Corruption’s big week
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And now for this week’s free section:
Corruption’s big week
Two major corruption stories surfaced over the past week:
- In Kenya, fraudulent payments, graft and corruption worth $100 million was reported out of several government agencies and companies.
- The International Consortium of Investigative Journalists published the “West Africa Leaks”, a cooperation with various West African journalists that linked offshore companies discovered in the “Panama Papers” , “Paradise Papers” and other data leaks.
The two scandal clusters are not linked directly, but nicely demonstrate two different sides of the corruption coin:
In Kenya, graft and fraudulent payments combined with kickbacks to civil servants demonstrated how government agencies can be used to rob the state. In 2016, Kenya’s anti-graft chief estimated that the country loses a third of its budget to corruption every year. Sometimes these schemes are so brazen, it seems the participants have no fear whatsoever of getting caught. In one of the current scandals, a fraudulent supplier charged Kenya’s National Youth Service, a key agency tasked with reducing youth unemployment, $10 million for beef. At current market prices, this translates to 66 kg beef per beneficiary of the KNY.
The “West Africa Leaks” in turn are light on details regarding actual corruption, instead documenting the various ways in which illegal funds leave African countries. Offshore companies in tax havens play an important role in this. They are used to stash illicit gains, disguise the beneficiaries of corruption and tax evasion, and to avoid taxes on investment incomes.
In contrast to European countries, some of which have recovered hundreds of millions of dollars in unpaid taxes based on the information provided in the various leaks of the last decade, African countries so far have not used the information to systematically track down lost funds. The ICIJ hypothesises that this is due to the lack of capacity in African revenue authorities as well as a lack of political will since elites and their cronies are among the chief beneficiaries of the status quo.
In that sense, massive scandals like those uncovered now in Kenya don’t show a broken system. Instead, the system works as designed, enriching a lucky few that support or overlap with Africa’s political class.
- The ICIJ has a handy overview of the “West Africa Leaks”
- A list of all stories that have been published by various West African media under the umbrella of the “West Africa Leaks”
- An overview over the recent corruption scandals in Kenya, courtesy of The Guardian
- Details on the scandal at Kenya’s National Youth Service, by the BBC
- The scandal at Kenya Power, detailed by The Star
- The Star also has an overview over allegations at the National Cereals and Produce Board, which paid out millions of dollars to fake farmers for nonexisting maize deliveries
- 2016 article about the impact of corruption on Kenya’s budget
Compiled by @PeterDoerrie