On April 29, 2009, the tenants of a strip of shops and offices on Maddox Street in London’s exclusive Mayfair neighborhood woke up with a new landlord: an 11-year-old boy.
This news should have been surprising. Not only was Heydar Aliyev not yet in his teens, but he also happened to be the son of Azerbaijan’s authoritarian president, Ilham Aliyev. And yet, he had managed to become the owner of 33.5 million pounds (US$ 48.9 million) of prime commercial real estate in the heart of London.
But the tenants on Maddox Street had no chance to be surprised — because they had no way of knowing who really bought their building. And, until today, neither did the rest of the world.
On paper, the owner of the property was a company, Mallnick Holdings S.A., set up in the British Virgin Islands. The fact that it had been acquired by an associate of President Aliyev and then handed over to his young son was hidden, thanks to the Caribbean territory’s strict corporate secrecy.
The deal is just one example of the miraculous secrecy enabled by offshore finance: a thriving, global industry of formation agents, bankers, lawyers, and accountants that helps hundreds of billions of dollars worth of the proceeds of corruption, crime, tax avoidance and shady deals move undetected around the world every year.
Now, a massive leak of data pulls back the veil of secrecy on the offshore finance industry like never before. Known as the Pandora Papers, it is the broadest-yet leak of confidential financial documents, comprising nearly 12 million files from 14 companies that provide offshore services.
Coordinated by the International Consortium of Investigative Journalists (ICIJ), over 600 journalists from around the world, including more than 75 from OCCRP’s network, spent two years sifting through nearly three terabytes of documents.
The result is an unprecedented look inside the world’s shadow economy. Coming more than five years after the Panama Papers, which exposed law firm Mossack Fonseca, the latest leak ends forever the idea that abuses of the offshore system are the work of a few bad apples. Instead, the files expose a vast and often interconnected system that is feeding crises and discontent across the world.
It’s “the dark side of globalization,” Oliver Bullough, author of Moneyland: Why Thieves And Crooks Now Rule The World And How To Take It Back, told OCCRP.
For decades, major banks, law firms and accountants have worked hand in hand with the world’s biggest corporations to build a system that allows for seamless global commerce and the minimization of tax, Bullough said. As time has gone by, kleptocrats and criminals have increasingly used this system for their own ends.
“It just so happens that the same things that big corporations want — minimal scrutiny, minimal taxes, best protection for contracts and so on — are also the same things the kleptocrats want,” he said.
But while corporate tax minimization might hurt the budgets of developed countries, the worst damage is in the Global South. For a fee, offshore providers are able to create sophisticated global structures that can be used by politicians, officials and businessmen in some of the world’s poorest countries to siphon staggering amounts of money abroad. As the Pandora Papers show, service providers often prove all too willing to take on such clients.
“It’s like unleashing a tiger on an island full of flightless birds,” Bullough said. “It’s obviously going to be a disaster.”
The files illustrate the truly global nature of the offshore business. It’s a hidden world in which a reported secret mistress of Russian President Vladimir Putin can get a luxury apartment in Monaco via an offshore shell company, and where the King of Jordan is able to secretly snap up real estate in London and Malibu. Again and again, the files show the ease with which money can be quietly moved around the world — including by politicians and others in positions of public trust.
From missing taxes to stolen artworks and smuggled antiquities, the Pandora Papers lays bare exactly how the offshore industry hides the fortunes of the world’s rich and infamous alike. In many cases, it has also facilitated the transfer of vast wealth from poor and developing countries to tax havens and wealthy enclaves in cities like London, where fashionable central areas have been gobbled up by politicians, officials, and their relatives. Trillions of dollars, mostly from the earnings of large corporations are believed to be stashed in offshore tax havens. Each year, tax avoidance alone is estimated to cost the world’s poorest countries $200 billion a year — far in excess of what they receive in development assistance.
The entire system is so hard to unpack in part because jurisdictions that offer corporate secrecy, such as the United Arab Emirates, are able to attract so much money, said Lakshmi Kumar, Policy Director at Global Financial Integrity, a Washington, DC-based nonprofit.
“These offshore jurisdictions act as financial centres for their region, businesses migrate there. The UAE allows for commercial disputes to be settled through English common law, they provide anonymous companies, protections for businesses,” Kumar said.
“It’s safe and convenient for business. But that is also safe and convenient for criminal actors.”
“Bringing Mischief to Mortals Silently”
The service providers whose data make up the leak are spread across the world and have decades of experience discreetly servicing high profile clients.
The largest tranche of files, just over 3.75 million in total, comes from Trident Trust Group, a firm that has operated since the late 1970s in offshore havens including the British Virgin Islands, the Seychelles, and Panama, as well as the United States and the United Kingdom.
The Pandora Papers shows Trident’s customers have included powerful people such as Bahrain’s former prime minister, Prince Khalifa bin Salman al-Khalifa, as well as Khadem al-Qubaisi, a former aide to Abu Dhabi’s royal family. Prominent businessmen, such as Alibaba’s Jack Ma, have also been clients.
