Saturday, October 15, 2011

Anti-Corruption Prescriptions don’t Provide Cures

Hits were it already hurts

If you read an earlier blog you saw where I mentioned the enormity of corruption in Africa. As African Americans we must wrap our collective brain around this problem. Government corruption is a ubiquitous, global scourge; however, it hurts developing countries the most.

Here are statistics on corruption in Africa from Transparency International:

·        According to the African Union, Corruption in Africa is costing the continent nearly US $150 billion a year

·         Corruption  increases the cost of goods by as much as 20 percent  

·       The African Union (AU) estimates that resources diverted by corrupt acts and resources withheld or deterred due to the existence of corruption, are thought to represent as much as 25 percent of the continent’s total Gross Domestic Product (GDP).

·       Research findings by the African Development Bank indicate that corruption leads to a loss of approximately 50 percent of tax revenue, which in some instances is a greater amount than a country's total foreign debt.

·        What is more, the impact of corruption is felt most by the poor. Lower income households spend an average 2-3 percent of their income on bribes, while rich

Anti corruption legislation, anti corruption agencies, anti corruption commissions…. much to do about nothing

I’m learning that one must contextualize corruption. Each region, country, city, town and village has its commonalites and differences.  It is an extremely complex problem and like the Baobab tree's roots extends into a society’s social, political, economic, cultural, class, colonial legacy, and ethnic components. In many countries corruption is a way of life.
Virtually all governments make big headlines when setting up anti-corruption programs, passing anti corruption legislation, or commissioning independent anti corruption agencies (ACAs).

South Africa’s version:

However, it appears that all of this 'much to do about nothing.' The records on the successes of legislation, government initiatives and Anti-Corruption agencies (ACAs) are dubious at best.  
The anti corruption story line usually take on the following modus operandi: First, there is the initial, very public, launch of the anti-corruption initiative. Speeches are made, news pictures are taken and published, and political commitments are given usually by the president or another leading government figure. “We the (you fill in the blank) government are determined to root out the scourge of corruption and the (you fill in the blank) anti-corruption commission is responsible for eliminating corruption from our glorious country.”
After the initial PR splash, and a brief honeymoon, research shows that these initiatives are often severely criticized and left twisting in the wind.  In 2005, a United Nations report concluded,

Several countries have opted for or are currently considering creating an independent commission or agency charged with the overall responsibility of combating corruption. However, the creation of such an institution is not a panacea to the scourge of corruption. There are actually very few examples of successful independent anticorruption commissions/agencies. (UNDP 2005, 5)

Mission Impossible

Government anti-corruption structures and independent ACAs are almost always given vague, “mission impossible” charges.  They are expected to be fiercely independent, develop specialized enforcement competences along with preventive and educational/research capacities and assume a leading role in implementing national anti-corruption strategies.
Weak, politicized and corrupt judiciaries block anti-corruption efforts and there is low accountability for public resources. In order to tackle corruption effectively, political commitment, adequate resources, technical skills, legal frameworks and action across borders are required.

More specifically, the report “How to monitor and evaluate anti-corruption agencies,” does an analysis of corruption trends across the region:

  • Although new anti-corruption legislation has been introduced, implementation is slow and resources are limited. While many countries have introduced new codes of conduct for top leaders, corresponding regulations were not approved until much later.
  • Multi-party democracy has opened new opportunities for corruption, but the pressure for political finance regulation has also grown. There is a link between increasing political competition in the region and political corruption.
  • Judiciaries are undermined by executive influence and bribery. Changing political circumstances have undermined some judiciaries, most notably in Zimbabwe and the DRC. In Mozambique, the judiciary is considered the weakest integrity mechanism.
  • While many new laws and regulations have been introduced to reform public procurement boards, political interests represent a powerful barrier to effective reform. Procurement boards need true independence and effective integrity rules.

