China’s secret deals strip African people of their country’s natural wealth

“Buccaneers are cutting themselves a large slice of Africa’s resource cake,” says Global Witness, a private watchdog agency that has exposed a series of scandals involving China and corrupt African leaders.

In its own follow-up investigations, Economist magazine in its August 13 edition ran an unusually long article with the subtitle: “China’s oil trade with China is dominated by an opaque syndicate. Ordinary Africans appear to do badly out of its hugely lucrative deals.”

Because of the volume of oil Angola sold to China over the years at rigged, non-market prices, the profit to China’s secret syndicate could amount to tens of billions of dollars, according to the Economist. Moreover, the syndicate promised to build cross-country highways, low-cost housing, hydroelectric plants, and other forms of infrastructure, but has delivered little.

Another dimension of the scandals is that the syndicate’s cash props up certain regimes and thereby fuels violent conflict. In Guinea, for example, the syndicate came to the rescue of the cash-strapped rulers after government officials massacred 150 protesters in a stadium and raped scores of women. A month later, the syndicate transferred $100,000,000 to the country as part of a minerals deal.

Model for Plunder

“Rather than fixing Africa’s lack of infrastructure, Chinese entrepreneurs and Africa’s governing elite look as if they are conspiring to use the development model as a pretext for plunder,” the Economist concluded.

Global Witness has individual reports on eight African countries in which the syndicate has one-sided deals for current and future wealth: Angola, Cote d’Ivoire, Democratic Republic of Congo, Equatorial Guinea, Liberia, Madagascar, Republic of Congo, Sudan, and Zimbabwe.

Global Witness conceived and co-launched Publish What You Pay (PWYP) campaign with more than 300 member groups seeking to promote greater transparency in the oil, gas, and mining industries. “A concerted coordinated response is urgently required that cuts across the political, institutional, and industry spheres,” says Global Witness. A key problem is the secrecy provided by U.S. shell companies that stash the syndicate's (and other) ill-gotten gains in American banks.

In the last Congress, two Senators – Levin, a Democrat from Michigan, and Grassley, a Republican from Iowa – introduced legislation to make it harder for corrupt politicians, terrorists, and other criminals to form and hide behind anonymous U.S. shell companies. That effort got nowhere. In July President Obama signed a new Strategy to Combat Transnational Crime, which proposes a series of laws to achieve its goals. That effort looks to be a victim of the continuing mindless debate about the U.S. federal deficit and future budgets.