U.S. GOVERNMENT PRINTING OFFICE

68–756 CC WASHINGTON : 2000

S. HRG. 106–873

ANTI-CORRUPTION EFFORTS AND AFRICAN

ECONOMIC DEVELOPMENT

PUBLIC MEETING

BEFORE THE

SUBCOMMITTEE ON AFRICAN AFFAIRS

OF THE

COMMITTEE ON FOREIGN RELATIONS

UNITED STATES SENATE

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

SEPTEMBER 21, 2000

Printed for the use of the Committee on Foreign Relations

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/senate

COMMITTEE ON FOREIGN RELATIONS

JESSE HELMS, North Carolina, Chairman

RICHARD G. LUGAR, Indiana

CHUCK HAGEL, Nebraska

GORDON H. SMITH, Oregon

ROD GRAMS, Minnesota

SAM BROWNBACK, Kansas

CRAIG THOMAS, Wyoming

JOHN ASHCROFT, Missouri

BILL FRIST, Tennessee

LINCOLN D. CHAFEE, Rhode Island

JOSEPH R. BIDEN, JR., Delaware

PAUL S. SARBANES, Maryland

CHRISTOPHER J. DODD, Connecticut

JOHN F. KERRY, Massachusetts

RUSSELL D. FEINGOLD, Wisconsin

PAUL D. WELLSTONE, Minnesota

BARBARA BOXER, California

ROBERT G. TORRICELLI, New Jersey

STEPHEN E. BIEGUN, Staff Director

EDWIN K. HALL, Minority Staff Director

SUBCOMMITTEE ON AFRICAN AFFAIRS

BILL FRIST, Tennessee, Chairman

ROD GRAMS, Minnesota

SAM BROWNBACK, Kansas

RUSSELL D. FEINGOLD, Wisconsin

PAUL S. SARBANES, Maryland

(II)

CONTENTS

Page

Lowery-Derryck, Vivian, Assistant Administrator Africa, U.S. Agency for

International Development ................................................................................. 12

Prepared statement .......................................................................................... 16

Marshall, Aileen, Senior Advisor, Global Coalition for Africa, Washington,

D.C. ........................................................................................................................ 30

Prepared statement .......................................................................................... 32

Schloss, Miguel, Executive Director, Transparency International, Washington,

D.C. ........................................................................................................................ 35

Prepared statement .......................................................................................... 38

Schneidman, Witney W., Deputy Assistant Secretary of State for African

Affairs .................................................................................................................... 3

Prepared statement .......................................................................................... 6

Taylor, Simon, Director, Global Witness, London, England ................................ 21

Prepared statement .......................................................................................... 24

(III)

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ANTI–CORRUPTION EFFORTS AND AFRICAN

ECONOMIC DEVELOPMENT

THURSDAY, SEPTEMBER 21, 2000

U.S. SENATE,

SUBCOMMITTEE ON AFRICAN AFFAIRS,

COMMITTEE ON FOREIGN RELATIONS,

Washington, D.C.

The subcommittee met, pursuant to notice, at 3:00 p.m. in Room

SD–419, Dirksen Senate Office Building, Hon. Russell D. Feingold

presiding.

Present: Senator Feingold.

Senator FEINGOLD I am not opening this session with a gavel for

two reasons—one is, I am not in the majority; but the other reason

is, this was originally scheduled as a hearing, but because of procedural reasons it is necessary for us to do this in the format of a

roundtable today, so I hope people in the room can hear just as

well, and we apologize for that, but given all the efforts of everyone

to come we certainly did not want to delay this. In fact, Senator

Frist, who of course, intends to be here, simply cannot get here

right now, and hopes to get here as soon as possible. I want to

thank Senator Frist for convening this roundtable meeting today

on a topic of great interest to me. Senator Frist and I have been

able to work together on a number of important issues over the

past year on this subcommittee, from Zimbabwe to Sierra Leone,

from Rwanda to the AIDS crisis, and the Subcommittee on Africa

has benefitted greatly from Senator Frist’s leadership and enthusiasm for African issues. I truly appreciate his efforts, and I know

that it was difficult, given all the things that are going on right

now, for him to make it possible for us to do this, but he did it anyway, and I am extremely grateful for that, and I will repeat that

when he comes.

I also want to thank all of the participants for being here today,

and in a few moments will ask each of you to speak for approximately 5 minutes, or up to 5 minutes with your remarks, and then

we will get into more of a discussion.

This roundtable focuses on anticorruption efforts in Africa, and

I want to clarify at the outset that the purpose of this meeting is

not to paint an entire continent with one broad brush, nor to engage in a round of Africa-bashing, wherein scores of countries are

blanketly accused of being corrupt, mismanaged, hopeless places.

Let us make no mistake, corruption is not just an African problem.

It is a global problem. I believe it is a problem right here in the

United States, as I think I have made fairly clear.

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This meeting is in part an acknowledgement of the fact that corruption issues have been moving into the public sphere in Africa.

In Kenya, in July, a raucous argument erupted in parliament when

ruling party MP’s joined with some opposition members to strike

a list of corrupt politicians from a select committee report. These

forces prevailed, but the fact that the so-called list of shame ever

existed, the very fact that this led to real debate, seems to me to

be a positive sign.

In Nigeria, President Obasanjo has made fighting corruption one

of his top priorities. Last year, the U.S. worked with 11 African

countries to develop a set of principles to fight corruption. Corruption is being discussed openly today, and the continent is better for

it.

I hope to explore three broad questions at this meeting. First,

what is the relationship between fighting corruption and pursuing

U.S. interests on the continent? I believe that corruption stands in

the way of virtually all of our United States policy goals in Africa.

It diverts resources from desperately needed basic health and education services. It acts as a deterrent to trade and investment, undermines the accountability that is at the core of democratization.

It allows the few to benefit from violent conflict, while the many

suffer. I hope that the participants will help to draw out these relationships in their remarks.

Second, I hope to explore the efforts currently underway to combat corruption on the continent. When I was in Uganda last December, the minister of ethics and integrity spoke to me of her desperate need for trained auditors and investigators. Since that time,

I have been pleased to learn that the Office of the Inspector General at USAID plans to train approximately 60 people from Uganda’s Supreme Audit Institution, NGOs and USAID personnel to improve their auditing skills.

It seems to me that this is an area where U.S. expertise and experience can be shared to the benefit of both of our countries, but

it will also take the efforts of African Governments themselves, of

NGOs, the independent press, and the international financial institutions to combat corruption effectively. I hope that we can begin

to examine the efforts already underway in the meeting today.

Finally, I hope that we can begin to determine through this

roundtable discussion the extent to which the United States is a

part of the problem in Africa. For every bribe taken, there is a

bribe paid. This country ranked in the middle of Transparency

International’s 1999 bribe payer’s index, which suggests to me that

there is room for improvement in U.S. business practices.

I feel particularly connected to this, because one of my predecessors in the United States Senate, William Proxmire of Wisconsin, wrote the Foreign Corrupt Practices Act. Press reports have

suggested that the U.S. banks were involved in the Abacha regime’s program of grand scale embezzlement. I think it is only reasonable to ask ourselves, in the context of this meeting, to examine

these issues.

So having had a chance to give some brief remarks at the beginning and, of course, when Senator Frist comes he will offer his

opening remarks, we can now move on to hear from each of you,

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and we will begin with Mr. Witney W. Schneidman, the Deputy Assistant Secretary of State for African Affairs.

STATEMENT OF MR. WITNEY W. SCHNEIDMAN, DEPUTY

ASSISTANT SECRETARY OF STATE FOR AFRICAN AFFAIRS

Mr. SCHNEIDMAN. Senator Feingold, I would like to thank you

and Senator Frist very much for providing this opportunity to participate in this roundtable. I am glad that we are continuing to

move forward to examine what is a very important subject.

President Clinton, Vice President Gore, and Secretary Albright

have placed a high priority within the administration’s foreign policy on fighting corruption and bribery, and promoting good governance and strengthening the rule of law in Africa and globally. Your

committee’s continued leadership on African issues is critical to our

effort to help the nations in Africa develop a future of peace, prosperity, and freedom. This afternoon, in the few minutes available,

I would like to touch on some of the issues that are contained in

my more developed text, and we look forward to working with you

in this committee on these issues to share ideas and to develop solutions to these challenges.

Now, it is well-known that corruption is a significant obstacle to

economic development and the improvement of living conditions

throughout Africa, as it is in other regions of the world, as you just

noted. Given poverty’s pervasiveness in Africa, efforts by officials

to extract bribes, or the willingness of businessmen to offer bribes,

or the willingness of officials and business representatives to engage in corrupt practices, it is a clarion call for action.

We also need to move against the illicit trade by corrupt officials,

rebels, and criminals in oil, diamonds, and other precious minerals.

Increasingly, these ill-gotten profits are used to fuel the conflicts

which we are working so hard to end. We are encouraged that African Governments, leaders of the media, civil society, and private

sector have shown a new willingness to confront these difficult

problems. With respect to issues of governance, African leaders

have come to recognize that corruption, opaque practices, and a

lack of accountability weaken democratic values, sap economic

growth and key development, and undermine new investment activities. Although much work remains ahead, this administration

has implemented various innovative strategies to support and stimulate African efforts to combat corruption. Under President Clinton’s partnership for economic growth and opportunity, and his

international crime control strategy for example, we are developing

key tools in the fight against corruption in an effort to accelerate

Africa’s integration into the global economy, which is one of our key

foreign policy objectives in Africa.

Senator, at every opportunity, U.S. officials underscore the importance of promoting good governance and fighting corruption as

a means of strengthening the rule of law, improving the investment

climate, and enhancing social equity. During his two trips to Africa, President Clinton repeatedly raised the importance of good governance in fighting corruption. So have the numerous members of

the President’s cabinet who have traveled to Africa over the last

several years. We advanced our dialogue on corruption at every

turn, such as at the U.S.-Africa Ministerial in March 1999, when

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more than 150 ministers of finance, trade, and foreign affairs came

to Washington for 3 days of discussions.

Most recently, we have raised the importance of staying vigilant

to routing out corruption through demarches both here and in African capitals as we discussed with our African counterparts eligibility criteria of the African Growth and Opportunity Act.

As a result, today, in addition to the State Department and

USAID, virtually every Government agency, from Justice to the

Treasury Department, from the Office of Government Ethics to the

Commerce Department, is implementing creative new initiatives to

strengthen our partnership with Africa and in fortifying democratic

institutions on the continent to promote better governance and halt

corruption.

Now, the administration is encouraged by many indications that

governance as well as corruption have become a more salient issue

in Africa. As you noted, African leaders are more willing to speak

out on the issue. Namibia, Botswana Uganda have set exemplary

standards on promoting public integrity and the rule of law. A

newly assertive press in many African countries has not flinched

from attacking poorly managed institutions and allegedly corrupt

individuals. Laudable efforts are underway to strengthen customs

services. The Governments of Benin, Ethiopia, Malawi, Mali, Uganda, and Tanzania agreed to introduce no-bribery clauses in public

contracts.

As you are aware, sir, the United States cooperates with many

nations to combat all forms of corruption and to help our businesses operate throughout the world on as level a playing field as

possible. For example, under the first-ever international crime control strategy in United States history, released by President Clinton in May 1998, we have broadened our efforts to provide systematic and comprehensive support and assistance to enable other nations to act against corruption and organized crime.

In Washington in February 1999, implementing one initiative,

the international crime control strategy, Vice President Gore

hosted the first global forum on fighting corruption. Over 500 participants from 90 nations attended, which included participation by

15 African countries and the Global Coalition who is represented

here today.

Several days prior to this forum, Senator, I had the personal

honor to cohost with Ambassador Amadu Udubdala, who is the executive secretary of the GCA, a day-long meeting at which representatives at the ministerial level from 11 African countries

adopted 25 principles that we are hopeful will soon form the basis

of an African anticorruption convention. We have shared these

principles with all of our embassies in Africa, and have encouraged

them to make these principles an important part of our bilateral

dialogue.

More recently, we asked all of our ambassadors to raise with

their host Governments, as well as with leaders of the private sector, civil society, and the media, what steps they are taking to combat corruption, develop an African anticorruption convention, and

what they are doing to prepare for the second global forum to be

held in May 2001 in the Netherlands, cohosted by the Netherlands

and the United States.

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It is important to note that through the efforts of the Global Coalition on Africa, that Africa is keeping pace with other regions in

the world who have combined efforts to fight corruption. The important work undertaken by GCA compliments our anticorruption

and transparency efforts in other regions, including the OECD

Antibribery Convention, the Inter-American Convention Against

Corruption, and Transparency International of the Asian Pacific

Economic Cooperation Forum.

Moreover the General Assembly of the United Nations this fall

is expected to approve procedures for the negotiation of a new

international instrument against corruption.

Now, I would just like briefly to touch on several of our bilateral

programs. Under the auspices of the U.S.-Africa Bilateral Commission, the United States and South Africa have adopted a joint action plan designed to improve the transparency and predictability

of South African Government processes and procedures affecting

foreign investment, including ethics, licensing, procurement, and

judicial enforcement. Working through the U.S.-South Africa Justice and Anticrime Cooperation Committee, which is part of the

BNC, both Governments together will focus on crime prevention,

upholding integrity among justice and security officials,

anticorruption and Government transparency measures, including

police accountability.

In Nigeria, the United States has taken a keen interest in supporting the development of the rule of law, and the Secretary of

State has identified Nigeria as one of four democracies deserving

of particular attention this year. We have developed the U.S.-Nigeria Joint Economic Partnership Committee to support Nigeria’s economic reform efforts, and I think we are all very encouraged by

President Obasanjo’s strong commitment to rooting out corruption

and the steps that he has taken from day 1, when he became president 15 months ago, and we can go into the law later.

In Kenya, as you noted, there are two important anticorruption

bills now pending in the country’s parliament. The draft code of

ethics would require financial disclosure for top civil servants,

while the economics crime bill would strengthen the powers of arrest and prosecution for the nascent Kenyan anticorruption authority. Approval and implementation of this legislation is crucial to

keep Kenya on track with its IMF program, and to keep its economic reforms on track. The economic crimes bill has been

gazetted, and parliament is expected to take up both bills when it

returns in October.

In Angola, a country that we have been reading about in the

Washington Post over the last couple of days—I think there is another picture to put forward. We have made it clear to the Government that, aside from the ongoing civil war, a lack of transparency

poses a serious impediment to greater involvement by U.S. firms

in the nonoil sectors of the economy. On numerous occasions and,

in particular, at our meetings of the U.S.-Angola Bilateral Consultative Commission, we have urged the Government to work with the

IMF and to take measures to stop the widespread graft and corruption.

Senator, we were encouraged when, earlier this year, the Angolan Government concluded a stock monitoring program with the

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IMF that has as one of its key components an audit of the oil accounts. Over the last month, the Angolan Government awarded a

contract to the international consulting firm, KPMG, that will

begin to conduct the audit, or diagnostic, as it is referred to, of the

oil sector. We are very hopeful that the Government will continue

to make progress in this most important area.

Now, let me conclude on a more positive note. Monday, July 24,

the U.S. and Botswana Government inaugurated our newest International Law Enforcement Academy in Gaborone, Botswana. As in

other ILEA’s, we will be providing over time a range of courses for

law enforcement professionals throughout southern Africa that will

focus on modern law enforcement investigative practices and management techniques. Such training has multiple objectives, including reforming the civil and criminal codes and revamping procedures to enable investigators, prosecutors, and judges alike to address criminal activity in an environment respectful of civil rights

and ethnic minorities. This last point is a particular challenge in

a region where tensions between ethnic groups have defined political, economic, and social structures for centuries.

I would like to thank the members of this committee for this opportunity to participate in this roundtable this afternoon, and to

discuss the issues of corruption and our anticorruption efforts in

Africa. As I have tried to put forward, the threats of corruption and

bribery in this region are serious impediments to social, economic,

and political development.

The United States seeks to address these threats through bilateral and multilateral cooperation and through direct training and

technical assistance. Lasting reform can only be built on a solid

foundation of the rule of law. It means enlisting Government, the

media, civil society, nongovernmental organizations, and the business community in joining together to fight the culture that permits corruption to exist and flourish.

Senator Feingold, I want to thank you and Senator Frist and

others for your concern and leadership on advancing America’s interests in Africa. We look forward again to working with you and

finding solutions to these difficult issues and challenges, and I look

forward to our discussion and answering any questions you might

have.

Thank you very much.

[The prepared statement of Mr. Schneidman follows:]

PREPARED STATEMENT OF WHITNEY W. SCHNEIDMAN

Mr. Chairman, Members of the Committee:

Thank you for providing this opportunity to testify before this Committee and to

address the impact of corruption and bribery in Africa. President Clinton, Vice

President Gore and Secretary Albright have placed a high priority within the Administration’s foreign policy on fighting corruption and promoting good governance

and strengthening the rule of law in Africa and globally.

This Committee’s continued leadership in African issues is critical to our effort

to help the nations in Africa develop a future of peace, prosperity and freedom. This

morning, I would like to discuss the Administration’s initiatives and programs in

combating corruption in Africa. We look forward to working with you on these

issues, to share ideas, and to develop solutions to these challenges.

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WHY ANTI-CORRUPTION IS VITAL IN AFRICA?

Corruption in Africa is of particular concern because it undermines the emerging

political and economic institutions in these countries and threatens the ongoing political and economic reforms in the region. It corrodes democratic institutions, weakens the rule of law, and undermines the confidence of people in democracy.

Corruption, as illustrated by the illicit trade of national resources, is also theft

from a nation. It robs citizens in Africa of their future and has a debilitating impact

on their quality of life. As a consequence, poorly managed resources, embezzlement,

and corruption result in fewer funds allocated to government programs in education,

healthcare, housing, physical infrastructure (such as, water and sanitary systems,

roads) and other social services.

Effective responses to the challenges of corruption must come from each individual government. A nation’s ability to confront and surmount corruption and organized crime depends on political will. Policy encouragement and material support

offered by other nations can be invaluable, but they cannot substitute for the determination and capability of each nation to act within its own borders.

Corruption flourishes behind closed doors and where bureaucratic control is unchecked. Transparency and accountability, by opening up government to the bright

light of public view, reduce the opportunity for corrupt acts by public officials.

Transparency complements strong law enforcement by using management and policy reforms. It also complements democratic principles such as freedom of speech

and a free media, freedom of information, open procurement and contracting measures, public access to decision-making, and public education as ways to replace a

culture of corruption with a culture of integrity.

PROMOTING ANTI-CORRUPTION AND GOOD GOVERNANCE IN AFRICA

The problems facing Africa today are enormous. Persistent conflict, HIV/AIDS,

poverty, and environmental degradation are some of the greatest threats to Africa’s

security, stability, and prosperity.

Corruption is another obstacle to Africa’s economic and political development. It

takes many forms. The illicit trades by corrupt officials, rebels and criminals in oil,

diamonds and other precious minerals and resources, are part and parcel of corruption.

Notwithstanding these challenges, many African governments and private sector

leaders have shown a new willingness to confront these difficult issues. With respect

to issues of governance, African leaders have come to recognize that corruption,

opaque practices and a lack of accountability weaken democratic values, sap economic growth, impede development, increase vulnerability to financial crises, and

undermine new investment activities.

Corruption problems are not unique to Africa. Corruption played a large role in

the recent Asian financial crisis. Wherever it occurs, corruption hinders the rule of

law, impedes economic growth and slows entry into the global marketplace.

Although much work remains ahead, the Administration has implemented various

innovative strategies for minimizing corruption in Africa. Under the President’s

Partnership for Economic Growth and Opportunity and International Crime Control

Strategy, we are accelerating Africa’s integration into the global economy and developing key tools in the fight against corruption.

The President and many members of his cabinet have traveled to Africa on numerous occasions. At every opportunity, U.S. officials have underscored the importance of promoting good governance and fighting corruption as a means of strengthening the rule of law, improving the investment climate, democratization, conflict

resolution and social equity. We have also advanced our dialogue on anti-corruption

with African countries through discussions at the U.S.-African Ministerial (March

1999), two meetings of the U.S.–SADC Forum (1999, 2000), and most recently

through demarches both here and in African capitals as we discuss with our African

counterparts, the eligibility criteria of the Africa Growth and Opportunity Act.

As a result, today, in addition to the State Department and USAID, virtually

every government agency—from Justice to the Treasury Department, from the Office of Government Ethics (OGE) to the Commerce Department is implementing creative new initiatives to strengthen our partnership with Africa and in fortifying its

democratic institutions to promote better governance and halt corruption.

THE ADMINISTRATION’S ANTI-CORRUPTION EFFORTS IN AFRICA

The Administration is encouraged by the many indications that African leaders

and civil society have taken up the campaign for good governance and against corruption. Namibia, Botswana, and Uganda have set exemplary standards on proVerDate 11-MAY-2000 13:04 Feb 07, 2001 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6621 68756 SFRELA2 PsN: SFRELA2
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moting public integrity and the rule of law. A newly assertive press in many African

countries has not flinched from attacking poorly managed institutions and allegedly

corrupt individuals. Laudable efforts are underway to strengthen customs services.

The governments of Benin, Ethiopia, Malawi, Mali, Uganda and Tanzania have

agreed to introduce no-bribery clauses in public contracts. World Bank President

Wolfensohn has received letters from several African heads of state requesting

World Bank assistance to establish or strengthen anti-corruption programs.

The United States has been active in this area through our bilateral efforts, the

multilateral development banks, the Global Coalition for Africa (GCA), and non-governmental and civil society organizations such as Transparency International.

The United States cooperates with other nations to combat all forms of corruption

and to help our international businesses operate without the baneful effects of corruption. Under the first-ever International Crime Control Strategy in United States

history, released by President Clinton in Nay 1998, we have broadened our efforts

to provide systematic and comprehensive support and assistance to enable other nations to act against corruption and organized crime. In global and regional diplomatic processes, we are seeking to define comprehensive, objective statements of

practices governments should employ to control and combat corruption and organized crime. We are working to increase the public commitment of governments and

political leaders to adopt and implement such practices.