“Our hope for the future depends on our resolution as a nation in dealing with the scourge of corruption. Success will require an acceptance that, in many respects, we are a sick society. It is perfectly correct to assert that all this was spawned by apartheid. No amount of self-induced amnesia will change the reality of history. But it is also a reality of the present that among the new cadres in various levels of government you will find individuals who are as corrupt as – if not more than – those they found in government. When a leader in a provincial legislation siphons off resources meant to fund service by legislators to the people; when employees of a government institution set up to help empower those who were excluded by apartheid defraud it for their own enrichment, then we must admit that we have a sick society. This problem manifests itself in all areas of life”.

-President Nelson Mandela opening address to Parliament in 1999:

Difference between a Code of Ethics and a code of conduct

 A Code of Ethics contains the ethical standards to which an organization commits itself, both as an organization and in respect of individual conduct by members of the organization. A Code of Ethics has two components combined in one document:

  • A brief values statement “A short, aspirational document listing and defining a organization” core ethical values, ideals or principles; and
  • A code of conduct “A longer, enforceable, compliance-oriented, operational document setting out policies, procedures and rules regarding best practices relating to daily operational issues affecting the organization.

A code of conduct provides illustrations of how values (contained in the values statement) translate into concrete decisions and actions, rather than a full or comprehensive catalogue of rules or prescriptions. It is not a comprehensive manual of applicable laws and legal regulations, but, where appropriate, it refers to such more technical or comprehensive documents for guidance.

Monday, October 10, 2011

The Dalai Lama, Bishop Tutu, China, Two Step Shuffle, or “If you dance to the music, you got to pay it to the piper.”

                                                       Jon Herskovitz JOHANNESBURG | Mon Oct 10, 2011 9:54pm IST

Unless you have been in a political black hole, you know the real reason the Dalai Lama did not make a personal appearance at Bishop Tutu’s 80th birthday bash in Cape Town….the China Fear Factor! The South African government did a simple cost/benefit analysis and subsequently became the 'party pooper' and dis-invited the Dalai Lama as a guest. 

Actually Zuma’s government has very good reason to fear China’s wrath according to two German economist, Andrea Fuchs and Nils-Hendrik Klann in their paper “Paying a Visit: The Dalai Lama Effect on International Trade.”

"Meetings of a head of state or head of government with the Dalai Lama lead to a reduction of exports to China by 8.1% or 16.9% on average, depending on the estimation technique used."

According to the researchers, governments across the globe have felt China’s economic sting after meeting with the Dalai Lama:
  • Economic and diplomatic relations between China and France began deteriorating after President Nicholas Sarkozy met the Dalai Lama in spite of threats from Chinese authorities should they do so. France was crossed off the travel agenda of two Chinese trade delegations in 2009. In the same year, Chinese Prime Minister Wen Jiabao did not pay a state visit to France during his trip to Europe.
  • The United States suffered the wrath of the Chinese after President Barack Obama met the Dalai Lama. The move soured relations with China, which undermined the US's recovery from the current economic crisis.
  • Recent meetings between the Dalai Lama and leaders in Mexico, the United Kingdom, Italy, Mongolia and Germany had also damaged relations with the Asian giant.

China’s African Strategy “to build a continent”

The Dalai Lama incident is an example of China’s goal of building an Africa in China’s image and the “One China” policy is central to that image. One report said Africa's 5.7% GDP growth last year is largely credited to China. 

In 2007 China founded the China-Africa Development Fund (CADF), with an initial investment of $1 billion, to establish three to five trade and economic cooperation zones. Partnering with CADF is China's large state-owned enterprises (SOEs). These economic structures are “interested in sectors such as energy, transportation, information and telecommunications, infrastructure, mining, agriculture and manufacturing.”  

The trade volume between China and 53 countries in Africa reached $106.8 billion in 2008, exceeding $100 billion for the first time.  Currently, there are over 1000 Chinese enterprises approved or filed with the Ministry of Commerce operating in Africa.  As of May of 2011 more than a million Chinese experts and skilled workers are on the ground in Africa. 

The Ministry of Commerce says that African countries lack building funds due to the financial crisis, so the cost advantage of Chinese enterprises has become prominent. In the first six months of 2009, new labor contracts signed by Chinese enterprises in Africa reached $ 22.45 billion, and the completed turnover totaled $11.53 billion, up 25% and 61.1%, respectively. "Since the founding of the China-Africa Cooperation Forum, China-Africa trade has contributed 20% to African economic growth." 

