NDPP) on formulating a program of
criminal justice assistance in the prosecutorial sector that will
complement our anti-corruption efforts.
The U.S. Office of Government Ethics (OGE) has also engaged in
formal exchanges of professional expertise between their office and
their counterpart institution in South Africa. In 1997, a senior
official from OGE was detailed to the South-African parliament to help
develop a financial assets declaration system. In 1998, OGE
provided.consultation to the Guanteng legislature on development of a
Code of Conduct and financial regulations. Since 1999, OGE has engaged
in meetings and provided consultation and training for the South
African Public Service Commission (PSC), as they begin to implement an
Ethics Code, financial disclosure and training for the South African
public service. Both parties have scheduled a formal consulting visit
by commissioners and staff of the PSC to Washington in October, 2000.
NIGERIA
The United States has a keen interest in supporting the development
of the rule of law in Nigeria. The Secretary of State has identified
Nigeria as one of four democracies in transition deserving of
particular attention this year. We.also developed the Joint Economic
Partnership Committee to support Nigeria's economic reform efforts.
Given that official corruption is widespread in Nigeria, the task
of reformers in Nigeria remains daunting. However, President Obasango
has demonstrated the political will and commitment to overcome these
obstacles. Obasango's overall anti-corruption strategy includes
implementing anti-money laundering law, revamping criminal procedure
code, and reforming the police.
In June 2000, Nigeria's congress passed and President Obasanjo
signed into law, comprehensive anti-corruption legislation. The State
Department is funding a legal advisor and Assistant U.S. Attorney with
experience in anti-corruption investigations, to advise the Government
of Nigeria on steps to implement this legislation. The State Department
also partially funded a diagnostic study of corruption in Nigeria that
will be used by the World Bank and other international financial
institutions in designing their programs of assistance.
KENYA
Two important anti-corruption bills are now pending in Kenya's
Parliament. The draft Code of Ethics would require financial disclosure
for top civil servants, while the Economic Crimes Bill (ECB) would
strengthen the powers of arrest and prosecution for the nascent Kenyan
Anti-Corruption Authority. Approval and implementation of this
legislation is crucial to keep Kenya on track with its IMF program and
its economic reform program. Parliament is expected to take up both
bills when it returns in. October.
ANGOLA
We have made clear to the Government of Angola that a lack of
transparency poses a serious impediment to greater U.S. investment in
the non-oil sectors of the economy. We have encouraged the government
to work with the IMF and to take measures to stop the widespread
corruption. The Government of Angola has begun to recognize that
corruption is a fundamental issue that must be addressed directly in
the context of a broader program of economic and political reform. We
continue to support efforts by the International Monetary Fund and the
World Bank to press the Government in Luanda to take a series of
measures designed to improve transparency, increase fiscal
accountability, and review government management of the oil and diamond
sectors.
BOTSWANA INTERNATIONAL LAW ENFORCEMENT ACADEMY (ILEA)
On Monday, July 24, the United States and Botswana inaugurated our
newest anticrime academy in Gaborone. As in other ILEAs in Budapest and
Bangkok, we will be providing over time a range of courses focusing on
modern law enforcement investigative practices and management
techniques for countries in southern Africa. Such training, which will
be conducted both at ILEA and offsite, has multiple objectives. These
include strengthening law enforcement efforts to confront transnational
organized crime, reforming the civil and criminal codes, and revamping
procedures to enable investigators, prosecutors and judges alike to
address criminal activity in an environment respectful of civil rights
and ethnic minorities. This last point is a particular challenge in a
region where tensions between ethnic groups have defined political,
economic and social structures for centuries.
CIVIL SOCIETY
The State Department also sponsors professional exchange programs
such as the International Visitor Program in which anti-corruption has
been one of the topics discussed among officials in government, law
enforcement, media, academia, and non-governmental organizations.
U.S. business associations and non-governmental organizations, such
as Transparency International, the-Corporate Council for Africa, the
African Business Roundtable, and the American Chambers of Commerce in
Africa, are playing an important role in helping the U.S. government
combat anti-corruption and the rule of law in Africa. In May, the
Department of State published a brochure, ``Fighting Global Corruption:
Business Risk Management'' that helps raise awareness of Foreign
Corrupt Practices Act (FCPA) issues and our global anti-corruption
efforts in Africa and other regions of the world.
UNITED NATIONS
In April 1999, the UN Crime Commission recommended that the UN
Convention against Transnational Organized Crime, to be completed by
the fall of 2000, include a provision to criminalize acts of corruption
involving domestic public officials and transnational organized crime.
On January 21 of this year, pursuant to a General Assembly resolution
approving the Crime Commission's December 1999 recommendations, the Ad
Hoc Committee negotiating the crime convention concluded that it would
be desirable for the UN to develop a comprehensive global instrument
against corruption. The Netherlands has indicated that its principal
goal for the Second Global Forum is to build support for such an
instrument.
GLOBAL FORUM II
As a follow-up to the Vice President's Global Forum on Fighting
Corruption, the United States is co-sponsoring Global Forum II, which
will be held at The Hague in May 2001. The Netherlands has indicated
its intention to invite all the nations of the world. Major topics of
Global Forum II are expected to be a potential UN global anti-
corruption instrument, ways to build regional cooperation through
mutual evaluation mechanisms, and ways to improve inclusion of civil
society and business in government efforts to reinforce the rule of
law. The United States is encouraging the Africans to participate fully
in the Global Forum process, in UN discussions on a possible global
international instrument on fighting corruption, and in various other
fora. The GCA is a member of the Organizing Committee for this
important governmental forum.
WORLD BANK AND IFIS
Within the World Bank, the African Development Bank and the IMF,
the United States has taken the lead in curtailing economic support to
governments which are unwilling to take action against corruption. The
United States also continues to encourage the World Bank and recipient
African countries to consider more explicitly in policy dialogue,
country assistance strategies, allocation of resources, and the design
of projects.
The State Department, through INL funding, provided substantial
assistance to the World Bank Institute for three anti-corruption
diagnostic surveys in Africa. These surveys will provide a basis for
development of national anti-corruption capacities in Nigeria, Mali,
and Malawi. We plan to continue this cooperation with the World Bank
and to continue funding future diagnostics for other African countries.
SUMMARY AND CONCLUSION
I would like to thank the members of this Committee for this
opportunity to discuss with you the issues of corruption and our anti-
corruption efforts in Africa.
As I have set forth this morning, the threats of corruption and
bribery are serious impediments to social, economic and political
development.
The United States seeks to address these threats through bilateral
and multilateral cooperation and through direct training and technical
assistance. Lasting reform can only be built on a solid foundation of
rule of law. It means enlisting government, civil society, NGOs and the
business community in joining together to fight the culture that
permits corruption to exist and flourish.
Mr. Chairman, I thank you and this Committee for its concerns and
leadership on advancing America's interest in Africa.. We look forward
to working with you and this Committee to find solutions to these
difficult challenges.
I would be happy to answer any questions you might have. Thank you.
Senator Feingold. I thank you very much, Mr. Schneidman,
for your comments, and now we will turn to Ms. Vivian Lowery-
Derryck, the Assistant Administrator Africa for USAID. Ms.
Lowery-Derryck.
STATEMENT OF MS. VIVIAN LOWERY-DERRYCK, ASSISTANT ADMINISTRATOR
AFRICA, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT
Ms. Lowery-Derryck. Thank you very much, Senator Feingold,
and thank you and Senator Frist for convening this roundtable
and for the invitation to discuss AID's anti-corruption efforts
in Africa.
Along with other donors, we view corruption as a major
impediment to sustainable development in Africa, as you earlier
said, but the good news is that African civil society
organizations and citizens and Governments are more and more
willing to acknowledge corruption as a development issue and
take appropriate action. My fuller remarks have been submitted
for the record, but in this discussion I am going to focus on
corruption as a development challenge, and USAID's efforts to
foster accountability, transparency, and good governance,
because all of those three reduce the incidence of corruption
on the continent, but two observations before I turn to
corruption as the development challenge.
First of all, progress in tackling corruption is a long-
term undertaking, and that progress requires patience and
persistence and a willingness to stay the course with our
African partners, and secondly, as you noted earlier, Senator,
we should also remember that corruption is a universal problem,
and the United States ranks now fourteenth on Transparency
International's latest index.
It is a universal problem, but it is more acutely felt in
the developing world, and particularly in Africa, but we
believe that corruption, probably with HIV/AIDS is one of the
most dramatic and acute development challenges facing the
continent.
In broad terms, corruption is the abuse of public office
for private gain, and I say that because we continue to say
that to people when we are trying to think up definitions for
corruption, but it undermines the foundation of sustainable
development in virtually all developing countries.
Economically, corruption leads to the inefficient allocation of
resources, it raises the cost of investment, it deceases
investor confidence, it promotes inequalities and
inefficiencies in the private sector, it raises the cost and
decreases the quality of public sector projects and services,
so I think I am beginning to answer your first question.
Politically, corruption contributes to a loss of confidence
in the Government, and a general noncompliance with laws.
Corruption undermines the legitimacy of elected officials and
democratic values. It also diminishes the effectiveness of
public policy and impairs the power of public institutions.
These consequences fall so very heavily on African
countries because they are already burdened by poverty, debt,
disease, illiteracy, and political and economic instability,
and where corruption undermines the rule of law, public safety
standards, environmental protection policies, criminal codes,
and basic legal contracts are not enforced.
Senator Feingold, corruption basically undermines a
fundamental goal for us at USAID, which is poverty alleviation,
and corruption is particularly egregious, because the burden of
corruption is disproportionately borne by the poorest and most
vulnerable in virtually any population.
The cost of corruptions are even further magnified in
conflict situations. I think that that was your second point.
In countries that are in turmoil, like Sierra Leone, Angola,
Congo, large sums of money are amassed through arms sales,
diamond smuggling, and drug trafficking, and a demand for money
laundering services thrives in these environments as public
institutions are overwhelmed and regulatory insight is severely
compromised. Furthermore, violent conflict is even more likely
to erupt in countries plagued by endemic corruption.
Corruption also becomes a national security issue when it
threatens the success of our interventions to combat HIV/AIDS
and to prevent violent conflict. The valuable investments of
USAID programs in African countries are at risk if corruption
both as a development issue and as a trigger for violent
conflict is not fully addressed.
The United States Government, including USAID, has been in
the forefront of the movement to bring international attention
to the high cost of corruption and to galvanize the public and
private sector and developing countries alike to give the issue
the serious attention that it merits. The USAID's
administrator, Brady Anderson, just today opened the
Anticorruption Summit 2000, which is being cochaired by USAID's
Office of the Inspector General. These meetings, which are
attended by representatives of 10 African countries, will focus
on financial accountability and its connections to corruption.
Increasingly, donors and Africans themselves are openly
discussing corruption, rather than cloaking it in terminology,
and USAID is convinced that with the advent of this new
openness and willingness to confront corruption issues on the
part of our African partners, civil society can have a
significant affect on a Government's willingness to enact and
sustain anticorruption reforms.
Now, USAID is capitalizing on this favorable environment by
tackling the issue more directly and by forging partnerships
with other U.S. Government agencies with bilateral and
multilateral donors as well as with African Governments and
regional institutions. Let me just describe a few ways of how
we are addressing the corruption issue.
USAID is addressing this by first demanding that its own
programs are transparently administered. Since its inception,
the agency has administered numerous checks and balances to
ensure that our funds are used for their intended purposes. In
other words, we are modeling for anticorruption.
For instance, our audits are routinely conducted by our
Inspector General's Office. For well over a decade, as part of
its development assistance strategy for Africa, USAID has
championed accountability and good governance practices. From
our past experiences in the global and regional fight against
corruption, we have learned several lessons, and I will just
cite four.
First of all, that Government regulation and enforcement
activities alone are insufficient anticorruption strategies.
Secondly, achievements of anticorruption reform programs,
economic and social, are vulnerable to nondemocratic regime
changes and to the conflicts that are so often generated by
these changes.
Third, that civil society must be engaged as a critic of
existing corruption and as a watchdog against emerging
corruption.
And lastly, that donors have to work together against the
culture of corruption and coordinate anticorruption efforts.
Based on what we have learned in the past, USAID has
developed a two-track response to the problems of corruption in
Africa, first of all changing the enabling environment and,
secondly, mobilizing public support.
USAID's democracy and governance and economic growth
sectors both include the anticorruption measures as part of
their larger program activities, and this is true in bilateral
missions as well as through our regional initiatives. Our
democracy and governance programs emphasize transparency and
accountability, and those are really our watch-words,
transparency and accountability, and they do this through
increased local government and citizen participation in
decisionmaking, more effective and independent legislatures and
judiciaries, and enhanced civilian control over the military
and policy forces.
USAID programs have trained judges and court administrators
to prevent tampering with records and reduced delays in hearing
cases. We have worked with national assemblies to create ethics
committees and codes of conduct for public officials, we have
supported the media in developing skills in investigative
journalism and, again, we think of the case of Angola that we
have been reading about in the papers for the past 2 days.
USAID also provides technical assistance and training to
audit institutions in order to increase fiscal accountability
and to improve capacity to detect and prosecute for
misappropriation of funds. In the enabling environment, in
addition, since its inception in 1997 the Africa Bureau's
leading economic growth activity and presidential initiative,
the Africa trade and investment policy program, as we call it,
ATRIPP, has concentrated heavily on regulatory reform that will
reduce the opportunities for solicitation of bribes for private
businesses.
Major goals of the program include removal of regulatory
red tape, improvements in the commercial laws and processes,
establishment of transparent procompetitive regulatory bodies,
and reform of the tax and customs systems that currently give
too much discretion to individual officials.
We are also very clear on a couple of specific
anticorruption programs. All of our Africa programs are
coordinated with other donors and organizations working in this
arena, and we have been collaborating closely, for example,
with Transparency International, the Global Coalition on
Africa, and the World Bank as well, in an effort to curb
corruption.
USAID and its partners work in some of the most challenging
development environments, including countries with
longstanding, endemic corruption problems. For instance,
Nigeria, one of the most important transitional democracies in
which USAID works, recently dropped to the last position in
Transparency International's corruption index that was released
on September 13, just literally last week.
But despite this ranking, however, we think that there are
positive prospects that now exist to improve Governments and
the investment climate by fighting corrupt practices in the
public and the private sector. President Obasanjo has taken
some bold moves, including the anticorruption bill, which
signals his strong commitment to deal with one of Nigeria's
most difficult development problems.
We put a top priority on anticorruption measures in our
Nigeria program. At the Joint Economic Partnership Commission
we were very careful to talk about this in ways that make our
point, but make it in a positive way, and we have pledged that
we will stay the course to help President Obasanjo build on his
commitment to transparency and accountability in the country.
Examples of USAID's corruption activities in Nigeria
include the fact that the mission is working to increase the
transparency of Government institutions, particularly focusing
on the national assembly and six State assemblies. USAID is
partnering with local Nigerian institutions to establish the
foundation for a fair and competitive electoral system,
including the development of a code of conduct for political
parties, which we think is particularly important.
At the local level, USAID is supporting the work of
Transparency International to develop an anticorruption
training manual for community groups, and at the request of
President Obasanjo, USAID provided funding for a conference
that led to establishment of the Nigerian Anticorruption
Commission.
In addition to its Nigeria program, USAID supports a wide
spectrum of anticorruption measures in many other African
countries, and I will speak to some of those if we have time
when we get to the discussion. I just note that Kenya is one of
them that I would focus on.
So in conclusion, Senator Feingold, we continue to make
strides to reduce corruption in Africa, although decreases in
corruption are difficult to quantify. You know, it is not easy
to count the number of bribes that were not taken or solicited,
and spectacular results are not quickly available in this area.
We think a lot about how do we measure this, and it really is
difficult, because the optimism and the good news is in what
did not occur.
However, since USAID began addressing systemic corruption
several years ago, there has been progress on many fronts,
including the degree to which citizens and Governments are
aware and engaged in fighting the corruption, the number of
elected officials exposed to ethics training, and the depth and
breadth of regulatory and judicial reforms in several
countries.
We should be heartened by these successes, yet we can only
help support efforts that Africans themselves wish to
undertake, and I think that we again go back to the example of
Nigeria, because it is that presidential leadership that really
does make a difference. The change must come from within, and
not be externally imposed. Corruption is a critical issue that
requires diligent attention by African Governments and donor
partners to forestall its debilitating impact. We in the Africa
Bureau will continue to work with other donors and with our
African partners as well as multilateral and regional
organizations to ensure that the successes achieved thus far
are sustained and expanded.
Again, I thank you for really pursuing this issue, because
we know that reducing corruption is a long-term process, as is
the promotion of democracy and good governance, but we are
increasingly required to make difficult decisions regarding
program funding due to reductions in democracy and economic
growth resources, and if we are going to be able to collaborate
with the larger donor community and support our United States
private sector's involvement in emerging African economies and
protect our ongoing assistance programs and support Africans in
their quest for sustainable development, the administration's
requested resources need to be heeded. We have and we can and
we will make positive differences, but the support of the
Congress is absolutely necessary.
I thank you, Senator Feingold.
[The prepared statement of Ms. Lowery-Derryck follows:]
Prepared Statement of Vivian Lowery-Denyck
INTRODUCTION
Good afternoon, Mr. Chairman, I would like by thank the Committee
for this invitation to testify on USAID anti-corruption efforts in
Africa. We, along with other members of the donor community, view
corruption as a major impediment to sustainable development in Africa.
African civil society organizations, citizens, and governments
themselves are also more and more willing to acknowledge corruption as
a development issue--and one not merely a factor in trade relations.
With the Subcommittee's concurrence, I will address how corruption
is a development challenge and how USAID is directing programs to help
foster accountability, transparency and good governance, thereby
reducing the occurrence of corruption in Africa. We must realize,
however, that progress in this area requires patience, persistence and
a willingness to stay the course with our African partners.
CORRUPTION AS A DEVELOPMENT CHALLENGE
In broad terms, corruption is the abuse of public office for
private gain. It arises both in political and bureaucratic office and
can be petty or grand, organized or disorganized. Systemic corruption
in Africa typically occurs in the management of public companies, in
public markets, in fiscal administration, in customs, in the justice
system, and often within the military. There is also widespread petty
corruption in the civil service, which most directly affects the public
by forcing them to pay for government services that would otherwise be
free. Whereas corruption in the privat sector undermines economic
growth, but may not affect political development, public corruption has
a destabilizing effect on both political and economic systems.
