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Highway Robbery and Sex Toys: Plunder by the Numbers

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Did the Jubilee government loot $20 billion during its first term? The equivalent of 10 Eurobond issuances, the money has disappeared from the government’s loan portfolio. Technically broke by its own admission, Treasury has blamed, unconvincingly, everything from devolution to the wage bill for the state of its finances. DAVID NDII delivers another damning indictment against the pirates of pillage.

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Three weeks ago, Finance Cabinet Secretary Henry Rotich caused a stir when he reportedly declared the government broke. Rotich made the pronouncement in Parliament, when he gave notice that he would be presenting an austerity supplementary budget to plug a Ksh. 84 billion hole in the government’s finances. A day later, he retracted— with good reason. When Simeon Nyachae did so 20 years ago, he was promptly demoted to the Ministry of Industry. He declined the job and left government.

The pronouncement came hot on the heels of Mr. Rotich’s gallant return from the City of London waving a fistful of dollars, two billion of them, which he proclaimed a ringing endorsement of Jubilee’s economic stewardship, an emphatic vote of confidence in our economy by the global financial markets.

Three weeks ago, Finance Cabinet Secretary Henry Rotich caused a stir when he reportedly declared the government broke. Rotich made the pronouncement in Parliament, when he gave notice that he would be presenting an austerity supplementary budget to plug a Ksh. 84 billion hole in the government’s finances. A day later, he retracted— with good reason. When Simeon Nyachae did so 20 years ago, he was promptly demoted to the Ministry of Industry. He declined the job and left government.

Two questions arise. First, if you’ve just raised 10 percent of your budget in one fell swoop, you ought to be flush with cash. Second, economic growth as brisk as projected should swell the public coffers. And growth prospects ought to be strong. We know the Jubilee government has borrowed upwards of two trillion shillings in its first term, doubling our public debt in the process. This is a huge amount of money— about three times the GDP of Rwanda. The economic benefits of the SGR and the other infrastructure projects that this money has financed should be kicking in now. Jubilee’s economic math does not add up. Where has the money gone?

Let us start with where it has not gone.

It is not the wage bill. As this column has demonstrated on several occasions, all the wage bill hysteria is fake news. The wage bill has only increased 23 percent, well below the rate of revenue growth. In effect, wage outlays share of revenue has been falling. It is difficult to understand why government lies about the wage bill. It is even more difficult to understand how it expects to get away with it when its own reports tell the complete opposite such as demonstrated by the chart below, which appears in this year’s Budget Policy Statement.

Wages as a percentage of National Government Revenue

It is not devolution either. Contrary to popular opinion, the establishment of counties did not entail expansion of government, or any new outlays. In fact, the number of elected representatives was reduced from more than 3,000 councillors to 1,450 county assembly members (MCAs). The money going to counties followed the functions. It should have been offset by reductions in national government budget on the same. In effect, devolution should be budget neutral.

The actual budget for (electricity) transmission and distribution is Ksh. 277 billion… Between half and two-thirds of the Ksh. 277 billion budget has been eaten.

In their first year of existence, the county governments’ revenue share came to Ksh. 193 billion but the deficit increased by only Ksh.66 billion. In the subsequent four years, county transfers have increased by 12 percent per year on average, while national government expenditure excluding county transfers has increased 16 percent per year, in other words, national government is gobbling money faster than the counties.

The wage bill and devolution are scapegoats.

In its four full financial years the Jubilee administration has posted capital budget to the tune of Ksh. 2.5 trillion. This is almost double the cumulative transfers to the counties over the same period (Ksh.1.3 trillion). Counties are mandated to invest a minimum of 30 percent on development but few manage to do so consistently. Cumulatively, capital spending in the counties is in the order of Ksh. 300 billion. Excluding the railway, the Jubilee administration has invested on average Ksh. 45 billion per county, while the county governments’ have spent an average of Ksh.6 billion. This means that on the ground, we should be seeing seven times as many, or bigger, national government development projects as county government ones. Where are they?

Between roads and power is a combined Ksh. 760 billion shillings which is still only a third of the Ksh. 2.1 trillion we need to account for. Where is the rest of it?