South Africa a special "buddy pass"

"South Africa is increasingly becoming China’s investment focus and China wants to diversify its investments in South Africa to other sectors of the economy such as information technology, biotechnology, human resources and other industry services," China Industrial Overseas Development and Planning (CIODP) Vice President and Secretary General FanChunyong said at the China and SADC Investment Conference held at Sinosteel Plaza in Johannesburg.

President Zuma visited China for the first time in August last year, accompanied by a 300-strong business delegation, and signed a comprehensive strategic partnership with the country that would result in more than R100-billion invested in South Africa over five years to support projects in culture, education, media, health, tourism and financial services.
China has edged out the US and Japan in recent years to become South Africa's biggest trade partner. The Industrial and Commercial Bank of China acquired a 20% stake in Standard Bank in 2007.
Last week, Deputy President Kgalema Motlanthe raised more than R20-billion of investment during his visit to Beijing as part of the partnership.
China rewarded the Zuma government with membership in the BRICS grouping of major emerging economies that also includes Brazil, Russia and India. South Africa, with a GDP less than a quarter the size of the smallest BRIC economy, Russia, has hoped accession to the group would increase it trade and prestige.  (However, South Africa’s membership has not paid dividends. All major BRIC-related investment funds have excluded South African shares from their portfolios.)
One anonymous South Africa government was very clear, "in this saga, we had to put our national interests first," said a government source. "We have a lot invested in China and support the one-China policy. Are we prepared to compromise that by taking an unprincipled action and supporting Tibet's secession from China? No."

China’s ‘hear no evil, see no evil, speak no evil’ foreign policy

The strategic charm of Chinese money is that it is unobstructed, there is no precondition on economic performance, and they do not interfere with the type of governance in the state, be it a democracy or a Pariah state.

China’s interests as pure and simple, they see oil, minerals, and markets for Chinese manufactured goods. They take a play out of the Cold War play book, “…no permanent friends only permanent interest.” 

China to the Rescue, West is the true villain

According to the Chinese, Western countries are at the root of most of the problems that African countries face today. They colonized or subjugated the countries, exploited their resources and manpower and left the people to suffer the pangs of abject poverty. Such was the level of exploitation that even after winning independence most of the African countries could not reconstruct their economies.

“The story doesn't end there. African nations are still denied their right to be represented and heard at international forums. The North always talks about strengthening North-South dialogue because that would be to the benefit of Western powers. The West rarely talks about South-South cooperation because that would mean a consolidation of developing countries, which China is. 

China cooperates with Africa not only because of its resources because it will never exploit another country. Instead, China's aim is to help African countries' realize economic development.”

We will look at China and Zambia after the Sata win.

Friday, October 7, 2011

Corruption is like a door knob…everyone gets a turn!

In South Africa while sitting at dinner or drinking tea with friends, to help with my acculturation, almost all of my associates tell me stories about their personal encounters with South African corruption, e.g., they were stopped by the police for running a stop sign that didn’t exist; they paid a bureaucrat to facilitate an application for a government contract; they were shaken down by an illegitimate taxi service. The stories go well into the night. An American point of reference would be Richard “The Boss” Dailey’s Chicago.( I too have had my own encounters with corruption. One was very serious involving a threat to my life, guns and police!  That's another story for another time)

Political Corruption in Developing Countries

Political corruption in government is a ubiquitous global plague. For example, in my native land, the United States, former House Republican majority whip Tom DeLay was convicted and sentenced for money laundering and conspiracy to commit money laundering. DeLay’s defense was: “What’s the big deal? Everybody does this stuff.”

However, I would argue that political corruption in developing countries is more injurious.  It undermines fledgling democracies and promotes all forms of authoritarian regimes, e.g., dictatorships, oligarchies, military juntas, kleptocracies, kratocracies, etc.  In addition, political corruption makes the bed for other criminal enterprises, i.e., drug trafficking, prostitution, money laundering, and human trafficking.  

