“The Washington model of ‘justice’ is to charge bankers a fine for such crimes, so that no one is jailed, and then banks pass the bill back to their customers.”
The High Level Panel on Illicit Financial Flows was commissioned three years ago by the African Union and United Nations Economic Commission on Africa (UN ECA). But notwithstanding extensive resources, the panel didn’t turn up anything particularly surprising. Researchers at the UN ECA, Global Financial Integrity and the Universities of Massachusetts, Witwatersrand and London have previously identified even larger IFFs.
One reason is that Mbeki’s team declined to explore the grey area between licit and illicit, in the examples noted above, especially capital control liberalization and legal tax loopholes. They displayed an annoying habit of providing anecdotes about rip-off schemes using real-life examples, while failing to name and shame the perpetrators. In short, the Mbeki report confirms that he and other African elites are not the least bit serious about building a powerful social force to halt and reverse the damage. His denial of the illicit financial flow to Warner is just icing on the cake.
Instead, such a movement is being built in South Africa by activists confronting these corporations directly. One example is the network demanding that the Marikana massacre report given to President Jacob Zuma in March finally be released so that at least one firm’s obvious blame can be codified and quantified. There is no question that Lonmin – a mining house once termed “the unacceptable face of capitalism” by Edward Heath – will be criticized by Judge Ian Farlam for colluding with police to arrange the massacre of 34 of its workers on August 16, 2012. Lonmin’s top officials included a board director in charge of “transformation,” Cyril Ramaphosa, who 24 hours earlier wrote emails to the police and mining minister describing the wildcat wage strike then raging as “dastardly criminal.”
Ramaphosa is now second in command in South Africa, with a strong likelihood of succeeding Zuma as president in 2019. Ramaphosa had access to a $100 million World Bank loan to build 5500 houses for Lonmin in 2011, but only built three, explaining that Lonmin faced a profitability crisis after 2008. But Dick Forslund of the Alternative Information and Development Centre has proven that the firm had recently exported more than $300 million to Lonmin subsidiaries in the “hot money centers” of Bermuda and London. A classic case of what can generally be termed transfer-pricing profits, it was a supposedly legal tax practice. Given Lonmin’s power and Ramaphosa’s explicit endorsement of the company’s financial accounts, don’t expect a South African government investigation.