Roads are the obvious place to start. The Jubilee administration promised the mother of all road building programs. In 2013, they took over 1788 km of road under construction (new and major rehabilitations) from the grand coalition government, with a contract value of Ksh. 143 billion. By the end of 2016, the most recent published data available shows they had increased this tally to 1931 km with contract sum of Ksh. 221 billion. The data shows that 932 km of these roads worth Ksh. 95.8 billion were inherited, meaning that Jubilee had commissioned 1000 km of new roads for Ksh.126 billion. This is not earth shattering. In fact, of these only 315 km are new roads, the rest being rehabilitation and upgrading of existing roads.

But construction costs have gone up 44 percent, from Ksh. 80 million to Ksh. 115 million per kilometre. In 2014, crude oil prices plummeted from US$ 110 per barrel to an average of US$50 for the rest of the period. The cost of bitumen mirrors crude oil prices, and road construction also consumes copious amounts of diesel. Road construction costs ought to have fallen by at least 25 percent, which translates to Ksh. 55 million a kilometre. We are being fleeced at least Ksh. 55 million a kilometre of road build by Jubilee than we were being fleeced before.

The other big ticket infrastructure item is electricity, and one of the administration’s flagship ventures. Budget data shows a cumulative outlay of Ksh. 360 billion over the four years. These figures are questionable.

The electricity transmission operator Ketraco reports that it has completed 1800 km of transmission lines since it was set up in 2007. It has another 2400 km under construction. The construction cost of transmission lines are not published, but we can work around this. One of these lines, the Loiyangalani-Suswa transmission line has been in the news a lot for all the wrong reasons. The line is for evacuating power from the Turkana Wind Power project (which is actually in Marsabit county). The power project was completed in 2017, but the government failed to complete the transmission line in time meaning that we have to pay the investor over a billion shillings a month for power we are not consuming. This is part of the reason why electricity costs have spiked, but I digress.

I recently estimated the Uhuruto kleptocracy’s plunder at Ksh. 350 billion (US$3.5 billion) which ranked it fifth in the world kleptocracy league table, right behind Mobutu and Abacha in joint third (US$5 billion), Ferdinard Marcos in second (US$10 billion) all trailing Suharto at US$35 billion). It is beginning to look like a gross understatement.

The cost of the 428 km 400Kv transmission line is quoted as Euro 142 million (Ksh. 17.8 billion), which works out to Ksh 42 million a kilometre. The actual budget for transmission and distribution is Ksh. 277 billion. At Ksh 42 million a kilometre, this budget outlay is the equivalent of 6,600 kilometres of 400Kv transmission lines, 60 percent more than all the transmission lines built and under construction over the past decade. And most of the lines are not 400Kv lines. They are 220Kv and 132Kv, which cost considerably less. The reasonable cost of the 2800 kilometres of transmission lines under construction would be in the order of Ksh.100 billion. Between half and two-thirds of the Ksh. 277 billion budget has been eaten.

Policy and planning, and public financial management, whose only infrastructure is IFMIS, do not immediately strike one as capital-intensive undertakings. Investment in policy and planning has absorbed Ksh. 140 billion, an average of Ksh. 35 billion a year. Investment in public financial management has absorbed Ksh. 137 billion. Two functions that require no brick and mortar have consumed Ksh. 277 billion. SGR from Mombasa all the way to Konza? Computers and sex toys? There is something rotten in the state of Denmark.

The budget figures for roads are equally questionable. While, as we have already established, the actual road output is in the order of 1,800 kilometres costing Ksh. 220 billion, the budget documents reflect a capital outlay of Ksh. 400 billion. Last financial year alone, the budget was Ksh. 147 billion. At the Jubilee cost of Ksh.115 million per kilometre, this outlay works out to 3500 kilometres of road – 1,500 kilometres more than the projects underway at the end of 2006 as per latest published data. Could the Jubilee administration have commissioned 1500 kilometres of road in 2017? We are talking Mombasa-Nairobi three times, Lunga Lunga to Lokichoggio with 100 kilometres to spare. Admittedly, we did see Uhuru Kenyatta racing up and down the country commissioning things, but 1,500 kilometres is a stretch.

We are done with the big infrastructure things. Between roads and power is a combined Ksh. 760 billion shillings which is still only a third of the Ksh. 2.1 trillion we need to account for. Where is the rest of it?

