At the latest with the revelations of the Panama Papers, mass media and wider public joined a chorus of outrage over the hidden financial assets of politicians, celebrities and criminal organisations. According to ICIJ, the Panama leaks expose “a system that enables crime, corruption and wrongdoing, hidden by secretive offshore companies”. In particular, the Panamanian law firm Mossack Fonseca has become one of the main protagonists in bribery and money laundering scandals. These leaked documents disclose internal files that contain information on 214,488 offshore entities connected to people in more than 200 countries and territories.
What are the services of law firms like Mossack Fonseca? What are shell companies, offshore entities and so-called tax havens? Can they be used for legitimate or illegitimate businesses? What does the current legislation say? Here is a brief guide and explanation of what has been going on for decades in the hidden financial world.
To put it simple, shell companies are corporations without any active business or operations, or companies that passively own the shares of other companies. Shell companies are also referred to as international business companies, personal investment companies, or “mailbox”/”letterbox” companies. Generally, establishing a shell company is no different from setting up any other type of company.There are legitimate purposes for shell companies, such as helping entrepreneurs gain cheaper and easier public listings on a stock exchange despite minimal sales turnover. Another example of legal use of shell corporations occurs in the case of hidden financial interactions between two companies: if “Company A” does not want to be associated with “Company B”, for instance because of its poor reputation, they can create a shell corporation through which the transaction can be concealed.
Nevertheless, this mechanism is being used to hide corruption and illegal financial transactions such as money laundering and tax evasion. Shell companies have the essential characteristic of being able to obscure the true ownership of an asset. By disguising both the ownership of the shell corporation and its activities, it is relatively simple to conceal the true origin and intent of large amounts of funds that might have been obtained through illegal actions such as drug dealing or other criminal processes.
Shell companies are often formed in so-called tax havens. There are dozens of tax havens besides Panama such as Switzerland, or Luxembourg and many countries in the Caribbean like the British Virgin Islands that provide little or no tax liability and financial information to foreign tax authorities.
The debate surrounding the legality of shell companies is characterised by pro-arguments that in particular focus on the distinct use and counterarguments that question the entire system of shell companies asking why a company should be allowed to hide financial transactions and assets.
Does law enforcement clarify the controversy? Here is the key issue of the discussion: law avoidance is possible and legally permitted – law firms like Mossack Fonseca are specialised to “protect” their clients from the law. Often, governments that harshly criticise tax avoidance and offshore finance are themselves beneficiaries of those strategies. In most cases public anger, accusations of being opportunistic or unethical and undermined political credibility bring about accountability of wrongdoings, not the judgement in a courtroom. Current laws do not require the creators of shell companies – such as Mossack Fonseca – to report who actually controls them. Further, the compliance with international anti-money laundering obligations remains low and inefficient since financial institutions may be negligent or incapable to perform due diligence to the appropriate depth. Anti-Corruption International fights for more transparency and less “legal corruption” in order to stop the immoral businesses of shell companies……More at: http://anticorruption-intl.org/criticising-shell-companies/
Governance: Ethiopia’s clampdown on dissent tests ethnic federal structure. #KonsoProtests #OromoProtests April 8, 2016
Posted by OromianEconomist in #OromoProtests, Ethiopia's Colonizing Structure and the Development Problems of People of Oromia, Afar, Ogaden, Sidama, Southern Ethiopia and the Omo Valley.Tags: #OromoProtests, Africa, Ethiopia, Governance: Ethiopia's clampdown on dissent tests ethnic federal structure. #KonsoProtests #OromoProtests, Konso, Oromia, Oromo, The Guardian
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Ethiopia’s clampdown on dissent tests ethnic federal structure
Protests sparked by the arrest of Konso leader Kala Gezahegn underlined growing tensions between Ethiopia’s central government and many ethnic populations
BY William Davison, The Guardian, Global development, 8 April 2016
Kala Gezahegn, the traditional leader of Ethiopia’s Konso people.
Kala Gezahegn, the leader of the Konso people, addresses a crowd. His arrest highlighted growing tensions in Ethiopia between state power and ethnic groups’ desire for autonomy. Photograph: Courtesy of Kasaye Soka
Nothing seemed amiss when an Ethiopian government vehicle arrived to collect the traditional leader of the Konso people for a meeting in March. But instead of being taken to discuss his community’s requests for more autonomy, Kala Gezahegn was arrested.