The family and business associates of Azerbaijan’s leader Aliyev used Trident’s services to build an offshore-controlled empire in the United Kingdom worth over half a billion dollars in unexplained wealth. Documents show that Trident set up 84 companies in the British Virgin Islands for Aliyev’s circle — including some that received money from the Russian and Troika Laundromats, two multi-billion-dollar money laundering schemes first revealed by OCCRP. The companies were also used to secretly invest in businesses back home in Azerbaijan.
In some cases, the documents show Trident maintained relationships with clients in spite of accusations of wrongdoing. Abu Dhabi adviser al-Qubaisi remained a client of Trident years after he was accused by the U.S. Justice Department of playing a role in a multi-billion dollar fraud involving funds from a Malaysian sovereign wealth fund, 1MDB. Trident also continued to work with the family trust of Dan Gertler, an Israeli mining billionaire, years after he was accused by a U.N. expert panel of exchanging “conflict diamonds” from Africa for cash and weapons. Gertler has since been sanctioned by the U.S. government.
In a response to reporters, Trident refused to answer questions on specific cases. Instead, it said the company “is regulated in the jurisdiction in which it operates and is fully committed to compliance with all applicable regulations. Trident routinely cooperates with any competent authority which requests information.”
Other providers in the data include law firms, such as Panama’s Alemán, Cordero, Galindo & Lee, known as Alcogal, and Cyprus’ Demetrios A. Demetriades, known as Dadlaw. They also include a wide geographic spread, from Asiaciti Trust, a service provider that focuses mainly on the Asia-Pacific region, to Alpha Consulting, a firm based in the Indian Ocean nation of the Seychelles.
The latest revelations show that offshore providers make up a truly global and interdependent industry, said Rachel Etter-Phoya, a senior researcher at the Tax Justice Network.
“The celebrities, the political families are all involved. They’re all using the same service providers,” Etter-Phoya said. “The service providers work together and go after similar clients [and] the clients recommended them to each other.”
The data also contains fascinating details on another trend: the growing role of the United States as an offshore haven. Due to the central role the U.S. plays in the global banking system, the country is in a uniquely powerful position to bring secretive offshore finance to heel. But while the federal government has made recent efforts to rein in the industry abroad, many states — such as Delaware, Alaska and Nevada — have held out or are moving in the opposite direction. In recent years, lawmakers in over a dozen U.S. states have voted to expand their financial secrecy industries.
The Pandora Papers contains details on over 200 trusts set up in the U.S. in recent years. In dozens of cases, clients have abandoned more traditional havens, such as the British Virgin Islands and the Bahamas, in favor of the U.S.
The most popular destination has been South Dakota, where the past decade has seen the value of assets held in trusts reach more than $360 billion. State laws in South Dakota allow for the establishment of secret trusts which don’t have to pay a cent of tax to the state for any earnings. Unlike most states, which restrict the life of trusts to a century or less, South Dakota trusts are also “perpetual,” meaning they have no end date. This means they can continue making tax free gains and passing them on to future generations — theoretically forever.
“As a citizen, I’m so sad that my state was the state that opened Pandora’s box,” Susan Wismer, a former South Dakota lawmaker, told ICIJ.
“You Know Who”
In the coming days, OCCRP will publish a broad range of stories based on the Pandora Papers. Frequently, the documents show that the biggest beneficiaries of the offshore systems are people in power, as well as their friends and family.
Known in the industry as “politically exposed persons,” or PEPs, such people are supposed to be subject to increased scrutiny to make sure their money hasn’t come from questionable deals or outright corruption. Offshore service providers routinely say they subject such people to enhanced “know your customer” checks.
In total, 35 current and former national leaders appear in the leak, alongside 400 officials from nearly 100 countries. Among those names are former British Prime Minister Tony Blair, Chilean President Sebastián Piñera, Kenyan President Uhuru Kenyatta, Montenegrin President Milo Đukanović, and Gabonese President Ali Bongo Ondimba.
Among the revelations are details of how Czech Prime Minister Andrej Babiš, who was elected on an anti-corruption platform, used offshore companies to disguise an investment of 15 million euros in luxury property in the south of France, including a chateau. The files also show how another European leader elected on an anti-graft platform, Volodymyr Zelensky, appears to have used complex offshore arrangements to allow his family to continue benefiting from overseas business without declaring it.
The leaked files show that offshore firms sometimes appear to have taken a lenient approach to their due diligence on politically sensitive clients.
Nikola Petrović was one such customer. The Serbian citizen was the head of the country’s state-owned electricity transmission company. He was also the kum — roughly equivalent to a best man or blood brother — of the country’s autocratic president, Aleksandar Vučić. He became an owner of a British Virgin Islands company, set up in 2016, via Swiss consulting firm Fidinam and Alcogal, the Panamanian law firm.