Policy and planning, and public financial management, whose only infrastructure is IFMIS, do not immediately strike one as capital-intensive undertakings. Investment in policy and planning has absorbed Ksh140 billion, an average of Ksh. 35 billion a year. Investment in public financial management has absorbed 137 billion. Two functions that require no brick and mortar have consumed Ksh. 277 billion. SGR from Mombasa all the way to Konza? Computers and sex toys? There is something rotten in the state of Denmark.

As this column has demonstrated on several occasions, all the wage bill hysteria is fake news

Water and irrigation was funded to the tune of Ksh. 160 billion, but pray, why are we still ravaged by drought. Last year, we spent Ksh. 244 billion to import food, more than double the preceding five-year average of Ksh. 112 billion, and this year promises to be another bumper food import year. Thwake, the biggest dam ever comes with a price tag Ksh. 36 billion. It is not in these figures, but we’ve already been doing the equivalent of one every year. Youth and women have been empowered to the tune of Ksh. 60 billion. Youth and women enterprises should be thriving everywhere. And on and on it goes.

The puzzle of Jubilee’s economic math is no puzzle at all. Borrowed money has been plundered and squandered. It should not surprise. Kenya National Assurance, Kenya Meat Commission, KCB, National Bank, Kenya Airways, Uchumi, KCC, Mumias and countless others we have plundered state corporations, some several times over. It was only a matter of time before we plundered the Government itself.

I recently estimated the Uhuruto kleptocracy’s plunder at Ksh. 350 billion (US$3.5 billion) which ranked it fifth in the world kleptocracy league table, right behind Mobutu and Abacha in joint third (US$5 billion), Ferdinard Marcos in second (US$10 billion) all trailing Suharto at US$35 billion. It is beginning to look like a gross understatement.

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Unlike the Rest of the UN, Is WHO (Finally) Taking Sexual Abuse Seriously?

A disturbing report on the sexual exploitation and abuse of women and children in the DRC has laid bare the failure of UN agencies to protect vulnerable populations.

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Unlike the Rest of the UN, Is WHO (Finally) Taking Sexual Abuse Seriously?
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It is extremely unfortunate that at a time when the World Health Organization (WHO) is spearheading a campaign to get people vaccinated against COVID-19, and pushing rich countries to donate their vaccines to low-income countries instead of hoarding them, it is confronted with revelations that suggest deep systemic failures within the global health agency that have allowed its employees to get away with sexual exploitation and abuse of vulnerable populations.

Last month, WHO released a report that confirmed that there was sexual abuse of women and children by WHO employees in the Democratic Republic of the Congo (DRC) during an outbreak of Ebola in the country’s North Kivu and Ituri provinces between 2018 and 2020. This report was the result of an independent commission’s investigations following an exclusive media report last year that found that dozens of women in the DRC had been sexually exploited by aid workers, including WHO employees.  The most disturbing revelation was that some of the perpetrators were medical doctors. Many of the abused women were offered jobs in exchange for sex; others were raped or coerced into having sex against their will. There were also stories of women being forced to have abortions after they were sexually abused. The independent commission stated that its findings showed that 21 of the 83 alleged perpetrators were WHO employees, and that “individual negligence” on the part of WHO staff may have amounted to “professional misconduct”.

This is not the first time that sexual abuse and exploitation of women and children by UN employees has been reported in the DRC. In 2004, UN Secretary-General Kofi Annan ordered an investigation into sexual abuses by UN peacekeepers in the country after it became apparent that such abuse was widespread in this mineral-rich but conflict-ridden country.  The investigation detailed various forms of abuse, including trading sex for money and food. It was in the DRC that the term “peacekeeper babies” first emerged. Women who had given birth after being raped by UN peacekeepers spoke about being abandoned by both their families and the peacekeepers who had impregnated them. However, the report had little impact on the UN’s peacekeeping mission in the DRC – none of the perpetrators were brought to book nor were the victims compensated.

