Will EU Summit address illicit financial flows?
BRUSSELS: While the origin of illicit financial flows ranges from government embezzlement to human trafficking, and from corporate tax evasion to grand corruption, the destination seems less ambiguous. A $35 million mansion in California, artwork totalling 18 million, and a $38 million dollar private jet. These sound like items purchased by the world’s wealthiest oligarchs, right? Well, they were actually acquired by Teodorin Obiang, son of President Teodoro Obiang of Equatorial Guinea. When his father meets with other leaders for this week’s EU-Africa summit, a wide range of topics will be covered. But there’s one issue in particular that should be given a loudspeaker during the talks: Illicit Financial flows.
Africa and Europe have a unique financial relationship. It’s one that is marked by illicit capital flowing out of African countries into bank accounts in financial centres across the European Union. While the younger Obiang’s official salary is less than $7,000 per month, he managed to spend more than $315 million between 2004 and 2011 on sports cars, beachfront mansions, lavish apartments, and even some Michael Jackson memorabilia. And this is only one example.
In 2011 alone, it’s estimated that 43.7 billion left Africa by way of illicit financial flows; this money should rather have been invested in infrastructure, education and healthcare, all of which are areas highlighted by the EU-Africa Summit. Just to put that = into perspective, African countries received a combined 34.3 billion in developmental aid the same year, according to statistics from Organisation for Economic Co-operation and Development (OECD). While the origin of illicit financial flows ranges from government embezzlement to human trafficking and from corporate tax evasion to grand corruption, the destination seems less ambiguous.
Loopholes in the current system have fostered a strange breed of firms. They don’t do any real work and more often than not, don’t even disclose who owns them. These anonymous companies are one of the primary vehicles used to funnel illicit money from Africa into places like the EU. This week’s summit is an opportunity for leaders like Obiang to face the subject of illicit financial flows head on.
Credit: Standard Media