Tax avoidance is a corruption that impoverishes

Arsenal Bolt: Quick updates on the news stories we’re following.

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Jim Yong Kim, President of the World Bank, gave a speech in which he argued that corporate tax avoidance schemes are a type of corruption:

“Some companies use elaborate strategies to not pay taxes in countries in which they work, a form of corruption that hurts the poor,” Kim said in a speech ahead of the World Bank and International Monetary Fund annual meetings next week in Lima, Peru. According to a recent United Nations report, tax evasion is costing an estimated $100 billion in lost public revenues in poor countries.

 
I’m pretty concerned about the lost revenues in rich countries too, which could also be used to help the poor.

AFD Radio Ep. 144 – Fr. Tony Akinwale on Nigeria’s Future

Posted by Bill on behalf of the team.

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Guest Interview by Bill: Fr. Tony Akinwale, Nigerian political philosopher and theologian of the Dominican Institute in Ibadan Nigeria. How Nigeria could become a world power very soon and what Americans should know about that country. Then: Kelley covers Guatemala’s political upheaval. Produced: September 18th, 2015.

Episode 144 (53 min):
AFD 144

Related Links

Fr. Tony Akinwale’s website
Nigeria Guardian: “The Real Name Of Corruption”, by Tony Akinwale
Nigeria Guardian: “Naming and renaming” (Public nomenclature under military rule), by Tony Akinwale
Nigeria Guardian: “A kingdom of warlords”, by Tony Akinwale
AFD by Kelley: “Guatemala has a lot to celebrate this independence day”

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And don’t forget to check out The Digitized Ramblings of an 8-Bit Animal, the video game blog of our announcer, Justin.

Guatemala has a lot to celebrate this independence day

Today Guatemala celebrates its Independence Day and it is quite a different country than it was just 365 short days ago, or even six months ago, when I left Guatemala after finishing my two years of Peace Corps service in the rural, western highlands of the beautiful country.

Photo taken by Kelley in Cajolá, Quetzaltenango, Guatemala at a girls' leadership camp hosted by Kelley and local health center staff.

Photo taken by Kelley in Cajolá, Quetzaltenango, Guatemala at a girls’ leadership camp hosted by Kelley and local health center staff.

When people ask me if I am glad to be back, I sincerely respond that I am not sure if I’m glad to be back in the United States, but I am definitely glad that I am not in Guatemala anymore. You see, Guatemala is an extremely difficult place to live. Bus drivers are frequently shot by cartels when bribes are not paid; men present a real and constant danger in the street and at home because of an oppressively “machismo” mindset that persists in the country; and 50% of children are chronically malnourished, an unfathomable and heartbreaking statistic.

Not only is Guatemala a hard place to live, it is a really hard place to get things done, Decades of impunity, staggering inequality, and corrupt governments make Guatemala a perfect storm of inefficiency and the people of Guatemala, particularly the large indigenous population, are the ones who suffer. According to the World Bank, of every country in the world, Guatemala spends the least on health, education, and infrastructure, proportionate to its economy. The Executive Director of the Foundation for the Development of Guatemala (Fundesa), Juan Carlos Zapata, reports “We believe that 30 percent of the budget is lost to corruption.”

However, today as I think about Guatemala, I am able to reflect more softly on my experience and I have brighter hopes for what’s ahead in Guatemala. Maybe that’s just because my months at home have allowed me to physically and emotionally begin to recuperate from an exhausting two years.

But I think it has more to do with the political revolution that is well under way in Guatemala. Guatemalans in the capitol, Guatemala City, and around the country, have begun to say “enough is enough”. Maybe, like many other countries, this is because of the smart phone revolution, allowing people to spread pictures and ideas more easily. Maybe Guatemala is finally shedding the yoke of a 36-year-long civil war, which ended in 1996 but still stains every part of society. Whatever the reason, the actions taken by ordinary Guatemalan citizens in the past few months make me proud of the time I worked in the endlessly fascinating country of Guatemala.

