“The people of Ethiopia are being bled dry. No matter how hard they try to fight their way out of absolute destitution and poverty, they will be swimming upstream against the current of illicit capital leakage”, wrote Economist Sarah Freitas who co-authored an upcoming report with Lead Economist Dev Kar of Global Financial Integrity (GFI). The GFI report entitled, “Illicit Financial Flows from Developing Countries over the Decade Ending 2009,” previewed in the Wall Street Journal, found that
Ethiopia, which has a per-capita GDP of just US$365, lost US$11.7 billion to illicit financial outflows between 2000 and 2009. In 2009, illicit money leaving the economy totaled US$3.26 billion, which is double the amount in each of the two previous years… In 2008, Ethiopia received US$829 million in official development assistance, but this was swamped by the massive illicit outflows. The scope of Ethiopia’s capital flight is so severe that our conservative US$3.26 billion estimate greatly exceeds the US$2 billion value of Ethiopia’s total exports in 2009.”
Two weeks ago in my commentary, “Why is Ethiopia Poor?”, I highlighted the fact that the Legatum Institute (LI), an independent non-partisan public policy group based in London, had recently ranked Ethiopia a pretty dismal 108th/110 countries on its 2011 Prosperity Index (LPI). Last year, the Oxford Poverty and Human Development Initiative (OPHDI) Multidimensional Poverty Index 2010 (formerly annual U.N.D.P. Human Poverty Index) ranked Ethiopia as the second poorest (ahead of famine-ravaged Mali) country on the planet. According to OPHDI, the percentage of the Ethiopian population in “severe poverty” (living on less than USD$1 a day) in 2005 was 72.3%. Six million Ethiopians needed emergency food aid in 2010 and many more millions needed food aid in 2011 in what the U.N. described as the “worst drought in over half a century to hit parts of East Africa”.
The cancer of corruption is deeply embedded in the marrow of the Ethiopian body politic. The recently released Transparency International (TI) 2011 Corruption Perception Indexreport on Ethiopia confirms the findings of GFI and other anti-corruption international organizations. For the past decade, TI has ranked Ethiopia at the bottom of the barrel of countries ruled by the most corrupt governments. In fact, for the past ten years Ethiopia’s score on the TI index has remained virtually unchanged (TI ranks countries on a 0 (“highly corrupt”) to 10 (“very clean”) scale.
TI Corruption Index Score for Ethiopia by Year
2011 2.7
2010 2.7
2009 2.7
2008 2.6
2007 2.4
2006 2.4
2005 2.2
2004 2.3
2003 2.5
2002 3.5
In light of the 2011 GFI and TI reports, is there any doubt today why Ethiopia is the second poorest nation in the world? Is it rocket science to figure out why Ethiopians are the second poorest people on the planet? Ethiopians are poor because they have been robbed, ripped off, flimflammed, bamboozled, conned, fleeced, scammed, hosed, swindled, suckered, hoodwinked, victimized, shafted and taken to the cleaners by those clinging to power like bloodsucking ticks on an African milk cow. Is it not mindboggling that the US$3.26 billion stolen out of Ethiopia in 2009 was double the amount stolen in 2008 and 2007!?!
The Art of Bleeding Ethiopia Dry
I have long argued that the business of African dictatorships is corruption. In a November 2009 commentary entitled “Africorruption Inc.”, I wrote the following about corruption in Ethiopia:
The devastating impact of corruption on the continent’s poor becomes self-evident as political leaders and public officials siphon off resources from critical school, hospital, road and other public works and community projects to line their pockets. For instance, reports of widespread corruption in Ethiopia in the form of outright theft and embezzlement of public funds, misuse and misappropriation of state property, nepotism, bribery, abuse of public authority and position to exact corrupt payments and gain are commonplace. The anecdotal stories of corruption in Ethiopia are shocking to the conscience. Doctors are unable to treat patients at the public hospitals because medicine and supplies are diverted for private gain. Tariffs are imposed on medicine and medical supplies brought into the country for public charity. Businessmen complain that they are unable to get permits and licenses without paying huge bribes or taking officials as silent partners.