Corruption undermines the foundations of sustainable development in
all developing countries. Economically, corruption leads to the
inefficient allocation of resources, raises the cost of investment,
decreases investor confidence, promotes inequalities and inefficiencies
in the private sector, raises the cost and decreases the quality of
public-sector projects and services. The political consequences of
widespread corruption, while less quantifiable, are no less real and
are just as damaging. Corruption contributes to a loss of confidence in
the government and a general non-compliance with laws, undermines the
legitimacy of elected officials and democratic values, diminishes the
effectiveness of public policy, and impairs the power of public
institutions. Indeed, political fallout from corruption creates a
vicious cycle of corruption, instability, weak institutions, and more
corruption.
The economic and political costs imposed by corruption fall heavily
on African countries, already burdened by poverty, debt, disease, high
rates of illiteracy and political and economic instability. Moreover,
in those countries experiencing widespread, systemic corruption, the
burden is disproportionately borne by the poorest and most vulnerable
of the population. Citizens are denied access to basic public services
and suffer from the non-enforcement of the rule of law, including
public safety standards, environmental protection policies and even
criminal codes. Corruption also directly contributes to the lack of
public infrastructure, investment, education opportunities, and jobs
that sustain the cycle of poverty endured by so many on the African
continent.
These high costs of corruption, which Africans can ill afford in
any event, are even further magnified in conflict situations. In cases
of cross-border conflict or failed states, already weak state
institutions are overwhelmed and regulatory oversight is severely
compromised. The rule of law often is significantly, if not completely,
undermined. Opportunities for corruption at all levels abound and often
go undetected and unpunished. In countries in turmoil, like Sierra
Leone, Angola, and the Democratic Republic of the Congo, large sums of
money are amassed through arms sales, diamond smuggling, and drug
trafficking. A demand for money laundering services especially thrives
in such environments. Furthermore, violent conflict is more likely to
erupt in countries plagued by endemic corruption in which public
dissatisfaction increases as the availability of services declines. The
valuable investments of USAID programs in African countries, including
our newly expanded initiatives to combat HIV/AIDS, are at risk if
corruption--both as a development issue and a trigger for violent
conflict--is not fully addressed.
The United States government, including USAID, has been at the
forefront of the movement to bring international attention to the high
costs of corruption and to galvanize the public and private sectors--in
developed and developing countries alike--to give the issue the serious
attention it merits. In February 1999, Vice President Gore underscored
the importance of fighting corruption when participants from 90
governments attended the First Global Forum on Fighting Corruption here
in Washington and began an intense effort to examine the causes of
corruption and the practices that are effective to prevent or combat
it. These important efforts have continued with the planning for a
Second Global Forum to be held next May in the Netherlands.
Importantly, World Bank President Wolfensohn noted during last
October's Ninth International Anti-Corruption conference in Durban,
South Africa that it was just a few years ago that donors limited their
discussions to improving transparency and accountability. Now donors
and Africans themselves openly discuss corruption rather than cloaking
it in terminology. As I will describe, USAID capitalizes on this
favorable environment for fighting corruption by incorporating anti-
corruption activities into our programs and forging partnerships with
other U.S. government agencies, bilateral and multilateral donors as
well as African governments and regional institutions.
HOW USAID ADDRESSES CORRUPTION
USAID addresses corruption by first ensuring that its own programs
are transparently administered. The Agency has demanded accountability
within its development programs since its inception. Within USAID, we
have instituted numerous checks and balances to ensure our funds are
used for their intended purpose and audits are routinely conducted by
our Inspector General's Office.
As a part of its development assistance strategy for Africa, USAID
has championed good governance practices for well over a decade. As
corruption has become a more visible issue in development and is being
more openly discussed, USAID has been able to tackle the issue more
directly. We are convinced that, with the advent of this new openness
and willingness to confront corruption issues on the part of our
African partners, civil society can have a significant effect on a
government's will to enact and sustain anti-corruption reforms.
We have learned several critical lessons from our past experiences
in the global and regional fight against corruption. We have learned
that:
Government regulation and enforcement activities alone are
insufficient anti-corruption strategies.
Corruption is a universal problem, but each country's
corruption challenge is shaped by its own particular
circumstances and requires a tailored approach to successfully
combat.
Achievements of anti-corruption reform programs--economic
and social--are vulnerable to non-democratic regime changes and
to the conflicts that are often generated by those changes.
Civil society must be engaged as a critic of existing
corruption and as a watchdog against emergent corruption.
Donors must work together against the ``culture of
corruption'' and coordinate our anti-corruption efforts.
Based on what we have learned in the past, USAID has developed a
two-track response to the problem of corruption in Africa, as well as
other regions:
-- Firstly, we work to change the environment in which the public
and private sectors interact. Our programs are designed to minimize
opportunities for corruption and to change the incentive structures
that often encourage corrupt behavior. Corruption is likely to flourish
where public officials have wide authority, little accountability, and
work within a distorted incentive framework. USAID's responses to
corruption seek to address this imbalance by:
Supporting legal and regulatory reform to reduce a
government's involvement in areas better handled by the private
sector;
Streamlining government procedures to reduce the
opportunities for corruption;
Improving accountability mechanisms; and
Introducing incentives that will encourage officials to act
in the public interest.
-- Secondly, we support efforts to mobilize public support for
change. We recognize that an empowered citizenry is the best safeguard
against corrupt officials at all levels, and the best guarantee of the
sustainability of our programs. Therefore, we work with civil society
and the private sector to raise awareness about the problems that
corruption poses to development and to society in general. USAID
missions promote active engagement by all sectors of the public in:
Monitoring government activities;
Advocating changes in attitudes and practices;
Raising awareness about the costs of corruption;
Decreasing tolerance for corrupt behavior and changing the
expected norms of ethical behavior; and
Raising public awareness about their rights and entitlements
as citizens.
USAID ANTI-CORRUPTION RESOURCES
USAID's democracy and governance and economic growth sectors both
include anti-corruption measures as part of their larger program
activities in bilateral missions as well as through regional
initiatives.
Our democracy and governance programs emphasize the transparency
and accountability of governments through increased local government
and citizen participation in decision making, more effective and
independent legislatures and judiciaries, and enhanced civilian control
over the military and police forces. USAID programs have trained judges
and court administrators to prevent tampering with records and reduce
delays in hearing cases; worked with national assemblies to create
ethics committees and codes of conduct for public officials, and
supported the media in developing skills in investigative journalism.
USAID also provides technical assistance and training to audit
institutions to increase fiscal accountability and improve capacity to
detect and prosecute the misappropriation of funds.
Additionally, since its inception in 1997, the Africa Bureau's
leading economic growth activity, the President's Initiative, Africa
Trade and Investment Program (ATRIP), has concentrated heavily on
regulatory reforms that will reduce the opportunities for the
solicitation of bribes from private businesses. Major goals of the
program include: removal of regulatory red tape, improvements in the
commercial laws and processes, establishment of transparent, pro-
competitive regulatory bodies, and reform of the tax and customs
systems that currently give too much discretion to individual
officials.
Calculating actual dollar figures that go towards fighting
corruption specifically is difficult since initiatives to improve
transparency and accountability crosscut many of our programs.
Governance activities in Africa that are specifically labeled and
tracked as anti-corruption totaled $833,000 in FY 1999 bilateral
assistance. That figure has nearly tripled in FY 2000. The number of
countries with specific anti-corruption objectives in the democracy and
governance sector has also increased from four to seven in a one-year
period. On the economic growth side, USAID has funded more than 25
ATRIP activities, both bilateral and regional, that are expected to
reduce opportunities for corruption in Africa. Total funding for this
set of ATRIP activities reached $10.3 million in FY 1999 and
approximately $15.8 million in FY 2000. However, we believe that
freedom of speech, independent media, freedom of association, and free
and transparent elections combine to lessen the impact of corruption in
Africa. Therefore, when adding in all Africa Bureau regional programs
and bilateral activities designed to improve accountability,
transparency, and good governance more generally, the total USAID funds
invested in fighting corruption in Africa is well into the tens of
millions.
AFRICA ANTI-CORRUPTION PROGRAMS
I would like to highlight just a few of the many activities our
overseas missions are implementing either through international non-
governmental organizations, U.S.-based technical assistance or other
implementing mechanisms. First, however, I believe it is important to
note that all of our Africa programs are coordinated with other donors
and organizations working in the anti-corruption arena. No one
organization or institution can shoulder all the responsibility for
fighting corruption. Nor can anyone take all the credit for the many
improvements made over the past few years in the quality of governance
region-wide. USAID has been working closely, for example, with
Transparency International, the Global Coalition on Africa, and the
World Bank in the effort to curb corruption on the African continent.
In addition, through the Consultative Group mechanism, we maintain a
dialogue with other bilateral donors and African host countries on
issues of importance to development, including corruption. Consultative
group meetings provide a forum for frank discussion of the issues
related to transparency and accountability, and enable the donors to
engage host country governments in the issues of corruption affecting
their development and the effectiveness of international aid. It has
resulted in stronger anti-corruption efforts in a number of countries.
USAID and its partners work in some of the most challenging
development environments including countries with long-standing,
endemic corruption problems. For instance, Nigeria, one of the Clinton
Administration's top four priority countries, recently dropped to the
last position in Transparency International's Corruption Index,
released September 13, 2000. Despite this ranking, however, positive
prospects now exist to improve governance and the investment climate by
fighting corrupt practices in the public and private sector. Nigeria's
President Obasanjo has taken some bold moves including introducing the
Anti-Corruption Bill which signals a strong commitment to deal with one
of Nigeria's most difficult development problems. USAID puts top
priority on anti-corruption measures in its Nigeria program and will
stay the course to help President Obasanjo build a broad commitment to
transparency and accountability in his country.
Examples of USAID anti-corruption activities in Nigeria include the
following:
The USAID mission in Nigeria is working to increase the
transparency of government institutions, particularly focusing
on the National Assembly and six state assemblies (one in each
of Nigeria's geopolitical zones).
USAID is partnering with local Nigerian institutions to
establish the foundation for a fair and competitive electoral
system, including the development of a code of conduct for
political parties.
At the local level, the USAID mission in Nigeria is
supporting the work of Transparency International to develop a
manual that will be used to train communities in the roles that
they can play in fighting corruption.
At the request of President Obasanjo, USAID-funded the
International Republican Institute (IRI) to sponsor a
conference for 150 future cabinet ministers and senior
administration officials last year which produced key
initiatives, such as the establishment of the Anti-Corruption
Commission.
In addition to its Nigeria program, USAID supports a wide spectrum
of anti-corruption measures in many other African countries. The kind
of corruption targeted, as well as the results vary widely. The
following are provided as illustrative examples of USAID-supported work
in fighting corruption in Africa:
BENIN: The USAID mission in Benin has provided technical and
institutional support to the country's Supreme Audit Institutions, both
at the Chamber of Accounts of the Supreme Court and the Inspector
General Office of the Ministry of Finance. As a result of their
increased capabilities, the Supreme Audit Institutions have started,
for the first time, to audit electoral campaign expenses and have
developed a manual for transparent financial and procurement
operations. In addition, the Transparency International chapter,
supported by USAID, conducted an extensive anti-corruption awareness
campaign during the parliamentary elections in March 1999. This
included televised sketches, radio and television ads, comic strips in
local newspapers, and a poster campaign.
MOZAMBIQUE: The ATRIP program supported the Confederation of
Mozambique's Business Associations in its efforts to reduce red tape
and to provide an effective forum for the private sector to examine
policy issues. This activity resulted in the passage of a new
industrial law and revisions in the industrial and commercial licensing
regulations that greatly simplified the registration process, and the
transfer to a single agency of all responsibility for import and export
controls. The Confederation has also worked to prominently display the
new commercial and industrial licensing requirements to promote
transparency and awareness of the rules for both government and
business. These reforms will greatly reduce bureaucratic delays caused
by bribe seeking.
In addition, with USAID support, NDI conducted a civic education
program throughout Mozambique designed to raise awareness about the
rights and responsibilities of citizens in a democracy. Many
participants soon put their newly acquired democratic skills into
action and tried to make improvements within their communities. In
Sofala province, for example, participants wrote a letter to the
District Office of Education complaining about the disappearance of
funds the community had pooled for the construction of a school. The
school administration was forced to pay the money back, and this
encouraged the community to provide additional funds, which enabled the
school to be built.
MALI: The USAID mission in Mali was involved in organizing for
regional workshops on ``illicit taxes'' that the custom and police levy
from livestock exporters in Sikasso, Segou, Mopti, and Koulikoro. The
workshops provided opportunities for livestock exporters and government
officials to interact and jointly develop a plan for eliminating
illegal taxes. As a result of these workshops, livestock exporters
decided to-create border livestock markets that will tremendously cut
down the opportunity for local officials to demand unwarranted payments
that negatively affect export revenues.
KENYA: In the past, when emergency food aid was required in Kenya,
there were two parallel emergency food programs--the Government of
Kenya (GOK) system and the UN's World Food Program (WFP) and their
implementing partners. The GOK system used to be highly corrupt with
high losses and little or no impact, as the food aid went to too many
districts and too many people due to political reasons. However, as a
result of a USAID-funded workshop facilitated by the Famine Early
Warning System (FEWS) project staff, augmented by additional USAID and
British-funded analyses, the GOK has made some dramatic changes in its
emergency aid program by moving towards a more transparent and
efficient community-based distribution system. The new system allows
for district and divisional level decisions to be made locally, and
PVOs have a much larger role in the allocation of all emergency food.
Targeting of households can now be done based on need rather than
on political factors; while improved and transparent accounting
procedures make unauthorized diversions harder. Kenya's remote Turkana
District, the area hardest hit by the country's recent drought,
demonstrates the improvements for the poorest households brought about
by a new community-based food aid targeting system. During a recent
visit to the region, observers noted that poor households were
receiving a monthly distribution of up to twenty-two pounds of corn,
dramatically more than the two pounds they received previously. The new
targeting system provides a more accountable and transparent
distribution mechanism to ensure than food aid goes to those most in
need.
CONCLUSION
We continue to make strides to reduce corruption in Africa,
although decreases in corruption are difficult to quantify. It is not
easy to count the number of bribes not taken, or solicited. Spectacular
results are not quickly available. However, since USAID began
addressing systemic corruption several years ago, there has been
progress on many fronts, including the degree to which citizens and
governments are aware and engaged in fighting the corruption, the
number of elected officials exposed to ethics training, and the depth
and breadth of regulatory and judicial reforms in several countries. We
should be heartened by those successes. Yet, we can only help support
efforts that Africans themselves wish to undertake. The change must
come from within and not be externally imposed. Corruption is a
critical issue that requires diligent attention by African governments
and donor partners to forestall its debilitating impact. We in the
Africa Bureau will continue to work with other donors and with our
African partners, as well as with multilateral and regional
organizations, to ensure that the successes achieved thus far are
sustained and expanded.
Lastly, we all know that reducing corruption is a long-term
process, as is the promotion of democracy and good governance. However,
we are increasingly required to make difficult decisions regarding
program funding due to reductions in democracy and economic growth
resources. If we are to collaborate with the larger donor community in
mutually supportive capacities, support our US private sector in
emerging African economies, protect our on-going assistance programs,
and support Africans in their quest for sustainable development, the
Administration's requested resources are needed. We have, we can, and
we will make a positive difference but the support of the Congress is
absolutely necessary.
Thank you.
Senator Feingold. Thank you, Ms. Lowery-Derryck. As we
turn to Simon Taylor, director of Global Witness, let me just
reiterate the 5-minute target, if we could, so we have some
time to have some back-and-forth.
STATEMENT OF MR. SIMON TAYLOR, DIRECTOR, GLOBAL WITNESS,
LONDON, ENGLAND
Mr. Taylor. Good afternoon. As an NGO based in London it
is quite a privilege to come and do this, so I would like to
start by saying thank you very much for having us. I will just
very briefly tell you about Global Witness. We are a London-
based investigative campaigning organization that looks at the
link between natural resources, the role of natural resources
and the funding of conflict. My expertise in the African
context is Angola, and so that is what I am going to focus my
discussion on. I hope that is okay.
I do not want to paint an utterly bleak picture of Angola,
but I think I would be interested in having more of a debate
about just how far the reforms have come in Angola. Whilst we
see, certainly, the start of the IMF staff monitoring program
as a very positive move, we also see that the program itself,
from our perspective, is quite flawed in that it does not quite
go as far as it could have done. Especially given the fact, I
think, that many of the objective commentators in discussions
with the IMF prior to the agreement, in addition to the
availability of public information, raised exactly what was
going wrong in Angola vis-a-vis corruption--information was
well available quite a long time prior to the finalization of
the agreement.
But I think from our perspective, whilst we see the staff
monitor program as a positive move forward, we think, well, it
was almost like aiming here instead of here, so that they have
not quite obtained what they could have done. I will come back
to that.
I will just very briefly run through where we see the key
problems in Angola. I think we have a situation where there is
literally top-down corruption that is endemic the whole way
through the structure of society, mainly I think because once
you get below the top levels there is actually no other way to
function. It is the only way to live.
There is no alternative access to revenue to survive unless
you have become part of the system, so to varying degrees,
depending on where you are on the ladder of the structure, the
hierarchy of society, you have corruption, but at the top end
you have control over virtually everything. Everything, as they
would say in Luanda, is an ``eschema,'' a scam.
So everything from--we have noted rotten container loads of
beef being imported from Lisbon, to weapons that do not roll
off container ships, that have to be literally dragged off, the
sole purpose of their acquisition seemingly to acquire the
commission attached with having made the deal in the first
place.
We have mentioned briefly Angola is a major conflict zone.
Some people here may be aware that we have been looking at the
issue of conflict diamonds, and it was our work through this
report, which we published in December 1998, which kind of,
together with other moves by the U.N. Sanctions Committee
precipitated a lot of the coverage and moves to deal with the
conflict diamond issue.
And for us the other side of the coin is the fact that
although you have got a war which is clearly draining the
revenue base for the country, for development and so on, it is
the massive scale of corruption, perpetrated by top-level
people, particularly within the presidency and other areas,
which is also siphoning off a vast proportion of the wealth.
And I think the most serious aspect of it is what we would
define, I think, as the de facto privatization of the war,
which took place around 1997-1998. I would like to be more
candid, if you like, but it is a bit hard because naming people
might stand me up for a little bit of grief when I go home, not
the least of which might be in a courtroom, or worse, I might
add.
