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Fantastically hypocritical Britain 15 May 2016

A few weeks after David Cameron had to admit he benefited from the tax-avoidance fund his father set up in Panama, the British Prime Minister decided to pull a public relations stunt to clean up his image. He led the British government to organise the Anticorruption Summit: London 2016, which held last week. The grand idea was to galvanise global actions against corruption and deal with issues including “corporate secrecy, government transparency, the enforcement of international anti-corruption laws, and the strengthening of international institutions.”

Although London is a leading haven for proceeds of corruption around the world, including poor countries, hosting the anticorruption summit is supposed to demonstrate that both the city and Mr. Cameron are anti-corruption. This is simply implausible. Besides, previous anticorruption initiatives have proved the lack of political will by the advanced Western countries to fight corruption that benefits their economies. According to the 2015 report by the joint panel of the African Union Commission and UN Economic Commission for Africa headed by former South African President, Thabo Mbeki, over $50 billion has continued to leave Africa yearly in illicit financial flows that implicate Western multinationals, including the so-called white shoe firms.

Anti-corruption Hypocrisy

By seeking collective anticorruption actions, Britain showed it was not ready to fight the corruption it benefits from. Mr. Cameron does not want to act alone on his putative anticorruption convictions. If he does, Britain would lose out on the proceeds and leverage of corruption. Instead, it wanted to mobilize global actions, which he knew would never yield substantial results (as already indicated in the meagre buy-in of his London initiative). But by organising the anticorruption circus, London will continue to receive illicit financial flows while Prime Minister David Cameron continues to pretend to anticorruption rectitude.

Mr. Cameron had to go for media sensationalism to boost publicity for his initiative. The Western media have always loved to present corruption as the second name of Nigeria. Thus, the British Prime Minister infamously named Nigeria and Afghanistan as “fantastically corrupt” countries whose leaders would be among his guests at the conference; and it worked.

However, although Nigeria is noted for the unremitting corruption of its ruling elites and their private sector mules, the moral code of the country is significantly higher than that of Great Britain. The popular view in Nigeria is that both the person who stole and the recipient of his loots are thieves. But with his sanctimonious description of Nigeria as “fantastically corrupt” without recognising the guilt of Britain as a recipient of funds looted in Nigeria, Mr. Cameron showed the British ethic is inferior to that of Nigeria. This further tells that the Prime Minister is not in a position to moralise to Nigeria on corruption.

Corruption Protection Index

Part of the anticorruption hypocrisy of Britain and the other advanced Western economies is to foster a barometer that glosses over their role in global corruption. The Transparency International’s Corruption Perception Index is the measuring rod for corruption in countries of the world. But the methodology of TI’s CPI is pathetically rigged. Instead of collecting data on illicit financial transactions, TI opted to measure “perception” of corruption, showing its acquiescence to secrecy. Even at that, TI decided to focus on the area of strength of Western countries which is the area of weakness of developing countries. Thus, the CPI measures perception of public sector corruption and glosses over private sector graft. But Western private sector firms and banks are the major co-conspirators in public sector graft in developing countries.

The West has done well to build its public institutions. This has been useful in preventing and punishing illicit local and cross-border transactions that can derail the state. But to continue to bolster their economies, the major world powers of the Western hemisphere cleverly designed frameworks that encourage illicit wealth transfers from developing countries. This entails weak public disclosure requirements for their (global) banks. Western countries also create safe haven assets, including real estate, to receive stolen public funds from developing countries. Where the stolen funds have been traced to the West, like the loot of the late Nigerian dictator, General Sanni Abacha, repatriation of the funds immediately hits a procedural or legal cul-de-sac.

It is unconscionable that Transparency International’s CPI has continued to make developing countries, who are victims of Western chicanery, the villains of global corruption. TI basically correlates underdevelopment to local corruption by parking developing countries in the bottom half of its CPI. But the wealth of the Western countries has roots in slave trade and colonialism – the most abject forms of corruption the world has ever known, and for which there has been no reparation.
 