Kala’s detention marked a low point in fraught relations between the Konso in southern Ethiopia and the regional authorities in the state capital, Hawassa. Five years ago, the Konso lost their right to self-govern, and growing tensions since then mirror discontent in other parts of Ethiopia.
The 1995 constitution in Africa’s second most populous country allows different ethnic groups to self-govern and protects their languages and culture under a system called ethnic federalism. The largest ethnicities – such as the approximately 35 million-strong Oromo – have their own regional states, while some smaller groups administer zones within regions, as the Konso effectively used to do.
Many of Ethiopia’s ethnic identities, which number more than 80, were suppressed during the imperial and national-socialist eras that preceded the federal system.
What happened in Konso followed demonstrations and killings by security forces in Oromia, the most populous region. A rights group says 266 people have been killed since mid-November during protests over injustice and marginalisation.
Demonstrations were sparked by a government plan to integrate the development of Addis Ababa and surrounding areas of Oromia. After fierce opposition from the Oromo, that scheme was shelved in January, but protests have continued, fuelled by anger over alleged killings, beatings and arrests.
In Amhara, a large region north of Addis Ababa, there was violence late last year related to the Qemant group’s almost decade-old claim for recognition as a group with constitutional rights. The fact that the Qemant rejected a territorial offer from the authorities, saying it was too small, may have provoked local Amhara people. In December, federal security forces were dispatched to contain escalating communal violence.
In Konso, after Kala and other leaders were locked up, thousands took to the streets to protest. During clashes with police on 13 March, three people were killed, and now the dispute seems entrenched.
Women at Fasha market in Ethiopia’s Konso region. Photograph: Grant Rooney/Alamy
The crux of the issue is a 2011 decision to include the Konso – which is in the multi-ethnic Southern Nations, Nationalities and Peoples’ Region (SNNPR) and has 250,000 people – in the newly created Segen zone, thereby removing their right to self-rule. That decision was taken without consultation and resulted in worsening public services and unresponsive courts, says Kambiro Aylate, a member of a committee chosen to represent the community’s demands.
The budget for Konso’s government was reduced by 15%, says Orkissa Orno, another committee member. “The Konso people used their rights to ask for a different administrative structure,” he says.
In a recent interview, prime minister Hailemariam Desalegn blamed the unrest in Oromia on high youth unemployment and a “lack of good governance”, a line echoed by officials in other regions.
Kifle Gebremariam, the deputy president of the SNNPR, said the Konso leaders were arrested on suspicion of maladministration and corruption, issues “completely different” from the political question.
Kifle added that discussions had been held with residents about the status of the administration. “The regional government, including the president, gave them the right response, but they are not peacefully accepting this.”
Kala’s supporters dispute that account, although there have been signs of compromise, with the traditional leader permitted to take part in recent negotiations.
Concerns over the federal system’s ability to withstand such strains are not new. For example, southern groups such as the Wolayta were involved in violent clashes before they were granted their own zone in 2000.
In 2009, the International Crisis Group wrote in a report (pdf): “Ethnic federalism has not dampened conflict, but rather increased competition among groups that vie over land and natural resources, as well as administrative boundaries and government budgets.”
Officials have argued for decades that the focus on minority rights has been integral to an unprecedented period of peace and development.
Assefa Fiseha, a federalism expert at Addis Ababa University, agrees the system has brought stability to a country threatened with fragmentation in the early 1990s after ethno-nationalist rebellions overthrew a military regime.
But a lack of democratisation and centralised economic decision-making works against local autonomy and exacerbates grievances, according to Assefa.
“The regional states, as agents of the regional people, have to be consulted on whatever development project the federal government wants to undertake,” he says.
In fact, the government appears to have been moving in the opposite direction, as its legitimacy depends on economic growth and improving social services and infrastructure.
National projects – 175,000 hectares (430,000 acres) of state-owned sugar plantations in the ethnically rich south Omo area, for instance – are designed, implemented and owned by federal agencies.
The now scrapped integrated Oromia-Addis Ababa plan is another example, as it was developed without scrutiny by “key stakeholders” in the Oromia government, Addis Ababa city and the federal parliament, Assefa says.
One reason for quick decisions in a devolved federation is that the political positions of Ethiopia’s diverse communities are filtered through a rigid ruling coalition.