Developing countries are trying to stand on their fragile political, economic and social feet, political corruption knock the legs out from under them. Honesty, integrity and formal procedures are critical to the functionality of every branch of a country’s government. Corruption in elections and in legislative bodies reduces accountability and distorts representation in policymaking.  A corrupt judiciary compromises the rule of law, at the very least, or worse, unleashes criminal predators onto the innocent. Corruption in the executive branch results in the inefficient provision of services exacerbating poverty. 

Constitutions and statutory laws determine what constitutes legal, illegal and corrupt activities in each country. A contribution to a judge running for office can be legal or illegal depending on the laws of the country/ jurisdiction being examined.  However, for our purposes political corruption is an illegal act by a public office holder when the act is directly related to their official duties. These acts include, but are not limited to, bribery, fraud, extortion, cronyism, nepotism, patronage, graft, and embezzlement. These types of activities are more or less universally accepted as corrupt. United Nations Convention Against Corruption

Political Corruption is a Colonial legacy…But! 

Colonial powers “extracted” valuable resources from the peripheral colonies to the European center. The colonial state laid the foundation to many current corrupt infrastructures in developing countries.  BUT, that was then, this is now! Maintaining a corrupt society falls on current government actors, be they actively or passively involved in political corruption. Current elite dominated governments are extracting public resources for private gain. Bishop Tutu called on members of President Jacob Zuma’s cabinet to sell their “expensive cars”
The power elite, or Politically Exposed Persons (PEPs), as the Financial Action Task Force labels them, are at an advantage when it comes to corrupt and illegal activities. First, they are part of regimes that give them  access to “intermediaries,” or cronies, advising them on efficient and effective ways to engage in corruption. Second, they, in general, control institutions in their own country, that facilitates access to financial markets and allows them to block attempts to investigate stolen assets.

“2010 Corruption Perceptions Index” SADC countries

            Rank                                      Country                                            Score

Democratic Republic of Congo
South Africa

Samples of Corruption: Headlines in SA

First, let me preference the use of headlines from South African national newspapers for samples of the proliferation of corruption here. I am intrigued by the amount of print corruption stories get in the national press.  But, as we know, newspapers are in the business to sale papers and as the saying goes, “dog bites man, no story, man bites dog, a story!”  In the future we will have discussions on politics and the media. Nevertheless, the following are headlines for the national press here in South Africa and Information Portal on Corruption and Governance in Africa

·         SA: AG gives Public Works a disclaimer – report Tuesday, 04 October 2011 00:00 Written by Polity  Public Works Minister Gwen Mahlangu-Nkabinde's department has been given a disclaimer, one of the worst audit reports possible, according to a report on Tuesday.

·        ‘Arms deal inquiry would benefit SA’ Friday, 30 September 2011 00:00 Written by IOL News. Public Protector Thuli Madonsela has suggested that President Jacob Zuma’s planned omission of inquiry into the arms deal will present an ideal opportunity for the government to learn some lessons about conducting business on a large scale without corruption taking place.

·      SA: Tender irregularities found in Public Works Department, Monday, 19 September 2011 00:00 Written by Polity Tender irregularities of about R3-billion were uncovered in a probe into the Public Works Department, Minister Gwen Mahlangu-Nkabinde said on Monday. "We know of more than 40 cases where tenders were awarded improperly, where procedures were not followed and dishonesty took place," said the Public Works Minister in a statement.

·         Spy boss quits with a golden handshake, CAIPHUS KGOSANA | 02 October, 2011 00:57, Embattled intelligence boss Gibson Njenje has quietly left the agency after accepting a settlement that will result in him being paid out for the remaining three years of his contract.

·       Staff accuse minister as works showdown looms, SIBUSISO NGALWA and MOIPONE MALEFANE A showdown is also looming in parliament where Mahlangu-Nkabinde, national police commissioner General Bheki Cele and public protector Thuli Madonsela will appear before a joint portfolio committee meeting on October 10 to deal with Madonsela's reports into the R2-billion SA Police Service lease deals.