In Washington in February 1999, Vice President Gore hosted and chaired the

First Global Forum on Fighting Corruption, one of the initiatives contained in the

International Crime Control Strategy. Over five hundred participants from ninety

nations attended, this included participation by 15 African countries and the Global

Coalition for Africa (GCA). Participants extensively discussed a comprehensive set

of principles and practices that are effective to promote public integrity and to combat official corruption. In their final Declaration, the participants called for governments to adopt practices appropriate to each nation’s particular circumstances and

requirements and to assist each other in fighting corruption.

GLOBAL COALITION FOR AFRICA (GCA)

Since the Global Forum, the State Department has continued to develop and coordinate the Vice President’s comprehensive international initiative against corruption in Africa and elsewhere. We have also worked with other governmental partners to encourage the political will to establish or improve their institutional capacities to define and implement national regimes based on the ‘‘Guiding Principles for

Fight Corruption and Safeguarding Integrity among Justice and Security Officials.’’

As a part of the follow-up to President Clinton’s trips to Africa, and on the margins of the Vice President’s Global Forum on official corruption, I co-chaired several

meetings between the GCA and the United States to discuss collaboration between

African countries to address corruption. Countries invited included those visited by

President Clinton and countries that had participated in a Maputo Conference in

1997 to develop effective anti-corruption mechanisms: Benin, Botswana, Ethiopia,

Ghana, Malawi, Mali, Mozambique, Senegal, South Africa, Tanzania, and Uganda.

As a result of this meeting, Ministers and senior policy makers from these 11 African countries, along with senior officials from some donor countries and organizations, adopted 25 anti-corruption principles to facilitate greater cooperation among

regional or sub-regional groups of African countries. These African countries also

agreed to adopt anti-corruption principles that would encourage implementation of

common standards at the national level, as well as joint action between and among

countries. These principles could also form the basis of more formal cooperative

frameworks at the sub-regional or regional levels.

The important work undertaken by the GCA complements our anti-corruption and

transparency efforts in other regions. These efforts include the Organization on Economic Cooperation for Development (OECD) Anti-bribery Convention, which obliges

major exporting countries to make it a criminal offense for individuals or enterprises

to bribe officials of foreign governments to secure or retain business; the InterAmerican Convention Against Corruption; the Council of Europe Criminal Law Convention Against Corruption; the U.S. initiative against corruption in the Organization for Security and Cooperation in Europe (OSCE); the Stability Pact Anti-corruption Initiative; and the transparency initiative of the Asia-Pacific Economic Cooperation (APEC) forum. The General Assembly of the United Nations in the fall of 2000

is expected to approve procedures for the negotiation of a new international instrument against corruption.

At the 9th International Anti-corruption Conference (IACC) held last fall in Durban, South Africa, the State Department and USAID sponsored a workshop to further build awareness and support for the GCA regional anti-corruption initiative for

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Africa, as an important element of our international strategy against corruption.

The United States urged that the countries concerned also consider an appropriate

mechanism for mutual evaluation of implementation of such commitments (such as

currently exists in the OECD Anti-Bribery Convention), to assist governments in

implementing effective practices. The GCA and the 11 African countries are expected later this year to approve at Summit level in Abuja, Nigeria, a declaration

of anti-corruption principles agreed to in 1999.

GOOD GOVERNANCE IN AFRICA

On a parallel track, the Administration continues to promote policy dialogue

through increased consultations with the OECD Development Assistance Committee

(DAC), UN Economic Commission for Africa (ECA), the World Bank, the IMF, and

the African Development Bank (AFDB) on transparency and accountability, governance, and anti-corruption issues and programs in Africa. The Administration has

worked closely with African regional economic groupings including the Economic

Community of West African States (ECOWAS) and West African Economic and

Monetary Union. (UEMOA).

As an example of this approach, the Administration supported the. recent ‘‘Good

Governance and Sustainable Development in Africa’’ initiative organized by the Federal Republic of Nigeria, the West African Economic Association (WAEA), the African Development Bank (AFDB), the Organization of African Unity (OAU), the World

Bank, UNDP, GCA, and other international organizations.

The initiative’s goals are to bring together African and international anti-corruption practitioners and experts, scholars, civil society representatives, and decisionmakers from governments and international donors to discuss the state of governance in Africa and to establish a mechanism to monitor the progress of good governance (integrity, transparency, efficiency and accountability) in Africa. Although this

initiative is still in its infancy, it will serve to complement the anti-corruption efforts

by the GCA and other African organizations.

U.S. BILATERAL PROGRAMS

With respect to our anti-corruption and rule of law programs, our approach is consistent in all the African states. We consider anti-corruption and good governance

to be related and mutually reinforcing goals. The cornerstone of our policy is to

build, through training and technical assistance, strong and democratic institutions

to combat the problem of corruption.

Our Anti-Crime Training and Technical Assistance Program (ACTTA) uses Foreign Assistance Act monies to support U.S.-African law enforcement cooperation in

addressing international organized crime, financial crimes, narcotics trafficking,

trafficking in persons, and border security. Fighting corruption is a significant goal

of these programs. United States federal agencies receiving funding to implement

training and technical assistance include the Federal Bureau of Investigation (FBI),

the Drug Enforcement Administration (DEA), the International Criminal Investigative Training Assistance Program (DOJ/ICITAP), the Office of Overseas Prosecutorial Development, Assistance and Training (DOJ/OPDAT), the Secret Service, the

Internal Revenue Service (IRS), the Customs Service, the Bureau of Alcohol, Tobacco and Firearms (ATF), the Financial Crimes Enforcement. Network (FinCEN),

the Department of State, Bureau of Diplomatic Security (DS), the Coast Guard; the

Federal Law Enforcement Training Center (FLETC), and the Office of Government

Ethics (OGE).

I would like at this time to address several particular countries in which this

Committee may have a specific interest on the implementation of the Administration’s regional training and technical assistance programs for fighting corruption

and improving governance in Africa.

SOUTH AFRICA

Since 1994, we have engaged the South Africans on a wide range of issues in the

U.S.-South Africa Law Enforcement Working Group. Under the auspices of the U.S.-

South Africa Bi-national Commission (BNC), the United States and South Africa

have adopted a joint action plan designed to improve the transparency and predictability of South African government processes and procedures affecting foreign investment, including ethics, licensing, procurement and judicial enforcement. Encouraging the establishment of a culture of transparency and good governance in South

Africa is a key objective.

Under the U.S.-Africa Justice and Anti-Crime Cooperation Committee (JACC),

both countries are cooperating on a broad range of law enforcement issues, especially crime prevention, upholding integrity among justice and security officials,

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anti-corruption and government transparency measures (including police accountability), and government-community relations concerning crimes. Most recently,

U.S. Attorney General Reno met with South African Minister of Justice Naduna to

discuss further cooperation on joint law enforcement and crime issues including corruption.

Through USAID’s Administration of Justice Project, the United States will have provided $16.4 million (from 1994–2001) in total support to the South African Justice Department in such areas as policy/regulatory reform, institutional development

and human rights education. USAID is presently planning a new six-year $15 million program that will continue to support South Africa’s criminal justice program

with an emphasis on improving management of justice institutions; improving case

processing and court efficiency, including prosecutorial and judicial training; and

NGO implementation of selected crime prevention strategies. The U.S. Department

of Justice, through OPDAT, will continue to consult with South Africa’s National Directorate of Public Prosecutions (NDPP) on formulating a program of criminal justice assistance in the prosecutorial sector that will complement our anti-corruption

efforts.

The U.S. Office of Government Ethics (OGE) has also engaged in formal exchanges of professional expertise between their office and their counterpart institution in South Africa. In 1997, a senior official from OGE was detailed to the SouthAfrican parliament to help develop a financial assets declaration system. In 1998,

OGE provided.consultation to the Guanteng legislature on development of a Code

of Conduct and financial regulations. Since 1999, OGE has engaged in meetings and

provided consultation and training for the South African Public Service Commission

(PSC), as they begin to implement an Ethics Code, financial disclosure and training

for the South African public service. Both parties have scheduled a formal consulting visit by commissioners and staff of the PSC to Washington in October, 2000.

NIGERIA

The United States has a keen interest in supporting the development of the rule

of law in Nigeria. The Secretary of State has identified Nigeria as one of four democracies in transition deserving of particular attention this year. We.also developed the Joint Economic Partnership Committee to support Nigeria’s economic reform efforts.

Given that official corruption is widespread in Nigeria, the task of reformers in

Nigeria remains daunting. However, President Obasango has demonstrated the political will and commitment to overcome these obstacles. Obasango’s overall anti-corruption strategy includes implementing anti-money laundering law, revamping

criminal procedure code, and reforming the police.

In June 2000, Nigeria’s congress passed and President Obasanjo signed into law,

comprehensive anti-corruption legislation. The State Department is funding a legal

advisor and Assistant U.S. Attorney with experience in anti-corruption investigations, to advise the Government of Nigeria on steps to implement this legislation.

The State Department also partially funded a diagnostic study of corruption in Nigeria that will be used by the World Bank and other international financial institutions in designing their programs of assistance.

KENYA

Two important anti-corruption bills are now pending in Kenya’s Parliament. The

draft Code of Ethics would require financial disclosure for top civil servants, while

the Economic Crimes Bill (ECB) would strengthen the powers of arrest and prosecution for the nascent Kenyan Anti-Corruption Authority. Approval and implementation of this legislation is crucial to keep Kenya on track with its IMF program and

its economic reform program. Parliament is expected to take up both bills when it

returns in. October.

ANGOLA

We have made clear to the Government of Angola that a lack of transparency

poses a serious impediment to greater U.S. investment in the non-oil sectors of the

economy. We have encouraged the government to work with the IMF and to take

measures to stop the widespread corruption. The Government of Angola has begun

to recognize that corruption is a fundamental issue that must be addressed directly

in the context of a broader program of economic and political reform. We continue

to support efforts by the International Monetary Fund and the World Bank to press

the Government in Luanda to take a series of measures designed to improve transparency, increase fiscal accountability, and review government management of the

oil and diamond sectors.

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BOTSWANA INTERNATIONAL LAW ENFORCEMENT ACADEMY (ILEA)

On Monday, July 24, the United States and Botswana inaugurated our newest

anticrime academy in Gaborone. As in other ILEAs in Budapest and Bangkok, we

will be providing over time a range of courses focusing on modern law enforcement

investigative practices and management techniques for countries in southern Africa.

Such training, which will be conducted both at ILEA and offsite, has multiple objectives. These include strengthening law enforcement efforts to confront transnational

organized crime, reforming the civil and criminal codes, and revamping procedures

to enable investigators, prosecutors and judges alike to address criminal activity in

an environment respectful of civil rights and ethnic minorities. This last point is a

particular challenge in a region where tensions between ethnic groups have defined

political, economic and social structures for centuries.

CIVIL SOCIETY

The State Department also sponsors professional exchange programs such as the

International Visitor Program in which anti-corruption has been one of the topics

discussed among officials in government, law enforcement, media, academia, and

non-governmental organizations.

U.S. business associations and non-governmental organizations, such as Transparency International, the-Corporate Council for Africa, the African Business

Roundtable, and the American Chambers of Commerce in Africa, are playing an important role in helping the U.S. government combat anti-corruption and the rule of

law in Africa. In May, the Department of State published a brochure, ‘‘Fighting

Global Corruption: Business Risk Management’’ that helps raise awareness of Foreign Corrupt Practices Act (FCPA) issues and our global anti-corruption efforts in

Africa and other regions of the world.

UNITED NATIONS

In April 1999, the UN Crime Commission recommended that the UN Convention

against Transnational Organized Crime, to be completed by the fall of 2000, include

a provision to criminalize acts of corruption involving domestic public officials and

transnational organized crime. On January 21 of this year, pursuant to a General

Assembly resolution approving the Crime Commission’s December 1999 recommendations, the Ad Hoc Committee negotiating the crime convention concluded

that it would be desirable for the UN to develop a comprehensive global instrument

against corruption. The Netherlands has indicated that its principal goal for the

Second Global Forum is to build support for such an instrument.

GLOBAL FORUM II

As a follow-up to the Vice President’s Global Forum on Fighting Corruption, the

United States is co-sponsoring Global Forum II, which will be held at The Hague

in May 2001. The Netherlands has indicated its intention to invite all the nations

of the world. Major topics of Global Forum II are expected to be a potential UN global anti-corruption instrument, ways to build regional cooperation through mutual

evaluation mechanisms, and ways to improve inclusion of civil society and business

in government efforts to reinforce the rule of law. The United States is encouraging

the Africans to participate fully in the Global Forum process, in UN discussions on

a possible global international instrument on fighting corruption, and in various

other fora. The GCA is a member of the Organizing Committee for this important

governmental forum.

WORLD BANK AND IFIS

Within the World Bank, the African Development Bank and the IMF, the United

States has taken the lead in curtailing economic support to governments which are

unwilling to take action against corruption. The United States also continues to encourage the World Bank and recipient African countries to consider more explicitly

in policy dialogue, country assistance strategies, allocation of resources, and the design of projects.

The State Department, through INL funding, provided substantial assistance to

the World Bank Institute for three anti-corruption diagnostic surveys in Africa.

These surveys will provide a basis for development of national anti-corruption capacities in Nigeria, Mali, and Malawi. We plan to continue this cooperation with the

World Bank and to continue funding future diagnostics for other African countries.

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SUMMARY AND CONCLUSION

I would like to thank the members of this Committee for this opportunity to discuss with you the issues of corruption and our anti-corruption efforts in Africa.

As I have set forth this morning, the threats of corruption and bribery are serious

impediments to social, economic and political development.

The United States seeks to address these threats through bilateral and multilateral cooperation and through direct training and technical assistance. Lasting reform can only be built on a solid foundation of rule of law. It means enlisting government, civil society, NGOs and the business community in joining together to

fight the culture that permits corruption to exist and flourish.

Mr. Chairman, I thank you and this Committee for its concerns and leadership

on advancing America’s interest in Africa.. We look forward to working with you and

this Committee to find solutions to these difficult challenges.

I would be happy to answer any questions you might have. Thank you.

Senator FEINGOLD. I thank you very much, Mr. Schneidman, for

your comments, and now we will turn to Ms. Vivian LoweryDerryck, the Assistant Administrator Africa for USAID. Ms. Lowery-Derryck.

STATEMENT OF MS. VIVIAN LOWERY-DERRYCK, ASSISTANT

ADMINISTRATOR AFRICA, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

Ms. LOWERY-DERRYCK. Thank you very much, Senator Feingold,

and thank you and Senator Frist for convening this roundtable and

for the invitation to discuss AID’s anti-corruption efforts in Africa.

Along with other donors, we view corruption as a major impediment to sustainable development in Africa, as you earlier said, but

the good news is that African civil society organizations and citizens and Governments are more and more willing to acknowledge

corruption as a development issue and take appropriate action. My

fuller remarks have been submitted for the record, but in this discussion I am going to focus on corruption as a development challenge, and USAID’s efforts to foster accountability, transparency,

and good governance, because all of those three reduce the incidence of corruption on the continent, but two observations before

I turn to corruption as the development challenge.

First of all, progress in tackling corruption is a long- term undertaking, and that progress requires patience and persistence and a

willingness to stay the course with our African partners, and secondly, as you noted earlier, Senator, we should also remember that

corruption is a universal problem, and the United States ranks now

fourteenth on Transparency International’s latest index.

It is a universal problem, but it is more acutely felt in the developing world, and particularly in Africa, but we believe that corruption, probably with HIV/AIDS is one of the most dramatic and

acute development challenges facing the continent.

In broad terms, corruption is the abuse of public office for private

gain, and I say that because we continue to say that to people

when we are trying to think up definitions for corruption, but it undermines the foundation of sustainable development in virtually all

developing countries. Economically, corruption leads to the inefficient allocation of resources, it raises the cost of investment, it deceases investor confidence, it promotes inequalities and inefficiencies in the private sector, it raises the cost and decreases the quality of public sector projects and services, so I think I am beginning

to answer your first question.

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Politically, corruption contributes to a loss of confidence in the

Government, and a general noncompliance with laws. Corruption

undermines the legitimacy of elected officials and democratic values. It also diminishes the effectiveness of public policy and impairs the power of public institutions.

These consequences fall so very heavily on African countries because they are already burdened by poverty, debt, disease, illiteracy, and political and economic instability, and where corruption

undermines the rule of law, public safety standards, environmental

protection policies, criminal codes, and basic legal contracts are not

enforced.

Senator Feingold, corruption basically undermines a fundamental goal for us at USAID, which is poverty alleviation, and corruption is particularly egregious, because the burden of corruption

is disproportionately borne by the poorest and most vulnerable in

virtually any population.

The cost of corruptions are even further magnified in conflict situations. I think that that was your second point. In countries that

are in turmoil, like Sierra Leone, Angola, Congo, large sums of

money are amassed through arms sales, diamond smuggling, and

drug trafficking, and a demand for money laundering services

thrives in these environments as public institutions are overwhelmed and regulatory insight is severely compromised. Furthermore, violent conflict is even more likely to erupt in countries

plagued by endemic corruption.

Corruption also becomes a national security issue when it threatens the success of our interventions to combat HIV/AIDS and to

prevent violent conflict. The valuable investments of USAID programs in African countries are at risk if corruption both as a development issue and as a trigger for violent conflict is not fully addressed.

The United States Government, including USAID, has been in

the forefront of the movement to bring international attention to

the high cost of corruption and to galvanize the public and private

sector and developing countries alike to give the issue the serious

attention that it merits. The USAID’s administrator, Brady Anderson, just today opened the Anticorruption Summit 2000, which is

being cochaired by USAID’s Office of the Inspector General. These

meetings, which are attended by representatives of 10 African

countries, will focus on financial accountability and its connections

to corruption.

Increasingly, donors and Africans themselves are openly discussing corruption, rather than cloaking it in terminology, and

USAID is convinced that with the advent of this new openness and

willingness to confront corruption issues on the part of our African

partners, civil society can have a significant affect on a Government’s willingness to enact and sustain anticorruption reforms.

Now, USAID is capitalizing on this favorable environment by

tackling the issue more directly and by forging partnerships with

other U.S. Government agencies with bilateral and multilateral donors as well as with African Governments and regional institutions. Let me just describe a few ways of how we are addressing

the corruption issue.

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USAID is addressing this by first demanding that its own programs are transparently administered. Since its inception, the

agency has administered numerous checks and balances to ensure

that our funds are used for their intended purposes. In other

words, we are modeling for anticorruption.

For instance, our audits are routinely conducted by our Inspector

General’s Office. For well over a decade, as part of its development

assistance strategy for Africa, USAID has championed accountability and good governance practices. From our past experiences

in the global and regional fight against corruption, we have learned

several lessons, and I will just cite four.

First of all, that Government regulation and enforcement activities alone are insufficient anticorruption strategies.

Secondly, achievements of anticorruption reform programs, economic and social, are vulnerable to nondemocratic regime changes

and to the conflicts that are so often generated by these changes.

Third, that civil society must be engaged as a critic of existing

corruption and as a watchdog against emerging corruption.

And lastly, that donors have to work together against the culture

of corruption and coordinate anticorruption efforts.

Based on what we have learned in the past, USAID has developed a two-track response to the problems of corruption in Africa,

first of all changing the enabling environment and, secondly, mobilizing public support.

USAID’s democracy and governance and economic growth sectors

both include the anticorruption measures as part of their larger

program activities, and this is true in bilateral missions as well as

through our regional initiatives. Our democracy and governance

programs emphasize transparency and accountability, and those

are really our watch-words, transparency and accountability, and

they do this through increased local government and citizen participation in decisionmaking, more effective and independent legislatures and judiciaries, and enhanced civilian control over the military and policy forces.

USAID programs have trained judges and court administrators

to prevent tampering with records and reduced delays in hearing

cases. We have worked with national assemblies to create ethics

committees and codes of conduct for public officials, we have supported the media in developing skills in investigative journalism

and, again, we think of the case of Angola that we have been reading about in the papers for the past 2 days.

USAID also provides technical assistance and training to audit

institutions in order to increase fiscal accountability and to improve

capacity to detect and prosecute for misappropriation of funds. In

the enabling environment, in addition, since its inception in 1997

the Africa Bureau’s leading economic growth activity and presidential initiative, the Africa trade and investment policy program,

as we call it, ATRIPP, has concentrated heavily on regulatory reform that will reduce the opportunities for solicitation of bribes for

private businesses.

Major goals of the program include removal of regulatory red

tape, improvements in the commercial laws and processes, establishment of transparent procompetitive regulatory bodies, and reVerDate 11-MAY-2000 13:04 Feb 07, 2001 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6602 68756 SFRELA2 PsN: SFRELA2
15

form of the tax and customs systems that currently give too much

discretion to individual officials.

We are also very clear on a couple of specific anticorruption programs. All of our Africa programs are coordinated with other donors and organizations working in this arena, and we have been

collaborating closely, for example, with Transparency International,

the Global Coalition on Africa, and the World Bank as well, in an

effort to curb corruption.

USAID and its partners work in some of the most challenging development environments, including countries with longstanding,

endemic corruption problems. For instance, Nigeria, one of the

most important transitional democracies in which USAID works,

recently dropped to the last position in Transparency International’s corruption index that was released on September 13, just

literally last week.

But despite this ranking, however, we think that there are positive prospects that now exist to improve Governments and the investment climate by fighting corrupt practices in the public and the

private sector. President Obasanjo has taken some bold moves, including the anticorruption bill, which signals his strong commitment to deal with one of Nigeria’s most difficult development problems.

We put a top priority on anticorruption measures in our Nigeria

program. At the Joint Economic Partnership Commission we were

very careful to talk about this in ways that make our point, but

make it in a positive way, and we have pledged that we will stay

the course to help President Obasanjo build on his commitment to

transparency and accountability in the country.

Examples of USAID’s corruption activities in Nigeria include the

fact that the mission is working to increase the transparency of

Government institutions, particularly focusing on the national assembly and six State assemblies. USAID is partnering with local

Nigerian institutions to establish the foundation for a fair and competitive electoral system, including the development of a code of

conduct for political parties, which we think is particularly important.

At the local level, USAID is supporting the work of Transparency

International to develop an anticorruption training manual for

community groups, and at the request of President Obasanjo,

USAID provided funding for a conference that led to establishment

of the Nigerian Anticorruption Commission.