But the bottom line is that in 1993 Luanda was in
difficulty in the conduct of the war. The war was going very
badly. There was not the revenue to fight it. There was not the
weapons supply and so on, and basically what happened is an SOS
call went out in the direction of France, and certain
individuals in France provided contacts with certain other
individuals, which I will not name now, who saw to it that
introductions were made with certain banks who provided oil-
backed loans.
The same individuals also provided the connections for the
``lifting of the oil,'' as it is known, to pay back the loans
and also provided the weaponry, and these individuals basically
monopolized the weapons supply to Luanda, whether directly
themselves or at least on the basis of orchestrating others to
do it.
This carried on until about 1997, and the deals they did
went through an Angolan parastatal company, a State company,
and there were obviously kickbacks of quite some magnitude.
What happened in 1997-1998? Top people in the presidency
removed the contract from the parastatal and gave it to a
private enterprise which is basically owned by these same
individuals, so what we have seen is an escalation of the kick-
back process to kick-backs plus profits, because they own the
very structure that is being deployed.
Some of the other areas that I think are of concern--and
this really brings us to the oil companies, and the role of the
oil companies. In 1999, in July of 1999, three oil blocks were
finalized. These are respectively blocks 31, 32, and 33. 31
went to BP-Amoco, 32 to ELF, which is now TotalFina ELF, and 33
to Exxon, and within the equity structures of Blocks 32 and 33
are some very strange partners, which we believe are basically
payments in kind for services rendered, the services being the
provision of weaponry and financing and so on. They certainly
do not appear to be companies that the international oil
industry is familiar with as ultra deep water oil- drillers.
I think the more disturbing aspect of the three blocks was
that some $870 million was paid over in signature bonuses, of
which we reckon at least $400 to $500 million disappeared
straight into the presidency for deployment through this
structure I described before, and has simply not been accounted
for. It has disappeared. I think the picture of all of this is
that a significant proportion of everything that is wrong with
what is going on in Angola is that it takes place off-shore.
So what we have in the Angolan staff monitoring program of
the IMF is a very positive step. It is miles ahead of where we
would have been, say, last year. But the bottom line is that it
has no retrospective analysis of what took place in 1998 and
1999, and as far as we are concerned these represent some of
the most corrupt years in terms of practices. And also it is
only looking at money from companies to Government, no
subsequent deployment of that revenue, so some of the key areas
of where it then disappears are simply not going to be looked
at at all. It is great that the companies are now being hired.
I think that is very good that we are moving forward, but are
they going to find out all the convoluted pathways of money
through, for example, the Cayman Islands, through all sorts of
different structures you might imagine, where that stuff is
going, and I seriously doubt it.
So if the end objective is to bring transparency to the
country, such that oil revenue provides some sort of revenue
for the development of the country and is actually going to the
people of the country, at least a bit, which it currently
clearly is not, then we need something more, and I think we
need at the very least some form of retrospective analysis of
what went on before, for the simple reason that we need to get
to the bottom of the structures that have been created, which
will continue to be created unless such an analysis is brought
to bear.
So somehow we need to go and readdress this side, and I
think that is something that the committee might be able to
help with, to go the administration, if that is at all
possible, to readdress this problem.
There is another strategy which we have been working on for
a while, and which seems to be bearing some fruit, and that is
to do with the role of the companies themselves and what they
can do. It is very clear that in Angola there is no
transparency from the companies themselves.
Whereas you and I can go to our respective tax offices and
find out what our companies pay to our Governments from tax
revenue for the activity they do, Angolans cannot do that, so
it is impossible to work out exactly how much is coming in to
the State coffers in the first place. If you want to hold your
Government to account, you have to know how big the pie is in
the first place, and so I think that leads us to a fundamental
point that the companies could do, and that is to follow the
best practice they would have to do in any developed country,
and that is to publish what they pay to the Angolan Government
in their annual accounts.
With that regard, we have now got an agreement from the
Foreign Office in London for Peter Hain, Minister of State for
Africa, to host a meeting on October 12, at which the London
representatives of the various oil companies in Angola--because
the focus will be Angola--will be attending together with some
NGOs, and obviously the Foreign Office itself, and the purpose
of that meeting is to examine this whole issue of what the
companies could do to live up to what one might quite
legitimately, I think, expect of them in any developed society.
The purpose of that meeting hopefully will be to lead to a
third meeting--a second meeting, really, in this context, at
which we would hope that the U.K. Government might start to
involve the U.S. Government and other Governments, together
with the head office senior representatives of the companies,
so another thing I would really like to ask, if that is at all
possible, is if the committee, together with the
administration, could help to deliver the top executives of the
companies from this end to that second meeting, which should be
scheduled hopefully towards the end of October.
So I think if we can get to that stage, we can see a
scenario where the companies could basically publish what they
pay in all the countries they operate in, then you would see a
situation where you would de-Angolanize. It would cease to be a
problem for them, and I think what I am suggesting is the
companies could literally have their cake and eat it, if you
like.
This should be an utterly painless process, where there is
no come-back to them because they all do it, and if they do it
everywhere, no one country can blame them, and I think what
would be true of Angola in terms of providing this basic
information for civil society to finally ask the question and
hold the Government to account would actually be very
beneficial in places like Gabon and Cameroon, and Nigeria--
Nigeria is improving and so on, but a whole host of other
places.
So that is the kind of strategy that is coming, and I would
very much like to ask for your assistance. Thank you very much.
[The prepared statement of Simon Taylor follows:]
Prepared Statement of Simon Taylor
INTRODUCTION--BACKGROUND TO GLOBAL WITNESS
Global Witness is a not-for-profit London based NGO, which focuses
on the role of natural resources in the funding of conflict. Global
Witness was established in 1993, by myself and 2 others--Chairman Gooch
and Patrick Alley.
Although this hearing is aimed at corruption and the continent of
Africa, my discussion will focus on Angola. Despite this quite narrow
focus, the importance of Angola to the region, both strategically and
because of its potential economic weight, and the sheer scale of
corruption--perhaps one of the worst examples of corrupt government in
Africa (if not globally), with no accountability to its people--all
conspire to make Angola an ideal focus.
There are always two sides to corruption--the corrupted and the
corrupter, and many of the corrupters in Angola are the very same
individuals and companies which have operated in a similar fashion in
countries such as Gabon, Congo-Brazzaville, Cameroon, and Nigeria, etc.
Angola also provides upwards of 8 percent of US oil imports (set to
rise massively over the next few years), and so it is of immense
strategic value to the United States. In addition, it is important that
these issues, though of course relating to Angola, are not considered
solely as Angolan problems. This is due to the fact that the war
economy is intimately connected to corrupt deals, which in turn likely
play a significant role in the capacity for Angolan military
involvement in the Democratic Republic of Congo (DRC).
Global Witness has considerable information relating to the role of
certain key individuals and companies in this situation. However, due
to safety and legal considerations, it is difficult to be as candid as
I would desire. Having said that, I am very keen to provide additional
detailed information to key interested parties in private, outside of
the context of this Hearing. For this hearing, I will attempt to be as
candid as possible within these constraints.
CORRUPTION AND LACK OF TRANSPARENCY AND THE DE FACTO PRIVATISATION OF
THE WAR IN ANGOLA
In December 1998, Global Witness published the report A Rough
Trade, focusing on the role of the international diamond trade in the
financing of UNITA's war in Angola. As many of you will know, this
report with its key finding that UNITA generated a conservative US$3.7
billion between 1992 and 1998, and subsequent press coverage was a
major precipitator of significant International Community focus on the
issue of ``conflict diamonds.'' International attention and focus on
this issue then received a major boost through the very pro-active
involvement of both the US and UK Governments, which in turn took on a
greater urgency following the events of earlier this year in Sierra
Leone itself. I have of course not referred to the activities of
various individuals within the US Congress and other NGOs.
In December 1999, Global Witness published A Crude Awakening, which
sought to examine the other side of the Angolan conflict; the role of
massive corruption on the government side, and the effect of a
considerable lack of transparency on behalf of the oil companies
operating in Angola, and lastly the role of the international banking
industry which has provided numerous loans, against future oil
extraction. In the latter case, the resultant monies being subject the
same lack of transparency, and being passed through opaque channels,
resulting in funds being siphoned off through secret arms deals. It is
the corruption aspect of the Angolan tragedy that I wish to address
here today--and it is this issue which is significantly affected by US
and other countries' foreign policy to Angola.
In late 1997, or early 1998 (the exact timing is not clear), the
contract for arms (and other procurement efforts) was removed from an
Angolan parastatal company and given to a private company--company X.
This decision was made by certain top level officials in the
Presidency, known as Futungo.
Company X is connected to certain individuals who have been
instrumental in the provision of oil-backed loans. These same
individuals also organised the ``lifting'' of the oil (in order to pay
back the loans) by a very well known oil trading company which was
notorious during the 1980's as a leading oil sanctions buster to
Apartheid South Africa. These same individuals, who have been the
quasi-monopoly weapons suppliers to Angola since around 1993/1994, also
provided weapons through this new supply structure.
WHAT ARE THE IMPLICATIONS OF THIS NEW ARRANGEMENT?
This new method of supply has resulted in a number of changes.
Whereas, the suppliers referred to above previously benefited from
large kick-backs sometimes amounting to 30-40 percent and which were
shared with top-level officials, the margin of profit has escalated.
This is because whilst previously they profited from the kick-backs
alone, they now benefit from both these kickbacks and the profits
generated from their joint ownership with Angolan officials of Company
X.
This removal of the contract from the Angolan parastatal to Company
X represents a de-facto privatisation of the current phase of Angola's
civil war. This is because every item from bombs and bullets to
clothing and food generates money for those who are involved in Company
X. If, as most objective commentators once again recognise, there is no
military solution to the current conflict in Angola, then the current
scenario represents a serious conflict of interest, given that those
who should be seeking a peaceful outcome to the war, are in fact making
money from its very continuation.
It is clear that frequently supplies of weapons and other
commodities purchased through these individuals, both prior to and
after the involvement of Company X, were not always up to the job.
There have been many occasions where weapons including tanks and other
heavy weaponry were literally dragged off the supply ships, because
they were unable to be driven off under their own power. This purchase
of inadequate military equipment has made up a significant percentage
of overall supply in recent years, and is consistent with imports of
other commodities, such as rotting meat from Portugal, which appear to
have been obtained for the commission alone.
The mid-1999 successes of the Angolan Armed Forces in part relate
to the fact that these and other suppliers finally delivered weaponry
(involving the same kick-backs) of sufficient quality and quantity to
do the job.
Whilst it is obvious that the war in Angola has been a massive
drain on the State's finances, and hence capacity for development, it
is also very clear that corruption has taken a vast percentage of
potential State income, of which in recent years, over 90 percent of
been derived from oil. Given that oil (in fact all state natural
resources) is enshrined in Angola's Constitution as belonging to the
people of Angola, it is very difficult to see where any benefit has
been derived by Angolans from their resource. This is clearly
illustrated by Angola's free-fall from position 73 (out of 172
countries assessed) in the UN's Human Development Index (HDI), when
daily production was 482,000 barrels, to position 160 by 1999, when
production had reached 770,000 barrels per day. It should be noted that
the volume of oil production in Angola has since increased, with no
appreciable change to the country's HDI position.
The capital, Luanda, is a vastly over-populated (due to the influx
of war refugees) sprawl, which some describe as the second most
expensive city in the world. It is a city of utter squalor, mixed with
a smattering of very expensive boutiques, available only to the elites.
Whilst hordes of children sift through the garbage, the elites
sometimes drive past in their limousines. Many of the other major towns
in the countryside resemble Dresden after World War II.
WHAT IS THE VALUE OF OIL TO THE ANGOLAN ECONOMY?
Angola is sub-Saharan Africa's second largest oil producer,
following Nigeria, with recent discoveries suggesting it soon become
the largest. Oil revenue makes up over 90 percent of state income. One
might presume that for such a significant sector, it might be
relatively easy to determine the actual dollar value of this resource
to the economy--this of course would not be difficult in any developed
country. But in the Angolan case, as for many developing countries
where resource revenue is siphoned off to benefit an elite class, the
lack of transparency makes this task almost impossible.
Global Witness conducted investigations in an attempt to uncover
raw data to calculate the dollar contribution of oil to the Angolan
economy. The results, not only demonstrate the difficulty of such a
task, but also clearly indicate the difference between the access
provided to civil society in developed countries regarding transparency
of tax contributions of major business' to developed country economies,
and the lot meted out to Angolans. I will return to this theme later.
From the best available data, Global Witness calculations indicate
that Angola generated between US$1.8 billion and US$3.0 billion
annually for the period 1990-1999. Clearly there is considerable
variation year on some of which is reflected in global oil price
fluctuations, but a significant source of this variation is due to the
lack of available and accurate data. In other words, this estimate is
not one that should be considered as particularly accurate. In
contrast, by late 1999, analysts were predicting an annual income from
oil of US$2.9 to US$3.2 billion for the years 2003 through to 2010,
with other forecasts suggesting that the industry is set to invest some
US$ 18 billion over the next four years in Angola.
Global Witness has also made its own calculations of estimated
income from oil in Angola over the period 2000 through to 2006. This
forecast is based on analysts' predictions for oil volume extraction
compared to two different, but conservative estimates of global oil
price--of US$ 12 and US$ 18 per barrel. Given these current forecasts,
we estimate that Angola will receive between US$1.4 billion and US$2.7
billion respectively over the next six years. It is worth pointing out
that for much of 1999 and this year, the global price of oil has
hovered nearer to the US$30 per barrel level (now over US$32). Clearly,
it is unrealistic to suggest that this price will be maintained in the
long term, but it is worth noting that these high levels and therefore
higher than estimated income levels have been maintained for a
significant proportion of the period we are looking at.
THE ROLE OF CIVIL SOCIETY IN ANGOLA
Angola's growing civil society is gradually escalating its
opposition to the war, and is also seriously questioning the scale of
corruption that is governing the country. However, NGOs and the press
in Angola are facing an enormous up-hill battle against seemingly
impossible odds. Those that have dared to challenge the current
situation, and who have publicly voiced their concern over corruption
by state officials have been ruthlessly dealt with--perhaps the best
known case is that of Rafael Marques who has been tried for
``defaming'' President dos Santos because he accused him of corruption.
His case should in no way be considered in isolation, and the response
has been to pursue such cases on a criminal basis, rather than through
the civil courts. Although there is a growing independent press in
Angola, they are severely limited in their capacity to cover
contentious issues--Folho 8, which attempted to cover the launch of
Global Witness' Crude Awakening report in December 1999, found its
printer threatened, which then refused to print the first four pages of
the paper--the banner headline front page leads with the launch of the
report, but inside, the reader is treated to four pages of blank
columns interspersed with photographs of oil rigs.
It is very clear that in addition to the almost complete lack of
available data concerning the true value of oil production to the
Angolan State, it is also not possible for Angolans to question any of
the decisions of the state, as to its conduct of the war, or the
economy. Despite the constraints placed on a state at war, this
situation is clearly unacceptable, especially given the implications
for the Angolan people and the vast benefit being generated by the
elite few through the continuation of current practices, at the expense
of the population. There is no accountability of government in Angola
today.
THE ROLE OF OIL COMPANIES IN ANGOLA
Currently, there is no significant transparency by the oil
companies in Angola. In stark contrast to the availability of tax and
royalty data to the general public in developed countries, through the
standard process of filing annual accounts by companies, such data is
not available in Angola. Given that Angolans have no recourse to the
data that they would require to at least begin the process of holding
their government to account for its use of this resource, this
situation of lack of oil company transparency is also clearly
unacceptable.
In July 1999, the three oil companies BP-Amoco, Elf (now
TotalFinaElf) and Exxon, finalised their agreements with government for
the three ultra-deep water oil blocks, respectively Blocks 31, 32 and
33. The three companies paid a total of US$ 870 million dollars in
signature bonuses, of which Global Witness estimates that between US$4-
500 million was ``disappeared'' through the Presidency.
Global Witness believes, due to the lack of oil company
transparency, that the companies are complicit in the plunder of Angola
by the country's elite. This is not to say that the companies are
directly involved in the paying of bribes, though some clearly are.
But, it is saying that the companies are playing the key role in the
provision of over 90 percent of Angola's State income, and given that
it is this income which is being stolen, they cannot absolve themselves
from that relationship and responsibility without taking every step to
ensure that it is as hard as possible to siphon off such revenue, It is
therefore clear that the companies can only escape from such a charge
through all the companies collectively publishing all payments they
make to government, just as they would be required to do so in any
developed country.
THE ROLE OF THE BANKING
The international banking sector has played a key role in the
provision of short-term, high interest loans, which have severely
exacerbated the effect of oil price fluctuations on Angola's economy,
and which have significantly increased the national debt.
Many of these loans have been negotiated in secret, and the
resultant monies have been utilised through the same opaque system as
oil derived state income. The value of the loans which have been
provided against future oil extraction have been so vast that by 1998/
1999, Angola actually derived little physical income from then volumes
of oil production, because the vast bulk of this revenue was needed to
service the expanding debt. Of course, the conduct of the war, required
continued funding, and so new loans have continued to be negotiated,
greatly assisted by the high oil price; many of the negotiations
involving the same individuals already referred to above, who are
intimately involved in the supply of weapons to Angola.
The Angolan parastatal oil company Sonangol is one of the main
routes of loan repayment, often involving the direct selling of oil,
with resultant revenues being directed through off-shore accounts. One
of the implications of such a significant proportion of state revenue
being directed via off-shore financial systems, is the development of a
set of parallel financial systems within the Angolan economy. This
simply adds to the lack of state transparency, providing ample
opportunity for further misappropriation. It has also allowed for
Sonangol to discount is tax liability to treasury, with the result that
a large proportion of the Angolan economy being run through a set of
foreign bank accounts--this set of off-shore parallel finances being
controlled by the various elites within Angola, with the vast bulk by
the Presidential clique.
Given not only the scale of the loans which have been provided, but
also the level of secrecy surrounding their negotiation and the
subsequent control which is being exercised by the elite over the off-
shore repayment structures, there is clear complicity of those
international banks which are involved, in the plundering of Angolan
state revenue. As for the oil companies, the international banks should
publish full details of existing and any new loans that are made
available, and they should insist that full transparency concerning
future loans be a condition of agreeing further financing. Given the
risk of providing loans to Angola, it would also be in the interest of
banks considering loans to Angola, to insist on a radical change in the
level of transparency exercised by Angolan State institutions.