But when setting up the company, Petrović never informed Alcogal that he might be considered a politically exposed person despite being so close to the president. Furthermore, his Swiss lawyer specifically told Alcogal that Petrović was not a PEP. However, Alcogal’s due diligence after the formation of the company uncovered his political position and asked for a bank reference letter. Documents show that the Swiss law firm pushed back on requests by Alcogal, offering instead to write the reference letter themselves. Alcogal accepted the offer. Petrović kept the company secret from Serbian officials, never declaring it as required by law with the anti-corruption agency.
Petrović did not respond to questions.
The documents show the lengths providers take to preserve their clients’ anonymity. The leak shows how Panamanian firm Alcogal and a Swiss adviser for Jordan’s King Abdullah II worked to conceal the monarch’s identity from the public. Even in emails between themselves, they referred to Abdullah using pseudonyms: the “final beneficiary” living in Jordan, or “you know who.” After the British Virgin Islands passed a 2017 law requiring companies to confidentially disclose their real owners, correspondence showed that Alcogal and the advisers discussed using a workaround in which they would have disclosed a holding company, rather than the king, as true owner to local authorities. It is unclear what they ultimately decided to do.
The king’s attorneys told ICIJ that professionals manage the king’s companies to ensure compliance with relevant legal and financial obligations. In a response to ICIJ, Alcogal said that the law does not require it to report politically-exposed people, known as PEPs, on the basis of their political ties alone. The firm said that it conducts enhanced background checks on all politically-connected individuals.
“One Set of Rules for Them”
The vast, secret flow of offshore cash isn’t just hurting the budget bottom line. Across the world, it’s also feeding discontent and undermining governments’ legitimacy.
In Lebanon, a severe banking crisis and a series of financial scandals involving the country’s business and political elite has led to sometimes violent protests. Amid electricity cuts, fuel lines, and shortages of currency, Lebanese are fleeing the country in droves.
One of the banks that has been the focus of public anger is Al Mawarid Bank, which responded to the crisis by preventing clients from withdrawing their U.S. dollar savings. When news emerged in 2020 that bank chairman Marwan Kheireddine, bought a Manhattan apartment from the Hollywood star Jennifer Lawrence, angry crowds burned a building in Beirut they believed belonged to him.
But thanks to the secrecy enabled by offshores, wealthy individuals like Kheireddine are able to hide much more.
For example, the Pandora Papers show that in 2019 amid warnings by economists of the impending crisis, Kheireddine became the owner of a British Virgin Islands company that owned a $2 million yacht. The previous owner of the yacht, Yahya Mawloud, told reporters that the vessel had been given to Kheireddine as collateral for a loan.
Kheireddine did not respond to a request for comment from ICIJ.
Lebanese remain furious with their country’s elites, who they blame for the economic chaos. Wafaa Abou Hamdan, a 57-year-old widow, told OCCRP partner Daraj that inflation had caused her life savings to fall from the equivalent of $60,000 to just $5,000. “All my life’s efforts went in vain, I have been working continuously for the past three decades,” she said. “We are still struggling on a daily basis to maintain our living” while “the politicians and the bankers . . . who seized our savings have all transferred and invested their money abroad.
Even countries that appear to have benefited from the inflow of illicit cash, like the United Kingdom, are seeing increases in inequality and local corruption as a result, said Nicholas Shaxson, the author of Treasure Islands: Tax Havens and the Men who Stole the World.
As revelations of offshore abuses by elites continue to pour out, there is a growing realization around the world that there is “one set of rules for them, and another set of rules for everybody else,” Shaxson said. “I think a lot of people grasp that viscerally.”
The good news is that greater awareness is leading more people to embrace concerted, cooperative action to work globally to reduce secrecy and close loopholes, he said.
“I’m quite optimistic for the long term. But you know, under no illusions that it’s going to be easy. Or, you know, even going to be successful.”
This story was first published by our partner OCCRP. It includes contributions from ICIJ, KRIK, Daraj, and other Pandora Papers partners.
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Moving, or Changing?
The purpose of the mass and civilizational migrations of Western Europe was the same as now: not simply to move from one point to another, but also from one type of social status to another, to change one’s social standing in relation to the country of origin.
Do we move to change, or do we move to stay the same?
That seems to depend on who we were, to begin with. In most cases, it seems we move in an attempt to become even more of whatever we think we are.
A good Kenyan friend of mine once (deliberately) caused great offense in a Nairobi nightspot encounter with a group of Ugandans he came across seated at a table. There were six or seven of them, all clearly not just from the same country, but from the same part of the country.
“It always amazes me,” he said looking over their Western Uganda features, “how people will travel separately for thousands of miles only to meet up so as to recreate their villages.
He moved along quickly.
“Most African Migration Remains Intraregional” is a headline on the Africa Centre for Strategic Studies website:
Most African migration remains on the continent, continuing a long-established pattern. Around 21 million documented Africans live in another African country, a figure that is likely an undercount given that many African countries do not track migration. Urban areas in Nigeria, South Africa, and Egypt are the main destinations for this inter-African migration, reflecting the relative economic dynamism of these locales.
Among African migrants who have moved off the continent, some 11 million live in Europe, almost 5 million in the Middle East, and more than 3 million in America.