In addition to its Nigeria program, USAID supports a wide spectrum of anticorruption measures in many other African countries,

and I will speak to some of those if we have time when we get to

the discussion. I just note that Kenya is one of them that I would

focus on.

So in conclusion, Senator Feingold, we continue to make strides

to reduce corruption in Africa, although decreases in corruption are

difficult to quantify. You know, it is not easy to count the number

of bribes that were not taken or solicited, and spectacular results

are not quickly available in this area. We think a lot about how

do we measure this, and it really is difficult, because the optimism

and the good news is in what did not occur.

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However, since USAID began addressing systemic corruption

several years ago, there has been progress on many fronts, including the degree to which citizens and Governments are aware and

engaged in fighting the corruption, the number of elected officials

exposed to ethics training, and the depth and breadth of regulatory

and judicial reforms in several countries.

We should be heartened by these successes, yet we can only help

support efforts that Africans themselves wish to undertake, and I

think that we again go back to the example of Nigeria, because it

is that presidential leadership that really does make a difference.

The change must come from within, and not be externally imposed.

Corruption is a critical issue that requires diligent attention by African Governments and donor partners to forestall its debilitating

impact. We in the Africa Bureau will continue to work with other

donors and with our African partners as well as multilateral and

regional organizations to ensure that the successes achieved thus

far are sustained and expanded.

Again, I thank you for really pursuing this issue, because we

know that reducing corruption is a long-term process, as is the promotion of democracy and good governance, but we are increasingly

required to make difficult decisions regarding program funding due

to reductions in democracy and economic growth resources, and if

we are going to be able to collaborate with the larger donor community and support our United States private sector’s involvement in

emerging African economies and protect our ongoing assistance

programs and support Africans in their quest for sustainable development, the administration’s requested resources need to be heeded. We have and we can and we will make positive differences, but

the support of the Congress is absolutely necessary.

I thank you, Senator Feingold.

[The prepared statement of Ms. Lowery-Derryck follows:]

PREPARED STATEMENT OF VIVIAN LOWERY-DENYCK

INTRODUCTION

Good afternoon, Mr. Chairman, I would like by thank the Committee for this invitation to testify on USAID anti-corruption efforts in Africa. We, along with other

members of the donor community, view corruption as a major impediment to sustainable development in Africa. African civil society organizations, citizens, and governments themselves are also more and more willing to acknowledge corruption as

a development issue—and one not merely a factor in trade relations.

With the Subcommittee’s concurrence, I will address how corruption is a development challenge and how USAID is directing programs to help foster accountability,

transparency and good governance, thereby reducing the occurrence of corruption in

Africa. We must realize, however, that progress in this area requires patience, persistence and a willingness to stay the course with our African partners.

CORRUPTION AS A DEVELOPMENT CHALLENGE

In broad terms, corruption is the abuse of public office for private gain. It arises

both in political and bureaucratic office and can be petty or grand, organized or disorganized. Systemic corruption in Africa typically occurs in the management of public companies, in public markets, in fiscal administration, in customs, in the justice

system, and often within the military. There is also widespread petty corruption in

the civil service, which most directly affects the public by forcing them to pay for

government services that would otherwise be free. Whereas corruption in the privat

sector undermines economic growth, but may not affect political development, public

corruption has a destabilizing effect on both political and economic systems.

Corruption undermines the foundations of sustainable development in all developing countries. Economically, corruption leads to the inefficient allocation of reVerDate 11-MAY-2000 13:04 Feb 07, 2001 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6621 68756 SFRELA2 PsN: SFRELA2
17

sources, raises the cost of investment, decreases investor confidence, promotes inequalities and inefficiencies in the private sector, raises the cost and decreases the

quality of public-sector projects and services. The political consequences of widespread corruption, while less quantifiable, are no less real and are just as damaging.

Corruption contributes to a loss of confidence in the government and a general noncompliance with laws, undermines the legitimacy of elected officials and democratic

values, diminishes the effectiveness of public policy, and impairs the power of public

institutions. Indeed, political fallout from corruption creates a vicious cycle of corruption, instability, weak institutions, and more corruption.

The economic and political costs imposed by corruption fall heavily on African

countries, already burdened by poverty, debt, disease, high rates of illiteracy and

political and economic instability. Moreover, in those countries experiencing widespread, systemic corruption, the burden is disproportionately borne by the poorest

and most vulnerable of the population. Citizens are denied access to basic public

services and suffer from the non-enforcement of the rule of law, including public

safety standards, environmental protection policies and even criminal codes. Corruption also directly contributes to the lack of public infrastructure, investment, education opportunities, and jobs that sustain the cycle of poverty endured by so many

on the African continent.

These high costs of corruption, which Africans can ill afford in any event, are even

further magnified in conflict situations. In cases of cross-border conflict or failed

states, already weak state institutions are overwhelmed and regulatory oversight is

severely compromised. The rule of law often is significantly, if not completely, undermined. Opportunities for corruption at all levels abound and often go undetected

and unpunished. In countries in turmoil, like Sierra Leone, Angola, and the Democratic Republic of the Congo, large sums of money are amassed through arms sales,

diamond smuggling, and drug trafficking. A demand for money laundering services

especially thrives in such environments. Furthermore, violent conflict is more likely

to erupt in countries plagued by endemic corruption in which public dissatisfaction

increases as the availability of services declines. The valuable investments of

USAID programs in African countries, including our newly expanded initiatives to

combat HIV/AIDS, are at risk if corruption—both as a development issue and a trigger for violent conflict—is not fully addressed.

The United States government, including USAID, has been at the forefront of the

movement to bring international attention to the high costs of corruption and to galvanize the public and private sectors—in developed and developing countries alike—

to give the issue the serious attention it merits. In February 1999, Vice President

Gore underscored the importance of fighting corruption when participants from 90

governments attended the First Global Forum on Fighting Corruption here in Washington and began an intense effort to examine the causes of corruption and the practices that are effective to prevent or combat it. These important efforts have continued with the planning for a Second Global Forum to be held next May in the Netherlands. Importantly, World Bank President Wolfensohn noted during last October’s

Ninth International Anti-Corruption conference in Durban, South Africa that it was

just a few years ago that donors limited their discussions to improving transparency

and accountability. Now donors and Africans themselves openly discuss corruption

rather than cloaking it in terminology. As I will describe, USAID capitalizes on this

favorable environment for fighting corruption by incorporating anti-corruption activities into our programs and forging partnerships with other U.S. government

agencies, bilateral and multilateral donors as well as African governments and regional institutions.

HOW USAID ADDRESSES CORRUPTION

USAID addresses corruption by first ensuring that its own programs are transparently administered. The Agency has demanded accountability within its development programs since its inception. Within USAID, we have instituted numerous

checks and balances to ensure our funds are used for their intended purpose and

audits are routinely conducted by our Inspector General’s Office.

As a part of its development assistance strategy for Africa, USAID has championed good governance practices for well over a decade. As corruption has become

a more visible issue in development and is being more openly discussed, USAID has

been able to tackle the issue more directly. We are convinced that, with the advent

of this new openness and willingness to confront corruption issues on the part of

our African partners, civil society can have a significant effect on a government’s

will to enact and sustain anti-corruption reforms.

We have learned several critical lessons from our past experiences in the global

and regional fight against corruption. We have learned that:

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• Government regulation and enforcement activities alone are insufficient anticorruption strategies.

• Corruption is a universal problem, but each country’s corruption challenge is

shaped by its own particular circumstances and requires a tailored approach to

successfully combat.

• Achievements of anti-corruption reform programs—economic and social—are vulnerable to non-democratic regime changes and to the conflicts that are often

generated by those changes.

• Civil society must be engaged as a critic of existing corruption and as a watchdog against emergent corruption.

• Donors must work together against the ‘‘culture of corruption’’ and coordinate

our anti-corruption efforts.

Based on what we have learned in the past, USAID has developed a two-track

response to the problem of corruption in Africa, as well as other regions:

— Firstly, we work to change the environment in which the public and private

sectors interact. Our programs are designed to minimize opportunities for corruption

and to change the incentive structures that often encourage corrupt behavior. Corruption is likely to flourish where public officials have wide authority, little accountability, and work within a distorted incentive framework. USAID’s responses to corruption seek to address this imbalance by:

• Supporting legal and regulatory reform to reduce a government’s involvement

in areas better handled by the private sector;

• Streamlining government procedures to reduce the opportunities for corruption;

• Improving accountability mechanisms; and

• Introducing incentives that will encourage officials to act in the public interest.

— Secondly, we support efforts to mobilize public support for change. We recognize that an empowered citizenry is the best safeguard against corrupt officials at

all levels, and the best guarantee of the sustainability of our programs. Therefore,

we work with civil society and the private sector to raise awareness about the problems that corruption poses to development and to society in general. USAID missions promote active engagement by all sectors of the public in:

• Monitoring government activities;

• Advocating changes in attitudes and practices;

• Raising awareness about the costs of corruption;

• Decreasing tolerance for corrupt behavior and changing the expected norms of

ethical behavior; and

• Raising public awareness about their rights and entitlements as citizens.

USAID ANTI-CORRUPTION RESOURCES

USAID’s democracy and governance and economic growth sectors both include

anti-corruption measures as part of their larger program activities in bilateral missions as well as through regional initiatives.

Our democracy and governance programs emphasize the transparency and accountability of governments through increased local government and citizen participation in decision making, more effective and independent legislatures and judiciaries, and enhanced civilian control over the military and police forces. USAID

programs have trained judges and court administrators to prevent tampering with

records and reduce delays in hearing cases; worked with national assemblies to create ethics committees and codes of conduct for public officials, and supported the

media in developing skills in investigative journalism. USAID also provides technical assistance and training to audit institutions to increase fiscal accountability

and improve capacity to detect and prosecute the misappropriation of funds.

Additionally, since its inception in 1997, the Africa Bureau’s leading economic

growth activity, the President’s Initiative, Africa Trade and Investment Program

(ATRIP), has concentrated heavily on regulatory reforms that will reduce the opportunities for the solicitation of bribes from private businesses. Major goals of the program include: removal of regulatory red tape, improvements in the commercial laws

and processes, establishment of transparent, pro-competitive regulatory bodies, and

reform of the tax and customs systems that currently give too much discretion to

individual officials.

Calculating actual dollar figures that go towards fighting corruption specifically

is difficult since initiatives to improve transparency and accountability crosscut

many of our programs. Governance activities in Africa that are specifically labeled

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and tracked as anti-corruption totaled $833,000 in FY 1999 bilateral assistance.

That figure has nearly tripled in FY 2000. The number of countries with specific

anti-corruption objectives in the democracy and governance sector has also increased

from four to seven in a one-year period. On the economic growth side, USAID has

funded more than 25 ATRIP activities, both bilateral and regional, that are expected

to reduce opportunities for corruption in Africa. Total funding for this set of ATRIP

activities reached $10.3 million in FY 1999 and approximately $15.8 million in FY

2000. However, we believe that freedom of speech, independent media, freedom of

association, and free and transparent elections combine to lessen the impact of corruption in Africa. Therefore, when adding in all Africa Bureau regional programs

and bilateral activities designed to improve accountability, transparency, and good

governance more generally, the total USAID funds invested in fighting corruption

in Africa is well into the tens of millions.

AFRICA ANTI-CORRUPTION PROGRAMS

I would like to highlight just a few of the many activities our overseas missions

are implementing either through international non-governmental organizations,

U.S.-based technical assistance or other implementing mechanisms. First, however,

I believe it is important to note that all of our Africa programs are coordinated with

other donors and organizations working in the anti-corruption arena. No one organization or institution can shoulder all the responsibility for fighting corruption. Nor

can anyone take all the credit for the many improvements made over the past few

years in the quality of governance region-wide. USAID has been working closely, for

example, with Transparency International, the Global Coalition on Africa, and the

World Bank in the effort to curb corruption on the African continent. In addition,

through the Consultative Group mechanism, we maintain a dialogue with other bilateral donors and African host countries on issues of importance to development,

including corruption. Consultative group meetings provide a forum for frank discussion of the issues related to transparency and accountability, and enable the donors

to engage host country governments in the issues of corruption affecting their development and the effectiveness of international aid. It has resulted in stronger anticorruption efforts in a number of countries.

USAID and its partners work in some of the most challenging development environments including countries with long-standing, endemic corruption problems. For

instance, Nigeria, one of the Clinton Administration’s top four priority countries, recently dropped to the last position in Transparency International’s Corruption

Index, released September 13, 2000. Despite this ranking, however, positive prospects now exist to improve governance and the investment climate by fighting corrupt practices in the public and private sector. Nigeria’s President Obasanjo has

taken some bold moves including introducing the Anti-Corruption Bill which signals

a strong commitment to deal with one of Nigeria’s most difficult development problems. USAID puts top priority on anti-corruption measures in its Nigeria program

and will stay the course to help President Obasanjo build a broad commitment to

transparency and accountability in his country.

Examples of USAID anti-corruption activities in Nigeria include the following:

• The USAID mission in Nigeria is working to increase the transparency of government institutions, particularly focusing on the National Assembly and six

state assemblies (one in each of Nigeria’s geopolitical zones).

• USAID is partnering with local Nigerian institutions to establish the foundation

for a fair and competitive electoral system, including the development of a code

of conduct for political parties.

• At the local level, the USAID mission in Nigeria is supporting the work of

Transparency International to develop a manual that will be used to train communities in the roles that they can play in fighting corruption.

• At the request of President Obasanjo, USAID-funded the International Republican Institute (IRI) to sponsor a conference for 150 future cabinet ministers and

senior administration officials last year which produced key initiatives, such as

the establishment of the Anti-Corruption Commission.

In addition to its Nigeria program, USAID supports a wide spectrum of anti-corruption measures in many other African countries. The kind of corruption targeted,

as well as the results vary widely. The following are provided as illustrative examples of USAID-supported work in fighting corruption in Africa:

BENIN: The USAID mission in Benin has provided technical and institutional

support to the country’s Supreme Audit Institutions, both at the Chamber of Accounts of the Supreme Court and the Inspector General Office of the Ministry of

20

Finance. As a result of their increased capabilities, the Supreme Audit Institutions

have started, for the first time, to audit electoral campaign expenses and have developed a manual for transparent financial and procurement operations. In addition,

the Transparency International chapter, supported by USAID, conducted an extensive anti-corruption awareness campaign during the parliamentary elections in

March 1999. This included televised sketches, radio and television ads, comic strips

in local newspapers, and a poster campaign.

MOZAMBIQUE: The ATRIP program supported the Confederation of Mozambique’s Business Associations in its efforts to reduce red tape and to provide an effective forum for the private sector to examine policy issues. This activity resulted

in the passage of a new industrial law and revisions in the industrial and commercial licensing regulations that greatly simplified the registration process, and the

transfer to a single agency of all responsibility for import and export controls. The

Confederation has also worked to prominently display the new commercial and industrial licensing requirements to promote transparency and awareness of the rules

for both government and business. These reforms will greatly reduce bureaucratic

delays caused by bribe seeking.

In addition, with USAID support, NDI conducted a civic education program

throughout Mozambique designed to raise awareness about the rights and responsibilities of citizens in a democracy. Many participants soon put their newly acquired democratic skills into action and tried to make improvements within their

communities. In Sofala province, for example, participants wrote a letter to the District Office of Education complaining about the disappearance of funds the community had pooled for the construction of a school. The school administration was

forced to pay the money back, and this encouraged the community to provide additional funds, which enabled the school to be built.

MALI: The USAID mission in Mali was involved in organizing for regional workshops on ‘‘illicit taxes’’ that the custom and police levy from livestock exporters in

Sikasso, Segou, Mopti, and Koulikoro. The workshops provided opportunities for

livestock exporters and government officials to interact and jointly develop a plan

for eliminating illegal taxes. As a result of these workshops, livestock exporters decided to-create border livestock markets that will tremendously cut down the opportunity for local officials to demand unwarranted payments that negatively affect export revenues.

KENYA: In the past, when emergency food aid was required in Kenya, there were

two parallel emergency food programs—the Government of Kenya (GOK) system

and the UN’s World Food Program (WFP) and their implementing partners. The

GOK system used to be highly corrupt with high losses and little or no impact, as

the food aid went to too many districts and too many people due to political reasons.

However, as a result of a USAID-funded workshop facilitated by the Famine Early

Warning System (FEWS) project staff, augmented by additional USAID and Britishfunded analyses, the GOK has made some dramatic changes in its emergency aid

program by moving towards a more transparent and efficient community-based distribution system. The new system allows for district and divisional level decisions

to be made locally, and PVOs have a much larger role in the allocation of all emergency food.

Targeting of households can now be done based on need rather than on political

factors; while improved and transparent accounting procedures make unauthorized

diversions harder. Kenya’s remote Turkana District, the area hardest hit by the

country’s recent drought, demonstrates the improvements for the poorest households

brought about by a new community-based food aid targeting system. During a recent visit to the region, observers noted that poor households were receiving a

monthly distribution of up to twenty-two pounds of corn, dramatically more than the

two pounds they received previously. The new targeting system provides a more accountable and transparent distribution mechanism to ensure than food aid goes to

those most in need.

CONCLUSION

We continue to make strides to reduce corruption in Africa, although decreases

in corruption are difficult to quantify. It is not easy to count the number of bribes

not taken, or solicited. Spectacular results are not quickly available. However, since

USAID began addressing systemic corruption several years ago, there has been

progress on many fronts, including the degree to which citizens and governments

are aware and engaged in fighting the corruption, the number of elected officials exposed to ethics training, and the depth and breadth of regulatory and judicial reforms in several countries. We should be heartened by those successes. Yet, we can

21

only help support efforts that Africans themselves wish to undertake. The change

must come from within and not be externally imposed. Corruption is a critical issue

that requires diligent attention by African governments and donor partners to forestall its debilitating impact. We in the Africa Bureau will continue to work with

other donors and with our African partners, as well as with multilateral and regional organizations, to ensure that the successes achieved thus far are sustained

and expanded.

Lastly, we all know that reducing corruption is a long-term process, as is the promotion of democracy and good governance. However, we are increasingly required

to make difficult decisions regarding program funding due to reductions in democracy and economic growth resources. If we are to collaborate with the larger donor

community in mutually supportive capacities, support our US private sector in

emerging African economies, protect our on-going assistance programs, and support

Africans in their quest for sustainable development, the Administration’s requested

resources are needed. We have, we can, and we will make a positive difference but

the support of the Congress is absolutely necessary.

Thank you.

Senator FEINGOLD. Thank you, Ms. Lowery-Derryck. As we turn

to Simon Taylor, director of Global Witness, let me just reiterate

the 5-minute target, if we could, so we have some time to have

some back-and-forth.

STATEMENT OF MR. SIMON TAYLOR, DIRECTOR, GLOBAL

WITNESS, LONDON, ENGLAND

Mr. TAYLOR. Good afternoon. As an NGO based in London it is

quite a privilege to come and do this, so I would like to start by

saying thank you very much for having us. I will just very briefly

tell you about Global Witness. We are a London-based investigative

campaigning organization that looks at the link between natural

resources, the role of natural resources and the funding of conflict.

My expertise in the African context is Angola, and so that is what

I am going to focus my discussion on. I hope that is okay.

I do not want to paint an utterly bleak picture of Angola, but I

think I would be interested in having more of a debate about just

how far the reforms have come in Angola. Whilst we see, certainly,

the start of the IMF staff monitoring program as a very positive

move, we also see that the program itself, from our perspective, is

quite flawed in that it does not quite go as far as it could have

done. Especially given the fact, I think, that many of the objective

commentators in discussions with the IMF prior to the agreement,

in addition to the availability of public information, raised exactly

what was going wrong in Angola vis-a-vis corruption—information

was well available quite a long time prior to the finalization of the

agreement.

But I think from our perspective, whilst we see the staff monitor

program as a positive move forward, we think, well, it was almost

like aiming here instead of here, so that they have not quite obtained what they could have done. I will come back to that.

I will just very briefly run through where we see the key problems in Angola. I think we have a situation where there is literally

top-down corruption that is endemic the whole way through the

structure of society, mainly I think because once you get below the

top levels there is actually no other way to function. It is the only

way to live.

There is no alternative access to revenue to survive unless you

have become part of the system, so to varying degrees, depending

on where you are on the ladder of the structure, the hierarchy of

22

society, you have corruption, but at the top end you have control

over virtually everything. Everything, as they would say in

Luanda, is an ‘‘eschema,’’ a scam.

So everything from—we have noted rotten container loads of beef

being imported from Lisbon, to weapons that do not roll off container ships, that have to be literally dragged off, the sole purpose

of their acquisition seemingly to acquire the commission attached

with having made the deal in the first place.

We have mentioned briefly Angola is a major conflict zone. Some

people here may be aware that we have been looking at the issue

of conflict diamonds, and it was our work through this report,

which we published in December 1998, which kind of, together

with other moves by the U.N. Sanctions Committee precipitated a

lot of the coverage and moves to deal with the conflict diamond

issue.

And for us the other side of the coin is the fact that although you

have got a war which is clearly draining the revenue base for the

country, for development and so on, it is the massive scale of corruption, perpetrated by top-level people, particularly within the

presidency and other areas, which is also siphoning off a vast proportion of the wealth.

And I think the most serious aspect of it is what we would define, I think, as the de facto privatization of the war, which took

place around 1997–1998. I would like to be more candid, if you like,

but it is a bit hard because naming people might stand me up for

a little bit of grief when I go home, not the least of which might

be in a courtroom, or worse, I might add.

But the bottom line is that in 1993 Luanda was in difficulty in

the conduct of the war. The war was going very badly. There was

not the revenue to fight it. There was not the weapons supply and

so on, and basically what happened is an SOS call went out in the

direction of France, and certain individuals in France provided contacts with certain other individuals, which I will not name now,

who saw to it that introductions were made with certain banks who

provided oil-backed loans.

The same individuals also provided the connections for the ‘‘lifting of the oil,’’ as it is known, to pay back the loans and also provided the weaponry, and these individuals basically monopolized

the weapons supply to Luanda, whether directly themselves or at

least on the basis of orchestrating others to do it.