Along with allied parties, the Ethiopian Peoples’ Revolutionary Democratic Front won every federal and regional legislative seat in May’s elections, extending its control of all tiers of government.
The EPRDF has held power for 25 years, partly by building a popular base of millions of farmers and demanding strict obedience to party doctrine and policy, but some say this is now changing.
The wave of protests, so soon after the landslide election victory, shows that the “dominant party system is facing problems”, Assefa says.
“Growing ethno-nationalism, centralised policymaking and the failure to provide space for political dissent combined together make a perfect storm for violence.”
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Ethiopia: The failed State’s Collapsing Economy April 8, 2016
Posted by OromianEconomist in Ethiopia's Colonizing Structure and the Development Problems of People of Oromia, Afar, Ogaden, Sidama, Southern Ethiopia and the Omo Valley, Free development vs authoritarian model.Tags: Africa, Africa's statistics, economics, Ethiopia, Ethiopia's Colonizing Structure and the Development Problems of People of Oromia, Ethiopia: The chronic shortage economy, Ethiopia: TPLF's corruption empire, poverty, The danger of Single story on Africa Rising, The failed State's Collapsing Economy, The Shadow Over Ethiopia's Construction Boom
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Ethiopia: Double Digit Growth or Collapsing Economy?
Analysis by Andualem Sisay, All Africa, 8 April 2016
Ethiopian government’s increasing reliance on foreign loans is posing a serious risk of economic collapse, a renowned economist has revealed.
“Take for instance China, which has loaned over $17 billion to the Ethiopian government for infrastructure projects. Our total investment is 40 per cent of the GDP. Our saving is between 10-20 per cent of the GDP.
“We import $13 billion and export $3 billion. They are the ones who are filling all these deficit gaps,” said Dr Alemayehu Geda.
The Addis Ababa and London universities don was presenting his paper on Foreign Direct Investment (FDI) in Ethiopia and Credit Financing.
“What will happen if they stopped such financing tomorrow? What if, for instance, the Chinese government tomorrow says sell for me Ethio Telecom or sell to me Ethiopian Airlines or give me some share or buy my aeroplanes, or I will stop such credit financing?
Strategic items
“The country will collapse, I guarantee you,” he said.
Dr Alemayehu went on: “About 77 per cent of our imports are strategic items. Fuel only has 25 per cent share of the total import. As a result, even if we want to reduce these imports, we can’t. Ethiopia needs to minimise strategic vulnerability.”
The don elaborated giving the example of how the Koreans mitigated against such dependency risks when they used to source 75 per cent of their imports from the US some decades ago.
Dr Alemayehu presented his paper in Addis Ababa at the launch of a two-year 12 series of public dialogue by the Forum for Social Studies – a local civil society, partially financed by the UK’s Department for International Development (DfID).
“The Koreans came out of such vulnerability risk after analysing their situation properly, discussing the issue with their intellectuals and setting long term plans,” he said, advising the Ethiopian government to invest in quality education, skilled labour and improve the negotiations capacity as well as have in place a well-designed policy.
Last decade
Official estimates have shown the Ethiopian economy growing by double digits annually for about a decade now, a figure that has highly been doubted by independent scholars.
The Addis government has been applauded for growing the country’s GDP by around 10 per cent per year for the last decade.
In his paper, Dr Alemayehu indicated that Ethiopia’s external loan included $17.6 billion from China for various infrastructure developments, around $3 billion from Turkish and close to $1 billion from Indian governments.
The World Bank’s data shows that from 2012 – 2016, Ethiopia has taken a total loan of close to $6 billion from the global lender. Last year, Ethiopia for the first time, joined Euro Bond and accessed $1.5 billion.
In addition to loans, reports show that some $3 billion annually came to the country in the form of aid from donors.
Have declined
Ethiopia’s exports have declined from around $3 billion last year to around $2.5 billion this year, as revealed in the recent six-month report of the prime minister to the parliament.
Even though tax collection has been growing by an average of 20 per cent annually over the past five years, Ethiopia’s tax to GDP ratio still stands at 13 per cent, which is less than the around 16 per cent of the sub-Saharan average.
Last year, Ethiopia collected around $6 billion from tax, including $25 million recovered from contraband traders. The figure could have been raised by at least $3 billion had it not been for the generous tax incentives the country has provided to investors, according to latest report of the Ethiopian Revenue and Customs Authority (ERCA).