More Africans may be on the move now than at any time since the end of enslavement, or perhaps the two large European wars. Even within the African continent itself. They navigate hostilities in the cause of movement—war, poverty and environmental collapse.
The last 500 years have seen the greatest expression of the idea of migration for the purpose of staying the same (or shall we say, becoming even more of what one is). The world has been transformed by the movement of European peoples, who have left a very visible cultural-linguistic stamp on virtually all corners of the earth. It is rarely properly understood as a form of migration.
It took place in three forms. The first was a search for riches by late feudal Western European states, in a bid to solve their huge public debts, and also enrich the nobility. This was the era of state-sponsored piracy and wars of aggression for plunder against indigenous peoples. The second form was the migration of indentured Europeans to newly conquered colonial spaces. The third was the arrival of refugees fleeing persecution borne of feudal and industrial poverty, which often took religious overtones.
Certainly, new spaces often create new opportunities, but only if the migrants concerned are allowed to explore the fullness of their humanity and creativity. The historical record shows that some humans have done this at the expense of other humans.
A key story of the world today seems to be the story of how those that gained from the mass and civilizational migrations of Western Europe outwards remain determined to keep the world organised in a way that enables them to hold on to those gains at the expense of the places to which they have migrated.
We can understand the invention and development of the modern passport—or at least its modern application—as an earlier expression of that. Originally, passports were akin to visas, issued by authorities at a traveler’s intended destination as permission to move through the territory. However, as described by Giulia Pines in National Geographic, established in 1920 by the League of Nations, “a Western-centric organization trying to get a handle on a post-war world”, the current passport regime “was almost destined to be an object of freedom for the advantaged, and a burden for others”. Today the dominant immigration models (certainly from Europe) seem based around the idea of a fortress designed to keep people out, while allowing those keeping the people out to go into other places at will, and with privilege, to take out what they want.
Certainly, new spaces often create new opportunities, but only if the migrants concerned are allowed to explore the fullness of their humanity and creativity.
For me, the greatest contemporary expression of “migration as continuity” has to be the Five Eyes partnership. This was an information-sharing project based on a series of satellites owned by the United States, the United Kingdom, Australia, New Zealand and Canada. Its original name was “Echelon”, and it has grown to function as a space-based listening system, spying on telecommunications on a global scale – basically, space-based phone tapping.
All the countries concerned are the direct products of the global migration and settlement of specifically ethnic English Europeans throughout the so-called New World, plus their country of origin. The method of their settlement are now well known: genocide and all that this implies. The Five Eyes project represents their banding together to protect the gains of their global ethnic settlement project.
In the United States, many families that have become prominent in public life have a history rooted, at least in part, in the stories of immigrants. The Kennedys, who produced first an Ambassador to the United Kingdom, and then through his sons and grandsons, a president, an attorney general, and a few senators, made their fortune as part of a gang of Irish immigrants to America involved in the smuggling of illicit alcohol in the period when the alcohol trade was illegal in the United States.
Recent United States president Donald Trump is descended from a German grandfather who, having arrived in 1880s America as a teenage barber, went on to make money as a land forger, casino operator and brothel keeper. Franklin Delano Roosevelt, the 32nd president of the United States was the paternal grandson of a trader named Warren, a descendant of Dutch settlers who made his fortune smuggling opium into China in the 1890s.
While it is true that the entire story of how Europeans came to be settled in all the Americas is technically a story of criminality, whether referred to as such or not, the essential point here is that many of the ancestors of these now prominent Americans would not have passed the very same visa application requirements that they impose on present-day applicants.
The purpose of migrations then was the same as it is now: not simply to move from one point to another, but also from one type of social status to another. It was about finding wealth, and through that, buying a respectability that had not been accessible in the country of origin. So, the point of migration was in a sense, not to migrate, but to change one’s social standing.
And once that new situation has been established, then all that is left is to build a defensive ring around that new status. So, previously criminal American families use the proceeds of their crime to build large mansions, and fill the rooms with antiques and heirlooms, and seek the respectability (not to mention business opportunities) of public office.
Many of the ancestors of these now prominent Americans would not have passed the very same visa application requirements that they put to present-day applicants.
European countries that became rich through the plunder of what they now call the “developing world”, build immigration measures designed to keep brown people out while allowing the money keep coming in. They build large cities, monuments and museums, and also rewrote their histories just as the formerly criminal families have done.
Thus the powers that created a world built on migration cannot be taken seriously when they complain about present-day migration.
Migration is as much about the “here” you started from, as it about the “there” you are headed to. It is not about assimilating difference; it is about trying to keep the “here” unchanged, and then to re-allocate ourselves a new place in that old sameness. This is why we go “there”.
This may explain the “old-new” names so common to the mass European migration experience. They carry the names of their origins, and impose them on the new places. Sometimes, they add the word “New” before the old name, and use migrant-settler phrases like “the old country”, “back east”. They then seek to choose a new place to occupy in the old world they seek to recreate, that they could not occupy in the old world itself. But as long as the native still exists, then the settler remains a migrant. And the settler state remains a migrant project.