THE ROLE OF THE IMF AND THE WORLD BANK
For some time the IMF has been trying to restart a programme in
Angola. It came close to an agreement with the government in 1998, when
the international oil price fell below US$10 per barrel. This was
because Angola was close to defaulting on its international debts due
to the low oil price. The Government was becoming desperate to secure
new and preferential rate loans, which would only become available
through an IMF agreement. In early 1999, the government did make some
positive changes to the state financial systems, by posting Aginaldo
Jaime as the new head of the National bank of Angola (BNA). This was a
significant improvement, because the BNA had been a major partner in
the system of state robbery, and Mr. Jaime is well respected in the
international community.
However, despite the improvements that Mr. Jaime continues to
implement to operation of the bank and various other structural
changes, there are still significant improvements required. These
concern not only the fact that a vast percentage of Angola's economy
(as already described) takes place entirely off-shore, but also the
role of both Sonangol and the role of the Presidency in the deployment
of state revenue.
In April 2000, the IMF finalised its Staff Monitoring Programme
(SMP) agreement with the Angolan Government. This agreement is a
positive step forward that Global Witness welcomes as a useful first
stage towards improving transparency in Angola. However there are
serious flaws in what is being proposed. These include:
1. There is no provision for any significant retrospective analysis
of the oil accounts and subsequent expenditure for the period
1998 to the present day--perhaps the worst period for massive
corrupt arms deals, involving both oil and loan revenue, in
Angola's history.
2. The agreement appears to be only contemplating an analysis (from
July 2000 onwards) of oil revenue to government--as far as the
treasury--with no analysis of subsequent expenditure.
3. This analysis (known as the oil diagnostic) was originally
intended to run until the end of 2000--for six months only.
This now appears to be extended until late 2001. However, there
appears to be no consideration as to what happens after that.
4. Given that a vast proportion of plundered revenue has been
siphoned off through a convoluted system of off-shore companies
and accounts, it is extremely doubtful if the team hired to do
the oil diagnostic will be able to deal with this problem;
meaning that the structures which have served the purpose of
state robbery so well, will likely remain in place.
The World Bank had pulled all of its country staff in 1999, leaving
a token office representation in Luanda. The Bank is now tasked to hire
the international accountancy company which will undertake the ``oil
diagnostic,'' according to the IMF's SMP agreement. To date, the
company of choice has not been finalised, though we understand this is
imminent. It seems likely that once the diagnostic team is in place,
that the Bank will resume its activities in Angola.
It is imperative that international pressure is brought to bear to
ensure that the IMF's SMP programme is truly a programme worth having.
Global Witness appreciates that there is a balance to be drawn between
having the programme, and pushing too hard and losing it all--however,
if the price of having the programme is such that it will not deliver
transparency, that it remains severely compromised as described above,
then it seems likely that the IMF's programme will be insufficient for
the job required.
This is of major concern, because if the Angolan Government does
perform according to what is required of this flawed programme, leaving
significant areas of corrupt activities in place, which the diagnostics
team is simply going to miss, then the logical next step is a likely
resumption of international aid. Whilst in the long run, Angola does
desperately need international assistance, Global Witness believes that
such an outcome will send the wrong message and will allow for a
continuation of current practices.
THE ROLE OF THE US AND THE INTERNATIONAL COMMUNITY
It is very hard to be precise about the role of the US in the
continuation of current corrupt practices in Angola. On the one hand
the US Government has played a very valid role in pushing the
``conflict diamond'' issue to date. Here congratulations are certainly
due. This is of course another area where corruption is also an issue.
However, it is very difficult to escape from a perspective of the
US, although it has gone on the record stating on various occasions
that this is an issue which needs remedy, that the issue of corruption
on the Angolan Government side also relates to oil--and of course,
unlike diamonds which are a non-essential commodity, oil is the
``untouchable'' item. There is a very strong perception amongst the NGO
community and beyond, that the US and other governments with oil
interests in Angola (especially France which fits into a category all
of its own), because of the nature of oil, will make all the necessary
``token'' noises about corruption, how bad it is, etc., but in the end
will do nothing, because it does not want to upset the elite in Luanda,
which may have repercussions for US oil companies. The US-Angola
chamber of Commerce, which could be seen ostensibly as a positive
vehicle, may in fact be contributing to the impression that the primary
concern appears to be business interests regardless of other factors.
Despite having had the opportunity to brief IMF officials directly
involved in the SMP negotiations with Angola as to some of the
essential areas which desperately need addressing, and having similarly
done so with the other key oil interest countries, all of whom have
significant influence at the IMF Board, we have been left with an SMP
agreement which is flawed, as described above. To what extent if any,
US and other countries' policies, or their lack, may have led to this
situation is not clear.
WHAT NEXT--SOLUTIONS TO THE CURRENT SITUATION
Regardless of what may or may not have been undertaken by the
various governments involved in the past, there is an area which I have
briefly focussed on which has not yet been tried out. This involves all
the major oil companies which are present in Angola and which, I hope,
can also include a significant involvement from the US Government,
together with the initial moves which are being made by the UK
Government, and which will hopefully also involve other governments as
the strategy moves forward.
As I have already described above, there is clear complicity of the
oil companies in Angola in the looting of state assets. Many of the
companies are clearly and genuinely concerned about this situation, I
think both in terms of the implications for the Angolan people, but
also because it does not make sound business sense to be operating in
an utterly corrupt environment. There are others, unfortunately who are
directly involved in this problem, and I would like to provide more
detail in private.
However, there is strategy being put together by the UK Government
right now and which is in its first stages. Minister of State Peter Ham
MP, who is Minister for Africa at the Foreign & Commonwealth Office in
London, is hosting a meeting of oil companies and some key NGOs with
both experience in this issue (including Global Witness) and those who
are working in the development field in Angola. The purpose of the
meeting is for a full and frank discussion about the issue of
corruption in Angola and to explore ways forward for the companies to
be able to help by becoming more transparent in their operations in
Angola. This meeting has been confirmed as taking place on October
12th.
In terms of the oil companies, the meeting is intended to include
London based executives of all the majors--so this will we hope include
Exxon, Chevron and Texaco. It is also intended that this meeting should
lead to a second meeting within a few weeks, at which there should be
participation from head office executives of the companies, together
with the US government, and other governments if possible.
Global Witness strongly believes that this strategy represents a
genuinely positive way forward for the companies. Whilst it is clear
that no one company alone wishes to incur the wrath of the Angolan
government by publishing its payments of taxes and royalties to the
Angolan Government (and neither would that be desirable, because such a
move would only produce a fraction of the data required), if all the
companies were to do so, there is not much the Angolan government could
do in response.
Things could be made even easier for the companies if they were to
adopt such a strategy for all their countries of operation, as this
would ``de-Angolanize'' the issue--the companies could easily explain
their move as part of a global move to reform accountancy practice to
adopt highest standards in order to act as ``responsible global
citizens'' regarding issues of corruption and lack of transparency. If
such a move was adopted, no one country could blame a company for its
actions, since these would take place internationally. It is certainly
clear that a similar move would be of immense value in countries such
as Nigeria, Gabon, Cameroon, Congo-B, and the DRC, to name just those
in Africa.
I hope this is a strategy which appeals to the sub-Committee and
that Global Witness might be able to ask for your assistance, together
with that of the US government to take this forward. Angola desperately
needs a radical change, and although this will not cure the ills, such
a move would provide the necessary data (at no cost to the companies),
which would at least allow Angolans to start the process of holding
their government to account for its actions. In addition, I strongly
believe that genuine transparency on behalf of the companies, together
with a real focus on this issue from the international community would
be a major help to the IMF in its efforts through the SMP and any
subsequent agreements.
Thank you for your time and consideration.
Senator Feingold. I thank you, Mr. Taylor, and I think it
is very appropriate to focus on Angola. If it is not Exhibit A,
it is Exhibit B in terms of this concern. The first country I
ever visited in Africa was Angola in 1994, and I was appalled,
but what really appalled me is to return there in December 1999
and to see that--
Mr. Taylor. It is unbelievable.
Senator Feingold. Unbelievably to me, things seemed worse.
Mr. Taylor. They are.
Senator Feingold. And I think it was helpful to hear that.
Mr. Taylor. Thank you.
Senator Feingold. Let me now turn to Ms. Aileen Marshall,
the senior advisor of the Global Coalition for Africa.
STATEMENT OF MS. AILEEN MARSHALL, SENIOR ADVISOR, GLOBAL
COALITION FOR AFRICA, WASHINGTON, D.C.
Ms. Marshall. Thank you very much, Mr. Senator, and thank
you very much for scheduling this meeting and allowing me to
come and join you in this discussion. In the interests of time,
I am going to try to make abbreviated comments.
Both African countries and the international community
should be concerned about corruption, because a peaceful and
prosperous Africa is to the benefit of us all, and to the
extent that corruption threatens stability and economic
progress, it impedes the development of the continent. And lack
of development will mean that African countries, instead of
becoming real partners in an increasingly integrated global
economy, will remain marginalized and dependent on development
assistance.
Others have already indicated some of the consequences of
corruption, but I think it is very important to note that
efforts to reduce poverty and improve the well-being of African
populations simply will not be successful unless corruption is
addressed. But it is not only the direct negative effects of
corruption which are cause for concern, but corruption can also
lead to or worsen other problems, including crime and conflict,
which have also been mentioned.
Because of the poverty and the weakness of their
institutions, African countries are particularly susceptible to
the activities of organized crime syndicates, be it Colombian
drug cartels or the Russian mafia, and while international
crime is increasingly sophisticated and well- financed, most
African countries lack either the resources or the capacity or
the technology to combat it.
It has already been mentioned that in countries like Sierra
Leone, Congo, Angola, corruption has helped to fuel and
perpetuate conflict. There can obviously be no development or
progress where there is conflict, and war has devastated some
of the potentially richest countries on the continent.
But there have been tremendous changes in Africa over the
past few years as far as corruption is concerned, as other
people have mentioned. Whereas once it was regarded as taboo,
it is now openly discussed. Throughout the continent, the
economic and social costs of corruption are being recognized,
and people are speaking out against it.
The press is uncovering and reporting corrupt business
deals. Questions are being asked in parliaments. A multiplicity
of civil society organizations dealing with corruption have
been created. In some cases, ministers and senior civil
servants have been censured or dismissed because of corrupt
practices. All of this would have been unthinkable just a few
years ago.
A good many African Governments are making a genuine effort
to counter corruption, and some lessons have been learned. I
think chief among these is that corruption in Africa, like
elsewhere, is a complex problem that requires a variety of
actions to be undertaken and political will is a fundamental
necessity. And that political will has to be encouraged.
It has also become clear that purely legal solutions are of
limited effectiveness, as we mentioned, and that Government
actions alone are insufficient. Effective coalitions between
Governments, civil society, and the private sector are needed,
and anticorruption efforts must have some demonstrable impact
if public confidence is to be sustained.
The primary responsibility for addressing corruption
obviously lies with individual countries, but collaboration and
cooperation between and among countries is also important. Mr.
Senator, you yourself mentioned the principles to combat
corruption, which Mr. Schneidman also mentioned, and progress
in implementing these principles will be discussed at the
forthcoming GCA policy forum in Abuja in October, where other
countries will also be invited to adopt them. Some countries,
including Nigeria, have already expressed an interest in doing
so.
We in the GCA are very grateful for the assistance the
United States Government has provided to this initiative of
developing principles and possibly an anticorruption
convention. All of the African countries involved were very
much encouraged by the active interest and support of both the
State Department and USAID.
As other speakers have indicated, the United States is
already supporting African efforts to address corruption, and
over the long term this assistance will make a difference. I
think specific support for reforms in public procurement,
taxation, and customs could be very useful. These are areas
identified by most African countries as major sources of
corruption.
This sort of assistance is obviously important and should
be continued, but another type of support is also needed, and
that is the moral encouragement to those forces within African
countries which are committed to fighting corruption. I think
the U.S. should take a public stance against corruption and
ensure it is part of its policy dialogue with African
Governments. The United States should also actively encourage
the continuation of political and economic reform. Corruption
cannot thrive in open, competitive societies, where there are
multiple power bases.
Support for African anticorruption initiatives is
necessary, but we also have to recognize that corruption in
African countries is not merely a domestic issue, and I would
just like very briefly to suggest some areas where
international cooperation is needed.
Forceful action is obviously needed to sever the links
between organized crime, corruption, and other activities such
as drug trafficking. Corruption and conflict, as has already
been noted, converge in the arms and diamond industries, and
much greater transparency and accountability is essential. But
sustained progress on issues such as these is beyond the
control of individual countries and demands international
collaboration. International business transactions that are a
source of corrupt practices also require attention, and the
private sector really has got to become a partner in the fight
against corruption.
Action at the global level is also needed with regard to
money laundering. The United States has taken a leadership role
in promoting changes within the international banking system,
but current provisions need to be strengthened and expanded,
and individual banks must be required to exercise due diligence
and fully comply with regulations.
It is important that OECD countries ratify and implement
the provisions of the recent anticorruption convention, but
pressure should also be brought to bear on countries in Asia
and the former Soviet Union to increase their vigilance with
regard to corruption in Africa. To the extent that individuals
and companies based in these countries engage in corrupt
practices in their dealings with Africa, the anticorruption
efforts put in place by individual African countries will be
undermined.
Mr. Senator, to conclude, combatting corruption in African
countries is not easy, and there are no quick fixes. It
requires political will and constant effort. It also requires
the encouragement and support of the international community.
To date, the United States has actively provided this
encouragement and support, and we in the GCA hope that it will
continue to do so. We also hope that the United States will
work to promote greater international collaboration and action
to counter corruption.
Once again, thank you very much for allowing me to join
you.
[The prepared statement of Ms. Marshall follows:]
Prepared Statement of Aileen Marshall
Mr. Chairman, members of the Subcommittee, I appreciate the
opportunity to appear before you today to discuss anti-corruption
efforts and African economic development. I congratulate you on
scheduling this session and for devoting time to an issue that is of
concern to Africans and friends of Africa alike.
Before commenting specifically on anti-corruption initiatives I
would like to emphasize that corruption is no worse in Africa than in
other parts of the world. Nor is the situation the same throughout the
continent. While at one extreme there is a country like the former
Zaire where wholesale corruption threatened the political and social
fabric of society, there is also the example of Botswana, noted for its
record of sound governance and lack of corruption. However, African
countries simply cannot bear the costs of corruption, which, left
unaddressed, threatens to undermine the very real gains that many
countries have made in recent years as a result of political and
economic reforms. It is for these reasons that combating corruption has
become a development imperative for the continent.
CORRUPTION IN AFRICA
Both African countries and the international community should be
concerned about corruption because a peaceful and prosperous Africa is
to the benefit of us all. To the extent that corruption threatens
stability and economic progress, it is an impediment to the development
of the continent. And lack of development will mean that African
countries, instead of becoming real partners in an increasingly
integrated global economy, will remain marginalized and dependent on
development assistance.
Corruption in Africa, as elsewhere, damages the political, social,
and economic systems of countries. It erodes the legitimacy of
governments, undermines the effective functioning of institutions,
slows economic progress, impedes the development of the private sector,
and limits the ability of people to get ahead as a result of their own
endeavors. Moreover, efforts to reduce poverty and improve the
wellbeing of African populations will not be successful unless
corruption is addressed.
But it is not only the direct negative effects of corruption that
are cause for concern. Corruption can also lead to, or worsen, other
problems. I would just like to mention two--crime and conflict.
Entrenched corruption undermines law and order, and thus facilitates a
rise in criminal activity. Because of their poverty and the weakness of
their institutions, African countries are particularly susceptible to
the activities of organized crime syndicates, be it Colombian drug
cartels or the Russian mafia. And while international crime is
increasingly sophisticated and well financed, most African countries
lack the capacity and technology to effectively combat it.
In countries like Sierra Leone, the Democratic Republic of Congo,
and Angola, corruption has also helped to fuel and perpetuate conflict.
There can obviously be no development or progress where there is
conflict, and war has devastated some of the potentially richest
countries on the continent. Although the burden has to be borne
principally by the countries themselves, conflict in Africa has also
imposed a cost on the international community. Resources that could
otherwise have been devoted to development have been diverted to
providing emergency assistance, peacekeeping, and post-conflict
reconstruction.
In short, Mr. Chairman, combating corruption is essential for the
economic development and political progress of the continent. Most
African countries are in transition--from authoritarianism to
multiparty democracy, and from command to market-based economies. They
are societies in flux, where one set of norms has broken down, but
another has not yet been fully institutionalized. They need the
assistance and support of the international community to sustain the
process of transition, and to ensure that the opportunities it provides
are acted upon.
AFRICAN ANTI-CORRUPTION INITIATIVES
There have been tremendous changes in Africa over the past few
years as far as corruption is concerned. Whereas once it was regarded
as taboo, it is now openly discussed. Throughout the continent, the
economic and social costs of corruption are being recognized, and
people are speaking out against it. The press is uncovering and
reporting corrupt business deals. Questions are being asked in
parliaments. A multiplicity of civil society organizations dealing with
corruption have been created. In some countries, national anti-
corruption coalitions have been formed, corruption diagnostic surveys
undertaken, and anti-corruption action plans formulated. In some cases
also, ministers and senior civil servants have been censured or
dismissed because of corrupt practices, and there has been a marked
increase in the number of corruption cases brought before the courts.
All these would have been unthinkable only a few years ago.
There are obviously some governments that are not at all interested
in seriously combating corruption. But there are also a good many that
are making a genuine effort. Most of them have adopted a combination of
legislation, public awareness and investigation. Several have
established specialized anti-corruption agencies. Although these
efforts are relatively recent, some lessons have been learned. Chief
among these is that corruption in African countries--like elsewhere--is
a complex problem that requires a variety of actions to be taken, and
that combating corruption takes time and sustained effort. It is also
evident that political will is a fundamental necessity, and needs to be
encouraged in most countries.
It has become clear that purely legal solutions are of limited
effectiveness, particularly in countries where the independence of the
judiciary is not yet fully established and where legal institutions are
weak. Similarly, specific anti-corruption bodies can be useful, but
they need to have sufficient independence, resources and authority to
successfully perform their functions. It is increasingly recognized
that government actions alone are insufficient, and that effective
coalitions between governments, civil society and the private sector
are needed. It is also important that anti-corruption efforts have a
demonstrable impact, if public confidence is to be sustained.
The primary responsibility for addressing corruption obviously lies
with individual countries. But collaboration and cooperation between
and among countries is also important. In February 1999, eleven African
countries--Benin, Botswana, Ethiopia, Ghana, Malawi, Mali, Mozambique,
Senegal, South Africa, Tanzania, and Uganda--met under the auspices of
the GCA and agreed to adopt a set of Principles to combat corruption.