This carried on until about 1997, and the deals they did went

through an Angolan parastatal company, a State company, and

there were obviously kickbacks of quite some magnitude. What

happened in 1997–1998? Top people in the presidency removed the

contract from the parastatal and gave it to a private enterprise

which is basically owned by these same individuals, so what we

have seen is an escalation of the kick-back process to kick-backs

plus profits, because they own the very structure that is being deployed.

Some of the other areas that I think are of concern—and this

really brings us to the oil companies, and the role of the oil companies. In 1999, in July of 1999, three oil blocks were finalized. These

are respectively blocks 31, 32, and 33. 31 went to BP-Amoco, 32 to

ELF, which is now TotalFina ELF, and 33 to Exxon, and within

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the equity structures of Blocks 32 and 33 are some very strange

partners, which we believe are basically payments in kind for services rendered, the services being the provision of weaponry and financing and so on. They certainly do not appear to be companies

that the international oil industry is familiar with as ultra deep

water oil- drillers.

I think the more disturbing aspect of the three blocks was that some $870 million was paid over in signature bonuses, of which we

reckon at least $400 to $500 million disappeared straight into the

presidency for deployment through this structure I described before, and has simply not been accounted for. It has disappeared. I

think the picture of all of this is that a significant proportion of everything that is wrong with what is going on in Angola is that it

takes place off-shore.

So what we have in the Angolan staff monitoring program of the

IMF is a very positive step. It is miles ahead of where we would

have been, say, last year. But the bottom line is that it has no retrospective analysis of what took place in 1998 and 1999, and as far

as we are concerned these represent some of the most corrupt years

in terms of practices. And also it is only looking at money from

companies to Government, no subsequent deployment of that revenue, so some of the key areas of where it then disappears are simply not going to be looked at at all. It is great that the companies

are now being hired. I think that is very good that we are moving

forward, but are they going to find out all the convoluted pathways

of money through, for example, the Cayman Islands, through all

sorts of different structures you might imagine, where that stuff is

going, and I seriously doubt it.

So if the end objective is to bring transparency to the country,

such that oil revenue provides some sort of revenue for the development of the country and is actually going to the people of the country, at least a bit, which it currently clearly is not, then we need

something more, and I think we need at the very least some form

of retrospective analysis of what went on before, for the simple reason that we need to get to the bottom of the structures that have

been created, which will continue to be created unless such an

analysis is brought to bear.

So somehow we need to go and readdress this side, and I think

that is something that the committee might be able to help with,

to go the administration, if that is at all possible, to readdress this

problem.

There is another strategy which we have been working on for a

while, and which seems to be bearing some fruit, and that is to do

with the role of the companies themselves and what they can do.

It is very clear that in Angola there is no transparency from the

companies themselves.

Whereas you and I can go to our respective tax offices and find

out what our companies pay to our Governments from tax revenue

for the activity they do, Angolans cannot do that, so it is impossible

to work out exactly how much is coming in to the State coffers in

the first place. If you want to hold your Government to account,

you have to know how big the pie is in the first place, and so I

think that leads us to a fundamental point that the companies

could do, and that is to follow the best practice they would have

24

to do in any developed country, and that is to publish what they

pay to the Angolan Government in their annual accounts.

With that regard, we have now got an agreement from the Foreign Office in London for Peter Hain, Minister of State for Africa,

to host a meeting on October 12, at which the London representatives of the various oil companies in Angola—because the focus will

be Angola—will be attending together with some NGOs, and obviously the Foreign Office itself, and the purpose of that meeting is

to examine this whole issue of what the companies could do to live

up to what one might quite legitimately, I think, expect of them in

any developed society.

The purpose of that meeting hopefully will be to lead to a third

meeting—a second meeting, really, in this context, at which we

would hope that the U.K. Government might start to involve the

U.S. Government and other Governments, together with the head

office senior representatives of the companies, so another thing I

would really like to ask, if that is at all possible, is if the committee, together with the administration, could help to deliver the

top executives of the companies from this end to that second meeting, which should be scheduled hopefully towards the end of October.

So I think if we can get to that stage, we can see a scenario

where the companies could basically publish what they pay in all

the countries they operate in, then you would see a situation where

you would de-Angolanize. It would cease to be a problem for them,

and I think what I am suggesting is the companies could literally

have their cake and eat it, if you like.

This should be an utterly painless process, where there is no

come-back to them because they all do it, and if they do it everywhere, no one country can blame them, and I think what would be

true of Angola in terms of providing this basic information for civil

society to finally ask the question and hold the Government to account would actually be very beneficial in places like Gabon and

Cameroon, and Nigeria—Nigeria is improving and so on, but a

whole host of other places.

So that is the kind of strategy that is coming, and I would very

much like to ask for your assistance. Thank you very much.

[The prepared statement of Simon Taylor follows:]

PREPARED STATEMENT OF SIMON TAYLOR

INTRODUCTION—BACKGROUND TO GLOBAL WITNESS

Global Witness is a not-for-profit London based NGO, which focuses on the role

of natural resources in the funding of conflict. Global Witness was established in

1993, by myself and 2 others—Chairman Gooch and Patrick Alley.

Although this hearing is aimed at corruption and the continent of Africa, my discussion will focus on Angola. Despite this quite narrow focus, the importance of Angola to the region, both strategically and because of its potential economic weight,

and the sheer scale of corruption—perhaps one of the worst examples of corrupt government in Africa (if not globally), with no accountability to its people—all conspire

to make Angola an ideal focus.

There are always two sides to corruption—the corrupted and the corrupter, and

many of the corrupters in Angola are the very same individuals and companies

which have operated in a similar fashion in countries such as Gabon, CongoBrazzaville, Cameroon, and Nigeria, etc. Angola also provides upwards of 8 percent

of US oil imports (set to rise massively over the next few years), and so it is of immense strategic value to the United States. In addition, it is important that these

25

issues, though of course relating to Angola, are not considered solely as Angolan

problems. This is due to the fact that the war economy is intimately connected to

corrupt deals, which in turn likely play a significant role in the capacity for Angolan

military involvement in the Democratic Republic of Congo (DRC).

Global Witness has considerable information relating to the role of certain key individuals and companies in this situation. However, due to safety and legal considerations, it is difficult to be as candid as I would desire. Having said that, I am

very keen to provide additional detailed information to key interested parties in private, outside of the context of this Hearing. For this hearing, I will attempt to be

as candid as possible within these constraints.

CORRUPTION AND LACK OF TRANSPARENCY AND THE DE FACTO PRIVATISATION OF THE

WAR IN ANGOLA

In December 1998, Global Witness published the report A Rough Trade, focusing

on the role of the international diamond trade in the financing of UNITA’s war in

Angola. As many of you will know, this report with its key finding that UNITA generated a conservative US$3.7 billion between 1992 and 1998, and subsequent press

coverage was a major precipitator of significant International Community focus on

the issue of ‘‘conflict diamonds.’’ International attention and focus on this issue then

received a major boost through the very pro-active involvement of both the US and

UK Governments, which in turn took on a greater urgency following the events of

earlier this year in Sierra Leone itself. I have of course not referred to the activities

of various individuals within the US Congress and other NGOs.

In December 1999, Global Witness published A Crude Awakening, which sought

to examine the other side of the Angolan conflict; the role of massive corruption on

the government side, and the effect of a considerable lack of transparency on behalf

of the oil companies operating in Angola, and lastly the role of the international

banking industry which has provided numerous loans, against future oil extraction.

In the latter case, the resultant monies being subject the same lack of transparency,

and being passed through opaque channels, resulting in funds being siphoned off

through secret arms deals. It is the corruption aspect of the Angolan tragedy that

I wish to address here today—and it is this issue which is significantly affected by

US and other countries’ foreign policy to Angola.

In late 1997, or early 1998 (the exact timing is not clear), the contract for arms

(and other procurement efforts) was removed from an Angolan parastatal company

and given to a private company—company X. This decision was made by certain top

level officials in the Presidency, known as Futungo.

Company X is connected to certain individuals who have been instrumental in the

provision of oil-backed loans. These same individuals also organised the ‘‘lifting’’ of

the oil (in order to pay back the loans) by a very well known oil trading company

which was notorious during the 1980’s as a leading oil sanctions buster to Apartheid

South Africa. These same individuals, who have been the quasi-monopoly weapons

suppliers to Angola since around 1993/1994, also provided weapons through this

new supply structure.

WHAT ARE THE IMPLICATIONS OF THIS NEW ARRANGEMENT?

This new method of supply has resulted in a number of changes. Whereas, the

suppliers referred to above previously benefited from large kick-backs sometimes

amounting to 30–40 percent and which were shared with top-level officials, the margin of profit has escalated. This is because whilst previously they profited from the

kick-backs alone, they now benefit from both these kickbacks and the profits generated from their joint ownership with Angolan officials of Company X.

This removal of the contract from the Angolan parastatal to Company X represents a de-facto privatisation of the current phase of Angola’s civil war. This is

because every item from bombs and bullets to clothing and food generates money

for those who are involved in Company X. If, as most objective commentators once

again recognise, there is no military solution to the current conflict in Angola, then

the current scenario represents a serious conflict of interest, given that those who

should be seeking a peaceful outcome to the war, are in fact making money from

its very continuation.

It is clear that frequently supplies of weapons and other commodities purchased

through these individuals, both prior to and after the involvement of Company X,

were not always up to the job. There have been many occasions where weapons including tanks and other heavy weaponry were literally dragged off the supply ships,

because they were unable to be driven off under their own power. This purchase

of inadequate military equipment has made up a significant percentage of overall

supply in recent years, and is consistent with imports of other commodities, such

26

as rotting meat from Portugal, which appear to have been obtained for the commission alone.

The mid-1999 successes of the Angolan Armed Forces in part relate to the fact

that these and other suppliers finally delivered weaponry (involving the same kickbacks) of sufficient quality and quantity to do the job.

Whilst it is obvious that the war in Angola has been a massive drain on the

State’s finances, and hence capacity for development, it is also very clear that corruption has taken a vast percentage of potential State income, of which in recent

years, over 90 percent of been derived from oil. Given that oil (in fact all state natural resources) is enshrined in Angola’s Constitution as belonging to the people of

Angola, it is very difficult to see where any benefit has been derived by Angolans

from their resource. This is clearly illustrated by Angola’s free-fall from position 73

(out of 172 countries assessed) in the UN’s Human Development Index (HDI), when

daily production was 482,000 barrels, to position 160 by 1999, when production had

reached 770,000 barrels per day. It should be noted that the volume of oil production in Angola has since increased, with no appreciable change to the country’s HDI

position.

The capital, Luanda, is a vastly over-populated (due to the influx of war refugees)

sprawl, which some describe as the second most expensive city in the world. It is

a city of utter squalor, mixed with a smattering of very expensive boutiques, available only to the elites. Whilst hordes of children sift through the garbage, the elites

sometimes drive past in their limousines. Many of the other major towns in the

countryside resemble Dresden after World War II.

WHAT IS THE VALUE OF OIL TO THE ANGOLAN ECONOMY?

Angola is sub-Saharan Africa’s second largest oil producer, following Nigeria, with

recent discoveries suggesting it soon become the largest. Oil revenue makes up over

90 percent of state income. One might presume that for such a significant sector,

it might be relatively easy to determine the actual dollar value of this resource to

the economy—this of course would not be difficult in any developed country. But in

the Angolan case, as for many developing countries where resource revenue is siphoned off to benefit an elite class, the lack of transparency makes this task almost

impossible.

Global Witness conducted investigations in an attempt to uncover raw data to calculate the dollar contribution of oil to the Angolan economy. The results, not only

demonstrate the difficulty of such a task, but also clearly indicate the difference between the access provided to civil society in developed countries regarding transparency of tax contributions of major business’ to developed country economies, and

the lot meted out to Angolans. I will return to this theme later.

From the best available data, Global Witness calculations indicate that Angola

generated between US$1.8 billion and US$3.0 billion annually for the period 1990–

1999. Clearly there is considerable variation year on some of which is reflected in

global oil price fluctuations, but a significant source of this variation is due to the

lack of available and accurate data. In other words, this estimate is not one that

should be considered as particularly accurate. In contrast, by late 1999, analysts

were predicting an annual income from oil of US$2.9 to US$3.2 billion for the years

2003 through to 2010, with other forecasts suggesting that the industry is set to invest some US$ 18 billion over the next four years in Angola.

Global Witness has also made its own calculations of estimated income from oil

in Angola over the period 2000 through to 2006. This forecast is based on analysts’

predictions for oil volume extraction compared to two different, but conservative estimates of global oil price—of US$ 12 and US$ 18 per barrel. Given these current

forecasts, we estimate that Angola will receive between US$1.4 billion and US$2.7

billion respectively over the next six years. It is worth pointing out that for much

of 1999 and this year, the global price of oil has hovered nearer to the US$30 per

barrel level (now over US$32). Clearly, it is unrealistic to suggest that this price

will be maintained in the long term, but it is worth noting that these high levels

and therefore higher than estimated income levels have been maintained for a significant proportion of the period we are looking at.

THE ROLE OF CIVIL SOCIETY IN ANGOLA

Angola’s growing civil society is gradually escalating its opposition to the war, and

is also seriously questioning the scale of corruption that is governing the country.

However, NGOs and the press in Angola are facing an enormous up-hill battle

against seemingly impossible odds. Those that have dared to challenge the current

situation, and who have publicly voiced their concern over corruption by state officials have been ruthlessly dealt with—perhaps the best known case is that of Rafael

27

Marques who has been tried for ‘‘defaming’’ President dos Santos because he accused him of corruption. His case should in no way be considered in isolation, and

the response has been to pursue such cases on a criminal basis, rather than through

the civil courts. Although there is a growing independent press in Angola, they are

severely limited in their capacity to cover contentious issues—Folho 8, which attempted to cover the launch of Global Witness’ Crude Awakening report in December 1999, found its printer threatened, which then refused to print the first four

pages of the paper—the banner headline front page leads with the launch of the report, but inside, the reader is treated to four pages of blank columns interspersed

with photographs of oil rigs.

It is very clear that in addition to the almost complete lack of available data concerning the true value of oil production to the Angolan State, it is also not possible

for Angolans to question any of the decisions of the state, as to its conduct of the

war, or the economy. Despite the constraints placed on a state at war, this situation

is clearly unacceptable, especially given the implications for the Angolan people and

the vast benefit being generated by the elite few through the continuation of current

practices, at the expense of the population. There is no accountability of government

in Angola today.

THE ROLE OF OIL COMPANIES IN ANGOLA

Currently, there is no significant transparency by the oil companies in Angola. In

stark contrast to the availability of tax and royalty data to the general public in

developed countries, through the standard process of filing annual accounts by companies, such data is not available in Angola. Given that Angolans have no recourse

to the data that they would require to at least begin the process of holding their

government to account for its use of this resource, this situation of lack of oil company transparency is also clearly unacceptable.

In July 1999, the three oil companies BP-Amoco, Elf (now TotalFinaElf) and

Exxon, finalised their agreements with government for the three ultra-deep water

oil blocks, respectively Blocks 31, 32 and 33. The three companies paid a total of

US$ 870 million dollars in signature bonuses, of which Global Witness estimates

that between US$4–500 million was ‘‘disappeared’’ through the Presidency.

Global Witness believes, due to the lack of oil company transparency, that the

companies are complicit in the plunder of Angola by the country’s elite. This is not

to say that the companies are directly involved in the paying of bribes, though some

clearly are. But, it is saying that the companies are playing the key role in the provision of over 90 percent of Angola’s State income, and given that it is this income

which is being stolen, they cannot absolve themselves from that relationship and responsibility without taking every step to ensure that it is as hard as possible to siphon off such revenue, It is therefore clear that the companies can only escape from

such a charge through all the companies collectively publishing all payments they

make to government, just as they would be required to do so in any developed country.

THE ROLE OF THE BANKING

The international banking sector has played a key role in the provision of shortterm, high interest loans, which have severely exacerbated the effect of oil price

fluctuations on Angola’s economy, and which have significantly increased the national debt.

Many of these loans have been negotiated in secret, and the resultant monies

have been utilised through the same opaque system as oil derived state income. The

value of the loans which have been provided against future oil extraction have been

so vast that by 1998/1999, Angola actually derived little physical income from then

volumes of oil production, because the vast bulk of this revenue was needed to service the expanding debt. Of course, the conduct of the war, required continued funding, and so new loans have continued to be negotiated, greatly assisted by the high

oil price; many of the negotiations involving the same individuals already referred

to above, who are intimately involved in the supply of weapons to Angola.

The Angolan parastatal oil company Sonangol is one of the main routes of loan

repayment, often involving the direct selling of oil, with resultant revenues being

directed through off-shore accounts. One of the implications of such a significant

proportion of state revenue being directed via off-shore financial systems, is the development of a set of parallel financial systems within the Angolan economy. This

simply adds to the lack of state transparency, providing ample opportunity for further misappropriation. It has also allowed for Sonangol to discount is tax liability

to treasury, with the result that a large proportion of the Angolan economy being

run through a set of foreign bank accounts—this set of off-shore parallel finances

28

being controlled by the various elites within Angola, with the vast bulk by the Presidential clique.

Given not only the scale of the loans which have been provided, but also the level

of secrecy surrounding their negotiation and the subsequent control which is being

exercised by the elite over the off-shore repayment structures, there is clear complicity of those international banks which are involved, in the plundering of Angolan

state revenue. As for the oil companies, the international banks should publish full

details of existing and any new loans that are made available, and they should insist that full transparency concerning future loans be a condition of agreeing further

financing. Given the risk of providing loans to Angola, it would also be in the interest of banks considering loans to Angola, to insist on a radical change in the level

of transparency exercised by Angolan State institutions.

THE ROLE OF THE IMF AND THE WORLD BANK

For some time the IMF has been trying to restart a programme in Angola. It came

close to an agreement with the government in 1998, when the international oil price

fell below US$10 per barrel. This was because Angola was close to defaulting on its

international debts due to the low oil price. The Government was becoming desperate to secure new and preferential rate loans, which would only become available

through an IMF agreement. In early 1999, the government did make some positive

changes to the state financial systems, by posting Aginaldo Jaime as the new head

of the National bank of Angola (BNA). This was a significant improvement, because

the BNA had been a major partner in the system of state robbery, and Mr. Jaime

is well respected in the international community.

However, despite the improvements that Mr. Jaime continues to implement to operation of the bank and various other structural changes, there are still significant

improvements required. These concern not only the fact that a vast percentage of

Angola’s economy (as already described) takes place entirely off-shore, but also the

role of both Sonangol and the role of the Presidency in the deployment of state revenue. In April 2000, the IMF finalised its Staff Monitoring Programme (SMP) agreement with the Angolan Government. This agreement is a positive step forward that

Global Witness welcomes as a useful first stage towards improving transparency in

Angola. However there are serious flaws in what is being proposed. These include:

1. There is no provision for any significant retrospective analysis of the oil accounts and subsequent expenditure for the period 1998 to the present day—perhaps the worst period for massive corrupt arms deals, involving both oil and

loan revenue, in Angola’s history.

2. The agreement appears to be only contemplating an analysis (from July 2000

onwards) of oil revenue to government—as far as the treasury—with no analysis of subsequent expenditure.

3. This analysis (known as the oil diagnostic) was originally intended to run until

the end of 2000—for six months only. This now appears to be extended until

late 2001. However, there appears to be no consideration as to what happens

after that.

4. Given that a vast proportion of plundered revenue has been siphoned off

through a convoluted system of off-shore companies and accounts, it is extremely doubtful if the team hired to do the oil diagnostic will be able to deal

with this problem; meaning that the structures which have served the purpose

of state robbery so well, will likely remain in place.

The World Bank had pulled all of its country staff in 1999, leaving a token office

representation in Luanda. The Bank is now tasked to hire the international accountancy company which will undertake the ‘‘oil diagnostic,’’ according to the IMF’s

SMP agreement. To date, the company of choice has not been finalised, though we

understand this is imminent. It seems likely that once the diagnostic team is in

place, that the Bank will resume its activities in Angola.

It is imperative that international pressure is brought to bear to ensure that the

IMF’s SMP programme is truly a programme worth having. Global Witness appreciates that there is a balance to be drawn between having the programme, and

pushing too hard and losing it all—however, if the price of having the programme

is such that it will not deliver transparency, that it remains severely compromised

as described above, then it seems likely that the IMF’s programme will be insufficient for the job required.

This is of major concern, because if the Angolan Government does perform according to what is required of this flawed programme, leaving significant areas of corrupt activities in place, which the diagnostics team is simply going to miss, then

29

the logical next step is a likely resumption of international aid. Whilst in the long

run, Angola does desperately need international assistance, Global Witness believes

that such an outcome will send the wrong message and will allow for a continuation

of current practices.

THE ROLE OF THE US AND THE INTERNATIONAL COMMUNITY

It is very hard to be precise about the role of the US in the continuation of current corrupt practices in Angola. On the one hand the US Government has played

a very valid role in pushing the ‘‘conflict diamond’’ issue to date. Here congratulations are certainly due. This is of course another area where corruption is also an

issue.

However, it is very difficult to escape from a perspective of the US, although it

has gone on the record stating on various occasions that this is an issue which

needs remedy, that the issue of corruption on the Angolan Government side also relates to oil—and of course, unlike diamonds which are a non-essential commodity,

oil is the ‘‘untouchable’’ item. There is a very strong perception amongst the NGO

community and beyond, that the US and other governments with oil interests in Angola (especially France which fits into a category all of its own), because of the nature of oil, will make all the necessary ‘‘token’’ noises about corruption, how bad it

is, etc., but in the end will do nothing, because it does not want to upset the elite

in Luanda, which may have repercussions for US oil companies. The US-Angola

chamber of Commerce, which could be seen ostensibly as a positive vehicle, may in

fact be contributing to the impression that the primary concern appears to be business interests regardless of other factors.

Despite having had the opportunity to brief IMF officials directly involved in the

SMP negotiations with Angola as to some of the essential areas which desperately

need addressing, and having similarly done so with the other key oil interest countries, all of whom have significant influence at the IMF Board, we have been left

with an SMP agreement which is flawed, as described above. To what extent if any,

US and other countries’ policies, or their lack, may have led to this situation is not

clear.

