How supply chain laundering hurts Africa (2)

MULTILATERAL TRADING SYSTEM has undergone unprecedented transformation, the volume of trade has grown exponentially and the diversity of goods traded has widened in scope of since the World Trade Organisation (WTO) became operational. In particular, the last two decades have been a period of phenomenal growths in volumes and values of traded commodities since the accession of big players – with China as a prominent example – to the WTO. What have not kept pace over the period are the implementation of safeguards, early warning systems, regulations and control mechanisms for the benefit of the earth and the people. Many challenges also arose within the global value chain and supply chain associated with the greater complexity and interplay of factors within the system that have proven inimical to environmental and human security and safety as well as sustainability. These are essentially associated with absence of or non-adherence to certain requirements either in the forms of standard operating procedures or quality control.

The gaps thus created have provided loopholes or opportunities to be exploited by those accustomed to cutting corners for gains. Illicit activities have thus become widespread and entrenched in many ways and those involved have become more sophisticated, more highly influential and largely intractable globally as some have built formidable networks across countries and continents. Under the consideration of Africa’s commodity-based economy, compliance with the relevant rules becomes relevant for effectiveness. The Extractive Industries Transparency Initiative (EITI) provides a global standard for the good governance of the extractive sectors such as oil, gas and mineral resources. It seeks to promote understanding of natural resource management, strengthen public and corporate governance and provide the data to inform greater transparency and accountability in the extractives sector. Membership requires disclosure of information along the extractive industry value chain – from how extraction rights are awarded, to how revenues make their way through the government and how they benefit the public. But, of all countries in the world, only 56 countries have agreed to the EITI Standard – a common set of rules governing what has to be disclosed and when.

Non-compliance with certain set of rules easily provides a leeway to violence, gun running, drug dealing, money laundering and commodity laundering. On details, many essential records such as product tags, elaborate documentation including source or origin are part of transparency and supply chain integrity. Some operators who indulge in sharp practices have found ways to launder illicit commodities, using recognised intermediaries. We are examining a few here. In the agricultural sector, cocoa production in Ivory Coast provides elaborate insight. In addition to social misdemeanours, there are reported cases of technical and scientific flaws. Despite all the esoteric claims by produce handlers, the exporters and the final processors, children continue to be trafficked from Ghana and Burkina Faso to work as labourers in cocoa farms in Ivory Coast, a country which produces 40 per cent of world cocoa output. Child labour is considered as blight on the $100bn industry which produces chocolate as one of its cherished end products. Satellite imagery and ground photographs have confirmed the unabated deforestation arising from the unregulated expansion of cocoa farms in Ivory Coast. If these operators were to attend the Conference of Parties (COP) on environment, it is doubtful that they will speak in favour of reducing the world temperature through the reduction of environmental destruction. Buying cocoa beans from questionable sources in the open markets and rebranding them for sale to processors could be misleading and fraudulent enough.

Fishing off the Peruvian coasts in the Southern Pacific – which is one of the richest seas in the planet – is an activity illegally indulged in by some foreign operators. More than 250 fleet of Chinese fishing boats were recently seen invading Peruvian territorial waters off the coast of Peru. Fish caught are processed on board and then sold to various countries. It is apparent that these foreign fishermen sell their catch as Chinese fish as their fleets can be on the sea for months, plundering the depth of Latin American seas with the Peruvian authorities unable to checkmate them. In Africa, Greenpeace environment group reported in 2020 that Senegal’s fisheries ministry has issued fishing licenses to vessels of a Chinese industrial fleet involved in illegal, unreported and unregulated fishing activity in recent years. All these are despite globally agreed conventions on sustainable fisheries. In almost all instances of value chain compromises or supply chain compromises, conspiracies between bad actors within states, multinationals and the mafias are combining efforts to destroy the world’s biodiversity and exposing the world to greater danger of environmental degradation, global warming and climate change. Their activities violate the dictum of “People, Planet and Profit” as they practically subjugate all other considerations under profit motive.