The Principles are intended to support the efforts of individual
countries. But if implemented by sufficient countries, they could also
form the basis of a regional anti-corruption convention, similar to
that adopted by the OAS.
We in the GCA are grateful for the assistance the United States
Government has provided to this initiative. All of the African
countries involved in the process were very much encouraged by the
active interest and support of both the State Department and USAID.
Progress in implementing the Principles will be discussed at the
forthcoming GCA Policy Forum in Abuja, in October 2000, where other
countries will also be invited to adopt them. Some, including Nigeria,
have already expressed an interest in doing so.
proactive measures to support african anti-corruption initiatives
The United States is already supporting African efforts to address
corruption, as other speakers have indicated. Over the long-term, the
assistance of USAID and other development partners to strengthen
institutions of state and civil society, streamline government
procedures and build effective legal systems will make a difference.
Specific support for reforms in public procurement, taxation, and
customs could also be very useful, as these are areas identified by
most African countries as major sources of corruption.
Mr. Chairman, the sort of assistance that is already being provided
is obviously important and should be continued, or even expanded. But
another type of support is also needed. This is the moral encouragement
to those forces within African countries that are committed to fighting
corruption. The United States and other donor governments and agencies
should take a public stance against corruption and ensure that it is
part of their policy dialogue with African governments. They should
also actively encourage the continuation of political and economic
reforms. Corruption cannot thrive in open societies and competitive
economies where there are multiple centers of power.
Support for African anti-corruption initiatives is necessary, but
we also have to recognize that corruption in African countries is not
merely a domestic issue, and that measures are required at the
international level. Forceful action is needed to sever the links
between organized crime, corruption and other activities such as drug
trafficking. Corruption and conflict in Africa converge in arms and
diamond trading, and much greater transparency and accountability is
essential in both industries. Sustained progress on issues such as
these is beyond the control of individual countries, and demands
international collaboration.
International business transactions that are a source of corrupt
practices also require attention. Major investment in Africa is largely
concentrated in a few countries with substantial mineral or oil
deposits. These are countries where corruption presents a significant
problem. But less visible business transactions in other countries can
also encourage corruption. The private sector has to become a partner
in the fight against corruption. Companies should be encouraged to
exercise good corporate governance and promote transparency in their
interactions with governments and individual officials.
Action at the global level is also needed with regard to the
illicit transfer of funds to western financial institutions. The United
States has taken a leadership role in promoting changes within the
international banking system to help prevent money laundering. But
current provisions need to be strengthened and expanded, and individual
banks must be required to exercise due diligence and fully comply with
international regulations. Pressure could also be brought to bear on
financial institutions for the effective and timely recovery of funds
found to have been obtained as a result of corruption.
It is important that OECD countries ratify and forcefully implement
the provisions of the Convention on Combating the Bribery of Foreign
Public Officials in International Business Transactions. At the same
time, sanctions such as blacklisting of companies that engage in
corrupt practices could be an effective deterrent, provided they are
enforced by sufficient countries. But pressure should also be brought
to bear on countries in Asia and the former Soviet Union to increase
their vigilance with regard to corruption in Africa. To the extent that
individuals and companies based in these countries engage in corrupt
practices in their dealings with Africa, the anti-corruption efforts
put in place by individual African countries will be undermined.
To conclude, combating corruption in African countries is not easy
and there are no quick fixes. It requires political will and constant
effort. It also requires the encouragement and support of the
international community. To date, the United States has actively
provided this encouragement and support, and we in the GCA hope that it
will continue to do so. We also hope that the United States will work
to promote greater international collaboration and action to counter
corruption.
Mr. Chairman, once again I congratulate you on raising this
important issue, and thank you for allowing me to contribute to your
deliberations.
Senator Feingold. Thank you very much, Ms. Marshall, and
finally, we will turn to Mr. Miguel Schloss, the executive
director of Transparency International. Mr. Schloss.
STATEMENT OF MR. MIGUEL SCHLOSS, EXECUTIVE DIRECTOR,
TRANSPARENCY INTERNATIONAL, WASHINGTON, D.C.
Mr. Schloss. Thank you very much, Mr. Chairman. First and
foremost, I want to thank you and compliment the chairman of
the subcommittee for calling this roundtable. In a way, having
an international civil society NGO testify in the U.S. Congress
is emblematic of how far this world is globalizing, how small
it is becoming and, very importantly, the open and important
role that this very country can play in the destiny of entire
continents like Africa.
I am not going to go fully through my statement. I will
leave it here on the record. It also will have an attachment of
a brief report which we have prepared in the context of a very
valuable grant we have received from USAID on activities we
have undertaken in Africa in selected countries. Nor am I going
to repeat any of the very well-made points, in fact, very
articulately, by those who spoke before me.
I would like to address four questions, if I may. First,
why Africa, second, then what should be done, thirdly, why now,
and finally, what next?
Why Africa? Africa has enormous unexploited and unexplored
potential in resources, in processing and manufacturing, and
considerable growth potential. The continent has barely tapped
the potential of its people and, in Transparency International,
we have no question whatsoever that with sage policies,
adequate human and financial resources, improved delivery of
technical assistance, and market access, the continent can
unlock its potential, no question whatsoever. But, very
important, giving people a stake in this development can help
reduce regional conflicts that one day could spill over beyond
this region's confines.
I do not need to go into why Africa finds itself in the
current state of economic development. Many of the points have
already been made on the underinvestment that has taken place
in the human and physical infrastructure, the policy context,
but I would like to stress one point, just to bring somewhat of
a different angle to what has been said in some ways by those
who spoke before me. Perhaps more fundamentally, the
marginalization, both locally and internationally, of Africa is
one of the causes of the problems which has resulted in
assistance programs to Governments that oftentimes hardly
represented the people they were supposed to serve.
All this has resulted in programs for which there has been
weak demand, fledgling civil society organizations that have
had limited possibilities to demand transparent and accountable
administrations, the buildup of vested interest that used
public office for private benefit, and the consequent debt
overhang and high levels of corruption. According to our index,
year after year the continent ranks last in our corruption
perception index. I do not need to go into the economic
consequences of it. They have been stated very clearly by those
who spoke before me.
Then, what should be done? Of course, as you yourself
pointed out, the whole continent is not engulfed in these types
of problems. There are countries, like Mauritius, Botswana,
Namibia, have done quite well and are developing at an
astonishing pace. I would say Mauritius is becoming a Singapore
very rapidly. Despite quotas in textiles and so on, they find a
way. By the same token, countries like Nigeria are at present
making a credible effort to redress the policy environment and
deal with the corroding scourge of corruption.
What should be learned from these experiences? First,
development has to come from within, and foreign and post
conditionality is more often than not a poor substitute for
efforts that have to be home-grown from both leadership of the
country and its people.
Second, under the wrong conditions, foreign assistance can
in fact bankroll misguided Governments, and there are times
where very hard decisions and wrenching judgments have to be
made between continuing such assistance, at the risk of
perpetrating inefficient or ineffective or corrupt
administration, or walking away to facilitate the creation of
conditions within the countries themselves for more fundamental
reforms. Of course, one has to always keep a minimum basic
support for institutional reforms so that when that moment
comes, the countries are ready to deal with the problems that
they have.
What I am trying to say is that, all in all, much greater
attention is needed on buildup of civil society, supporting it,
buildup of oversight mechanisms with proper civil society
representation, including independent legislatures and, I must
say, it will be very good for the U.S. Congress and Senate to
have regular exchanges with their counterparts in the countries
concerned, a free press, access to information, enhanced
financial management, auditing, and disclosure practices. As
the old proverb states, the Sun is the best disinfectant.
And last but not least, remove the incentives for
corruption, particularly those coming from unchecked and
unwarranted discretionary powers of public officials,
monopolistic practices, either public or private, and measures
of this type.
In sum, Africa can develop. It can do it with economic
policies that have proven successful in other parts of the
world, but the reform agenda must also deal with the resource
allocation arrangements through greater empowerment of civil
society, shifting the decisionmaking and monitoring authority
so that the intended beneficiaries which hitherto have tended
to be excluded can take proper role in holding accountable
their authorities for results.
No amount of technocratic solutions, or no amount of money
can substitute for a society that demands what it needs. Above
all, leveling the playing field for civil society will be a key
ingredient to combat the pervasive and wasteful effects of
corruption.
Why now? I think we have two very big factors why it should
be done now. One, with the cold war behind us, Africa no longer
has to be one of the ideological battlegrounds where so-called
strategic allies receive foreign assistance regardless of their
record of governance or economic performance.
Second, similarly, with the OECD convention to combat
bribery of foreign officials, the supply side of corruption can
also be tackled by capital-providing countries. On both counts,
however, serious efforts are needed to move from words to
deeds, but the basic conditions are in place to do so.
At Transparency International, we do our share, and we have
the various programs throughout the continent that are aimed at
putting and supporting the buildup of civil society, adapting
approaches that exist elsewhere to the local institutional and
cultural conditions based on home-grown strategies among the
people themselves.
We have a major program starting now in Francophone Africa.
We are supporting very heavily Governments that want to move
forward like Nigeria, and so on. In time, we would hope that
this should set the foundation for a stronger, locally grounded
TI presence in the continent, and the basis for a better-
focused assistance as well.
What next, and here I sum up the three final points. We
would like to encourage the donor community, and that includes
the United States, first to mainstream and raise the issue of
corruption higher on the policy agenda dialogues with the
countries in all the things that are done, foreign assistance,
trade, et cetera. This is not something like a ghetto that you
can treat on its own, but you have to deal with it across the
board.
Second, bring to the forefront, to the development of civil
society and its representative organizations to bring about
accountable administration. There is nothing--and you should
know this better than I--that helps more than having a review
of what authorities do so that we see that they are being
checked. We have done a number of experiments in other
continents that show clearly that when such monitoring exists
the performance changes very significantly, and measurably.
And last but not least, be more selective in supporting
countries. Do not help those that cannot help themselves, and
be more responsive, conversely, to those who address these
issues. These issues, which are at the core of nation-
building, as several of my colleagues have said over here, are
not simple. If they were, we would not be talking about them
today.
Thank you very much.
[The prepared statement of Mr. Schloss follows:]
Prepared Statement of Miguel Schloss
I want to thank and compliment the Chairman of this subcommittee
for calling this hearing. In a way, having an international civil
society NGO testify in the U.S. Congress is emblematic of how far
globalization has come, and the open and important role this country
can play in the destiny of entire continents like Africa.
I am an Executive Director of Transparency International (TI), an
NGO formed in 1993 to combat corruption around the world. TI's
headquarters are in Berlin, Germany, and we now have a network of
national chapters in over 75 countries, including in 20 Africa. I have
attached to my written statement a report on TI activities in Africa,
which are supported by a grant from USAID. I would like to take this
opportunity to thank USAID for its support to Transparency
International and other civil society organizations.
WHY AFRICA?
Africa has enormous unexploited and unexplored potential--in
resources and in processing and manufacturing--and considerable growth
potential. The continent has barely tapped the potential of its people,
and with sage policies, adequate human and financial resources,
improved delivery of technical assistance and market access, the
continent can unlock this potential. Giving people a stake in this
development can help reduce regional conflicts that one day could spill
over beyond this region's confines.
But developing the region requires an understanding of where it
stands at present. It will come as no surprise to this subcommittee
that the region has:
The greatest backlog of under investment in human and
physical infrastructure;
A large, though in some cases diminishing, burden of policy
distortions, including oversized and oftentimes unmanageable
public sectors, which have tended to ``crowd out'' private
initiative; and
But, perhaps more fundamentally, the marginalization both
locally and internationally of Africans, resulting from
assistance programs to governments that oftentimes hardly
represented the people they were supposed to serve.
All this has resulted in public programs for which there has been
weak demand, fledgling civil society organizations that have had
limited possibilities to demand transparent and accountable
administrations, the build-up of vested interests that used public
office for private benefit, and the consequent debt overhang and high
levels of corruption (the highest of all continents according to TI's
Corruption Perception Index).
I do not need to stress to this subcommittee the pernicious effects
of corruption. Suffice it to say that survey after survey, the evidence
shows that corruption increases the cost of public works, and reduces
the level of public services, maintenance expenditures and surpluses to
invest in social services--all the key ingredients of long term and
sustained economic growth. Not surprisingly, Africa is beset by
economic problems, and whatever progress one can observe is fragile and
halting.
THEN, WHAT SHOULD BE DONE?
It would be wrong to assume that the whole continent is engulfed in
these types of problems. There are countries, like Mauritius and
Botswana that have done quite well, and are developing at an
astonishing pace. By the same token, countries like Nigeria are at
present making a credible effort to redress the policy environment, and
deal with the corroding scourge of corruption. What should be learned
from these experiences is that:
Development has to come from within, and foreign imposed
conditionality is, more often than not, a poor substitute for
efforts that have to be home grown, from both the leadership of
the countries and its people; and
Under the wrong conditions, foreign assistance can in fact
bankroll misguided governments, and there are times where hard
and wrenching judgments have to be made between continuing such
assistance at the risk of perpetuating corrupt or ineffective
administrations, or walking away to facilitate the creation of
conditions within the countries themselves for more fundamental
reforms. Minimum support may of course be needed on a sustained
basis, to assist in developing basic institutional reforms, in
preparation for the times when more fundamental reforms become
feasible.
On both counts, what is clear is that Africa can develop, but that
much greater attention is needed in supporting civil society
organizations, such as those that have helped this country to prosper
and flourish--i.e. professional organizations, chambers of commerce,
NGOs, to help shape and articulate opinion, build alliances, provide
technology, and monitor public administrations.
By the same token, much greater attention is needed on build up of
oversight mechanisms, with proper civil society representation--i.e.
independent legislatures, ombudsmen's offices, a free press, access to
information, enhanced financial management, auditing and disclosure
practices. As the old proverb states: ``the sun is the best
disinfectant.''And last, but not least, remove incentives for
corruption, particularly unchecked or unwarranted discretionary powers
of public officials, monopolistic practices, either public or private,
and the like.
In sum, Africa can develop. It can do so with economic policies
that have proven successful in other parts of the world. But the reform
agenda must also deal with resource allocation arrangements through
greater empowerment of civil society and assignment of
responsibilities--shifting the decision-making and monitoring authority
so that intended beneficiaries, which hitherto have tended to be
excluded can take a proper role in holding authorities accountable for
results. No amount of technocratic solutions can substitute for a
society that demands what it needs.
Above all, leveling the playing field for civil society will be a
key ingredient to combat the pervasive and wasteful effects of
corruption.
WHY NOW?
With the Cold War behind us, Africa no longer has to be one of the
ideological battlegrounds where ``strategic allies'' receive foreign
assistance, regardless of their record of governance or economic
performance.
Similarly, with the OECD Convention to Combat Bribery of Foreign
Officials, the supply side of corruption can also be tackled by capital
providing countries.
On both counts serious efforts are needed to move from words to
deeds, but the basic conditions are in place to do so.
We, in Transparency International will do our share in the
continent--as we are doing elsewhere. As our presence is particularly
weak in Francophone Africa, we have just started a major effort to link
National Chapters and contacts with various professional and other
associations to adapt and tailor best practices and tools from other
continents into the institutional and cultural context of this region.
Similarly, in Anglophone Africa, greater efforts are being focused
on awareness raising and, in the case of Nigeria, on the adoption of
codes of conduct and other practices adapted from other parts of the
world to create a more responsive and effective government.
In time, we would hope, this should set the foundation for a
stronger, locally grounded TI presence in the continent, and the basis
for better-focused assistance to Africa.
WHAT NEXT?
To sum up, we would like to encourage all donors to:
bring to the forefront the development of civil society and
its representative organizations, to bring about accountable
administrations; and
be more selective in supporting countries and more
responsive to those who address these issues.
These issues, which are at the core of nation building, are not
simple. If they were, we would not be talking about them today.
Additional Material Submitted by Mr. Schloss
special integrity improvement program (sip)
usaid grant # aep-5466-g-00-5028-00
progress report
december 1999
BENEN
1. Achievements to date:
As planned and as previously reported, members of TI-Benin co-
organized and actively participated in a Forum for the Mobilization of
Civil Society Against Corruption in 1998.
The main priority of the Chapter in the period has been to
strengthen its institutional capacity in order to function effectively
as a competent and operational organization. In 1999, with the
assistance of a grant of $100,000 from USAID, Benin, the Chapter was
able to set up an office with a staff of four and adequate equipment.
Two members of the chapter were trained in the meetings on developing
integrated country strategies organized by the World Bank Institute.
Two other members of the chapter participated in the TI-S organized
capacity-building workshop in Accra, Ghana in May 1999. TI-Benin also
finalized a detailed plan of action and budget for the period 1998-
2000, with a major focus on awareness raising and advocacy activities.
As part of this strategy, the Chapter conducted an anti-corruption
awareness-raising campaign during the parliamentary elections in March
1999. This included televised sketches, radio and television ads, comic
strips in local newspapers and a poster campaign. Members of TI-Benin
also participated and facilitated various anti-corruption workshops in
Benin, Ghana, Mali. A TI-Benin member was a panelist in the workshop on
Corruption and the environment at the 9th IACC.
The main achievement in the period has been the Chapter's active
involvement in the extensive consultation process that took place to
review existing legislation on public procurements. From early 1999,
members of the Chapter participated with government representatives in
a committee whose work led to the adoption by the government in June,
1999 of a decree introducing a code of ethics for public procurement
that integrates a comprehensive integrity pact into the existing
legislation.
2. Targeted Achievements for 2000:
Continue to strengthen the capacity of the Chapter through
training, elaboration of a manual of procedures, etc.;
Develop and implement a media strategy including production
of TV spots, organization of a seminar on investigative
journalism, production of a play on corruption;
Conduct various awareness activities such as publication,
translation into 4 national languages and dissemination of a
volume of anti-corruption texts, organization of a national
anti-corruption day, implementation of an awareness program in
schools, organization of a competition on the fight against
corruption, publication of a trimestrial bulletin, etc.; and
Collaborate with the government anti-corruption office and
lobby for implementation of the recommendations of the anti-
corruption office, promote respect for the GCA principles,
contribute to the Commission on the misappropriation of public
funds.
Participate in conducting a survey on corruption in the
country.
GHANA
1. Achievements to date:
As described in the previous TI-S report to USAID in early 1999,
TI-S supported in 1998 the work of an influential group of Ghanaians
who prepared a National Integrity Workshop which took place 20-21
October, 1998. That workshop produced an action plan which included the
strengthening of networking and collaboration among civil society
organizations in Ghana as one of its objectives.