Protests began in April after the Comisión Internacional contra la Impunidad en Guatemala (International Commission against Impunity in Guatemala, CICIG), an international body backed by the United Nations and responsible for prosecuting serious crimes in Guatemala, charged the Vice President and others in the administration with taking bribes for reducing import and customs taxes.

The first big victory for Guatemalans seeking a less corrupt government was the resignation of Vice President Roxana Baldetti on May 8, 2015, who prosecutors claim took $3.7 million in bribes as part of the customs scandal. At the time, President Otto Pérez Molina claimed no wrongdoing, but CICIG and the Guatemalan people were suspect.

So, protests continued with the simple phrase “Renuncia Ya” (Resign Already) at the heart of it all. For nineteen weeks, concerned citizens protested, employing only nonviolent protest tactics, even going to far as to offer flowers to police. Then the unthinkable happened, on August 31st, the 132 members of Congress who were present for voting (out of 158 members total), voted unanimously to rescind the presidential immunity, which had formerly protected Perez from prosecution. In a country where lawlessness abounds because people are not held accountable for their actions, 132 members of Congress and tens of thousands of protesters decided that Guatemala needed to change.

Then, on September 2nd, the embattled president, Otto Pérez Molina, finally resigned.

Now, with the former Vice President and President in jail, the world’s eyes are watching what Guatemala does next. In Guatemala’s first round of voting for a new president, which occurred on September 6, Jimmy Morales, a comedian with no political experience won the first round. (This election had already been scheduled before Molina’s resignation.) A run-off election will occur on October 25, between Morales and former first lady Sandra Torres. Morales is running on a simple platform of “Not corrupt, not a thief” and is touting his position as an outsider, while Torres is reminding the country of the social work she did as First Lady. There are lingering questions about each of their abilities to continue to rid the government of corruption.

The battle against corruption is far from won, but today, Guatemala’s Independence Day, is a day to celebrate the hard work done by men and women over the past 365 days to ensure a better future for the citizens of Guatemala. Guatemala has been referred to as one of the worst places in the world to be a child, but the progress made in the past few months makes me hopeful that the impoverished, indigenous children I worked with in Guatemala might grow up to live in a country whose government strives to serve them and their families.

Tunisia debates ex-regime corruption amnesty bill

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Claiming it is a recessionary necessity for bringing back domestic investment by Tunisian businessmen and government bureaucrats affiliated with the former regime, Tunisia’s leading party (which is itself relatively aligned with the old regime) is proposing a controversial law to accelerate and streamline the process for forgiving corruption-related crimes committed before the 2010 revolution:

The economic reconciliation bill proposed by the presidency, however, calls for “an amnesty … in favour of civil servants, public officials and the like, regarding acts related to financial corruption and embezzlement of public funds, as long as such acts did not seek to achieve personal gain”, according to an English translation of the bill provided to Al Jazeera by the ICTJ.

 
Oh, well, if the embezzlement of public funds was not meant “to achieve personal gain” then I guess it must be ok.

That’s about as plausible as a former deputy governor in China’s Shandong province recently claiming that “nearly all of the money he accepted [5.6 million yuan] had simply been set aside – and that he was in principle saving money for the country.”

6 very bold corruption excuses from Chinese officials

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For the Wall Street Journal’s China Realtime blog, Russell Leigh Moses of the Beijing Center for Chinese Studies, recently compiled various quotations published in Chinese state media from public officials convicted of corruption or embezzlement trying to explain and justify their actions, often pretty audaciously. Here are some of them…

Good Manners

A former vice-mayor in the city of Meishan in China’s southwest Sichuan province:

Declining to go with the flow, according to this official, “wouldn’t have been good for my work, and it would have rendered further promotion out of the question.”

 
Tan Xinsheng, former deputy mayor of Tongnan in the megacity of Chongqing:

“My motive wasn’t for the money itself, but because it’s normal job behavior to accept gifts and payments when offered them…”

 

For the Good of the Nation

A former deputy governor in Shandong province:

… the official declared that nearly all of the money he accepted [5.6 million yuan] had simply been set aside – and that he was in principle saving money for the country.