Sexual abuse of vulnerable populations, especially women and children, is particularly rampant in UN peacekeeping missions.  In 2017, the Associated Press revealed in an exclusive report that at least 134 Sri Lankan UN peacekeepers had exploited nine Haitian children in a sex ring from 2004 to 2007. Many of the victims were offered food or money after they were sexually violated. (These “sex-for-food” arrangements have also been reported in other countries experiencing conflict or disaster.) Although 114 of these peacekeepers were sent home after the report came out, none of them were prosecuted or court-martialled in their countries.

One reason why UN peacekeepers evade the consequences of their actions is that under the Status of Forces Agreement negotiated between the UN and troop-producing countries, UN peacekeepers fall under the exclusive jurisdiction of the country they come from. When cases of abuse are reported, they are either ignored by the countries, or the perpetrators are sent home—no questions asked.

Unfortunately, civilian UN staff who commit crimes such as rape also evade any legal action because the UN accords the UN and its employees immunity from prosecution. This immunity can only be waived by the UN Secretary-General, but the Secretary-General hardly ever waives this immunity even when there is overwhelming evidence against a UN staff member. This means that cases brought against UN employees cannot be tried in national courts, nor can the perpetrators be detained or arrested by national law enforcement agencies.  

At a press conference held last month, WHO’s director-general, Tedros Adhanom Ghebreyesus, apologised to the victims of the abuse in the DRC at the hands of WHO employees and promised to take action to prevent such abuse from happening again. “I am sorry for what was done to you,” he said. “What happened to you should not happen to anyone.”

The head of WHO has also promised to review the organisation’s emergency response measures and internal structures and to discipline those staff members who fail to report cases of sexual exploitation and abuse. WHO member states have also called for an “immediate, thorough and detailed assessment of what went wrong”.

I have no doubt that Mr Ghebreyesus is serious about fixing a problem that has plagued the UN for decades. In fact, his response to the sexual abuse allegations is much more honest and sincere than the responses of other heads of UN agencies whose employees have been accused of allowing sexual exploitation and abuse to occur under their watch. One, he established an independent commission to look into the sexual abuse allegations, which rarely happens. (Most UN agencies either ignore the allegations or order an internal investigation, which invariably determines that the allegations “could not be substantiated”.) Two, he has publicly committed to undertake wholesale reforms in WHO’s structures and culture that allow sexual exploitation and abuse of vulnerable populations to go undetected, unreported and unpunished. Three, he has agreed to the independent commission’s recommendation that an independent monitoring group be set up within two months to ensure that the commission’s recommendations are enforced.

“What happened to you should not happen to anyone.”

Most UN agencies would not welcome such intense scrutiny of their operations by independent bodies, so WHO’s efforts in this regard are laudable.  WHO’s actions could also be attributed to the fact that, unlike other UN agencies that report to the General Assembly, WHO reports to the World Health Assembly that comprises delegates that have technical competence in health matters and represent their governments’ ministries of health. Because it is a specialised UN agency not governed by the General Assembly, WHO can establish its own rules without deferring to the General Assembly. In this sense, WHO enjoys relative autonomy from the UN system’s gargantuan and highly opaque bureaucracy.

Cover-ups and impunity 

WHO’s response is a far cry from the normal tendency of UN bosses to cover up cases of sexual abuse and exploitation taking place under the UN’s watch.  In 2014, for instance, when a senior UN official reported to the French government that French peacekeepers operating in the Central African Republic were sexually abusing boys as young as eight years old, his bosses at the Office of the UN High Commissioner for Human Rights (OHCHR) responded by asking him to resign. When he refused to do so, they suspended him for “unauthorized disclosure of confidential information”, and, in a typical case of “shooting the messenger”, they directed their internal investigations towards him rather than towards the peacekeepers who had allegedly abused the children. This case, which received wide media coverage, did not lead to significant changes in how the UN handles sexual abuse cases. On the contrary, Anders Kompass, the UN official who reported the abuse, was retaliated against, and eventually left the organisation in frustration.

Cases of UN employees sexually abusing or harassing their colleagues are also brushed under the carpet. In 2018, for example, when an Indian women’s rights activist accused the United Nations Population Fund (UNFPA)’s India representative of sexual harassment, the UN agency said that its preliminary investigations showed that her allegations could not be substantiated. The Code Blue Campaign, which tracks instances of sexual harassment and exploitation by UN employees, dismissed the findings of the investigation, calling them a “cover-up.” (Soon after the activist made her allegation, UNFPA evacuated the accused from India, which further muddied her case.)