A core group of key stakeholders began to meet after the National
Integrity Workshop to discuss next steps in setting up a anti-
corruption coalition. The Centre for Democracy and Development (COD),
headed by one of the group's convenors, E. Gyimah-Boadi, served as
secretariat for the organizing committee. The process of setting up
formal structures was delayed by other demands on the time of important
members. E. Gyimah-Boadi, for example, is much in demand as a
consultant on issues relating to governance in Africa (e.g. to the
African Development Bank) and as a contributor to fora such as the
World Bank meetings on integrated country strategies. Emile Short,
Commissioner for Human Rights and Administrative Justice, another
convenor of the group has extensive demands on his time both in his
function as Commissioner and as a participant in international
discussions on governance issues.
The formation of the group was also slowed down by efforts to
arrange with an earlier TI contact that he withdraw his registration of
the Transparency International name in Ghana. Nonetheless, the
organizational work has now sufficiently progressed that the group In
Ghana has launched their organization, to be called the Ghana Integrity
Initiative (GII), on 6 December 1999. The launch was the occasion for a
public meeting, which highlighted the corruption problem in Ghana and
initiatives to combat it; Mr. Emile Short is Interim Chair. DANIDA-
Ghana has funded the launch.
Yaw Asamoa, a lawyer, is interim General Secretary operating from
the CDD and probably will continue to function as paid executive after
the Chapter is launched. Members of the GII have also been engaged in
several anti-corruption activities during 1999. In May 1999, several
members of the group attended a TI-S-organized capacity building
workshop hosted in Accra by the Centre for Democracy and Development.
Four members of the group made important contributions as speakers at
the 9th International Anti-Corruption Conference in Durban, South
Africa, 10-15 October. 1999 and the group also Sent a representative to
the TI Annual General Meeting prior to the Conference.
Recently, in November, members of the group were involved in the
organization of an anti-corruption demonstration in Accra.
2. Targeted Achievements for 2000:
The launch will unveil the GII strategy, which will focus on
public awareness-raising; and
The General Secretary will continue to work from CDD for the
foreseeable future.
MOZAMBIQUE
The Context
Mozambique is a difficult, yet successful case of transformation
and nation building. Coming out from independence and a bloody civil
war, the country has demobilized and disarmed some 80,000 troops, and
is at present going through the long road towards democratization,
stabilization, and economic adjustment.
After flirting with Marxist policies, the government had in 1994
multiparty elections and initiated rapid liberalization. As a result,
the Mozambicans seem to have got a hold of their affairs, and
succeeding in generating high rate economic growth rates, with rapidly
declining inflation for the past two years. Not surprisingly, though,
the country is heavily dependent on external assistance--financially,
institutionally, and in every other respect.
There is hardly any tradition, let alone institutions or sufficient
numbers of people who could easily manage the many initiatives and
advice that is being showered on the country. The obverse of this is
that the country is falling prey to massive corruption--from issues of
land distribution to the absence of a professional judicial system. It
is only a question of time that the environment in civil society, will
be such that conditions will be ripe for building up a coalition
against corruption. Such moment has not yet arrived, but as soon as it
does, a proper coalition could be formed and supported.
1. Achievements to date:
A TI-mission visited the country in March 1999, contacts have been
established with both members of the government and representatives of
civil society. This two-fold approach seems to be of crucial
importance, since there still appears to exist a widespread ambivalence
of talking on the issue openly, organizing civil society or taking more
forthright actions, for fear of government cooption of such movement,
reprisals, and the like, In that sense the fact that TI was engaging
the Administration in discussions on anti-corruption efforts, including
the formation of a civil society group to address the issue, is giving
legitimacy to the latter. This has been instrumental in the formation
of an informal ``founding group'' of four people, headed by the former
Chairman of the first Election Commission and currently Chancellor of
Mozambique's Eduardo Mondlane University. The group has agreed that, in
light of the Government's preparedness to cautiously accept a civil
society group in this field, and their concerns with growing corruption
in the country, they would help work towards the establishment of a
wider group that may in time develop into a Chapter.
2. Targeted Achievements for 2000:
Working in Mozambique is the equivalent of ``starting from the
scratch,'' which is why the whole process will require considerable
time, support and follow up. At this stage the founding group is still
at the very beginning of a process of defining future programmes and
bringing in other people. Once the group is more openly formed, even in
a fledgling fashion, the stage will be set for a more engaged civil
society input into the subject, and thus the carrying out of more
active work in the field.
______
ATTACHMENT I
BENIN
Civil Society
Civil society is organizing itself slowly and steadily on key
issues such as election monitoring. The active civil society groups
include religious, business and professional organizations, and youth
groups.
In September 1997, a group of civil society organizations met to
establish the basis for greater collaboration in combating corruption.
They included Transparency International-Benin, Nouvelle Ethique (New
Ethics), l'Association des Femmes Juristes du Benin (Association of
Women Jurists of Benin), Association de lutte contre le racisme,
l'ethnocentrisme, le regionalisme (ALCRER--Asssociation for the fight
against racism, enthocentricity and regionalism), le Centre Africa-
Ogbota (CAO), and l'Association ``Franchir le Cap.'' These
organizations initiated, in collaboration with the President's Office
for the Moralization of Public Life (Cellule de la Moralisation de la
Vie Publique), the preparation of the National Forum for the
Mobilization of Civil Society Against Corruption (FONAC), which took
place on 26-28 March 1998. This Forum brought together some 240
participants representing about 70 civil society organizations and
about 50 government representatives. Through working groups focusing on
different themes, the Forum developed an action plan for combating
corruption in Benin, and formulated the framework for an umbrella anti-
corruption organization. At subsequent meetings, an organization was
established with TI-Benin member, Maximillien Sossour-Gloh, as
president. According to information received by us, this organization
is considered to be under the control of the government. A rival
organization has now been established by TI-Benin member Lucien Agbota,
founder of Nouvelle Ethique, and a group of businessmen called Savoir-
Agir. Agbota is believed to have political ambitions.
Two socio-economic factors appear to limit the ability to mobilize
civil society in Beam, which is one of the poorest countries in the
world. The first is the high level of illiteracy. Among the 5 million
population, the rate of literacy is 26 percent, with only 16 percent of
the women being literate. While the small, better educated, elitist
Francophone population in the cities, especially Cotonou, is served by
a press that is articulate, relatively free, and occasionally
irresponsible, the majority of the population is less well served by
radio which is generally state-controlled and often not in their native
language. The second is that traditional hierarchal structures are
interwoven with the modern state. In the villages, the local patronage
system means that rural people do not have a habit of questioning their
superiors and often do not identify with structures beyond the local
level. Under the system, as it has developed, the ``clients'' have no
automatic claim to state services but must secure them by payment.
Anti-Corruption Activists
TI-Benin is a small (about 12-15 members) group of respected
individuals from different segments of society. The President is the
highly regarded Archbishop of Cotonou, who played a prominent role in
the transition to democracy in 1990. It also includes three prominent
lawyers, including a former Minister, a sociologist, a cardiologist, a
prominent journalist, a businessman, a government employee and
representatives of a number of NGOs including GERRDES and Nouvelle
Ethique. The group is very cautious about expanding, given the danger
of attracting the wrong sort of people.
TI-Benin has a reasonably good working relationship with the
Government. The President of TI-Benin, the Archbishop of Cotonou, has
some access arid influence due to his Stature and to the fact that in
his personal capacity he supported the election campaign of the current
President Kerekou. The President established the ``Cellule'' (see
above), and has expressed a wish for more action by TI-Benin. At the
international level, TI-Chairman Peter Eigen was a member of a mission
to Benin in September 1997 which was received by President Kerekou and
which introduced to him the TI Integrity Pact concept for government
procurement which the President subsequently endorsed for procurement
in Benin. In January 1999, a team of TI Senior Advisers visited Benin
to assist the government with the implementation of the Integrity Pact.
Political Will
In June 1998, prior to a change in the composition of the
government, the declared political commitment of the President to fight
corruption was seriously questioned by many. While the President
himself was credited with wishing to see some change, the question was
posed why he surrounded himself with corrupt Ministers. How much the
situation has now changed remains to be seen, but the Industries
Minister M. Pierre John Igue is said by some to be a potential ally in
the fight against corruption, while the woman heading the Ports and
Customs from early 1998 is also said to have a commitment to cleaning
up the massive corruption within her domain.
The donor community is exerting heavy pressure for progress in
combating corruption. For example, the World Bank, USAID and UNDP are
supporting anti-corruption programs, and meet regularly under the
chairmanship of the Swiss to discuss governance issues. USAID has given
support to the Chamber of Audit (an audit body) and to the Office of
the Inspector General in the Ministry of Finance, while the World Bank
is supporting administrative reform and the strengthening of the
Cellule de la Moralisation de la Vie Publique.
Nature of Corruption
Corruption in Benin is said to be so pervasive as to have become a
socially accepted norm, There is said to be considerable social
pressure on members of the civil service to engage in corruption.
Corruption includes both the high level and petty varieties. Some of
the areas most affected are the port and customs services, but other
areas of activity involving government expenditures and government
licensing and policing are involved, as well as the judiciary.
Previous Anti-Corruption Activities
Combating corruption has been on the political agenda in Benin
since the movement for democratization in 1990. It has been addressed
in a number of national conferences on reform of the public sector and
the judiciary, and in a workshop on good governance which was held as
part of the National Economic Conference in December 1996. It was then
that President Kerekon signed a decree creating the Cellule de la
Moralisation de la Vie Publique which reports directly to the
President. The Cellule, a type of anti-corruption bureau with a
potentially broad mandate has just recently increased its two-person
staff to seven. The World Bank is providing assistance to the Cellule
to help increase its effectiveness. Another recent development is the
effort to reform the judiciary, including revival of the office of the
Inspecteur General Judiciaire. Measures have also been introduced to
revive the public accounting and auditing functions, including the
appointment of the Chambre des Comptes under the Supreme Court and the
increased staffing of the office of the Inspecteur General des
Finances. Civil service reforms are also in progress. A new Procurement
Code in the form of an Ordinance was signed by the President on 31
January, 1996. Draft decrees for its implementation have still not been
made effective, and the Code is, therefore, not in force.
The government played an important role in co-organizing the Anti-
Corruption Forum in March 1998. In the same month, a new head of the
Port of Cotonou was appointed in order to clean up the endemic
corruption there. This new appointee has convened a roundtable with
business, NGO and government representatives to discuss how to deal
with the corruption problem. However, existing anti-corruption penal
legislation and disciplinary measures for government employees not
appear to be enforced.
1997-2001 Integrity Improvement Programme
The Integrity Improvement Programme for Benin is still in the
process of development. In February 1998, we received the broad
outlines of a plan of action for 1998-2001, with an attached budget of
approximately US$200,000. It envisaged:
1. TI-Benin participation in the Forum in March 1998--DONE.
2. Awareness-raising activities, including: (a) conferences; (b)
television programmes; (c) training of TI-Benin members and others in
conducting research on sensitive sectors; (d) television ads and
banners; and (e) creation of videos or using theatre groups for
awareness-raising campaigns throughout Benin.
3. Lobbying activities:
(a) re: Parliament--to initiate new laws on
corruption, create a code of conduct, and encourage
parliamentary commissions of inquiry;
(b) re: Executive--to obtain government support for
the TI-Integrity Pact concept, to pressure for the
introduction of anti-corruption instruments, and too
make the control structures more functional;
(c) re: Judiciary--to review the question of the
reserve obligation, to persuade judges to act on
certain corruption dossiers, to institute an effective
mechanism of control of the assets of persons entering
and leaving government employment;
(d) re: Political Parties--to secure a commitment to
the use of anti-corruption instruments, including the
Integrity Pact, in their manifestos;
(e) re: All Citizens--to organize public telephone
lines to facilitate citizens recourse, and to encourage
the media to introduce programmes to enable citizens to
denounce acts of corruption.
4. Publications:
(a) dissemination of texts on the law of corruption;
(b) periodic reporting of the results of
investigations and of the activities of TI-Benin;
(c) a national anti-corruption index.
5. Institutional Support for TI-Benin, including renting
headquarters in short-term and constructing headquarters in medium-
term, and recruiting personnel.
The budget submitted by TI-Benin was heavily weighted towards
institutional support and gave little indication of estimates of
expenditure for particular projects. The TI-Secretariat's policy at the
time was not to provide institutional support, while not opposing it if
it was offered in the form of add-ons from USAID-Benin. TI-Benin,
however, indicated that its highest priority was institutional support,
followed by awareness-raising.
In March 1998, two TI-Secretariat representatives visited Benin and
met with TI-Benin and USAID-Benin to discuss the integrity improvement
programme. It was agreed that TI-Benin would prepare a document
prioritizing and detailing the proposed projects, describing their
goals, and indicating both costs and time-frames. This was not
forthcoming, and that unfortunately held up the development of a TI
programme for Benin. Meanwhile, USAID-Benin submitted its own programme
for Benin, incorporating its own add-ons to the global grant. That
proposal, sent to headquarters in April 1998, was formally submitted to
TI-S for its approval in December 1998. By then, USAID-Benin was
interested in decommissioning the money it had sent to Washington for
the add-on's, and this was agreed to by TI-S on the understanding that
the money would go directly to TI-Benin through the local USAID office.
In January 1999, TI-S transferred US$10,000 from the global grant to
TI-Benin for use during the period January-April 1999 for awareness-
raising activities. TI-Benin has been encouraged to use part of this
amount to commission a consultant to prepare the supplementary document
which has been requested by TI-S. It has also been agreed that at the
end of April 1999, TI-S would review the question of Benin's inclusion
in the USAID global programme.
The difficulties of four-way communications (USAID)/TI-S/USAID-
Benin/TI-Benin) across three continents and two languages have meant
that problems associated with TI-S's request for clarification and
elaboration have only recently been ironed out. TI-S requested more
information from TI-Benin out of a desire to be a responsible
fiduciary, but the request appears to have raised with TI-Benin
unpleasant memories of colonialism and World Bank conditionality.
USAID-Benin also apparently failed to see the need for more
information, and may have been frustrated by the resulting delay in the
disbursement of the add-on funds which they had made available.
GHANA
Civil Society
Since the return to constitutional rule (The Fourth Republic),
civil society has emerged as a major player in economic and social
fields. It is also gaining visibility in the political sphere. However,
it is subject to severe impediments. Economically, it is handicapped,
especially due to the weakness of the private and non-state sectors
from which it could secure an independent financial base, and is
therefore susceptible to governmental co-optation. Politically, it is
inhibited by a combination of governmental co-optation and repression.
The prevailing political culture inhibits anti-state and anti-hegemony
civil society activism, and compels many to adopt positions of
defensive political neutrality. Culturally, it suffers from ethnic,
regional and religious fragmentation, and sometimes considerable
parochialism. Consequently, many CSQs are not active in the civic area.
The press exhibits features of extreme irresponsibility,
immaturity, docility, and self-censorship. The state media is better
endowed and has a national reach. The independent media (with a few but
notable exceptions) is aggressive but materially and professionally
inept. Anti-corruption activity in general, and investigative
journalism in particular, are severely constrained by the active
application of criminal defamation laws and an anti-press judicial
temperament. Over 50 prosecutions against independent media editors and
publishers are now pending. Most of the complainants are government
functionaries, and the complaints relate to newspaper reports arising
out of journalistic investigations.
Anti-Corruption Activists
Identifiable activists in the anti-corruption field include the
Commission on Human Rights and Administrative Justice (Chairman: Emile
Short), which is constitutionally mandated to uphold ethics in public
l1fe and which conducted high profile investigations into allegations
of corruption against senior members of the government in 1995-1996;
the Catholic Church, which has been active in voicing opinion against
corruption. In late 1997 it issued a Pastoral Letter against the
phenomenon; in July 1998 it declared a Moral Crusade against corruption
at a Bishops Conference in Koforidua and later that month
representatives of the Catholic Church met with the Head of State to
discuss and mobilize opinion against corruption in the country; and the
Christian Council which, in collaboration with Islamic organizations,
has formed an Inter-Faith Group to work towards the elimination of
corruption. The efforts of the Catholic Church are relatively broad-
based, are cross-gender, and cross-ethnicity. However, there has so far
been only a token involvement of the Islamic community and of the
Charismatic churches in these anti-corruption activities.
Of the personalities in government, the Head of State, FLT. LT.
J.J. Rawlings has always expressed abhorrence of corruption. This
appears to be genuine. He believes quite strongly that opposition to
corruption is his principal political legacy to Ghana, despite all
appearances to the contrary. But he has also demonstrated considerable
inconsistency and ambivalence in this area. He has protected persons in
his government against whom serious allegations of corruption have been
made, and he has demonstrated downright hostility towards persons from
outside his inner political circle, and especially opposition figures,
who have made allegations of corruption against members of his
government. Vice-President John Atta-Mills, is generally considered to
be clean and has publicly declared his commitment to combat corruption.
However, he is not a forceful personality and his base within the
ruling party is rather weak. The Minister for Local Government, Kwamena
Ahwoi, appears to be interested in combating corruption. He had been
one of the principal figures involved in the extra-anti-corruption
measures of the early PNDC years, i.e. the Citizens Vetting Commission,
the National Investigations Commission, and Operation Hawk which, in
the early 1980s, exposed embezzlement in second cycle institutions. In
recent years, his interest in combating corruption has been confined
mainly to the district Assemblies and especially their use of the
Common Fund. Abwoi's interest in combating corruption has, however,
been widely perceived as a partisan ploy to undermine other factions
within the NDC, and to promote the agenda of a faction dominated by the
members of the Fanti tribe of which he is a leading figure. On the
other hand, he was very supportive of the CHRAJ initiative to hold an
integrity workshop, and was instrumental in persuading the executive
branch/Attorney General to nominate two representatives for the
planning group for the workshop (Mrs. Betty Mould-Iddrisu, Head of the
International Law Division of the Attorney-General's Office and wife of
the long-serving Minister of Defence, and Sarfo Sampong, senior public
prosecutor in the Attorney-General's Office).
The likely members of the Board of TI-Ghana in formation are:
Emile Short, Chairman of the Commission on Human Rights and
Administrative Justice.
Dr. E. Gyimah-Boadi, Associate Professor at the University
of Ghana and Regional Coordinator of the Regional Office of the
Center for Democracy and Development (CDD), an NGO dedicated to
the promotion of transparency, accountability, good governance
and civil society support in Ghana and the West Africa sub-
region. He is the coordinator of TI activities in Ghana and was
secretary of the planning group of the Integrity workshop.
