Welcome to the second edition of the dark side matters.
This month we are focusing on kleptocracy and sharing some resources on the vice. We are also sharing two investigative reports released by The Sentry (an investigative and policy team that follows the dirty money connected to African war criminals and transnational war profiteers) that highlighted the illicit assessment risks in Kenya as well as the impact of a multinational company on the conflict in Central Africa Republic.
As countries gathered in Glasgow Scotland for COP26, we sought to share a report by the Global initiative against organized crime titled Plastic for profit that highlighted another climate change challenge that is fueled by the dark side of globalization. Plastic shipped to African countries from the Global North.
The topic of the month;
Kleptocracy!
Kleptocracy can be defined as “the specific corruption that occurs when state leaders, usually from poorer countries, routinely loot millions or even billions of dollars from their national treasuries and the money is spent or stashed in rich countries.”
Globalization has made transnational transactions easier but also exposed loopholes that are utilized by the powers that be to exploit and loot.
In a journal article by The Journal of Democracy, it was noted that "Shell companies and new forms of international investment, such as luxury real-estate purchases, serve to launder the ill-gotten gains of kleptocrats and disimbed them from their country of origin."
The article further added that “everyday kleptocracy” depends heavily on transnational professional intermediaries: Western public-relations agents, lobbyists, and lawyers help to recast kleptocrats as internationally respected business people and philanthropic cosmopolitans. The resulting web of relationships makes up a “transnational uncivil society,” which bends global-governance institutions to work in its favor.
Kleptocrats do not just transform their polities to systematically control economic activity and plunder natural-resource wealth; they also cultivate extensive networks of transnational actors and institutions to assist in camouflaging their financial flows and polishing their reputations. Although some of these relationships and activities remain hidden, a hallmark of contemporary kleptocracy lies in its public face and visibility. Unlike other illicit actors—such as narco criminals and terrorists—who keep their extensive transnational ties in the shadows, kleptocrats tend to use the agents, services, and institutions of globalization not only to safeguard their assets but also to maintain a high-profile status.
Kleptocracies are aided by a global system that enables them, take money from their countries and put it in offshore accounts.
A global financial system that is built on secrecy. Whereas an unrestricted global financial system is supposed to ease financial services, it has been key in facilitating kleptocracy.
Learn more about kleptocracy with these resources:
The podcast Making A Killing by the Hudson Institute shares insights into kleptocracy and what it entails.
Check out this podcast by The Royal United Services Institute (RUSI) and this particular episode journalist Tom Burgis talks about his book on kleptocracy.
Away from our pick of the month;
A report released by The Sentry about the illicit finance risk assessment in Kenya revealed the threats and weaknesses that have been exploited by South-Sudanese politically exposed persons (PEPS) to launder money. It also revealed that Kenya has been used as a route for arms and ammunition en route to South Sudan.
The report further noted that “Kenya faces numerous illicit finance risks that expose its society to crime and deprive it of public services. These risks include domestic corruption, terrorist financing, environmental crimes, illegal trafficking, tax evasion, and the misuse of digital finance such as mobile banking and cryptocurrency.”
South Africa’s targeted assassinations have been a common occurrence in the news and the latest was a report by Institute for Security Studies (ISS) highlighting the alarming threats and deaths that constituted the recently concluded local elections. These targeted assassinations saw the deaths of aspirants as well as threats to the contenders. It was noted that one of the reasons for these assassinations and threats is the local construction contracts.
Multinational companies often play key roles in facilitating insurgency directly or indirectly and in August 2021, The Sentry published a report with key findings of how the Castel Group is the third-largest wine producer worldwide, the second-largest brewer in Africa, and a major bottling partner for Coca-Cola in Africa,” According to The Sentry’s investigation, in late 2014, amid political and security upheaval, SUCAF RCA negotiated a security arrangement with an armed group, the Unité pour la Paix en Centrafrique (Union for Peace in the Central African Republic, or UPC). Through this tacit agreement, UPC leaders committed to secure SUCAF RCA’s factory and sugar cane fields and to ensure free movement on key roadways necessary for the provision of supplies. SUCAF RCA also secured UPC support in trying to assure the company’s monopoly on sugar distribution in several prefectures, including through the forced seizure of smuggled sugar, particularly from Sudan. To protect its market, SUCAF RCA set up a sophisticated, informal system to finance the violent militias through direct and indirect cash payments, as well as through in-kind support in the form of vehicle maintenance and fuel provision"
The Global Initiative against Transnational organized crime published a report titled “Plastic for-profit” highlighting how plastic from developed countries makes its way to developing countries. It also explained why recycling plastic is difficult because raw plastic is cheaper than recycling.
This improper disposal of plastic involves illicit trade, according to the report, “Misdeclaration and concealment of hazardous and mixed waste, money laundering, financial crime, and corruption are among the crimes committed concerning plastic waste. The criminalized supply chain for plastic waste often involves complex networks of brokers, recycling companies, logistics and shipping entities, as well corrupt officials (often at ports) who arrange the shipping of hazardous and mixed waste from countries such as the United States, the UK or The Netherlands to Malaysia, the Philippines, and other countries predominantly in the Global South.”
Learn more about these events;
Later this month, Casey Micheal will be talking about his new book American Kleptocracy: how the US created the world's greatest money laundering scheme. Register to attend the session
American Kleptocracy: How the US Created the World’s Greatest Money Laundering Scheme in History
The International Consortium of investigative journalists (ICIJ) together with the Organized Crime and Corruption Reporting Project (OCCRP) have put together a guide for investigative journalists to dig deep on organized crime including kleptocrats.
The Global Financial Integrity will be hosting a book launch for "the enablers" How the west supports Kleptocrats and corruption endangering democracy by Frank Vogl the co-founder of Transparency International. Register for it here
On 10 November 2021, the Global Initiative against Organized crime will launch a report on the role of organized crime in contract killings. Register for it here
Curated by Tabitha Agaba