Foreign Policy Blogs

Show Me The Money

One heart-warming story I have been following has been the epic international showdown between the IRS and the Swiss banking giant UBS. Until recently, if you were to ask any American to name a “good” country, Switzerland would probably have come to mind first, because of its role in World War II. More recent events bracingly remind us that there is a difference between neutrality and goodness. Sometimes neutrality can foster and protect wrong too.

So the IRS finally got the inside track (an internal whistle-blower) on the secret UBS bank accounts of thousands of Americans (and their hundreds of millions of dollars), forcing the bank to divulge depositors’ names, and playing chicken with the tax cheats — Do we have your number? Do you feel lucky? Pay up or else!  More than 7500 Americans fessed up to avoid prosecution . They had banks accounts in 70 countries.

If only we could do that with all the crooks in the world.

Last week, I went to an event at NYU on African economic development. Ghanaian economist Yaw Nyarko, who is co-director at NYU’s Development Research Institute (with famed anti-aid economist, William Easterly) was rightly lamenting the fact that while it’s great to catch American tax cheats, it would completely change the dynamics of the developing world, especially in Africa, if there was a way to track the illegal bank accounts of those dictators, crooks, and cronies who have plundered their countries’ coffers of either aid monies or especially, resource revenues. For example, up to $400 billion in oil money has been stolen in Nigeria alone.

In some socially conscious circles, offshore or complicit banks that hide or launder ill-gotten gains have assumed the role of chief villain once reserved for oil companies. To find and return the money would make a huge difference in the fortunes of these countries, but such initiatives have been slipping lately.

In Nigeria and Indonesia, anti-corruption commissions have been thwarted, its people threatened. Most countries don’t even try. When British Petroleum (BP) agreed to transparency, the Angolan government forced them to back down.  Last week, anti-corruption groups in Zambia organized a honk-a-thon to protest the state’s refusal to pursue former President, Frederick Chiluba’s surprising acquittal in a corruption trial this summer. (Honkers were arrested.)

Of course, it isn’t just oil money. Michela Wrong’s book,  It’s Our Turn to Eat, tracks the entrenched corruption (from stolen aid and other revenues) that fanned the flames of extreme ethnic violence in Kenya after the flawed 2007 election. Earlier this year, NGO Global Witness released its report, Undue Diligence: How Banks Do Diligence with Corrupt Regimes. )

Transparency initiatives like Publish What You Pay and Extractive Industries’ Transparency Initiative have spent eight years struggling to get extraction companies and governments to open their books and account for the money, but to little avail.

Ironically, it’s not hard to track such wire transfers or deposits. |Surveillance equipment and banking technology are easily sophisticated enough to track suspicious financial movements.  It just takes political will, which has been sorely lacking from offshore banks and corrupt governments and most noticeably, Western countries. Finally, this September, in Pittsburgh, the G20 asked the international FATF (Financial Action Task Force), which is supposed to set banking standards, to make anti-corruption a higher priority.

In another blog, I’ll write about new US initiatives to force the issue of corruption, the multinationals, and international law and how they might backfire.



Jodi Liss

Jodi Liss is a former consultant for the United Nations, the United Nations Development Programme, and UNICEF. She has worked on the “Lessons From Rwanda” outreach project and the Post-Conflict Economic Recovery report. She has written about natural resources for the World Policy Institute's blog and for Punch (Nigeria).