Dr. S.K.B. Asante.
Dr. Angela Ofori-Atta, lecturer in clinical psychology at
the University of Ghana Medical School.
Audrey Gadzekpo, a journalist.
Justice F. Apaloo, former Chief Justice of Ghana and Kenya.
Rev. Dr. Charles Palmer-Buckle, Catholic Bishop of Koforidua
and an outspoken commentator on national economic issues,
especially anti-corruption issues.
Mauvi Wahab Adam, Head of the Ahmadiya Muslim Movement.
Ms. Nana A. Apt, Professor of Social Policy at Legon.
Kwasi Abeasi, Director-General of the Private Enterprise
Foundation; a widely respected person who was active in mooting
the issue of corruption at the National Economic Forum in
September 1997.
Prof. Kasim Kasanga, of the University of Science and
Technology (Land Management), a young, well-respected
representative of the Northern Regions.
Ms. Alima Mahma, another representative of the Northern
Regions.
In addition to these persons, others active in combating corruption
include William Nyarko, the young and dynamic chief investigative
journalist for The Chronicle (an independent newspaper) who received
the Ghana Journalist Association Award for the Best Investigative
Journalist in 1998; and Yaw Asamoa, a young lawyer with the General Law
Group involved with anti-corruption work under the auspices of the
Africa Leadership Forum.
Relations with Government
TI-Ghana is still in formation.
Political Will
The Government's will to combat corruption can best be described as
ambivalent. On the one hand, it appears to be willing to admit that
there is a problem with public sector corruption and to express a
desire to combat it. On the other baud, it suffers a great deal of
cognitive dissonance and often exhibits a denial in this mailer. It
tends to see corruption as something which was rampant under regimes
that preceded the PNDC and NDC, and which, if even occurring now, is
much smaller in scale than in the past. At the same time, it has
expressed official support for anti-corruption initiatives, including
the Integrity Workshop. On the whole, the Government's response to
allegations of corruption appear to be far stronger when such
allegations are made by external agencies such as the Control Risk
Report.
Nature of Corruption
The nature of corruption in the country is largely disorganized,
and takes the form of kick-backs, inflated costs for official projects,
graft, bribery, nepotism, extra legal fees, illegal exemptions,
insider-trading, conflict of interest, and especially improper
tendering and corrupt execution of government contracts. To a
substantial extent, grand corruption is linked to the financing of the
ruling party and its political machine. The involvement of the military
is indirect and may be inferred from the fact that it allows only a
partial audit of its books. There is also a pervasive practice of
corruption in the society at large, mainly due to grossly inadequate
official wages, and cultural practices such as lavish outlays for
marriages, funerals and other extraneous social activities.
Previous Anti-Corruption Activities
Activities carried out by previous governments include:
Commissions of Inquiry into allegations of bribery and
corruption since 1954; after the 1966 coup; and after other
coups.
Public inquiries, such as the one which examined the affairs
of R.T. Briscoe Company (dealers in German automotives).
Populist outbursts against industry and senior management.
Anti-profiteering measures against traders.
The so-called ``House Cleaning Exercise,'' including the
establishment of the Citizens Vetting Committee.
The National Investigations Committee.
The One-Man-One-House and other confiscatory exercises led
by J.J. Rawlings in 1979 and in the early 1980s.
Sporadic anti-corruption initiatives in the mid and late
1980s targeted at specific institutions such as the banking
sector and secondary schools (Operation Hawk).
It must be noted that many of these efforts were conducted in
defiance of due process, and were widely perceived as political witch-
hunting. The trials of persons accused of corruption were often held
before extra-legal public tribunals, and punishments included
executions and confiscation of property. No person considered to be
closely allied to the PNDC regime was ever tried or punished in that
manner.
There is no history of civil society based anti-corruption activity
in Ghana, except perhaps in the form of church sermons against the
practice. However, since 1993, the independent media has been extremely
active in this respect; in particular, The Ghanaian Chronicle, The
Dispatch, The Public Agenda, and The Independent. More recently, the
Public Enterprises Foundation has raised the issue nationally, and
other civil society organizations are beginning to take a greater
interest in the subject. TI-Ghana will be the first formal civil
society organization initiative in the area of combating corruption.
1997-2001 Integrity Improvement Programme
Following two preparatory missions undertaken by TI Resource
Person, Neville Linton, and Programme Officer responsible for Ghana,
Gillian Dell, it was agreed that Emile Short, Chairman of the
Commission on Human Rights and Administrative Justice (CHRAJ) and Prof.
E. Gyimah-Boadi, Regional Director of the Center for Democracy and
Development (CDD) be the convenors of TI-Ghana.
National Integrity Workshop
The programme commenced with the National Integrity Workshop on 20-
21 October 1998. TI-S contributed US$19,637 from the USAID global grant
towards the expenses of the workshop which was organized by CHRAJ in
collaboration with CDD, with support from USAID and DANIDA. Under the
theme Toward a Collective Plan of Action for the Creation of a National
Integrity System, the workshop brought together over 150
representatives from government, the private sector, and civil society.
The government offices represented included the President's Office, the
Attorney-General's Office, the National Commission on Civic Education,
the Bureau of National Investigations, and the Customs, Excise and
Preventive Service. Civil society representatives included the Ghana
Bar, Journalists Associations, the Private Enterprise Foundation, the
National Union of Ghana Students, several women's organizations, and
Christian and Muslim religious institutions. The keynote address was
delivered by the Vice President of Ghana, Prof. Atta Mills, and the
closing address by the Minister for the Interior, Nii Adamafio. Non-
Ghanaian speakers included Bertrand de Speville, former Head of the
Independent Commission Against Corruption, Hong Kong; Adolf Hirschfeld,
Assistant Director of Corruption and Economic Crime, Botswana; and
Nibal Jayawickrama, Executive Director, Transparency International,
Berlin.
A major component of the workshop was the small group sessions in
which aspects of the problem and the impact of corruption on specific
sectors (such as land administration, customs, excise and prevention,
education, and health) were examined. The results of a nation-wide
survey on Public Perceptions of Corruption in the Delivery of Health
Care and Education Services were presented. The role of the media,
civil society, private sector, and public agencies in combating
corruption was also analyzed.
In addition to expressing an interest in forming a national chapter
of TI, participants at the workshop adopted an action plan which
included:
Revamping and actively enforcing codes of conduct for
professional bodies;
Concerted awareness raising by relevant public agencies and
civil society organizations;
The institution of annual integrity awards;
Strengthening networking and collaboration among civil
society organizations and nongovernmental organizations
dedicated to fighting corruption;
Fostering greater transparency in governmental processes,
especially the public procurement process;
Campaigning for the enactment of a Freedom of Information
Act and the repeal of criminal defamation and other laws that
impede access to information;
Creation of mechanisms to promote ``whistleblowers.''
As an awareness-raising measure and as a mechanism for bringing
together many segments of Ghanaian society interested in combating
corruption, the workshop was a significant success. During the workshop
and in the days immediately preceding it, considerable time and space
was devoted by the media to the subject of corruption. At the workshop
itself, discussions were free, lively and vibrant. However, at a
critical evaluation conducted some weeks later, it was noted that there
had been insufficient time for in-depth discussion; that discussions
would have been stronger if the papers had been circulated in advance;
that a combination of named invitations as well as institutional ones
would have induced a stronger response rate; that more people and
institutions should be brought into the integrity process and future
workshops; that chairs for working groups must be pre-selected to
facilitate meaningful discussion; and that the absence of the police,
military and regular security agencies was a matter for regret.
Formation of TI-Ghana
The preliminary steps towards the formation of TI-Ghana were taken
immediately after the national integrity workshop. The potential
candidates for the Board have been approached, and a 100 percent
acceptance rate recorded. The Center for Democracy and Development will
serve as the secretariat for the national chapter, and it is hoped to
employ an executive director. An informal meeting of the Board is
scheduled for January 1999 when a three-year plan for integrity in
Ghana is expected to be discussed. A problem has arisen in regard to
the registration of TI-Ghana as an NGO. Two registrations in the names
of TI-Ghana and TI already exist, having been made on 4 March 1997 and
12 September 1997, by individuals in Accra and Barekum. These have been
made without any reference to, or authority from, TI-S. Efforts are
being made to have these registrations withdrawn.
BANGLADESH
Civil Society
The NGO component of civil society in Bangladesh is quite active,
focusing mainly on poverty alleviation, rural development, relief and
disaster management, gender issues and human rights. More than 15,000
NGOs are currently operating in Bangladesh. Among them, more than 1,200
NGOs are reported to be directly involved in development activities and
about 900 are operating with assistance from foreign donors. Besides,
the business community has of late become quite vocal.
Anti-Corruption Activists
Anti-corruption activists in Bangladesh are still mostly male,
belonging to professions such as law, teaching, business, and
journalism. However, some watchdog groups willing to network with TI-
Bangladesh on integrity issues are women's organizations. Ethnically,
they are Bengalee; religion wise, they are mostly Muslims. Politically,
TI-Bangladesh adheres to the principle of being independent and non
partisan in its approaches.
FRANCOPHONE AFRICA
Consultation with TI contacts and National Chapters in Francophone
Africa indicated three constraints to more effective NCs in these
countries: insufficient outreach to relevant professional and civil
society associations in the region; lack of materials on corruption in
the French language; and low resonance of the operational strategies
contained in the TI Source Book and other documents for the political,
legal and administrative structures in Francophone African countries.
Based on these consultations, an operational work program has been
developed to establish more systematic contact with relevant
professional and civil society organizations and involve them in
analyzing the nature and causes of corruption and in adapting the TI
Source Book to the Francophone African context. Specifically, the
proposed program of activities would focus on three areas:
Improvement of the general awareness of the issues and
enhance professional contacts in Francophone Africa, through
corruption surveys and increased outreach;
Compilation of best practices and preparation and
dissemination of materials especially adapted to the
Francophone African context, through translation and discussion
workshops; and
Expanded activity of TI NCs and national contact points in
Francophone Africa, through discussion workshops to adapt and
disseminate the TI Source Book and follow-up missions to
countries interested in expanding their fight against
corruption.
Senator Feingold. I thank you, and first let me say I will
never forget Ambassador Holbrooke and I met with President dos
Santos in his office in Angola. The main purpose of the meeting
was to discuss the conflict in Congo, but I did choose to use
my brief time to ask him a bit about corruption in Angola.
I will never forget him citing the rating that they had
received that year by Transparency International. I do not
think he will be brandishing this year's rating, but it was
quite an interesting thing to see the impact that an
organization like yours and the others represented here today
have, and it was very enlightening for me.
Secondly, I wanted to tell you that I certainly take to
heart your suggestion that legislators, especially at the
Federal level, but perhaps even at the State level, can do a
lot by, when they go to one of these countries, not just meet
with the President and the Cabinet ministers, but seek out our
colleagues, compatriots in those countries.
We did this in Mali and with some of the SADAC countries,
and then when some of the new Nigerian legislators came here, I
believe it was on defense issues, these are very, not only
productive but inspiring meetings in some ways, for me as well
as for the legislators, and in addition I would mention--you
referenced a meeting with a civil society group. I remember one
of the only bright moments I felt in Angola was an opportunity
to meet with some of those groups. I think that is all very
helpful.
Let me just ask one question. Senator Frist is still not
able to be here, but I assure you it is for a very, very
compelling reason that he is stuck. We are in a very difficult
time of year here, but let me indicate that I will now direct
questions at different individuals, but unlike a hearing, I
think we can be a little more free to comment, so I hope people
will feel free to chime in and respond, so we will not get into
heavy duty debates, but I would like to hear some exchange.
So let me begin by asking Mr. Schneidman, what is your
reaction to Mr. Taylor's proposal that the United States
Government should encourage the major oil companies to disclose
the taxes and royalties they pay to Governments around the
world?
Mr. Schneidman. Well, Senator Feingold, I think that the
issue of transparency and accountability and fighting
corruption can never be sought enough, and I think in this
regard we should engage our friends in the private sector and
in the oil companies to do as much as they can to increase
transparency and accountability to the degree that they can. I
do not think we should limit it just to the private sector.
Mr. Taylor brought up the issue on the staff monitoring
program, and I think it is not just in Angola, but I think this
issue of making more public what an IMF program is all about,
or a World Bank program, what these are all about in all
countries in sub-Saharan Africa is a very important thing to
do, because I think once civil society, once the different
stakeholders in society understand what the Governments have
committed to, they can better understand why they may be taking
on some hardships, what the short-term pain is for the long-
term gain, as it were.
So I think these steps are to be commended, and I think
this is something we have tried to do through our bilateral
consultative commission, because the U.S. private sector is
very much a part of this, and we meet together with the Angolan
Government and we discuss issues of transparency, and we have
discussed the issues of the payments by the oil companies to
the Government with the Government and with the private sector,
and what has happened to that money.
To be candid, the answers are not yet satisfactory to us,
but it is an issue that we will continue to dig away at because
we feel that it is essential to do so.
Senator Feingold. Could you say a little bit more about
how the State Department has been working with the major
American corporations involved in Angola to combat corruption
and to ensure that these companies are not shaken down for
bribes as a part of doing business in Angola? What is the
actual process you go through?
Mr. Schneidman. Well, most fundamentally we have to rely
on these companies to comply with the Foreign Corrupt Practices
Act, and to the best of our knowledge they are doing so.
As Mr. Taylor pointed out, the problem is not so much their
dealings with the Angolan Government. It is what happens to
that money when it is paid to the Angolan Government, where
does it go, and clearly it does go for illicit purposes.
We referenced the oil audit in the staff monitoring
program. That is important, but I think we have to recognize
that this is just a first step, a significant step but a first
step. There is still the diamond sector and the lack of
transparency there, and the interface between payments for
diamonds and the purchase of arms. It is totally opaque, and if
Angola's going to take its place as a full member of the
international community, that opacity is going to have to be
rectified.
We have taken some interesting developments with our oil
companies through our BCC on the issue of HIV/AIDS, and U.S.
companies have agreed to put up several million dollars over
the next 2 or 3 years to help the Angolan Government address
the issue of HIV/AIDS, and at our last meeting in Luanda in May
we were able to compel the Angolan Government to seed the money
that the U.S. companies had put up. It is not much. We are
talking, like, $1, $3, $4, $5 million. From our point of view
it is a start, and we are going to have another meeting in
October and we are going to continue this dialogue.
Senator Feingold. Where does that money go?
Mr. Schneidman. We have not yet received a full proposal
from the corporales on how they are actually going to spend it,
but the Angolan Government made it clear to us that they do not
yet have a full accounting of the infection rate in Angola.
Senator Feingold. Is the money spent directly by the
corporations, or is it given to the Government?
Mr. Schneidman. It will be spent directly by the
corporations to NGOs.
Senator Feingold. Mr. Schloss, do you want to respond to
that?
Mr. Schloss. If I may just add on the issue, let me just
make two points. Hydrocarbons trade is by far the largest item
in the balance of payments, of all the sub-Saharan African
countries, be it in the import or the export side, and it is
either the first or the second item in the fiscal revenues, so
we are talking about big money, big resources for all of the
countries.
Some 5 years ago some colleagues of mine have done a survey
about what happens at each of the stages from point of
production, refinery, transportation, and distribution of the
hydrocarbons in all of the sub-Saharan African countries. To
get that information, what was very important was to get all
the oil industry, not only the American but all of it together.
Only then, at least as far as I could see, were they prepared
to provide the information for us to make these price
comparisons.
At the time, what these surveys indicated was that Africa
was losing something on the order of $1.5 billion a year on
account of how hydrocarbons were traded, which at the time was
higher than the total gross disbursements of the whole World
Bank Group put together to that same continent, so we are
talking about very large resources, and certainly this is an
area that merits careful review.
Senator Feingold. All right. If there are no other
comments on that, I guess I would like to focus, Mr.
Schneidman, on if countries in Africa require their Government
officials to disclose their assets, and does the United States
Government encourage this kind of asset declaration?
Mr. Schneidman. We certainly do. I am not aware that this
practice is continent-wide, but for instance, when I was with
the Government of Cameroon, which does not do very well on the
TI index, I brought this issue up in the context of talking
about the African Growth and Opportunity Act. They assured me
that Government officials were required to make these kinds of
facts known, and we will follow that up through our embassy to
see if that is happening.
But I think one of the issues that we have been discussing
with the Global Coalition on Africa in the context of the
principles and thinking about an anticorruption convention is
the issue of peer review, where African countries would get
together to assess each other and to establish models and
levels of transparency, because at the end of the day it is
going to be the Africans themselves that are accountable to
themselves and to their own people, and we will continue to be
as helpful as we can in that respect, but we cannot do it for
them.
Senator Feingold. Does anyone else know the extent of the
practice of requiring this kind of disclosure? Ms. Marshall.
Ms. Marshall. Quite a few countries have legislation which
requires the disclosure. The problem is that it is not usually
complied with, and that is something that within the GCA we
have been trying to push--you have already got a law saying
that you should do this, it should be done and, more
importantly, it should be public and publicly available.
There has been some movement on this, but still it is
really very few countries that actually do it and do it
properly.
Senator Feingold. Is there an example or two? I mean, you
are talking about annual disclosures like we have here?
Ms. Marshall. Yes.
Senator Feingold. Are there any that do that and have it
public?
Ms. Marshall. South Africa has started, and Botswana.
Uganda is supposed to, and I do believe they actually do it,
but it is not usually made public. Other countries like Kenya,
which again are supposed to, really are not doing it yet, but I
think this is something that, you know, in the policy dialogue,
this could be encouraged.
Some countries, like South Africa, in fact have gone
further than many western countries, and parliament is also
expected to submit this disclosure.
Senator Feingold. Yes, Ms. Derryck.
Ms. Lowery-Derryck. Thank you, Senator. I think also that
countries can be encouraged to make sure that they fulfill
their own obligations by regional programs that can reinforce
one and another. There is the East and Southern African
Antimoney Laundering Group, for instance, and it helps if
countries see that their neighbors or others are beginning to
comply and be absolutely free and open in publishing this kind
of information, so I think that that is something that we
should support as well.
Senator Feingold. Good. Perhaps, Mr. Schneidman, you could
say a bit about the anticorruption bill recently enacted in
Nigeria. You alluded to it. Would you say a little bit about
it, and the difficulties that you see in implementing that?
Mr. Schneidman. Well, I think it is important to remember
that Nigeria is been through 20 years of military rule, where
there has been no accountability whatsoever, and I think this
is a situation where corruption has become endemic, and
President Obasanjo from the first day, when he canceled some
oil contracts that had been concluded by his predecessor,
showed a willingness and a determination to fight corruption.