The challenge to Transparency International is to factor perception of private sector corruption into its survey questions. If it does this, there would be a dramatic restructuring of its index. The corruption of British banks alone could push Britain to the last quartile of the CPI for 2017.

US regulators fined Barclays Bank $2.38 billion for forex rigging in May 2015, HSBC $1.92 billion in December 2015 as penalty for laundering drug money out of Mexico, and Standard Chartered Bank agreed in 2014 to pay $300 million for non-compliance to anti-money-laundering controls for which it was fined in 2012. Barclays and other Western banks were also fined heavily by US regulators for rigging Libor -- the inter-bank interest rate that is tied to over $800 trillion loans and securities in global markets. Of course, African countries from where estimated $50 - $60 billion is taken out yearly in illicit financial flows have no power to act similarly to the US authorities.

Enigmatic Buhari

Many commentators have tried to determine whether Prime Minister David Cameron simply goofed by describing Nigeria and Afghanistan in front of cameras as “fantastically corrupt” countries. All the more because he was expecting leaders from these countries to be his guests at the London summit. One way to solve the riddle is to ask why the determined anti-corruption efforts of President Buhari eluded the reckoning of Mr. Cameron in his remark.

The answer is that, at best, President Buhari’s anticorruption cuts him an enigmatic persona. He seems to believe that Western leaders are enamoured of anticorruption in Nigeria. He seems not to realise that money laundering is benign when it is not linked to terrorism financing: the nightmare of the Western countries. On the laundering of crime proceeds, acclaimed crime expert, Roberto Saviano, said: “The British treat it as not their problem because there aren’t corpses on the street.” All the better if proceeds of corruption help to bolster British asset prices. In short, Mr. Cameron’s diatribe shows Buhari’s anticorruption has won him the scorn, and not the respect, of the British Prime Minister.

Well-meaning Nigerians have continued to flaw the anticorruption posturing of President Buhari for good reasons. His anti-graft efforts entail bad-mouthing the country, like agreeing with Mr. Cameron that Nigeria is “fantastically corrupt.” While so-called truth-telling about Nigeria’s corruption might presumably bolster Buhari’s reputation, he is eroding the honour of the country, contrary to the National Pledge. The London summit ended without any promissory note on repatriation of Nigeria’s looted funds in Britain, which President Buhari had thought he was facilitating by agreeing with Prime Minister Cameron that Nigeria is “fantastically corrupt.”

Buhari’s anticorruption has been inflicting collateral damage not only on the reputation of Nigeria, but also the economy. For lack of required attention – because of focus on anticorruption, the economy has been faring worse than what is explained by the decline in oil prices. Because he makes up his economic policies as he goes along, policy somersaults have become the hallmark of policymaking by his administration. A new and potentially more damaging facet of this anticorruption rigmarole is seeing indiscreet probing of Nigerian bank executives. This will only compound the woes in the financial market, the heartbeat of the economy.

There are alternative strategies to President Buhari’s current anticorruption efforts. He can stop wasting time and resources chasing funds that have left the country’s shores and focus more on curbing and deterring new cases of corruption, especially illegal financial outflow from the country. He can initiate a strategic anti-money laundering that seeks to keep the proceeds of Nigeria’s corruption within the country. This will entail the prioritisation of the limited expert resources in forensic surveillance of the financial system. Astute allocation of legal expertise to the prosecution of (new) cases involving illegal capital outflow from Nigeria will aid speedy and efficient trials and convictions that will dent the sense of impunity that fuels Nigeria’s corruption. In line with our ethic, any banker or associate who helped to facilitate the illegal outflows must also be prosecuted.

Those who steal public funds and retain the money in the country would be treated as lesser offenders who would not compete for the limited state prosecutorial capacity. A national reorientation towards ethical rebirth should be launched to address local corruption, while the ongoing institutional measures against corruption would continue to be strengthened.

Nigeria’s resources must not be allowed to continue to illegally flow out for the benefit of other economies. The country will systematically reduce local corruption with the above measures. There is nothing the London summit or any other international conference can offer in this regard.