5 March 2018

West Africa: Stolen Cars, Oil Head to Ghana - Report

Ghana and two other countries serve as the most popular destinations for stolen cars, a new report by the Organisation for Economic Co-operation and Development (OECD) reveals.

In addition, Ghana is associated with trafficking in three major drugs and oil theft.

According to the report, "although it is not possible to fully identify the scale of the flow of counterfeits, anecdotal evidence suggests it is rising.

"These practices are not unique to West Africa; the discovery of a large trafficking ring revealed that the most popular destinations for vehicles are Ghana, Gambia and Nigeria."

This OECD (2018) report is titled: Illicit Financial Flows: The Economy of Illicit Trade in West Africa" and published under the responsibility of the Secretary-General of the OECD.

The magnitude of the stolen cars business in Ghana, Gambia, and Nigeria appears to be influencing the arrival of cars in other countries.

"For example, the rate of Benin's imports of second-hand cars rose from 200 000 vehicles per year in 2010 to 314 000 in 2014. Around 80-90% of these vehicles go to Nigeria; it is likely that a number of transactions are illegal, and that Benin and Togo compete to smuggle vehicles into Nigeria," authors of the OECD referenced INTERPOL.

According to the report, Asia and Europe are also implicated. "Cars are stolen from markets in Europe, most notably those with easy port access, although some vehicles are stolen from landlocked states. In an impressive display of logistical capacity, a car stolen in Europe can take less than 24 hours to arrive in West Africa for resale."

Why West Africa?

"This report looks beyond specific countries to capture illicit financial flows (IFFs) in the West African region. It zeroes in on illicit trade to illustrate the larger picture: criminal activity as a source of IFFs, its relationship to development and the challenges it poses for governance," according to Phil Mason, Co-chair of the Anti-Corruption Task Team and Senior Anti-Corruption Adviser at UK Department for International Development, and Jorge Moreira da Silva, Director, Development Co-operation Directorate of the Organisation for Economic Co-operation and Development.

They say that the focus on West Africa, and for that matter, Ghana is because several countries in the region post extremely low development indicators, have weak state institutions and present capacity gaps for regulation. "As in many developing countries, a large share of economic activity takes place in the informal economy. Not everything informal is bad: in fact, the informal sector often provides precious livelihoods, particularly for the poor.

"Yet what happens informally happens outside the checks and balances of regulatory systems.

"As a result, illicit or criminal activities may flourish more easily, with negative implications for governance, peace, stability and development. Under these conditions, resource diversion and illegal acts affecting a country's development can thrive, damage the integrity of institutions, and distort political governance in ways that disrupt the relationship between citizens and the state."

The report under discussion feeds into a strategy of the OECD Development Co-operation Directorate to increase data and evidence in the area of IFFs to help address the risks they pose to development. This strategy started with the publication of Illicit Financial Flows from Development Countries: Measuring OECD Responses. Two other publications followed, Few and Far: The Hard Facts on Asset Recovery, and Tracking Anti-Corruption and Asset Recovery Commitments, tracing the efforts of OECD member countries to increase the investigation and repatriation of stolen assets to their countries of origin. So this new report, Illicit Financial Flows: The Economy of Illicit Trade in West Africa, builds on the first three in the series, focusing on West Africa.

Institutional partners from the region - the African Development Bank, the Intergovernmental Action Group on Money Laundering in West Africa and the New Partnership for Africa's Development - provided access to local knowledge and networks, helping to understand the issues in their context. The World Bank contributed unique expertise and knowledge on the financing of terrorism.

Oil theft

The report also links Ghana to oil stolen from neighbouring Nigeria.

According to the report, the International Energy Agency (IEA) estimated in a 2014 report that oil theft in Nigeria amounted to 150 000 b/d; this would comprise a loss of over USD 5 billion per year - a sum that would fund access to electricity for all Nigerians by 2030.

"The more professional bunkering operations are highly armed and linked to foreigners. These include Moroccans, Venezuelans, Lebanese, Chinese and Russians, who own ships that load crude oil and deliver it for refining to Ghana, Cameroon and Côte d'Ivoire before transferring it to other markets."

Drugs

On the drugs, the OECD reports that since 2011, West Africa has become a prominent region for methamphetamine manufacturing. In that year alone, five methamphetamine labs were discovered and dismantled in Nigeria.

"According to seizure reports, methamphetamine has been trafficked from West Africa, either directly or through South Africa, to markets in Asia and Europe (UNODC, 2014b).

"Between 2007 and 2012, the highest levels of seizures of methamphetamines were recorded in Niger, followed by Benin, Ghana and Côte d'Ivoire. This indicates that both land and sea routes are used to disperse the drugs following their production in Nigeria and Ghana.

"In 2010, the value of the methamphetamine drug trade in the region was estimated at USD 330 000 (Bavier, 2013)."

Similarly, the innovation and relentless criminal entrepreneurism of the cocaine trade is particularly well documented. West Africa has gained a reputation as a safe haven for cocaine traffickers, and nearly all West African states have been accused of ties to the cocaine trade, the report says.

"Seizure data between 2007 and 2011 indicated that most of the cocaine flow is channelled through the coastal states of West Africa, with corridors focusing on two hubs. Ghana is the entrance point of the southern locus, through which cocaine is taken to Togo, Benin and Nigeria before being shipped to consumption markets... "

Quantifying IFFs

Although previous research has largely focused on capturing the volumes and sources of IFFs, and on identifying the commercial practices that contribute to them such as trade misinvoicing, tax evasion and avoidance, and transfer pricing, this OECD publication takes a different approach by seeking to build the evidence basis on criminal and illicit economies, the IFFs these economies generate, and their impact on development.

The United Nations Economic Commission for Africa's High Level Panel on Illicit Financial Flows has estimated that illicit financial flows (IFFs) from Africa could amount to as much as US $50 billion per year. Although the figures on IFFs are heavily disputed, current analyses agree that IFFs exceed the amount of ODA provided to Africa.

There are various estimates of the losses Ghana incurs as a result of illicit fund flows.

According to civil society, conservative estimates put the level of illicit financial flows from Ghana at $14.6 billion (equivalent to 61.6 billion cedis) for the 10 year period 2002 - 2011, with current annual losses estimated at an average $702 million (2.96 billion cedis).

Last year, the Minister for Lands and Natural Resources, John Peter Amewu, alleged that in 2016, about $2.3 billion worth of gold left Ghana through illicit mining.

Also, the Customs Division of the Ghana Revenue Authority (GRA) reportedly busted 12 boxes of gold bullion that weighed about 480kg at the Kotoka International Airport, valued at US$18 million

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