To recreate the old world, while creating a new place for themselves in it, , such migrants also strive to make the spaces adapt to this new understanding of their presence that they now seek to make real.
I once witness a most ridiculous fight between three Ugandan immigrants in the UK. It took place on the landing of the social housing apartment of two of them, man and wife, against the third, until that moment, their intended house guest. As his contribution to their household, the guest had offered to bring a small refrigerator he owned. However, when the two men went to collect the fridge in a small hired van, the driver explained that traffic laws did not permit both to ride up front with him – one would have to ride in the back with the fridge. The fridge owner, knowing the route better, was nominated to sit up front, to which his friend took great and immediate exception; he certainly had not migrated to London to be consigned to the back of a van like a piece of cargo. After making his way home via public means, and discussing his humiliation with his good wife, the arrangement was called off – occasioning a bitter confrontation with the bewildered would-be guest.
There must have been so many understandings of the meaning of their migration to Britain, but like the Europeans of the New World, the Ugandans had settled on replicating the worst of what they were running from in an attempt to become what they were never going to be allowed to be back home.
A good case in point is the ethnic Irish communities in Boston and New York, whose new-found whiteness—having escaped desperate poverty, oppression and famine under British colonial rule on what were often referred to as “coffin ships” —saw them create some of the most racist and brutal police forces on the East Coast. They did not just migrate physically; they did so socially and economically as well.
It starts even with naming.
The word “migrant” seems to belong more to certain races than to others, although that also changes. When non-white, normally poor people are on the move, they can get labeled all sorts of things: refugees, economic migrants, immigrants, illegals, encroachments, wetbacks and the like.
With white-skinned people, the language was often different. Top of the linguistic league is the word “expatriate”, to refer to any number of European-origin people moving to, or through, or settling in, especially Africa.
According to news reports, some seven million Ukrainians fleeing the Russian invasion were absorbed by their neighboring European countries, most of which are members of the European Union. Another 8 million remain displaced within the war-torn country.
This is an outcome of which the Europeans are proud. They have even emphasized how the racial and cultural similarities between themselves and the Ukrainian refugees have made the process easier, if not a little obligatory.
This sparked off a storm of commentary in which comparisons were made with the troubles earlier sets of refugees (especially from the Middle East and Afghanistan) faced as the fled their own wars and tried to enter Western Europe.
And the greatest irony is that the worst treatment they received en-route was often in the countries of Eastern Europe.
Many European media houses were most explicit in expressing their shock that a war was taking place in Europe (they thought they were now beyond such things), and in supporting the position that the “white Christian” refugees from Ukraine should be welcomed with open arms, unlike the Afghans, Iraqis and Syrians before them.
Human migration was not always like this.
Pythagoras (570-495 BC), the scholar from Ancient Greece, is far less well remembered as a migrant and yet his development as a thinker is attributable to the 22 or so years he spent as a student and researcher in Ancient Egypt. The same applies to Plato, who spent13 years in Egypt.
There is not that much evidence to suggest that Pythagoras failed to explain where he got all his learning from. If anything, he seems to have been quite open in his own writing about his experiences, first as an apprentice and later a fellow scholar in the Egyptian knowledge systems. The racial make-up of Ancient Egypt, and its implications, was far from becoming the political battleground it is today.
Top of the linguistic league is the word “expatriate” to refer to any number of European-origin people moving to, or through, or settling in, especially Africa.
Classic migration was about fitting in. Colonial migration demands that the new space adapt to accommodate the migrant. The idea of migrants and modern migration needs to be looked at again from its proper wider 500-year perspective. People of European descent, with their record of having scattered and forcibly imposed themselves all over the world, should be the last people to express anxieties about immigrants and migration.
With climate change, pandemic cycles, and the economic collapse of the west in full swing, we should also focus on the future of migration. As was with the case for Europeans some two to three hundred years ago, life in Europe is becoming rapidly unlivable for the ordinary European. The combination of the health crisis, the energy crisis, the overall financial crisis and now a stubborn war, suggests that we may be on the threshold of a new wave of migration of poor Europeans, as they seek cheaper places to live.
The advantages to them are many. Large areas of the south of the planet are dominated physically, financially and culturally, by some level of Western values, certainly at a structural level. Just think how many countries in the world use the Greco-Latin origin word “police” to describe law enforcement. These southern spaces have already been sufficiently Westernized to enable a Westerner to live in them without too much of a cultural adjustment on their part. The Westerners are coming back.
This article is part of a series on migration and displacement in and from Africa, co-produced by the Elephant and the Heinrich Boll Foundation’s African Migration Hub, which is housed at its new Horn of Africa Office in Nairobi.
The Iron Grip of the International Monetary System: CFA Franc, Hyper-Imperial Economies and the Democratization of Money
Cameroonian economist Joseph Tchundjang Pouemi died in 1984, either poisoned or by suicide. His ideas about the international monetary system and the CFA franc are worth revisiting.
