By Emily Williams and William Minter
In June 2015, a coalition of six Pan-African activist networks launched #StoptheBleeding Africa in Nairobi, Kenya to curb the hemorrhage of resources from the African continent. As the #BlackLivesMatter movement continues to gain strength in the United States, this Pan-African coalition came together to expose and mobilize global support to end illicit financial flows – money that is illegally earned, transferred or used. Estimates of illegal transactions in Africa show a loss of at least $50 billion to $80 billion in wealth every year, a figure that would be incalculably more if transfers made legal by loopholes and unfair treaties were included. Some flows are only seen as “legal” because the laws are written and interpreted by those profiting from the system. Nevertheless, the outflow of clearly illegal funds is far greater than the estimated $40 billion a year that Africa receives in official development assistance. As explained in this 16-minute video from the United Nations Economic Commission on Africa, the #StoptheBleeding campaign includes official commitments by African governments. However, implementing these commitments depends on large-scale mobilizations within Africa and around the world.
Unlike the pillage of Africa in earlier periods of the slave trade and colonial rule, these illicit financial transactions are most often hidden from public view. They happen through fraudulent invoicing of trade, “creative accounting” by multinational corporations, tax giveaways by African governments, and the use of shell companies based in tax havens around the world including Delaware, Luxembourg, Panama, the British Virgin Islands, Liberia, and Mauritius. Despite repeated revelations, notably the recent #PanamaPapers scandal, the public eye glazes over at billions of dollars cited alongside obscure company names and a complex web of financial links across national and continental borders. This article seeks to do the following: 1) introduce readers to the #StoptheBleeding campaign and make the tremendous loss of resources from African countries via illicit financial flows more visible, 2) begin to make the case for linking #BlackLivesMatter and #StoptheBleeding with the understanding that the same system of (mis)appropriation of wealth is hurting people in Africa and elsewhere in the world including the US, and 3) offer several domestic and global policy changes that could make a difference on both sides of the Atlantic.
The Looting Machine
As South African student activist Pearl Pillay noted, “it is a common error of thought that violence is only what you can see.” Violence that stems from decisions made in boardrooms, city halls, and the offices of high-paid international accounting and law firms can be harder to see than violence on the streets but is deadly nonetheless.
In the US, economic violence is carried out through systemic public disinvestment in health and education as we’ve seen in Flint, Michigan’s water crisis and the closure of public schools in Chicago and Detroit, not to mention below-poverty-level wages paid by corporations such as Wal-Mart and McDonald’s.
In African countries, capitalist enterprises suck resources out of the continent via traditional industries like oil and minerals and rapidly expanding economic sectors like telecommunications and retail:
- In Nigeria, Shell, Chevron, and other companies from Europe and China share oil profits with corrupt Nigerian officials. The Panama Papers reveals that “three oil ministers, several senior employees of the national oil company, and two former state governors” were “convicted of laundering ill-gotten money from the oil industry.” One prominent Nigerian oil trader is accused of cheating the Nigerian government out of 1.8 billion dollars in oil sales.
- In Angola, an oligarchy headed by the president’s family presides over oil riches in alliance with companies including Chevron, ExxonMobil, BP, and a Hong Kong-based international network of companies known as the Queensway Group.
- In South Africa, it was revealed last year that the mobile phone company MTN is able to avoid paying taxes on hundreds of millions of dollars from its subsidiaries in Nigeria, Ghana, Uganda, and other African countries by channeling most of its profits through “management fees” to its subsidiary tax haven in Mauritius.
- Walmart, which has controlled the South Africa-based Massmart since 2011, hides an estimated $76 billion of its foreign earnings through subsidiaries in Luxembourg, where it owns no stores. By hiding these earnings stored in Luxembourg, Walmart avoids paying taxes on the funds.
These financial practices can be as, if not more, deadly than police violence due to the sheer number of people impacted as resources needed for health, education, and other public services—as well as for private and public investment in development—are siphoned out to multinational corporations and overseas bank accounts. The ensuing competition for scarce resources fuels local and national conflicts, often heightened by demagogues channeling the frustration into hostility toward ethnic “others.”
The direct and indirect toll resulting from illicit financial flows reflects the unequal value today’s world places on human lives by race and place; and, in fact, not only parallels the violence of terrorism but also reflects its disproportionate toll on the Middle East, Africa, and Asia than in Europe and the Americas. Reflecting the legacy of the slave trade and colonialism, the African continent and Black people around the world are disproportionately located at the bottom of a global system that systematically sucks wealth upward, toward the top “one percent.” Whether this system is best called capitalism, neoliberalism, global apartheid, white supremacy, kleptocracy, or something else, there can be no doubt that the number of deaths caused by these structural economic inequalities rivals or likely even exceeds those lost due to bombs, guns, or machetes.