But this bill is generally very comprehensive. It is
designed to put in place a money laundering regime. It is
designed to reform the criminal code. It is designed to reform
the police, among others. Our Justice Department is providing
an attorney to advice the Government of Nigeria on the
implementation of this, but we should have no illusion that it
is going to be easy, or that it is going to happen overnight.
I think it is quite instructive that we all see President
Obasanjo as a genuine reformer, but this year Nigeria ranks
lower than Angola on the corruption perception index of
Transparency International. It is a very complex issue, and one
that has to be tackled in a number of ways.
One other thing that we did when President Clinton was in
Nigeria, President Clinton announced that we are going to
establish in our embassy a position that will help to address
the issue of corruption and corporate governance in the delta
region, and this is where we are going to seek to bring
together representatives from the oil companies,
representatives from civil society, representatives from the
Nigerian Government, representatives from State governments, in
an effort to stimulate the kind of dialogue that will lead to
more progress and upliftment of living conditions there.
Senator Feingold. Thank you. Let me turn to Ms. Derryck.
The answer that Ms. Marshall gave me about disclosure made me
think about the role of a free press. When she says that they
require these reports but they are not public, obviously that
is a little bit alien to somebody who is asked instantaneously
to turn over to the press these filings. Could you comment a
bit on the role of a free press in combatting corruption, and
how does USAID work to make this connection in its democracy
and governance program?
Ms. Lowery-Derryck. Yes, Senator. Our programs really
focus, as I said, on changing the environment and building
institutions and working with civil society, and clearly one of
the institutions that we think is particularly important is the
free press.
For instance, in Angola, to go back to that example, we
have worked with the radio stations and have tried to support
journalists because we believe that this is the way that you
get the information out. We are concerned about transparency,
and there is no better way than to have this information that
is available to journalists.
We also encourage free press in countries like Uganda, and
particularly when there was a discussion, there were the
hearings in parliament on corruption issues, to see those, the
reports of the results of those meetings in the paper every day
was really a very, very effective way to encourage public
dialogue and to build civil society support for this, and the
fact that the journalists were not arrested, and there is no
consequence, bad consequence to that action, also helps to
reinforce the fact that this is an area with which we can deal,
that it is important and appropriate, and that there is
support, even tacit support within Government and certainly
within the broader civil society.
Senator Feingold. Thank you. Yes, Mr. Taylor.
Mr. Taylor. Just, I hope to bring a copy of a December, I
think 8th, copy of Foya Oyta, which is one of the supposedly
free press in Angola that was produced in response to this, but
I could not find it. I do not know if you were in Luanda when
that came out, but what we deliberately did was to target press
coverage through Lisbon, because we knew that various Lisbon-
produced newspapers would end up on the plane to Luanda whether
they liked it or not, bearing in mind it might open a bit of
space up for the Angolan press to run with it.
Foya Oyta produced a beautiful front page saying, Witness
accuses the Government of blah, blah, blah, blah, and you
opened up the front, and the first four pages were blank
columns with oil rig photographs, and I have never seen
anything like that in my life, and it really brought it home to
me that there is no accountability for anything that is being
decided by the top end. If the top end does not want it to come
out, it does not come out, end of story.
And we have also seen what has happened to, amongst others,
Raphael Marquez and people like that, so I think it is a
serious problem that I am very happy to hear AID is working on,
but it is a long way off getting to the point where I think
civil society can really challenge Government to live up to
what it should be doing.
Senator Feingold. I thank you for saying that, and I know
that Mr. Schneidman needs to leave in a few minutes, so let me
just say I think Mr. Taylor's idea about public oil industry
disclosure is a very good one, and I would encourage you to
work to get the administration to take it seriously, and I will
do the same.
Mr. Schneidman. We certainly will, and Mr. Taylor and I
have met before, and I am sure we will meet again, and we can
talk about how we can do this together.
Senator Feingold. Thank you. Let me turn to Mr. Schloss
again. I understand that the World Bank is working on a black
list of corporations that have been involved in bribery and
corruption incidents in developing countries. Firms on the list
will be banned from contracting for AID projects sponsored by
the bank and other organizations.
My question is about other organizations. As I understand
it, currently it is not difficult for firms barred from
participating in bank contracts to evade that restriction by
covering themselves with the umbrella of other development
banks. Will firms banned from participating in the World Bank's
projects also be banned from the regional development banks?
How would that work?
Mr. Schloss. Certainly the World Bank is much more
advanced than all the other organizations in every respect in
terms of the issue of combatting corruption, particularly in a
project that it, itself finances. It has a high-level committee
which goes through the--what is the term called? They don't
call it bans, but there is a list of growing companies that now
can no longer, because they have been discovered associated
with corruption on the World Bank projects, that they can no
longer bid for projects financed by the World Bank. I think
this is a very good step. It sends a very clear signal.
It is, of course, a number of rather smaller type firms
that are so far on this list, but it is a growing one, and I
certainly feel that it would be very desirable that this
practice be extended to the other multilateral development
banks and, more broadly, even to the bilateral community, but
this is a list that operates, only so far as I know, in the
World Bank.
Senator Feingold. Thank you. Let me look at this issue in
another way. In Rwanda and elsewhere I understand that charges
of corruption appear to be exchanged between political
opponents regularly, regardless of their veracity. Is there a
danger that as corruption becomes a more common part of
political discourse in Africa, efforts to condemn it will be
used chiefly as a political weapon? How can the manipulation of
this issue be avoided?
Mr. Schloss. Ideally, and this is what I have been trying
to convey with such difficulty, one should depoliticize the
issue to make it more technical, to provide hard data.
I would say, for instance, the listing of companies in the
World Bank is not done very lightly. There has to be some
pretty serious evidence for that to happen, and this is not
decided at a lower level. This is decided at a very senior
level, because this is something that is a step that has
consequences for the rest of the life of that enterprise as far
as the World Bank is concerned.
I would say that the more one moves in the direction of
having greater disclosure, providing evidence put together, et
cetera, in the mechanisms that build in the country, the
better. In other words, a simple accusation should not be
enough. Still a certain amount of burden of proof rather than
benefit of doubt should be on those who say there has been
corruption.
For instance, there has been a wider use of--and I say this
only as illustration--of integrity packs as a way of providing
contracts, where the different contending parties to a contract
look at each other and see the evidence and bring it up, and
once it is brought up and it is there to be seen, then it is
acted upon. Those mechanisms help.
I think this needs to be institutionalized. It cannot be
done simply by accusing. There have to be mechanisms to do
that.
Senator Feingold. Let me ask both you, Mr. Schloss, and
Ms. Marshall if there is any momentum-building in Africa to
develop a convention similar to the OAS Inter-American
Convention Against Corruption. I have been interested in the
convention's attempt to capture behavior on both sides of the
bribery question.
Ms. Marshall. Yes, as was mentioned earlier, these
anticorruption principles which African countries themselves
developed last year were an attempt to put in place some sort
of collaboration, collaborative mechanisms which could form the
basis of a convention, and there are a number of countries that
are seeking to join that, to broaden the number that are
involved, but of course beyond that they have got to work on
harmonizing legislation and that kind of thing to make them
really work.
But in addition, within SADC there are discussions to have
SADC-wide agreement, which would be like a sort of regional
convention. That also could help build momentum, and the OAU
itself is interested in working on the convention. They have
just started--they have just hired some people to start putting
together something in draft. There is going to be an experts
meeting on that, hopefully in the first quarter of next year.
The real issue is pulling all of these things together to
get something that is workable, that is implementable. If you
get something that is too complicated it is never going to
work, and we are going to get back into the situation of people
signing it but not doing anything about it, so the idea--and
this is what we were trying to come up with in principles, was
things that would benefit the countries themselves and would--
the collaboration with each other would help to support what
they were doing already, and I think this is the way to go.
But there is certainly tremendous interest in Africa on the
part of Governments and also on the part of civil society. A
lot of civil society organizations, a lot of the TI chapters
are very interested in trying to get this, because they see it
as a legal mechanism that they can use.
Senator Feingold. I would be interested in whatever I can
do or this subcommittee can do to encourage that kind of
direction.
Ms. Marshall. Thank you. That would be very, very helpful.
Senator Feingold. Do you want to comment at all, Mr.
Schloss?
Mr. Schloss. Just a broad point. If one observes different
conventions that deal with a subject, I would say there are at
least in my mind three things that have to stand out. First,
how focused and implementable the convention is. If I look, for
instance, at the OAS convention as against the OECD, the OECD
very focused on one particular subject, whereas the OAS, which
covers the whole waterfront--clearly the more focused, the
better the chances that this can be implemented.
Second, monetary. There has to be some way of determining
who is performing in what way, and some element of peer
pressure as a result, and last but not least, targets. There
has to be some teeth to it in order for that to be commended.
I am afraid that in questions of conventions there have
been many words, many papers, and perhaps these three
principles are so vital that anything that can be done in this
direction would be extremely helpful.
Senator Feingold. I have one more question for Mr. Taylor,
and then, unless Senator Frist is able to come, if any of you
would like to make brief concluding remarks I would welcome
that.
Mr. Taylor, in May of this year the World Resources
Institute and the World Wildlife Fund released a report finding
that in Cameroon, Gabon, Congo, the Central African Republic,
and Equatorial Guinea, multinational companies have paid bribes
to circumvent environmental regulations and gain access to
forest areas for logging that are protected by local
regulations. In some cases the logging took place in parks,
where donor countries have invested significant resources in
protection.
What can be done to ensure that corrupt practices do not
undermine efforts at environmental protection in Africa?
Mr. Taylor. You have raised a very--an interesting
example, which brings me back to sort of my earlier stage at
Global Witness, where we were looking at logging in--we still
are, in fact--in Cambodia, and where we are now--well, as of
December last year, the independent monitor of Cambodia's
forestry reform process.
And the reason I wanted to raise that is not so much to
flag what we have been doing, but the principle of there being
an independent monitor came out of the donor process, so with
legislatures backing that up through the annual World Bank
Consultative Group process for Cambodia, and basically it was
made as a condition of resumption of assistance that there
would be--because the Government basically had agreed to these
reforms taking place, that they would implement the various
reforms, and the donor said great, but you told us that for 5
years in a row and we want to see performance, so we insist on
there being an independent monitor.
Now, it took quite a long time for that to go past the
stage of simply hiring a large commercial organization with
huge overheads, and then a couple of ambassadors said, why
don't you do it, to us, and we had not really kind of thought
about it in that context, but then we said, why not.
So we are (a) committed, because that is what we were doing
anyway, (b) we knew more about it than anyone else because we
had been everywhere, and (c) we were much cheaper than anyone
else, so it made sort of commercial sense, apart from anything
else, to go in that direction.
Now, we are on the cusp right now of DIFID in London, the
equivalent of AID--I think that is right, isn't it? Yes--
putting forward, together with some other donors, some
assistance which has been tied to overall assistance to
Cameroon, that there should be an independent monitor of
Cameroon's forestry reform process.
Now, it strikes us that certainly in our limited experience
as the monitor since December last year that being able to be
the official monitor, and a monitor that is not going to bury
anything, so if there is dirt to be found we will find it and
it will come out, has moved the concept of forestry reform
forward far quicker and far further than any other process than
we have seen to date.
And so my answer to what you asked was that, I think
actually the principle of independent monitoring, just like
looking at the standards by which companies adhere to things
like the U.S. Foreign Corrupt Practices Act, for example, or
other things like that, is that the monitoring principle, there
should be an independent monitor, is, I think, extremely valid
and very valuable, and I would encourage that that should be
examined as a way to mitigate against this kind of thing, and
if companies are caught out, they should go, end of story, out
the door.
I mean, it brings me to another issue. You raised the issue
of a black list. We for some time in the Cambodian context
thought about creating a list of companies, the idea being to
make it absolutely internationally unacceptable if businesses,
if you repeatedly catch them out doing things.
There are a number of big international timber companies
that come from various countries in Southeast Asia who have the
worst practices, and they are responsible for some of the worst
misdemeanors in forestry in protected parks and so on, and
nothing ever happens to them, ever. They never get fined, they
never get kicked out, they never get penalized.
So I think through a willingness of donors to put pressure
on Governments who are in receipt of international assistance
as a condition--you know, if they have a monitor, and the
monitor catches people out and it is--you know, it is
absolutely blatant, then some action should be taken, and I
think that is somewhere where donors could have a big impact.
Senator Feingold. Thank you. Anyone like to respond to
anything, or other any other remark? Yes, Ms Derryck.
Ms. Lowery-Derryck. Thank you. I think I just want to
emphasize a couple of points. We are talking about usually
countries with weak institutions and weak civil societies, and
there are two aspects of civil society that we are concerned
with.
One is the role of women. Because they have not had the
opportunity accorded to some to be involved in some of the more
egregious aspects of corruption, and because they are very
often willing to speak out against it, then this is a way that
civil society can be harnessed, and so we are supported of
women's efforts.
And secondly, the petty corruption that we see in many
countries is really endemic, and we have talked largely today
about a grand corruption, but the petty corruption really does
insidiously erode confidence in Government and in institutions,
and I think that we have to be careful to make sure that some
of our activities really do focus on the smaller aspects of
corruption.
Those are my two points. Thank you, Mr. Chairman.
Mr. Schneidman. Senator Feingold, I would just like to
thank you for holding this roundtable. It is an issue, I think
we have tried to convey, of great importance to us, and there
is no question that it is really at the key of socioeconomic
development in Africa, and certainly our ability to work
together as Government agencies and NGOs is vital, and just two
points.
I think, first, we have to keep a proper perspective,
because I think what we see in Africa, as has been stressed, is
more openness to reporting corruption, so on the one hand it
makes some countries appear more corrupt, and I think we have
to be able to separate out what is being reported and what is
coming out in the sunshine from what is really happening.
And second, just to go back to a point that my colleague,
Vivian Derryck, concluded her remarks on, and that is the
resources that we as the executive branch need to do what we
are able to do and work with Congress, and there is no question
that we depend upon you for those resources, and I hope in that
context and in many other contexts we can continue to have a
very close relationship on this issue, so we can make sure that
we are doing the most that we can do in forging new
partnerships, be it with our private sector, addressing the
environmental issues that Mr. Taylor just addressed.
It is clear we have got a very big agenda. We cannot do it
by ourselves, and we look forward to working with you on it.
Senator Feingold. Well, I thank you. Yes, Mr. Taylor.
Mr. Taylor. I am sorry. I do not want to hog this thing,
but there is one thing that I had not raised so much, but more
at a tangent in the course of what I was saying before, and
that is the role of organized crime. I briefly hinted at the
privatization of the war, that--well, it is not just the role
of organized crime.
There is a very large European company, which I shall not
name, who is intimately involved and connected with individuals
who have been monopolizing this main weapons supply and who are
part of the process of, on the one hand, acquisition of equity
stake within the resources, and the real key thing, key aspect
of this is, somebody needs to do something about the activity
of this very big company, because it is, as far as I am
concerned, totally unacceptable, and it pales--it is
extraordinary what they have been doing. I would like to
elaborate on that in private.
But the other characters who I have been alluded to are
very well-connected to, shall we say, Russian oligarchs and
other well-connected individuals in that part of the world, and
because of the activities that I know that they have been
involved in in terms of weapons supply not just to Angola but
to Zimbabwe, being used in DRC, to Uganda, being used in the
top end of the DRC, possibly with connections to people who
have been named who are suppliers to UNITAS.
So that means that they are supplying both sides in the
Angola conflict, also to Ethiopia we think, probably the main
suppliers to the Bosnian Serbs, and we have also heard, also
supplied helicopters to SLORK in Burma, as a condition of
another company getting a deal with that regime.
The end point I am trying to make here is that I think what
these people represent on the one hand is an attempt by those
same oligarchs who ripped off, at the last count I heard, some
$130 billion out of Russia in the mid-nineties, to do exactly
the same thing in Central and Southern Africa, and these people
are using the banking facilities provided by countries like
South Africa, they are using our banking facilities in London,
here, the Cayman Islands, off-shore accounting structures and
convoluted companies and so on.
Somebody desperately needs to start looking seriously at
the activities of the off-shore banking centers around the
world and penalizing them for lack of transparency in terms of
who they are dealing with, and I think to actively pursue what
some of these people are doing, because if the IMF thing does
not deliver what I do not think it will deliver, and if none of
this changes, the structures that are being created will stay
in place, and what we will all wake up to in a few years time,
when Angola's oil production peaks, when the country will
desperately need all it can to rebuild, we will find that these
people own basically everything, and I think that is a pretty
sad outcome after 30 years of killing each other.
So if I could urge the committee to perhaps think about how
it might look into that--I would also be considering that. I do
not know what rapport we can have and come back to you on that,
but if that is an area you could think about it would be very
valuable I think.
Senator Feingold. Well, let me just thank all of you very
much for providing this opportunity for me and the other
committee members. We will look at this information. The
comments were good.
There were some specific ideas that I think will be
helpful, and the perspective of making sure we do not look at
this just as some kind of a failure of African Governments or
African peoples, especially your comments, Mr. Taylor, when we
talk about the companies, the international syndicates and
others that have so much to do with this, are a critical part
of this, and we have to make sure as a committee and as a
Senate that we think of it in those terms.
But when we turned to the individual African countries, I
was struck by Mr. Schneidman's remark and the remarks of Ms.
Marshall about how at first, when a country gets involved in
this business, it might make them look bad. It reminds me of
how Uganda decided to get out in front on the AIDS issue. I had
the impression for a while, because I was not well-informed,
that Uganda was the place for AIDS, and it turned out that
Uganda was willing to discuss this, be open about it, and as a
result is relatively speaking a leader in reducing the AIDS
problem in Africa.
I think the same thing applies here. It is probably going
to be painful at first to have the disclosure of this kind of
information, but I think when one country in Africa starts
succeeding in this regard, and sees the investment and other
things that come as a result of it, the peer pressure and even
the desire to emulate those other countries will be a very
valuable thing.
I do think this issue is starting to come of age. In terms
of the Senate's look at it, there was some discussion of this,
too brief, I think, but some of it in the context of our debate
on the African Growth and Opportunity Act.
So I look forward to reviewing your comments and your ideas
and I again want to especially thank Dr. Frist for making this
hearing possible. It was extremely difficult to schedule at
this point, and I am very glad we could get it done this year
so we can take advantage of some of your good ideas.
Thank you very much.
[Whereupon, the public meeting ended.]