This is not an isolated case. In 2004, when a staff member at the UN’s refugee agency accused the head of the organisation of sexual harassment, the UN Secretary-General, Kofi Annan, dismissed her claims. Recently, a woman working at UNAIDS lost her job soon after she filed a complaint of sexual harassment against UNAIDS’ deputy executive director. This was after Michel Sidibé, the then head of UNAIDS, told a staff meeting that people who complain about how the agency was handling sexual harassment “don’t have ethics.”

The UN’s highly patriarchal and misogynistic culture allows such abuse to continue unabated. In 2018, the UN conducted an internal survey that found that one-third of the UN employees surveyed had experienced sexual harassment. It revealed that the most vulnerable targets were women and transgender personnel aged between 25 and 44. Two out of three harassers were male and only one out of every three employees who were harassed took any action against the perpetrator. About one in ten women reported being touched inappropriately; a similar number said they had witnessed crude sexual gestures.

Another survey by the UN Staff Union found that sexual harassment was one among many abuses of authority that take place at the UN. Results of the survey showed that sexual harassment made up about 16 per cent of all forms of harassment. Forty-four per cent said that they had experienced abuse of authority; of these, 87 per cent said that the person who had abused his or her authority was a supervisor. Twenty per cent felt that they had experienced retaliation after reporting the misconduct.

The UN’s highly patriarchal and misogynistic culture allows such abuse to continue unabated.

Since then, the UN has established a new sexual harassment policy and a hot line for victims of sexual harassment. However, remedial actions spelled out in the policy appear to be mediation or counselling exercises rather than disciplinary ones. The emphasis is on psychosocial support and counselling (for the victims, of course) and “facilitated discussions” between the “offender” and the “affected individual”. Disciplinary measures include physical separation of the offender from the victim, reassignment, and temporary changes in reporting lines. Official internal investigations are permitted, but as I have tried to illustrate, most internal UN investigations into cases of sexual harassment and other kinds of wrongdoing inevitably conclude that the sexual harassment or wrongdoing “could not be substantiated.” This leaves victims vulnerable to retaliation.

Perhaps WHO can lead the way in showing the rest of the UN system how to tackle sexual exploitation, abuse and harassment by UN employees. WHO has already terminated the contracts of four of its employees who were accused of sexually exploiting women in the DRC. However, a true test of WHO and the UN’s commitment to end such abuses would be if they reinstated all those who were fired for reporting such cases. I for one am eagerly awaiting the independent monitoring group’s findings on whether or not WHO has taken tangible and impactful measures to protect people from being sexually abused and exploited by its employees and to safeguard the jobs of those who report such abuses.

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The Retrospective Application of Constitutional Statutes: Notes From the High Court of Kenya

Katiba Institute adds to the growing comparative discussion around constitutional statutes and therefore ought to be keenly studied by students of comparative constitutional law.

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Previously, I have discussed the concept of constitutional statutes. Recall that a constitutional statute is a law that is “enacted in pursuance of the State’s positive obligation to fulfil a constitutional right.” While certain constitutional rights are self-enforcing (such as, for example, the right to free speech ipso facto prohibits the State from engaging in arbitrary censorship), others – by their very nature – require a statutory framework to be made effective. For example, the right to vote cannot be made effective without an infrastructure in place to conduct free and fair elections, including the existence of an independent, non-partisan Election Commission. Insofar as such a legislative framework is not in existence, the state is arguably in breach of its positive obligations to fulfil the right in question. Thus, to refine the definition further, a constitutional statute is a statute that “provides a statutory framework towards implementing a fundamental right, thereby fulfilling the state’s positive obligation to do so.”