Stop the Bleeding (4-minute music video)
Financial Flows and Tax Losses
With the #PanamaPapers leak in April 2016, illicit financial flows momentarily gained international media attention. This is in part because rich as well as poor countries are affected. A recent calculation estimated that illegal tax evasion costs US taxpayers $35 billion a year, with an additional $130 billion a year lost to technically legal “tax avoidance.” Even without any changes in tax rates for the rich, these “lost” funds could add $165 billion a year more in public funds and be invested in health, education, and other public goods that benefit Americans.
The losses to sub-Saharan Africa from illicit flows, however, have an even more significant impact given the smaller size of African economies and the urgent need for investment in basic services. According to World Bank estimates for 2014, while the United States and other rich countries on average spend over $9,000 a year per person on public health, South Africa spends a little less than $600 a year per person. Meanwhile the average for all African countries together is less than $100 per person per year. As the wealthy evade taxes in both richer and poorer countries, it is always those most vulnerable in society who suffer the most from budget cuts. On a global scale, African countries and African people suffer disproportionately, reflecting the global hierarchy of wealth and power.
Watch this 3.5 minute video on how Zambia Sugar evades taxes.
Making Connections Across Geographic and Mental Distance
Although #BlackLivesMatter and #StoptheBleeding were born out of distinct geographic contexts, highlight apparently different social problems, call for varying solutions, and have diverging levels of visibility in the global media, they are inextricably and deeply linked.
Thanks to #BlackLivesMatter the pervasive systemic violence against Black people by police and the criminal justice system in the US is now more visible. Names like Trayvon Martin, Mike Brown, Sandra Bland, Rekia Boyd, Eric Garner, Tamir Rice, Alton Sterling, and Philando Castile have not been forgotten because activists have strategically used social media, street protests, and behind-the-scenes organizing to force the media, the public, and politicians to pay attention.
In the U.S., increasing economic inequality has led to the criminalization of the poor and can be directly connected to police violence. For example, in the cases of Alton Sterling and Eric Garner, their attempts to make money in the street economy (selling cd’s and loose cigarettes respectively) is what preceded their interaction with police that ultimately ended in the loss of their lives. U.S. activists are intentionally making economic justice fundamental to the message of #BlackLivesMatter in initiatives like the Agenda to Build Black Futures released by Black Youth Project in January 2016 and the Vision for Black Lives released by a coalition of Black organizations in August 2016. Notably, #BlackLivesMatter interventions in numerous cities were integral to pushing Bernie Sanders’ presidential campaign, which appealed to a growing segment of the American population because it called for a more progressive and populist economic agenda, to (belatedly) acknowledge the relationship between racial justice, gender justice, and economic justice.
But the violence plaguing Africa remains far too invisible to most Americans. It is more difficult to #saytheirnames when the report is of 44 killed at the #Marikana mine in South Africa, 147 students at #Garissa in Kenya, or hundreds of men, women, and children at #Baga in northeastern Nigeria—places most Americans have never visited and can’t find on a map.
Although the Nigerian-launched campaign to #BringBackOurGirls won international fame, few Americans (beyond African immigrants and others with close personal links to the continent) are attentive to other struggles in Africa. Hashtags like #StoptheBleeding, #OccupyNigeria, #MinersShotDown, #FeesMustFall, and #RhodesMustFall echo faintly, if at all, across the Atlantic.
Making the connections between what is happening “here” and what is happening “there” is not easy – #StoptheBleeding can feel less tangible because the violence being contested is hidden in a tangle of economic statistics, anonymous shell companies, and accounting tricks – but it is fundamental to addressing the obstacles that must be overcome to make a different world possible. It is imperative to address the roots of injustice that connect #BlackLivesMatter and #StoptheBleeding by fostering a collective process that builds solidarity between movement forces in the US and Africa.
Follow the Money
When policymakers—in Chicago, Washington, Pretoria, Nairobi, or anywhere else —ask “Where is the money?” to pay for health, education, and infrastructure, the answer should be, in the words of the African Union Panel on Illicit Financial Flows: “Track it! Stop it! Get it!” The debate must go beyond the very real issues of setting different budget priorities to raising the basic question of who pays and who is evading their duty to pay their fair share. The first step is to ensure that there is full information available on income and wealth of those who have the most money, including the ultra-rich, the well-known giant companies, and also the obscure shell companies that both use to hide their wealth from public view.
The United States and other rich countries are the home countries for the majority of multinational corporations involved in the looting of the African continent. They also provide convenient facilities for African elites to hide their riches. In a report published in January 2016, Global Witness documented with video interviews their undercover investigation of 13 leading New York law firms. “We said we were advising an African minister who had accumulated millions of dollars, and we wanted to buy a Gulfstream Jet, a brownstone and a yacht. We said we needed to get the money into the U.S. without detection…the results were shocking; all but one of the lawyers had suggestions on how to move the funds.”
On the African continent, #StoptheBleeding activist groups and many public officials at continental and national level are working to identify the money that pours out of the continent. They have identified specific measures to improve tracking of fraud in trade invoices and are campaigning against tax treaties with foreign investors with massive giveaways. They are working with international partners to train journalists in investigations such as those in the Panama Paper, and with tax specialists to improve capacity to track overseas bank accounts. Implementation depends on mobilization of public pressure and political will in each individual country. Since the system is global, however, it also depends on international collaboration, particularly from the countries where the money is hidden.
