FrontPageAfrica (Monrovia)

20 June 2013

Liberia: Why Is Liberia Playing With Fire? Illicit Financial Flows Report Warrants Serious Attention

editorial

Photo: Vanguard
Banks in Nigeria.

WHEN FRONTPAGEAFRICA recently began raising questions about the possibility that laundered money could wind up in Liberia should the government proceed with its quest to accept funds from Equatorial Guinea for the refurbishing of the Roberts International Airport, some skeptics wondered why?

EQUATORIAL GUINEA is no doubt a small but rich nation whose people live in abject poverty. But that's not where the problem lies.

DESPITE ITS massive wealth, the country has come under scrutiny over allegations that revenue for the country are being siphoned overseas in accounts of Obiang's family. In 2012, French authorities issued an arrest warrant for Teodorin Nguema Obiang Mangue, son of the President, after he had failed to appear at a French money-laundering investigation in order to answer questions about how he managed to spend millions of dollars despite earning a modest government salary.

OUR CONCERNS outlined the possibility that some of those funds gathered illegally could be used or laundered into Liberia.

NOW A NEW report by the United Nations High Level Panel on Illicit Financial Flows from Africa backs up our concerns.

THE REPORT which lists Liberia among a number of African countries being used as laundered point for illicit funds, validates our concerns that the post-war government should begin taking a closer look at how funds are being processed and sent overseas.

THE REPORT NOTES: "These offshore banking centres also operate in Africa in the Seychelles, Mauritius and Liberia, and to some extent Botswana, which provide offshore financial services to a variety of domestic and international clients. To what extent these offshore financial centres facilitate outflows of illicit funds from the continent will need further research."

THE REASON for this is simple. The exchange rates in Liberia continues rise equally or possibly surpassing the days of the civil war when the rates fluctuated between 77 and 80 Liberia dollars to one U.S. dollar.

THE ECONOMY is currently at a standstill because those languishing at the bottom of the economic ladder are not feeling the economic prosperity the government's financial sector is professing.

THE CENTRAL Bank is doling out cash to market women and banks are aiding small businesses but yet, the economy is not moving, finances are tight and no one seems to know what is going on.

THE ILLICIT FUNDS' REPORT suggests that Liberia and other countries are serving as a hub for offshore banking centers used by multinationals for tax havens to set up shell companies that can be used for a variety of tax evasion schemes. "These offshore banking centres also operate in Africa in the Seychelles, Mauritius and Liberia, and to some extent Botswana, which provide offshore financial services to a variety of domestic and international clients. To what extent these offshore financial centres facilitate outflows of illicit funds from the continent will need further research," according to the UN High Level Panel report on Illicit Financial Flows from Africa.

THE REPORT AMONG other things suggests that Africa lost about US$ 854 billion in illicit financial flows over the 39 year period (1970-2008). "Corresponding to a yearly average of about US$ 22 billion. "The trend has been increasing over time and especially in the last decade, with an annual average illicit financial flow of US$ 50 billion between 2000 and 2008 against a yearly average of only US$ 9 billion for the period 1970-1999. However, these estimates may well be short of reality as they exclude various forms of IFF such as proceeds from smuggling and mispricing of services."

THE UN REPORT confirms a recent assertion by former South African President Thabo Mbeki, who declared during a visit to Liberia recently that Africa is losing billions each year to illicit capital outflows in development. Addressing members of the 53rd Liberian Legislature in a joint session Tuesday in Monrovia, he said that the rate at which Africa loses development money through illegal means is alarming. Said Mr. Mbeki: "We are losing a lot of this capital that we need as a result of everything we throw out of the continent through illegal means and there is an estimate that the continent loses annually at least fifty billion dollars through illicit capital outflow. Now you can compare that to something like US$25 billion that comes into the continent as a result of development assistance."

WHAT LIBERIA AND its people are failing to realize is that any illegal money which enters this country has the potential to plunge this country into another civil war.

IF THE CENTRAL BANK, the Liberian government and the various financial institutions do not put their houses in order, we could wake up one morning and find everything we have fought over the past few months and years to restore peace and economic sanity would have been wasted.

NOW IS THE time to begin implementing regulations that will keep dirty money from entering our country and illegally-obtained funds from heading to accounts overseas.

THE REASON the economy is in a mess is not only limited to the fact that the budget had a shortfall but because the money is not flowing in the economy. Those at the bottom of the economic ladder are not feeling and enjoying the wealth.

AFTER MORE than a decade of war, officials and relevant stakeholders must not relent or take the issue of money laundering and illicit funds flow lightly. Doing so could jeopardize Liberia's economic outlook, make this nation a haven for terrorists and dampen our resolve to restore economic sanity on our rugged road to post-war redemption.

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