Despite being one of Africa’s greatest economists, Joseph Tchundjang Pouemi is little known outside Francophone intellectual circles. Writing in the 1970s, he offered a stinging rebuke of orthodox monetary theory and policy from an African perspective that remains relevant decades later. Especially powerful are his criticisms of the international monetary system and the CFA franc, the regional currency in West and Central Africa that has historically been pegged to the French currency—at first the franc, and now the euro.
Pouemi was born on November 13th, 1937, to a Bamiléké family in Bangoua, a village in western Cameroon. After obtaining his baccalaureate and working as a primary school teacher, Pouemi moved to France in 1960, where he studied law, mathematics, and economics at the University of Clermont-Ferrand. Pouemi then worked as a university professor and policy adviser in Cameroon and Cote d’Ivoire. In 1977, he joined the IMF but quit soon after, vehemently disagreeing with its policies. He returned to Cameroon and published his magnum opus, Money, Servitude, and Freedom, in 1980. The recently elected president of Cameroon, Paul Biya, appointed Pouemi head of the University of Douala in August 1983—then fired him a year later. On December 27th, 1984, Pouemi was found dead of an apparent suicide in a hotel room. Some of his friends and students argue he was poisoned by the Biya regime (which still governs Cameroon), while others believe that harassment by Biya’s cronies drove Pouemi to suicide.
International Monetary System
Writing in the turbulent 1970s after the breakdown of the Bretton Woods regime of fixed exchange rates, Pouemi anticipated the three “fundamental flaws” with the international monetary “non-system”: one, using a national currency, the US dollar, as global currency; two, placing the burden of adjustment exclusively on deficit nations; and, three, the “inequity bias” of the foreign reserve system, which makes it a form of “reverse aid.” All three issues have been highlighted by the economic impact of the COVID-19 pandemic.
Long recognized as a problem, the challenges with using the US dollar as the world’s currency have once again become apparent. Low- and middle-income countries (which include essentially all African countries) have to deal with the vicissitudes of the global financial cycles emanating from the center of the global capitalist system. As the Federal Reserve raises interest rates to combat inflation by engineering a recession—because if borrowing costs rise, people have less money to spend and prices will decrease—they are increasing the debt burden of African governments that have variable-rate loans in US dollars. Already, the World Bank has warned of a looming debt crisis and the potential for another “lost decade” like the 1980s. Moreover, higher interest rates in the US lead to the depreciation of African currencies, making imports more expensive and leading to even higher food and oil prices across the continent.
Pouemi viewed the IMF’s attempt to create a global currency through the 1969 establishment of the special drawing rights (SDR) system as an inadequate response to the problems created by using the US dollar. The issuance of SDRs essentially drops money from the sky into the savings accounts of governments around the world. The IMF has only issued SDRs four times in its history, most recently in August 2021 in response to the COVID-19 pandemic. With African governments dealing with falling export earnings and the need to import greater amounts of personal protective equipment—and, eventually, vaccines—there was a clear need to bolster their savings, i.e., foreign reserves. The problem is that the current formula for allocating SDRs provides 60% of them to the richest countries—countries that do not need them, since they can and have borrowed in their own currencies. Of the new 456 billion SDR (approximately US$650 billion), the entire African continent received only 5% (about US$33 billion).
Decades ago, Pouemi had slammed SDRs as “arbitrary in three respects: the determination of their volume, their allocation and the calculation of their value.” Instead, Pouemi advocated for a truly global currency, one that could be issued by a global central bank in response to global recessions and that prioritized financing for the poorest countries. Such a reorientation of SDRs could provide a way of repaying African nations for colonialism and climate change.
Secondly, unable to get the financing they need, African governments with balance-of-payments deficits (when more money leaves a country than enters in a given year) have no choice but to shrink their economies. Pouemi strongly criticized the IMF, which he dubbed the “Instant Misery Fund” for applying the same “stereotypical, invariable remedies: reduce public expenditures, limit credit, do not subsidize nationalized enterprises” regardless of the source of a country’s deficits. Devaluing the currency is unlikely to work for small countries that are price takers in world markets and instead improves the trade balance by lowering domestic spending. The IMF has become “a veritable policeman to repress governments that attempt to offer their countries a minimum of welfare.” The current international monetary non-system then creates a global “deflationary bias,” since those countries with balance-of-payments deficits must reduce their spending, while those with large surpluses—like Germany, China, Japan, and the Netherlands—face little pressure to decrease their surpluses by spending more.
The third major issue with the current international monetary non-system is that developing countries have to accumulate foreign exchange reserves denominated in “hard” currencies like US dollars and euros, which means they are forced to transfer real resources to richer countries in return for financial assets—mere IOUs. Pouemi claimed that “if the international monetary system was not ‘rigged,’ reserves would be held as other goods like coffee or cocoa, gold for example. But the system is ‘rigged’; coffee reserves are quantified as dollars, pound sterling or non-convertible francs.” Instead, in the late 1970s, governments like that of Rwanda effectively lent coffee to the United States by using export earnings to purchase US treasury bills, whose real value was being quickly eroded by high inflation in the US. Hence, we live in a world where developing countries like China and Brazil lend money to rich governments like that of the US. As Pouemi explains: “The logic of the international monetary system wants the poor to lend to—what am I saying—give to the rich.”
