FINANCING FOR DEVELOPMENT
Naming, shaming and warning all trespassers
> BY ROMAN ROLLNICK
Copyright © 2002 by The Earth Times. All rights reserved

The speakers at a meeting at the UN's international conference on Financing for Development drew applause when they named companies, banks, rich and poor countries and some leaders. They said the warning was an important note of caution as the European Union and the US publicly vied for top place in Monterrey as the world's leading donors. In an unusual intervention at such a meeting, Switzerland, the United States and the World Bank sent senior officials to hear the panelists' views and to respond. They, too, drew applause.

Activists and government representatives agreed that new instruments to track the funds of international terrorists and money launderers in the post-September 11 climate could be coordinated as part of the broader fight against corruption.

David M. Luna, the US State Department Director of Anticorruption and Governance Issues, said, "We welcome such honest dialogue. We applaud your efforts." He said the Organization for Economic Cooperation and Development, the European Union, and the Organization of American States had all only recently adopted anti-corruption conventions. These needed to be strengthened.

"The view from the West is that Africa is corrupt," said Reverend David Ugolor, a Nigerian who is president of the African Network for Environmental and Economic Justice. Acknowledging his country's high ranking among the list of most corrupt nations, he added: "This is, however, a two-way street. Public funds stolen by public leaders end up in bank accounts overseas. There is a relationship between corruption and the huge external debt, and we are talking here of stolen assets. The US concept of corruption in Nigeria is very controversial. Shell has lifted oil through years of corrupt military dictatorship, and that's because they know how to operate. Likewise Citibank. Why has the West waited until just recently, for example, to do something about President Robert Mugabe of Zimbabwe's assets in the UK and elsewhere? In the West African country of Mali, there was a military ruler who stashed $2 billion away in Switzerland."

The Swiss official, Giorgio Dhima, head of the international finance division of the Swiss Federal Finance Administration, said his country was fully aware of the funds "of politically exposed people and some leaders" held in his country. "It is pertinent that this meeting is being held today because it has an impact on financing for development. But we are talking of an international problem here. It is not solely that of the developing or the developed countries." Switzerland, renowned for its system of secret bank accounts, favored international cooperation in resolving the problem, Dhima said. "There is, however, no quick solution and we are participating in the UN's Vienna process aimed at seeking an international convention on corruption."

To stress his point, Dhima referred to a booklet Swiss authorities distributed in Monterrey this week saying the Alpine nation was no longer "the ideal place for corrupt rulers to hide their loot." It said Swiss financial intermediaries cared about the identity of their clients and the origin of their assets, and that there were no anonymous bank accounts in Switzerland. The booklet, written in English, also said Swiss banking secrecy rules did not protect criminals, and that Switzerland did repatriate assets to their rightful owners.

Nevertheless, the panelists wanted to know why only African governments were mentioned in their booklet. They asked why Switzerland had taken so long to do something about corrupt funds in secret bank accounts, how they could find the monies, and whether these funds would then be transferred back to their countries of origin. Were only governments corrupt? And what about businessmen?

The Swiss official acknowledged that it had taken pressure from civil society to reach this stage.

Another panelist, Sugeng Bahagijo, of the International NGO Forum on Indonesian Development, said that although his country's previous government under President Suharto had received millions in funding over the years, the country remained poor with half the population living on less than $1 a day. Suharto and corrupt colleagues in government and business had, over 32 years, amassed an estimated $15 billion in assets such as stocks, property and bank accounts in wealthy nations around the world from Australia to Switzerland and the US. Unraveling the accounts would take years, and getting the money back would take much longer. "Without an international treaty to help resolve these issues, our people will continue to suffer like those of the Philippines and Nigeria," Bahagijo said.

Pa Babou N´Jie, of the Gambia Workers Confederation, said people of the small West African nation would be noticeably better off if funds were not spirited abroad: "We have corruption on both sides of the North-South divide. We expect the North to play its role too." The attitude of the West, said Wahu Kaara, spokeswoman of the Kenya Debt Relief Network, harked back to the days of slavery and colonialism. "Our chiefs used to sell slaves for a bottle of whisky, and now, in the post-colonial period, they perfect this through aid by making our leaders corrupt absolutely. Bear in mind the corruption of African leaders is not corruption of African people. It is a challenge for all of us. The greatest question here is over our choice between life and profit."

The United States said it was pleased to note that the UN now was also moving towards an international treaty on corruption. The Monterrey Declaration to be adopted this week states: "Fighting corruption at all levels is a priority. Corruption is a serious barrier to effective resource mobilization and allocation, and diverts resources away from activities that are vital for poverty eradication and economic and sustainable development."

Luna, the US official, said Washington applauded the Monterrey conference for elevating the corruption issue. "This is a very important part of the dialogue here in Monterrey and we take it very seriously," he said. "We are working very closely, with Nigeria for example, on tracking, recovery and the return of assets." When it comes to corruption, said Amar Bhattacharya, Senior Advisor at the World Bank, "it is useful to look at where we are on resolution and prevention."

As the issue of corruption was debated in Monterrey, in London, Australian Prime Minister John Howard announced Monday that the Commonwealth has suspended Zimbabwe from the organization's councils for a year with immediate effect. Howard said the measure had been taken after the Commonwealth's observer group concluded that Zimbabwe's presidential election had been marred by high levels of violence. Diplomats said the move was a further blow to President Robert Mugabe who has held power for the past 22 years. Mugabe, who has been banned from traveling to Western nations as part of smart sanctions, is, however, scheduled to participate in the Monterrey summit meetings at the end the week, according to the UN list of heads of government expected to participate.

The Commonwealth's action was followed by an announcement by Switzerland that it is imposing sanctions on Zimbabwe, including a freeze on financial assets that might be held by government officials in Swiss banks. In further action, Denmark also said it was closing its embassy in Harare and halting development aid to Zimbabwe.

African diplomats in Monterrey said they were "saddened" by the action against Zimbabwe. "This is an issue that should be resolved regionally through the South African government, which is trying to get all parties in Zimbabwe engaged in meaningful dialogue. What must be realized at all costs is that further violence has to be avoided and tensions calmed," a Tanzanian diplomat told the Earth Times.