Publicly-owned assets are acquired by regime-supporters or officials through illegal transactions and fraud. Banks loan millions of dollars to front enterprises owned by regime officials or their supporters without sufficient or proper collateral. Businessmen must pay huge bribes or kickbacks to participate in public contracting and procurement. Those involved in the import/export business complain of shakedowns by corrupt customs officials. The judiciary is thoroughly corrupted through political interference and manipulation as evidenced in the various high profile political prosecutions. Ethiopians on holiday visits driving about town complain of shakedowns by police thugs on the streets. Two months ago, Ethiopia’s former president Dr. Negasso Gidada offered substantial evidence of systemic political corruption by documenting the misuse and abuse of political power for partisan electoral advantage. Last week, U.S. State Department spokesman Ian Kelley stated that the U.S. is investigating allegations that “$850 million in food and anti-poverty aid from the U.S. is being distributed on the basis of political favoritism by the current prime minister’s party.” [As of December 2011, over two years after the investigation was launched, the State Department has not publicly released the results of its investigation.]
Deceit, chicanery, paralogy and sophistry are the hallmarks of Meles Zenawi’s regime in Ethiopia. The cunning dictator has been able to shroud his corrupt empire by pursuing a propaganda policy of mass distraction and by staging one farcical political theatre after another. Zenawi has successfully distracted public attention from rampant corruption by
Making wild allegations of terrorism against his critics, persecuting and prosecuting his opponents and by jailing and exiling independent journalists (a couple of weeks ago, Zenawi shuttered Awramba Times);
Proclaiming a bogus Growth and Transformation Plan that will “double economic growth by an annual average of14.9 percent” by 2015;
Selling Ethiopia’s most fertile land for pennies above the table and for millions under the table;
Taking massive loans from international banks without any significant accountability on how it is spent;
Trying to shame and intimidate Western bankers and donors by hectoring them of the evils of “neoliberalism”;
Proclaiming the construction of an imaginary hydroelectric dam over the River Nile;
Sending troops to occupy Somalia and threatening war with other neighboring countries;
Vilifying international human rights groups, election observers and officials of multilateral organizations who disagree with him;
Dispatching swarms of officials to panhandle the Ethiopian Diaspora for nickels and dimes to buy dam bonds;
Systematically extracting foreign remittances sent by Diaspora Ethiopians;
Staging political theatre by a toothless anti-corruption agency to hoodwink complicit Western donors and loaners.
Etc., etc.
The Economics of Corruption
The Economist Magazine in its November 7, 2006 editorial described “the Ethiopian government as one of the most economically illiterate in the modern world.” In 2009 at a high level meeting of Western donor policy makers in Berlin where, a German diplomat suggested that Ethiopia’s economic woes could be traced to “Meles’ poor understanding of economics”. They are all wrong!
The international community “naively” believes that corruption in Ethiopia and the rest of Africa could be controlled and significantly reduced by anti-corruption programs. The U.N. Convention Against Corruption (2003) requires signatories to “develop and implement or maintain effective, coordinated anti-corruption policies that promote the participation of society and reflect the principles of the rule of law, proper management of public affairs and public property, integrity, transparency and accountability.” Ethiopia signed the U.N. Convention in 2003. The Africa Union Convention on Preventing and Combatting Corruption (2003) established a regime to empower African countries to “prevent, detect, punish and eradicate corruption and related offences in the public and private sectors.” The Convention prescribes that “in order to combat corruption and related offences in the public service, State Parties” shall “require public officials to declare their assets at the time of assumption of office during and after their term of office in the public service.” Ethiopia signed the AU Convention in 2004. Neither of these Conventions has even made a dent in controlling the metastasizing corruption in Ethiopia.
Zenawi knows the power of corruption. He has effectively used corruption allegations to neutralize and eliminate his political opponents. He used his “Federal Ethics and Anticorruption Commission” to railroad his comrade-in-arms and former defense minister, Seeye Abraha, to jail for six years on unsubstantiated allegations of corruption. When then-Judge Birtukan Midekssa, and later Ethiopia’s first female political party leader and long suffering political prisoner, released Seeye for lack of evidence, Zenawi rammed legislation through his rubberstamp parliament to deny Seeye bail and keep him in pretrial detention. He later fired Judge Birtukan. In 2008, Zenawi’s anticorruption commission reported that “USD$16 million dollars” worth of gold bars simply walked out of the bank in broad daylight. A number of culprits were fingered for the inside bank job, but no one was ever prosecuted. In February 2011, Zenawi publicly stated that 10,000 tons of coffee earmarked for exports had simply vanished from the warehouses. He called a meeting of commodities traders and in a videotaped statement told them he will forgive them because “we all have our hands in the disappearance of the coffee”. He warned them that if anyone should steal coffee in the future, he will “cut off their hands”.