Pouemi was also a harsh critic of the CFA franc, since maintaining the fixed exchange rate to the euro implies abandoning an autonomous monetary policy and the need to restrict commercial bank credit. Pouemi also argued that the potential benefits and costs of currency unions are different for rich and poor countries, and that therefore it is inappropriate to analyze African monetary unions through a European lens. His thoughts are especially relevant at a moment when the future of the CFA franc and West African monetary integration are up for debate.
In theory, by fixing the exchange rate to the euro, the two regional central banks that issue the CFA franc—the Banque centrale des états de l’Afrique de l’ouest (Central Bank of West African States) and the Banque centrale des états de l’Afrique centrale (Central Bank of Central African States)—have relinquished monetary policy autonomy. They have to mimic the European Central Bank’s policy rates instead of setting interest rates that reflect economic conditions in the CFA zone. The amount of CFA francs in circulation is also limited by the amount of foreign reserves each regional central bank holds in euros. Therefore, “the solidity of the CFA franc is based on restricting M [the money supply], a restriction not desired by the states, but one proceeding from the very architecture of the zone.” As a result, the economies of the CFA franc zone are starved of credit, especially farmers and small businesses, hindering growth and development. In Pouemi’s words, “There is no doubt, the CFA remains fundamentally a currency of the colonial type.”
When discussing the possibilities for a single currency for the Economic Community of West African States (ECOWAS), Pouemi stressed that the potential benefits and costs of currency union are different for rich and poor countries. “There is not only a difference of perception of the mechanisms of cooperation” between Europe and Africa, “there’s a difference of the conception of common life. Economic cooperation as it is conceived in the industrialized West is the Kennedy Round, North-South dialogue, the EEC, etc.—in other words, essentially ‘customs disarmament’ or common defense; armament is the rule, disarmament the exception.” In Africa, however, economic cooperation is a positive-sum game. Conventional economic theory argues against monetary integration among African countries, since they trade little with each other. But to Pouemi, the goal of monetary integration is precisely to get these countries to trade more with one another. He also questions the view that monetary integration should come last, following the same sequence as the European Union from free trade zone to customs union to common market and, finally, to currency union. “This view is not only imaginary, it is practically non-verified; we have seen examples. Theoretically, it is indefensible: a 10% decrease in tariffs could be … offset by a devaluation of 10%.”
Pouemi also dismissed arguments that Nigeria would dominate the proposed ECOWAS single currency as another example of the classic colonialist tactic of “divide and conquer.” While he acknowledged that “monetary union between unequal partners poses problems,” these are “only problems, open to solutions.” They do not make monetary integration unviable. Such integration need not limit sovereignty. In a regional or continental African monetary union, no “currency would be the reserve of others. Each country would have its own central bank, free to conduct the policy that best suits the directives judged necessary by the government. The only loss of sovereignty following such a union would be the respect of the collective balance. It would not be appropriated by anyone; it would be at the service of all. It would be, for that matter, less a loss of sovereignty than the collective discipline necessary to all communal life.”
Pouemi advocated for an African monetary union with fixed exchange rates between members, the pooling of foreign reserves, and a common unit of account—like the European Currency Unit that preceded the euro. He thought that the debate over whether the CFA franc is overvalued is misguided, since there is no a priori reason for its members to have the same exchange rate. Fixed but adjustable exchange rates—as in the Bretton Woods system or European Monetary System—would allow each nation greater monetary and exchange rate policy autonomy. Settling payments using a common unit of account instead of foreign exchange reserves would help economize on the latter. Moving toward the free movement of capital, goods and labor—as envisioned by the African Continental Free Trade Area—would help diffuse shocks through the monetary union. Finally, such a union would need to have a common policy on capital controls or at least collective supervision of international capital flows.
As Pouemi so eloquently lamented: “History will hold on to the fact that all of [Africa’s] children that have tried to make her respected have perished, one after the other, by African hands, without having the time to serve her.” We do not know what Pouemi could have accomplished had he had the time to serve Africa for longer. All we can do is heed his call that “in Africa, money needs to stop being the domain of a small number of ‘specialists’ pretending to be magicians.”
The Post-colonial Kenyan State: The Thorn in Our Flesh
The lesson from political economist Rok Ajulu’s academic work and activism: it’s not enough to change the “tenants,” but fight to change both the “state” and all of its houses.
In early May 2022, with almost three months to the August election, Kenya had close to 50 presidential candidates, and 5,000 people running for the 1,500 Member of County Assembly (MCA) positions. Ultimately, not all of these aspirants will be cleared by the Independent Electoral and Boundaries Commission (IEBC) (more like “blunder commission” judging from the 2017 elections and its lack of preparedness for the August 2022 poll), but the question remains—one that the political economist, Rok Ajulu, asked in his 2021 book Post-Colonial Kenya: The Rise of an Authoritarian and Predatory State: what is it about the post-colonial state in Africa that makes so many people want to control it?