·        State sued over land deal, ROB ROSE, STEPHAN HOFSTATTER and MZILIKAZI WA AFRIKA | 02 October, 2011 00:57. The land reform case will be played out in the High Court in Pretoria tomorrow. PG Bison, owned by JSE-listed furniture multinational Steinhoff, is accused of trying to bribe key government officials to ensure they won the deal. They are accused of bribing the head of land reform in the Eastern Cape to ensure that a deal signed between the Maluti consortium, who have lodged the application, and Mondi did not go through.  Maluti thought they had bought 76000ha of prime timber forests for R200-million, with the bulk of it coming from government.

·         Top Cop’s Plot to Kill Lover’s Husband, South Africa’s police crime intelligence boss allegedly refused to be spurned by his ex-lover

The next installment will be my suggestions for Solutions to Corruption. 

[1] Since 1995, Transparency International (TI) publishes the Corruption Perceptions Index (CPI) annually ranking countries "by their perceived levels of corruption, as determined by expert assessments and opinion surveys."The CPI generally defines corruption as "the misuse of public power for private benefit." As of 2010, the CPI ranks 178 countries "on a scale from 10 (very clean) to 0 (highly corrupt)."

Saturday, October 1, 2011

Zambian Election Results: And the winner is….. democracy in Sub Sahara Africa!

Part one of two part series.

As an African American I am proud of the Zambian elections; democracy at work in Sub Sahara Africa.  With Africa receiving so much negative American press these days, this is great news:

  • An incumbent lost and freely turned over power
  • Most independent observes declare free and fair election procedures
  • The country was relatively free of election violence

Unfortunately African American knowledge of Zambia is abysmal.  Quick, what countries border Zambia? Better yet where is Zambia?  Anyway do your research.

“ba King Cobra” new President

As of 12 am September 23 (local time) Zambia elected  a new president, 74 years old Mr. Michael “ba King Cobra” Sata of the Patriotic Front (PF). The name King Cobra comes from Sata’s legendary sharp tongue.   

Mr. Sata won with 1,150,045 or 43% of the votes casted. The loser President Rupiah Banda of the ruling Movement for Multiparty Democracy (MMD) won 961,796, or 36.1% of votes casted.  Sata’s  PF  benefitted from the registration of 1,279,181 new voters, many of them young (out of a total electorate of 5,223,316), and a high turnout (around 60% or above) in Lusaka, Central, Northern, Luapula Provinces and on the Copper belt, Sata’s traditional urban and ethnic strongholds, whose electorate dominate those of the remaining five provinces in sheer weight of numbers.

Banda's party -- of which Sata had been a member until a 2001 leadership dispute -- had been in power for two decades. This is the third time in post colonial Zambia power has been handed over from one party to another.  The first was Kenneth Kaunda assuming power from colonial rule in 1964.  The second time was in 1991, Kaunda (UNIP) to Chiluba (MMD) and the third time is now Banda (MMD) to Sata (PF). Africa needs to study this success!

Parliament, Minor Parties and Women

Zambia is a multiparty republic with a unicameral legislature.  The final parliamentary results were announced on Sunday 25th of September. Of 148 contested seats, the PF won 60 (40.1%), with the MMD a close second with 55 (37.2%), leaving the United Party for National Development (UPND) trailing with 28. Of the remaining 5 seats, three were taken by independents, and one apiece went to the Forum for Democracy and Development (FDD) and the Alliance for Democracy and Development (ADD). 11% of MPs will be women, somewhat below the average of around 15% in sub-Saharan Africa generally and vastly below Rwanda’s level of female representation in parliament, currently at over 50%.

Minimal Scattered Violence

There were some violent protests reported in north-central Zambia Thursday as the county awaited final results in a tight presidential race.  Police say demonstrators stoned cars and buildings in the cities of Kitwe and Ndola and set fire to a market in Kitwe.  Some disturbances by Zambian youth were recorded in Lusaka, Ndola, Nakonde and Mufulira after the Electoral Commission of Zambia (ECZ) delayed announcing election results.

However, this is quite different from the 2008 special elections when Sata lost and riots broke out for days in the capital Lusaka, Sata’s stronghold.  At the time, true to his Cobra tongue, Sata said the government had "robbed" him of victory by "stealing votes" from under the noses of "timid and toothless" election observers from the European Union.

