ENHANCING THE WAR AGAINST ILLICIT FINANCIAL FLOWS (IFFs) IN EAST AFRICA

Transcription

1 ENHANCING THE WAR AGAINST ILLICIT FINANCIAL FLOWS (IFFs) IN EAST AFRICA Remarks by Mumo Matemu, MBS, Chairperson of the Ethics and Anti-Corruption Commission (EACC) during the Official Opening of the Kenya Session Results of Research on Illicit Financial Flows in East Africa 24 th September 2013 at Eka Hotel, Nairobi Kenya at 9.00 a.m.

2 Ms. Diarietou Gaye, World Bank Country Director, Kenya and Rwanda; Senior Officials from the World Bank; Representative of the UNDOC; Representative of the Netherlands Embassy in Kenya; Representative of the Norway Embassy in Kenya; Prof. Peter Reuter, Professor of Public Policy and Criminology, University of Maryland; Representatives from various government agencies and departments; Colleagues from the Commission;

3 Distinguished participants; Ladies and Gentlemen It is gives me great pleasure to be with you this morning as we launch this important and historic workshop whose main objective is to receive and discuss the Results of the Research on Illicit Financial Flows (IFFs) in East Africa. I am informed that today s session will focus on the results of the study for Kenya while in the next two days the focus will be on the region as a whole: this is also an opportunity for experts in this area to share experiences and present on different country specific studies. From the onset, let me commend the World Bank Institute for agreeing to the request of the Executive Committee of the East African Association of Anti-Corruption Authorities (EAAACA) which was made

4 way back in 2009 to have this study undertaken. The request to undertake the study was premised on the recognition of the fact that asset recovery is closely related to the illicit financial flows (IFFs) that are often the get-away car of corruption and other crimes. This was also due to the fact that none of the East African countries had in place a systematic method or structure to identify and focus strategically on: i) the main predicatory crimes that generate IFFs; ii) the mechanisms through which the IFFs flow; iii) their main destinations; iv) the manner in which they are hidden or invested abroad; and finally; v) the developmental consequences of such flows. Since then, the World Bank Institute has taken the lead in carrying out the study. I note with appreciation that Kenya was identified to be the

5 first country for such a case study, recognizing that she is a notable player in the financial markets of this region. In the same breath, I also thank the Ministry of Foreign Trade and Development Cooperation of the Netherlands, the Ministry of Foreign Affairs of Norway and the UNODC for enabling us to converge here to discuss the findings of the study. I have no doubt that the findings will help experts, policy makers and stakeholder institutions focusing on IFFs to formulate effective policies and strategies to address the problem of the flows. Appreciation must also go to the Government of Kenya for creating a commercial and public financial sector management climate which makes it appropriate to hold a forum like this one in the Country. Ladies and Gentlemen,

6 Today s conference comes at a critical time when there is unprecedented clamour from citizens of our nations for firm action against corruption and other crimes related to IFFs. It also comes against the backdrop of rising demands for reforms in various government institutions as well as for nations that adhere to the principles of good governance and the rule of law. For us in Kenya, we are at crucial stages of implementing various major developments in the history of our nation which have a direct bearing on combating and preventing IFFs. Some of the said developments include the following: i) We are implementing our Constitution, 2010 which ushered in a major paradigm shift in the governance of our nation bolstering the war against corruption including IFFs;

7 ii) iii) The nation has recently discovered massive minerals including coal and oil; A few days ago, we also discovered immense underground water resource aquifer in the same area where the mineral resources were discovered. The study is therefore a step in the right direction since IFFs are part of the curse that ordinarily comes along with wealth brought about by natural resources such as the ones discovered in Kenya. There is therefore no choice but for each stakeholder to reposition themselves in the war against IFFs. On our part, the Commission has employed diverse strategies aimed at combating and preventing acts that may facilitate the occurrence of IFFs at the international, continental, regional and national levels.

8 At the international level, there is now a widespread consensus that illicit flows are a major problem that is integrated into the fabric of the world economy. Nations have thus come together to collectively prevent, detect, investigate, prosecute and repatriate illicit flows through mutual legal assistance, asset recovery and other relevant mechanisms. For this reason, Kenya continues to intensify her efforts in the implementation of international, continental and regional anti-corruption initiatives through her membership to the following Associations; i) East Africa Association of Anti-corruption Authorities (EAAACA); ii) African Association of Anti-Corruption Authorities (AAACA); iii) International Association of Anti-Corruption Authorities (IAACA); iv) Network of Anti-Corruption Agencies in Commonwealth Africa.

9 In addition, Kenya has also signed and ratified the United Nations Convention Against Corruption (UNCAC) and the African Union Convention on Combating and Preventing Corruption (AUCCPC). In regard to this, I am happy to note that Kenya is currently undergoing review of its implementation of the UNCAC in order to determine any implementation gaps and work towards full compliance. Ladies and Gentlemen, IFFs have emerged as an issue of concern not only to Kenya but other developing nations in the last ten years or so. This has been the case even though transfers of the proceeds of corruption and other crimes date back to several decades. In Kenya, for instance, you may be aware of the recent reports on grand corruption involving billions of Kenya shillings. Each of these reports involved different networks of politicians, public officials as well as private business people advised by or working

10 in collaboration with lawyers, accountants and financiers within Kenya and abroad. Using the Goldenberg case as a specific example, the Kroll report refers to Much of the money being used to buy real estate in the United States and Australia while some was moved to Switzerland, South Africa, Jersey, the Netherlands, Luxembourg, Italy and the Gulf States. Assets that had been identified included expensive homes in European capitals, shares in two London hotels and cash generated partly through foreign exchange transactions at leading international banks. According to the Global Financial Integrity report, the proceeds of these and other crimes have been immense over the years, amounting to about USD5.6 Billion over four decades and equal to several percentage points of the Kenyan GDP; they have significantly reduced Kenya s

11 resources for economic development in general and impacted negatively on poverty reduction efforts in particular. Ladies and Gentlemen, You will therefore agree with me that this is a situation that ought to change. The Results of the Study we are receiving today could not have come at a better time. The findings are a critical milestone in the war against IFFs in many ways. In particular, they will help stakeholders: i) To get an in-depth understanding of the missing link in the asset recovery process, notably the channels used; the major crimes that were committed to generate them; and the perpetrators of the crimes of IFFs, their accomplices and Associates;

12 ii) To develop a multi-institutional approach in combating and preventing IFFs; iii) To help us identify and learn more about the major destinations of Kenyan IFFs to facilitate collaboration with the relevant nations in endeavours to recover the stolen assets. I therefore urge all of you to study these findings and effectively implement them in your respective institutions so as to seal the loopholes that allow, facilitate or encourage IFFs. As I conclude, I call upon all the institutions represented here today to take the session seriously and collectively strategize on how Kenya could, design an effective framework for dealing with the issues of IFFs, Asset Forfeiture and Recovery.

13 Given that Kenya could be a major destination for in-coming and flowthrough IFFs, it may be necessary to consider the following: i) Using this workshop to build networks and linkages internationally, regionally and nationally that would help us to reduce the illicit flows as well as recover a higher proportion of those that have been pilfered from the state; ii) Adopting and domesticating the research methodology that was developed and used for this study to do further research on IFFs. It is also very necessary for Kenyans to discharge their individual and collective responsibility in combating and preventing corruption in all its facets. Its only when each of us cleans their own front yards that the whole street would be clean.

14 With those remarks, it is now my singular honour and pleasure to declare this workshop officially open and wish you fruitful deliberations. Thank You All and May God Bless You, Mr. Mumo Matemu, MBS