In Romania, earlier mentioned in the first part of this series, anyone who tries to scuttle the interest of the forest mafia gets into trouble or could even die, said an informed source. This is even as the Romanian forests are disappearing fast amidst quest for financial fortune while corruption is rife. Much of the loggings there are illegal for cheap furniture in Europe. Trans-loading or laundering points are common parts of their illicit activities, while under-declaration of resources being conveyed, improper or inappropriate documentation, absence of or forged legal papers, and forged auctions are parts of the game of elusiveness as the term Sustainability is regularly misused to justify what is done in the breach.  Investigations revealed some stunning findings. After more than three years of evaluating the damage, said a Romania volunteer, “we reached a number of 4,000 big trucks full with timber that went out from here illegally. The big company that bought all the timber from here knew exactly what happened. They didn’t do anything. They just made a lot of profits.” By their actions, these are on collision path with environmental activists and climate campaigners. The country is being stripped of its forest, and there is public outrage at government’s complacency and multiple examples of wrongdoings as Romania, Ukraine and Russia are three European countries with great problems with corruption and illegalities, with the perpetrators working with powerful multinationals. In Romania, vested interest and well-connected people are preventing the regulations to stop the uncontrolled deforestation from coming into force. Forest Mafia tries various means to eliminate whoever stands their way. The Democratic Republic of Congo faces similar dilemma for its forest resources.

The tragedy of countries that are richly endowed with mineral resources and yet riven by poverty, conflict and corruption is widely documented. Cases abound of armed groups, criminal gangs, corrupt elites and unscrupulous companies all feeding off the mineral trade and have removed vast wealth from developing economies over the years through a range of illegal and/or unethical practices. Africa has suffered immensely from the outcomes of some or all of these illegalities at various times. Angola, Liberia, and Sierra Leone have been the hotbed of brutal, diamond-funded civil wars fought in the 1990s, which tarnished the image of diamonds. Blood diamonds (also called conflict diamonds, brown diamonds, hot diamonds, or red diamonds) are diamonds mined in a war zone and sold to finance an insurgency, an invading army’s war efforts, or a warlord’s activity. Diamonds mined during the 20th to 21st century civil wars in Angola, Ivory Coast, Sierra Leone, Liberia, Guinea, and Guinea-Bissau have been given the label. In its 2018 List of Goods Produced by Child or Forced Labour, the U.S. Department of Labour identified abusive labour practices in diamond mines across West and Central Africa, and noted that deaths or injuries due to dangerous working conditions remain frequent.

Many multinationals are struggling to cut good corporate images for themselves despite the very nature and details of their activities. Glencore is the largest commodity trader in the world and the leading supplier of zinc and cobalt. It has also been accused of disastrous environmental pollution, poisoning rivers, and permitting child labour in its African mines, taking advantage of the vulnerabilities of the resource-rich but regulation-poor Africa. Glencore has had to embark on financial settlements to end some of its crisis in the DR Congo. Those who are at the receiving end of the mineral extraction often have to live with the human rights impacts of pollution, conflict and exploitation. Attention of rights activists have been drawn to the scale and scope of illegal activities being perpetrated in any mining activities. In a 2015 report titled Chains Of Abuse: The global diamond supply chain and the case of the Central African Republic, the Amnesty International was able to identify some of the infractions that are frequently committed along the value chains of precious mineral resources. Since Africa’s economy is dependent on these commodities, every country involved needs to raise awareness about wrongdoings and enact laws and policies to ensure effective policing and quality control if the continent is to continue to earn significant foreign exchange from their exports. Allowing bad actors to control the extraction, transformation and trade of these precious minerals can only spell doom for Africa in the future. It is time to correct the errors hitherto allowed and move Africa forward in the right path of accountability, transparency and sustainability.  The world is not waiting for Africa. Let the right rules be set and followed for the common good of this and coming generations.