The Star (Nairobi)

Kenya: Banks Loan People Money They Don't Have

(Page 3 of 3)

Now, do you remember the court case of one Sam Gichuru of the Power Lighting Corporation fame; he is accused by the UK government of concealing and transferring proceeds of crime amounting to over Sh900 million and depositing the money in offshore accounts (tax havens) including Jersey, UK? He has denied the criminal charge, so let us not go there; but he has admitted that it is his money that they are talking about.

Now tax havens are repositories for dirty money. It is where the corrupt hide their stolen money and where fraud money is stored. They are used for money laundering where illegal businesses clean up their money and by smugglers and con-artists to hide their stolen booty; and the wealthy use them to evade taxation; they are also useful facilities for the intelligence community, etc.

By the beginning of the 21st century, UK banks' balance sheets were worth over five times the GDP; so the question to ask is who benefits from the tax havens? Whose crime is greater, the UK government which allows these criminal activities and benefits from them or an individual who is lured by these products?

The point is that the UK banks benefited from the Gichuru deposit. And going by fractional banking, the UK banks stood to benefit not only Sh900 million but possibly by as much as Sh8 billion through fractional banking which benefit would go to the UK pool of money (in tax havens where there are hardly any banking rules the leverage can be as high as 40:1 making the Gichuru deposit potentially even more lucrative for the UK).

The deposit in Jersey is an opportunity loss to all Kenyans. If the money was in Kenyan banks, Kenyans could have had access to it to the same tune and opportunity that was presented by Gichuru to the UK people. And here lies the problem with Africa. How many Gichurus are there in Africa? Do you think there are 10 Gichurus in Africa? Perhaps 100 Gichuru's? Thousands? Whatever you think, multiply by 10 the amount you think they have stashed outside Africa and that's the potential opportunity that the motherland has lost. And that loss is directly related to malnutrition, death by curable diseases; lack of adequate educational facilities for all, inadequate clean water and power transmission, and all manner of ills that beset Africa.

It needs to be noted that assets held outside Africa by the elite far exceed the debts that African countries owe.

Through your own imagination, you will notice that those who we have given responsibility to chart our course after we broke the political and social chains of colonialism are the very ones who have turned our hands in to be chained to economic servitude and to be tethered to poverty.

And why should profit from money created out of nothing belong to private banks? Why not at the least the employees and the borrowers who have a stake? Why not the franchise of all Kenyans who as a whole toil to create the Kenyan wealth? Is not a bank an institution to merely facilitate economic/financial transactions? There are no goldsmiths or gold standards in banking anymore, so why is banking treated different from the other public institutions?

This is only a part of the absurdity of the money in finance. Have you wondered why they don't create enough of the stuff? Let us listen to the warning of Russian writer Leo Tolstoy: "Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal- that there is no human relation between master and slave.

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