http://www.voanews.com/content/corruption-concerns-tain-buregeoning-china-africa-trade/2432469.html
Corruption Concerns Taint Burgeoning China-Africa Trade
Jeffrey Young
September 01, 2014 7:00 AM
Africa’s mineral, timber and oil wealth has been highly sought – and fought
over – for years, mainly by Western nations.
Today, though, Africa has become a strong trading partner for China, which
surpassed the United States in 2009 and whose bilateral trade reached $210
billion in 2013.
In February, China’s President Xi Jinping hosted Senegal's President Macky
Sall and told him this fast-growing trade relationship with Africa "stands
witness to the endlessly renewed vitality of Sino-African friendship, to
the scale of the potential for co-operation" and "Sino-African strategic
partnership."
Chinese Premier Li Keqiang has announced plans to double bilateral trade
with Africa to $400 billion a year by 2020.
But there are concerns some of that trade may be illicit.
China aggressively pursues and locks in economic opportunities using,
according to analysts, suitcases full of cash when it is needed to close
the deal. Another tactic used by Beijing is the "gift" of building and
donating public works projects to African states that have raw materials
and other things that China wants access to.
Summit addressed corruption
At a summit on Africa hosted by the Obama administration in August in
Washington, corruption was high on the agenda. And, there were complaints
that Beijing is not adhering to international anti-corruption conventions
as it secures African business.
Meanwhile, U.S. corporations are bound by the U.S. Foreign Corrupt
Practices Act and also the United Nations Convention Against Corruption
(UNCAC). It is a crime for a U.S. entity to bribe or otherwise improperly
gain business overseas. Because of that, the U.S.-Chinese economic
competition in Africa can be described as an uneven playing field, analysts
say.
"China is observing the United States and increasingly, many other wealthy
western nations in the OECD [Organization for Economic Cooperation and
Development] such as Germany enforce their anti-bribery laws," said
anti-corruption specialist Andrew Spalding at the University of Richmond.
"China knows that this gives its own companies a competitive advantage.
Accordingly, the more the west enforces anti-bribery laws, the greater the
incentive for China not to enforce."
Spalding said that "China has passed a foreign bribery prohibition to
satisfy its requirements under the UNCAC, but UNCAC does not require
enforcement. It would seem [that] neither cultural or economic factors, nor
its membership in UNCAC, will pressure China to address foreign corruption."
Corruption abounds in Africa
But China has a fertile corruption field in Africa. The continent has long
suffered from rampant corruption.
When nearly 50 African leaders came to Washington in August, U.S. Vice
President Joseph Biden was blunt in his remarks about corruption’s endemic
prevalence on the continent.
"It’s a cancer in Africa," Biden said. "It not only undermines but prevents
the establishment of genuine democratic systems. It stifles economic growth
and scares away investment. It siphons off resources that should be used to
lift people out of poverty."
Sub-Saharan Africa's record suffers
Sub-Saharan Africa’s anti-corruption record is, overall, dismal.
The good governance group Transparency International’s latest global
Corruption Perceptions Index, released in December 2013, reported that of
the 20 most corrupt nations, half are in sub-Saharan Africa. Somalia came
in at the very bottom, with Sudan, Chad and Eritrea ranking very low on the
index.
Some in business circles have proposed that the United States scale back on
its anti-corruption measures so as to enable American companies to more
aggressively compete for African business.
Spalding stands steadfast against that idea.
"We cannot, and will not, repeal or scale back anti-bribery laws," he said.
"Foreign bribery prohibitions are here to stay."
Spalding proposes "encouraging and assisting African governments in
enforcing their own domestic bribery laws through joint enforcement and
other forms of institution building."
Joseph Siegle, with the Africa Center for Research Studies at the National
Defense University in Washington, said illicit activity causes Africa to
ultimately wind up with less .
"In a competition involving corruption," he said, "there will always be
actors willing to take the process one rung lower. This process would
simply accelerate a race to the bottom. … With these actors, however, there
is a risk premium on the part of African governments and business partners.
There is often a poorer standard of performance, lower reliability and
fewer avenues of recourse if there are disagreements over a contract.
"Business transactions with international partners upholding the rule of
law, in contrast, are more apt to be sustainable and bring African
businesses into other corporate networks, creating more opportunity over
the short and long term," he said.
William Fanjoy, with the U.S. Commerce Department’s U.S. Export Assistance
Center, said American business attributes ultimately trump shady deals with
others.
"U.S. companies can never 'sweeten’ a deal in Africa, but they do offer
African partners quality, responsiveness, financing, training and a
long-term business relationship," Fanjoy said. "After years of getting to
know Chinese poor quality, we find that African companies are seeking out
known American quality and reliability."
African countries split on convention
While the United States and China, along with other nations, compete for
Africa’s wealth and business, the continent has taken steps to address
illicit economic activity.
The African Union in 2003 forged its Convention on Preventing and
Combatting Corruption, which so far has been ratified by only 35 of the
AU’s 54 members. Transparency International notes, however, that many of
those signatory states "have not taken action to implement the necessary
legal frameworks" supporting the AU’s Convention.
In 2012, a high-level anti-corruption working group was launched by the
United Nations and the African Union. The goal is to find ways to curb
illicit financial flows from sub-Saharan Africa, which the good governance
group Global Financial Integrity says took 5.7 percent of the region's
collective GDP. This U.N.-AU group is expected to issue a report on its
strategies for fighting illicit activity later in 2014.
Transparency International puts the responsibility for combatting
corruption not only on those African states but also on the G20 – the
world’s top 20 nations measured by their economies.
The group is calling for adopting mandatory reporting standards for the
natural resource sector for all G20 countries, and country-by-country
reporting by multi-national companies.
This would show where the money for oil, gas, logging and precious minerals
goes. T-I says "only if leaders and civil society work together to enforce
tough laws, and share information on illicit financial flows, will these
latest commitments stop the pillaging of Africa."
Africa attracts China
As for China, Africa is a continuing lure.
Former New York Times reporter Howard French, who wrote a book on the
burgeoning China-Africa ties, reported that "China’s Export-Import Bank
extended $62.7 billion in loans to African countries between 2001-2010, or
$12.5 billion more than the World Bank."
U.S. President Barack Obama said this summer that China can be good
business for Africa, as long as trade is above board.
"My view is the more the merrier," he said. When I was in Africa, the
question of China often came up, and my attitude was every country that
sees investment opportunities and is willing to partner with African
countries should be welcomed.
"The caution is to make sure that African governments negotiate a good deal
with whoever they’re partnering with," Obama said. "And that is true
whether it’s the United States; that’s true whether it’s China."
________________________________
Jeffrey Young
Jeffrey Young came to the “Corruption” beat after years of doing news
analysis, primarily on global strategic issues such as nuclear
proliferation. During most of 2013, he was on special assignment in
Baghdad and elsewhere with the Special Inspector General for Iraq
Reconstruction (SIGIR). Previous VOA activities include VOA-TV, where he
created the “How America Works” and “How America Elects” series, and the
“Focus” news analysis unit.
Received on Tue Sep 02 2014 - 13:06:31 EDT