For years, I have documented and railed against corruption in Ethiopia. In December 2008, three years to the month, in a weekly commentary entitled, “The Bleeping Business of Corruption in Ethiopia”, I wrote:
The fact of the matter is that the culture of corruption is the modus operandi in the Ethiopian body politics. Former president Dr. Negasso Gidada clearly understood that when he declared in 2001 that ‘corruption has riddled state enterprises to the core,’ adding that the government would show ‘an iron fist against corruption and graft as the illicit practices had now become endemic’. In 2007 when Ethiopia’s auditor general, Lema Aregaw, reported that Birr 600 million of state funds were missing from the regional coffers, Zenawi fired Lema and publicly defended the regional administrations’ ‘right to burn money.’…. Ironically, in 2003, Ethiopia signed the U.N. Convention Against Corruption; and a couple of months ago, a conference on institutions, culture, and corruption was hosted jointly in Addis Ababa by the United Nations Economic Commission for Africa and the Council for the Development of Social Science Research in Africa.
The fact of the matter is that absolute power corrupts absolutely. Zenawi has absolute power in Ethiopia. Pleading for transparency and issuing moral exhortations against corruption will have no effect on the behavior of Zenawi or any of the other African dictators. Indeed, to plead the virtues of accountability, transparency and good governance with Zenawi and Co., is like preaching Scripture to a gathering of heathens. It means nothing to them. They are unfazed by moral hectoring or appeals to conscience. They sneer and jeer at those who rail and vociferate against corruption. Preaching to the corrupt, to put it simply, is an exercise in total futility!
In my November 7 commentary “To Catch Africa’s Biggest Thieves Hiding in America!”, I discussed the importance of initiating and cooperating with the U.S. Justice Department (DOJ) in civil forfeiture actions to seize corruptly obtained cash, personal or real property of any person or entity that can be traced to “specified unlawful activity”. These civil court actions extend to foreign offenses involving extortion, money laundering, or the misappropriation, theft or embezzlement of public funds by or for the benefit of a public official of a foreign government. (18 U.S. C. sections 981 (a) (1) (c); 1956; 1957.) The U.S. has recently filed action to seize personal and real property of Teodoro Nguema Obiang Mangue, the 43-year old son of President Teodoro Obiang Nguema Mbasogo of Equatorial Guinea.
Carefully review and analysis of GFI and TI data sources reveals that public assets and funds stolen from many African countries, including Ethiopia, are often hidden in banks located in the U.S. and Europe, although the clever African dictators are now diversifying by taking advantage of financial havens in countries experiencing rapid growth and industrialization. Much of the corruption activity centers around money laundering (that is, illegal or dirty money is put through a complex cycle of financial transactions or washed and is transformed into legitimate or clean money).
The basic idea in money laundering is to minimize the chances of detection of stolen public assets and funds by breaking the direct link between the kleptocrats or “corruptocrats” and their collaborators by disguising the true ownership. Using financial consultants, shell companies (bogus companies that exist to simply create the appearance of legitimate transactions through fake invoices and balance sheets), fraudulent official documentation, wire transactions, and “smurfing” techniques (breaking up large amounts of money into smaller, less-suspicious amounts in the names of multiple persons) etc., those who have stolen public assets and funds try to sever or camouflage their loot from its illegal source by placing it in international financial institutions. The aim in money laundering is at least twofold: 1) gain anonymity and hide the audit trail in case of a criminal investigation, and 2) plough the “clean money” into the legitimate economy by buying homes, investing in legitimate businesses, starting businesses and so on.
If the problem of corruption is to be addressed effectively in Ethiopia and the rest of Africa, it is not going to be at the fountainhead of the corruption itself but in the ocean where the river of corruption terminally flows. As one cannot expect the fox to safeguard the henhouse, one cannot similarly expect Africa’s dictators and corruptocrats and their collaborators to safeguard public assets and funds. A big part of the answer to the question of corruption lies in the Laundromats of financial institutions where the dirty money is washed. That’s why I believe it is the civic and moral duty of every Ethiopian and African to help the U.S. Justice Department catch Africa’s biggest thieves hiding in America. It is very easy to do, and do it anonymously. Individuals with information about possible proceeds of foreign corruption in the United States, or funds laundered through institutions in the United States, should contact Immigration and Customs Enforcement, Homeland Security Investigations (ICE HIS) toll free at 866-347-2423 or send email to: [email protected]. If calling from outside of the U.S., the number is: 802-872-6199
BLOW THE WHISTLE ON AFRICA’S BIGGEST THIEVES HIDING IN AMERICA!!!