In only nine months of Ethiopia’s last budget (July 8, 2014 – July 7, 2015), the country provided tax incentives of around $2.4 billion to investors, by exempting them from customs and excise duties and withholding, VAT and surtaxes, according to ERCA’s report.
Financial integrity
A financial integrity report last December indicated that around $2 billion was leaving Ethiopia every year through mis-invoicing and other tax frauds.
When it comes to the FDI coming from China, India and Turkey, close to 71 per cent of their investments in Ethiopia were in the manufacturing sector.
However, job creation, technology transfer and export contribution were insignificant for Ethiopia, which has over an 90 million population dominated by the youth. The country has about 16 per cent unemployment rate, according to Dr Alemayehu.
Between 2003-2012, there were 93 Chinese companies that had reportedly invested $600 million, creating around 69,000 permanent and 79,000 temporary jobs for Ethiopians. There was little contribution to technology transfer and foreign currency generation through the exportation of their products.
However, his special economic adviser with a ministerial docket, Dr Arkebe Equbay, reportedly told Bloomberg media that the economy was expected to grow by 11 per cent this year.
Foreign debts
The government was now expected to deal with puzzles such as why the economic performance was not as good as in the previous years, with all the generous incentives to investors and huge infrastructure investments mainly dependent on local and external loans?
How to repay its local and foreign debts before the lenders force the government to cede shares in its highly protected businesses, such as, Ethio Telecom, Ethiopian Airlines, the Commercial Bank of Ethiopia, the Ethiopian Insurance Corporation and Ethiopian Shipping Lines is, for sure, the elephant in the room.
But the big question is: How soon will these issues get the attention of a government pre-occupied with trying to feed about a dozen million people affected by drought and dealing with political unrest and conflicts mainly in Oromia and Gondar area of Amhara Region?
Anti-Corruption International: What is the #Panamapapers and how does it work? April 8, 2016
Posted by OromianEconomist in 10 best Youtube videos, 25 killer Websites that make you cleverer, Corruption.Tags: Anti-Corruption International, Corruption, The networks of shell companies, What is the #Panamapapers and doeshow it works?
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What are we talking about when we criticise the networks of shell companies?
ACI, 8 April 2016
Oromia & Ethiopia: #OromoProtests: With whom are the European Union, the United States, and the African Union Officials meeting to discuss and end the exclusion and marginalization of the Oromo people in Ethiopia? April 8, 2016
Posted by OromianEconomist in #OromoProtests.Tags: #OromoProtests, Africa, and the African Union Officials meeting to discuss and end the exclusion and marginalization of the Oromo people in Ethiopia?, AU, Crimes against Humanity in Oromia/Ethiopia, Ethiopia: Update - European Parliament Adopts Powerful Ethiopia Resolution, Oromia, Oromo, the United States, With whom are the European Union
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With whom are the European Union, the United States, and the African Union Officials meeting to discuss and end the exclusion and marginalization of the Oromo people in Ethiopia?
By Dr. Birhanemeskel Abebe Segni, 8 April 2016
In response to the Ethiopian government’s unrelenting attack on the ongoing #OromoProtests, the United States, European Union, and African Union have been sending delegations to Ethiopia to express their “concerns” about the killings, large scale mass arrest and torture of Oromo Protesters; and urge the Ethiopian government to end the systemic exclusion and marginalization of the Oromo people from Ethiopia’s economic, political, social and urban lives.
But, with whom are these American, European and African Officials meeting and talking in Ethiopia if they don’t meet a single Oromo? More specifically, if they don’t meet and speak with a single Oromo on an Oromo issue, in a country where the Oromo people constitutes close 50% of the population, with whom are they convening and speaking? Who is representing and speaking on behalf of the Oromo people in Ethiopia?
One may think the OPDO, the Oromo wing of the EPRDF– the ruling party in Ethiopia, is representing and speaking for the Oromo people. That is not actually the case. No official from the United States, the European Union or the African Union ever spoke and convened with a single OPDO officials over the last four months.
