May 31, 2011

Can mobs of the millennium be trusted to build The Renaissance Dam?

by Ephrem Madebo -Power does not corrupt man; fools, however, if they get into a position of power, corrupt power- G. B. Shaw

When I first heard about His Imperial Majesty Haile Selassie’s “billion” dollar Swiss Bank account, I was a naïve 9th grader who has no idea what a million birr was let alone a billion dollar. Actually, I was a green country boy who never heard financial amounts over a couple of thousands and who never new what a television set looked like. Thanks to God, today TV is the last thing I see before I go to bed and it is the first thing I see every time I wake up.

Today, I hear the phrase “trillion dollars” every day – but tragically; I also hear about leaders in my country who steal tens of billions of dollar from poor and hungry citizens. Emperor Haile Selassie was already a rich man when he was born, and he was raised to be richer; moreover, it took Haile Selassie more than 45 years to stash multibillion dollar in Swiss bank account.

The current leaders of Ethiopia were leaders of a rag-tag guerilla force who did not have a property worth mentioning when they assumed power in 1991. When they set their foot on the streets of Addis Ababa some 20 years ago, none of the current TPLF leaders had a spare pair of shoe. Today, they frequently go to Paris and Rome to buy shoes and apparel. Twenty years ago, none of them had a bank account more than may be a couple of thousands of Ethiopian birr, today, each of the TPLF leaders, their families, and their friends have a fat foreign bank account [in Euro, UK Pound, and US dollar]. They also have financial securities, real estate companies, and mansions in upscale residential areas of the UK, Germany, France and the United States. Mind you these people are public officials; therefore, their income is public information. I’m sure none of them, including the prime minister who has an “endless contract” with the Ethiopian people earn more than $120, 000 a year. So how did these people manage to be multi-billionaires?

In May 2011, an incredibly shocking report by Global Financial Integrity [a report commissioned by the UNDP], overwhelmed the entire world; especially, people in developing countries. The report revealed the scale and composition of illicit flows of financial resources from poor countries to the big banks of the developed countries. On page 13 of this report, Ethiopia is cited as the top 4 countries in Africa [9th in the world] from where a huge sum of fund is transferred illegally into the banks of the developed world. Thanks to the muggers from ‘Dedebit’, Ethiopia, one of the poorest countries on earth that usually leads the bottom pack in poverty indices, is now among the top ten countries in yet another very embarrassing statistics.

According to the report, a staggering 8.4 billion US dollar has over the past two decades been illegally and corruptly appropriated from the world’s poorest country [Ethiopia], almost all of it by a group of ethnically assembled politicians whose political ideology has no demarcation between a political party, the state and the economy. The word corruption is synonymous with the continent of Africa and Ethiopia is no exception. The exception in this case is – the scale of the corruption and the amount of public resources illicitly converted to private ownership and exported to international banking centers and financial havens. Mind you, Ethiopia is an aid dependent and non- oil exporting poor country where a good portion of the population depends on food-aid. So how did this very poor country that almost always finds itself at the bottom of development index tables, now finds itself at the top of a corruption table? Well, we all know that the TPLF gangs are inherently corrupted ethnic Kleptocrats, but is this all that we have to say? What is the role of donor nations here? The origin of the bulk of the 8.4 billion dollar is the Treasury of England, and after a quick round trip, its destination is commercial banks in England. So what exactly is the UK doing here? Is it helping Ethiopia? Or this is simply another kind of banking bailout?

According to the UNDP commissioned paper, nearly 65 percent of the illicit financial flows from poor countries are through trade mispricing. Therefore, in the case of Ethiopia, this simply means that out of the total 8.4 billion dollar, 5.4 billion dollar was transferred into the individual accounts of foreign banks through a process known as trade mispricing or re-invoicing. What about the other 3 billion dollar? Well, the destination and the actors are the same; but the 3 billion dollar was shipped to foreign banks by corrupt TPLF/EPRDF party members and their close associates. By the way, how big is 8.4 billion dollar and what is trade mispricing?

Trade Mispricing

Trade Mispricing is a phenomenon known as “Re-invoicing”, and re-invoicing is a dishonest commercial practice that takes place when goods are exported from one country under one invoice and then the invoice is redirected to another low-tax country where the invoice price is altered. The revised invoice is sent to the importing country for clearing and payment purposes. In the case of Ethiopia, by insincerely overpricing imports or underpricing exports, trade mispricing shifts profits out of Ethiopia. This is not a windfall shift that could take any direction at any given time. This is a constant unidirectional movement of money. In our case, since trade mispricing redirects tax revenue that Ethiopia could have earned; the shift can be considered as the transfer of money from the Ethiopian treasury to the big banks of Europe.

There are many factors that facilitate such a massive amount of financial laundering, corruption, and political misconduct to take place in Ethiopia. Some of the main factors as enumerated by the rare voice of truth from Addis Ababa [Eskinder Nega] are: feeble rule of law; suffocated civil society; suppressed free media; nominal judicial independence; patronage based civil service, absence of a democracy with checks and balances.

As we all know, Ethiopia’s 86 billion [PPP] dollar economy is dominated by a tribally owned economic conglomerate called EFFORT that dominates the import and export sectors of the nation. In fact, companies owned by EFFORT are key players in every sector of the Ethiopian economy. Unlike many companies in the private sector, EFFORT companies have no pressure or fear of the competition because they have the political baton to kill the competition before it starts. The naïve West and donor nations consider EFFORT as a privately owned company. But, the truth is that, there is no difference between EFFORT and the ruling TPLF party- they both control Ethiopia. TPLF is the political arm whereas EFFORT is the economic arm of the ruling minority regime. All in all, EFFORT is primarily responsible for public corruption in Ethiopia and trade mispricing that allowed the theft of 8.4 billion dollar form poor Ethiopians.

How much is 8.4 billion dollar?

Once a famous United States Senator form Illinois said: a billion here, a billion there, and pretty soon you’re talking about real money. United States, China, or Japan – by any standard; 8.4 billion dollar is a lot of money. In Ethiopia, where 40% of the population lives on less than a dollar a day, 8.4 billion dollar is an enormously huge amount of money. The quote of the humorous senator reminded me a recent doodle on aigaforum by a hallucinating writer who tried to tell us how quickly the quote of financial amounts is changing in Ethiopia form millions to billions. The naïve writer seems to be overjoyed with his own narratives because to him the change of tone form “millions to billions” signifies Zenawi’s gift to Ethiopia- which is “economic growth”. What about the theft of 8.4 billion? Would that make Zenawi and his thugs “Muggers” of the millennium? Or “የህዳሴዉ ሌቦች”!

What does 8.4 billion dollar or 138.6 billion birr look like? In today’s TPLF controlled Ethiopia, a million birr is tossed around by big rollers like a candy treat. A million birr could be a big deal for a working person that sweats the whole day to earn less than 50 birr [$3], but for the TPLF party members who steal in billion dollars; a million birr is just a tip. I created the following table to give the reader a sense of what exactly 8.4 billion dollar looks like. Most of the values in the table are estimated in a very generous way. For example, $150,000 which is 2.4 million birr can build more than one high school in most parts of Ethiopia. Taking this into consideration, I’m sure the table will shade a light to many clueless people like me who have no idea of what 8.3 billion dollar can do.

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