What follows from the finding that a particular law is a constitutional statute? On this blog, we have discussed constitutional statutes in the context of amendments to the Right to Information Act, which have sought to undermine the independence of the Information Commissioners. We have argued that, insofar as constitutional statutes stand between the individual and the State, mediating the effective enforcement of rights, legislative amendments that prevent them from fulfilling this function, are thereby unconstitutional. Furthermore, once a constitutional statute has been enacted, the principle of non-retrogression applies – that is, the legislature cannot simply repeal the law and go back to a position where the right in question was unprotected. Another example discussed on this blog is the recent judgment of the Kenyan Court of Appeal in David Ndii, where it was held that the implementation of the Popular Initiative to amend the Kenyan Constitution required a legislative scheme, as also its discussion of the previous judgment in Katiba Institute, where an attempt to reduce the quorum for resolutions of the Independent Electoral and Boundaries Commission was held to be unconstitutional.

The judgment of the High Court of Kenya of 14 October 2021 – also titled Katiba Institute – provides an additional, fascinating implication that flows from the finding that a law is a constitutional statute. Katiba Institute arose out of the efforts of the Government of Kenya to implement a national biometric identification system called NIIMS, and the judgment of the High Court with respect to a challenge to the constitutionality of NIIMS (Nubian Rights Forum), which we discussed on this blog back in 2019. Recall that in Nubian Rights Forum, after a detailed analysis, the High Court struck down a part of NIIMS, and allowed the government to go ahead with the rest of the programme subject to the implementation of an effective data protection law. Therefore, as I had noted in that post:

The High Court’s decision – at least in part – is a conditional one, where the (legal) future of the NIIMS is expressly made dependant on what action the government will take. Thus, there remain a significant number of issues that remain open for (inevitable) litigation, even after the High Court’s judgment.

Notably, Kenya had enacted a data protection law in between the hearings and the judgment, but the High Court – in its verdict – was insistent that until the point of effective implementation, the continued rollout of NIIMS could not go on. And this was at the heart of the challenge in Katiba Institute: the applicant argued that NIIMS had been rolled out, in particular, without complying with Section 31 of the Kenyan Data Protection Act, which required a Data Impact Assessment as a pre-requisite to any data collection enterprise. In response, the state argued that the data collection in question had already been completed before the passage of the Data Protection Act, and that therefore – in accordance with the general principle that statutes are not meant to apply retrospectively – Section 31 was inapplicable to this case.

Engaging in impeccable constitutional statute analysis, Justice Jairus Ngaah noted that the Data Protection Act was “enacted against the backdrop of Article 31 of the Constitution.” Article 31 of the Constitution of Kenya 2010 guarantees the right to privacy. As the learned Justice noted, in its very preamble, the DPA stated that its purpose was to “give effect to Articles 31(c) and (d) of the Constitution.” Justice Ngaah then rightly observed, “The need to protect the constitutional right to privacy did not arise with the enactment of the Data Protection Act; the right accrued from the moment the Constitution was promulgated.”

The judgment of the High Court of Kenya provides an additional, fascinating implication that flows from the finding that a law is a constitutional statute.

It therefore followed that, on the balance, an interpretation that gave the DPA retrospective effect was to be preferred over one that did not. A contrary interpretation would mean that the state was entitled to collect data and infringe the right to privacy even in the absence of a legislative scheme. Or, in other words, having failed to implement its positive obligation to enact a constitutional statute to give effect to the right to privacy, the state could then take advantage of its own failure by nonetheless engaging in data collection enterprises anyway. This, naturally, could not be countenanced. And in any event, given that Article 31 had always existed, it followed that:

. . . there was always the duty on the part of the State to ensure that the Bill of Rights . . . is respected and protected. Section 31 of the Act does not impose any more obligation or duty on the state than that which the state, or the respondents . . . have hitherto had to bear.

On this basis, Justice Ngaah therefore held that NIIMS had been rolled out in breach of Section 31, and therefore, first, quashed the rollout itself, and secondly, issued a mandamus restraining the State from rolling it out again without first complying with Section 31.*

The judgment in Katiba Institute does not, of course, answer the number of questions that still remained to be resolved after the Nubian Rights Forum judgment, including some problematic aspects of the DPA itself. Those questions were not, however, before the court in this instance; on the other hand, the court’s finding that constitutional statutes apply retrospectively – and the reasons for that finding – make it a landmark judgment. Katiba Institute adds to the growing comparative discussion around constitutional statutes, Fourth Branch bodies, and “Guarantor Institutions”, and therefore ought to be keenly studied by students of comparative constitutional law.

