ROAPE’s Jörg Wiegratz introduces a special issue on economic fraud in capitalist Africa. He encourages us to delve deeply into a critical analysis of fraud, its causes, characteristics, and repercussions, in the context of the long history of the relationship between capitalism and economic crime on the continent. This week we will publish two further blogs in our series on economic trickery, fraud and crime in Africa.
By Jörg Wiegratz
Global capitalism has never been more advanced and aggressive than now. A key feature of this intensively global capitalist world is the staggering level, variety and institutionalisation of fraud and other economic crimes, across economic sectors. Wherever you look, the extensive societal restructuring of the last 30 years, that is ‘neoliberalism’, has produced structures and conditions that are fraud enabling. The production, trade, finance, social services and entertainment sectors are all affected by routine fraud.
These processes have also taken place in Africa. Corporate irregularities have received considerable attention since the 2010s, for instance, illicit financial flows including tax evasion of transnational corporations (TNCs). This focus is part of the long aftermath of the report of the African Union/United Nations Economic Commission for Africa which estimated that illicit flows from Africa could be around US$50 billion a year. Faced with widespread economic crimes a number of states in Africa and elsewhere have recently started to acknowledge more formally that there is an issue with economic irregularities that needs tackling. They have undertaken explicit countermeasures in the name of detecting and reducing fraudulent activities in their economies. After two decades of light-touch regulation of the economy during the rise and height of neoliberalism, these initiatives are advanced in the name of fostering product quality, consumer confidence, competitiveness, exports, and ultimately economic growth, and include attempts to restrict a range of economic, financial and environmental crimes. These regulatory initiatives to ‘clean up’ the economy are sometimes complemented by the activities of consumer protection organisations demanding regulation of problematic business practices and these organisations occasionally form anti-fraud coalitions with business associations and donor agencies such as USAID. Even the World Bank releases reports about ‘ill-gotten money and the economy’ and anti-competitive practices in African economies in the context of the prevalent misuse of market power by monopolies or oligopolies. While the UK Department for International Development (DFID) currently funds an ongoing large-scale research programme that investigates ‘private sector corruption’ in various African countries. Cartels are now formally recognised by authorities (e.g. COMESA) as a widespread phenomenon in East Africa for instance and investigations into various sectors are ongoing.
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Next, the fisheries sector remains another key example of the multi-national (north-south and south-south) co-production of economic crimes (with European corporate actors being prominent here as well), with devastating consequences for affected populations.
In a ROAPE special issue on fraud in Africa, I thus argue that existing research needs to be consolidated, expanded and deepened; there is need for a strengthened and more intensive critical political-economic analysis of fraud in the ‘private sector’, its causes, characteristics, and societal repercussions. The issue is set against the background of the recent phase in the long history of the relationship between capitalism and economic crime. One of the starting points of the issue is the observation that African Studies has not yet sufficiently engaged with and mobilised the relevant global, critical criminology literature (including its conceptual tool kit) to analyse how economic crimes are bound to global and local capitalism.
By contrast, African studies has rather a lot to say regarding state criminality, including corruption, and also about smugglers, tricksters, violent gangs, but relatively little to say, especially from a criminological perspective, regarding corporate criminality. Relatively few criminologists study African corporate crime cases, much of the existing research on corporate crime is on South Africa, with legal studies dominating. Donors have to-date not been at the forefront of funding research into corporate criminality. Further, a significant share of the data and analysis in the African context is published not by academic scholars, but by national or inter-national bodies, activist groups, think tanks, NGOs, corporate analysts, independent researchers and investigative journalists. What is the state of exchange, networking, dialogue and cooperation between these different groups of analysts, writers and activists? The issue picks up on some of these points, observations, and concerns. In particular, it responds to the imperative to advance the analysis of the link between capitalism and crime in Africa, and to locate capitalism more centrally in the analysis of economic crimes.
The issue is alive to relevant themes and debates in African studies and branches of economics and development studies; for example, this include research on underground/parallel economy, organised crime, trade in drug/weapons/human beings, smuggling; financial crimes, creative accounting, illicit finance, capital flights, off-shore/tax heavens, tax evasion; irregularities in the minerals and forestry sectors (roape.net has covered some of these debates over recent years). Terms commonly used in some of the respective debates in African studies include patronage, patrimonialism, kleptocracy, plunder, spoil politics, primitive accumulation, grabbing, rent capture. A number of debates are concerned with how crime affects matters of state building, political (dis)order, violence, political institutions, stability and (economic) development in Africa.