In this impressive compendium, Ajulu chronologically and exhaustively mapped out the authoritarian turns of the Kenyan post-colonial state. In doing so, he documented the predatory nature of the colonial regime and how three successive African governments— headed respectively by Jomo Kenyatta, Daniel Arap Moi and Mwai Kibaki—have built on this legacy and, in addition, weaponized ethnicity at specific junctures to consolidate control and accumulation. And not just any accumulation: predatory and parasitic hoarding—in the sum of trillions of dollars and with many detrimental effects for the population—that is only possible when steered, despite declarations to the contrary from the top.
While he charts the oscillating, often moderate and neo-imperial allegiances of actors such as Jomo Kenyatta (the late father of outgoing president, Uhuru), Tom Mboya and Moi—none of whom were great fans of the Mau Mau—Ajulu’s focus is on how the state “becomes brazenly the instrument of the dominant political elite. This type of regime gravitates towards authoritarian dispensation of power precisely because economic mobility and expansion of the new elite is largely tied to their continued control of state-power.”
This thesis, while not unique to Ajulu and recognized in everyday discourse, is anchored here in a prolific and comprehensive archive, which also makes evident, as does the author, that the predatory pursuits of politicians are not unencumbered, even against the heavy-handed authoritarian implements (read political assassinations, state sanctioned ethnic clashes) they use to entrench them. Although Ajulu does not dwell on protests or resistances to this authoritarian rule over four decades(please read this powerful book by Maina wa Kinyatti for that), and focuses primarily on party politics and the trajectories of (in)famous politicians to narrate the incremental creation of an authoritarian state in Kenya, the constant tug and pull of class tensions and the heterogeneous actions of supposedly homogeneous ethnic populations are always on the horizon.
Who is this man Rok Ajulu? In the short film about him called Breakfast in Kisumu, his daughter, the filmmaker Rebecca Achieng Ajulu-Bushell, documents his academic and political labors dating to his exile from Kenya in the early 1970s. Oriented around interviews she had with him—and it is his narrations that piece together the diverse landscapes that are the visuals for this film (we actually, interestingly, barely see Ajulu)—his voice takes us through his life as a student, political activist and academic, in a journey that spans Bulgaria, Lesotho, the UK and South Africa. The evocative images of these countries where Rok Ajulu lived, while recent, anchor this narrative that accounts for a life of political praxes in academia and beyond. Though his sojourns mainly pivot around academic pursuits, we also hear about his labors as an agricultural worker in Bulgaria, a pirate taxi driver in Fulham, London and, importantly, as an organizer with the Committee for Action and Solidarity for Southern African Students (CASSAS) while at the National University of Lesotho in the late 1970s and early 1980s (for this work he was imprisoned for three weeks).
It is, perhaps, this period as an anti-apartheid organizer in Lesotho that created the path to a life in South Africa from 1994. Here he taught at Rhodes University and married Lindiwe Sisulu, the current Minister of Tourism (and one of the aspirants vying to succeed Cyril Ramaphosa as South Africa’s next president), and daughter of renowned anti-apartheid activists Walter and Albertina Sisulu. Consequently, it is in South Africa, rather than Kenya, where his influence was more extensive, even as Kenya appears to have been the primary focus of his academic scholarship.
Ajulu-Bushell’s poetic film demonstrates that her father’s life was not ordinary. But it is perhaps the internationalist and pan-African paths he chose that led her to recognize him, as she does in this film, as a “father” but not a “parent.” Her bid to understand her father’s life as an adult and, simultaneously, to document his political praxes, appear to be what has prompted this documentary. While the style of the film may not be for everyone—there are a few seemingly gratuitous appearances of the filmmaker—Breakfast in Kisumu is an important tribute to a father, and one who is representative of a generation who endured many unanticipated and painful exiles for nations and lands which did not always claim them, but for which they gave their lives.
As the final book Ajulu wrote before he died of cancer in 2016, Post-Colonial Kenya: The Rise of an Authoritarian and Predatory State is informed by questions that, likely, the author grappled with throughout his life.
Against the impending 2022 Kenya general elections that are not cause for much inspiration —with the male dominated alliances, handshakes, intrigues and elite contestations that characterize it—Ajulu’s thesis still rings true: that the state is the primary vehicle for accumulation and thus engenders a predatory authoritarianism by those who want to control it.
After years in an exile(s) documented by Ajulu-Bushell’s film, I’m not sure how optimistic Ajulu was for our Kenyan future, for he wrote in his final book: “Besides the change of tenants at the state house, not much really changed. The mandarins who used to lord it over the hapless rank and file remained in their same old places.”
At the very least, this generation can turn to the histories Rok Ajulu has documented in his book, as well as those he lived, to reflect on how, for this election and the next, we are not just going to change the “tenants,” but will fight to change both the “state” and all of its houses.
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