And that’s where the connection to the United States becomes essential, and the agendas of #BlackLivesMatter and #StoptheBleeding Africa potentially converge. The ultra-rich and multinational corporations operate on a global playing field. Using secret bank accounts, lawyers, and accountants spread around the world, money can be transferred with a click of a mouse from Nairobi or Chicago to the British Virgin Islands to London, with stops along the way in Panama, the Seychelles in the Indian Ocean, Singapore, and Samoa in the Pacific. If tax authorities are going to track down the money they should be getting, activists and honest public officials around the world must also find ways to collaborate to change the laws and implement them (see the text box for a few examples of key policies that could make a difference).
Key Policy Changes Needed for Tax Justice
1. Beneficial ownership in the US
Over two million corporations, LLCs, and other business entities are formed in the United States every year—and almost every state collects less identifying information from the individuals forming these entities than from people applying for a driver’s license or registering to vote. Indeed, many states rank among the easiest places in the world in which to form “anonymous shell companies” or “phantom firms” – business entities that exist solely on paper with no obligation to list the real people who actually own or control them, otherwise known as the “beneficial owners.” If they remain hidden, it is not possible to find and to tax the assets, whether they come from drug dealing or simply from rich people trying to avoid paying taxes.
Relevant federal legislation proposed: The Incorporation Transparency and Law Enforcement Assistance Act (S. 2489 and H.R. 4450)
2. Public Country-by-Country Reporting
Currently, multinationals are able to exploit loopholes in domestic and international tax laws to shift profits from one country to the next, often through tax havens (or “secrecy jurisdictions”), with the end goal of reducing or even eliminating the tax they pay to governments. Without leaks and whistleblowers, even governments only see a small window into the inner workings of companies, which makes proving tax avoidance or evasion nearly impossible. Although MNCs report on their profits, revenue, taxes paid, and number of employees, the global numbers they provide are for the operations of all of their subsidiaries bundled together.
Multinational corporations should be required to submit individual reports with basic financial information such as revenue, profits, taxes, and number of employees for each jurisdiction in which they operate. These country by country reports should be made available to the public. Public country-by-country reporting strengthens the financial system for everyone.
New regulations on country-by-country reporting by corporations were issued this year by the Treasury and the IRS, and are also under consideration by the Security and Exchange Commission. However, these do not yet meet the standard of public disclosure demanded by tax justice advocates.
3. Financial Transaction (Robin Hood) Tax
Simply put, the big idea behind the Robin Hood Tax is to generate hundreds of billions of dollars, through a small tax of 0.5% on all financial transactions such as sales of stocks and bonds. That money could provide funding for jobs to kickstart the economy and get America back on its feet. It could help save the social safety net here and around the world, and it will come from fair taxation of the finance sector. The revenue raised would be enough to protect American schools, housing, local governments and hospitals, to pay for lifesaving AIDS medicines, to support people and communities around the world, and to deal with the climate challenges we’re facing.
Relevant federal legislation proposed: The Inclusive Prosperity Act (H.R. 1464), introduced in the House of Representatives by Rep. Keith Ellison and 36 co-sponsors and in the Senate (S. 1371) by Sen. Bernie Sanders, with 1 co-sponsor.
Action at the federal level can have the widest effect, given the size of the U. S. economy and the impact of U.S. policy on international action. But given that corporations are registered at the state level and also pay corporate taxes at the state level, states also have the capacity to take the lead and set a precedent for national action. If the political will and the technical legal and financial expertise are available, similar laws could possibly even be implemented at city levels, as were divestment measures in the anti-apartheid era.
Solidarity between #BlackLivesMatter and #StoptheBleedingAfrica is crucial. Via weak corporate tax law, the U.S. gives license to corporations to hoard profits and withhold their fair share of taxes from the societies and countries which allow them to become prosperous. By standing in opposition to tax injustice, activists can push back against an aspect of U.S. capitalism that contributes to increasing wealth inequality. By staying informed, building relationships, and working in solidarity, we begin to create better conditions for Black lives across the globe.
Incremental policy change will not be enough. We must confront the legacy of centuries of systemic injustice and end society’s denial that this past still shapes the present. The violent inequality of today’s world is not new, despite dramatic changes in the technologies of both physical and economic violence. Making that violence visible also requires making full use of new technologies, from cellphone videos to big-data journalism. But above all, it depends on forging links between activists engaged on these different fronts in different places, who together can build the political will to act and thus make new futures possible.
For More Information
Tax Justice Network – Africa
USA and Global
Emily Williams is an educator and organizational development consultant. William Minter is the editor of AfricaFocus Bulletin ( http://www.africafocus.org) and author of numerous books and other publications on African issues and international relations. Both authors are members of the coordinating committee of the US-Africa Network (http://www.usafricanetwork.org). The authors are grateful for the skillful editing of Alice Kim, which has contributed immensely to the development of this article.