Treasure Islands - Nicholas Shaxson [85]
Because of the offshore secrecy, it is impossible to tell whether what Gaydamak said is even partly true. What is certain is that Angola’s leaders, in partnership with Russian interests and private offshore intermediaries, cooked up a curious deal, routed offshore, with vast profits for some insiders, and with absolutely no chance of accountability to the people of Angola or Russia. The African insiders had used offshore to enrich themselves not from Angola’s assets but from its debts.
The Swiss judge was later promoted away from the post, and his replacement unblocked the notes in October 2003, arguing that neither Angola nor Russia had complained about the deal, and accepting the argument that the accounts held by the Angolan dignitaries amounted to “strategic funds, placed abroad in a time of war.”
I could have chosen any number of murky African offshore episodes to explore, but I chose this one to illustrate a particular point about the scale of the draining of Africa’s wealth. Gaymadak’s deals represent only a tiny fraction of what the offshore system has drained from Africa. Two recent studies point directly to the sheer scale of the problem.
In March 2010 Global Financial Integrity (GFI) in Washington authored a study on illicit financial flows out of African countries.22 Between 1970 and 2008, it concluded, “Total illicit financial outflows from Africa, conservatively estimated, were approximately $854 billion. Total illicit outflows may be as high as $1.8 trillion.” Of that overall conservative figure, it estimates Angola lost $4.68 billion23 between 1993 (when Gaydamak’s main “Angolagate” deals started) and 2002, the year after his Abalone debt dealings ended. My personal belief, based on years of investigating Angola’s economy and its offshore-diving leadership, is that Baker’s estimate—equivalent to just over 9 percent of its $51 billion in oil and diamond exports during that time24—simply has to be a gross underestimate of the losses. Many billions have disappeared offshore through opaque oil-backed loans channeled outside normal state budgets, many of them routed through two special trusts25 operating out of London.
GFI’s shocking estimates complement the figures I mentioned in the prologue about the global scale of illicit financial flows: Developing countries lost up to a trillion dollars in illicit financial outflows just in 2006—that is, ten dollars out for every dollar of foreign aid flowing in.26
Another study emerged in April 2008 from the University of Massachusetts, Amherst, using different methodologies to examine “capital flight” from forty African countries from 1970 to 2004.27 Its conclusions are similarly striking: “Real capital flight over the 35-year period amounted to about $420 billion (in 2004 dollars) for the 40 countries as a whole. Including imputed interest earnings, the accumulated stock of capital flight was about $607 billion as of end–2004.” Yet at the same time, the total external debt of these countries was “only” $227 billion. So, the authors note, Africa is a net creditor to the rest of the world, with its net external assets vastly exceeding its debts. Yet there is a crucial difference between the assets and the liabilities. The University of Massachusetts study concludes, “The subcontinent’s private external assets belong to a narrow, relatively wealthy stratum of its population, while public external debts are borne by the people through their governments.”
Having watched people die before my eyes in Angola; having seen an otherwise pretty six-year-old Angolan girl