* One cannot, of course, help comparing this with the judgment of the Indian Supreme Court in the Aadhaar case, where despite the fact that Aadhaar data was collected for more than five years without any law whatsoever, it was retrospectively validated by the Supreme Court.

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The Pandora Papers Reveal the Dark Underbelly of the United Kingdom

Through its network of tax havens, the UK is the fulcrum of a system that benefits the rich and powerful.

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There’s the role, for instance, played by the British Virgin Islands, an overseas territory of the UK that functions as a tax haven. Czechia’s multimillionaire prime minister used the territory to hide his ownership of a chateau in France. Others, including the family of Kenyan president Uhuru Kenyatta and Vladimir Putin’s PR man, have made similar use of the islands to conceal wealth – while Tony and Cherie Blair reportedly saved £312,000 in stamp duty when they bought a London property from a company registered in the British Virgin Islands in 2017.

Then there’s London itself. The leaked documents show how the King of Jordan squirreled personal cash away in the capital’s property market, as did key allies of Imran Khan, Pakistan’s president.

More details will emerge in the coming days. But one thing is already clear. This isn’t a story about countries on the periphery of the world economy. It is a story about how the British state drives a global system in which the richest extract wealth from the rest.

British through and through

The British Virgin Islands were captured by England from the Dutch in 1672. By then, the indigenous population had already gone – either slaughtered in an unrecorded genocide or fled for fear of one. The islands have been a haven for pirates of various sorts ever since.

But this is just one part of Britain’s offshore network. There are around 18 legislatures across the globe that Westminster is ultimately responsible for. These include some of the worst offenders in the world of money laundering, tax dodging and financial secrecy. The Cayman Islands are British. So is Gibraltar. So are Anguilla and Bermuda.

These places aren’t just British in an abstract sense. Under the 2002 British Overseas Territories Act, their citizens are British citizens. They operate under the protection of the British diplomatic service. And, when need be, they can rely on Her Majesty’s Armed Forces: in the last 40 years, Britain has twice gone to war to defend Overseas Territories. Once was when Argentina tried to claim back the Falklands/Malvinas. The other time was the invasion of Iraq, when the British government claimed that Saddam Hussein’s weapons programme threatened its military bases at Akrotiri and Dhekelia on the island of Cyprus.

This complexity is no accident

In total, experts estimate, Britain and its overseas territories are responsible for facilitating around a third of the total tax dodged around the world. And that’s before we consider money stolen by corrupt rulers, or the proceeds of crime. Not to mention the way that billionaires’ hidden wealth allows them to influence our political systems in secret.

This complexity is no accident. The UK, unlike almost any other country on earth, lacks a written constitution. The rules about how the rules are made are set through ‘convention’, an endless fudge that ultimately amounts to them being made up by our rulers as they go along.

We see this most clearly in how the domestic territories of the British state are governed: Scotland, Wales, Northern Ireland, Greater London and the City of London each has its own arrangements, each absurd in its own way. Each of these messes leaves a different tangled thicket in which the crooks of the world can hide their cash.

Seen from the perspective of international capital, though, it is the Overseas Territories, as well as the Crown Dependencies of Jersey, Guernsey and Mann, which form the most significant part of this complex. They use the malleability of the British constitution to form a network of safes in which the rich can hide their cash.

A new era

Although no one knows for sure how much money is hidden in tax havens, of which the British territories make up a significant chunk, the figures involved are so vast that academics at the Transnational Institute in the Netherlands have described them as “the backbone of global capitalism”.

Seen this way, the constitutional flexibility of the British state isn’t just some post-medieval hangover. It’s a hyper-modern tool in an era of global surveillance capitalism, where the rich can flit around offshore while the rest are forever trapped by borders.

Through its empire, the British state played a key role in inventing modern capitalism. Now, the UK is helping reinvent capitalism once more, by extending the protection of a constitution designed by the powerful, for the powerful, to the billionaires, oligarchs and criminals of the world.

Adam Ramsay is openDemocracy’s main site editor. You can follow him at @adamramsay. Adam is a member of the Scottish Green Party, sits on the board of Voices for Scotland and advisory committees for the Economic Change Unit and the journal Soundings.

This article was  first published by Progressive International

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