WHAT NEXT—SOLUTIONS TO THE CURRENT SITUATION

Regardless of what may or may not have been undertaken by the various governments involved in the past, there is an area which I have briefly focussed on which

has not yet been tried out. This involves all the major oil companies which are

present in Angola and which, I hope, can also include a significant involvement from

the US Government, together with the initial moves which are being made by the

UK Government, and which will hopefully also involve other governments as the

strategy moves forward.

As I have already described above, there is clear complicity of the oil companies

in Angola in the looting of state assets. Many of the companies are clearly and genuinely concerned about this situation, I think both in terms of the implications for

the Angolan people, but also because it does not make sound business sense to be

operating in an utterly corrupt environment. There are others, unfortunately who

are directly involved in this problem, and I would like to provide more detail in private.

However, there is strategy being put together by the UK Government right now

and which is in its first stages. Minister of State Peter Ham MP, who is Minister

for Africa at the Foreign & Commonwealth Office in London, is hosting a meeting

of oil companies and some key NGOs with both experience in this issue (including

Global Witness) and those who are working in the development field in Angola. The

purpose of the meeting is for a full and frank discussion about the issue of corruption in Angola and to explore ways forward for the companies to be able to help by

becoming more transparent in their operations in Angola. This meeting has been

confirmed as taking place on October 12th.

In terms of the oil companies, the meeting is intended to include London based

executives of all the majors—so this will we hope include Exxon, Chevron and Texaco. It is also intended that this meeting should lead to a second meeting within

a few weeks, at which there should be participation from head office executives of

the companies, together with the US government, and other governments if possible.

Global Witness strongly believes that this strategy represents a genuinely positive

way forward for the companies. Whilst it is clear that no one company alone wishes

to incur the wrath of the Angolan government by publishing its payments of taxes

and royalties to the Angolan Government (and neither would that be desirable, because such a move would only produce a fraction of the data required), if all the

30

companies were to do so, there is not much the Angolan government could do in

response.

Things could be made even easier for the companies if they were to adopt such

a strategy for all their countries of operation, as this would ‘‘de-Angolanize’’ the

issue—the companies could easily explain their move as part of a global move to

reform accountancy practice to adopt highest standards in order to act as ‘‘responsible global citizens’’ regarding issues of corruption and lack of transparency. If such

a move was adopted, no one country could blame a company for its actions, since

these would take place internationally. It is certainly clear that a similar move

would be of immense value in countries such as Nigeria, Gabon, Cameroon, CongoB, and the DRC, to name just those in Africa.

I hope this is a strategy which appeals to the sub-Committee and that Global Witness might be able to ask for your assistance, together with that of the US government to take this forward. Angola desperately needs a radical change, and although

this will not cure the ills, such a move would provide the necessary data (at no cost

to the companies), which would at least allow Angolans to start the process of holding their government to account for its actions. In addition, I strongly believe that

genuine transparency on behalf of the companies, together with a real focus on this

issue from the international community would be a major help to the IMF in its

efforts through the SMP and any subsequent agreements.

Thank you for your time and consideration.

Senator FEINGOLD. I thank you, Mr. Taylor, and I think it is very

appropriate to focus on Angola. If it is not Exhibit A, it is Exhibit

B in terms of this concern. The first country I ever visited in Africa

was Angola in 1994, and I was appalled, but what really appalled

me is to return there in December 1999 and to see that— Mr. TAYLOR. It is unbelievable.

Senator FEINGOLD. Unbelievably to me, things seemed worse.

Mr. TAYLOR. They are.

Senator FEINGOLD. And I think it was helpful to hear that.

Mr. TAYLOR. Thank you.

Senator FEINGOLD. Let me now turn to Ms. Aileen Marshall, the

senior advisor of the Global Coalition for Africa.

STATEMENT OF MS. AILEEN MARSHALL, SENIOR ADVISOR,

GLOBAL COALITION FOR AFRICA, WASHINGTON, D.C.

Ms. MARSHALL. Thank you very much, Mr. Senator, and thank

you very much for scheduling this meeting and allowing me to

come and join you in this discussion. In the interests of time, I am

going to try to make abbreviated comments.

Both African countries and the international community should

be concerned about corruption, because a peaceful and prosperous

Africa is to the benefit of us all, and to the extent that corruption

threatens stability and economic progress, it impedes the development of the continent. And lack of development will mean that African countries, instead of becoming real partners in an increasingly integrated global economy, will remain marginalized and dependent on development assistance.

Others have already indicated some of the consequences of corruption, but I think it is very important to note that efforts to reduce poverty and improve the well-being of African populations

simply will not be successful unless corruption is addressed. But it

is not only the direct negative effects of corruption which are cause

for concern, but corruption can also lead to or worsen other problems, including crime and conflict, which have also been mentioned.

Because of the poverty and the weakness of their institutions, African countries are particularly susceptible to the activities of orgaVerDate 11-MAY-2000 13:04 Feb 07, 2001 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6602 68756 SFRELA2 PsN: SFRELA2
31

nized crime syndicates, be it Colombian drug cartels or the Russian

mafia, and while international crime is increasingly sophisticated

and well- financed, most African countries lack either the resources

or the capacity or the technology to combat it.

It has already been mentioned that in countries like Sierra

Leone, Congo, Angola, corruption has helped to fuel and perpetuate

conflict. There can obviously be no development or progress where

there is conflict, and war has devastated some of the potentially

richest countries on the continent.

But there have been tremendous changes in Africa over the past

few years as far as corruption is concerned, as other people have

mentioned. Whereas once it was regarded as taboo, it is now openly

discussed. Throughout the continent, the economic and social costs

of corruption are being recognized, and people are speaking out

against it.

The press is uncovering and reporting corrupt business deals.

Questions are being asked in parliaments. A multiplicity of civil society organizations dealing with corruption have been created. In

some cases, ministers and senior civil servants have been censured

or dismissed because of corrupt practices. All of this would have

been unthinkable just a few years ago.

A good many African Governments are making a genuine effort

to counter corruption, and some lessons have been learned. I think

chief among these is that corruption in Africa, like elsewhere, is a

complex problem that requires a variety of actions to be undertaken and political will is a fundamental necessity. And that political will has to be encouraged.

It has also become clear that purely legal solutions are of limited

effectiveness, as we mentioned, and that Government actions alone

are insufficient. Effective coalitions between Governments, civil society, and the private sector are needed, and anticorruption efforts

must have some demonstrable impact if public confidence is to be

sustained.

The primary responsibility for addressing corruption obviously

lies with individual countries, but collaboration and cooperation between and among countries is also important. Mr. Senator, you

yourself mentioned the principles to combat corruption, which Mr.

Schneidman also mentioned, and progress in implementing these

principles will be discussed at the forthcoming GCA policy forum

in Abuja in October, where other countries will also be invited to

adopt them. Some countries, including Nigeria, have already expressed an interest in doing so.

We in the GCA are very grateful for the assistance the United

States Government has provided to this initiative of developing

principles and possibly an anticorruption convention. All of the African countries involved were very much encouraged by the active

interest and support of both the State Department and USAID.

As other speakers have indicated, the United States is already

supporting African efforts to address corruption, and over the long

term this assistance will make a difference. I think specific support

for reforms in public procurement, taxation, and customs could be

very useful. These are areas identified by most African countries as

major sources of corruption.

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This sort of assistance is obviously important and should be continued, but another type of support is also needed, and that is the

moral encouragement to those forces within African countries

which are committed to fighting corruption. I think the U.S. should

take a public stance against corruption and ensure it is part of its

policy dialogue with African Governments. The United States

should also actively encourage the continuation of political and economic reform. Corruption cannot thrive in open, competitive societies, where there are multiple power bases.

Support for African anticorruption initiatives is necessary, but

we also have to recognize that corruption in African countries is

not merely a domestic issue, and I would just like very briefly to

suggest some areas where international cooperation is needed.

Forceful action is obviously needed to sever the links between organized crime, corruption, and other activities such as drug trafficking. Corruption and conflict, as has already been noted, converge in the arms and diamond industries, and much greater transparency and accountability is essential. But sustained progress on

issues such as these is beyond the control of individual countries

and demands international collaboration. International business

transactions that are a source of corrupt practices also require attention, and the private sector really has got to become a partner

in the fight against corruption.

Action at the global level is also needed with regard to money

laundering. The United States has taken a leadership role in promoting changes within the international banking system, but current provisions need to be strengthened and expanded, and individual banks must be required to exercise due diligence and fully

comply with regulations.

It is important that OECD countries ratify and implement the

provisions of the recent anticorruption convention, but pressure

should also be brought to bear on countries in Asia and the former

Soviet Union to increase their vigilance with regard to corruption

in Africa. To the extent that individuals and companies based in

these countries engage in corrupt practices in their dealings with

Africa, the anticorruption efforts put in place by individual African

countries will be undermined.

Mr. Senator, to conclude, combatting corruption in African countries is not easy, and there are no quick fixes. It requires political

will and constant effort. It also requires the encouragement and

support of the international community. To date, the United States

has actively provided this encouragement and support, and we in

the GCA hope that it will continue to do so. We also hope that the

United States will work to promote greater international collaboration and action to counter corruption.

Once again, thank you very much for allowing me to join you.

[The prepared statement of Ms. Marshall follows:]

PREPARED STATEMENT OF AILEEN MARSHALL

Mr. Chairman, members of the Subcommittee, I appreciate the opportunity to appear before you today to discuss anti-corruption efforts and African economic development. I congratulate you on scheduling this session and for devoting time to an

issue that is of concern to Africans and friends of Africa alike.

Before commenting specifically on anti-corruption initiatives I would like to emphasize that corruption is no worse in Africa than in other parts of the world. Nor

33

is the situation the same throughout the continent. While at one extreme there is

a country like the former Zaire where wholesale corruption threatened the political

and social fabric of society, there is also the example of Botswana, noted for its

record of sound governance and lack of corruption. However, African countries simply cannot bear the costs of corruption, which, left unaddressed, threatens to undermine the very real gains that many countries have made in recent years as a result

of political and economic reforms. It is for these reasons that combating corruption

has become a development imperative for the continent.

CORRUPTION IN AFRICA

Both African countries and the international community should be concerned

about corruption because a peaceful and prosperous Africa is to the benefit of us

all. To the extent that corruption threatens stability and economic progress, it is an

impediment to the development of the continent. And lack of development will mean

that African countries, instead of becoming real partners in an increasingly integrated global economy, will remain marginalized and dependent on development assistance.

Corruption in Africa, as elsewhere, damages the political, social, and economic

systems of countries. It erodes the legitimacy of governments, undermines the effective functioning of institutions, slows economic progress, impedes the development

of the private sector, and limits the ability of people to get ahead as a result of their

own endeavors. Moreover, efforts to reduce poverty and improve the wellbeing of African populations will not be successful unless corruption is addressed.

But it is not only the direct negative effects of corruption that are cause for concern. Corruption can also lead to, or worsen, other problems. I would just like to

mention two—crime and conflict. Entrenched corruption undermines law and order,

and thus facilitates a rise in criminal activity. Because of their poverty and the

weakness of their institutions, African countries are particularly susceptible to the

activities of organized crime syndicates, be it Colombian drug cartels or the Russian

mafia. And while international crime is increasingly sophisticated and well financed,

most African countries lack the capacity and technology to effectively combat it.

In countries like Sierra Leone, the Democratic Republic of Congo, and Angola, corruption has also helped to fuel and perpetuate conflict. There can obviously be no

development or progress where there is conflict, and war has devastated some of the

potentially richest countries on the continent. Although the burden has to be borne

principally by the countries themselves, conflict in Africa has also imposed a cost

on the international community. Resources that could otherwise have been devoted

to development have been diverted to providing emergency assistance, peacekeeping,

and post-conflict reconstruction.

In short, Mr. Chairman, combating corruption is essential for the economic development and political progress of the continent. Most African countries are in transition—from authoritarianism to multiparty democracy, and from command to market-based economies. They are societies in flux, where one set of norms has broken

down, but another has not yet been fully institutionalized. They need the assistance

and support of the international community to sustain the process of transition, and

to ensure that the opportunities it provides are acted upon.

AFRICAN ANTI-CORRUPTION INITIATIVES

There have been tremendous changes in Africa over the past few years as far as

corruption is concerned. Whereas once it was regarded as taboo, it is now openly

discussed. Throughout the continent, the economic and social costs of corruption are

being recognized, and people are speaking out against it. The press is uncovering

and reporting corrupt business deals. Questions are being asked in parliaments. A

multiplicity of civil society organizations dealing with corruption have been created.

In some countries, national anti-corruption coalitions have been formed, corruption

diagnostic surveys undertaken, and anti-corruption action plans formulated. In

some cases also, ministers and senior civil servants have been censured or dismissed

because of corrupt practices, and there has been a marked increase in the number

of corruption cases brought before the courts. All these would have been unthinkable only a few years ago.

There are obviously some governments that are not at all interested in seriously

combating corruption. But there are also a good many that are making a genuine

effort. Most of them have adopted a combination of legislation, public awareness and

investigation. Several have established specialized anti-corruption agencies. Although these efforts are relatively recent, some lessons have been learned. Chief

among these is that corruption in African countries—like elsewhere—is a complex

problem that requires a variety of actions to be taken, and that combating corrupVerDate 11-MAY-2000 13:04 Feb 07, 2001 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6621 68756 SFRELA2 PsN: SFRELA2
34

tion takes time and sustained effort. It is also evident that political will is a fundamental necessity, and needs to be encouraged in most countries.

It has become clear that purely legal solutions are of limited effectiveness, particularly in countries where the independence of the judiciary is not yet fully established and where legal institutions are weak. Similarly, specific anti-corruption bodies can be useful, but they need to have sufficient independence, resources and authority to successfully perform their functions. It is increasingly recognized that government actions alone are insufficient, and that effective coalitions between governments, civil society and the private sector are needed. It is also important that anticorruption efforts have a demonstrable impact, if public confidence is to be sustained.

The primary responsibility for addressing corruption obviously lies with individual

countries. But collaboration and cooperation between and among countries is also

important. In February 1999, eleven African countries—Benin, Botswana, Ethiopia,

Ghana, Malawi, Mali, Mozambique, Senegal, South Africa, Tanzania, and Uganda—

met under the auspices of the GCA and agreed to adopt a set of Principles to combat

corruption. The Principles are intended to support the efforts of individual countries.

But if implemented by sufficient countries, they could also form the basis of a regional anti-corruption convention, similar to that adopted by the OAS.

We in the GCA are grateful for the assistance the United States Government has

provided to this initiative. All of the African countries involved in the process were

very much encouraged by the active interest and support of both the State Department and USAID. Progress in implementing the Principles will be discussed at the

forthcoming GCA Policy Forum in Abuja, in October 2000, where other countries

will also be invited to adopt them. Some, including Nigeria, have already expressed

an interest in doing so.

PROACTIVE MEASURES TO SUPPORT AFRICAN ANTI-CORRUPTION INITIATIVES

The United States is already supporting African efforts to address corruption, as

other speakers have indicated. Over the long-term, the assistance of USAID and

other development partners to strengthen institutions of state and civil society,

streamline government procedures and build effective legal systems will make a difference. Specific support for reforms in public procurement, taxation, and customs

could also be very useful, as these are areas identified by most African countries

as major sources of corruption.

Mr. Chairman, the sort of assistance that is already being provided is obviously

important and should be continued, or even expanded. But another type of support

is also needed. This is the moral encouragement to those forces within African countries that are committed to fighting corruption. The United States and other donor

governments and agencies should take a public stance against corruption and ensure that it is part of their policy dialogue with African governments. They should

also actively encourage the continuation of political and economic reforms. Corruption cannot thrive in open societies and competitive economies where there are multiple centers of power.

Support for African anti-corruption initiatives is necessary, but we also have to

recognize that corruption in African countries is not merely a domestic issue, and

that measures are required at the international level. Forceful action is needed to

sever the links between organized crime, corruption and other activities such as

drug trafficking. Corruption and conflict in Africa converge in arms and diamond

trading, and much greater transparency and accountability is essential in both industries. Sustained progress on issues such as these is beyond the control of individual countries, and demands international collaboration.

International business transactions that are a source of corrupt practices also require attention. Major investment in Africa is largely concentrated in a few countries with substantial mineral or oil deposits. These are countries where corruption

presents a significant problem. But less visible business transactions in other countries can also encourage corruption. The private sector has to become a partner in

the fight against corruption. Companies should be encouraged to exercise good corporate governance and promote transparency in their interactions with governments

and individual officials.

Action at the global level is also needed with regard to the illicit transfer of funds

to western financial institutions. The United States has taken a leadership role in

promoting changes within the international banking system to help prevent money

laundering. But current provisions need to be strengthened and expanded, and individual banks must be required to exercise due diligence and fully comply with international regulations. Pressure could also be brought to bear on financial institutions

35

for the effective and timely recovery of funds found to have been obtained as a result of corruption.

It is important that OECD countries ratify and forcefully implement the provisions of the Convention on Combating the Bribery of Foreign Public Officials in

International Business Transactions. At the same time, sanctions such as blacklisting of companies that engage in corrupt practices could be an effective deterrent,

provided they are enforced by sufficient countries. But pressure should also be

brought to bear on countries in Asia and the former Soviet Union to increase their

vigilance with regard to corruption in Africa. To the extent that individuals and

companies based in these countries engage in corrupt practices in their dealings

with Africa, the anti-corruption efforts put in place by individual African countries

will be undermined.

To conclude, combating corruption in African countries is not easy and there are

no quick fixes. It requires political will and constant effort. It also requires the encouragement and support of the international community. To date, the United

States has actively provided this encouragement and support, and we in the GCA

hope that it will continue to do so. We also hope that the United States will work

to promote greater international collaboration and action to counter corruption.

Mr. Chairman, once again I congratulate you on raising this important issue, and

thank you for allowing me to contribute to your deliberations.

Senator FEINGOLD. Thank you very much, Ms. Marshall, and finally, we will turn to Mr. Miguel Schloss, the executive director of

Transparency International. Mr. Schloss.

STATEMENT OF MR. MIGUEL SCHLOSS, EXECUTIVE DIRECTOR, TRANSPARENCY INTERNATIONAL, WASHINGTON, D.C.

Mr. SCHLOSS. Thank you very much, Mr. Chairman. First and

foremost, I want to thank you and compliment the chairman of the

subcommittee for calling this roundtable. In a way, having an

international civil society NGO testify in the U.S. Congress is emblematic of how far this world is globalizing, how small it is becoming and, very importantly, the open and important role that this

very country can play in the destiny of entire continents like Africa.

I am not going to go fully through my statement. I will leave it

here on the record. It also will have an attachment of a brief report

which we have prepared in the context of a very valuable grant we

have received from USAID on activities we have undertaken in Africa in selected countries. Nor am I going to repeat any of the very

well-made points, in fact, very articulately, by those who spoke before me.

I would like to address four questions, if I may. First, why Africa,

second, then what should be done, thirdly, why now, and finally,

what next?

Why Africa? Africa has enormous unexploited and unexplored potential in resources, in processing and manufacturing, and considerable growth potential. The continent has barely tapped the potential of its people and, in Transparency International, we have no

question whatsoever that with sage policies, adequate human and

financial resources, improved delivery of technical assistance, and

market access, the continent can unlock its potential, no question

whatsoever. But, very important, giving people a stake in this development can help reduce regional conflicts that one day could

spill over beyond this region’s confines.

I do not need to go into why Africa finds itself in the current

state of economic development. Many of the points have already

been made on the underinvestment that has taken place in the

human and physical infrastructure, the policy context, but I would

36

like to stress one point, just to bring somewhat of a different angle

to what has been said in some ways by those who spoke before me.

Perhaps more fundamentally, the marginalization, both locally and

internationally, of Africa is one of the causes of the problems which

has resulted in assistance programs to Governments that oftentimes hardly represented the people they were supposed to serve.

All this has resulted in programs for which there has been weak

demand, fledgling civil society organizations that have had limited

possibilities to demand transparent and accountable administrations, the buildup of vested interest that used public office for private benefit, and the consequent debt overhang and high levels of

corruption. According to our index, year after year the continent

ranks last in our corruption perception index. I do not need to go

into the economic consequences of it. They have been stated very

clearly by those who spoke before me.

Then, what should be done? Of course, as you yourself pointed

out, the whole continent is not engulfed in these types of problems.

There are countries, like Mauritius, Botswana, Namibia, have done

quite well and are developing at an astonishing pace. I would say

Mauritius is becoming a Singapore very rapidly. Despite quotas in

textiles and so on, they find a way. By the same token, countries

like Nigeria are at present making a credible effort to redress the

policy environment and deal with the corroding scourge of corruption.

What should be learned from these experiences? First, development has to come from within, and foreign and post conditionality

is more often than not a poor substitute for efforts that have to be

home-grown from both leadership of the country and its people.

Second, under the wrong conditions, foreign assistance can in

fact bankroll misguided Governments, and there are times where

very hard decisions and wrenching judgments have to be made between continuing such assistance, at the risk of perpetrating inefficient or ineffective or corrupt administration, or walking away to

facilitate the creation of conditions within the countries themselves

for more fundamental reforms. Of course, one has to always keep

a minimum basic support for institutional reforms so that when

that moment comes, the countries are ready to deal with the problems that they have.

What I am trying to say is that, all in all, much greater attention

is needed on buildup of civil society, supporting it, buildup of oversight mechanisms with proper civil society representation, including independent legislatures and, I must say, it will be very good

for the U.S. Congress and Senate to have regular exchanges with

their counterparts in the countries concerned, a free press, access

to information, enhanced financial management, auditing, and disclosure practices. As the old proverb states, the Sun is the best disinfectant.

And last but not least, remove the incentives for corruption, particularly those coming from unchecked and unwarranted discretionary powers of public officials, monopolistic practices, either public or private, and measures of this type.

