Thursday, May 08, 2008

Charles Taylor again, and Citibank

We bring you an update on investigations into the financial affairs of the former Liberian strongman Charles Taylor. (Our previous story is here.) He is currently up before a United Nations tribunal in the Hague, accused of war crimes. As the BBC explains:

"The charges relate to his role in the war in neighbouring Sierra Leone where he allegedly backed rebels responsible for widespread atrocities."

A new Reuters article sheds new light on our earlier blog on this emerging story.

"The Special Court's chief prosecutor, Stephen Rapp, said a London law firm working with the court had found records of two bank accounts in Taylor's name at Citibank in New York. These accounts were closed and a total of $375 million was transferred from them over time into other bank accounts in the U.S. and elsewhere," Rapp told Reuters in an interview this week."

The accounts were closed in December 2003, four months after Taylor stepped down as President and went into exile, he said. "The amount of money is truly remarkable ... It seems at least 80 percent of the revenues of Liberia -- from timber, ship money, customs, other things -- ends up in Taylor's own private accounts," Rapp said. "Customs receipts would be delivered to him at the end of the day. There are examples of paying nearly $2 million into the government treasury in the morning and that same afternoon that same exact figure -- $1,999,975 -- going into Taylor's account.

The trial is being held in the Hague for fear of destabilising West Africa. Last month a former fighter told the court he had killed men, women and babies on Taylor's orders and had eaten the heart of a former rebel leader."

This is not the first time Citibank has been in hot water for coddling corrupt African dictators. The bank was censured, after an investigation by the crime-busting US Senate Permanent Subcommittee on investigations, for taking huge deposits from Omar Bongo, president of oil-rich Gabon (and today the world's longest-standing president.) As a recent book explains:

"A Citibank official told the Senate that he never once asked Bongo about the source of his wealth “for reasons of etiquette and protocol.” Another told the Office of the Comptroller of the Currency (OCC) in 1997 that Bongo would have a courier pick up suitcases full of cash from the oil companies, and he always paid cash when visiting the United States. On one visit to the United States, Citibank noted, Bongo’s entourage took two full floors at the Plaza Hotel in New York.

A Citigroup official painted it as a matter of a few rogue officials failing to implement proper controls. 'I do think we are talking about five or 6 cases out of a large number...the private bank now has 100% good audits which was not the case during the period of time we are talking about.' "

Once again, the banks or other suppliers of corruption services are found out, and they say the problem was a glitch; a case of a few bad apples - and then everyone forgets about them. It is simply not good enough. (Britain, it has to be said, is probably just as bad, not to mention the other pariah states like Switzerland or Singapore.) Bongo was bad enough, but he was never particularly brutal. Taylor is in another league altogether.

And how big is this problem, worldwide? The World Bank has reported that illicit financial flows across borders - of which the alleged Taylor money is but one small example - range between 1-1.6 trillion (yes, trillion) per year, half from developing and transitional economies. Accumulated capital flight sucked out of Africa is, as recent research has shown, far greater than Africa's external debts, meaning that Africa is a net creditor to the world. The difference is that Africa's assets - sucked out into the secrecy jurisdictions, where they can't be recovered or taxed - are in the hands of unaccountable private élites, while the liabilities - the external debts - are held by the African governments, and through them, the African people.

“Laundered proceeds of drug trafficking, racketeering, corruption, and terrorism tag along with other forms of dirty money to which the United States and Europe lend a welcoming hand,”said Raymond Baker of the Global Financial Integrity Program, who testified before the U.S.Senate during its investigation into Omar Bongo’s millions at Citibank. “These are two rails on the same tracks through the international financial system.”
You cannot tackle one - terrorism, or the proceeds of people-trafficking or national-level corruption, for example, without tackling them all. The world needs to change, profoundly. For one thing, we need to turn our definitions of corruption on their heads. Read more about that here. But we also need to crack down hard on secrecy. As our recent blog explains, the United States uses secrecy as a key tool in attracting money to finance its current account deficit - and, it seems, without caring which other countries this might damage.

It astonishes us at the Tax Justice Network that these kinds of problems have been allowed to fester for so long.


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