For instance, no one from the United States delegations that visited Ethiopia in recent months including Ambassador Samantha Power (United States Permanent Representative to the United Nations in New York), Ambassador Linda Thomas-Greenfield (Assistant Secretary of State for African Affairs), Ms. Gayle E. Smith (Administrator of USAID), and Tom Malinowski ( the U.S. Assistant Secretary of State for Democracy, Human Rights, and Labor) convened and talked with a single OPDO officials both at federal and regional levels. They all met with non-Oromo Ethiopian officials with no Oromo present and discussed about the plight of the Oromo people and left, or they told us so.
Similarly, no one from the European Union officials who recently visited Ethiopia to express their concern on the Oromo people’s economic and political marginalization and exclusion and the ongoing bloody crackdown on the #OromoProtests met with a single OPDO official, both at the federal and regional levels.
Some might think these European, African and American officials who visited Addis Ababa over the last four months to express their concern about the systemic exclusion and marginalization of the Oromo people in Ethiopia are meeting and holding consultation with the only legally registered Oromo opposition party, the Oromo Federalist Congress(OFC), officials. That is not the case either.
In early February this year, the Assistant Secretary of State for African Affairs, Ambassador Linda Thomas-Greenfield, who went to Ethiopia to participate on the AU Summit held consultation with the Ethiopian authorities on the Oromo issues. She also said she met with the Oromo community representatives.
It turned out Ambassador Linda Thomas-Greenfield did not meet with anyone from the Oromo wing of the EPRDF, the OPDO, as well as the Oromo Federalist Congress (OFC), the two known groups who claim to represent the Oromo.
Dr. Merera Gudina, the Chairman of the Oromo Federalist Congress, stated on record that no one from OFC met with the delegation of Ambassador Linda Thomas-Greenfield including Ms. Gayle E. Smith, the Administrator of USAID. It is mindboggling who met with Ms. Thomas-Greenfield delegation as there is no known Oromo community in Addis Ababa let alone Oromo community representatives.
Similarly, the African Union spokeswoman stated that African Union is talking with the Ethiopian Authorities behind closed doors on the #OromoProtests. But, who are these proxies with whom these officials are speaking on behalf of the Oromo people?
The representation of the Oromo professionals in the Ethiopian federal government bureaucracy including in the Ethiopian federal security and defense forces are virtually non-existent. One may blame the Amharic only monolingual language policy of the federal government for the total and complete exclusion of Afaan Oromo speakers, but that is just one reason among many written and unwritten exclusionary policies in place.
The critical questions though are, how long could the Ethiopian government keep the Oromo people in obscurity as non-existing majority with no representation?
And how long could the United States, the European Union and the African Union turn blind eyes and deaf ears to the plight of the Oromo people in Ethiopia?
Are violence and war necessary prerequisites for the rights of peaceful people like the Oromo to be respected?
Is investing in peace not less expensive in comparison to investing in war, violence and the resultant humanitarian crisis for the so called development and security partners of Ethiopia, particularly the United States and United Kingdom? #OromoProtests.
http://ethiopia.usembassy.gov/pr_2016_20.html#.Vv2G3uGIVNs.twitter
Read more at: http://www.caboowanci.com/2016/04/08/eu-us-au-officials-meeting/
QZ: Political Tweets: Politics and activism are driving Africa’s Twitter conversations to new highs April 8, 2016
Posted by OromianEconomist in #OromoProtests, 10 best Youtube videos.Tags: #OromoProtests, Africa, Best youtube videos that make you the brightest, QZ, TWEETOCRACY Politics and activism are driving Africa’s Twitter conversations to new highs
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In past decades, older generations of Africans had to be tolerant of oppressive governments, which were often dictatorships—if only for their own safety. But the younger generation is more vocal, critical and demanding of their leaders, and unwilling to allow their questions to be left unanswered.
Those higher expectations have been voiced on the streets of African cities from Bujumbura to Cape Town in the last year, but increasingly the murmurings of protest and criticism start via social media apps on mobile phones. And Twitter, with its relatively low bandwidth consumption, good for the slower networks and 3G phones of many African consumers, has played a leading role as a platform for raising political awareness on the continent.Data from the latest How Africa Tweets report conducted by Portland shows Twitter continues to provide an important platform for political discourse in Africa. The report analyzed 1.6 billion tweets and 5,000 hashtags from 2015 and found that politics-related tweets in Africa, while behind entertainment and commerce, were very much on the rise, and generally topped the rates of political tweets in the United States and United Kingdom.
Politics and activism are driving Africa’s Twitter conversations to new highs
OromianEconomist 
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