Multinational transactions drive 60% of illicit financial flows from Africa – Lawyer

Grace Mbogo
Grace Mbogo

Every year between $50 to $60 billion are illicitly moved out of Africa and activities of transnational companies make up 60 per cent of the factors that drive the activities.

While many African countries are party to several sub-regional, continental and global conventions, the region has the highest illicit financial outflows to GDP ratio, with transactions by multinational companies believed to account for 60 per cent, criminal activities 35 per cent, and corruption is five per cent.

A Kenyan lawyer, Grace Mbogo has therefore suggested that African countries should build the capacity of lawyers and law firms in tax law, fighting corruption, asset recovery, legislative drafting of laws and other law practice areas relating to illicit financial flows, to help in fighting the phenomenon.

Speaking on strengthening legal instruments at a sub-regional workshop in Accra on illicit financial flows, the Programme Associate in Economic Governance at the Pan African Lawyers Union – a continental umbrella union of various regional lawyers’ associations – said lawyers would need capacity building as most of them are not experts in tax matters and corruption.

A high level panel on illicit financial flows in Africa, established in 2012 and chaired by former South African President Thabo Mbeki, had among its recommendations that Africa strengthens legal resilience against illicit financial flows that are costing the continent hugely.

“We need to build the capacity of legal practitioners so that when that legislative drafter is going to draft a law on illicit financial flows, they know what to draft; they know what multinational corporations do to evade taxation and they will have an airtight legislation that does not have any gaps”, the lawyer said.

She said legislators would also need to amend laws with existing gaps in them, such as the AU Convention Against Corruption which does not have specific provisions to cater for illicit financial flows.

Additionally, Ms Mbongo suggested that African lawyers should be more involved in international level litigation so as to develop judicial precedents which could become a source of legal reference for adjudication in matters relating to illicit financial flows.

The lawyer also highlighted the need for African countries to domesticate and internalize their commitments under existing regional and global conventions against corruption and illicit financial flows.

The continental and sub-regional conventions include the AU Convention Against Corruption, the AU Special Declaration on Illicit Financial Flows, EAC (East African Community) Draft Protocol on Preventing and Combating Corruption, ECOWAS Protocol on Corruption and the Yaoundé Declaration on combating Illicit Financial Flows from Africa.

Among the global and inter-continental conventions are the UN convention Against Corruption, UN Declaration against corruption, EU Convention Against Corruption and the OECD (Organization for Economic Cooperation and Development) Convention on Combating Bribery in International Business Transactions, and the OECD Guidelines on Transfer Pricing.

By Emmanuel Odonkor

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