In sum, Africa can develop. It can do it with economic policies

that have proven successful in other parts of the world, but the reform agenda must also deal with the resource allocation arrangeVerDate 11-MAY-2000 13:04 Feb 07, 2001 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6602 68756 SFRELA2 PsN: SFRELA2
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ments through greater empowerment of civil society, shifting the

decisionmaking and monitoring authority so that the intended

beneficiaries which hitherto have tended to be excluded can take

proper role in holding accountable their authorities for results.

No amount of technocratic solutions, or no amount of money can

substitute for a society that demands what it needs. Above all, leveling the playing field for civil society will be a key ingredient to

combat the pervasive and wasteful effects of corruption.

Why now? I think we have two very big factors why it should be

done now. One, with the cold war behind us, Africa no longer has

to be one of the ideological battlegrounds where so-called strategic

allies receive foreign assistance regardless of their record of governance or economic performance.

Second, similarly, with the OECD convention to combat bribery

of foreign officials, the supply side of corruption can also be tackled

by capital-providing countries. On both counts, however, serious efforts are needed to move from words to deeds, but the basic conditions are in place to do so.

At Transparency International, we do our share, and we have the

various programs throughout the continent that are aimed at putting and supporting the buildup of civil society, adapting approaches that exist elsewhere to the local institutional and cultural

conditions based on home-grown strategies among the people themselves.

We have a major program starting now in Francophone Africa.

We are supporting very heavily Governments that want to move

forward like Nigeria, and so on. In time, we would hope that this

should set the foundation for a stronger, locally grounded TI presence in the continent, and the basis for a better-focused assistance

as well.

What next, and here I sum up the three final points. We would

like to encourage the donor community, and that includes the

United States, first to mainstream and raise the issue of corruption

higher on the policy agenda dialogues with the countries in all the

things that are done, foreign assistance, trade, et cetera. This is not

something like a ghetto that you can treat on its own, but you have

to deal with it across the board.

Second, bring to the forefront, to the development of civil society

and its representative organizations to bring about accountable administration. There is nothing—and you should know this better

than I—that helps more than having a review of what authorities

do so that we see that they are being checked. We have done a

number of experiments in other continents that show clearly that

when such monitoring exists the performance changes very significantly, and measurably.

And last but not least, be more selective in supporting countries.

Do not help those that cannot help themselves, and be more responsive, conversely, to those who address these issues. These

issues, which are at the core of nation- building, as several of my

colleagues have said over here, are not simple. If they were, we

would not be talking about them today.

Thank you very much.

[The prepared statement of Mr. Schloss follows:]

38

PREPARED STATEMENT OF MIGUEL SCHLOSS

I want to thank and compliment the Chairman of this subcommittee for calling

this hearing. In a way, having an international civil society NGO testify in the U.S.

Congress is emblematic of how far globalization has come, and the open and important role this country can play in the destiny of entire continents like Africa.

I am an Executive Director of Transparency International (TI), an NGO formed

in 1993 to combat corruption around the world. TI’s headquarters are in Berlin,

Germany, and we now have a network of national chapters in over 75 countries, including in 20 Africa. I have attached to my written statement a report on TI activities in Africa, which are supported by a grant from USAID. I would like to take

this opportunity to thank USAID for its support to Transparency International and

other civil society organizations.

WHY AFRICA?

Africa has enormous unexploited and unexplored potential—in resources and in

processing and manufacturing—and considerable growth potential. The continent

has barely tapped the potential of its people, and with sage policies, adequate

human and financial resources, improved delivery of technical assistance and market access, the continent can unlock this potential. Giving people a stake in this development can help reduce regional conflicts that one day could spill over beyond

this region’s confines.

But developing the region requires an understanding of where it stands at

present. It will come as no surprise to this subcommittee that the region has:

• The greatest backlog of under investment in human and physical infrastructure;

• A large, though in some cases diminishing, burden of policy distortions, including oversized and oftentimes unmanageable public sectors, which have tended

to ‘‘crowd out’’ private initiative; and

• But, perhaps more fundamentally, the marginalization both locally and internationally of Africans, resulting from assistance programs to governments that

oftentimes hardly represented the people they were supposed to serve.

All this has resulted in public programs for which there has been weak demand,

fledgling civil society organizations that have had limited possibilities to demand

transparent and accountable administrations, the build-up of vested interests that

used public office for private benefit, and the consequent debt overhang and high

levels of corruption (the highest of all continents according to TI’s Corruption Perception Index).

I do not need to stress to this subcommittee the pernicious effects of corruption.

Suffice it to say that survey after survey, the evidence shows that corruption increases the cost of public works, and reduces the level of public services, maintenance expenditures and surpluses to invest in social services—all the key ingredients of long term and sustained economic growth. Not surprisingly, Africa is beset

by economic problems, and whatever progress one can observe is fragile and halting.

THEN, WHAT SHOULD BE DONE?

It would be wrong to assume that the whole continent is engulfed in these types

of problems. There are countries, like Mauritius and Botswana that have done quite

well, and are developing at an astonishing pace. By the same token, countries like

Nigeria are at present making a credible effort to redress the policy environment,

and deal with the corroding scourge of corruption. What should be learned from

these experiences is that:

• Development has to come from within, and foreign imposed conditionality is,

more often than not, a poor substitute for efforts that have to be home grown,

from both the leadership of the countries and its people; and

• Under the wrong conditions, foreign assistance can in fact bankroll misguided

governments, and there are times where hard and wrenching judgments have

to be made between continuing such assistance at the risk of perpetuating corrupt or ineffective administrations, or walking away to facilitate the creation of

conditions within the countries themselves for more fundamental reforms. Minimum support may of course be needed on a sustained basis, to assist in developing basic institutional reforms, in preparation for the times when more fundamental reforms become feasible.

On both counts, what is clear is that Africa can develop, but that much greater

attention is needed in supporting civil society organizations, such as those that have

helped this country to prosper and flourish—i.e. professional organizations, chamVerDate 11-MAY-2000 13:04 Feb 07, 2001 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6621 68756 SFRELA2 PsN: SFRELA2
39

bers of commerce, NGOs, to help shape and articulate opinion, build alliances, provide technology, and monitor public administrations.

By the same token, much greater attention is needed on build up of oversight

mechanisms, with proper civil society representation—i.e. independent legislatures,

ombudsmen’s offices, a free press, access to information, enhanced financial management, auditing and disclosure practices. As the old proverb states: ‘‘the sun is the

best disinfectant.’’And last, but not least, remove incentives for corruption, particularly unchecked or unwarranted discretionary powers of public officials, monopolistic

practices, either public or private, and the like.

In sum, Africa can develop. It can do so with economic policies that have proven

successful in other parts of the world. But the reform agenda must also deal with

resource allocation arrangements through greater empowerment of civil society and

assignment of responsibilities—shifting the decision-making and monitoring authority so that intended beneficiaries, which hitherto have tended to be excluded can

take a proper role in holding authorities accountable for results. No amount of technocratic solutions can substitute for a society that demands what it needs.

Above all, leveling the playing field for civil society will be a key ingredient to

combat the pervasive and wasteful effects of corruption.

WHY NOW?

With the Cold War behind us, Africa no longer has to be one of the ideological

battlegrounds where ‘‘strategic allies’’ receive foreign assistance, regardless of their

record of governance or economic performance.

Similarly, with the OECD Convention to Combat Bribery of Foreign Officials, the

supply side of corruption can also be tackled by capital providing countries.

On both counts serious efforts are needed to move from words to deeds, but the

basic conditions are in place to do so.

We, in Transparency International will do our share in the continent—as we are

doing elsewhere. As our presence is particularly weak in Francophone Africa, we

have just started a major effort to link National Chapters and contacts with various

professional and other associations to adapt and tailor best practices and tools from

other continents into the institutional and cultural context of this region.

Similarly, in Anglophone Africa, greater efforts are being focused on awareness

raising and, in the case of Nigeria, on the adoption of codes of conduct and other

practices adapted from other parts of the world to create a more responsive and effective government.

In time, we would hope, this should set the foundation for a stronger, locally

grounded TI presence in the continent, and the basis for better-focused assistance

to Africa.

WHAT NEXT?

To sum up, we would like to encourage all donors to:

• bring to the forefront the development of civil society and its representative organizations, to bring about accountable administrations; and

• be more selective in supporting countries and more responsive to those who address these issues.

These issues, which are at the core of nation building, are not simple. If they

were, we would not be talking about them today.

40

ADDITIONAL MATERIAL SUBMITTED BY MR. SCHLOSS

SPECIAL INTEGRITY IMPROVEMENT PROGRAM (SIP)

USAID GRANT # AEP–5466–G–00–5028–00

PROGRESS REPORT

DECEMBER 1999

BENEN

1. Achievements to date:

As planned and as previously reported, members of TI–Benin co-organized and actively participated in a Forum for the Mobilization of Civil Society Against Corruption in 1998.

The main priority of the Chapter in the period has been to strengthen its institutional capacity in order to function effectively as a competent and operational organization. In 1999, with the assistance of a grant of $100,000 from USAID, Benin,

the Chapter was able to set up an office with a staff of four and adequate equipment. Two members of the chapter were trained in the meetings on developing integrated country strategies organized by the World Bank Institute. Two other members of the chapter participated in the TI–S organized capacity-building workshop

in Accra, Ghana in May 1999. TI–Benin also finalized a detailed plan of action and

budget for the period 1998–2000, with a major focus on awareness raising and advocacy activities.

As part of this strategy, the Chapter conducted an anti-corruption awareness-raising campaign during the parliamentary elections in March 1999. This included televised sketches, radio and television ads, comic strips in local newspapers and a poster campaign. Members of TI–Benin also participated and facilitated various anticorruption workshops in Benin, Ghana, Mali. A TI–Benin member was a panelist

in the workshop on Corruption and the environment at the 9th IACC.

The main achievement in the period has been the Chapter’s active involvement

in the extensive consultation process that took place to review existing legislation

on public procurements. From early 1999, members of the Chapter participated with

government representatives in a committee whose work led to the adoption by the

government in June, 1999 of a decree introducing a code of ethics for public procurement that integrates a comprehensive integrity pact into the existing legislation.

2. Targeted Achievements for 2000:

• Continue to strengthen the capacity of the Chapter through training, elaboration of a manual of procedures, etc.;

• Develop and implement a media strategy including production of TV spots, organization of a seminar on investigative journalism, production of a play on corruption;

• Conduct various awareness activities such as publication, translation into 4 national languages and dissemination of a volume of anti-corruption texts, organization of a national anti-corruption day, implementation of an awareness program in schools, organization of a competition on the fight against corruption,

publication of a trimestrial bulletin, etc.; and

• Collaborate with the government anti-corruption office and lobby for implementation of the recommendations of the anti-corruption office, promote respect for

the GCA principles, contribute to the Commission on the misappropriation of

public funds.

• Participate in conducting a survey on corruption in the country.

GHANA

1. Achievements to date:

As described in the previous TI–S report to USAID in early 1999, TI–S supported

in 1998 the work of an influential group of Ghanaians who prepared a National Integrity Workshop which took place 20–21 October, 1998. That workshop produced

an action plan which included the strengthening of networking and collaboration

among civil society organizations in Ghana as one of its objectives.

A core group of key stakeholders began to meet after the National Integrity Workshop to discuss next steps in setting up a anti-corruption coalition. The Centre for

41

Democracy and Development (COD), headed by one of the group’s convenors, E.

Gyimah-Boadi, served as secretariat for the organizing committee. The process of

setting up formal structures was delayed by other demands on the time of important

members. E. Gyimah-Boadi, for example, is much in demand as a consultant on

issues relating to governance in Africa (e.g. to the African Development Bank) and

as a contributor to fora such as the World Bank meetings on integrated country

strategies. Emile Short, Commissioner for Human Rights and Administrative Justice, another convenor of the group has extensive demands on his time both in his

function as Commissioner and as a participant in international discussions on governance issues.

The formation of the group was also slowed down by efforts to arrange with an

earlier TI contact that he withdraw his registration of the Transparency International name in Ghana. Nonetheless, the organizational work has now sufficiently

progressed that the group In Ghana has launched their organization, to be called

the Ghana Integrity Initiative (GII), on 6 December 1999. The launch was the occasion for a public meeting, which highlighted the corruption problem in Ghana and

initiatives to combat it; Mr. Emile Short is Interim Chair. DANIDA-Ghana has

funded the launch.

Yaw Asamoa, a lawyer, is interim General Secretary operating from the CDD and

probably will continue to function as paid executive after the Chapter is launched.

Members of the GII have also been engaged in several anti-corruption activities during 1999. In May 1999, several members of the group attended a TI–S-organized

capacity building workshop hosted in Accra by the Centre for Democracy and Development. Four members of the group made important contributions as speakers at

the 9th International Anti-Corruption Conference in Durban, South Africa, 10–15

October. 1999 and the group also Sent a representative to the TI Annual General

Meeting prior to the Conference.

Recently, in November, members of the group were involved in the organization

of an anti-corruption demonstration in Accra.

2. Targeted Achievements for 2000:

• The launch will unveil the GII strategy, which will focus on public awarenessraising; and

• The General Secretary will continue to work from CDD for the foreseeable future.

MOZAMBIQUE

The Context

Mozambique is a difficult, yet successful case of transformation and nation building. Coming out from independence and a bloody civil war, the country has demobilized and disarmed some 80,000 troops, and is at present going through the long

road towards democratization, stabilization, and economic adjustment.

After flirting with Marxist policies, the government had in 1994 multiparty elections and initiated rapid liberalization. As a result, the Mozambicans seem to have

got a hold of their affairs, and succeeding in generating high rate economic growth

rates, with rapidly declining inflation for the past two years. Not surprisingly,

though, the country is heavily dependent on external assistance—financially, institutionally, and in every other respect.

There is hardly any tradition, let alone institutions or sufficient numbers of people

who could easily manage the many initiatives and advice that is being showered on

the country. The obverse of this is that the country is falling prey to massive corruption—from issues of land distribution to the absence of a professional judicial system. It is only a question of time that the environment in civil society, will be such

that conditions will be ripe for building up a coalition against corruption. Such moment has not yet arrived, but as soon as it does, a proper coalition could be formed

and supported.

1. Achievements to date:

A TI–mission visited the country in March 1999, contacts have been established

with both members of the government and representatives of civil society. This twofold approach seems to be of crucial importance, since there still appears to exist

a widespread ambivalence of talking on the issue openly, organizing civil society or

taking more forthright actions, for fear of government cooption of such movement,

reprisals, and the like, In that sense the fact that TI was engaging the Administration in discussions on anti-corruption efforts, including the formation of a civil society group to address the issue, is giving legitimacy to the latter. This has been inVerDate 11-MAY-2000 13:04 Feb 07, 2001 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6621 68756 SFRELA2 PsN: SFRELA2
42

strumental in the formation of an informal ‘‘founding group’’ of four people, headed

by the former Chairman of the first Election Commission and currently Chancellor

of Mozambique’s Eduardo Mondlane University. The group has agreed that, in light

of the Government’s preparedness to cautiously accept a civil society group in this

field, and their concerns with growing corruption in the country, they would help

work towards the establishment of a wider group that may in time develop into a

Chapter.

2. Targeted Achievements for 2000:

Working in Mozambique is the equivalent of ‘‘starting from the scratch,’’ which

is why the whole process will require considerable time, support and follow up. At

this stage the founding group is still at the very beginning of a process of defining

future programmes and bringing in other people. Once the group is more openly

formed, even in a fledgling fashion, the stage will be set for a more engaged civil

society input into the subject, and thus the carrying out of more active work in the

field.

ATTACHMENT I

BENIN

Civil Society

Civil society is organizing itself slowly and steadily on key issues such as election

monitoring. The active civil society groups include religious, business and professional organizations, and youth groups.

In September 1997, a group of civil society organizations met to establish the

basis for greater collaboration in combating corruption. They included Transparency

International-Benin, Nouvelle Ethique (New Ethics), l’Association des Femmes

Juristes du Benin (Association of Women Jurists of Benin), Association de lutte

contre le racisme, l’ethnocentrisme, le regionalisme (ALCRER—Asssociation for the

fight against racism, enthocentricity and regionalism), le Centre Africa-Ogbota

(CAO), and l’Association ‘‘Franchir le Cap.’’ These organizations initiated, in collaboration with the President’s Office for the Moralization of Public Life (Cellule de la

Moralisation de la Vie Publique), the preparation of the National Forum for the Mobilization of Civil Society Against Corruption (FONAC), which took place on 26–28

March 1998. This Forum brought together some 240 participants representing about

70 civil society organizations and about 50 government representatives. Through

working groups focusing on different themes, the Forum developed an action plan

for combating corruption in Benin, and formulated the framework for an umbrella

anti-corruption organization. At subsequent meetings, an organization was established with TI–Benin member, Maximillien Sossour-Gloh, as president. According to

information received by us, this organization is considered to be under the control

of the government. A rival organization has now been established by TI–Benin

member Lucien Agbota, founder of Nouvelle Ethique, and a group of businessmen

called Savoir-Agir. Agbota is believed to have political ambitions.

Two socio-economic factors appear to limit the ability to mobilize civil society in

Beam, which is one of the poorest countries in the world. The first is the high level

of illiteracy. Among the 5 million population, the rate of literacy is 26 percent, with

only 16 percent of the women being literate. While the small, better educated, elitist

Francophone population in the cities, especially Cotonou, is served by a press that

is articulate, relatively free, and occasionally irresponsible, the majority of the population is less well served by radio which is generally state-controlled and often not

in their native language. The second is that traditional hierarchal structures are

interwoven with the modern state. In the villages, the local patronage system means

that rural people do not have a habit of questioning their superiors and often do

not identify with structures beyond the local level. Under the system, as it has developed, the ‘‘clients’’ have no automatic claim to state services but must secure

them by payment.

Anti-Corruption Activists

TI–Benin is a small (about 12–15 members) group of respected individuals from

different segments of society. The President is the highly regarded Archbishop of

Cotonou, who played a prominent role in the transition to democracy in 1990. It also

includes three prominent lawyers, including a former Minister, a sociologist, a cardiologist, a prominent journalist, a businessman, a government employee and representatives of a number of NGOs including GERRDES and Nouvelle Ethique. The

43

group is very cautious about expanding, given the danger of attracting the wrong

sort of people.

TI–Benin has a reasonably good working relationship with the Government. The

President of TI–Benin, the Archbishop of Cotonou, has some access arid influence

due to his Stature and to the fact that in his personal capacity he supported the

election campaign of the current President Kerekou. The President established the

‘‘Cellule’’ (see above), and has expressed a wish for more action by TI–Benin. At the

international level, TI–Chairman Peter Eigen was a member of a mission to Benin

in September 1997 which was received by President Kerekou and which introduced

to him the TI Integrity Pact concept for government procurement which the President subsequently endorsed for procurement in Benin. In January 1999, a team of

TI Senior Advisers visited Benin to assist the government with the implementation

of the Integrity Pact.

Political Will

In June 1998, prior to a change in the composition of the government, the declared political commitment of the President to fight corruption was seriously questioned by many. While the President himself was credited with wishing to see some

change, the question was posed why he surrounded himself with corrupt Ministers.

How much the situation has now changed remains to be seen, but the Industries

Minister M. Pierre John Igue is said by some to be a potential ally in the fight

against corruption, while the woman heading the Ports and Customs from early

1998 is also said to have a commitment to cleaning up the massive corruption within her domain.

The donor community is exerting heavy pressure for progress in combating corruption. For example, the World Bank, USAID and UNDP are supporting anti-corruption programs, and meet regularly under the chairmanship of the Swiss to discuss governance issues. USAID has given support to the Chamber of Audit (an audit

body) and to the Office of the Inspector General in the Ministry of Finance, while

the World Bank is supporting administrative reform and the strengthening of the

Cellule de la Moralisation de la Vie Publique.

Nature of Corruption

Corruption in Benin is said to be so pervasive as to have become a socially accepted norm, There is said to be considerable social pressure on members of the civil

service to engage in corruption. Corruption includes both the high level and petty

varieties. Some of the areas most affected are the port and customs services, but

other areas of activity involving government expenditures and government licensing

and policing are involved, as well as the judiciary.

Previous Anti-Corruption Activities

Combating corruption has been on the political agenda in Benin since the movement for democratization in 1990. It has been addressed in a number of national

conferences on reform of the public sector and the judiciary, and in a workshop on

good governance which was held as part of the National Economic Conference in December 1996. It was then that President Kerekon signed a decree creating the

Cellule de la Moralisation de la Vie Publique which reports directly to the President.

The Cellule, a type of anti-corruption bureau with a potentially broad mandate has

just recently increased its two-person staff to seven. The World Bank is providing

assistance to the Cellule to help increase its effectiveness. Another recent development is the effort to reform the judiciary, including revival of the office of the

Inspecteur General Judiciaire. Measures have also been introduced to revive the

public accounting and auditing functions, including the appointment of the Chambre

des Comptes under the Supreme Court and the increased staffing of the office of

the Inspecteur General des Finances. Civil service reforms are also in progress. A

new Procurement Code in the form of an Ordinance was signed by the President

on 31 January, 1996. Draft decrees for its implementation have still not been made

effective, and the Code is, therefore, not in force.

The government played an important role in co-organizing the Anti-Corruption

Forum in March 1998. In the same month, a new head of the Port of Cotonou was

appointed in order to clean up the endemic corruption there. This new appointee

has convened a roundtable with business, NGO and government representatives to

discuss how to deal with the corruption problem. However, existing anti-corruption

penal legislation and disciplinary measures for government employees not appear to

be enforced.

44

1997–2001 Integrity Improvement Programme

The Integrity Improvement Programme for Benin is still in the process of development. In February 1998, we received the broad outlines of a plan of action for 1998–

2001, with an attached budget of approximately US$200,000. It envisaged:

1. TI–Benin participation in the Forum in March 1998—DONE.

2. Awareness-raising activities, including: (a) conferences; (b) television programmes; (c) training of TI–Benin members and others in conducting research on

sensitive sectors; (d) television ads and banners; and (e) creation of videos or using

theatre groups for awareness-raising campaigns throughout Benin.