 

What Else Are Best Friends For?

A vice mayor from Shanxi province:

…accepted 2 million yuan because he thought the person bribing him merely wanted to be close friends and that the money was a reflection of the two of them “hitting it off,”

 

Study Abroad

Xu Jing, teacher, Beijing University for Industry:

She embezzled more than 9 million yuan, and used a third of that amount to fund her daughter studying abroad. […] Xu maintained that using the money to send her daughter overseas to study was compatible with “the national program to nurture talent for the country” and therefore shouldn’t be considered corruption.

Retirement Plan

Liu Tienan, former deputy director of the National Development and Reform Commission:

…Liu said that he accepted bribes because he had anxiety about old age and was worried about where he would end up after he retired.

 

August 5, 2015 – Arsenal For Democracy 137

Posted by Bill on behalf of the team.

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Topics: Presidential megadonors; Medicare turns 50; Nigeria asks US to close banking loopholes. People: Bill, Kelley. Produced: August 2nd, 2015.

Discussion Points:

– Presidential megadonors: Like ridiculously expensive racetrack betting and equally pointless.
– Medicare just turned 50: Are Democrats pushing Big Ideas in public policy these days?
– Nigeria’s new president argues closing corruption loopholes in the West is more helpful than loans.

Episode 137 (51 min):
AFD 137

Related Links

NYT: Million-Dollar Donors in the 2016 Presidential Race
The Hill: President: ObamaCare finishes job started by Medicare, Medicaid
NASI: Medicare’s Efforts to Reduce Disparities
AFD: Buhari: Anti-corruption help better than foreign aid, for Nigeria

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RSS Feed: Arsenal for Democracy Feedburner
iTunes Store Link: “Arsenal for Democracy by Bill Humphrey”

And don’t forget to check out The Digitized Ramblings of an 8-Bit Animal, the video blog of our announcer, Justin.

Buhari: Anti-corruption help better than foreign aid, for Nigeria

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Nigeria Pulse — “Buhari: President says Nigeria doesn’t need foreign aid”:

President Muhammadu Buhari has appealed to the United States to help Nigeria by plugging all the loopholes that had been used by government officials to steal the country’s assets rather than help with foreign aids.

According to Mallam Garba Shehu, Senior Special Assistant to President Buhari on Publicity, “Buhari did not go to the US with a begging bowl. We don’t need foreign aid, he told everyone, so long as the world powers can help us plug all the loopholes that had been used to steal our assets.”

 
A novel approach, maybe; I don’t know how extensively this suggestion of substituting banking reform for development aid has been pitched before. And it’s quite correct that the West’s blind eye toward revenue embezzlement and asset theft schemes (using Western companies and finance networks) is a major scourge on African development in general:

Hundreds of Western multinational firms involved in concession trading in Africa are registered in traditional tax havens, such as the Cayman Islands, the British Virgin Islands and Bermuda.

Or they are associated with shell companies registered in the United Kingdom, or are directed via financial entities in Switzerland and the United States.
[…]
If the most powerful industrial countries take steps to curb tax evasion and the use of opaque holding companies by multinational resource extraction firms and by their African business partners (often in government positions) it would do much to benefit African citizens.
[…]
Court actions in France and U.S. Senate investigations have brought to light vast luxury investments held in France and the U.S. in the names of some African leaders and members of their families.

More importantly, Western governments could start to force banking institutions to implement existing “know your customer” rules. These would compel African leaders to demonstrate how they obtained their fortunes and on what basis the cash is rightly their own.

 
But I fear Buhari’s appeal is unlikely to be effective on a significant scale, given how little we’ve done against tax avoidance, accounting games, and financial network loopholes that severely hurt us too (albeit at a smaller proportion). If we won’t fix something for ourselves, the odds are sadly even lower that we will fix it anyone else — even for Africa’s largest economy.