Copper, Chinese, Corruption

Cooper has had an “extraordinary dominance" in the Zambian economy.  Many developing countries depend heavily on a few primary products for export as their means of earning foreign exchange.  Zambia, however, is an extreme case of over dependence on the production and export of a single product; copper.  Zambia is also characterized by an urban community shaped by the requirements of the copper industry and the growth of its labor force. 

This year’s elections came up against the backdrop of Zambia being re-classified as a middle income country in July this year and economic growth rates averaging 6.4% over the past five years (World Bank). Zambia, Africa’s top copper producer, has been predicted to become the world’s fifth largest copper-miner by 2015. (Bloomberg)

China has invested an estimated $6.1 billion (4.3 billion Euros) into the southern African nation since 2007, equivalent to more than one third of gross domestic product last year. In 2010, China trade with Zambia nearly doubled to reach $2.5 billion. However, 19 people died in two incidents last year when Chinese managers at coal and copper mines shot workers involved in labor and wage disputes. In fact, China’s labor and human rights violation in Zambian’s copper industry is notorious:

·         In April 2005, 52 Zambian workers died in a factory explosion, which has been blamed on China’s Nonferrous Metal Industry’s (NFC) poor safety standards and lack of accountability. [1] The accident occurred at the Beijing General Research Institute of Mining and Metallurgy (BGRIMM), a joint venture between NFC and the Chinese government. The mine workers were trapped in the manufacturing plant when the explosion occurred. None of the Chinese staff employed at the plant were injured.
·         In July 2006, four NFC mine workers were shot and wounded by the company’s Chinese management in combination with police while protesting a wage dispute.
·         In 2007, police shot and killed five miners during violent protests over the working conditions at the Chambishi Mine.
·         In March 2008, the British Broadcasting Corporation (BBC) reported on the dismissal of five hundred mine workers from Chambishi. While negotiating for pay increases and better safety conditions, the workers clashed with Chinese foremen, and mine workers assaulted a Chinese manager.

Therefore copper politics dominated the elections. The incumbent President Banda campaigned on a record of several years of strong economic growth in copper-rich Zambia, which has benefited from a boom in global commodity prices. On the other hand, Sata's Patriotic Front accused Mr. Banda government of failure to protect Zambian citizens’ right to life and to prevent workers’ abuses by allowing Chinese corporations to commit human rights abuses with impunity. Sata also indicted Banda’s government for tolerating corruption and not doing enough to ensure that more Zambians share in the wealth of the country's copper reserves.

In the 2008 special elections Sata took a strong anti-Chinese line. This year he toned down his rhetoric. Nevertheless, Sata’s win is thought to have been propelled by the resonance of his rhetoric with the youth and unemployed in urban areas and the copper belt who feel they have not benefited from Zambia’s growing economy.

On Monday, September 26, Zambia's newly-elected President Michael Sata warned Chinese investors to respect the country's labor laws. "Your investment should benefit Zambia and your people need to adhere to local laws," Sata told Chinese ambassador Zhou Yuxiao, who paid a visit to the new president at State House.  "If they adhere to local laws, there will be no need to point fingers at each other," Sata said.

Sata’s harsh criticism of foreign investors has led some to fear renegotiation of mining contracts or the withdrawal of foreign investors. However, this analysis doesn’t calculate the financial clout of Chinese, Australian and South African mining and investment interests and how irresistible such is to any Zambian political leadership. “Political capital is expended far faster than its financial counterpart.” 

Sata has promised to fight corruption, “our fight against corruption will go beyond rhetoric and pious hope. Corruption is morally unacceptable and those charged with the responsibility of looking after our resources should guard it jealously.”

As one writer said, “anything is possible in Zambia, bearing in mind the adage that where there’s a will, you must pay.”

Part II will address the historical and current relations between African Americans and Zambia.

[1] Established in 1983, China Nonferrous Metal Industry (NFC) is a Chinese-based transnational corporation that extracts minerals, installs and supplies mining equipment, and has contracting projects in more than twenty countries.