We are still left with a couple of questions. First, what are the under researched themes currently? Here, the political economy of health and safety crimes of corporations, the role of banks and accounting firms in facilitating fraud, and the regulation of corporate crimes seem to get little research coverage. Under-explored are also the legal privileges that (criminal) corporations enjoy in African countries. One major issue that is yet to be more fully researched and discussed is what exactly makes the neoliberal period of fraud distinct from earlier periods, and how has the shifting character of neoliberalism in its different phases over the last three decades affected the scale, character and dynamics of fraud in particular regions, countries, sectors and professions in Africa. Secondly, how would a corporate crime research agenda that is informed by critical (and Marxist) criminology look like? The research tells us that tracing and understanding relevant social relations of power including the sources and mechanisms of the power of the corporation is one of the key tasks here.
That said, the issue sheds light on some of the major political-economic characteristics of the fraud, and on what fraud has to do with, and can tell us about, relevant aspects of state–business relations, regulation and regulatory agencies, capitalist transformation and the corporation. It investigates fraud as a phenomenon of neoliberal reform and unpacks fraud as a social phenomenon under capitalism. The issue extends some of the debates in Africa and beyond about present-day economic fraud, particularly regarding the political character of fraud, and of anti-fraud measures, the relationship between neoliberal reform and fraud, the relationship between power, class and fraud, and the social making or co-production of fraud by a wide range of social actors who are enabling fraud. More specifically, the research articles cover topics such as the political economy of cartels, fake medical drugs, music piracy, microcredit sector fraud, and procurement/contract fraud and kickbacks, while a briefing gives an overview of anti-fraud measures that have become more prevalent in the last decade.
Overall, the analyses shows the fruitfulness of focusing on corporate crime, gathering data especially on the powerful, following the broader set of actors, interests and ideas that allow corporate crime. The issue shows that fraud is a political and social phenomenon uniting various classes as well as state, political and professional organisations. In the discussion of the microcredit industry case for instance, Milford Bateman argues there is evidence that key actors in the international aid sector are entangled with corporate criminality and gangster capitalism, at the expense of the poor. In partnerships of the powerful, some of the donor/aid state agencies, in collaboration with some state agencies, are enablers, backers and defenders of criminal capital. In this case, high profile frauds in the industry get deliberately overlooked or downplayed by officialdom (see also Mary Serumaga’s analysis on similar issues concerning IFIs and corporate tax evasion).
One line of future enquiry that comes out of the issue is to explore the link between economic fraud and public-sector dynamics and investigate how the state becomes internally restructured and incapacitated, with the aim of facilitating corporate fraud. To ‘follow the state’, to explore the political economy of the relationship between economic fraud and political corruption, might add to our debate about the special relationship between capital and state under neoliberalism. The pro-corporate-criminality effect of some of the ideologies and operations of sections of the international aid/development sector requires further research too.
To introduce the issue (and the debates) on economic fraud in capitalist Africa to roape.net readers this week we will publish two further blogs in our series on ‘Economic Trickery, Fraud and Crime in Africa’. These blogposts, by Ben Fine and Thomas MacManus, cover the crucial issues of illegal capital flight from South Africa and Trafigura’s dumping of toxic waste in West Africa. We invite contributors to contact us and send us their ideas for blogposts. We are keen to continue our coverage and debate about the crimes of capitalism, and its political economy, also because, last but not least, this is vital in the age of the climate emergency and the role of the capitalist corporation in the unfolding catastrophe.
Jörg Wiegratz is a Lecturer in the Political Economy of Global Development at the University of Leeds and a member of the editorial board of RoAPE. His recent books include Neoliberal Moral Economy: Capitalism, Socio-cultural Change and Fraud in Uganda (Rowman & Littlefield International, 2016), Uganda: The Dynamics of Neoliberal Transformation (co-edited with Giuliano Martiniello and Elisa Greco, Zed, 2018), and Neoliberalism and the Moral Economy of Fraud (co-edited with David Whyte, 2016). His is a regular contributor and editor of roape.net.
Featured Photograph: Taken from the Progress in Political Economy website at the Department of Department of Political Economy at the University of Sydney.