3. Lobbying activities:

(a) re: Parliament—to initiate new laws on corruption, create a code of

conduct, and encourage parliamentary commissions of inquiry;

(b) re: Executive—to obtain government support for the TI–Integrity Pact

concept, to pressure for the introduction of anti-corruption instruments, and

too make the control structures more functional;

(c) re: Judiciary—to review the question of the reserve obligation, to persuade judges to act on certain corruption dossiers, to institute an effective

mechanism of control of the assets of persons entering and leaving government employment;

(d) re: Political Parties—to secure a commitment to the use of anti-corruption instruments, including the Integrity Pact, in their manifestos;

(e) re: All Citizens—to organize public telephone lines to facilitate citizens

recourse, and to encourage the media to introduce programmes to enable

citizens to denounce acts of corruption.

4. Publications:

(a) dissemination of texts on the law of corruption;

(b) periodic reporting of the results of investigations and of the activities

of TI–Benin;

(c) a national anti-corruption index.

5. Institutional Support for TI–Benin, including renting headquarters in shortterm and constructing headquarters in medium-term, and recruiting personnel.

The budget submitted by TI–Benin was heavily weighted towards institutional

support and gave little indication of estimates of expenditure for particular projects.

The TI–Secretariat’s policy at the time was not to provide institutional support,

while not opposing it if it was offered in the form of add-ons from USAID-Benin.

TI–Benin, however, indicated that its highest priority was institutional support, followed by awareness-raising.

In March 1998, two TI–Secretariat representatives visited Benin and met with

TI–Benin and USAID–Benin to discuss the integrity improvement programme. It

was agreed that TI–Benin would prepare a document prioritizing and detailing the

proposed projects, describing their goals, and indicating both costs and time-frames.

This was not forthcoming, and that unfortunately held up the development of a TI

programme for Benin. Meanwhile, USAID–Benin submitted its own programme for

Benin, incorporating its own add-ons to the global grant. That proposal, sent to

headquarters in April 1998, was formally submitted to TI–S for its approval in December 1998. By then, USAID–Benin was interested in decommissioning the money

it had sent to Washington for the add-on’s, and this was agreed to by TI–S on the

understanding that the money would go directly to TI–Benin through the local

USAID office. In January 1999, TI–S transferred US$10,000 from the global grant

to TI–Benin for use during the period January–April 1999 for awareness-raising activities. TI–Benin has been encouraged to use part of this amount to commission

a consultant to prepare the supplementary document which has been requested by

TI–S. It has also been agreed that at the end of April 1999, TI–S would review the

question of Benin’s inclusion in the USAID global programme.

The difficulties of four-way communications (USAID)/TI–S/USAID–Benin/TI–

Benin) across three continents and two languages have meant that problems associated with TI–S’s request for clarification and elaboration have only recently been

ironed out. TI–S requested more information from TI–Benin out of a desire to be

a responsible fiduciary, but the request appears to have raised with TI–Benin unpleasant memories of colonialism and World Bank conditionality. USAID–Benin also

apparently failed to see the need for more information, and may have been frustrated by the resulting delay in the disbursement of the add-on funds which they

had made available.

45

GHANA

Civil Society

Since the return to constitutional rule (The Fourth Republic), civil society has

emerged as a major player in economic and social fields. It is also gaining visibility

in the political sphere. However, it is subject to severe impediments. Economically,

it is handicapped, especially due to the weakness of the private and non-state sectors from which it could secure an independent financial base, and is therefore susceptible to governmental co-optation. Politically, it is inhibited by a combination of

governmental co-optation and repression. The prevailing political culture inhibits

anti-state and anti-hegemony civil society activism, and compels many to adopt positions of defensive political neutrality. Culturally, it suffers from ethnic, regional and

religious fragmentation, and sometimes considerable parochialism. Consequently,

many CSQs are not active in the civic area.

The press exhibits features of extreme irresponsibility, immaturity, docility, and

self-censorship. The state media is better endowed and has a national reach. The

independent media (with a few but notable exceptions) is aggressive but materially

and professionally inept. Anti-corruption activity in general, and investigative journalism in particular, are severely constrained by the active application of criminal

defamation laws and an anti-press judicial temperament. Over 50 prosecutions

against independent media editors and publishers are now pending. Most of the

complainants are government functionaries, and the complaints relate to newspaper

reports arising out of journalistic investigations.

Anti-Corruption Activists

Identifiable activists in the anti-corruption field include the Commission on

Human Rights and Administrative Justice (Chairman: Emile Short), which is constitutionally mandated to uphold ethics in public l1fe and which conducted high profile investigations into allegations of corruption against senior members of the government in 1995–1996; the Catholic Church, which has been active in voicing opinion against corruption. In late 1997 it issued a Pastoral Letter against the phenomenon; in July 1998 it declared a Moral Crusade against corruption at a Bishops

Conference in Koforidua and later that month representatives of the Catholic

Church met with the Head of State to discuss and mobilize opinion against corruption in the country; and the Christian Council which, in collaboration with Islamic

organizations, has formed an Inter-Faith Group to work towards the elimination of

corruption. The efforts of the Catholic Church are relatively broad-based, are crossgender, and cross-ethnicity. However, there has so far been only a token involvement of the Islamic community and of the Charismatic churches in these anti-corruption activities.

Of the personalities in government, the Head of State, FLT. LT. J.J. Rawlings has

always expressed abhorrence of corruption. This appears to be genuine. He believes

quite strongly that opposition to corruption is his principal political legacy to Ghana,

despite all appearances to the contrary. But he has also demonstrated considerable

inconsistency and ambivalence in this area. He has protected persons in his government against whom serious allegations of corruption have been made, and he has

demonstrated downright hostility towards persons from outside his inner political

circle, and especially opposition figures, who have made allegations of corruption

against members of his government. Vice-President John Atta-Mills, is generally

considered to be clean and has publicly declared his commitment to combat corruption. However, he is not a forceful personality and his base within the ruling party

is rather weak. The Minister for Local Government, Kwamena Ahwoi, appears to

be interested in combating corruption. He had been one of the principal figures involved in the extra-anti-corruption measures of the early PNDC years, i.e. the Citizens Vetting Commission, the National Investigations Commission, and Operation

Hawk which, in the early 1980s, exposed embezzlement in second cycle institutions.

In recent years, his interest in combating corruption has been confined mainly to

the district Assemblies and especially their use of the Common Fund. Abwoi’s interest in combating corruption has, however, been widely perceived as a partisan ploy

to undermine other factions within the NDC, and to promote the agenda of a faction

dominated by the members of the Fanti tribe of which he is a leading figure. On

the other hand, he was very supportive of the CHRAJ initiative to hold an integrity

workshop, and was instrumental in persuading the executive branch/Attorney General to nominate two representatives for the planning group for the workshop (Mrs.

Betty Mould-Iddrisu, Head of the International Law Division of the Attorney-General’s Office and wife of the long-serving Minister of Defence, and Sarfo Sampong,

senior public prosecutor in the Attorney-General’s Office).

The likely members of the Board of TI–Ghana in formation are:

46

• Emile Short, Chairman of the Commission on Human Rights and Administrative Justice.

• Dr. E. Gyimah-Boadi, Associate Professor at the University of Ghana and Regional Coordinator of the Regional Office of the Center for Democracy and Development (CDD), an NGO dedicated to the promotion of transparency, accountability, good governance and civil society support in Ghana and the West Africa

sub-region. He is the coordinator of TI activities in Ghana and was secretary

of the planning group of the Integrity workshop.

• Dr. S.K.B. Asante.

• Dr. Angela Ofori-Atta, lecturer in clinical psychology at the University of Ghana

Medical School.

• Audrey Gadzekpo, a journalist.

• Justice F. Apaloo, former Chief Justice of Ghana and Kenya.

• Rev. Dr. Charles Palmer-Buckle, Catholic Bishop of Koforidua and an outspoken

commentator on national economic issues, especially anti-corruption issues.

• Mauvi Wahab Adam, Head of the Ahmadiya Muslim Movement.

• Ms. Nana A. Apt, Professor of Social Policy at Legon.

• Kwasi Abeasi, Director-General of the Private Enterprise Foundation; a widely

respected person who was active in mooting the issue of corruption at the National Economic Forum in September 1997.

• Prof. Kasim Kasanga, of the University of Science and Technology (Land Management), a young, well-respected representative of the Northern Regions.

• Ms. Alima Mahma, another representative of the Northern Regions.

In addition to these persons, others active in combating corruption include William Nyarko, the young and dynamic chief investigative journalist for The Chronicle

(an independent newspaper) who received the Ghana Journalist Association Award

for the Best Investigative Journalist in 1998; and Yaw Asamoa, a young lawyer with

the General Law Group involved with anti-corruption work under the auspices of

the Africa Leadership Forum.

Relations with Government

TI–Ghana is still in formation.

Political Will

The Government’s will to combat corruption can best be described as ambivalent.

On the one hand, it appears to be willing to admit that there is a problem with public sector corruption and to express a desire to combat it. On the other baud, it suffers a great deal of cognitive dissonance and often exhibits a denial in this mailer.

It tends to see corruption as something which was rampant under regimes that preceded the PNDC and NDC, and which, if even occurring now, is much smaller in

scale than in the past. At the same time, it has expressed official support for anticorruption initiatives, including the Integrity Workshop. On the whole, the Government’s response to allegations of corruption appear to be far stronger when such allegations are made by external agencies such as the Control Risk Report.

Nature of Corruption

The nature of corruption in the country is largely disorganized, and takes the

form of kick-backs, inflated costs for official projects, graft, bribery, nepotism, extra

legal fees, illegal exemptions, insider-trading, conflict of interest, and especially improper tendering and corrupt execution of government contracts. To a substantial

extent, grand corruption is linked to the financing of the ruling party and its political machine. The involvement of the military is indirect and may be inferred from

the fact that it allows only a partial audit of its books. There is also a pervasive

practice of corruption in the society at large, mainly due to grossly inadequate official wages, and cultural practices such as lavish outlays for marriages, funerals and

other extraneous social activities.

Previous Anti-Corruption Activities

Activities carried out by previous governments include:

• Commissions of Inquiry into allegations of bribery and corruption since 1954;

after the 1966 coup; and after other coups.

• Public inquiries, such as the one which examined the affairs of R.T. Briscoe

Company (dealers in German automotives).

• Populist outbursts against industry and senior management.

47

• Anti-profiteering measures against traders.

• The so-called ‘‘House Cleaning Exercise,’’ including the establishment of the

Citizens Vetting Committee.

• The National Investigations Committee.

• The One-Man-One-House and other confiscatory exercises led by J.J. Rawlings

in 1979 and in the early 1980s.

• Sporadic anti-corruption initiatives in the mid and late 1980s targeted at specific institutions such as the banking sector and secondary schools (Operation

Hawk).

It must be noted that many of these efforts were conducted in defiance of due

process, and were widely perceived as political witch-hunting. The trials of persons

accused of corruption were often held before extra-legal public tribunals, and punishments included executions and confiscation of property. No person considered to

be closely allied to the PNDC regime was ever tried or punished in that manner.

There is no history of civil society based anti-corruption activity in Ghana, except

perhaps in the form of church sermons against the practice. However, since 1993,

the independent media has been extremely active in this respect; in particular, The

Ghanaian Chronicle, The Dispatch, The Public Agenda, and The Independent. More

recently, the Public Enterprises Foundation has raised the issue nationally, and

other civil society organizations are beginning to take a greater interest in the subject. TI–Ghana will be the first formal civil society organization initiative in the

area of combating corruption.

1997–2001 Integrity Improvement Programme

Following two preparatory missions undertaken by TI Resource Person, Neville

Linton, and Programme Officer responsible for Ghana, Gillian Dell, it was agreed

that Emile Short, Chairman of the Commission on Human Rights and Administrative Justice (CHRAJ) and Prof. E. Gyimah-Boadi, Regional Director of the Center

for Democracy and Development (CDD) be the convenors of TI–Ghana.

National Integrity Workshop

The programme commenced with the National Integrity Workshop on 20–21 October 1998. TI–S contributed US$19,637 from the USAID global grant towards the expenses of the workshop which was organized by CHRAJ in collaboration with CDD,

with support from USAID and DANIDA. Under the theme Toward a Collective Plan

of Action for the Creation of a National Integrity System, the workshop brought together over 150 representatives from government, the private sector, and civil society. The government offices represented included the President’s Office, the Attorney-General’s Office, the National Commission on Civic Education, the Bureau of

National Investigations, and the Customs, Excise and Preventive Service. Civil society representatives included the Ghana Bar, Journalists Associations, the Private

Enterprise Foundation, the National Union of Ghana Students, several women’s organizations, and Christian and Muslim religious institutions. The keynote address

was delivered by the Vice President of Ghana, Prof. Atta Mills, and the closing address by the Minister for the Interior, Nii Adamafio. Non-Ghanaian speakers included Bertrand de Speville, former Head of the Independent Commission Against

Corruption, Hong Kong; Adolf Hirschfeld, Assistant Director of Corruption and Economic Crime, Botswana; and Nibal Jayawickrama, Executive Director, Transparency International, Berlin.

A major component of the workshop was the small group sessions in which aspects of the problem and the impact of corruption on specific sectors (such as land

administration, customs, excise and prevention, education, and health) were examined. The results of a nation-wide survey on Public Perceptions of Corruption in the

Delivery of Health Care and Education Services were presented. The role of the

media, civil society, private sector, and public agencies in combating corruption was

also analyzed.

In addition to expressing an interest in forming a national chapter of TI, participants at the workshop adopted an action plan which included:

• Revamping and actively enforcing codes of conduct for professional bodies;

• Concerted awareness raising by relevant public agencies and civil society organizations;

• The institution of annual integrity awards;

• Strengthening networking and collaboration among civil society organizations

and nongovernmental organizations dedicated to fighting corruption;

48

• Fostering greater transparency in governmental processes, especially the public

procurement process;

• Campaigning for the enactment of a Freedom of Information Act and the repeal

of criminal defamation and other laws that impede access to information;

• Creation of mechanisms to promote ‘‘whistleblowers.’’

As an awareness-raising measure and as a mechanism for bringing together many

segments of Ghanaian society interested in combating corruption, the workshop was

a significant success. During the workshop and in the days immediately preceding

it, considerable time and space was devoted by the media to the subject of corruption. At the workshop itself, discussions were free, lively and vibrant. However, at

a critical evaluation conducted some weeks later, it was noted that there had been

insufficient time for in-depth discussion; that discussions would have been stronger

if the papers had been circulated in advance; that a combination of named invitations as well as institutional ones would have induced a stronger response rate; that

more people and institutions should be brought into the integrity process and future

workshops; that chairs for working groups must be pre-selected to facilitate meaningful discussion; and that the absence of the police, military and regular security

agencies was a matter for regret.

Formation of TI–Ghana

The preliminary steps towards the formation of TI–Ghana were taken immediately after the national integrity workshop. The potential candidates for the Board

have been approached, and a 100 percent acceptance rate recorded. The Center for

Democracy and Development will serve as the secretariat for the national chapter,

and it is hoped to employ an executive director. An informal meeting of the Board

is scheduled for January 1999 when a three-year plan for integrity in Ghana is expected to be discussed. A problem has arisen in regard to the registration of TI–

Ghana as an NGO. Two registrations in the names of TI–Ghana and TI already

exist, having been made on 4 March 1997 and 12 September 1997, by individuals

in Accra and Barekum. These have been made without any reference to, or authority from, TI–S. Efforts are being made to have these registrations withdrawn.

BANGLADESH

Civil Society

The NGO component of civil society in Bangladesh is quite active, focusing mainly

on poverty alleviation, rural development, relief and disaster management, gender

issues and human rights. More than 15,000 NGOs are currently operating in Bangladesh. Among them, more than 1,200 NGOs are reported to be directly involved

in development activities and about 900 are operating with assistance from foreign

donors. Besides, the business community has of late become quite vocal.

Anti-Corruption Activists

Anti-corruption activists in Bangladesh are still mostly male, belonging to professions such as law, teaching, business, and journalism. However, some watchdog

groups willing to network with TI–Bangladesh on integrity issues are women’s organizations. Ethnically, they are Bengalee; religion wise, they are mostly Muslims. Politically, TI–Bangladesh adheres to the principle of being independent and non partisan in its approaches.

FRANCOPHONE AFRICA

Consultation with TI contacts and National Chapters in Francophone Africa indicated three constraints to more effective NCs in these countries: insufficient outreach to relevant professional and civil society associations in the region; lack of materials on corruption in the French language; and low resonance of the operational

strategies contained in the TI Source Book and other documents for the political,

legal and administrative structures in Francophone African countries.

Based on these consultations, an operational work program has been developed

to establish more systematic contact with relevant professional and civil society organizations and involve them in analyzing the nature and causes of corruption and

in adapting the TI Source Book to the Francophone African context. Specifically, the

proposed program of activities would focus on three areas:

• Improvement of the general awareness of the issues and enhance professional

contacts in Francophone Africa, through corruption surveys and increased outreach;

49

• Compilation of best practices and preparation and dissemination of materials

especially adapted to the Francophone African context, through translation and

discussion workshops; and

• Expanded activity of TI NCs and national contact points in Francophone Africa,

through discussion workshops to adapt and disseminate the TI Source Book and

follow-up missions to countries interested in expanding their fight against corruption.

Senator FEINGOLD. I thank you, and first let me say I will never

forget Ambassador Holbrooke and I met with President dos Santos

in his office in Angola. The main purpose of the meeting was to discuss the conflict in Congo, but I did choose to use my brief time

to ask him a bit about corruption in Angola.

I will never forget him citing the rating that they had received

that year by Transparency International. I do not think he will be

brandishing this year’s rating, but it was quite an interesting thing

to see the impact that an organization like yours and the others

represented here today have, and it was very enlightening for me.

Secondly, I wanted to tell you that I certainly take to heart your

suggestion that legislators, especially at the Federal level, but perhaps even at the State level, can do a lot by, when they go to one

of these countries, not just meet with the President and the Cabinet ministers, but seek out our colleagues, compatriots in those

countries.

We did this in Mali and with some of the SADAC countries, and

then when some of the new Nigerian legislators came here, I believe it was on defense issues, these are very, not only productive

but inspiring meetings in some ways, for me as well as for the legislators, and in addition I would mention—you referenced a meeting with a civil society group. I remember one of the only bright

moments I felt in Angola was an opportunity to meet with some of

those groups. I think that is all very helpful.

Let me just ask one question. Senator Frist is still not able to

be here, but I assure you it is for a very, very compelling reason

that he is stuck. We are in a very difficult time of year here, but

let me indicate that I will now direct questions at different individuals, but unlike a hearing, I think we can be a little more free to

comment, so I hope people will feel free to chime in and respond,

so we will not get into heavy duty debates, but I would like to hear

some exchange.

So let me begin by asking Mr. Schneidman, what is your reaction

to Mr. Taylor’s proposal that the United States Government should

encourage the major oil companies to disclose the taxes and royalties they pay to Governments around the world?

Mr. SCHNEIDMAN. Well, Senator Feingold, I think that the issue

of transparency and accountability and fighting corruption can

never be sought enough, and I think in this regard we should engage our friends in the private sector and in the oil companies to

do as much as they can to increase transparency and accountability

to the degree that they can. I do not think we should limit it just

to the private sector.

Mr. Taylor brought up the issue on the staff monitoring program,

and I think it is not just in Angola, but I think this issue of making

more public what an IMF program is all about, or a World Bank

program, what these are all about in all countries in sub-Saharan

Africa is a very important thing to do, because I think once civil

50

society, once the different stakeholders in society understand what

the Governments have committed to, they can better understand

why they may be taking on some hardships, what the short-term

pain is for the long-term gain, as it were.

So I think these steps are to be commended, and I think this is

something we have tried to do through our bilateral consultative

commission, because the U.S. private sector is very much a part of

this, and we meet together with the Angolan Government and we

discuss issues of transparency, and we have discussed the issues of

the payments by the oil companies to the Government with the

Government and with the private sector, and what has happened

to that money.

To be candid, the answers are not yet satisfactory to us, but it

is an issue that we will continue to dig away at because we feel

that it is essential to do so.

Senator FEINGOLD. Could you say a little bit more about how the

State Department has been working with the major American corporations involved in Angola to combat corruption and to ensure

that these companies are not shaken down for bribes as a part of

doing business in Angola? What is the actual process you go

through?

Mr. SCHNEIDMAN. Well, most fundamentally we have to rely on

these companies to comply with the Foreign Corrupt Practices Act,

and to the best of our knowledge they are doing so.

As Mr. Taylor pointed out, the problem is not so much their dealings with the Angolan Government. It is what happens to that

money when it is paid to the Angolan Government, where does it

go, and clearly it does go for illicit purposes.

We referenced the oil audit in the staff monitoring program. That

is important, but I think we have to recognize that this is just a

first step, a significant step but a first step. There is still the diamond sector and the lack of transparency there, and the interface

between payments for diamonds and the purchase of arms. It is totally opaque, and if Angola’s going to take its place as a full member of the international community, that opacity is going to have

to be rectified.

We have taken some interesting developments with our oil companies through our BCC on the issue of HIV/AIDS, and U.S. companies have agreed to put up several million dollars over the next

2 or 3 years to help the Angolan Government address the issue of

HIV/AIDS, and at our last meeting in Luanda in May we were able

to compel the Angolan Government to seed the money that the U.S.

companies had put up. It is not much. We are talking, like, $1, $3,

$4, $5 million. From our point of view it is a start, and we are

going to have another meeting in October and we are going to continue this dialogue.

Senator FEINGOLD. Where does that money go?

Mr. SCHNEIDMAN. We have not yet received a full proposal from

the corporales on how they are actually going to spend it, but the

Angolan Government made it clear to us that they do not yet have

a full accounting of the infection rate in Angola.

Senator FEINGOLD. Is the money spent directly by the corporations, or is it given to the Government?

51

Mr. SCHNEIDMAN. It will be spent directly by the corporations to

NGOs.

Senator FEINGOLD. Mr. Schloss, do you want to respond to that?

Mr. SCHLOSS. If I may just add on the issue, let me just make

two points. Hydrocarbons trade is by far the largest item in the

balance of payments, of all the sub-Saharan African countries, be

it in the import or the export side, and it is either the first or the

second item in the fiscal revenues, so we are talking about big

money, big resources for all of the countries.

