30th July 2020
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Africa’s mining sector remains vulnerable to corruption and IFFs
Another week, another set of extraordinary developments relating to illicit finance flows (IFFs).
Following the UK Parliament’s publication of the ‘Russia Report’ into suspected meddling by Moscow in UK affairs – activities allegedly funded by money laundering in London – the US and Kenya this week took the lead in clamping down on illegal financial activity.
Acting on information from the US authorities, Kenya arrested 60-year-old fugitive Mansur Surur at Mombassa Airport after the alleged drug dealer and illegal wildlife trader arrived back from Yemen.
Surur’s arrest – it is important to stress that he has not been found guilty of any crime – has been hailed as a significant development in a multi-agency investigation into the Uganda-based “Kromah” network – named after the gang’s leader, who is already in custody.
Surur was wanted in the US for alleged heroin trafficking and sales of rhino horn and elephant ivory, and has now been handed over to Interpol. He was previously charged with money laundering.
Interestingly, I learnt of Surur’s arrest during an excellent webinar on IFFs hosted by Global Finance Integrity – and not through the national media. While there has been some limited media focus on Surur’s activity, still too little coverage of illicit finance makes it into a modern media obsessed with celebrity, spoon-fed (diary) news and political rows.
Yet as the Russia Report last week highlighted, the threats posed by IFFs are now so severe that they are working to undermine major democracies and economies the world over, not just the UK. Surur’s arrest is a critical plank in multi-agency efforts to tackle IFFs which continue to destabilise Sub-Saharan Africa’s borders and economies.
The Global Financial Integrity webinar – entitled ‘The Paradox of Plenty: Natural Resource Crime in Africa’ – featured a panel of guest speakers, each focusing on distinct IFFs within Africa. The session was expertly chaired by Francis Kairu from GFI’s Nairobi office.
Alexandra Gillies from the Natural Resource Governance Institute kicked off proceedings by providing an update on levels of oil-based corruption. She began with the good news: the scale of oil-related corruption is, she believes, coming down due to the slump in oil prices since 2014 and the current Coronavirus pandemic.
But the bad news is that the risk of oil-related corruption across Africa has not decreased significantly, despite the continued efforts of anti-corruption agencies. Specifically, Gillies warned, critical parts of the continent’s oil sector remain exposed to potential corruption: national oil companies (especially those closely tied to political leaders), oil trading and procurement (the risk of contracts being handed to political insiders etc.).
Gillies also highlighted a key point. There is, she said, no such thing as “African” oil corruption. The pillaging of Africa’s natural resources, she added, is almost always enhanced and facilitated by an army of ‘enablers’ from across the globe. Financiers who move dodgy money, lawyers and specialists who set up offshore accounts and trusts into which illegal assets are transferred etc. As the UK’s Russia Report last week highlighted, such people and companies in far-flung corners of the globe play almost as big a part in IFFs as corrupt politicians or organised crime gangs themselves.
During a Q&A section, I asked Gillies whether, in light of the financial scale of corruption decreasing since the end of the oil boom in 2014, organised crime would re-focus its energies away from oil and onto other IFFs. Understandably, Gillies said that it was perhaps too early to tell, given the ongoing pandemic and its impact. But her excellent presentation left little doubt that oil-sector corruption, and its illicit finance flows into offshore centres, for example, remains a considerable threat to African economies during the 2020s.
Next up was Alastair Nelson from the Global Initiative Against Transnational Organised Crime. Nelson’s presentation revealed the extent to which many of the activities within the illegal wildlife trade now overlap significantly with the activities of broader organised crime.
Nelson highlighted, for example, the arrest of Surur – who is both an alleged heroin dealer and wildlife trafficker. On the issue of the all-important ‘enablers’, Nelson showed how the same IFF facilitators are now moving humans (trafficking), heroin and illegally-traded tortoises along the same routes out of Madagascar.
The final speaker was Opimbi Osore from the Bonn-based Deutsche Gesellschaft für Internationale Zusammenarbeit (GiZ), who addressed the issue of illegal mining and trade in gemstones. Osore warned that the cost of gold has ‘skyrocketed’ during the Coronavirus pandemic – leaving some African states vulnerable to hawkish organised crime gangs which establish illegal mining operations.
As well as the pandemic, other factors continue to fuel the black market in natural resources. The price of Cobalt, a natural mineral vital to the global electric car industry, has also soared – bringing with it further risks of corruption superficially masked by financial activities such as trade mis-invoicing. The copper industry also remains a target for the corrupt.
Asked whether there was a feeling that some of these IFFs are now better monitored and addressed, the panel was in broad agreement that progress is slow-but-steady. On the issue of tackling ‘politically exposed people’ (PEPs), the panel agreed that, in their experiences, progress can and has been made. In Kenya, for example, Osore noted that some corrupt former MPs have now been arraigned. But Gillies warned that, across the extraction sector, companies needed to introduce better screening processes to identify corruption.
Which brings me to the final message. All three guest speakers spoke positively about the need for greater transparency across the sector. As Gillies said: “Each corruption case that we know about is a success story”.
But there are some obvious starting points, it seems, to going further un tackling IFFs. As Osore noted, the anti-IFF community needs to continue to “follow the money” – and that means tackling those all-important, and deeply suspicious, enablers of illicit finance.
From London, flush with laundered Russian cash, to the ports of Madagascar and its trawler fleets hiding traffickers, drugs and rare reptiles: targeting the enablers of illicit finance flows has never been more critical.
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