Some 5 years ago some colleagues of mine have done a survey

about what happens at each of the stages from point of production,

refinery, transportation, and distribution of the hydrocarbons in all

of the sub-Saharan African countries. To get that information,

what was very important was to get all the oil industry, not only

the American but all of it together. Only then, at least as far as

I could see, were they prepared to provide the information for us

to make these price comparisons.

At the time, what these surveys indicated was that Africa was

losing something on the order of $1.5 billion a year on account of

how hydrocarbons were traded, which at the time was higher than

the total gross disbursements of the whole World Bank Group put

together to that same continent, so we are talking about very large

resources, and certainly this is an area that merits careful review.

Senator FEINGOLD. All right. If there are no other comments on

that, I guess I would like to focus, Mr. Schneidman, on if countries

in Africa require their Government officials to disclose their assets,

and does the United States Government encourage this kind of

asset declaration?

Mr. SCHNEIDMAN. We certainly do. I am not aware that this

practice is continent-wide, but for instance, when I was with the

Government of Cameroon, which does not do very well on the TI

index, I brought this issue up in the context of talking about the

African Growth and Opportunity Act. They assured me that Government officials were required to make these kinds of facts

known, and we will follow that up through our embassy to see if

that is happening.

But I think one of the issues that we have been discussing with

the Global Coalition on Africa in the context of the principles and

thinking about an anticorruption convention is the issue of peer review, where African countries would get together to assess each

other and to establish models and levels of transparency, because

at the end of the day it is going to be the Africans themselves that

are accountable to themselves and to their own people, and we will

continue to be as helpful as we can in that respect, but we cannot

do it for them.

Senator FEINGOLD. Does anyone else know the extent of the practice of requiring this kind of disclosure? Ms. Marshall.

Ms. MARSHALL. Quite a few countries have legislation which requires the disclosure. The problem is that it is not usually complied

with, and that is something that within the GCA we have been trying to push—you have already got a law saying that you should do

this, it should be done and, more importantly, it should be public

and publicly available.

52

There has been some movement on this, but still it is really very

few countries that actually do it and do it properly.

Senator FEINGOLD. Is there an example or two? I mean, you are

talking about annual disclosures like we have here?

Ms. MARSHALL. Yes.

Senator FEINGOLD. Are there any that do that and have it public?

Ms. MARSHALL. South Africa has started, and Botswana. Uganda

is supposed to, and I do believe they actually do it, but it is not

usually made public. Other countries like Kenya, which again are

supposed to, really are not doing it yet, but I think this is something that, you know, in the policy dialogue, this could be encouraged.

Some countries, like South Africa, in fact have gone further than

many western countries, and parliament is also expected to submit

this disclosure.

Senator FEINGOLD. Yes, Ms. Derryck.

Ms. LOWERY-DERRYCK. Thank you, Senator. I think also that

countries can be encouraged to make sure that they fulfill their

own obligations by regional programs that can reinforce one and

another. There is the East and Southern African Antimoney Laundering Group, for instance, and it helps if countries see that their

neighbors or others are beginning to comply and be absolutely free

and open in publishing this kind of information, so I think that

that is something that we should support as well.

Senator FEINGOLD. Good. Perhaps, Mr. Schneidman, you could

say a bit about the anticorruption bill recently enacted in Nigeria.

You alluded to it. Would you say a little bit about it, and the difficulties that you see in implementing that?

Mr. SCHNEIDMAN. Well, I think it is important to remember that

Nigeria is been through 20 years of military rule, where there has

been no accountability whatsoever, and I think this is a situation

where corruption has become endemic, and President Obasanjo

from the first day, when he canceled some oil contracts that had

been concluded by his predecessor, showed a willingness and a determination to fight corruption.

But this bill is generally very comprehensive. It is designed to

put in place a money laundering regime. It is designed to reform

the criminal code. It is designed to reform the police, among others.

Our Justice Department is providing an attorney to advice the Government of Nigeria on the implementation of this, but we should

have no illusion that it is going to be easy, or that it is going to

happen overnight.

I think it is quite instructive that we all see President Obasanjo

as a genuine reformer, but this year Nigeria ranks lower than Angola on the corruption perception index of Transparency International. It is a very complex issue, and one that has to be tackled

in a number of ways.

One other thing that we did when President Clinton was in Nigeria, President Clinton announced that we are going to establish in

our embassy a position that will help to address the issue of corruption and corporate governance in the delta region, and this is

where we are going to seek to bring together representatives from

the oil companies, representatives from civil society, representaVerDate 11-MAY-2000 13:04 Feb 07, 2001 Jkt 000000 PO 00000 Frm 00056 Fmt 6633 Sfmt 6602 68756 SFRELA2 PsN: SFRELA2
53

tives from the Nigerian Government, representatives from State

governments, in an effort to stimulate the kind of dialogue that will

lead to more progress and upliftment of living conditions there.

Senator FEINGOLD. Thank you. Let me turn to Ms. Derryck. The

answer that Ms. Marshall gave me about disclosure made me think

about the role of a free press. When she says that they require

these reports but they are not public, obviously that is a little bit

alien to somebody who is asked instantaneously to turn over to the

press these filings. Could you comment a bit on the role of a free

press in combatting corruption, and how does USAID work to make

this connection in its democracy and governance program?

Ms. LOWERY-DERRYCK. Yes, Senator. Our programs really focus,

as I said, on changing the environment and building institutions

and working with civil society, and clearly one of the institutions

that we think is particularly important is the free press.

For instance, in Angola, to go back to that example, we have

worked with the radio stations and have tried to support journalists because we believe that this is the way that you get the information out. We are concerned about transparency, and there is no

better way than to have this information that is available to journalists.

We also encourage free press in countries like Uganda, and particularly when there was a discussion, there were the hearings in

parliament on corruption issues, to see those, the reports of the results of those meetings in the paper every day was really a very,

very effective way to encourage public dialogue and to build civil

society support for this, and the fact that the journalists were not

arrested, and there is no consequence, bad consequence to that action, also helps to reinforce the fact that this is an area with which

we can deal, that it is important and appropriate, and that there

is support, even tacit support within Government and certainly

within the broader civil society.

Senator FEINGOLD. Thank you. Yes, Mr. Taylor.

Mr. TAYLOR. Just, I hope to bring a copy of a December, I think

8th, copy of Foya Oyta, which is one of the supposedly free press

in Angola that was produced in response to this, but I could not

find it. I do not know if you were in Luanda when that came out,

but what we deliberately did was to target press coverage through

Lisbon, because we knew that various Lisbon-produced newspapers

would end up on the plane to Luanda whether they liked it or not,

bearing in mind it might open a bit of space up for the Angolan

press to run with it.

Foya Oyta produced a beautiful front page saying, Witness accuses the Government of blah, blah, blah, blah, and you opened up

the front, and the first four pages were blank columns with oil rig

photographs, and I have never seen anything like that in my life,

and it really brought it home to me that there is no accountability

for anything that is being decided by the top end. If the top end

does not want it to come out, it does not come out, end of story.

And we have also seen what has happened to, amongst others,

Raphael Marquez and people like that, so I think it is a serious

problem that I am very happy to hear AID is working on, but it

is a long way off getting to the point where I think civil society can

really challenge Government to live up to what it should be doing.

54

Senator FEINGOLD. I thank you for saying that, and I know that

Mr. Schneidman needs to leave in a few minutes, so let me just say

I think Mr. Taylor’s idea about public oil industry disclosure is a

very good one, and I would encourage you to work to get the administration to take it seriously, and I will do the same.

Mr. SCHNEIDMAN. We certainly will, and Mr. Taylor and I have

met before, and I am sure we will meet again, and we can talk

about how we can do this together.

Senator FEINGOLD. Thank you. Let me turn to Mr. Schloss again.

I understand that the World Bank is working on a black list of corporations that have been involved in bribery and corruption incidents in developing countries. Firms on the list will be banned

from contracting for AID projects sponsored by the bank and other

organizations.

My question is about other organizations. As I understand it,

currently it is not difficult for firms barred from participating in

bank contracts to evade that restriction by covering themselves

with the umbrella of other development banks. Will firms banned

from participating in the World Bank’s projects also be banned

from the regional development banks? How would that work?

Mr. SCHLOSS. Certainly the World Bank is much more advanced

than all the other organizations in every respect in terms of the

issue of combatting corruption, particularly in a project that it,

itself finances. It has a high-level committee which goes through

the—what is the term called? They don’t call it bans, but there is

a list of growing companies that now can no longer, because they

have been discovered associated with corruption on the World Bank

projects, that they can no longer bid for projects financed by the

World Bank. I think this is a very good step. It sends a very clear

signal.

It is, of course, a number of rather smaller type firms that are

so far on this list, but it is a growing one, and I certainly feel that

it would be very desirable that this practice be extended to the

other multilateral development banks and, more broadly, even to

the bilateral community, but this is a list that operates, only so far

as I know, in the World Bank.

Senator FEINGOLD. Thank you. Let me look at this issue in another way. In Rwanda and elsewhere I understand that charges of

corruption appear to be exchanged between political opponents regularly, regardless of their veracity. Is there a danger that as corruption becomes a more common part of political discourse in Africa, efforts to condemn it will be used chiefly as a political weapon?

How can the manipulation of this issue be avoided?

Mr. SCHLOSS. Ideally, and this is what I have been trying to convey with such difficulty, one should depoliticize the issue to make

it more technical, to provide hard data.

I would say, for instance, the listing of companies in the World

Bank is not done very lightly. There has to be some pretty serious

evidence for that to happen, and this is not decided at a lower

level. This is decided at a very senior level, because this is something that is a step that has consequences for the rest of the life

of that enterprise as far as the World Bank is concerned.

I would say that the more one moves in the direction of having

greater disclosure, providing evidence put together, et cetera, in the

55

mechanisms that build in the country, the better. In other words,

a simple accusation should not be enough. Still a certain amount

of burden of proof rather than benefit of doubt should be on those

who say there has been corruption.

For instance, there has been a wider use of—and I say this only

as illustration—of integrity packs as a way of providing contracts,

where the different contending parties to a contract look at each

other and see the evidence and bring it up, and once it is brought

up and it is there to be seen, then it is acted upon. Those mechanisms help.

I think this needs to be institutionalized. It cannot be done simply by accusing. There have to be mechanisms to do that.

Senator FEINGOLD. Let me ask both you, Mr. Schloss, and Ms.

Marshall if there is any momentum-building in Africa to develop a

convention similar to the OAS Inter-American Convention Against

Corruption. I have been interested in the convention’s attempt to

capture behavior on both sides of the bribery question.

Ms. MARSHALL. Yes, as was mentioned earlier, these

anticorruption principles which African countries themselves developed last year were an attempt to put in place some sort of collaboration, collaborative mechanisms which could form the basis of a

convention, and there are a number of countries that are seeking

to join that, to broaden the number that are involved, but of course

beyond that they have got to work on harmonizing legislation and

that kind of thing to make them really work.

But in addition, within SADC there are discussions to have

SADC-wide agreement, which would be like a sort of regional convention. That also could help build momentum, and the OAU itself

is interested in working on the convention. They have just started—they have just hired some people to start putting together

something in draft. There is going to be an experts meeting on

that, hopefully in the first quarter of next year.

The real issue is pulling all of these things together to get something that is workable, that is implementable. If you get something

that is too complicated it is never going to work, and we are going

to get back into the situation of people signing it but not doing anything about it, so the idea—and this is what we were trying to

come up with in principles, was things that would benefit the countries themselves and would—the collaboration with each other

would help to support what they were doing already, and I think

this is the way to go.

But there is certainly tremendous interest in Africa on the part

of Governments and also on the part of civil society. A lot of civil

society organizations, a lot of the TI chapters are very interested

in trying to get this, because they see it as a legal mechanism that

they can use.

Senator FEINGOLD. I would be interested in whatever I can do or

this subcommittee can do to encourage that kind of direction.

Ms. MARSHALL. Thank you. That would be very, very helpful.

Senator FEINGOLD. Do you want to comment at all, Mr. Schloss?

Mr. SCHLOSS. Just a broad point. If one observes different conventions that deal with a subject, I would say there are at least in

my mind three things that have to stand out. First, how focused

and implementable the convention is. If I look, for instance, at the

56

OAS convention as against the OECD, the OECD very focused on

one particular subject, whereas the OAS, which covers the whole

waterfront—clearly the more focused, the better the chances that

this can be implemented.

Second, monetary. There has to be some way of determining who

is performing in what way, and some element of peer pressure as

a result, and last but not least, targets. There has to be some teeth

to it in order for that to be commended.

I am afraid that in questions of conventions there have been

many words, many papers, and perhaps these three principles are

so vital that anything that can be done in this direction would be

extremely helpful.

Senator FEINGOLD. I have one more question for Mr. Taylor, and

then, unless Senator Frist is able to come, if any of you would like

to make brief concluding remarks I would welcome that.

Mr. Taylor, in May of this year the World Resources Institute

and the World Wildlife Fund released a report finding that in Cameroon, Gabon, Congo, the Central African Republic, and Equatorial

Guinea, multinational companies have paid bribes to circumvent

environmental regulations and gain access to forest areas for logging that are protected by local regulations. In some cases the logging took place in parks, where donor countries have invested significant resources in protection.

What can be done to ensure that corrupt practices do not undermine efforts at environmental protection in Africa?

Mr. TAYLOR. You have raised a very—an interesting example,

which brings me back to sort of my earlier stage at Global Witness,

where we were looking at logging in—we still are, in fact—in Cambodia, and where we are now—well, as of December last year, the

independent monitor of Cambodia’s forestry reform process.

And the reason I wanted to raise that is not so much to flag what

we have been doing, but the principle of there being an independent monitor came out of the donor process, so with legislatures

backing that up through the annual World Bank Consultative

Group process for Cambodia, and basically it was made as a condition of resumption of assistance that there would be—because the

Government basically had agreed to these reforms taking place,

that they would implement the various reforms, and the donor said

great, but you told us that for 5 years in a row and we want to

see performance, so we insist on there being an independent monitor.

Now, it took quite a long time for that to go past the stage of

simply hiring a large commercial organization with huge

overheads, and then a couple of ambassadors said, why don’t you

do it, to us, and we had not really kind of thought about it in that

context, but then we said, why not.

So we are (a) committed, because that is what we were doing

anyway, (b) we knew more about it than anyone else because we

had been everywhere, and (c) we were much cheaper than anyone

else, so it made sort of commercial sense, apart from anything else,

to go in that direction.

Now, we are on the cusp right now of DIFID in London, the

equivalent of AID—I think that is right, isn’t it? Yes—putting forward, together with some other donors, some assistance which has

57

been tied to overall assistance to Cameroon, that there should be

an independent monitor of Cameroon’s forestry reform process.

Now, it strikes us that certainly in our limited experience as the

monitor since December last year that being able to be the official

monitor, and a monitor that is not going to bury anything, so if

there is dirt to be found we will find it and it will come out, has

moved the concept of forestry reform forward far quicker and far

further than any other process than we have seen to date.

And so my answer to what you asked was that, I think actually

the principle of independent monitoring, just like looking at the

standards by which companies adhere to things like the U.S. Foreign Corrupt Practices Act, for example, or other things like that,

is that the monitoring principle, there should be an independent

monitor, is, I think, extremely valid and very valuable, and I would

encourage that that should be examined as a way to mitigate

against this kind of thing, and if companies are caught out, they

should go, end of story, out the door.

I mean, it brings me to another issue. You raised the issue of a

black list. We for some time in the Cambodian context thought

about creating a list of companies, the idea being to make it absolutely internationally unacceptable if businesses, if you repeatedly

catch them out doing things.

There are a number of big international timber companies that

come from various countries in Southeast Asia who have the worst

practices, and they are responsible for some of the worst misdemeanors in forestry in protected parks and so on, and nothing

ever happens to them, ever. They never get fined, they never get

kicked out, they never get penalized.

So I think through a willingness of donors to put pressure on

Governments who are in receipt of international assistance as a

condition—you know, if they have a monitor, and the monitor

catches people out and it is—you know, it is absolutely blatant,

then some action should be taken, and I think that is somewhere

where donors could have a big impact.

Senator FEINGOLD. Thank you. Anyone like to respond to anything, or other any other remark? Yes, Ms Derryck.

Ms. LOWERY-DERRYCK. Thank you. I think I just want to emphasize a couple of points. We are talking about usually countries with

weak institutions and weak civil societies, and there are two aspects of civil society that we are concerned with.

One is the role of women. Because they have not had the opportunity accorded to some to be involved in some of the more egregious aspects of corruption, and because they are very often willing

to speak out against it, then this is a way that civil society can be

harnessed, and so we are supported of women’s efforts.

And secondly, the petty corruption that we see in many countries

is really endemic, and we have talked largely today about a grand

corruption, but the petty corruption really does insidiously erode

confidence in Government and in institutions, and I think that we

have to be careful to make sure that some of our activities really

do focus on the smaller aspects of corruption.

Those are my two points. Thank you, Mr. Chairman.

Mr. SCHNEIDMAN. Senator Feingold, I would just like to thank

you for holding this roundtable. It is an issue, I think we have tried

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to convey, of great importance to us, and there is no question that

it is really at the key of socioeconomic development in Africa, and

certainly our ability to work together as Government agencies and

NGOs is vital, and just two points.

I think, first, we have to keep a proper perspective, because I

think what we see in Africa, as has been stressed, is more openness

to reporting corruption, so on the one hand it makes some countries appear more corrupt, and I think we have to be able to separate out what is being reported and what is coming out in the sunshine from what is really happening.

And second, just to go back to a point that my colleague, Vivian

Derryck, concluded her remarks on, and that is the resources that

we as the executive branch need to do what we are able to do and

work with Congress, and there is no question that we depend upon

you for those resources, and I hope in that context and in many

other contexts we can continue to have a very close relationship on

this issue, so we can make sure that we are doing the most that

we can do in forging new partnerships, be it with our private sector, addressing the environmental issues that Mr. Taylor just addressed.

It is clear we have got a very big agenda. We cannot do it by ourselves, and we look forward to working with you on it.

Senator FEINGOLD. Well, I thank you. Yes, Mr. Taylor.

Mr. TAYLOR. I am sorry. I do not want to hog this thing, but

there is one thing that I had not raised so much, but more at a

tangent in the course of what I was saying before, and that is the

role of organized crime. I briefly hinted at the privatization of the

war, that—well, it is not just the role of organized crime.

There is a very large European company, which I shall not name,

who is intimately involved and connected with individuals who

have been monopolizing this main weapons supply and who are

part of the process of, on the one hand, acquisition of equity stake

within the resources, and the real key thing, key aspect of this is,

somebody needs to do something about the activity of this very big

company, because it is, as far as I am concerned, totally unacceptable, and it pales—it is extraordinary what they have been doing.

I would like to elaborate on that in private.

But the other characters who I have been alluded to are very

well-connected to, shall we say, Russian oligarchs and other wellconnected individuals in that part of the world, and because of the

activities that I know that they have been involved in in terms of

weapons supply not just to Angola but to Zimbabwe, being used in

DRC, to Uganda, being used in the top end of the DRC, possibly

with connections to people who have been named who are suppliers

to UNITAS.

So that means that they are supplying both sides in the Angola

conflict, also to Ethiopia we think, probably the main suppliers to

the Bosnian Serbs, and we have also heard, also supplied helicopters to SLORK in Burma, as a condition of another company

getting a deal with that regime.

The end point I am trying to make here is that I think what

these people represent on the one hand is an attempt by those

same oligarchs who ripped off, at the last count I heard, some $130

billion out of Russia in the mid-nineties, to do exactly the same

59

thing in Central and Southern Africa, and these people are using

the banking facilities provided by countries like South Africa, they

are using our banking facilities in London, here, the Cayman Islands, off-shore accounting structures and convoluted companies

and so on.

Somebody desperately needs to start looking seriously at the activities of the off-shore banking centers around the world and penalizing them for lack of transparency in terms of who they are

dealing with, and I think to actively pursue what some of these

people are doing, because if the IMF thing does not deliver what

I do not think it will deliver, and if none of this changes, the structures that are being created will stay in place, and what we will

all wake up to in a few years time, when Angola’s oil production

peaks, when the country will desperately need all it can to rebuild,

we will find that these people own basically everything, and I think

that is a pretty sad outcome after 30 years of killing each other.

So if I could urge the committee to perhaps think about how it

might look into that—I would also be considering that. I do not

know what rapport we can have and come back to you on that, but

if that is an area you could think about it would be very valuable

I think.

Senator FEINGOLD. Well, let me just thank all of you very much

for providing this opportunity for me and the other committee

members. We will look at this information. The comments were

good.

There were some specific ideas that I think will be helpful, and

the perspective of making sure we do not look at this just as some

kind of a failure of African Governments or African peoples, especially your comments, Mr. Taylor, when we talk about the companies, the international syndicates and others that have so much to

do with this, are a critical part of this, and we have to make sure

as a committee and as a Senate that we think of it in those terms.

But when we turned to the individual African countries, I was

struck by Mr. Schneidman’s remark and the remarks of Ms. Marshall about how at first, when a country gets involved in this business, it might make them look bad. It reminds me of how Uganda

decided to get out in front on the AIDS issue. I had the impression

for a while, because I was not well-informed, that Uganda was the

place for AIDS, and it turned out that Uganda was willing to discuss this, be open about it, and as a result is relatively speaking

a leader in reducing the AIDS problem in Africa.

I think the same thing applies here. It is probably going to be

painful at first to have the disclosure of this kind of information,

but I think when one country in Africa starts succeeding in this regard, and sees the investment and other things that come as a result of it, the peer pressure and even the desire to emulate those

other countries will be a very valuable thing.

I do think this issue is starting to come of age. In terms of the

Senate’s look at it, there was some discussion of this, too brief, I

think, but some of it in the context of our debate on the African

Growth and Opportunity Act.

So I look forward to reviewing your comments and your ideas

and I again want to especially thank Dr. Frist for making this

hearing possible. It was extremely difficult to schedule at this

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point, and I am very glad we could get it done this year so we can

take advantage of some of your good ideas.

Thank you very much.

[Whereupon, the public meeting ended.]

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